MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
FOR THE THREE AND NINE MONTHS ENDED
The following Management's Discussion and Analysis ("MD&A ") reviews the operating results, financial position, and liquidity of Danavation Technologies Corp. ("Danavation ", "we ", "our ", or the "Company "). All amounts are stated in Canadian dollars unless otherwise noted. This MD&A should be read in conjunction with the Unaudited Condensed Interim Consolidated Financial Statements and the notes thereto for the three and nine months ended April 30, 2022, and 2021 (the "Q3 Financial Statements ").
This document is intended to assist the reader in better understanding operations and key financial results as of the date of this MD&A. The Unaudited Condensed Interim Consolidated Financial Statements and this MD&A have been approved by its Board of Directors. This MD&A is dated June 28, 2022.
This MD&A may contain forward-looking information that is based on the Company's expectations, estimates and projections regarding its business and the economic environment in which it operates. Forward-looking information contained herein is made as of the date of this MD&A and is not a guarantee of future performance and involves risks and uncertainties that are difficult to control or predict. Readers should refer to the "Forward Looking Statements " section in this MD&A.
Danavation was incorporated on June 4, 2007, under the Business Corporations Act of British Columbia. The registered office of the Company is located at 1000 - 595 Burrard Street - P.O. Box 49290 - Vancouver, British Columbia, Canada V7X 1S8. The Company is proudly founded and based in North America. Its principal activity relates to the sale of micro e-paper displays and software to retailers to automate labeling, price, product, and promotions in real-time.
During the year ended July 31, 2021, the Company changed its name to Danavation Technologies Corp., and changed its year end from December 31 to July 31.
The Company's common shares trade on the Canadian Securities Exchange under the symbol "DVN" and on the OTCQB Venture Market in the US under the symbol "DVNCF".
Danavation is a Canadian-based, Internet of Things ("IoT ") technology company, providing micro e-paper displays to organizations across North America. The Company's Digital Smart Labels™ ("DSLs "), powered by IoT automation technology and software Platform-as-a-Service ("PaaS" ), enables companies across various sectors to automate labelling, price, product, and promotions in real-time, enhancing data accuracy and improving performance by optimizing inventory, removing high labour costs and low productivity associated with traditional labour-intensive workflows. DSL's also help lessen company's need to attract and retain labor during a fiercely competitive period. By empowering the adoption of smart retail, smart cities and industry 4.0, Danavation's goal is to create a sustainable and profitable business for shareholders while advancing sound environmental, social and governance practices, including by significantly reducing paper usage. Danavation has introduced its solution to retailers across North America, including big box and boutique grocers, while also targeting new markets including healthcare providers, manufacturing, and logistics companies.
We believe that the following competitive advantages of its DSL solution are instrumental to securing business from both existing and future potential clients:
Strategic Objectives and Performance Drivers
As Danavation has achieved commercialization and is entering a period of forecast revenue ramp, the Company is committed to pursuing continued growth through expanded contracts to deploy DSLs for existing clients, including retailers, grocery stores, convenience and big box stores across the US and Canada, as well as healthcare providers and manufacturing and logistics companies. In addition, Danavation intends to continue developing new proprietary products, services and software solutions and securing further distribution partnerships with international companies who can market Danavation's solutions in various jurisdictions outside of North America.
Despite the challenges brought on from COVID-19, Danavation remains focused on executing its long-term strategy. Danavation is committed to building shareholder value by becoming a leading provider of DSLs, growing revenue and annual recurring revenue related to software solutions, and ultimately driving the generation of positive net income. As part of this strategy, the Company has focused on building an organization that is prudently managed within a sector that offers significant future potential as economies seek to increase automation and reduce the need for physical contact. The Company believes that adhering to capital discipline and fundamental customer-oriented principles will be the keys to success, along with cost controls and operational efficiencies.
To date in calendar 2022, Danavation has secured new clients, partnerships and location deployments for its DSLs, including the announcement of multiple new installs and a distribution partnership for Latin America and the Caribbean. Danavation intends to continue executing on growth opportunities that drive long-term value, focusing resources on securing high-quality clients with access to multiple locations which can help enhance exposure and support the pursuit of long-term profitability. The Company will also continue to evaluate compelling new hardware and software solutions which can further contribute to its long-term portfolio value and help fuel growth and sustainability into 2022 and beyond.
Danavation is targeting to accomplish the following business objectives and milestones through fiscal 2022:
RECENT DEVELOPMENTS: Third Quarter 2022 To Date
On June 22, 2022, the Company announced its entry into the warehousing and logistics segment with the successful implementation of our DSLs into a warehouse for Montreal-based Chef Cook it, a pioneer in Canadian home delivery meal kits. The implementation at the Cook it warehouse was fully integrated in early June and has resulted in pending orders for additional DSLs to undertake a second phase roll-out at the facility.
On May 6, 2022, the Company announced its successful expansion into Nova Scotia through the installation of our DSLs into Luminate Co Wellness Market.
On May 5, 2022, the Company announced the installation of our DSLs into a Palma Pasta location in Mississauga, which we anticipate will be followed by a full roll-out to an additional three locations throughout the Greater Toronto Area. The location is expected to be fully operational during the fourth quarter of fiscal 2022.
On April 29, 2022, the Company announced the signing of a preferred vendor agreement with CTW to actively promote our DSLs and PaaS solution to their expansive and varied clientele. CTW membership includes the Independent Grocers Alliance ("IGA "), which has approximately 1,300 locations, plus another 100 additional retailers who collectively operate approximately 1,000 further locations. With this preferred vendor partnership, our technology will be actively showcased to all of CTW's customers, positioning us to attract further interest from retailers throughout the US and Canada.
On April 20, 2022, the Company announced its first installation of DSLs into a BMR Pro branded location in Ontario. We anticipate commencing the installation by the end of Q1 2023, with the location expected to be fully operational shortly thereafter.
On April 7, 2022, the Company announced further expansion into the U.S. market with the Company's first installation of DSLs in the state of South Carolina, and a second installation in California. Building on our initial installation with an Ace Hardware in Indiana announced in December of 2021, we are very pleased to extend this relationship with two new installations for independently owned Ace Hardware stores.
On March 31, 2022, the Company announced the completion of the first installation of our DSLs into a City Cannabis Co. branded location in southern California. This installation marks our first entry into the non- medical retail cannabis market, and one of six locations operating under the City Cannabis Co. brand.
On March 10, 2022, the Company announced that Sobeys Inc.'s Wholesale division awarded it a contract to provide customized software that delivers an end-to-end IoT operations management solution for the automation and streamlining of Sobeys Inc.'s Wholesale operations. Initially, the software roll-out is expected to approximately 300 Sobeys Inc. Wholesale customers. This software provides Sobeys Inc.'s wholesale operations with a unified digital experience across multiple hardware endpoints. Installation is planned primarily on their wholesale partners' networked scanner devices, with data being pulled from internal systems. The Company's custom-built software will be available across Sobeys Inc.'s Wholesale customer portfolio, primarily on Android-based personal device assistants ("PDA ").
On February 28, 2022 the Company confirmed that it had secured an agreement to install its DSLs into a pilot location for the Macadoodles family of stores. The company anticipates the installation into the Missouri-based store will commence mid to late spring of 2022 and be completed shortly thereafter. Based on the success of the pilot location, Macadoodles anticipates further installations of DSLs across additional stores. Macadoodles has ten locations across Missouri and Arkansas. Each Macadoodles location operates independently and offers a range of services, including gas stations, wine cellars, and cigar humidors, to best serve the needs of the community. Having supported other beverage alcohol retailers, the Company's DSLs and PaaS offer an ideal solution for automating Macadoodles' in-store operations.
On February 17, 2022 the company announced its first installation of DSLs under the Pharmasave banner. Following the company's development of a custom link to Pharmasave's Point-of-Sale ("POS ") system, the company anticipates the installation will be completed by Q1 2023. With over 800 stores across the country, Pharmasave is one of Canada's leading independent drugstore and pharmacy retailers.
On February 9, 2022, the company announced a strategic partnership with Profile Systems Design Group, Inc. ("PSDG "), provider of the TransActPOS software, for the marketing and promotion of the company's DSLs and PaaS solution. Under this agreement, PSDG has committed to install DSLs into an initial demonstration location centre, with plans to move to four test locations before the end of July 2022, assuming success with the first. PSDG currently manages and runs its TransActPOS software for a total of 274 hardware stores. Through this partnership, PSDG intends to broadly market and showcase the company's solutions to its wide-ranging group of retail customers.
On February 7, 2022, the company announced another installation of its Digital Smart LabelsTM ("DSLs") into a Liquor Control Board of Ontario ("LCBO") location in downtown Toronto, Ontario. This installation will be at the LCBO's newly relocated flagship store at 15 Cooper Street and will mark the company's third installation into an LCBO location. The installation was scheduled and successfully completed in time to service the store's grand opening on February 4, 2022. Following the company's successful installations into LCBO locations in Kitchener, informing its two-store pilot project and subsequent LCBO Case Study, the company has continued to build on developing a relationship with the Ontario government enterprise. The installation of the company's DSLs and PaaS solution will contribute to the LCBO's new urban concept design experience. LCBO will be receiving the company's custom-size, sleek, low profile, all charcoal black smart labels that will further elevate their new store design and enhance the customer experience.
FINANCIAL HIGHLIGHTS AND KEY PERFORMANCE INDICATORS
For the three months ended:
For the nine months ended:
For the three and nine months ended April 30, 2022, total revenues were $628,114 and $906,202 respectively, an increase of approximately $662,751 and $813,078 respectively, over the same periods in 2021. Sales during the third quarter of fiscal 2022 significantly improved primarily due to expansions into new markets and acquisitions of new customers.
Net losses improved to $1,017,715 from a loss of $1,405,056 in the third quarter of 2021 primarily due to the increase in revenues during the third quarter of 2022. Year-to-date net losses of $4,565,187 improved over the loss of $4,836,906 reported during the same period in 2021 due to the increase in revenues being offset by additional costs incurred in earlier quarters associated with generating business and promoting awareness.
Cash was $19,092 on April 30, 2022, an increase of $13,083 from July 31, 2021. The cash increase was primarily due to proceeds from debt financing activities partially offset by negative cash from operating and investing activities.
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Danavation Technologies Corp. published this content on 30 June 2022 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 30 June 2022 14:52:09 UTC.