All amounts in this news release are in United States dollars, unless otherwise noted.
During the second half of 2016, the Company undertook a number of measures to stabilize its operations, restructure its financial obligations, and return to profitable growth.
The Company announced changes to the Board of Directors, which resulted in a new composition of the full Board. Additionally, the Company announced changes in senior management and organizational restructuring necessary to align the Company's resources with the on-going revenue opportunities.
In December 2016, the Company announced the restructuring of its outstanding debt agreements with Vertex One Asset Management Inc. The restructuring included a Bridge Loan for $6.0 million, to be repaid with the proceeds of a Rights Offering during the first quarter of 2017, the extension of the maturity date of all current promissory notes to September 1, 2020 and the elimination of interest, the cash sweep and the royalty payment obligations.
"These organizational changes and refinancing steps provided the liquidity to execute the Company's business plan, and return to its core strategic focus towards data acquisition, value added data processing, and related application solutions and services," commented Patrick Blott, Chairman and CEO of Intermap. In addition, the Company continued to invest in its core risk management business, where it has seen increased demand for risk management software and services related to flood underwriting. The Company is seeking to become a large participant in underwriting private flood risk, which is a growing market segment where many large surplus and admitted carriers have recognized the Company's unique products and have recently become customers."
Moving into 2017, the Company announced major steps forward in its new strategic direction. It announced a comprehensive upgrade of its radar system, making it the most advanced commercial multi-frequency data acquisition platform available. It announced a task order to deploy its new system in Southeast Asia in 2017. And it added employees to its processing operation to absorb increased demand for services associated with these initiatives.
On February 24, 2017, the Company announced its plans to proceed with the previously announced Rights Offering. The Rights Offering Notice was mailed on March 2, 2017 to all shareholders of record as of March 1, 2017. Pursuant to the Rights Offering, one right was issued for each common share of the Company held and each right entitles the holder to subscribe for one common share of the Company upon the payment of the subscription price of C$0.06 or US$0.05 per common share. An aggregate of 101,344,582 rights were issued pursuant to the Rights Offering and, if fully subscribed and the subscription price is paid in US dollars, would result in gross proceeds of approximately US$5.0 million. The rights expire at 4:00 p.m. (Calgary time) on March 27, 2017. All proceeds received in connection with the Rights Offering will be used to repay the Bridge Loan referenced above and no proceeds will be retained by the Company. Details of the Rights Offering are available on the Company's profile at www.sedar.com.
Financial Review
For the fourth quarter 2016, Intermap reported total revenue of $1.5 million, compared to $3.2 million last year. Acquisition services revenue in the fourth quarter was $0.9 million, compared to $0.4 million last year. Value added data revenue was $0.4 million, compared to $2.4 million last year. The decrease from prior year relates to two large sales during 2015, without a similar size transaction in 2016. Software and solutions revenue was $0.2 million, compared to $0.4 million last year. The decrease from prior year relates to the timing of sales being more evenly spread in 2016. As of December 31, 2016, there remained $1.2 million in backlog contracts to be recognized in future periods.
For the fourth quarter 2016 and 2015, personnel expense was $1.7 million and $2.3 million, respectively. The decrease is primarily due to decreases in headcount on a year-over-year basis, following the restructuring actions taken at the end of the third quarter and beginning of the fourth quarter of 2016.
For the fourth quarter 2016, purchased services and materials expense was $0.1 million, consistent with the same period last year. Purchased services and materials includes (i) aircraft related costs (ii) professional and consulting costs (iii) third-party support services related to the collection, processing and editing of the Company's airborne data collection activities, and (iv) software expenses (including maintenance and support).
Fourth quarter adjusted EBITDA, a non-GAAP and IFRS financial measure, was negative $1.1 million, compared with $0.2 million last year. Adjusted EBITDA is defined as earnings before interest, taxes, depreciation and amortization and excludes share-based compensation expense, fair value adjustments to derivative instruments, gain or loss on the disposal of equipment, and gain or loss on foreign currency translation. Adjusted EBITDA is not a recognized performance measure under IFRS. The most directly comparable measure to adjusted EBITDA calculated in accordance with IFRS is net income (loss). See below for a reconciliation of the Company's net loss to adjusted EBITDA for the fourth quarter of 2016 as compared to 2015 and for the year ended December 31, 2016 compared to December 31, 2015.
For the year ended December 31, 2016, Intermap reported total revenue of $7.0 million, compared to $8.6 million recorded in 2015. Acquisition services revenue for the year was $3.5 million compared to $3.8 million last year. Value added data revenue was $2.2 million compared to $3.8 million last year. The decrease from prior year relates to two large sales during the fourth quarter of 2015, without a similar size transaction in 2016. Software and solutions revenue was $1.3 million compared to $1.0 million last year.
For the year ended December 31, 2016, personnel expense was $9.4 million compared to $11.0 million last year. The year-over-year decrease in personnel expense is primarily due to the restructuring actions taken during the end of the third quarter and beginning of the fourth quarter of 2016.
