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Ynvisible Interactive Inc. Management Reports 2024
43745_rns_2024-11-29_e7640439-0359-4374-9ab6-0a5101082397.pdf
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ynvisible
MD&A
YNVISIBLE INTERACTIVE INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS
NINE MONTHS ENDED SEPTEMBER 30, 2024
Date of Report: November 29, 2024
The following management’s discussion and analysis (“MD&A”) of the financial position and results of operations for Ynvisible Interactive Inc. (the “Company”, “we”, “our” or “Ynvisible”) should be read in conjunction with the Company’s audited consolidated financial statements and the notes thereto for the years ended December 31, 2023 and 2022 and the unaudited condensed interim consolidated financial statements for the nine months ended September 30, 2024 and 2023 (the “Financial Statements”). Except as otherwise disclosed, all dollar figures included therein and in the following MD&A are quoted in Canadian dollars. Additional information relevant to the Company’s activities can be found on SEDAR+ at www.sedarplus.ca.
Overall Performance
Ynvisible Interactive Inc. is a public company listed on the TSX Venture Exchange under the trading symbol “YNV”, on the OTCQB under the symbol “YNVYF”, and FSE under the symbol “1XNA”.
Ynvisible is a printed e-paper product company and a market leader in printed electrochromic display (ECD) technology. The company commands end-to-end expertise and a strong intellectual property position in the design, development and high volume manufacturing of printed e-paper display products. Ynvisible displays are engineered for seamless integration into a broad range of applications, such as retail signage, supply chain labels and medical diagnostic devices.
Ynvisible offers a range of standard and customized ultra-low power and easy-to-use displays for everyday smart objects, Internet of Things (IoT) and industrial products. Ynvisible displays (printed on flexible substrates) are simpler to integrate and more cost effective than traditional LCDs and electrophoretic displays. The Company also provides contracted research, development, prototyping, and manufacturing services of printed electronics.
With a unique blend of materials science, process technology, and display electronics, Ynvisible is poised to differentiate itself as a leader in the emerging printed and flexible electronics sector. Moreover, Ynvisible’s brand is increasingly well recognized among brand owners developing IoT products, which positions the Company as a key player in this rapidly evolving market.
The address of the Company’s head office and principal place of business is 830 – 1100 Melville Street, Vancouver, British Columbia, Canada, V6E 4A6, and the registered and records office is located at 1500 – 1055 West Georgia Street, Vancouver, British Columbia, Canada, V6E 4N7. The Company maintains a website at www.ynvisible.com.
The Company’s ability to continue as a going concern, to fund work commitments and to ensure adequate working capital is dependent upon achieving profitable operations or upon obtaining sufficient additional financing. Management believes that the Company has sufficient working capital to meet the Company’s obligations over the next twelve months.
ynvisible
MD&A
Management Discussion & Business Highlights
Overview
In 2023, Ynvisible showcased the success of its transition from research and development (R&D) to an e-paper product company with a robust pipeline of new e-paper products set for launch in 2024 and 2025.
Ynvisible made significant strides in expanding its market presence and engaging with customers across various sectors, such as Retail, Medical & Pharma, Logistics & Supply Chain, and Industrial. By introducing innovative products and forming strategic partnerships, the Company has demonstrated its commitment to providing customizable solutions that meet the market needs for cost effective and sustainable digital displays.
During 2023, the Company secured and delivered important commercial purchase orders, and received additional customer commitments, which reflects a growing demand for Ynvisible's e-paper solutions. Investments in manufacturing capabilities and supply chain optimization are ensuring the Company can meet this growing demand effectively.
In addition, Ynvisible continues to focus on product performance, technology refinement, and breakthrough innovation, along with its commitment to sustainability, fostering an inclusive and entrepreneurial workplace culture, which underlines its dedication to customer satisfaction, employee well-being and the environment.
As we conclude the third quarter of 2024, our focus remains on ensuring Ynvisible continues to be a preferred choice for our customers and investors. We have established a clear path forward to achieve Rapid Growth and Market Leadership, by:
- Accelerating Sales & Marketing to expand customer base, both through an expansion of our global distribution network and strengthening business development and direct sales
- Scaling operations to meet growing demand, both through investing in our internal manufacturing capabilities (increasing capacity and efficiency) and establishing strong partnerships with industry leaders that help scale procurement, supply chain and manufacturing
- Investing in Product Innovation, to optimize and diversify product offering
For the rest of 2024, we will continue to drive our growth both as an organization and as a business. We are committed to fostering a productive and efficient workplace culture that offers opportunities for growth and collaboration, ultimately boosting our overall performance and cohesiveness. In addition, we are actively working to attract new talent and strengthen key areas within the Company, including Business Development, Sales & Marketing, Operations and Product Innovation.
Finally, we value open communication and transparency. In 2024, we have invested in building stronger, trust-based relationships with our stakeholders, including investors, customers, and partners, and we will continue to do so until the end of the year.
Products & Services
In Q3 2024, Ynvisible continued the strategic focus on commercializing and manufacturing e-paper products for key customers, building upon the significant progress made in 2023. Engaging across the four e-paper product categories of Indicators, Digital Signage, Electronic Labels, and Smart Cards; the Company remains committed to targeting diverse sectors such as Retail, Medical & Pharma, Logistics & Supply Chain, and Industrial applications.
A focal point of Ynvisible's product strategy in 2023 and 2024 was the launch of innovative offerings, notably the commercial introduction of a new digital signage solution for retail applications. This addition exemplified the Company's commitment to addressing a substantial and growing market demand for cost-effective, energy-efficient, and sustainable digital signage display solutions. Beyond retail, Ynvisible is also focusing on public information signage as an application for our printed e-paper display solutions.
ynvisible
MD&A
Ynvisible expanded its product range to include a broader category of e-paper products, with a specific emphasis on digital product information – indicators. These e-paper indicators can be customized and seamlessly integrated into various applications, spanning from industrial and supply chain solutions to medical/diagnostics products. In 2024, Ynvisible has made progress in developing, prototyping and commercializing new indicator products, for single-use diagnostic devices, industrial maintenance timers, wireless battery chargers for medical devices, hygiene applications and doorway security solutions. Ynvisible's e-paper products serve not only to replace existing solutions but also to pioneer new product applications, solidifying the Company's position as an innovative leader in the e-paper industry.
Ynvisible has historically generated revenue through a combination of different sources. These include:
- Customer-funded R&D and product development projects
- Prototyping of printed e-paper displays
- Sales of printed e-paper display products
- Production up-scaling and contract manufacturing services
Among these revenue sources, historically the most significant segments for Ynvisible have been the sale of R&D and product development projects, and production up-scaling services. However, in 2023, there was a strong shift in the Company's revenue segmentation, that continued in 2024. In the first 9 months of 2024, the total revenue coming from sales of e-aper display products represented 48% of the total revenues of the Company, an increase from 39% in the same period in 2023.
Within the production up-scaling and contract manufacturing services revenue category, the Company anticipates that its capabilities and revenue associated with the cost-effective design and production of printed systems in the high growth sector of energy generation/storage, where Ynvisible has been supporting several start-up companies, will fluctuate as a function of:
- Customers' material needs and their own internal production and scale-up capabilities;
- Capacity of Ynvisible's manufacturing line in Linköping, Sweden; and
- Competition within the contract manufacturing and process scale-up services market.
Currently, Ynvisible's primary goal is to streamline the product launch process, by offering printed e-paper displays in four different product categories, namely:
- Indicators
- Digital Signage
- Electronic Labels
- Smart Cards
Ynvisible's short to medium term goal is to gain market share by offering standard products in the indicators and digital signs categories, while, in the cards and labels markets, Ynvisible will collaborate with chosen industry leaders to create innovative products tailored for emerging markets.
Ynvisible's displays are tailored to meet the specific requirements of different segments within the e-paper market. These segments exhibit unmet market needs and require mass producible displays with ultra-low power consumption. As mentioned, Ynvisible's target market segments include:
- Retail
- Medical & Pharma
- Logistics & Supply Chain
- Industrial
- Banking
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ynvisible
MD&A
Sales & Marketing
In Q3 2024, Ynvisible's sales and marketing operations continued to strengthen global sales and distribution networks for its printed e-paper display products. Outbound efforts targeted specific end-user markets and customers, with a focus on project sales for Non-Recurring Engineering (NRE) and strategic development projects.
Key initiatives included:
- Establishing new sales and distribution channels in Europe, North America and Asia
- Optimizing and scaling up production to meet the needs of selected target markets
- Forming technology and manufacturing partnerships to enhance product offerings and scale operations, respectively
Ynvisible's sales mix encompassed a full range of services related to e-paper displays, including contract research, electronics development, production up-scaling, and contract manufacturing printing services. However, the Company became more discerning in pursuing opportunities with stronger long-term business potential and/or alignment with strategic objectives.
In 2024, the Company's product strategy centered on offering custom solutions for digital signs, indicators and labels, resulting in additional customer engagements:
- For indicators, Ynvisible continued a collaboration with a leading customer in the Medical/Diagnostics industry to develop a novel, energy-efficient, visual indicator. Once optimized, tested and approved by the Food and Drug Administration (FDA), the solution is estimated to enter high volume production in Q2 - Q3 2025, creating significant revenue potential. Additionally, Ynvisible completed the development of a maintenance time indicator solution for industrial equipment, in partnership with a European industrial equipment manufacturer, with high volumes of the product expected to be delivered in Q1 2025. In Q3 2024, Ynvisible also developed and prototyped additional indicator solutions, for a hand sanitizer hygiene application, a wireless battery charger for medical devices, and a door security system. The estimated market potential for Ynvisible's indicator solutions is substantial, serving industries demanding simple and energy-efficient visual indicators, such as Supply Chain & Logistics, Industrial, and Medical & Pharma. With continuous technological advancements, Ynvisible remains at the forefront of the evolving visual indicator space.
- In labels, Ynvisible developed a strategic collaboration with Hive-Zox, a Swiss-based company providing supply-chain digitalization solutions for visibility and real-time monitoring. Ynvisible's printed e-paper displays will be integrated into a new, compact, smart label designed for pharmaceutical and healthcare shipment monitoring. The integration of Ynvisible's printed e-paper displays into supply chain real-time monitoring solutions is a good example of a promising application in the space of smart labels.
Marketing events in 2024:
In Q2 and Q3 2024, marketing highlights encompassed the Company's participation in some of the biggest events dedicated to electronics, displays and the printing industry:
- Embedded world, Nuremberg, Germany, 9 -11 April, 2024 – Exhibition booth
- Display Week, San Jose, USA, 14 - 16 May, 2024 – Exhibition booth by our partner in North America Display Logic USA
- DRUPA, Düsseldorf, Germany, 28 May - 7 June 2024 – Our team visited the show to meet with partners, suppliers and discuss new opportunities
- IOTE 2024, Shenzhen, China, 28 - 30 August – Exhibition booth by our partner in China, Ynvitech
ynvisible
MD&A
Other Marketing activities in 2024:
- In the first 9 months of 2024, Ynvisible invested strongly into developing its communications and outreach marketing activities. This was done through a multi-channel approach, including social media, publications, website content and interviews. Ynvisible will continue to strengthen these activities throughout 2024, to intensify both customer and investor engagement.
- On June 26, 2024, Ynvisible held an investor-focused webinar, where we highlighted our progress in product development, customer acquisition, and market strategy. On September 18, Ynvisible held its second corporate webinar of the year, focused on Accelerating Growth and Scaling Operations.
Team, Management & Culture
Ynvisible's team is a multidisciplinary team of over 30 professionals with diverse backgrounds, nationalities and skill sets. In its operations in Portugal, Sweden and Germany, the Company leverages the highly skilled labor base and competitive labor costs.
Ynvisible builds and promotes a strong Company culture, aligned with the Company's vision, values and goals. The three pillars of the Company's values are: Ethics and Integrity, Collaboration and Teamwork, and Resilience and Agility.
To make sure each team member feels well integrated within the team and maintains a sense of contribution to the Company's goals, Ynvisible has a Performance Management Program (PMP), through which individual goals for each person are set and aligned with the Company's goals. The PMP includes quarterly reviews of performance and goals, to ensure constructive feedback is shared and that the individual goals continue to be meaningful and updated on a regular basis.
In May 2024, Ynvisible held its annual team building event in Portugal to further strengthen our shared culture. Our international team gathered for 3 days to connect, learn from each other and discuss our future strategy and goals, under the theme "One Team, One Goal, All In". During the third quarter of 2024, the Company continued to leverage the spirit and learnings acquired during the team building event, to promote teamwork and collaboration across all departments, teams and locations, recognizing that a strong sense of shared goals and values is essential for achieving sustained success and growth as an enterprise.
The Company also nurtures a culture of continuous learning and refinement of product and services, based on lessons learned from customer interactions, coupled with careful assessment of market needs, size and future profitability of opportunity, and clear decisive execution.
Financial Performance
In Q3 2024, the Company's revenue from customer sales amounted to $214,693, marking a 9% increase compared to the total revenue from customers of $197,675 in the same period of 2023. This positive variation is a result of the Company delivering higher volume production orders to customers, aligned with the strategic shift from R&D to customer products.
As the Company continues to pursue revenue growth, it expects to reinforce its position and create further commercial success through necessary product optimization and scaling efforts throughout 2024.
During Q3 2024, income from European Union (EU) funding was $10,484, a 79% decrease compared to the prior year, with most of the European projects coming to an end. This decrease is a result of the intentional focus of Ynvisible in allocating its full resources to product development and production scale-up activities, and carefully choosing any new projects, to ensure alignment with its strategy and long-term goals.
ynvisible
MD&A
SALES AND EU FUNDING 2020-2024
The Company's total revenue and other income for Q3 2024 was $364,260 a decrease of 24% from Q3 2023, of$ 477,441. Total income & gains include customer sales, EU co-funded project grants, and other income and gains, such as interest and other minor sources.
In Q3 2024, the cost of sales amounted to $124,446, reflecting a (41\%$ decrease compared to $\$ 210,481$ in the previous year.
News & Events Q3 2024 and Up to the Date of this Report
On July 17, 2024, Ynvisible announced an important collaboration with a leading provider of air compressors and compressed air systems. Ynvisible has developed an innovative maintenance timer based on its e-paper displays to replace traditional analogue time stickers. The projected volume to be delivered to the customer over the next three years is 105,000 units, valued at over 1.5 million Canadian dollars.
On July 30, 2024, Ynvisible announced that it had signed a new distribution agreement with Hardware & Software Technology Co., Ltd. ("HST"), a leading technology provider in the Greater China region. Through this partnership, Ynvisible expands its presence in China, Taiwan, Hong Kong and Macau, making its thin, low-power, cost-effective e-paper display products available to interested customers in the region. The non-exclusive distribution agreement with HST aims to expand Ynvisible's international presence and connect with new customers interested in implementing or developing e-paper based solutions. HST's in-depth market knowledge and established local network are expected to be valuable in achieving these objectives
On August 14, 2024, Ynvisible announced the successful delivery of a high-temperature resistant display for product status indication in medical equipment, to a key player in the medical field. This innovative countdown timer leverages Ynvisible's advanced display technology, customized to endure the rigorous sterilization and cleaning processes required in hospital environments. At the special request of a leading medical corporation, Ynvisible has developed and successfully delivered a prototype of a new type of display meant to be integrated into high-end medical equipment.
ynvisible
MD&A
On August 19, 2024, Ynvisible announced the resignation of Benjamin Leboe as a director of the Company effective August 13, 2024, due to health reasons. Mr. Leboe had been a member of the Company's Board of Directors since 2018.
On September 5, 2024, Ynvisible announced the appointment of Kamran Kian as a new independent member of its Board of Directors, effective September 4, 2024. Mr. Kian was a senior executive at Avery Dennison, a global leader in material science and manufacturing, where, as Senior Vice President for Global Operations, Supply Chain and Procurement, he oversaw an approximately $7B global operation. As part of his role, he also oversaw the Corporate Engineering team that supports innovation and design of capital equipment for the entire company, including its large Radio Frequency Identification (RFID) technology business. With over 38 years of experience in Operations, Engineering and General Management in North America, Europe and Asia Pacific, he took Avery Dennison's Operations to new heights and built a solid global team.
On September 12, 2024, Ynvisible announced a strategic custom e-paper collaboration with a global leader in water, hygiene and infection prevention products. The collaboration will lead to Ynvisible's innovative e-paper displays being integrated into hand sanitizer dispensers, to provide real-time feedback on device status and usage. Ynvisible developed and delivered first prototypes that have been approved by the customer and has now received a purchase order to deliver more than 500 units, for integration and testing. Following successful testing and validation, up to 50,000 units of hand sanitizers will be equipped with Ynvisible's e-paper displays. In addition, the customer is actively working with Ynvisible to expand the integration of Ynvisible's e-paper displays into other higher volume product lines.
In September 2024, the Company granted 250,000 stock options to a director, at an exercise price of $0.09 per share for a period of five years vesting as follows: 1/4th at the date of grant, 1/4th at four months from the date of grant, 1/4th at eight months from the date of grant, and 1/4th at twelve months from the date of grant. The options were valued at $18,673 using the Black-Scholes option pricing model.
In September 2024, the Company granted 20,000 stock options to employees at an exercise price of $0.20 per share for a period of five years, vesting as follows: 1/4th at the date of grant, 1/4th at four months from the date of grant, 1/4th at eight months from the date of grant, and 1/4th at twelve months from the date of grant. The options were valued at $2,226 using the Black-Scholes option pricing model.
On October 8, 2024, Ynvisible announced that it signed a new distribution agreement with Crystal Display Systems Ltd. ("CDS"), a leading technology provider in the United Kingdom, European and North American markets. Through this partnership, Ynvisible expands its distribution network in Europe and North America, making its thin, low-power, cost-effective e-paper display products available to an increasingly higher volume of customers. The non-exclusive distribution agreement with CDS aims to strengthen Ynvisible's sales and marketing capabilities, and expand the Company's international presence, making it easier to connect with and sell to new customers interested in implementing or developing e-paper based solutions.
On October 18, 2024, Ynvisible announced that it had arranged a non-brokered private placement financing of up to 5,000,000 common shares of the Company at a price of $0.10 per common share, for aggregate gross proceeds of up to $500,000. Further to this release, Ynvisible closed the non-brokered private placement financing on November 4, 2024. The Company received subscriptions for the entire private placement of 5,000,000 common shares of the Company at a price of $0.10 per common share, raising aggregate gross proceeds of $500,000. In the context of this private placement, the CEO of the Company, Ramin Heydarpour released a letter to shareholders on October 22, 2024, in which he stated: "... subsequent to the closing of Ynvisible's private placement, designed to have minimal dilutive impact on existing shareholdings, we intend to undertake an investor relations and marketing program aimed at retail, institutional and strategic investors. The goal of our marketing program will be to expand our reach and improve liquidity. In the coming months, we intend to engage in several initiatives to build investor awareness, including roadshows, participating in key investor conferences (e.g. LD Micro), and hosting webinars, with our next scheduled for December. These actions are all designed to raise Ynvisible's visibility in the market and unlock the true value of the Company."
ynvisible
MD&A
On October 24, 2024, Ynvisible announced that it had recently delivered more than 10,000 customized e-paper displays to a leading company in the diagnostics sector. This delivery comes as a critical step in the product commercialization process, as the displays were integrated into novel at-home medical diagnostic tests by Ynvisible's customer, and are currently under review by the Food and Drug Administration (FDA) in the United States. Ynvisible had previously announced this collaboration with an emergent industry leader in medical devices, to develop the next generation of medical at-home testing and diagnostic solutions. The customized displays that Ynvisible developed for this application follow strict medical industry requirements. In addition, switching to Ynvisible's innovative display technology is expected to significantly increase market share over the coming years for this customer, due to the cost-effectiveness and energy efficiency of Ynvisible's e-paper displays, coupled with the advantages of roll-to-roll manufacturing.
On October 29, 2024, Ynvisible announced that it is expanding the reach of its thin, flexible, ultra-low power e-paper displays to new customers in South America. Ynvisible is partnering with the South America-based division of a global leader in medical device manufacturing, reinforcing the potential of its cutting-edge displays in advancing medical technology. The customer chose Ynvisible to develop a thin, flexible, ultra-low energy display that will be part of a wireless battery charger for implantable devices, indicating an "ON" state and several visual warnings. Such battery chargers can be used, for example, for implantable neurostimulators, which can be applied to a wide range of therapies.
On November 21, 2024, the Company announced a collaboration with Waypoint Transit Solutions ("Waypoint"), a US-based company focused on bringing cost effective, real time, physical transit information signs to cities and agencies that could not previously afford such infrastructure. Together, Ynvisible and Waypoint intend to bring to the market innovative transit information solutions, by introducing cost-effective e-paper display signage to bus stations.
News & Events 2023 and Q1, Q2 2024
In January 2023, Ynvisible announced the launch of its Large Format Electronic Shelf Label Display product. This new display offers an easy-to-read solution for displaying basic product information and pricing, and boasts several unique selling points, including a cost reduction of up to 80% in comparison to competing reflective display technologies, highly customizable options with no minimum order quantity, ultra-low power consumption, and a durable design that can withstand the rigors of daily use in a grocery store environment.
In February 2023, the Company granted 2,427,500 stock options to various directors, officers, consultants, and employees of the Company at an exercise price of $0.20 per share for a period of five years, vesting as follows: 1/4th at the date of grant, 1/4th at four months from the date of grant, 1/4th at eight months from the date of grant, and 1/4th at twelve months from the date of grant. In March 2023, the Company granted 25,000 stock options to a provider of investor relations services at an exercise price of $0.20 per share for a period of five years, vesting as follows: 1/4th at three months from the date of grant, 1/4th at six months from the date of grant, 1/4th at nine months from the date of grant, and 1/4th at twelve months from the date of grant.
In March 2023, the Company granted 20,000 stock options to employees at an exercise price of $0.20 per share for a period of five years, vesting as follows: 1/4th at the date of grant, 1/4th at four months from the date of grant, 1/4th at eight months from the date of grant, and 1/4th at twelve months from the date of grant.
On May 24, 2023, Ynvisible announced that it had received its first purchase order for the commercial launch of its sustainable sign products. In collaboration with a customer specializing in smart solutions for the fuel distribution business, Ynvisible developed a large outdoor information sign designed to be regularly updated and withstand various weather conditions. Additionally, Ynvisible announced it was working on another promising opportunity in the signage space by partnering with one of the world's largest outdoor advertising companies. The collaboration focused on the development of an outdoor large city information panel.
The Company followed up this announcement with a press release on April 10, 2024, where it stated that it had completed the mass production and delivery of 25,000 large-format digital signs for Fortech S.r.l., Italy's leading provider of bespoke solutions for the fuel retail sector.
ynvisible
MD&A
In June 2023, Ynvisible announced a major customer commitment for interactive indicator solutions. The product validation phase was expected to conclude by Q4 2023, and, upon successful validation, the customer has committed to launching the product in the market in 2024.
In June 2023, the Company granted 20,000 stock options to employees at an exercise price of $0.20 per share for a period of five years, vesting as follows: 1/4th at the date of grant, 1/4th at four months from the date of grant, 1/4th at eight months from the date of grant, and 1/4th at twelve months from the date of grant.
In September 2023, Ynvisible announced the appointment of Lúcia Gomes as the Chief Operating Officer of the Company. Inês Henriques, the previous Chief Operating Officer of the Company, has been appointed to a newly created position within the Company as Executive Vice-President of People, Culture and Corporate Affairs.
In September 2023, the Company granted 100,000 stock options to an officer at an exercise price of $0.20 per share for a period of five years, vesting as follows: 1/4th at the date of grant, 1/4th at four months from the date of grant, 1/4th at eight months from the date of grant, and 1/4th at twelve months from the date of grant. In addition, the Company granted 50,000 stock options to a provider of investor relations services at an exercise price of $0.20 per share for a period of five years, vesting as follows: 1/4th at three months from the date of grant, 1/4th at six months from the date of grant, 1/4th at nine months from the date of grant, and 1/4th at twelve months from the date of grant. These options were valued at $3,961 using the Black-Scholes option pricing model.
In October 2023, Ynvisible announced major strategic partnerships with global market leaders, to develop smart and interactive label solutions. These projects are set to transform the labels market where the printed product information on the labels is static and cannot be updated.
In January 2024, Ynvisible announced that it had granted stock options to certain officers, directors, and employees of the Company to acquire an aggregate of 520,000 common shares in the capital of the Company (the "Stock Options"), pursuant to the Company's omnibus equity incentive compensation plan. A total of 400,000 of the Stock Options have been granted to key members of management and are each exercisable at a price of $0.09 until January 11, 2029. The remaining 120,000 of the Stock Options are each exercisable at a price of $0.20 until January 11, 2029. The Stock Options vest 1/4 on January 11, 2024 (the "Grant Date"), 1/4 on the date that is four months from the Grant Date, 1/4 on the date that is eight months from the Grant Date and the final 1/4 on the date that is 12 months from the Grant Date.
In March 2024, Ynvisible announced the appointment of Felix Karlsson as a Director of the Company. Mr. Karlsson was the co-founder and CEO of Rdot AB, an e-paper start-up from Sweden, that was acquired by Ynvisible in 2020. The appointment of Mr. Karlsson followed the resignation of Jani-Mikael Kuusisto as a director of the Company. Mr. Kuusisto has played an integral role in helping shape Ynvisible from its inception. He is currently the CEO of The Warming Surfaces Company, a technology start-up bringing a new sustainable heating technology to the market, that turns surfaces in living environments into smart warming surfaces. With potential business relations developing between Ynvisible and The Warming Surfaces Company, Mr. Kuusisto has decided to step down from the Board of Directors, to prevent any conflicts of interest. He will continue to support Ynvisible through a position in the Advisory Board of the Company.
In March 2024, the Company signed a technology license agreement (the "Agreement") with the Research Institutes of Sweden AB ("RISE") in respect of printed display technology owned by RISE.
The Agreement gives the Company:
- Broad field of use of the technology;
- Six years worldwide exclusive license;
- Perpetual worldwide non-exclusive license;
- Ownership of the product and manufacturing intellectual property;
- Right to buy RISE's intellectual property; and
- Right to terminate the Agreement if Ynvisible is not able to develop viable products or there is a failure in materials supply.
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MD&A
The Agreement gives RISE:
- License fees for 6 years in the range of €70,000 – €90,000/year;
- Perpetual royalties in the range of 1 - 3%;
- Ynvisible commits to purchase services and materials estimated to be €230,000 in 2024 and €180,000 in 2025;
- Ownership of the materials and devices intellectual property; and
- Right to terminate the Agreement if Ynvisible is not commercially successful.
If the Company decides to purchase the intellectual property, the licence fees, royalties and commitment to purchase services and materials will terminate.
In May 2024, the Company granted 130,000 stock options to various directors, officers, consultants, and employees at an exercise price of $0.20 per share for a period of five years, vesting as follows: 1/4th at the date of grant, 1/4th at four months from the date of grant, 1/4th at eight months from the date of grant, and 1/4th at twelve months from the date of grant. The options were valued at $10,557 using the Black-Scholes option pricing model. In addition, the Company granted 50,000 stock options to a provider of investor relations services at an exercise price of $0.20 per share for a period of five years, vesting as follows: 1/4th at three months from the date of grant, 1/4th at six months from the date of grant, 1/4th at nine months from the date of grant, and 1/4th at twelve months from the date of grant. These options were valued at $4,060 using the Black-Scholes option pricing model.
In May 2024, Ynvisible announced that it had granted stock options to certain employees and consultants of the Company to acquire an aggregate of 180,000 common shares in the capital of the Company, pursuant to the Company's omnibus equity incentive compensation plan. The stock options are each convertible into a common share at an exercise price of $0.20 until May 28, 2029. With respect to vesting provisions, a total of 130,000 stock options vest 1/4 on May 28, 2024 (the "Grant Date"), 1/4 on the date that is four months from the Grant Date, 1/4 on the date that is eight months from the Grant Date and the final 1/4 on the date that is 12 months from the Grant Date. A total of 50,000 stock options (the "IR Stock Options") were granted to a provider of investor relations services. In accordance with the policies of the TSX Venture Exchange, the IR Stock Options vest 1/4 on the date that is three months from the Grant Date, 1/4 on the date that is six months from the Grant Date, 1/4 on the date that is nine months from the Grant Date, and the final 1/4 on the date that is 12 months from the Grant Date.
In June 2024, Ynvisible announced that it closed a new commercial agreement with Norwegian material technology company CondAlign AS ("CondAlign"). Through this collaboration, Ynvisible will use CondAlign's proprietary E-Align anisotropic, conductive film to connect its displays to a wide range of electronic devices, unlocking new markets and applications.
In June 2024, Ynvisible announced a strategic collaboration with Hive-Zox, a Swiss-based company providing supply-chain digitalization solutions for visibility and real-time monitoring. Ynvisible's printed e-paper displays will be integrated into a new, compact, smart label designed by Hive-Zox for pharmaceutical and healthcare shipment monitoring.
In June 2024, Ynvisible announced a collaboration with a global industry leader in medical devices, to develop the next generation of medical at-home testing and diagnostic devices. The customized displays that Ynvisible developed for this application follow strict medical industry requirements, to comply with FDA regulations, and can become a standard solution in a wide range of medical and diagnostics products. Ynvisible has received a purchase order for more than 10,000 units for this new type of display, which will be delivered until the end of the year.
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MD&A
ynvisible
Selected Quarterly Information
All financial information in this MD&A has been prepared in accordance with IFRS. The following financial data is derived from the Financial Statements:
| Three Months Ended September 30, | Nine Months Ended September 30, | |||
|---|---|---|---|---|
| 2024 | 2023 | 2024 | 2023 | |
| $ | $ | $ | $ | |
| Sales | 214,693 | 197,675 | 804,358 | 620,587 |
| Operating expenses | (1,214,082) | (1,479,799) | (4,269,557) | (4,823,966) |
| Other items | 158,561 | 279,455 | 440,017 | 870,322 |
| Net loss | (965,274) | (1,213,150) | (3,460,923) | (3,777,803) |
| Total comprehensive loss | (958,031) | (1,199,730) | (3,654,434) | (4,127,841) |
| Loss per share (basic and diluted) | (0.01) | (0.01) | (0.03) | (0.03) |
| As at September 30, | ||||
| --- | --- | --- | ||
| 2024 | 2023 | |||
| $ | $ | |||
| Working capital | 3,789,686 | 8,399,459 | ||
| Total assets | 6,502,372 | 11,397,763 | ||
| Total liabilities | 1,040,393 | 1,214,890 |
Operations
The following table sets forth selected financial information regarding the Company's operating and administrative expenses for the three and nine months ended September 30, 2024 and 2023:
| Three months ended September 30, | Nine months ended September 30, | |||
|---|---|---|---|---|
| Operations | 2024 | 2023 | 2024 | 2023 |
| $ | $ | $ | $ | |
| Sales | 214,693 | 197,675 | 804,358 | 620,587 |
| Cost of sales | (124,446) | (210,481) | (435,741) | (444,716) |
| Compensation and consulting | (766,621) | (768,091) | (2,314,832) | (2,377,170) |
| Depreciation | (151,145) | (145,523) | (444,789) | (447,570) |
| Development and production | (133,952) | (284,743) | (895,445) | (725,497) |
| Interest and bank charges | (1,697) | (2,492) | (7,207) | (8,270) |
| Marketing and promotion | (39,785) | (25,629) | (77,699) | (115,741) |
| Office facilities and services | (36,514) | (67,060) | (99,199) | (267,231) |
| Professional fees | (59,513) | (69,514) | (218,976) | (265,876) |
| Share-based compensation | 6,312 | (69,061) | (73,395) | (464,432) |
| Transfer and listing fees | (14,672) | (11,669) | (57,188) | (43,465) |
| Travel and project investigation | (16,495) | (36,017) | (80,827) | (108,744) |
| Loss from operations | (1,123,835) | (1,492,605) | (3,900,940) | (4,648,125) |
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Results of Operations for the Nine Months Ended September 30, 2024 and 2023
Loss from operations for the nine months ended September 30, 2024 decreased to $3,900,940 compared to $4,648,125 during the nine months ended September 30, 2023. Key differences between the two periods are as follows:
| Expenses | Increase / Decrease in Expenses | Explanation for Change |
|---|---|---|
| Sales | Increase of $183,771 | Increased due to the Company having a greater focus on product sales. |
| Cost of sales | Increase of $8,975 | Increased due to aligning with sales increase. |
| Development and production | Increase of $169,948 | Increased due to focusing in the product development and optimization for scale up. |
| Share-based compensation | Decrease of $391,037 | Decreased due to the timing of the vesting of options granted. |
Results of Operations for the Three Months Ended September 30, 2024 and 2023
Loss from operations for the three months ended September 30, 2024 decreased to $1,123,835 compared to $1,492,605 during the three months ended September 30, 2023. Key differences between the two periods are as follows:
| Expenses | Increase / Decrease in Expenses | Explanation for Change |
|---|---|---|
| Sales | Increase of $17,018 | Increased due to the Company converting previous customer initiatives to sales. |
| Cost of sales | Decrease of $86,035 | Decreased due to corresponding product focus. |
| Share-based compensation | Decrease of $75,373 | Decreased due to the timing of the vesting of options granted. |
Summary of Quarterly Results
| Three months ended | Sales | EU Co-Funded Project Grants | Net Loss | Loss Per Share (Basic and Diluted) |
|---|---|---|---|---|
| $ | $ | $ | $ | |
| September 30, 2024 | 214,693 | 10,484 | (965,274) | (0.01) |
| June 30, 2024 | 213,936 | 19,952 | (1,193,201) | (0.01) |
| March 31, 2024 | 375,729 | 19,964 | (1,302,448) | (0.01) |
| December 31, 2023 | 456,884 | (8,729) | (1,124,662) | (0.01) |
| September 30, 2023 | 197,675 | 49,641 | (1,213,150) | (0.01) |
| June 30, 2023 | 158,017 | 48,670 | (1,469,436) | (0.01) |
| March 31, 2023 | 264,895 | 76,478 | (1,193,057) | (0.01) |
| December 31, 2022 | 355,995 | 73,807 | (945,918) | (0.01) |
- In the quarters ended September 30, 2024, June 30, 2024, March 31, 2024, December 31, 2023, September 30, 2023, June 30, 2023, March 31, 2023, December 31, 2022, net loss includes ($6,312), $17,889, $61,818, ($63,116), $69,061, $253,534, $141,837, and $203,634, respectively, in non-cash share-based compensation.
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Liquidity
In management's view, given the nature of the Company's operations and the focus on delivering recurring revenues in the short term, profitability is a medium and longer term goal for the Company.
The Company has financed its operations to date primarily through the issuance of common shares and the exercise of stock options or warrants. The Company continues to seek capital through various means including the issuance of equity and/or debt.
Capital Resources
The Company's liquidity and capital resources are as follows:
| September 30, 2024 | December 31, 2023 | |
|---|---|---|
| $ | $ | |
| Cash and cash equivalents | 4,046,064 | 7,445,758 |
| Amounts receivable | 426,489 | 808,879 |
| Inventories | 225,932 | 276,288 |
| Prepaid expenses | 131,594 | 125,173 |
| Total current assets | 4,830,079 | 8,656,098 |
| Accounts payables and accrued liabilities | (747,025) | (1,088,608) |
| Current portion of lease liabilities | (259,918) | (261,063) |
| Deferred project grants | (33,450) | (140,893) |
| Working capital | 3,789,686 | 7,165,534 |
Common Share Exchange
On September 4, 2019, the Company implemented a squeeze-out transaction, as per the applicable Portuguese law, pursuant to the RTO transaction, whereby the Company acquired the remaining 499,369 shares of YD Ynvisible, S.A., on a one-for-one basis for the Class A common shares of the Company, held by certain Minority Shareholders of YD Ynvisible, S.A. Accordingly, the Company recorded an obligation to issue 499,369 Class A common shares with a fair value of $172,282, which has been reported as RTO transaction costs. As a result of the squeeze-out transaction, the Company now owns 100% of YD Ynvisible, S.A.
In April 2022, the Company issued 5,000 Class A common shares to the SEA Minority Shareholders in exchange for 5,000 common shares of Ynvisible SA.
Cash Flows
Net cash used in operating activities for the nine months ended September 30, 2024 was $ 2,945,599 (2023 - $3,116,785). The cash used consisted primarily of general and administrative expenses, net of non-cash expenditures and a net change in non-cash working capital, detailed in the statement of cash flows.
During the nine months ended September 30, 2024, cash used in investing activities was $29,332 (2023 - $25,843) for the purchase of fixed and intangible assets and deposits paid.
During the nine months ended September 30, 2024, cash used for financing activities was $213,617 (2023 - $209,794) due to the Company repaying the lease liabilities.
The Company's cash decreased by $3,399,694 from $7,445,758 at December 31, 2023 to $4,046,064 at September 30, 2024.
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Proposed Transactions
There are no proposed transactions that will materially affect the performance of the Company other than those disclosed elsewhere in this MD&A.
Off Balance Sheet Arrangements
At September 30, 2024 and as of the date of this report, the Company had no material off-balance sheet arrangements such as guarantee contracts, contingent interest in assets transferred to an entity, derivative instruments obligations or any obligations that trigger financing, liquidity, market or credit risk to the Company.
Transactions with Related Parties
As of September 30, 2024, the Company had the following directors and officers:
- Ramin Heydarpour – Chief Executive Officer and Chairman of the Board
- Carlos Pinheiro Baptista, PhD – Chief Technology Officer
- Darren Urquhart, CPA, CA – Chief Financial Officer
- Inês Henriques, PhD – Executive Vice-President of People, Culture and Corporate Affairs, Director
- Alexander Helmel – Director
- Alex Langer – Director
- Kamran Kian – Director
- Felix Karlsson – Director
- Lucia Gomes – Chief Operating Officer
- Keith Morton – VP of Sales and Marketing
In August 2024, Benjamin Leboe resigned as a director.
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The Company has incurred charges during the nine months ended September 30, 2024 and 2023 from directors and officers, or companies controlled by them, for management and consulting fees and share-based compensation as follows:
| Nine Months ended September 30, | ||
|---|---|---|
| 2024 | 2023 | |
| $ | $ | |
| Jani-Mikael Kuusisto – Non-executive Consultancy | 4,500 | 13,500 |
| Jani-Mikael Kuusisto – Share based compensation | 2,945 | 4,696 |
| Lúcia Gomes – Salary and bonus | 103,473 | 4,503 |
| Lúcia Gomes – Share based compensation | 3,198 | 1,716 |
| Inês Henriques – Salary | 121,845 | 109,201 |
| Inês Henriques – Share based compensation | 13,323 | 21,440 |
| Alexander Helmel – Management fees | 27,000 | 27,000 |
| Alexander Helmel – Share based compensation | 126 | 4,696 |
| Keith Morton – Consulting fees | 73,000 | 66,000 |
| Keith Morton – Share based compensation | 8,027 | 5,097 |
| Carlos Pinheiro Baptista – Salary | 120,377 | 110,127 |
| Carlos Pinheiro Baptista – Share based compensation | 632 | 18,428 |
| Benjamin Leboe – Non-executive Consultancy | 13,500 | 13,500 |
| Benjamin Leboe – Share based compensation | - | 1,683 |
| Ramin Heydarpour - Management fees | 135,000 | 135,000 |
| Ramin Heydarpour – Share based compensation | 15,404 | 23,022 |
| Alex Langer – Non-executive Consultancy | 13,950 | 13,500 |
| Alex Langer – Share based compensation | 5,833 | 18,594 |
| Darren Urquhart – Management fees | 22,500 | 22,500 |
| Darren Urquhart – Share based compensation | 126 | 4,696 |
| Felix Karlsson – Non-executive Consultancy | 8,156 | - |
| Felix Karlsson – Share based compensation | 2,318 | 13,320 |
| Kamran Kian - Consulting fees | 3,000 | - |
| Kamran Kian - Share based compensation | 6,497 | - |
| Total cash consulting and management fees | 646,301 | 514,831 |
| Total share-based compensation | 58,429 | 117,388 |
| Total compensation for officers and directors | 704,730 | 632,219 |
Note: Share based compensation is a non-cash expense for valuing stock option grants that is computed using the Black-Scholes Valuation Model.
As at September 30, 2024, accounts payable and accrued liabilities include $56,995 (2023 - $49,565) due to officers and directors. Accounts payable and accrued liabilities due to related parties are unsecured and have no specified terms of repayment.
Related party transactions are in the normal course of operations and are measured at the exchange amount, which is the amount of consideration established and agreed to by the related parties.
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Disclosure of Data for Outstanding Common Shares, Stock Options, and Warrants
The following table summarizes the outstanding common shares, stock options, and warrants of the Company:
| As at September 30, 2024 | Date of this MD&A | |
|---|---|---|
| Common shares | 124,671,915 | 129,671,915 |
| Stock options | 8,732,500 | 8,565,000 |
| Warrants | - | - |
| Fully Diluted | 133,403,415 | 138,236,915 |
Details of the outstanding stock options as at the date of this MD&A:
| Expiry Date | Weighted Average Exercise Price ($) | Number of Options Outstanding | Number of Options Vested and Exercisable | Weighted Remaining Contractual Life (years) |
|---|---|---|---|---|
| May 20, 2025 | 0.33 | 195,000 | 195,000 | 0.47 |
| September 16, 2025 | 0.25 | 215,000 | 215,000 | 0.80 |
| November 11, 2025 | 0.29 | 125,000 | 125,000 | 0.95 |
| March 17, 2026 | 1.29 | 10,000 | 10,000 | 1.30 |
| June 3, 2026 | 0.63 | 100,000 | 100,000 | 1.51 |
| July 1, 2026 | 0.75 | 1,140,000 | 1,140,000 | 1.59 |
| July 22, 2026 | 0.62 | 80,000 | 80,000 | 1.64 |
| August 26, 2026 | 0.55 | 250,000 | 250,000 | 1.74 |
| October 20, 2026 | 0.44 | 370,000 | 370,000 | 1.89 |
| December 7, 2026 | 0.32 | 500,000 | 500,000 | 2.02 |
| July 20, 2027 | 0.20 | 2,400,000 | 2,400,000 | 2.64 |
| February 24, 2028 | 0.20 | 2,095,000 | 2,095,000 | 3.24 |
| June 26, 2028 | 0.20 | 20,000 | 20,000 | 3.58 |
| September 15, 2028 | 0.20 | 150,000 | 150,000 | 3.80 |
| January 11, 2029 | 0.20 | 100,000 | 75,000 | 4.12 |
| January 11, 2029 | 0.09 | 400,000 | 300,000 | 4.12 |
| May 28, 2029 | 0.20 | 145,000 | 75,000 | 4.50 |
| September 4, 2029 | 0.09 | 250,000 | 62,500 | 4.77 |
| September 23, 2029 | 0.20 | 20,000 | 5,000 | 4.82 |
| 0.31 | 8,565,000 | 8,167,500 | 2.61 |
There are no outstanding warrants as at the date of this MD&A.
Controls and Procedures
Disclosure controls and procedures ('DC&P') are intended to provide reasonable assurance that information required to be disclosed is recorded, processed, summarized and reported within the time periods specified by securities regulations and that information required to be disclosed is accumulated and communicated to management. Internal controls over financial reporting ('ICFR') are intended to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with IFRS.
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TSX Venture listed companies are not required to provide representations in filings relating to the establishment and maintenance of DC&P and ICFR, as defined in Multinational Instrument MI 52-109. In particular, the CEO and CFO certifying officers do not make any representations relating to the establishment and maintenance of (a) controls and other procedures designed to provide reasonable assurance that information required to be disclosed by the issuer in its annual filings, interim filings or other reports filed or submitted under securities legislation is recorded, processed, summarized and reported within the time periods specified in securities legislation, and (b) a process to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with the issuer's GAAP. The issuer's certifying officers are responsible for ensuring that processes are in place to provide them with sufficient knowledge to support the representations they are making in their certificates regarding absence of misrepresentations and fair disclosure of financial information. Investors should be aware that inherent limitations on the ability of certifying officers of a venture issuer to design and implement on a cost effective basis DC&P and ICFR as defined in MI 52-109 may result in additional risks to the quality, reliability, transparency and timeliness of interim and annual filings and other reports provided under securities legislation.
Forward-Looking Statements
All statements made in this MD&A, other than statements of historical facts, are forward-looking statements. The Company's actual results may differ significantly from those anticipated in the forward-looking statements and readers are cautioned not to place undue reliance on these forward-looking statements. Except as required by securities regulations, the Company undertakes no obligation to publicly release the results of any revisions to forward-looking statements that may be made to reflect events or circumstances after the date of this MD&A or to reflect the occurrence of unanticipated events. Forward-looking statements include, but are not limited to, statements with respect to the development of products, sales growth and global expansion, projected future sales in connection with new customer agreements, the impact of the Company's products and services on customers and marketplaces, future financial or operating performance of the Company, the ability to capitalize on future opportunities and estimates regarding the size and scope of target markets and their potential for growth.
In certain cases, forward-looking statements can be identified by the use of words such as "aims", "plans", "expects" or "does not expect", "is expected", "budget", "scheduled", "estimates", "forecasts", "intends", "anticipates" or "does not anticipate", or "believes", or variations of such words and phrases, or state that certain actions, events or results "may", "could", "would", "might" or "will be taken", "occur" or "be achieved". Forward-looking statements involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of the Company to be materially different from any future results, performance or achievements expressed or implied by the forward-looking statements. Such factors include, among others, risks related to the integration of acquisitions; future costs of materials and labor; speed of technology adoption in target markets and emergence of competing technologies, and other risks of the printed electronics and technology industries; and delays in obtaining financing.
Although the Company has attempted to identify important factors that could cause actual actions, events or results to differ materially from those described in forward-looking statements, there may be other factors that cause actions, events or results not to be as anticipated, estimated or intended. There can be no assurance that forward-looking statements will prove to be accurate, as actual results and future events could differ materially from those anticipated in such statements. Accordingly, readers should not place undue reliance on forward-looking statements.
Critical Judgments and Accounting Estimates
When preparing the financial statements in conformity with IFRS, management undertakes a number of judgments, estimates and assumptions about the application of accounting policies and the reported amounts of assets, liabilities, income and expenses. The actual results may differ from the judgments, estimates and assumptions made by management.
Significant areas of judgments and estimation uncertainty considered by management in preparing the financial statements are as follows:
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Accounting Estimates
a. The amounts disclosed related to fair values of stock options and warrants issued are based on estimates of future volatility of the Company's share price, expected lives of the options and expected dividends.
b. The application of IFRS 16 requires the Company to make judgments that affect the measurement of the right-of-use assets and lease liabilities. These include determining agreements in scope of IFRS 16, determining the contract term and determining the interest rate used for discounting of future cash flows. The lease term determined by the Company is comprised of the non-cancellable period of lease agreements, periods covered by an option to extend the lease if the Company is reasonably certain to exercise that option and periods covered by an option to terminate the lease if the Company is reasonably certain not to exercise that option. The present value of the lease payment is determined using a discount rate representing the incremental borrowing rate, observed in the period when the lease agreement commences or is modified.
c. Depreciation of tangible and intangible assets is dependent upon estimates of useful lives, which are determined through the exercise of judgment. The assessment of any impairment of these assets is dependent upon estimates of recoverable amounts that take into account factors such as economic and market conditions and the useful lives of assets.
d. The amounts receivable balance is recorded at the estimated recoverable amount, which involves the estimate of uncollectible accounts.
Critical Judgements
At the end of each reporting period, the Company reviews the carrying amounts of its long-lived assets consisting of fixed assets, intangible assets, and goodwill to determine whether there is any indication that the carrying amount is not recoverable. The determination of whether any such indication exists requires significant management judgment. If any such indication exists, the recoverable amount of the asset is estimated in order to determine the extent of the impairment loss (if any). When an individual asset does not generate independent cash flows, the Company estimates the recoverable amount of the cash-generating unit to which the asset belongs.
Risks and Uncertainties
The Company is subject to a number of risks and uncertainties due to the nature of its business. The Company's activities expose the Company to various operational and financial risks that could have a significant impact on its level of operating cash flows in the future. Readers are advised to study and consider risk factors stressed below. The following are identified as main risk factors that could cause actual results to differ materially from those stated in any forward-looking statements made by, or on behalf of, the Company.
Global Uncertainties and Economic Risks
The Company's business financial condition and results of operations may be negatively affected by economic and other consequences from Russia's military action against Ukraine and the sanctions imposed in response to that action in late February 2022. While the Company expects any direct impacts, of the war in the Ukraine, to the business to be limited, the indirect impacts on the economy and on the industries in general could negatively affect the business and may make it more difficult for it to raise equity or debt financing. There can be no assurance that the Company will not be impacted by adverse consequences that may be brought about on its business, results of operations, financial position and cash flows in the future.
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Global Semiconductor Shortage
The 2020/2021 semiconductor shortage has highlighted the need for adjustments in capacity and sourcing patterns between automakers, tier-1 suppliers, semiconductor suppliers, and their foundries. The Company's contract manufacturing partners and the Company's clients rely on a supply of semiconductor chips for a wide range of functional electronic and display needs. While the impact on across all electronics sector production is already significant, the situation remains fluid and the Company's contract manufacturing partners and customers are tracking this situation on an ongoing basis.
Operational Risks
The Company is subject to operational risk from such factors as personnel and/or environmental accidents at production facilities; fire; patent disputes; changes in supplier pricing; non-performance of obligations under existing agreements; technical difficulties including plant and equipment breakdown; loss of significant customers; problems with product transportation and logistics; legal action from persons or entities adversely impacted by the Company's business; and the ability to obtain financing to maintain operations.
Customer Demand
The Company is subject to risk from cyclic customer demand for its services and products. Global, regional and seasonal economic, political and military events including recessions and wars; competition including pricing and availability of similar products from competitors; changes in technology; and changes in laws and regulations affecting the Company's customers.
Governmental Regulation
Regulatory standards continue to change, making the review process longer, more complex and therefore more expensive. Electrochromic display production on the Company's facilities is affected by government regulations relating to such matters as environmental protection, health, safety and labour, restrictions on production, price control, and tax increases. There is no assurance that future changes in such regulations couldn't result in additional expenses and capital expenditures, decreasing availability of capital, increased competition, reserve uncertainty, title risks, and delays in operations. The Company relies on the expertise and commitment of its management team, advisors, employees and contractors to ensure compliance with current laws.
Financial Risks
The Company is exposed to financial risks arising from its financial assets and liabilities. The Company manages its exposure to financial risks by operating in a manner that minimizes its exposure to the extent practical. The main financial risks affecting the Company are:
Credit Risk
Credit risk is the risk that one party to a financial instrument will cause a financial loss for the other party by failing to discharge an obligation. The Company's cash are exposed to minimal credit risk. The credit risk on cash is low because the counterparties are highly rated banks.
Cash and amounts receivable are subject to the impairment requirements of IFRS 9, however, impairment was not identified. The carrying amount of cash, amounts receivable and deposits represents the maximum credit exposure.
Interest Rate Risk
Interest rate risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market interest rates. The Company's cash is exposed to minimal interest rate risk as the Company invests cash at floating rates and cash equivalents at fixed rates of interest in highly liquid instruments, when applicable.
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Liquidity Risk
Liquidity risk is the risk that the Company will encounter difficulty in meeting obligations associated with financial liabilities. The Company ensures that it has sufficient capital to meet short term financial obligations after taking into account its cash on hand.
Market Risk
Market risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market prices. Market risk comprises: currency risk, interest rate risk and other price risk. The Company's management of market risk has not changed materially from that of the prior year and the Company's financial instruments aren't subject to other price risk.
Foreign Currency Risk
The Company's functional currency is the Canadian dollar. The Company funds the operations of Ynvisible SA in Portugal, Ynvisible GmbH in Germany, and Ynvisible Production in Sweden by using Euros and Swedish krona, respectively, converted from its Canadian dollar bank accounts. Based on the Company's Euro and Swedish krona denominated financial instruments at September 30, 2024, a 10% change in exchange rates between the Canadian dollar and the Euro and Swedish krona, respectively, would result in an approximately $36,544 and $23,467 respectively, change in foreign exchange gain or loss.
Other MD&A Requirements
This MD&A is intended to assist the reader's understanding of Ynvisible and its operations, business, strategies, performance and future outlook from the perspective of management.
This MD&A may contain management estimates of anticipated future trends, activities, or results; these are not a guarantee of future performance, since actual results may vary based on factors and variables outside of management's control. Management is responsible for the preparation and integrity of the financial statements, including the maintenance of appropriate information systems, procedures and internal controls. Management is also responsible to ensure that information disclosed externally, including the financial statements and MD&A, is complete and reliable. Ynvisible's Board of Directors follows recommended corporate governance guidelines for public companies to ensure transparency and accountability to shareholders. The Board's Audit Committee meets with management to review the financial statement results, including the MD&A, and to discuss other financial, operating and internal control matters. The Audit Committee is free to meet with the independent auditors at any time.
Approval
A copy of this MD&A will be provided to anyone who requests it and can be located, along with additional information, on the SEDAR+ website at www.sedarplus.ca including, not but limited to:
- the Company's audited consolidated financial statements for the years ended December 31, 2023 and 2022.
The Board of Directors of Ynvisible has approved the disclosure contained in this MD&A as of the date of this report.
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