Annual Report

Transcription

1 Annual Report 1

2 Table of Contents Note Regarding Forward Looking Statements 3 Business Overview 4 Summary of Results 6 Management Discussion 8 Financing 10 Subsidiary 10 Office and Staff 10 Guidance 11 Considerations 14 To Our Shareholders 14 Consolidated Balance Sheets 15 Consolidated Statements of Operations 16 Information for Shareholders 17 2

3 Note Regarding Forward Looking Statements This presentation contains forward-looking statements that involve known and unknown risks and uncertainties. Examples of forward-looking statements include: projections of capital expenditures, competitive pressures, revenues, income, cash flow, growth prospects, product development, financial resources and other financial matters. You can identify these and other forward-looking statements by the use of words such as may, will, should, plans, anticipates, believes, estimates, predicts, intends, potential or the negative of such terms, or other comparable terminology. Our ability to predict the results of our operations or the effects of various events on our operating results is inherently uncertain. The unknown factors include economic conditions, the results of negotiations of potential future business in our pipeline, the financial and operational health of our prospects and customers and many others which have not been stated. These factors and many other factors beyond the control of our management could cause our actual results, performance or achievements to be materially different from any future results, performance or achievements that may be expressed or implied by the forward-looking statements. The information contained herein should be read in conjunction with our Form 10-K for our f iscal year ended October 31, 2014 filed with the Securities and Exchange Commission. 3

4 Business Overview HMI (Human Machine Interface) and SCADA (Supervisory Control and Data Acquisition) software products are used extensively in industrial automation for monitoring and controlling equipment and used in commercial settings for monitoring performance indicators. The dashboard in your vehicle is an example of an HMI interface. Your dashboard tells you the speed of your vehicle, engine temperature and the amount of oil in your engine. Similar dashboards are used everywhere in heavy industry and commercial settings. HMI and SCADA systems are used for monitoring the HVAC (Heating Ventilation and Air Conditioning) systems in large commercial complexes. They are used in waste water treatment plants, with oil wells, hydro-electric plants, subway systems and almost every manufacturing facility, including the making of Kraft Dinner. Maximizing operator effectiveness is essential to minimizing the risk of accidents, eliminating unscheduled downtime and maximizing production quality. B-Scada has two products for the industrial market. We have Status Machine Edition which is used right on the factory floor to monitor and control equipment, and Status Enterprise, a management level application for aggregating, organizing and displaying information for decision makers. 4

5 One of the most demanded features of Status Enterprise is its ability to render real time data on a variety of mobile devices. While HMI and SCADA systems are of great value in the industrial world, increasingly these systems are being used in other areas of business. There is a lot of talk right now of the Internet of Things (IoT). The main idea the Internet of Things is having devices connected to the Internet. SCADA systems deployed in the cloud or on hosted servers already provide much of what the Internet of Things requires. As B-Scada moves into 2015, we will be starting new initiatives to utilize our existing technology to address this new and growing market. 5

6 Summary of Results Fiscal 2014 was a successful year for B-Scada with revenue increasing from $1,547,532 in 2013 to $2,037,572 in 2014, an increase of 32%. Our last quarter for fiscal 2014 was a record quarter with revenue of $619,711. Net Income rose $158,315 in 2014 to $1,029,563 ($0.04 per share basic and diluted), an increase of 18% from the same period last year of $871,248. Please see the consolidated financial statements as some of this income is due to tax benefit. The consolidated balance sheets and consolidated statements of operation included herein should be read in conjunction with our audited financial statements for the year ended October 31, 2014 included in our Form 10-K. Figure 1 - B-Scada Net Income Figure 2 - B-Scada Revenue

7 B-Scada stock performed well in fiscal We have been active in keeping our shareholders and the general public informed with our latest news and events. The requirements to remain on the OTCQB (OTC Markets Group Venture Exchange) changed considerably this year. Annual fees will be rising to nearly $10K per year and there are additional thresholds to remain eligible. Despite these hurdles, B-Scada remains with the OTCQB. It is our hope that the new requirements will result in higher quality companies on the exchange and that our presence there will increase value for our shareholders. Figure 3 - B-Scada Performance 5-year 7

8 Management s Discussion and Analysis Technology licensing generates recurring revenue for our company through the licensing of various pieces of our technology to other companies to use in software products they develop. Since license agreements are typically several years in length, technology licensing revenue is both predictable and reliable. In fiscal 2014 technology licensing and support revenues increased $616,465 over 2013 and provided much of our growth. Commercial software revenues declined by $126,425 over the same period. The demand for our consulting and professional services was stronger than anticipated in As we transition our focus from our Machine Edition product and begin to put a greater focus on Status Enterprise, we expected that our commercial software sales would be difficult for the year. Status Enterprise was released in the spring, and with a nine-month sales cycle revenues did not begin to materialize until the end of Commercial Software Sales provided about 11% of our company s revenue for fiscal 2014 and did not grow as a percentage of our overall revenue as was predicted. 8

9 The purchase of the SCADA.com domain name has proven to be a good investment. This domain along with the additional marketing staff that were hired has resulted in a large increase of traffic to our website. B-Scada is now placed consistently on Page 1 for SCADA web searches in both Google and Bing. Status Enterprise, the newest version of our HMI/SCADA system, was released at the end of Q1 of 2014 and has begun to gain momentum. 9

10 Financing In August of 2014, B-Scada Inc. entered into a Stock Purchase Agreement to sell 2,424,242 common shares at a price of $0.33 per share to Yorkmont Capital Partners, LP. B-Scada has dedicated the proceeds to set up and fund our Spanish branch office (see below) for its first year, to invest in additional sales and marketing staff, to purchase additional internet advertising, and to make our company and brand more visible to prospective customers. Subsidiary B-Scada opened a fully owned subsidiary in Cartagena, Spain on November 1, The team operating this office is responsible for providing Spanish speaking sales and support for any B-Scada customers who speak Spanish as their native language and to provide improved sales, service and support to Europe, Latin America, the Middle East and Africa. The B-Scada Spain team have experience with the sales of industrial software and services, and have successful deployments of Status Enterprise. Our Spanish subsidiary has started to generate some revenue. As it is the first year of business, new customers are being established and new employees require knowledge and training of our system, we are not expecting the revenue from Spain to be significant in year one. Office and Staff B-Scada has 19 full time employees in Crystal River, and 5 in Spain. In early 2014 we ran out of space in our offices. We purchased and renovated a 4,000 sq. ft. office building to house our growing staff. The office purchase has reduced our monthly payments for commercial space, and added an asset to our balance sheet. 10

11 Guidance All indications are that demand for our consulting and services will be strong at least through the first half of We have outstanding proposals that if accepted and started in the near future will ensure that this revenue will be strong well into Now that Status Enterprise has some real world deployments and is beginning to be known in the marketplace we are expecting that revenue from software sales will become stronger in the upcoming year. We have a number of pilot projects that are using Status Enterprise. Licenses for these projects may be small as they are initially deployed, but if successful additional licenses will be purchased over time. Maintenance contracts provide ongoing revenue. These projects are varied and include manufacturing, smart grid, building automation and logistics. We currently have 5 deployments of Status Enterprise Power Plant Glass Manufacturer Boiler monitoring Public Pools Plastic Molding We have 17 pilots running Electricity and Water Management Robotic stamping machines Labeling system for plastic manufacturing Glass manufacturer Fleet Management Water tanks GS E&R sustainable energy GJ E&C - sustainable energy Gas Metering Electrical Energy Management Power Plant and Biogas Power Plant Recycling Plant Mining Plastic Molding Parabolic trough metering Boiler monitoring expansion 11

12 B-Scada is also in the process of appointing a Vice President of Sales. The individual that will be joining B-Scada has an extensive background in the marketing and sales of industrial software solutions, and has been previously employed by a leading SCADA software company. Part of our strategy to grow software sales is to rebrand Status Enterprise as an Internet of Things software platform. In addition to offering Status Enterprise as a world class SCADA solution, B-Scada will offer Status Enterprise as a hosted solution for the monitoring of Internet connected devices and commercial data. This initiative is currently known as the Virtualization of Things (VoT) Platform. B-Scada will be offering the solution in different flavors. It will be offered in a SASS (Software as a Service) model where B-Scada develops and hosts the solution and sells the data back to the customer. We will also sell the VoT Platform to other companies that can use it to create IoT solutions. Customers can host the VoT Platform on their own machines, or B-Scada can host the solution for them. Our VoT initiative was launched January 27, 2015 at the Machine to Machine Conference and Exhibition in Miami, Florida. VoT enables users to consolidate and organize data from any number of locations via Virtual Models. These virtual models transforms the previously unassociated data into actionable information, which can then be visualized in easily understood graphics. And with B-Scada s VoT initiative, the end user is not tied to a display in close proximity to the devices these 12

13 visualizations can be viewed on any device from anywhere with a web connection. B-Scada s VoT technology is available as an extensible, open platform that allows users to create their own custom IoT applications, or it can be deployed as a hosted, cloud-based solution for users who do not want to develop their own. Our revenue growth has averaged 26% annually over the past four years. We anticipate that we will be able to continue this growth into 2015 based on the following assumptions: 1. The IoT market is new and untested, but we are assuming our VoT platform is well received and makes some modest contributions to revenue for the fiscal year. 2. Our Spanish subsidiary will have started to contribute modest revenue to our company for the fiscal year. 3. We are also assuming that as the market begins to adopt Status Enterprise, the demand for the system and related consulting services increase. There are also factors that could allow our growth to exceed 20%: 1. We have brought on additional senior talent to our sales team. 2. The IoT (Internet of Things) is an extremely hot area to activity right now. Our product offerings could fit squarely into this new market and produce a boost in revenue and demand. 3. Companies that have previously licensed portions of B-Scada technology are now showing interest in the HTML 5 and mobile device capabilities that we have developed. 13

14 Considerations A significant part of our revenue comes from a handful of companies that license our technology. A loss of revenue from any of these companies could prevent us from attaining our projections for the upcoming year. The IoT initiative may not produce the desired results, or our technology may not be adaptable to commercial applications as is hoped. Our success depends heavily on the talent we have attracted over the past several years. Loss of these key people can have an adverse effect on our results. To Our Shareholders We would like to thank Yorkmont Capital Partners and our other shareholders for their ongoing support. Getting our technology and company to its present state through the recession and tough times was a challenge, but you stuck with us and we appreciate that. The future is looking bright for our company. Our staff are grateful for your participation, and are working hard to ensure your faith in us is well rewarded. Regards, Ron DeSerranno CEO Tel: Ext W Fort Island Trail Plantation Village Building 9 Crystal River, FL

15 Consolidated Balance Sheets October 31, Assets Current Assets Cash and Cash Equivalents $1,144,915 $ 252,571 Accounts Receivable Net 233, ,618 Accrued Revenue 222, ,150 Deferred Income Tax - Current 186,221 71,560 Prepaid Expenses and Other Current Assets 226,598 6,258 Total Current Assets 2,013, ,157 Property and Equipment Net 223,452 12,587 Other Assets Intangible Asset 114, ,479 Deferred Income Tax 711, ,184 Security Deposits 1,500 3,650 Total Other Assets 827, ,313 Total Assets $3,064,768 $ 1,111,057 Liabilities and Stockholders Equity Current Liabilities Accounts Payable and Accrued Liabilities $ 142,528 $ 201,855 Deferred Revenue 178, ,499 Mortgage Payable Current 16, Total Current Liabilities 337, ,354 Long Term Liabilities Mortgage Payable 102, Total Liabilities 439, ,354 Commitments and Contingencies Stockholders Equity Preferred Stock, $ Par Value, 5,000,000 Shares Authorized and Unissued Common Stock, $ Par Value; 100,000,000 Shares Authorized; Shares Issued and Outstanding, 27,243,414 and 24,586,672 at October 31, 2014 and 2013, respectively 2,724 2,459 Additional Paid in Capital 7,900,463 7,100,728 Accumulated Other Comprehensive Loss (5,215) -- Accumulated Deficit (5,272,921) (6,302,484) Total Stockholders Equity 2,625, ,703 Total Liabilities and Stockholders Equity $3,064,768 $ 1,111,057 15

16 Consolidated Statements of Operations For the Years Ended October 31, Revenue Technology Licensing and Support $ 1,803,622 $ 1,187,157 Commercial Software 233, ,375 Total Revenues 2,037,572 1,547,532 Operating Expenses Technology Licensing and Support 191, ,987 Commercial Software 245, ,819 Sales and Marketing 361, ,372 Research and Development 115,496 85,037 General and Administrative 570, ,429 Depreciation and Amortization 11,944 5,040 Total Operating Expenses 1,496,336 1,067,684 Operating Income 541, ,848 Other Income (Expenses) Interest Income 1, Interest Expense (3,869) (7,434) Interest Expense-Related Party -- (7,979) Total Other Income (Expenses) - Net (2,422) (15,344) Income Before Income Taxes 538, ,504 Benefit from Income Taxes (Note 10) (490,749) (406,744) Net Income $ 1,029,563 $ 871,248 Basic Earnings Per Common Share $ 0.04 $ 0.04 Diluted Earnings Per Common Share $ 0.04 $ 0.04 Weighted-Average Common Shares Outstanding Basic Earnings Per Share 25,310,103 24,586,672 Weighted-Average Common Shares Outstanding Diluted Earnings Per Share 25,310,103 24,736,672 16

17 Information for Shareholders Corporate Headquarters B-Scada, Inc W. Fort Island Trail, Bldg #9 Crystal River, FL Phone: (352) Fax: (352) European Subsidiary B-Scada Spain C/ Amsterdam parcela 72, Poligono Industrial Cabezo Beaza CP 30353, Cartagena Murcia, Spain Phone: (in Spain) (outside Spain) Investor Relations Debbie Gardner Phone: (352) General Manager Alerts Subscribe to our alerts to receive current information on B-Scada activities. with Alert in the subject line. Exchange Listing B-Scada is listed on the OTCQB Bulletin Board under the symbol SCDA Professional Services Legal Counsel Mr. Jay Weil Auditors Cowan, Gunteski & Co. Bank Bank of America & TD 17