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Deveron Corp. Management Reports 2025
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Management Reports
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A New Level of Farming
DEVERON CORP.
MANAGEMENT'S DISCUSSION AND ANALYSIS
(REVISED)
FOR THE YEAR ENDED JUNE 30, 2024, SIX MONTHS ENDED JUNE 30, 2023,
AND THE YEAR ENDED DECEMBER 31, 2022
(EXPRESSED IN CANADIAN DOLLARS)
DEVERON CORP.
Management's Discussion and Analysis (REVISED)
Period Ended June 30, 2024
Dated: September 15, 2025
Introduction
The following management's discussion and analysis ("MD&A") of the financial condition and results of the operations of Deveron Corp. ("Deveron" or the "Company") constitutes management's review of the factors that affected the Company's financial and operating performance for the period ended June 30, 2024. This MD&A was written to comply with the requirements of National Instrument 51-102 – Continuous Disclosure Obligations. This discussion should be read in conjunction with the audited consolidated financial statements of the Company for the periods ended June 30, 2024, June 30, 2023, and December 31, 2022 together with the notes thereto. Results are reported in Canadian dollars, unless otherwise noted. The Company's consolidated financial statements and the financial information contained in this MD&A are prepared in accordance with IFRS Accounting Standards as issued by the International Accounting Standards Board ("IFRS Accounting Standards") and interpretations of the IFRS Interpretations Committee ("IFRIC"). In the opinion of management, all adjustments (which consist only of normal recurring adjustments) considered necessary for a fair presentation have been included. Information contained herein is presented as of February 18, 2025, unless otherwise indicated.
For the purposes of preparing this MD&A, management, in conjunction with the Board of Directors (the "Board"), considers the materiality of information. Information is considered material if: (i) such information results in, or would reasonably be expected to result in, a significant change in the market price or value of Deveron common shares; (ii) there is a substantial likelihood that a reasonable investor would consider it important in making an investment decision; or (iii) it would significantly alter the total mix of information available to investors. Management, in conjunction with the Board, evaluates materiality with reference to all relevant circumstances, including potential market sensitivity.
The commentary within this MD&A, aligns with the results in the revised and amended audited financial statements for June 30, 2024. The results presented for the period ending June 30, 2023, align with the previously audited set of financial statements, which were for a six-month period from January 1, 2023 to June 30, 2023. The results presented for the period ending December 31, 2022, align with the previously audited set of financial statements, which were for a twelve-month period from January 1, 2022 to December 31, 2022.
Additional information relating to the Company is available free of charge on the System for Electronic Document Analysis and Retrieval (SEDAR+) website at www.sedarplus.ca.
Cautionary Note Regarding Forward-Looking Statements
This MD&A contains certain forward-looking information and forward-looking statements, as defined in applicable securities laws (collectively referred to herein as "forward-looking statements"). These statements relate to future events or the Company's future performance. All statements other than statements of historical fact are forward-looking statements. Often, but not always, forward-looking statements can be identified by the use of words such as "plans", "expects", "is expected", "budget", "scheduled", "estimates", "continues", "forecasts", "projects", "predicts", "intends", "anticipates" or "believes", or variations of, or the negatives of, such words and phrases, or statements that certain actions, events or results "may", "could", "would", "should", "might" or "will" be taken, occur or be achieved. Forward-looking statements involve known and unknown risks, uncertainties and other factors that may cause actual results to differ materially from those anticipated in such forward-looking statements. The forward-looking statements in this MD&A speak only as of the date of this MD&A or as of the date specified in such statement. The following table outlines certain significant forward-looking statements contained in this MD&A and provides the material assumptions used to develop such forward-looking statements and material risk factors that could cause actual results to differ materially from the forward-looking statements.
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DEVERON CORP.
Management's Discussion and Analysis (REVISED)
Period Ended June 30, 2024
Dated: September 15, 2025
| Forward-looking statements | Assumptions | Risk factors |
|---|---|---|
| Growth of Deveron's business in the data acquisition and data analytics sector will strive to achieve profitability. | Financing will be available for the continued growth of data acquisition and data analytics sector | Changes in debt and equity markets; timing and availability of external financing on acceptable terms; increases in costs; and changes in environmental and other local legislation and regulation; changes in economic conditions |
| The Company's ability to meet its working capital needs at the current level for the twelve-month period ending June 30, 2025. | ||
| The Company expects to incur further losses in the development of its business | ||
| Should the Company not raise sufficient capital or have adequate profits (defined as revenues less expenses), it may cease to be a reporting issuer | The operating activities of the Company for the twelve-month period ending June 30, 2025, and the costs associated therewith, will be consistent with Deveron's current expectations; debt and equity markets, exchange and interest rates and other applicable economic conditions are favourable to Deveron |
Inherent in forward-looking statements are risks, uncertainties and other factors beyond Deveron's ability to predict or control. Please also make reference to those risk factors referenced in the "Risk Factors" section below. Readers are cautioned that the above chart does not contain an exhaustive list of the factors or assumptions that may affect the forward-looking statements, and that the assumptions underlying such statements may prove to be incorrect. Actual results and developments are likely to differ, and may differ materially, from those expressed or implied by the forward-looking statements contained in this MD&A.
Forward-looking statements involve known and unknown risks, uncertainties and other factors that may cause Deveron's actual results, performance or achievements to be materially different from any of its future results, performance or achievements expressed or implied by forward-looking statements. All forward-looking statements herein are qualified by this cautionary statement. Accordingly, readers should not place undue reliance on forward-looking statements. The Company undertakes no obligation to update publicly or otherwise revise any forward-looking statements whether as a result of new information or future events or otherwise, except as may be required by law. If the Company does update one or more forward-looking statements, no inference should be drawn that it will make additional updates with respect to those or other forward-looking statements, unless required by law.
Description of Business
Deveron is an agriculture technology company that uses data and insights to help farmers and large agriculture enterprises increase yields, reduce costs and improve farm outcomes. The Company employs a testing and analysis processes that leverages data collected on farms across North America to drive unbiased interpretation of production decisions, ultimately recommending how to optimize input use. Our team of agronomists and data scientists build products that recommend ways to better manage fertilizer, seed, fungicide, and other farm inputs. Additionally, we have a national network of third party and in-house data technicians that are deployed to collect various types of farm data, from soil to drone, that forms the best-in-class data layers. Our focus is the US and Canada where 1 billion acres of farmland are actively farmed annually.
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DEVERON CORP.
Management's Discussion and Analysis (REVISED)
Period Ended June 30, 2024
Dated: September 15, 2025
Deveron was incorporated under the laws of the Province of Ontario on March 28, 2011. On August 31, 2020, the Company changed its corporate name from Deveron UAS Corp. to Deveron Corp. On September 21, 2020, the Company was accepted for listing on the TSX Venture Exchange (the "TSXV") as a Tier 2 issuer, and its common shares commenced trading on the TSXV under the symbol "FARM". The primary office is located at 141 Adelaide Street West, Suite 1702, Toronto, ON M5H 3L5.
Operational Highlights
Corporate
On January 18, 2022, the Company granted 1,600,000 stock options to certain officers, employees and advisors to the Company. The stock options, at a price of $0.75 per share, will expire in six years from the issue date.
On February 25, 2022, the Company announced a public offering for gross proceeds of $11,500,000 through the issuance of 16,428,573 units in the capital of the Company at a price of $0.70 per unit. Each Unit is comprised of one common share in the Company and one-half of one whole Common Share purchase warrant. Each warrant entitles the holder thereof to acquire one Common Share at a price of $0.90 per Common Share for a period of two years from the date of issuance.
On March 9, 2022, the Company announced a non-brokered private placement for gross proceeds of $600,000 through the issuance of 857,143 units in the capital of the Company at a price of $0.70 per unit. Each unit is comprised of one common share in the Company and one-half of one whole common share purchase warrant. Each warrant entitles the holder thereof to acquire one common share at a price of $0.90 per common share for a period of two years from the date of issuance.
On March 10, 2022, the Company completed the acquisition of Agri-Labs, Inc.
On March 31, 2022, the Company granted 105,000 stock options to certain officers, employees and advisors to an officer of the Company. The stock options, at a price of $0.63 per share, will expire in five years from the issue date.
On May 2, 2022, the Company entered into a definitive agreement with certain vendor shareholders to acquire a 67% equity interest in A&L Canada Laboratories East, Inc. ("A&L"), with an option to purchase the remaining 33% following the three-year anniversary of closing (the "Acquisition"). Total consideration payable to the vendor shareholders includes: (i) $37.8 million in cash; (ii) $4.9 million in promissory notes; and (iii) $7.5 million or 13,688,182 common shares in the capital of the Company at a deemed issue price of $0.55 per common share. The $7.5 million in the Company's common shares will be distributed to a company controlled by Greg Patterson, one of the vendor shareholders who, upon closing of the Acquisition, is expected to continue as President, Chief Executive Officer ("CEO") and director of A&L and be appointed to Deveron's Board of Directors (subject to regulatory approval). A&L is the largest soil and tissue laboratory in Canada. On May 20, 2022, the Company completed its acquisition of a 67% equity interest in A&L. As previously announced, the Company financed the cash component of the purchase price of the Acquisition through: (i) a $28.3 million credit facility provided by Toronto- Dominion Bank; (ii) a non-brokered private placement of $10 million in unsecured convertible debentures (each, a "Debenture") at a price of $1,000 per Debenture, which closed on May 18, 2022; and (iii) the Company's treasury cash.
On May 10, 2022, the Company announced that intended to complete a non-brokered private placement of a minimum of $5 million and a maximum of $10 million in Debenture at a price of $1,000 per Debenture (the "Offering"). On May 18, 2022, the Company closed its previously announced non-brokered private placement of 7.0% Debenture for aggregate gross proceeds of $10 million. The private placement was completed in connection with Deveron's previously announced acquisition of a 67% equity interest in A&L. The issuance of the Debentures pursuant to the private placement were completed on a private placement and prospectus exemption basis, as applicable, such that the issuances are exempt from any applicable prospectus and securities registration requirements. In connection with the private placement, certain arm's-length finders received an aggregate of
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DEVERON CORP.
Management's Discussion and Analysis (REVISED)
Period Ended June 30, 2024
Dated: September 15, 2025
$470,200 in cash finders fee commissions and an aggregate of 818,012 finders warrants with each finders warrant being exercisable to acquire a common share at an exercise price of $0.50 for a period of 24 months after the closing date of the private placement.
On June 29, 2022, the Company announced that it has granted an aggregate of 388,637 options to purchase common shares of the Company exercisable at a price of $0.55 per common share, and expiring on June 29, 2027 to certain officers, directors and employees of the Company.
On July 6, 2022, the Company has made its initial milestone payment consisting of USD $420,000 and 750,000 common shares in the capital of the Company at a deemed price of $0.61 per common share to Agri-Labs, Inc.
On July 29, 2022, the Company announced that in connection with its previously announced acquisition of Stealth Ag, Inc. ("Stealth Ag"), Stealth Ag has exceeded gross revenues of USD $1,000,000 during the fiscal year ending December 31, 2021. As a result of achieving this milestone, the Company has made the one-time payment of USD $140,000, satisfied through the issuance of an aggregate of 330,909 common shares in the capital of the Company at a deemed price of $0.55 per common share.
On August 26, 2022, the Company granted 2,000,000 stock options to certain officers, directors and employees of the Company. The stock options, at a price of $0.56 per share, will expire in six years from the issue date.
On September 8, 2022, Agronomic Solutions was issued 262,346 common shares at a price of $0.68 on the 1 year anniversary of the acquisition, drawing down on the shares to be issued recognized as part of the acquisition.
On October 4, 2022, the Company announced that it has signed an arm's length definitive agreement dated October 4, 2022 to acquire 100% of the assets of Frontier Labs Inc. ("Frontier Labs"). As consideration for the acquisition, the Company has agreed to: (i) pay Frontier Labs an initial cash payment of USD $825,000 upon closing of the acquisition and USD $412,500 on each of the first two anniversaries following the completion of the definitive agreement; and (ii) issue such number of common shares in the capital of the Company equal to USD $275,000 at a price of $0.50 per common share upon receipt of the approval of the TSX Venture Exchange and an additional number of common shares equal to USD $137,500 at a price of $0.50 per common share on each of the first two anniversaries following the signing of the definitive agreement. On November 1, 2022, the Company acquired all of the assets of Frontier Labs pursuant to the arm's length definitive agreement as outlined above.
On October 5, 2022, the Company announced the closing of a non-brokered private placement through the issuance of 5,400,000 Common Shares in the capital of the Company at a price of $0.50 per Common Share for gross proceeds of $2,700,000 (the "Offering"). In connection with the Offering, the Company paid certain eligible persons a cash commission in total of $77,000 equal to 7% of the gross proceeds of the Offering delivered by finders and issued a total of 154,000 non-transferable broker warrants ("Broker Warrants"), equal to 7% of the common shares delivered by Finders pursuant to the Offering. Each Broker Warrant entitles the holder to purchase one Common Share for a period of two years from the closing of the Offering at a price of $0.50 per Common Share.
On October 14, 2022, the Company was named as a key partner in a multiyear USD$7.5 million USDA initiative, with current enterprise client, AgriCapture. On October 18, 2022, the Company had expanded its enterprise agreement supporting the USDA By $900,000. This represents organic growth of 50% on the contract and increases the total value to US $2.7 million.
On November 17, 2022, the Company announced it has appointed Tim Close as a director to the Company's Board of Directors. Tim is the former President and CEO of AGI, a leading provider of equipment and technology solutions for the world's food infrastructure including seed, fertilizer, grain, feed and food processing systems.
On November 23, 2022, the Company announced that it had granted an aggregate of 300,000 stock options to purchase common shares of the Company exercisable at a price of $0.475 per Common share and expiring on
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DEVERON CORP.
Management's Discussion and Analysis (REVISED)
Period Ended June 30, 2024
Dated: September 15, 2025
November 23, 2027, to an employee and a director of the Company. The common shares issuable upon exercise of the options are subject to a four-month hold period from the original date of the grant.
On December 1, 2022, the Company implemented a significant cost optimization program driven by a strategic refocusing on the North American soil testing market and the synergies created from its recent acquisitions.
On December 23, 2022, the Company announced that Jim Pirie, an original board member of Deveron, is retiring from the Board of Directors, effective January 1, 2023.
During the year ended December 31, 2022, 5,098,819 warrants were exercised at a price of $0.45 per unit for gross proceeds of $2,294,469, and 694,644 warrants were exercised at a price of $0.35 for gross proceeds of $243,125.
During the year ended December 31, 2022, 1,980,000 options were exercised at a price of $0.30 per unit for gross proceeds of $519,000 and 1,500,000 options were exercised at a price of $0.365 per unit for gross proceeds of $244,450.
On September 11, 2023, the Company announced the appointment of Akshay Shirodker as Chief Financial Officer ("CFO") of Deveron Corp, effective immediately; in addition, the Company announced that Carmelo Marrelli had resigned.
On September 25, 2023, the Company announced a non-brokered private placement of $2 million in unsecured convertible debentures ("Debenture") at a price of $1,000 per Debenture ("Offering"). The Company intends to use the net proceeds from the Offering for general working capital.
On October 5, 2023, the Company announced that it had closed the first tranche of a non-brokered private placement through the issuance of 1,750 unsecured Debentures, at a price of $1,000 per Debenture for gross proceeds of $1,750,000. In connection with the Offering, the Company paid certain eligible finders a cash commission in the aggregate of $91,000 and issued 216,666 finder's warrants (each, a "Finder Warrant"). Each Finder Warrant entitles the holder thereof acquire one Common Share at a price of $0.42 per Common Share until the date that is twelve (12) months from the date of issuance.
On November 1, 2023, the Company announced that A&L Canada Laboratories, Inc., a subsidiary of Deveron Corp., has launched a new testing service analyzing pre-and polyfluoroalkyl substances ("PFAS") in soil, water, compost and other matrices. PFAS are group of synthetic chemicals that have gained significant attention due to their widespread use and potential environmental and health concerns.
On December 6, 2023, the Company announced that it has implemented another phase of its cost optimization program. In a continued effort to prioritize profitable fertility related field services execution and focus, the Company has implemented $1.5 million in cost savings mainly through the reduction of field staff and ancillary support costs within the Company's carbon business unit.
On December 29, 2023, the Company granted an aggregate of 2,500,000 stock options to purchase common shares of the Company exercisable at a price of $0.185 per common share and expiring on December 23, 2028, to employees of the Company. The common shares issuable upon exercise of the options are subject to a four-month hold period from the original date of grant.
On February 7, 2024, the Company announced the onboarding of a new enterprise contract with a prominent player in Per- and Polyfluoroalkyl Substances ("PFAS") remediation in water PFAS are synthetic chemicals that have garnered significant attention due to their widespread use and potential environmental and health concerns.
On April 25, 2024, the Company announced that it had closed a non-brokered private placement through the issuance of 575 unsecured convertible debentures at a price of $1,000 per debenture for gross proceeds of $575,000. The debenture will mature three (3) years following the date of issuance and will bear interest at an interest rate of nine percent (12%) per annum, payable in arrears in cash or the equivalent value in common shares
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DEVERON CORP.
Management's Discussion and Analysis (REVISED)
Period Ended June 30, 2024
Dated: September 15, 2025
based on a price per common share equal to the greater of (A) the 20 trading day volume weighted average trading price of the common shares on the TSXV ending five trading days preceding the investment due date and (B) the Market Price of the common shares at the time the interest becomes payable. The holder of a debenture will have the right, from time to time and at any time after first year anniversary of the date of issuance, to the maturity date, to convert all or any portion of the outstanding principal amount into common shares, at a conversion price of $0.20 per common share.
On May 27, 2024, the Company announced that it has received a letter from two unsecured creditors demanding repayment of the unsecured loans evidenced by promissory notes dated May 20, 2022, issued by Deveron in connection with the acquisition of a 67% interest in A&L Laboratories Canada East, Inc. ("A&L"). The loans have aggregate principal amounts of $4,726,600 with accrued interest at maturity amounting to $400,949.
On June 21, 2024, the Company announced that it has settled an aggregate of $701,055 of indebtedness owed to the holders of the 7% unsecured convertible debentures, representing the accrued interest for the second year of the debentures. In connection with the debt settlement, the Company issued an aggregate of 6,146,341 common shares in the capital of the Company at a price of $0.11406 per common share.
Company Update
There are almost 1 billion acres of farmland in North America, and it is estimated that, currently, data and technology are applied in making input decisions (such as seeding, fertilizer use etc.) on only 30% of this total area under cultivation.
Science and technology can have a significant role to play in improving farm outcomes; including yields, profitability and climate impact.
Deveron is a growing company focused on the North American agriculture market that provides:
- Agricultural laboratories and soil and plant health testing services
- Educational services focused on soil and plant health
- Data collection services via soil sampling, and other methods
- Data insights to better manage inputs like fertilizer, seed, water and other crop protection that is based on highly localized data and farm variability
- Carbon sequestration data services, serving many of the largest agriculture companies with field and analytical support for their carbon programs
- Standardized data solutions and technology platforms that helps farmers, agronomists and agri-businesses record, organize and leverage on-farm information to make better decisions
Deveron provides these services directly through:
- Our network of laboratories across Canada and the USA
- Our growing network of local agronomists and partner channels
- Our digital affiliations with multi-national input companies
- Our online presence at www.deveron.com
Deveron is focused on removing the subjective decision making of farming and making it easy for any grower, using any brand of input or equipment, to use data to make more money on the farm.
DEVERON CORP.
Management's Discussion and Analysis (REVISED)
Period Ended June 30, 2024
Dated: September 15, 2025
Trends and Economic Conditions
Deveron's operations are focused within the agriculture marketplace. Soil testing, plant tissue analysis, imagery and other data solutions will have a significant effect on this market by allowing farmers to reduce costs, strengthen yields and improve profitability. Other trend factors impacting agriculture are changes to applicable laws and regulations, weather conditions, rising fertilizer and other agricultural costs, the availability of qualified people, and obtaining necessary services in jurisdictions where Deveron operates. The current trends relating to these factors could change at any time and negatively affect Deveron's operations and business.
Deveron is managing its business during uncertain market, political and economic conditions, including among others, geopolitical and other risks associated with our operations, including military actions, protectionism and reactive countermeasures, economic or other sanctions or trade barriers.
Apart from these factors and the risk factors noted under the heading "Risk Factors", management is not aware of any other trends, commitments, events or uncertainties that would have a material effect on the Company's business, financial condition or results of operations.
Related Party Transactions
Shareholder
As of June 30, 2024, the Company has a short term loan due from a related party in the amount of $547,684 (June 30, 2023 - $584,158, December 31, 2022 - $605,264) owed to them from a shareholder of the Company. This loan is non-interest bearing and is due on demand.
Marrelli Group of Companies
During the year ended June 30, 2024, the Company incurred professional fees of $14,804 (six months ended June 30, 2023 - $125,161, twelve months ended December 31, 2022 - $95,442) to a group of companies of which Carmelo Marrelli is Managing Director. As of March 31, 2024, Mr. Marrelli was the former Chief Financial Officer of Deveron. He had resigned as of September 11, 2023. All services were made on terms equivalent to those that prevail with arm's length transactions. As at June 30, 2024, the group of companies was owed $31,678 (June 30, 2023 - $10,721, December 31, 2022 - $5,217) and this amount is included in accounts payable and accrued and other liabilities.
Related party transactions
During the year ended June 30, 2024, the Company also incurred legal fees of $86,120 (six months ended June 30, 2023 - $62,915, twelve months ended December 31, 2022 - $129,513) to Irwin Lowy LLP for legal services. Chris Irwin is the controlling party of Irwin Lowy LLP and a former director of Deveron. Included in the June 30, 2024 accounts payable and accrued and other liabilities is $170,050 due to Irwin Lowy LLP (June 30, 2023 - $49,661, December 31, 2022 - $38,256).
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DEVERON CORP.
Management's Discussion and Analysis (REVISED)
Period Ended June 30, 2024
Dated: September 15, 2025
Remuneration of directors and key management personnel of the Company was as follows:
| Twelve Months Ended June 30, 2024 | Six Months Ended June 30, 2023 | Twelve Months Ended December 31, 2022 | |
|---|---|---|---|
| Salaries and Benefits | $ 671,783 | $ 505,965 | $ 442,500 |
| Directors fees | 53,750 | 62,189 | - |
| Professional fees | 100,924 | 188,076 | 367,847 |
| $ 826,457 | $ 756,230 | $ 810,347 |
Outlook
For the immediate future, the Company intends to continue to focus on testing and analytic services. The Company continues to monitor its spending and will amend its plans based on business opportunities that may arise in the future. See "Cautionary Note Regarding Forward-Looking Statements", "Trends and Economic Conditions" and "Risk Factors".
The Company may need to secure additional financing to meet its ongoing obligations; however, there is no assurance that the Company will be able to do so. See "Cautionary Note Regarding Forward-Looking Statements" and "Trends and Economic Conditions" in "Risk Factors".
Selected Financial Information
The following is selected financial data derived from the audited annual consolidated financial statements of the Company as at June 30, 2024, June 30, 2023 and December 31, 2022 and for the periods then ended.
| Year ended June 30, 2024 | Six months ended June 30, 2023 | Year ended December 31, 2022 | |
|---|---|---|---|
| Total revenues | $ 35,316,939 | $ 14,265,009 | $ 28,923,133 |
| Total loss | $ (56,358,446) | $ (13,701,606) | $ (8,573,905) |
| Net loss per share - basic | $ (0.37) | $ (0.10) | $ (0.07) |
| Net loss per share - diluted | $ (0.37) | $ (0.10) | $ (0.07) |
| As at June 30, 2024 | As at June 30, 2023 | As at December 31, 2022 | |
| Total assets | $ 56,858,833 | $ 109,228,245 | $ 116,727,088 |
| Total non-current financial liabilities | $ 32,306,755 | $ 59,208,988 | $ 57,498,353 |
| Distribution of cash dividends | $ nil | $ nil | $ nil |
- The net loss for the year ended June 30, 2024, consisted primarily of (i) share-based payments of $1,064,118; (ii) salaries and benefits of $12,150,397; (iii) change in NCI put obligation of $839,664; (iv) depreciation of $4,487,087; (v) professional fees of $976,601; (vi) amortization of intangible assets of $3,454,438 and (vii) impairment expense of $43,132,423 and (viii) other working capital expenditures incurred to maintain the operations of the Company which was offset by (i) net agronomic services of $35,316,939 and (ii) interest income of $933.
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DEVERON CORP.
Management's Discussion and Analysis (REVISED)
Period Ended June 30, 2024
Dated: September 15, 2025
- The net loss for the six months ended June 30, 2023, consisted primarily of (i) share-based payments of $900,841; (ii) salaries and benefits of $7,443,947; (iii) change in NCI put obligation of $3,296,586; (iv) depreciation of $1,798,538; (v) professional fees of $815,870; (vi) amortization of intangible assets of $1,789,662 and (vii) other working capital expenditures incurred to maintain the operations of the Company which was offset by (i) net drone and agronomic services of $14,265,009 and (ii) interest income of $20,673.
- The net loss for the year ended December 31, 2022, consisted primarily of (i) share-based payments of $1,147,082; (ii) salaries and benefits of $11,396,425; (iii) change in NCI put obligation of $3,048,977; (iv) depreciation of $2,574,996; (v) professional fees of $2,338,257; (vi) amortization of intangible assets of $2,255,488 and (vii) other working capital expenditures incurred to maintain the operations of the Company which was offset by (i) net drone and agronomic services of $28,923,133 and (ii) interest income of $58,568.
| Three Months Ended | Total Revenue ($) | Profit or (Loss) | Total Assets ($) | |
|---|---|---|---|---|
| Total ($) | Basic and Diluted Income (Loss) Per Share ($) | |||
| June 30, 2024(1) | 6,836,912 | (47,541,120) | (0.30) | 56,858,833 |
| March 31, 2024(2) | 5,453,028 | (4,277,906) | (0.03) | 102,451,765 |
| December 31, 2023(3) | 15,308,397 | 1,436,526 | 0.01 | 106,894,375 |
| September 30, 2023(4) | 7,718,603 | (5,975,946) | (0.04) | 106,030,197 |
| June 30, 2023(5) | 8,906,469 | (7,567,227) | (0.05) | 109,228,245 |
| March 31, 2023(6) | 5,358,540 | (6,134,379) | (0.04) | 109,213,655 |
| December 31, 2022(7) | 15,143,300 | 3,975,837 | 0.03 | 116,727,088 |
| September 30, 2022(8) | 7,189,494 | (4,785,772) | (0.04) | 111,178,367 |
| June 30, 2022(9) | 5,183,378 | (4,214,092) | (0.04) | 104,937,733 |
| March 31, 2022(10) | 1,406,961 | (3,549,878) | (0.04) | 30,485,546 |
Notes:
1) The Company's net loss totaled $47,541,120 for the three months ended June 30, 2024, with basic and diluted loss per share of $0.30. Activities for the three months ended June 30, 2024, principally involved salaries and benefits of $2,408,819; change in NCI put obligation of $1,040,498; professional fees of $424,831, representing costs incurred for general legal, accounting and audit services; depreciation of $1,654,596; amortization of intangible assets of $712,382; office and general of $2,241,554; impairment expense of $43,132,423 and cost of services of $2,936,446 which was offset by data services revenues of $6,836,912; and interest income of $43,878.
2) The Company's net loss totaled $4,277,906 for the three months ended March 31, 2024, with basic and diluted loss per share of $0.03. Activities for the three months ended March 31, 2024, principally involved share- based payments of $236,906; salaries and benefits of $2,711,801; professional fees of $221,022, representing costs incurred for general legal, accounting and audit services; interest expenses of $1,008,774; depreciation of $979,605; amortization of intangible assets of $916,488, office and general of $1,897,925; and cost of services of $2,093,380 which was offset by data services revenue of $5,453,028; and interest income of $32.
3) The Company's net gain totaled $1,436,526 for the three months ended December 31, 2023, with basic and diluted earnings per share of $0.01. Activities for the three months ended December 31, 2023, principally involved share-based payments of $316,479; change in NCI put obligation of $426,839; professional fees of
Page 10
DEVERON CORP.
Management's Discussion and Analysis (REVISED)
Period Ended June 30, 2024
Dated: September 15, 2025
$30,563, representing costs incurred for general legal, accounting and audit services; depreciation of $951,862; amortization of intangible assets of $918,614; office and general of $2,201,617; and cost of services of $3,974,051 which was offset by data services revenues of $15,308,397; and interest income of $1,768.
4) The Company's net loss totaled $5,975,946 for the three months ended September 30, 2023, with basic and diluted loss per share of $0.04. Activities for the three months ended September 30, 2023, principally involved share-based payments of $291,936; salaries and benefits of $3,496,088; professional fees of $300,185, representing costs incurred for general legal, accounting and audit services; interest expenses of $891,300; depreciation of $901,025; amortization of intangible assets of $906,954, office and general of $2,447,943; and cost of services of $2,704,068 which was offset by data services revenue of $7,718,603 and interest income of $43,010.
5) The Company's net loss totaled $7,567,227 for the three months ended June 30, 2023, with basic and diluted loss per share of $0.05. Activities for the three months ended June 30, 2023, principally involved salaries and benefits of $3,952,747; change in NCI put obligation of $4,056,258; professional fees of $430,073, representing costs incurred for general legal, accounting and audit services; interest expenses of $348,461; depreciation of $896,516; amortization of intangible assets of $899,502; office and general of $2,085,424; and cost of services of $2,408,125 which was offset by data services revenues of $8,906,469; and interest income of $7,378.
6) The Company's net loss totaled $6,134,379 for the three months ended March 31, 2023, with basic and diluted loss per share of $0.04. Activities for the three months ended March 31, 2023, principally involved share based payments of $563,786; salaries and benefits of $3,491,200; professional fees of $385,797, representing costs incurred for general legal, accounting and audit services; interest expenses of $1,138,884; depreciation of $902,022; amortization of intangible assets of $890,160, office and general of $2,419,278; and cost of services of $2,464,855 which was offset by data services revenue of $5,358,540; and interest income of $13,295.
7) The Company's net income totaled $3,975,837 for the three months ended December 31, 2022, with basic and diluted earnings per share of $0.03. Activities for the three months ended December 31, 2022, principally involved share-based payments of $241,148; change in NCI put obligation of $3,048,977; professional fees of $392,509, representing costs incurred for general legal, accounting and audit services; depreciation of $1,054,790; amortization of intangible assets of $578,484; office and general of $2,338,319; and cost of services of $3,417,717 which was offset by data services revenues of $15,143,300 and interest income of $13,672.
8) The Company's net loss totaled $4,785,772 for the three months ended September 30, 2022, with basic and diluted loss per share of $0.04. Activities for the three months ended September 30, 2022, principally involved share-based payments of $293,255; salaries and benefits of $2,552,974; professional fees of $309,092, representing costs incurred for general legal, accounting and audit services; interest expenses of $1,130,931; depreciation of $735,699; amortization of intangible assets of $1,423,030, office and general of $2,865,629; and cost of services of $2,869,087 which was offset by data services revenue of $7,189,494 and interest income of $3,205.
9) The Company's net loss totaled $4,214,092 for the three months ended June 30, 2022, with basic and diluted loss per share of $0.04. Activities for the three months ended June 30, 2022, principally involved share-based payments of $165,373; salaries and benefits of $2,806,240; professional fees of $1,385,549, representing costs incurred for general legal, accounting and audit services and the Company's acquisition of A&L Canada Laboratories; interest expenses of $348,461; depreciation of $473,782; amortization of intangible assets of $135,010, office and general of $2,133,336; and cost of services of $2,015,204 which was offset by data services revenue of $5,183,378 and interest income of $13,492.
10) The Company's net loss totaled $3,549,878 for the three months ended March 31, 2022, with basic and diluted loss per share of $0.04. Activities for the three months ended March 31, 2022, principally involved share-based payments of $447,306; salaries and benefits of $1,855,371; professional fees of $251,107, representing costs incurred for general legal, accounting and audit services; interest expenses of $46,485; depreciation of
Page 11
DEVERON CORP.
Management's Discussion and Analysis (REVISED)
Period Ended June 30, 2024
Dated: September 15, 2025
$310,725; amortization of intangible assets of $118,964, office and general of $1,246,550; and cost of services of $669,287 which was offset by data services revenue of $1,406,961 and interest income of $5,683.
11) Per share amounts are rounded to the nearest cent, therefore aggregating quarterly amounts may not reconcile to year-to-date per share amounts.
Key Performance Indicators
The Company monitors a number of key performance indicators to evaluate performance. Some of the key performance indicators used by management are recognized under IFRS Accounting Standards, whereas others are non-IFRS measures and are not recognized under IFRS Accounting Standards. These non-IFRS measures are provided as additional information to complement the IFRS Accounting Standards measures by providing further understanding of our results of operations from management's perspective. We believe that non-IFRS financial measures are useful to investors and others in assessing our performance; however, these measures should not be considered as a substitute for reported IFRS Accounting Standards measures nor should they be considered in isolation. As these measures are not recognized measures under IFRS Accounting Standards, they do not have a standardized meaning prescribed by IFRS Accounting Standards and therefore may not be comparable to similar measures presented by other companies. For a reconciliation of the non-IFRS measures to the most directly comparable measure calculated in accordance with IFRS Accounting Standards, see section entitled "Non-IFRS Measures" below.
IFRS Accounting Standards Measures
Revenue
The Company generates revenue by providing data collection, testing and analytics services to the agricultural industry in Canada and the United States. Contracts for the Company's services, including carbon services, soil sampling, drone data etc., is based on the collection of on-farm data through the Company's network of third party and in-house data technicians. The Company's products and services are also sold through dealers, affiliates and other companies that partner with the Company in certain regions.
Cost of Services
Cost of services includes agronomic services and laboratory fees, salaries and benefits, software and processing fees, employee-related expenses, subcontractor costs, and vehicle and travel-related expenses that are directly related to the product and services that the Company provides.
Gross Margin
Gross margin reflects our revenue less cost of services.
Operating expenses
Operating expenses consist primarily of salaries and benefits, office and general, share-based payments, depreciation and amortization among others. Salaries and benefits include employee related expenses for our sales and operations, general and administrative, and finance teams.
Office and general expenses consist primarily of travel, short-term rent, corporate and public relations, software subscriptions, bank charges, bad debts and insurance-related expenses among others.
Page 12
DEVERON CORP.
Management's Discussion and Analysis (REVISED)
Period Ended June 30, 2024
Dated: September 15, 2025
Non-IFRS Measures
Adjusted EBITDA
Adjusted EBITDA is a supplemental measure used by management and other users of Deveron's audited consolidated financial statements, including Deveron's lenders and investors, to assess the financial performance of the Company's business without regard to financing methods or capital structure. Adjusted EBITDA is also a key metric that management uses prior to execution of any strategic investing or financing opportunity. For example, management uses Adjusted EBITDA as a measure in determining the value of acquisitions, expansion opportunities, and dispositions. In addition, Adjusted EBITDA is utilized by financial institutions to measure borrowing capacity. The Company believes that Adjusted EBITDA is useful to management, lenders, and investors in assessing the underlying performance of its ongoing operations and its ability to generate cash flows to fund its cash requirements.
The Company defines Adjusted EBITDA as IFRS net loss excluding interest expense, depreciation and amortization expense, share-based payments, income tax expense, acquisition and integration costs, and impairment of goodwill and intangible assets, property, plant, and equipment and right-of-use assets ("ROU"), and change in Non-Controlling Interest ("NCI") put obligation.
The following table reconciles Adjusted EBITDA to Net loss for the periods indicated:
| For the year ended June 30, 2024 | For the six months ended June 30, 2023 | For the year ended December 31, 2022 | |
|---|---|---|---|
| IFRS Net (Loss) Income | $ (56,358,446) | $ (13,701,606) | $ (8,573,905) |
| Interest | 3,495,841 | 2,600,091 | 3,368,346 |
| Depreciation & Amortization | 7,941,525 | 3,588,200 | 4,830,484 |
| Share-based payments | 1,064,118 | 900,841 | 1,147,082 |
| Income Taxes | 1,761,362 | 120,041 | 399,196 |
| Change in NCI put obligation | 839,664 | 3,296,586 | 1,050,506 |
| Impairment Charges | 43,132,423 | - | - |
| Adjusted EBITDA (Loss) | $ 1,876,487 | $ (3,195,847) | $ 2,221,709 |
| For the three months ended | |||
| --- | --- | --- | |
| June 30, 2024 | June 30, 2023 | ||
| IFRS Net Loss | $ (47,622,885) | $ (7,567,227) | |
| Interest | 629,996 | 1,466,431 | |
| Depreciation & Amortization | 2,366,978 | 1,796,018 | |
| Share-based payments | 218,797 | 337,055 | |
| Income Taxes | 1,035,480 | 98,872 | |
| Change in NCI put obligation | (1,040,498) | 4,056,258 | |
| Impairment Charges | 43,132,423 | ||
| Adjusted EBITDA (Loss) | $ (1,279,709) | $ 187,407 |
DEVERON CORP.
Management's Discussion and Analysis (REVISED)
Period Ended June 30, 2024
Dated: September 15, 2025
Selected Financial Information
Certain selected financial information is set out below:
| For the year ended | For the six months ended | For the year ended | |
|---|---|---|---|
| June 30, 2024 | June 30, 2023 | December 31, 2022 | |
| Total revenues | $ 35,316,939 | $ 14,265,009 | $ 28,923,133 |
| Gross margin | 23,608,995 | 9,392,029 | 19,951,841 |
| Gross margin % | 66.8 % | 65.8 % | 69.0 % |
| Operating expenses | 78,206,079 | 22,973,594 | 28,126,550 |
| Adjusted EBITDA (loss) | 1,876,487 | (3,195,847) | (827,268) |
| Net loss | $ (56,358,446) | $ (13,701,606) | $ (8,573,905) |
| Basic and diluted net loss per common share | $ (0.37) | $ (0.10) | $ (0.07) |
| Weighted average common shares outstanding | 156,786,972 | 142,087,346 | 116,387,677 |
| For the three months ended | |||
| --- | --- | --- | --- |
| June 30, 2024 | June 30, 2023 | % Change | |
| Total revenues | $ 6,836,912 | $ 8,906,469 | (23)% |
| Gross Margin | 4,002,349 | 6,498,290 | (38)% |
| Gross Margin % | 58.5 % | 73.0 % | (15)% |
| Operating Expenses | 50,507,989 | 13,966,645 | 262 % |
| Adjusted EBITDA (loss) | (44,412,132) | 187,407 | 23,798 % |
| Net loss | $ (47,541,120) | $ (7,567,227) | (528)% |
| Basic and diluted net loss per common share | $ (0.30) | $ (0.05) | |
| Weighted Average Common Shares Outstanding | 156,547,370 | 142,087,346 |
Page 14
DEVERON CORP.
Management's Discussion and Analysis (REVISED)
Period Ended June 30, 2024
Dated: September 15, 2025
Consolidated results of operations:
| For the three months ended June 30, 2024 | For the three months ended June 30, 2023 | For the year ended June 30, 2024 | For the six months ended June 30, 2023 | For the year ended December 31, 2022 | |
|---|---|---|---|---|---|
| Data collection | $ 1,138,370 | $ 2,213,869 | $ 7,121,590 | $ 3,109,729 | $ 6,888,215 |
| Data analytics | 5,698,542 | 6,692,600 | 28,195,349 | 11,155,280 | 22,034,918 |
| Total Revenue | 6,836,912 | 8,906,469 | 35,316,939 | 14,265,009 | 28,923,133 |
| Cost of services | (2,834,563) | (2,408,179) | (11,707,944) | (4,872,980) | (8,971,292) |
| Gross Margin | 4,002,349 | 6,498,290 | 23,608,995 | 9,392,029 | 19,951,841 |
| Expenses | |||||
| Salaries and benefits | 2,510,701 | 3,952,747 | 12,150,397 | 7,443,947 | 11,396,425 |
| Office and general | 2,241,557 | 2,085,369 | 8,789,039 | 4,504,702 | 8,583,834 |
| Share-based payments | 218,797 | 337,055 | 1,064,118 | 900,841 | 1,147,082 |
| Depreciation | 1,654,596 | 896,516 | 4,487,087 | 1,798,538 | 2,574,996 |
| Professional fees | 424,831 | 430,073 | 976,601 | 815,870 | 2,338,257 |
| Amortization of intangibles | 712,382 | 899,502 | 3,454,438 | 1,789,662 | 2,255,488 |
| Interest expense | 629,996 | 1,466,431 | 3,495,841 | 2,600,091 | 3,368,346 |
| Foreign exchange (gain)/loss | 2,581 | (65,913) | (50,650) | (75,453) | (249,007) |
| Interest income | (875) | (12,601) | (933) | (20,673) | (58,568) |
| Gain on disposition of PP&E | - | (78,792) | - | (80,517) | (181,326) |
| Gain on disposition of ROU | 21,500 | - | (131,946) | - | - |
| Impairment of goodwill | 43,132,423 | - | 43,132,423 | - | - |
| Change in NCI put obligation | (1,040,498) | 4,056,258 | 839,664 | 3,296,586 | (3,048,977) |
| Operating Expenses | 50,507,991 | 13,966,645 | 78,206,079 | 22,973,594 | 28,126,550 |
| Income tax expense | $ 1,035,480 | $ 98,872 | $ 1,761,362 | $ 120,041 | $ 399,196 |
| Net loss for the period | $ (47,541,122) | $ (7,567,227) | $ (56,358,446) | $ (13,701,606) | $ (8,573,905) |
Discussion of operations
Three months ended June 30, 2024, compared with three months ended June 30, 2023
Deveron's net loss totaled $47,541,121 for three months ended June 30, 2024, with basic and diluted loss per share of $0.30. This compares with a net loss of $7,567,227 with basic and diluted loss per share of $0.05 for the three months ended June 30, 2023. The increase of $39,973,894 in net loss was principally due to the following:
- Total revenues decreased by $2,069,557 for the three months ended June 30, 2024, compared to the three months ended June 30, 2023. Data collections revenue decreased by $1,075,499 and Data analytics revenue decreased by $994,058. Decline is attributable to discontinuance of servicing carbon programs.
- Cost of services increased by $426,384 for the three months ended June 30, 2024, compared to the three months ended June 30, 2023. The increase in cost of services is due to reallocation of services to the cost of services line that previously was reported in salaries and benefits, to enhance our measurement of servicing revenue.
Page 15
DEVERON CORP.
Management's Discussion and Analysis (REVISED)
Period Ended June 30, 2024
Dated: September 15, 2025
- Professional fees decreased by $5,242 for the three months ended June 30, 2024, compared to the three months ended June 30, 2023. The decrease is attributable to a reduction in related expenses.
- Office and general increased by $156,185 for the three months ended June 30, 2024 compared to the three months ended June 30, 2023. The increase is attributable to the corporation's restructuring efforts enacted in December 2023.
- Salaries and benefits decreased by $1,442,046 for the three months ended June 30, 2024, compared to the three months ended June 30, 2023. The decrease is attributable to cost saving restructuring done during the prior quarters.
- Depreciation increased by $758,080 for the three months ended June 30, 2024, compared to the three months ended June 30, 2023. The increase is attributable to depreciation recorded on equipment, land and building, drones, vehicles and right-of-use assets acquired during the current and prior years.
- Intangible amortization decreased by $187,120 for the three months ended June 30, 2024, compared to the three months ended June 30, 2023. The increase primarily relates to the acquisitions of Agri-Labs, A&L, and Frontier Labs in the prior year.
- Impairment charges related to goodwill increased by $43,132,423 for the three months ended June 30, 2024, compared to the three months ended June 30, 2023. The increase arose from the year-end audit of the financial statements ending June 30, 2024, resulting in an impairment loss for the period.
- Share-based payments decreased by $118,258 for the three months ended June 30, 2024, compared to the three months ended June 30, 2023. The decrease is due to the timing of expensing the estimated fair value of stock options granted in prior and current periods. The Company expenses its stock options in accordance with the vesting terms of the stock options granted.
- Change in the NCI put/call obligation decreased by $5,096,756 for the three months ended June 30, 2024, compared to the three months ended June 30, 2023. The decrease is due to the timing of revaluation of the acquired lab asset, and the change in EBITDA at A&L Labs. The company revalued the expense using an independent valuation expert to arrive at the fair market value of the obligation as at June 30, 2024.
- All other expenses related to general working capital expenditures.
Year ended June 30, 2024, compared with six months ended June 30, 2023
Deveron's net loss totaled $56,358,446 for year ended June 30, 2024, with basic and diluted loss per share of $0.37. This compares with a net loss of $13,701,606 with basic and diluted loss per share of $0.10 for the six months ended June 30, 2023. The increase of $42,656,840 was principally due to the following:
- Total revenues increased by $21,051,930 for the year ended June 30, 2024, compared to the six months ended June 30, 2023. Data collections revenue decreased by $4,011,861. Data analytics revenue increased by $17,040,069. The decrease in data collections revenue is due to Deveron discontinuing servicing of carbon programs. The increase in Data Analytics revenue is due to the comparative period covering the complete year including the primary testing season, compared to prior year comparatives.
- Cost of services increased by $6,834,964 for the year ended June 30, 2024, compared to the six months ended June 30, 2023. The increase in cost of services is due to reallocation of services to the cost of services line that previously was reported in salaries and benefits, to enhance our measurement of servicing revenue.
Page 16
DEVERON CORP.
Management's Discussion and Analysis (REVISED)
Period Ended June 30, 2024
Dated: September 15, 2025
- Salaries and benefits increased by $4,706,450 for the year ended June 30, 2024, compared to the six months ended June 30, 2023. The increase is attributable to the comparative period including an additional 6 months, but monthly salaries and benefits are lower due to cost restructuring enacted in the period.
- Office and general increased by $4,284,337 for the year ended June 30, 2024 compared to the six months ended June 30, 2023. The increase to the comparative period including an additional 6 months, but monthly expenses have declined as a result of the company's restructuring efforts.
- Depreciation increased by $2,688,549 for the year ended June 30, 2024, compared to the six months ended June 30, 2023. The increase is attributable to depreciation recorded on equipment, land and building, drones, vehicles and right-of-use assets over a 12-month period vs a 6-month period.
- Professional fees increased by $160,731 for the year ended June 30, 2024, compared to the six months ended June 30, 2023. The increase is attributable to the timing of professional fees and expenses incurred in relation to obtaining a shareholder settlement.
- Intangible amortization increased by $1,664,776 for the year ended June 30, 2024, compared to the six months ended June 30, 2023. The increase is due to the timing of reporting for the period.
- Interest expense increased by $895,750 for the year ended June 30, 2024, compared to the six months ended June 30, 2023. The year over year increase is attributable to the inclusion of 6 months of additional interest per the reporting periods.
- Impairment expense increased by $43,132,423 for the year ended June 30, 2024, compared to the six months ended June 30, 2023. The year over year increase is attributable to the work performed as part of the annual impairment testing. The impairment expense represents a write down of the goodwill and intangible assets related to our acquired assets.
Deveron's total assets at June 30, 2024 were $56,858,833 (June 30, 2023 - $109,228,245) against total liabilities of $74,702,099 (June 30, 2023 - $72,610,537). The decrease in total assets of $52,369,412 resulted primarily from the right down of goodwill and intangible assets, as part of our annual impairment testing. The Company's current liabilities of $42,395,344 exceeds current assets of $5,364,381 at June 30, 2024.
Year ended June 30, 2024, compared with year ended December 31, 2022
Deveron's net loss totaled $56,358,446 for year ended June 30, 2024, with basic and diluted loss per share of $0.37. This compares with a net loss of $8,573,905 with basic and diluted loss per share of $0.07 for the twelve months ended December 31, 2022. The increase of $47,784,541 was principally due to the following:
- Total revenues increased by $6,393,806 for the year ended June 30, 2024, compared to the twelve months ended December 31, 2022. Data collections revenue increased by $233,375. Data analytics revenue increased by $6,160,431. The revenue increases are driven in part by full year operations in FY2024 of many of our calendar 2022 acquisitions. We are servicing more fertility acres through collection and testing offerings which has driven top line growth.
- Cost of services increased by $2,736,652 for the year ended June 30, 2024, compared to the twelve months ended December 31, 2022. The increase is due to reallocation of services to the cost of services line that previously was reported in salaries and benefits, to enhance our measurement of servicing revenue. There were also increases in our supply and shipping related costs to service the increase in revenues.
- Salaries and benefits increased by $753,972 for the year ended June 30, 2024, compared to the twelve months
Page 17
DEVERON CORP.
Management's Discussion and Analysis (REVISED)
Period Ended June 30, 2024
Dated: September 15, 2025
ended December 31, 2022. The increase is attributable to overall growth in revenue serviced, but we continue to streamline efficient use of full and part time staff. This resulted in only a 6.62% increase relative to revenue growing by 22.11% in the same comparable period.
- Office and general increased by $205,205 for the year ended June 30, 2024 compared to the twelve months ended December 31, 2022. The increase is minor relative to revenue growth which highlights our cost management efforts.
- Depreciation increased by $1,912,091 for the year ended June 30, 2024, compared to the twelve months ended December 31, 2022. The increase is attributable to depreciation recorded on equipment, land and building, drones, vehicles and ROU assets acquired since December 2022.
- Professional fees decreased by $1,361,656 for the year ended June 30, 2024, compared to the twelve months ended December 31, 2022. The decrease is attributable to costs incurred related to FY2022 acquisitions and it's associated legal, financial, and consulting fees.
- Intangible amortization increased by $1,198,950 for the year ended June 30, 2024, compared to the twelve months ended December, 2022. The increase is due to write-offs of intangible assets that were deemed to be impaired and no longer providing economic benefits.
- Interest expense increased by $127,495 for the year ended June 30, 2024, compared to the twelve months ended December 31, 2022. The year over year increase is attributable to interest on convertible debentures, lease & loan liabilities and interest on debt.
- Impairment expense increased by $43,132,423 for the year ended June 30, 2024, compared to the twelve months ended December 31, 2022. The year over year increase is attributable to the work performed as part of the annual impairment testing. It was determined that there was a significant decline in projected future cash flows from certain business entities, resulting in a write down of goodwill that arose from acquired entities.
Deveron's total assets at June 30, 2024 were $56,858,833 (December 31, 2022 - $116,727,088) against total liabilities of $74,702,099 (December 31, 2022 - $72,724,930). The decrease in total assets of $59,868,255 resulted primarily from the right down of goodwill and intangible assets, as part of our annual impairment testing as well as our divestment in various non-cash generating ROU assets as a part of cost optimization strategies. The Company's current liabilities of $42,395,344 exceeds current assets of $5,364,381 at June 30, 2024.
Six months ended June 30, 2023, compared with year ended December 31, 2022
Deveron's net loss totaled $13,701,606 for six months ended June 30, 2023, with basic and diluted loss per share of $0.10. This compares with a net loss of $8,573,905 with basic and diluted loss per share of $0.07 for the year ended December 31, 2022. The decrease of $5,127,701 was principally due to the following:
- Total revenues decreased by $10,559,812 for the six months ended June 30, 2023, compared to the year ended December 31, 2022. Data collections revenue decreased by $3,109,729. Data analytics revenue decreased by $10,879,638. The revenue decreases are driven in part by full year operations in FY2022 of compared to the six months operations in FY2023.
- Cost of services decreased by $4,098,312 for the six months ended June 30, 2023, compared to the year ended December 31, 2022. The change is due to reallocation of services to the cost of services line that previously was reported in salaries and benefits, to enhance our measurement of servicing revenue.
Page 18
DEVERON CORP.
Management's Discussion and Analysis (REVISED)
Period Ended June 30, 2024
Dated: September 15, 2025
- Salaries and benefits decreased by $3,952,478 for the six months ended June 30, 2023, compared to the year ended December 31, 2022. The decrease is attributable to the change in fiscal year end as well as the continued effort to streamline efficient use of full and part time staff.
- Office and general decreased by $4,079,132 for the six months ended June 30, 2023 compared to the year ended December 31, 2022. The decrease is attributable to the change in fiscal year end as well as continued cost management efforts.
- Depreciation increased by $776,458 for the six months ended June 30, 2023 compared to the year ended December 31, 2022. The decrease is attributable to the change in fiscal year end as well as less capital asset acquisitions during the current fiscal year.
- Professional fees decreased by $1,522,387 for the six months ended June 30, 2023 compared to the year ended December 31, 2022. The decrease is attributable to costs incurred related to FY2022 acquisitions and it's associated legal, financial, and consulting fees.
- Intangible amortization decreased by $1,198,950 for the year ended June 30, 2024, compared to the twelve months ended December, 2022. The decrease is due to write-offs of intangible assets that were deemed to be impaired and no longer providing economic benefits.
- Interest expense decreased by $768,255 for the six months ended June 30, 2023 compared to the year ended December 31, 2022. The decrease is attributable to interest on convertible debentures, lease & loan liabilities and interest on debt.
Cash Flow
At June 30, 2024, the Company had cash and cash equivalents of $1,193,894. The decrease in cash of $1,770,826 from the June 30, 2023 cash balance of $2,964,720 was a result of cash inflow in operating activities of $4,496,104, cash outflow from investing activities of $1,484,141 and cash outflow from financing activities of $4,782,789. Operating activities were affected by depreciation of $4,487,087, amortization of intangibles of $3,454,438, share-based payments of $1,064,118, interest expense of $3,495,841, gain on disposition of property, plant and equipment of $131,946, change in NCI put obligation of $839,664, foreign exchange and other of $939,569 and net change in non-cash working capital balances of $3,691,132 because of a decrease in accounts receivable, prepaids and other receivables of $1,483,716, an increase in accounts payable, accrued and other current liabilities of $2,107,101 and income tax paid of $100,315. Investing activities were affected by the cash payment of $91,647 for the contingent consideration from previous acquisitions, $1,456,441 for the purchase of property, plant and equipment, $1,456,441 for the purchase of right-of-use assets and offset by $63,947 for the proceeds on the disposition of right-of-use assets. Financing activities were affected by proceeds of convertible debentures net of fees of $2,234,000, and proceeds from related party of $36,474, and offset by loan repayments of $200,000, share issue costs of $13,000, lease payments of $2,404,281 as well as credit facility principal and interest payments of $2,664,776.
At June 30, 2023, the Company had cash and cash equivalents of $2,964,720. The decrease in cash of $2,860,091 from the December 31, 2022 cash balance of $5,824,811 was a result of cash outflow in operating activities of $2,609,544, cash outflow from investing activities of $1,864,853 and cash inflow from financing activities of $1,614,306. Operating activities were affected by depreciation of $1,798,538, amortization of intangibles of $1,789,662, share-based payments of $900,841, interest expense of $2,600,091, gain on disposition of property, plant and equipment of $80,517, change in NCI put obligation of $3,296,586, foreign exchange and other of $278,143 and net change in non-cash working capital balances of $944,963 because of a decrease in accounts receivable, prepaids and other receivables of $2,392,595, and an increase in accounts payable, accrued and other current liabilities of $1,071,723. Investing activities were affected by the cash payment of $833,527 for the
Page 19
Page 20
DEVERON CORP.
Management's Discussion and Analysis (REVISED)
Period Ended June 30, 2024
Dated: September 15, 2025
contingent consideration from previous acquisitions, and $1,138,813 for the purchase of property and equipment. Financing activities were affected by lease payments of $962,486 as well as credit facility principal and interest payments of $2,406,506.
At December 31, 2022, the Company had cash and cash equivalents of $5,824,811. The decrease in cash of $1,042,319 from the December 31, 2021 cash balance of $6,867,130 was a result of cash outflow in operating activities of $9,998,105, cash outflow from investing activities of $43,450,554 and cash inflow from financing activities of $52,406,340. Operating activities were affected by depreciation of $2,574,996, amortization of intangibles of $2,255,488, share-based payments of $1,147,082, interest expense of $3,368,346, gain on disposition of property, plant and equipment of $181,326, foreign exchange and other of $452,489 and net change in non-cash working capital balances of $7,486,516 because of an increase in accounts receivable, prepaids and other receivables of $3,137,771, a decrease in accounts payable, accrued and other current liabilities of $3,145,169, lease payments of $-, and interest paid of $1,203,576. Investing activities were affected by the cash payment of $546,483 for the acquisition of Agri-Labs, $34,796,783 for the acquisition of A&L (offset with $- cash acquired), $1,698,746 for the contingent consideration of Agronomic Solutions, $5,491,738 for the purchase of property and equipment, and offset by $212,163 for the proceeds from the sale of property plant and equipment. Financing activities were affected by the cash acquired by convertible debentures net of fees of $9,604,237, cash acquired by credit facilities of $31,603,189, the public offering of $11,500,000, issuance of common shares for private placements of $3,300,000 exercise of warrants and options totaling $2,537,715 and $683,250 respectively. Financing activities were offset by loan repayments of $3,334,276, share issue costs of $955,648, lease payments of $790,574 and interest costs of $1,741,553.
Liquidity and Financial Position
As at June 30, 2024, the Company had a working capital deficit of $37,030,963 (June 30, 2023 – working capital deficit of $4,782,626, December 31, 2022 - $8,573,905). The Company's continuing operations have previously been dependent on its ability to secure equity and/or debt financing.
The Company expects financing through the completion of equity transactions such as equity and debt offerings. There is no assurance that future equity capital will be available to the Company in the amounts or at the times desired by the Company or on terms that are acceptable to it, if at all. See "Cautionary Note Regarding Forward-Looking Statements", "Trends and Economic Conditions" and "Risk Factors".
Deveron intends to focus on the following business objectives:
a) Continue marketing service offering through current sales network; and
b) Continue to work with current and future partners on data integration, testing, and analytics
Off-Balance-Sheet Arrangements
As of the date of this MD&A, the Company does not have any off-balance-sheet arrangements that have, or are reasonably likely to have, a current or future effect on the results of operations or financial condition of the Company, including, and without limitation, such considerations as liquidity and capital resources.
Share Capital
As at the date of this MD&A, the Company had a total of 213,444,888 common shares issued and outstanding.
DEVERON CORP.
Management's Discussion and Analysis (REVISED)
Period Ended June 30, 2024
Dated: September 15, 2025
Capital Management
The Company includes equity, comprising issued share capital, reserves, accumulated other comprehensive income and deficit, equity component of the convertible debentures, and non-controlling interest in the definition of capital, which as at June 30, 2024, totaled $17,843,266 (June 30, 2023 - $36,617,708, December 31, 2022 - $44,002,158).
The Company's primary objective with respect to its capital management is to ensure that it has sufficient cash resources to fund its acquisition strategy, technology development, and research and development costs devoted to identifying and commercializing new services. To secure the additional capital necessary to continue with its activities, the Company may attempt to raise additional funds through the issuance of debt or equity.
The Company monitors its capital structure and makes adjustments according to market conditions in an effort to meet its objectives given the current outlook of the business and industry in general. The Company may manage its capital structure by issuing new shares and adjusting capital spending. The capital structure is reviewed by management and the Board on an ongoing basis.
There were no changes in the Company's objective, process, policies and approach to capital management during the year ended June 30, 2024, the six months ended June 30, 2023 and twelve months ended December 31, 2022. The Company is not subject to any capital requirements imposed by a lending institution or regulatory body.
Financial Instruments
The Company's activities expose it to a variety of financial risks: credit risk, liquidity risk and market risk (including interest rate risk, foreign currency risk and price risk).
Credit risk
Credit risk is the risk of loss associated with a counterparty's inability to fulfill its payment obligations. The Company's credit risk is primarily attributable to cash and cash equivalents and amounts receivable. Cash is held with a Canadian chartered bank, from which management believes the risk of loss to be minimal.
Amounts receivable consists of sales tax receivable from government authorities in Canada and trades receivable. Sales tax receivable are in good standing as of June 30, 2024. Management believes that the credit risk with respect to these amounts receivable is minimal. As at June 30, 2024, the provision for amounts receivable is $38,747 (June 30, 2023 - $223,616, December 31, 2022 - $252,341).
Liquidity risk
Liquidity risk is the risk that the Company will not have sufficient cash resources to meet its financial obligations as they come due. The Company's liquidity and operating results may be adversely affected if its access to the capital market is hindered, whether as a result of a downturn in stock market conditions generally or matters specific to the Company. The Company generates cash flow primarily from its operating and financing activities. As at June 30, 2024, the Company had cash and cash equivalents of $1,193,894 (June 30, 2023 - $2,964,720; December 31, 2022 - $5,824,811) to settle current liabilities of $42,395,344 (June 30, 2023 - $13,401,549; December 31, 2022 - $15,226,577). All of the Company's financial liabilities have contractual maturities of less than 90 days and are subject to normal trade terms. The Company regularly evaluates its cash position to ensure preservation and security of capital as well as liquidity.
The Company obtained its financing through the equity and debt market. If the Company cannot obtain the necessary financing to fund its operating activities, the Company might not be able to continue as a going concern entity.
Page 21
DEVERON CORP.
Management's Discussion and Analysis (REVISED)
Period Ended June 30, 2024
Dated: September 15, 2025
Market risk
Market risk is the risk of loss that may arise from changes in market factors such as interest rates, foreign exchange rates and equity price.
Interest rate risk
The Company has cash balances. The Company's current policy is to invest surplus cash in high yield savings accounts with a Canadian chartered banks and US banks with which it keeps its bank accounts. As at June 30, 2024, the Company did not have any surplus cash in high yield savings accounts. The Company periodically monitors the investments it makes and is satisfied with the creditworthiness of its Canadian chartered bank. The Company is exposed to interest rate risk through its loans payable, borrowings under credit facility, promissory notes and convertible debentures.
Foreign currency risk
The Company's functional and presentation currency is the Canadian dollar. Certain of the Company's revenues and expenses are incurred in USD and are therefore subject to gains and losses due to fluctuations against the functional currency.
Price risk
The Company is exposed to price risk with respect to equity prices and commodity prices. Equity price risk is defined as the potential adverse impact on the Company's loss due to movements in individual equity prices or general movements in the level of stock market.
Sensitivity analysis
Based on management's knowledge and experience of the financial markets, the Company believes the following movements are reasonably possible over a twelve month period:
The Company is exposed to foreign currency risk on fluctuations related to cash and cash equivalents and amounts receivable and amounts payable and other liabilities that are denominated in USD. As at June 30, 2024, had the USD weakened/strengthened by 10% against the CAD with all other variables held constant, the Company's consolidated statements of comprehensive loss for the year ended June 30, 2024 would have been approximately $788,631 higher/lower as a result of foreign exchange losses/gains on translation of non-CAD denominated financial instruments. Similarly, as at June 30, 2024, shareholders' equity would have been approximately $381,157 higher/lower had the USD weakened/strengthened by 10% against the CAD as a result of foreign exchange losses/gains on translation of non-CAD denominated financial instruments.
Risk Factors
Deveron operates in evolving markets, which makes it difficult to evaluate its business and future prospects.
Deveron cannot accurately predict the extent to which demand for its services will increase, if at all. The challenges, risks and uncertainties frequently encountered by companies in rapidly evolving markets could impact Deveron's ability to do the following:
- generate sufficient revenue to maintain profitability;
- acquire and maintain market share;
- achieve or manage growth in its operations;
Page 22
DEVERON CORP.
Management's Discussion and Analysis (REVISED)
Period Ended June 30, 2024
Dated: September 15, 2025
- develop and renew contracts;
- attract and retain other highly-qualified personnel;
- successfully develop and commercially market new services;
- adapt to new or changing policies; and
- access additional capital when required and on reasonable terms.
If Deveron fails to address these and other challenges, risks and uncertainties successfully, its business, results of operations and financial condition would be materially harmed.
Climate Change
Global climate change continues to attract considerable public, scientific and regulatory attention. Governments and regulatory bodies at the international, national, regional and local levels have introduced or may introduce legislative changes to respond to the potential impacts of climate change. Additional government action to regulate climate change, including regulations on carbon emissions and energy use, could increase direct and indirect costs to the Company's operations and may have a material adverse impact on the Company.
Based on risk assessments conducted by the Company, climate change is not an immediate material risk faced by the Company. However, as time goes on, it will likely have an impact on how the Company conducts its business.
Public Company Obligations
The Company's business is subject to evolving corporate governance and public disclosure regulations that have increased both the Company's compliance costs and the risk of non-compliance, which could have a material adverse impact on the Company's share price.
The Company is subject to changing rules and regulations promulgated by a number of governmental and self-regulated organizations, including the Canadian Securities Administrators, the TSXV, and the International Accounting Standards Board. These rules and regulations continue to evolve in scope and complexity creating many new requirements. The Company's efforts to comply with rules and obligations could result in increased general and administration expenses and a diversion of management time and attention from revenue-generating activities.
Disclosure of Internal Controls
Management has established processes to provide them with sufficient knowledge to support representations that they have exercised reasonable diligence to ensure that (i) the unaudited condensed interim consolidated financial statements do not contain any untrue statement of material fact or omit to state a material fact required to be stated or that is necessary to make a statement not misleading in light of the circumstances under which it is made, as of the date of and for the periods presented by the unaudited condensed interim consolidated financial statements; and (ii) the unaudited condensed interim consolidated financial statements fairly present in all material respects the financial condition, results of operations and cash flows of the Company, as of the date of and for the periods presented.
In contrast to the certificate required for non-venture issuers under National Instrument 52-109 Certification of Disclosure in Issuers' Annual and Interim Filings ("NI 52-109"), the Company uses the Venture Issuer Basic Certificate, which does not include representations relating to the establishment and maintenance of disclosure controls and procedures ("DC&P") and internal control over financial reporting ("ICFR"), as defined in NI 52-109. In particular, the certifying officers filing this certificate are not making any representations relating to the establishment
Page 23
DEVERON CORP.
Management's Discussion and Analysis (REVISED)
Period Ended June 30, 2024
Dated: September 15, 2025
and maintenance of:
i. controls and other procedures designed to provide reasonable assurance that information required to be disclosed by the issuer in its annual filings, interim filings or other reports filed or submitted under securities legislation is recorded, processed, summarized and reported within the time periods specified in securities legislation; and
ii. a process to provide reasonable assurance regarding the reliability of financial reporting and the preparation of unaudited condensed interim consolidated financial statements for external purposes in accordance with the issuer's generally accepted accounting principles (IFRS). The Company's certifying officers are responsible for ensuring that processes are in place to provide them with sufficient knowledge to support the representations they are making in this certificate.
Investors should be aware that inherent limitations on the ability of certifying officers of a venture issuer to design and implement on a cost-effective basis DC&P and ICFR as defined in NI 52-109 may result in additional risks to the quality, reliability, transparency and timeliness of interim and annual filings and other reports provided under securities legislation.
Events After The Reporting Period
a) On May 14, 2024, the Company received $200,000 and a further $250,000 on June 19, 2024, for a total of $450,000 as a non-interest bearing, bridge loan from a shareholder to fund ongoing operations. This amount was to be settled as part of the private placement settled as per the terms outlined.
b) On August 15, 2024, the Company announced that it had reached a settlement agreement ("Settlement Agreement") with the principal of 27436130 Ontario Inc., Greg Patterson. Pursuant to the Settlement Agreement, the Company intends to complete a non-brokered private placement offer for units of the Company at an offering price of $0.07 per unit for net proceeds of up to $3,000,000. Each unit shall be comprised of one common share in the capital of the Company and one half of one common share purchase warrants excisable for 18 months at an exercise price of at least $0.10. As part of the Settlement Agreement:
- Greg Patterson agrees to withdraw the Requisition and, along with the Settlement Parties, agrees to customary standstill covenants related to, among other things, the solicitation of proxies and the voting of securities of the Company, until the later of the day after the 2025 annual meeting of shareholders of the Company or the repayment of the Promissory Notes.
- The repayment of the Promissory Notes will be extended 30 months and the relevant Settlement Parties agree to work towards development of a reasonable repayment plan.
- Greg Patterson will have the right to have one nominee (the "Initial Nominee") serve on the board of directors of the Company (the "Board") until the later of the 2025 annual meeting of shareholders of the Company or the repayment of the amounts outstanding under the Promissory Notes (the "Outside Date").
- The Board will be fixed at five persons and Ron Patterson, as the initial nominee of Greg Patterson, will be appointed to the Board along with Albert Contardi. Upon the occurrence of certain specified events, Greg Patterson shall be entitled to replace Albert Contardi with an additional nominee to the Board.
- To facilitate the transition to the new Board, Bill Linton, Chris Irwin, Joelle Faulkner and Tim Close agree to resign as directors of the Company such that the new Board will be comprised of Greg Patterson, Ron Patterson (who shall serve as Chair of the Board), Roger Dent, David MacMillan and Albert Contardi.
Page 24
DEVERON CORP.
Management's Discussion and Analysis (REVISED)
Period Ended June 30, 2024
Dated: September 15, 2025
- The Settlement Parties agree to ensure that the Company does not take certain actions relating to, among other things, certain financings and acquisitions and dispositions, changes to the management of the Company or its subsidiaries or material changes in the business of the Company or its subsidiaries, without the approval of at least four directors.
c) On September 4, 2024, the Company announced that it had closed the first tranche of a non-brokered private placement through the issuance of 22,805,991 units in the capital of the Company at a price of $0.07 per unit for gross proceeds of $1,596,419. Each unit is comprised of one common share in the capital of the Company and one half of one whole Common Share Purchase warrant. Each warrant entitles the holder thereof to acquire one Common Share at a price of $0.10 per Common Share until the date that is eighteen (18) months from the date of issuance. In connection with the Offering, the Company paid StephenAvenue Securities Inc., an aggregate of $35,749.99 and issued an aggregate of 510,713 broker warrants. Each Broker warrant entitles the holder thereof to acquire one Common Share at a price of $0.10 per Common Share for a period of 18 months from the date of issuance.
d) On September 16, 2024, the Company announced that it had closed the final tranche of a non-brokered private placement through the issuance of 21,991,300 units in the capital of the Company at a price of $0.07 per unit for gross proceeds of $1,539,391. Each unit is comprised of one common share in the capital of the Company and one half of one whole Common Share Purchase warrant. Each warrant entitles the holder thereof to acquire one Common Share at a price of $0.10 per Common Share until the date that is eighteen (18) months from the date of issuance. In connection with the Offering, the Company paid Canaccord Genuity Corp., an aggregate of $100,060 and issued an aggregate of 1,429,430 broker warrants. Each Broker warrant entitles the holder thereof to acquire one Common Share at a price of $0.10 per Common Share for a period of 18 months from the date of issuance.
e) On September 19, 2024, the Company announced that it has satisfied the conditions precedent to the settlement agreement (August 14, 2024), between the Company and certain parties. In accordance to the Settlement Agreement, each of Bill Linton, Chris Irwin, Joelle Faulkner and Tim Close have resigned as directors of the Company. Ron Patterson and Albert Contardi have been appointed as directors of the Company, which has been fixed at five directors. Ron Patterson has been appointed the Chair of the board of directors of the Company.
f) On October 4, 2024, the Company announced that it has settled an outstanding promissory note in the amount of $400,000 through the issuance of 5,714,285 Units, with each Unit being comprised of one common share and one-half of one whole common share purchase warrant. Each warrant entitles the holder thereof to acquire one Common Share at a price of $0.10 per Common Share until the date that is eighteen (18) months from the date of issuance.
g) On October 18, 2024, the Company announced that the Ontario Securities Commission has denied the Company's application for a voluntary management cease trade order ("MCTO") under National Policy 12-203 as the Company did not meet the criteria for an MCTO.
Additional Information
Additional information concerning the Company is available on Sedar+ at www.sedarplus.ca.
Page 25
DEVERON CORP.
Management's Discussion and Analysis (REVISED)
Period Ended June 30, 2024
Dated: September 15, 2025
Acquisition of Agri-Labs Inc.
On March 10, 2022, the Company entered into a definitive agreement to acquire the assets of Agri-Labs, Inc. ("Agri-Labs") a leading soil lab and agronomy company that services Indiana, Michigan, and Ohio (the "Agri-Labs Acquisition"). Agri-Labs conducts approximately 45,000 soil tests annually and provides clients with sampling services and prescription recommendations across 100,000 acres. As consideration for the Agri-Labs Acquisition, Deveron has agreed to:
- Pay Agri-Labs an initial cash payment of USD $420,000 upon signing of the Definitive Agreement, and USD $210,000 on each of the first two anniversaries of the signing of the Definitive Agreement, and
- Issue such number of common shares in the capital of the company equal to USD $180,000 at a price of $0.61 per common share upon receipt of the approval of the TSXV and an additional number of common shares equal to USD $90,000 at a price of $0.61 per common share on each of the first two anniversaries of the signing of the Definitive Agreement.
The allocation of the purchase price is as follows:
| Purchase price allocation | |
|---|---|
| Issuance of 375,000 common shares upon closing (i) | $ 228,750 |
| Cash payment | 546,483 |
| Deferred cash consideration | 536,674 |
| Additional 375,000 common shares to be issued (ii) | 228,750 |
| Contingent consideration (earnout) (iii) | 31,034 |
| Total consideration | $ 1,571,691 |
| Allocation of purchase price | |
| Property, plant and equipment | $ 274,260 |
| Goodwill | 822,900 |
| Intangible assets | 474,531 |
| Agri-labs net assets acquired | $ 1,571,691 |
For the purpose of determining the value of the purchase price consideration, the 375,000 common shares were valued at $0.61 per share based on Deveron's closing price as of March 9, 2022.
For the purpose of determining the value of the purchase price consideration, the 375,000 common shares to be issued were valued at $0.61 per share based on Deveron's closing price as of March 9, 2022 and was recorded as an addition to shares to be issued.
The earnout (cash-settled) has a fair value of $31,034 as of the date of acquisition and was recorded as "deferred and contingent consideration".
Page 26
DEVERON CORP.
Management's Discussion and Analysis (REVISED)
Period Ended June 30, 2024
Dated: September 15, 2025
Acquisition of A&L Canada Laboratories East, Inc
On May 20, 2022, the Company entered into a definitive agreement to acquire a 67% equity interest in A&L, with an option to purchase the remaining 33% following the three-year anniversary of closing, and an obligation to purchase the remaining 33% after five years ("A&L Acquisition"). A&L is the largest soil and tissue laboratory in Canada. As consideration for the A&L Acquisition, Deveron has:
- Paid A&L an initial cash payment of $37,833,750 upon signing of the Definitive Agreement;
- Paid A&L $4,926,600 in promissory notes. The promissory notes bear an interest of 7% per annum. The principal and any accrued and unpaid interest owing are due in full on May 20, 2023;
- Issued such number of common shares in the capital of the Company equal to $5,338,391 at a price of $0.39 per common share upon receipt of the approval of the TSXV
The allocation of the purchase price is as follows:
| Purchase price allocation | |
|---|---|
| Cash payment | $ 37,833,750 |
| Issuance of 13,688,182 common shares upon closing (i) | 5,338,391 |
| Deferred cash consideration | 4,926,600 |
| Total consideration | $ 48,098,741 |
Page 27
DEVERON CORP.
Management's Discussion and Analysis (REVISED)
Period Ended June 30, 2024
Dated: September 15, 2025
Allocation of purchase price
| Cash | $ 3,036,967 |
|---|---|
| Accounts receivable | 1,598,173 |
| Prepaid and other current assets | 500,857 |
| Investment in significantly influenced entities | 1,480,072 |
| Property, plant and equipment | 11,561,647 |
| Right-of-use assets | 1,092,352 |
| Goodwill | 44,796,104 |
| Intangible assets | 20,828,000 |
| Liabilities assumed | (6,453,550) |
| Deferred income taxes liability | (6,436,519) |
| Non-controlling interest | (23,905,362) |
| NCI put obligation | (12,966,726) |
| Equity reserves | 12,966,726 |
| A&L net assets acquired net of liabilities assumed (ii) | $ 48,098,741 |
For the purpose of determining the value of the purchase price consideration, the 13,688,182 common shares were valued at $0.39 per share in accordance with the May 20, 2022 closing share price.
Per IFRS 3, the acquirer has up to one year from the acquisition date (the "Measurement Period") to finalize the accounting for business combinations. The initial accounting for this transaction is not yet complete and as such, provisional amounts have been recognized as of the period end. During the Measurement Period, provisional amounts will be retrospectively adjusted to reflect new information obtained about facts and circumstances that existed as of the acquisition date and, if known, would have affected the measurement of the amounts recognized as of that date.
Deveron repaid $3,334,276 of long term debt held by A&L on the May 20, 2022 acquisition closing date.
Page 28
DEVERON CORP.
Management's Discussion and Analysis (REVISED)
Period Ended June 30, 2024
Dated: September 15, 2025
Acquisition of Frontier Labs Inc.
On October 27, 2022, the Company entered into a definitive agreement ("Definitive Agreement") to acquire the assets of Frontier Labs Inc. ("Frontier") a leading soil lab and agronomy company that services Indiana, Michigan, and Ohio (the "Frontier Acquisition").
As consideration for the Frontier Acquisition, Deveron has:
a. Paid Frontier an initial cash payment of USD $825,000 upon closing of the Frontier Acquisition;
b. Issued further payments in the aggregate of USD $412,500 on each of the first two anniversaries on the closing date of the Frontier Acquisition (the "Closing Date");
c. Issued 746,570 Common Shares in the capital of the company upon receipt of the final approval of the Frontier Acquisition; and
d. Issue 373,285 Common Shares at a price of $0.50 per Common Share on each of the first two anniversaries following the signing of the Definitive Agreement.
The allocation of the purchase price is as follows:
| Purchase price allocation | |
|---|---|
| Cash payment | $ 1,128,967 |
| Issuance of 746,570 common shares upon closing (i) | 373,375 |
| Deferred cash consideration | 1,128,967 |
| Additional 746,570 common shares to be issued (i) | 373,375 |
| Contingent consideration (earnout) (ii) | 482,333 |
| Total consideration | $ 3,487,017 |
| Allocation of purchase price | |
| Property, plant and equipment | 367,466 |
| Goodwill | 1,871,731 |
| Intangible assets | 1,247,820 |
| A&L net assets acquired net of liabilities assumed (ii) | $ 3,487,017 |
For the purpose of determining the value of the purchase price consideration, the 746,570 common shares were valued at $0.50 per share in accordance with the October 31, 2022 share purchase agreement.
The earnout (cash-settled) has a fair value of $1,611,300 as of the date of acquisition and was recorded as "deferred and contingent consideration".
Page 29