Q3 2020 Highlights
Financials
- Revenues were
$45,239 , an increase of$41,209 or 1,023% over prior year. - Gross margin was
$19,533 or 43% compared to$3,301 or 82% in prior year. - Interest income generated of
$3,188 a decrease of$2,870 or 47% over prior year. - Adjusted earnings1 of
$6,582 , an increase of$1,020 or 18% over prior year. - Net income for the period was
$17,492 compared to a net loss of$2,959 in prior year.
Corporate Developments
- Launched a normal course issuer bid (“NCIB”) in
July 2020 and purchased 797,952 common shares for an aggregate cost of$4,745 . - Completed the tender offer process and acquired all of the outstanding Brazilian Depositary Receipts (“BDR”) of Biotoscana Investments S.A. (“GBT”).
Products
- Obtained regulatory approval for Lenvima® and Halaven® in
Ecuador . - Received regulatory approval from
Health Canada for Imvexxy™ and Bijuva®. - Submitted a supplement to a New Drug Submission (“NDS”) of Nerlynx for HER2-positive metastatic breast cancer.
Strategic Investments
- Received distributions of
$14,887 from strategic fund investments and realized a gain of$9,348 .
Key Subsequent Event
- Signed a new exclusive distribution agreement with Gilead for the continued commercialization of AmBisome® in
Brazil , effectiveJanuary 1, 2021 .
“We are pleased to have completed the GBT acquisition and are knee deep in needed integration work which is complicated by COVID-19. In addition, we remain focused on execution of business development initiatives to in-license and acquire innovative pharmaceuticals for the Canadian and Latin American markets”, said
_____________________
1Adjusted earnings is not a defined term under IFRS, refer to the definition below for additional details.
SELECT FINANCIAL RESULTS & BALANCE SHEET ITEMS
[In thousands of Canadian dollars]
Change | Change | |||||||||||||||
Q3-20 | Q3-19 | $1 | %2 | YTD-20 | YTD-19 | $1 | %2 | |||||||||
Revenues | 45,239 | 4,030 | 41,209 | 1,023 | % | 144,328 | 10,190 | 134,138 | 1,316 | % | ||||||
Gross margin | 19,533 | 3,301 | 16,232 | 492 | % | 61,630 | 8,519 | 53,111 | 623 | % | ||||||
Selling and marketing | 7,763 | 1,146 | (6,617 | ) | 577 | % | 26,928 | 3,341 | (23,587 | ) | 706 | % | ||||
General and administrative | 10,835 | 4,761 | (6,074 | ) | 128 | % | 27,424 | 12,339 | (15,085 | ) | 122 | % | ||||
Research and development | 2,967 | 892 | (2,075 | ) | 233 | % | 8,035 | 2,502 | (5,533 | ) | 221 | % | ||||
Amortization of intangible assets | 5,703 | 424 | (5,279 | ) | 1,245 | % | 17,546 | 1,273 | (16,273 | ) | 1,278 | % | ||||
Operating loss | (7,735 | ) | (3,922 | ) | (3,813 | ) | 97 | % | (18,303 | ) | (10,936 | ) | (7,367 | ) | 67 | % |
Interest income | (3,188 | ) | (6,058 | ) | (2,870 | ) | 47 | % | (11,515 | ) | (18,108 | ) | (6,593 | ) | 36 | % |
Interest expense | 822 | — | (822 | ) | N/A | 3,070 | — | (3,070 | ) | N/A | ||||||
Foreign exchange loss | 703 | 638 | (65 | ) | 10 | % | 9,666 | 3,315 | (6,351 | ) | 192 | % | ||||
Net income (loss) | 17,492 | (2,959 | ) | 20,451 | N/A | 23,527 | 21,186 | 2,341 | 11 | % | ||||||
Basic net earnings (loss) per share | 0.138 | (0.021 | ) | 0.159 | N/A | 0.256 | 0.150 | 0.106 | 71 | % | ||||||
Adjusted earnings3 | 6,582 | 5,562 | 1,020 | 18 | % | 23,510 | 14,755 | 8,755 | 59 | % | ||||||
1 Includes fair value adjustments recorded on the business combination | ||||||||||||||||
2 A positive variance represents a positive impact to net income and a negative variance represents a negative impact to net income | ||||||||||||||||
3 Percentage change is presented in absolute values |
Change | ||||||||
$ | %1 | |||||||
Cash, cash equivalents, restricted cash and marketable securities | 392,352 | 536,182 | (143,830 | ) | 27 | % | ||
Trade and other receivables | 65,611 | 108,182 | (42,571 | ) | 39 | % | ||
Inventory | 61,783 | 70,870 | (9,087 | ) | 13 | % | ||
Financial assets | 173,116 | 159,151 | 13,965 | 9 | % | |||
Accounts payable, accrued and other liabilities | 44,128 | 96,156 | (52,028 | ) | 54 | % | ||
Bank loans | 43,407 | 55,579 | (12,172 | ) | 22 | % | ||
1 Percentage change is presented in absolute values | ||||||||
Revenue: For the quarter ended
Gross margin: For the quarter ended
Selling and marketing: The increase of
General and administrative: The increase in general and administrative expenses of
Research and development: GBT’s financial results accounted for
Amortization of intangible assets: Increase due to the amortization of the definite-life intangible assets acquired in the GBT acquisition.
Interest income: Interest income is the sum of interest income on financial instruments measured at amortized costs and other interest income. For the quarter, interest income was
Interest expense: The consolidation of GBT’s financial results accounted for
Net income or loss: For the quarter net income was
Adjusted Earnings: For the three-month period ended
Cash, cash equivalents, restricted cash and marketable securities: As at
Trade and other receivables: As at
Inventory: Overall decrease in inventories of
Financial assets: The increase of
Accounts payable, accrued, and other liabilities: Decrease in accounts payable and accrued liabilities balance of
Bank Loans: As at
Product Updates
In
On
In
On
NCIB
On
Acquisition of GBT
On
BRL11.23 per BDR with an amount equivalent to 20% deposited in an escrow account to secure the sellers' indemnification obligations under the purchase agreement for the GBT Transaction, provided thatBRL 0.91 of the escrow amount shall be mandatorily paid on or at any time prior toNovember 29, 2022 . The escrow amount will be released equally over a period of three years from closing, net of claims in accordance with the terms and conditions of the Share Purchase Agreement.BRL10.40 per BDR in cash on the settlement date (“Alternative Offer Price”).
Upon close of the tender offer process, 99.6% of the public shareholders tendered their BDRs through the Alternative
COVID-19 Update
The recent outbreak of the coronavirus, or COVID-19, which has been declared by the
Conference Call Notice
Knight will host a conference call and audio webcast to discuss its third quarter results today at
Date:
Time:
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About Knight Therapeutics Inc.
Forward-Looking Statement
This document contains forward-looking statements for
CONTACT INFORMATION:
Investor Contact: | |
Arvind Utchanah | |
President & Chief Operating Officer | Chief Financial Officer |
T: 514.484.4483 ext.122 | T. 514.484.4483 ext. 115 |
F: 514.481.4116 | F. 514.481.4116 |
Email: info@knighttx.com | Email: info@knighttx.com |
Website: www.gud-knight.com | Website: www.gud-knight.com |
IMPACT OF HYPERINFLATION
[In thousands of Canadian dollars]
The Company applies IAS 29, Financial Reporting in Hyperinflation Economies, as the Company’s Argentine subsidiaries used the Argentine Peso as their functional currency. IAS 29 requires that the financial statements of an entity whose functional currency is the currency of a hyperinflationary economy be adjusted based on an appropriate general price index to express the effects of inflation. If the Company did not apply IAS 29, the effect on the Company’s operating income would be as follows:
Q3-20
Reported under IFRS | Excluding impact of IAS 29 | Variance | ||||||
$1 | %2 | |||||||
Revenues | 45,239 | 45,847 | (608 | ) | 1 | % | ||
Cost of goods sold | 25,706 | 24,765 | (941 | ) | 4 | % | ||
Gross margin | 19,533 | 21,082 | (1,549 | ) | 7 | % | ||
Gross margin (%) | 43 | % | 46 | % | ||||
Expenses | ||||||||
Selling and marketing | 7,763 | 7,604 | (159 | ) | 2 | % | ||
General and administrative | 10,835 | 10,883 | 48 | 0 | % | |||
Research and development | 2,967 | 3,026 | 59 | 2 | % | |||
Amortization of intangible assets | 5,703 | 5,756 | 53 | 1 | % | |||
Operating Loss | (7,735 | ) | (6,187 | ) | (1,548 | ) | 25 | % |
1 A positive variance represents a positive impact to net income due to the application of IAS 29 and a negative variance represents a negative impact to net income due to the application of IAS 29 | ||||||||
2 Percentage change is presented in absolute values | ||||||||
YTD-20
Reported under IFRS | Excluding impact of IAS 29 | Variance | ||||||
$1 | %2 | |||||||
Revenues | 144,328 | 145,860 | (1,532 | ) | 1 | % | ||
Cost of goods sold | 82,698 | 78,792 | (3,906 | ) | 5 | % | ||
Gross margin | 61,630 | 67,068 | (5,438 | ) | 8 | % | ||
Gross margin (%) | 43 | % | 46 | % | ||||
Expenses | ||||||||
Selling and marketing | 26,928 | 27,021 | 93 | 0 | % | |||
General and administrative | 27,424 | 26,656 | (768 | ) | 3 | % | ||
Research and development | 8,035 | 8,175 | 140 | 2 | % | |||
Amortization of intangible assets | 17,546 | 17,407 | (139 | ) | 1 | % | ||
Operating Loss | (18,303 | ) | (12,191 | ) | (6,112 | ) | 50 | % |
1 A positive variance represents a positive impact to net income due to the application of IAS 29 and a negative variance represents a negative impact to net income due to the application of IAS 29 | ||||||||
2 Percentage change is presented in absolute values |
RECONCILIATION TO ADJUSTED EARNINGS
[In thousands of Canadian dollars]
Non-IFRS measure: EBITDA and Adjusted earnings
The Company discloses non-IFRS measures that do not have standardized meanings prescribed by IFRS. The Company believes that shareholders, investment analysts and other readers find such measures helpful in understanding the Company’s financial performance and in interpreting the effect of the GBT Transaction on the Company. Non-IFRS financial measures do not have any standardized meaning prescribed by IFRS and may not have been calculated in the same way as similarly named financial measures presented by other companies.
The Company uses the following non-IFRS measures:
EBITDA: Operating (loss) income adjusted to exclude amortization and impairment of intangible assets, depreciation, purchase price allocation accounting, and the impact of IAS 29 (accounting under hyperinflation) but to include costs related to leases.
Adjusted earnings: Operating (loss) income adjusted to exclude amortization and impairment of intangible assets, depreciation, acquisition costs, non-recurring expenses incurred but to include interest income earned net of interest expenses and costs related to leases.
Adjustments to operating (loss) income include the following:
- With the adoption of IFRS 16, the lease payments of Knight are not reflected in operating expenses. The IFRS 16 adjustment approximates the cash outflow related to leases of Knight.
- Acquisition costs relate to expenses of
$3,490 for the quarter, for the acquisition of GBT. - Other non-recurring expenses relate to expenses incurred by Knight that are not due to, and are not expected to occur in, the ordinary course of business. For the quarter ended
September 30, 2020 , Knight recorded one-time costs of$595 related to restructuring activities including severance to certain employees as part of restructuring and integration of GBT - Interest income Includes “Interest income on financial instruments measured at amortized cost” and “Other interest income”. Primarily from interest earned on loans, cash and cash equivalents, marketable securities and accretion on loans receivable.
- Interest expense on bank loans includes GBT’s interest expense mainly related to interest on its bank loans and excludes Knight’s interest accretion
For the three-month and nine-month periods ended
Q3-20 | Q3-19 | YTD-20 | YTD-19 | |||||
Operating (loss) income | (7,735 | ) | (3,922 | ) | (18,303 | ) | (10,936 | ) |
Adjustments to operating (loss) income: | ||||||||
Amortization of intangible assets | 5,703 | 424 | 17,546 | 1,273 | ||||
Depreciation of property, plant and equipment | 1,382 | 112 | 4,916 | 305 | ||||
Lease costs (IFRS 16 adjustment) | (820 | ) | (122 | ) | (2,405 | ) | (274 | ) |
Impact of PPA accounting | — | — | 865 | — | ||||
Impact of IAS 29 | 1,601 | — | 5,973 | — | ||||
EBITDA | 131 | (3,508 | ) | 8,592 | (9,632 | ) | ||
Acquisition costs | 3,490 | 2,476 | 3,810 | 2,476 | ||||
Other non-recurring expenses | 595 | 536 | 2,663 | 3,803 | ||||
Interest income | 3,188 | 6,058 | 11,515 | 18,108 | ||||
Interest expense on bank loans | (822 | ) | — | (3,070 | ) | — | ||
Adjusted earnings | 6,582 | 5,562 | 23,510 | 14,755 | ||||
INTERIM CONSOLIDATED BALANCE SHEETS
[In thousands of Canadian dollars]
[Unaudited]
ASSETS | ||||
Current | ||||
Cash, cash equivalents and restricted cash | 218,091 | 174,268 | ||
Marketable securities | 158,944 | 235,045 | ||
Trade receivables | 51,894 | 85,845 | ||
Other receivables | 11,809 | 17,622 | ||
Inventories | 61,783 | 70,870 | ||
Prepaids and deposits | 2,927 | 3,306 | ||
Other current financial assets | 26,248 | 26,303 | ||
Income taxes receivable | 6,439 | 8,265 | ||
Total current assets | 538,135 | 621,524 | ||
Marketable securities | 15,317 | 126,869 | ||
Trade receivables | 1,908 | 4,715 | ||
Prepaids and deposits | 4,066 | 4,652 | ||
Right-of-use Asset | 4,651 | 6,409 | ||
Property, plant and equipment | 21,979 | 22,639 | ||
Investment properties | 1,439 | 1,740 | ||
Intangible assets | 156,641 | 173,372 | ||
77,770 | 88,262 | |||
Other financial assets | 146,868 | 132,848 | ||
Deferred income tax assets | 1,123 | 3,991 | ||
Other long-term receivables | 41,582 | 41,582 | ||
473,344 | 607,079 | |||
Assets held for sale | 2,484 | 76,700 | ||
Total assets | 1,013,963 | 1,305,303 | ||
INTERIM CONSOLIDATED BALANCE SHEETS (continued)
[In thousands of Canadian dollars]
[Unaudited]
LIABILITIES AND SHAREHOLDERS’ EQUITY | ||||||
Current | ||||||
Accounts payable and accrued liabilities | 42,475 | 94,406 | ||||
Lease liabilities | 1,089 | 1,788 | ||||
Other liabilities | 1,270 | 1,750 | ||||
Other financial liabilities | — | 184,023 | ||||
Bank loans | 41,567 | 50,557 | ||||
Income taxes payable | 11,828 | 15,447 | ||||
Other balances payable | 802 | 2,833 | ||||
Total current liabilities | 99,031 | 350,804 | ||||
Accounts payable and accrued liabilities | 383 | — | ||||
Lease liabilities | 3,351 | 4,812 | ||||
Bank loan | 1,840 | 5,022 | ||||
Other balances payable | 8,495 | 1,699 | ||||
Deferred income tax liabilities | 18,641 | 27,860 | ||||
Total liabilities | 131,741 | 390,197 | ||||
Equity | ||||||
Share capital | 695,066 | 723,832 | ||||
Warrants | 117 | 785 | ||||
Contributed surplus | 18,203 | 16,463 | ||||
Accumulated other comprehensive income | 2,530 | 17,405 | ||||
Retained earnings | 166,306 | 52,246 | ||||
Attributable to shareholders of the Company | 882,222 | 810,731 | ||||
Non-controlling interests | — | 104,375 | ||||
Total equity | 882,222 | 915,106 | ||||
Total liabilities and Equity | 1,013,963 | 1,305,303 | ||||
INTERIM CONSOLIDATED STATEMENTS OF INCOME (LOSS)
[In thousands of Canadian dollars, except for share and per share amounts]
[Unaudited]
Three months ended | Nine months ended | |||||||
2020 | 2019 | 2020 | 2019 | |||||
Revenues | 45,239 | 4,030 | 144,328 | 10,190 | ||||
Cost of goods sold | 25,706 | 729 | 82,698 | 1,671 | ||||
Gross margin | 19,533 | 3,301 | 61,630 | 8,519 | ||||
Expenses | ||||||||
Selling and marketing | 7,763 | 1,146 | 26,928 | 3,341 | ||||
General and administrative | 10,835 | 4,761 | 27,424 | 12,339 | ||||
Research and development | 2,967 | 892 | 8,035 | 2,502 | ||||
Amortization of intangibles | 5,703 | 424 | 17,546 | 1,273 | ||||
Operating loss | (7,735 | ) | (3,922 | ) | (18,303 | ) | (10,936 | ) |
Interest income on financial instruments measured at amortized cost | (1,754 | ) | (4,825 | ) | (7,477 | ) | (14,651 | ) |
Other interest income | (1,434 | ) | (1,233 | ) | (4,038 | ) | (3,457 | ) |
Interest expense | 822 | — | 3,070 | — | ||||
Other income | (243 | ) | (1,579 | ) | (133 | ) | (1,949 | ) |
Net (gain) loss on financial instruments measured at fair value through profit or loss | (12,873 | ) | 4,883 | (22,642 | ) | (19,649 | ) | |
Net gain on mandatory tender offer liability | (10,502 | ) | — | (12,072 | ) | — | ||
Realized gain on sale of asset held for sale | — | — | (2,948 | ) | — | |||
Realized gain on automatic share purchase plan | — | — | (4,168 | ) | — | |||
Share of net income of associate | — | (128 | ) | — | (448 | ) | ||
Foreign exchange loss | 703 | 638 | 9,666 | 3,315 | ||||
Loss on hyperinflation | 401 | — | 1,205 | — | ||||
Income before income taxes | 17,145 | (1,678 | ) | 21,234 | 25,903 | |||
Income tax | ||||||||
Current | (3,079 | ) | 999 | 1,386 | 3,168 | |||
Deferred | 2,732 | 282 | (3,679 | ) | 1,549 | |||
Income tax (recovery) expense | (347 | ) | 1,281 | (2,293 | ) | 4,717 | ||
Net income for the period | 17,492 | (2,959 | ) | 23,527 | 21,186 | |||
Attributable to: | ||||||||
Shareholders of the Company | 18,094 | (2,959 | ) | 33,834 | 21,186 | |||
Non-controlling interests | (602 | ) | — | (10,307 | ) | — | ||
Attributable to shareholders of the Company | ||||||||
Basic (loss) earnings per share | 0.138 | (0.021 | ) | 0.256 | 0.150 | |||
Diluted (loss) earnings per share | 0.138 | (0.021 | ) | 0.256 | 0.150 | |||
Weighted average number of common shares outstanding | ||||||||
Basic | 130,867,769 | 137,783,892 | 132,346,922 | 141,147,239 | ||||
Diluted | 131,051,220 | 138,154,629 | 132,614,809 | 141,519,892 | ||||
INTERIM CONSOLIDATED STATEMENTS OF CASH FLOWS
[In thousands of Canadian dollars]
[Unaudited]
Three months ended | Nine months ended | ||||||||
2020 | 2019 | 2020 | 2019 | ||||||
OPERATING ACTIVITIES | |||||||||
Net income for the period | 17,492 | (2,959 | ) | 23,527 | 21,186 | ||||
Adjustments reconciling net income to operating cash flows: | |||||||||
Deferred income tax expense (recovery) | 2,732 | 282 | (3,679 | ) | 1,549 | ||||
Share-based compensation expense | 725 | 484 | 1,422 | 1,639 | |||||
Depreciation and amortization | 7,085 | 536 | 22,462 | 1,578 | |||||
Net (gain) loss on financial instruments | (12,873 | ) | 4,883 | (22,642 | ) | (19,649 | ) | ||
Net gain on mandatory tender offer liability | (10,502 | ) | — | (12,072 | ) | — | |||
Realized gain on sale of asset held for sale | — | — | (2,948 | ) | — | ||||
Realized gain on automatic share purchase plan | — | — | (4,168 | ) | — | ||||
Interest expense | 822 | — | 3,070 | — | |||||
Foreign exchange loss | 703 | 638 | 9,666 | 3,315 | |||||
Loss on hyperinflation | 401 | — | 1,205 | — | |||||
Share of net income of associate | — | (128 | ) | — | (448 | ) | |||
Other adjustments | 424 | (180 | ) | (50 | ) | (363 | ) | ||
7,009 | 3,556 | 15,793 | 8,807 | ||||||
Changes in non-cash working capital and other items | (15,413 | ) | 472 | (30,974 | ) | 2,368 | |||
Other long-term receivable | — | — | — | (18,242 | ) | ||||
Dividends from associate | — | — | — | 4,159 | |||||
Interest payments on bank loans | (8 | ) | — | (1,321 | ) | — | |||
Cash (outflow) inflow from operating activities | (8,412 | ) | 4,028 | (16,502 | ) | (2,908 | ) | ||
INVESTING ACTIVITIES | |||||||||
Acquisition of shares through mandatory tender offer | (170,855 | ) | — | (170,855 | ) | — | |||
Purchase of marketable securities | (662 | ) | (20,300 | ) | (37,778 | ) | (203,445 | ) | |
Purchase of intangible assets | (1,191 | ) | (328 | ) | (14,024 | ) | (2,317 | ) | |
Purchase of property and equipment | (861 | ) | — | (3,119 | ) | (4 | ) | ||
Exercise of warrant investments | — | — | (397 | ) | — | ||||
Issuance of loans receivables | — | (1,987 | ) | (7,364 | ) | (20,038 | ) | ||
Purchase of equity investments | — | — | — | (6 | ) | ||||
Investment in funds | (2,010 | ) | (5,864 | ) | (15,010 | ) | (18,434 | ) | |
Proceeds on sale of asset held for sale | — | — | 77,000 | — | |||||
Proceeds on maturity of marketable securities | 32,440 | 90,543 | 226,999 | 362,091 | |||||
Proceeds from repayments of loans receivable | 17 | 873 | 7,786 | 3,574 | |||||
Proceeds from disposal of equity investments | — | 1,676 | 2,919 | 1,676 | |||||
Proceeds from distribution of funds | 14,887 | 8,500 | 26,996 | 9,177 | |||||
Cash (outflow) inflow from investing activities | (128,235 | ) | 73,113 | 93,153 | 132,274 | ||||
FINANCING ACTIVITIES | |||||||||
Proceeds from exercise of stock options | 115 | — | 595 | — | |||||
Proceeds from contributions to share purchase plan | 62 | 62 | 175 | 178 | |||||
Proceeds from repayment of share purchase loans | — | 425 | — | 425 | |||||
Proceeds from bank loans | — | — | 10,998 | — | |||||
Repurchase of common shares through Normal Course Issuer Bid | (3,736 | ) | (54,181 | ) | (35,001 | ) | (54,181 | ) | |
Principal repayment of lease liabilities | (888 | ) | (68 | ) | (2,406 | ) | (205 | ) | |
Principal repayments on bank loans | (701 | ) | — | (8,219 | ) | — | |||
Cash outflow from financing activities | (5,148 | ) | (53,762 | ) | (33,858 | ) | (53,783 | ) | |
(Decrease) increase in cash and cash equivalents during the period | (141,795 | ) | 23,379 | 42,793 | 75,583 | ||||
Cash, cash equivalents and restricted cash, beginning of the period | 359,593 | 294,911 | 174,268 | 244,785 | |||||
Net foreign exchange difference | 293 | 835 | 1,030 | (1,243 | ) | ||||
Cash, cash equivalents and restricted cash, end of the period | 218,091 | 319,125 | 218,091 | 319,125 | |||||
Cash and cash equivalents | 218,091 | 319,125 | |||||||
Short-term marketable securities | 158,944 | 243,790 | |||||||
Long-term marketable securities | 15,317 | 137,177 | |||||||
Total cash, cash equivalents and marketable securities | 392,352 | 700,092 |
Source: Thérapeutique Knight inc.
2020 GlobeNewswire, Inc., source