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One party is a unit of the Spanish-headquartered group that has a market cap in excess of 50 billion euros; another relies in Canada having a market cap of $25 million.
Yet despite the size difference, the 2 parties, Telefonica and Lingo Media, have found enough in common to setup an industrial distribution partnership, an offer that may be announced as early as Thursday.
Under that arrangement, the Telefonica unit that offers online learning solutions for education and training, will “market, sell and distribute,” Lingo Media’s suite of English language training products in Peru – products that were coded in downtown Toronto.
Michael Kraft, chief executive said Wednesday the two parties have worked together on two small test projects. “They would be the dominant telecom in Peru and recognize the large potential of English-language training in South usa. For us, the deal provides for us an excellent partner and can let us expand our business. It is a great validation for our software,” he said.
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Lingo operates two distinct businesses: through its ELL Technologies unit it provides online training and assessment; and, through Lingo Learning, it offers print-based publishing, using the bulk that business located in China. In 2015, a lot more than 18 million primary students for the reason that country used its textbooks. The revenue stream from that source is rather predictable.
The cope with Telefnica caps a rather remarkable comeback by Lingo, which has been around since 1997. In 2012 and 2013, for example, fees owing to management were deferred, and just before that the insiders backed a $1 million loan removed to make an acquisition. Last April, some insiders increased when it raised $500,000 using a private placement at $0.10 a share.
The situation was grim. The financial statements for fiscal 2014 show the problem: the business’s total equity was $749,956 in large part because of $21.185 million in accumulated deficit. But as one way of measuring the fundamental improvement: nine months later, at the end of September 2015, total equity had risen to $3.15 million.
To get there, Lingo Media, changed its product mix and committed to more user-friendly technology (spending about $1 million in 2013 and 2014.) In its most recent MD&A it said that since 2012, it “has completely redesigned the consumer interface, learning management system and the multi-browser delivery system for desktops and tablets,” for its online business. “We built the most recent product and launched the technology in Q1 2015,” said Kraft.
While it took a while, revenue from its online business grew rapidly reaching a lot more than $1 million in its newest quarter using the vast majority of that originating from digital learning. And because margins are high (58 per cent last quarter) it posted healthy profits. Indeed the third quarter of 2015 (the period ending Sept. 30, 2015) was its fourth consecutive profitable 3 months.
And it diversified: from China to South usa. And that is where it promises to focus, specifically Peru, Colombia and Mexico. On Wednesday ELL Technologies announced that it has hired Luis Ortiz since it’s director of sales Latin America. Ortiz has worked previously for 2 Canadian technology companies.
Last month, came some recognition: it was selected towards the TSX Venture Exchange 50 and top ranked in that exchanges Diversified Industries Sector. It achieved that status on the back of a 745 percent grow in its stock price and a 992 per cent grow in its market cap. The TSX-V 50 ranks 10 companies in five industry sectors according to performance.
Lingo Media closed Wednesday at $0.85.
