Local loyalty rewards startup Ackroo (TSX-V: AKR) reported a large increase in revenue during its most recent fiscal year, but the company is still losing money.
Ackroo, which runs a web-based loyalty platform for retailers, reported revenue of $1,284,016 during the year that ended on Dec. 31, 2013. That’s up from $681,142 in 2012.
"The results for 2013 show we continue to make progress across all aspects of our business with almost 90 per cent growth in annual revenue." said Eamonn Garry, chief executive officer at Ackroo, in a statement.
"I'm extremely pleased with these results because as well as our strong revenue growth we also increased our merchant footprint to over 700 locations while continuing to reduce cost and decrease our burn rate."
Despite the increased revenue Ackroo is still posting losses that stretch into the millions of dollars.
The company reported comprehensive losses of $3,882,411 during 2013, which is an improvement over comprehensive losses of $5,424,872 in 2012.
While the company’s financial reports do not specifically include net income, the company does not appear to have any income or losses that would make its comprehensive losses different than its net losses.
“As the company is still in its early stages of its growth plan the company does not generate sufficient revenue and has not yet achieved profitable operations, and expects to incur further losses,” company officials wrote in the management's discussion and analysis filed with securities regulators.
Ackroo says it will still have to raise more money to continue operations. According to its MD&A, as of Dec. 31, 2013 “the company did not have sufficient working capital to fund new technology activities and administrative expenses for the next fiscal year and while the company has growing operating revenues it requires additional future financings.”
But that might not be possible. In a note in the audited financials, the company’s auditor writes that Ackroo’s “accumulated loss of $9,307,283 and negative cash flow … raises doubts about the ability of the company to continue as a going concern.”
Ackroo is taking steps to reduce cost, but it is paying for it. The company spent $464,591 last year to replace employment contracts with consulting contracts for its workforce and to terminate leases for satellite offices in Toronto and Vancouver.