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Direct Communication Solutions, Inc. Management Reports 2025
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Management Reports
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Direct Communication Solutions, Inc.
Management’s Discussion and Analysis
For the three months ended March 31, 2025
Amounts in United States dollars unless stated otherwise
Direct Communication Solutions, Inc.
Management's Discussion and Analysis
For the Three Months Ended March 31, 2025
United States dollars unless otherwise stated
MANAGEMENT'S DISCUSSION AND ANALYSIS
This Management's Discussion and Analysis of Direct Communication Solutions, Inc. (the "Company", "DCS", "we" and "our" refer to Direct Communication Solutions, Inc.) provides an analysis of the Company's performance and financial condition for the three months ended March 31, 2025. This management discussion and analysis should be read in conjunction with the Company's condensed consolidated interim financial statements and related notes thereto of the Company for the three months ended March 31, 2025 and 2024, and audited consolidated financial statements for the years ended December 31, 2024 and 2023 (the "Financial Statements"), which were prepared in accordance with IFRS Accounting Standards ("IFRS").
All amounts referred to in this management discussion and analysis are prepared in accordance with IFRS and presented in United States dollars (\$ or US\$), unless otherwise indicated. C$ refers to Canadian dollars.
The following information is prepared as of May 30, 2025.
Forward-looking Statements
This management discussion and analysis contains "forward-looking information" which may include, but is not limited to, statements with respect to the future financial or operating performances of the Company; revenues; the timing and amount of estimated future operating, capital and development expenditures and requirements for additional capital. Often, but not always, forward-looking information can be identified by the use of words such as "plans", "expects", "is expected", "budget", "scheduled", "estimates", "forecasts", "intends", "anticipates", or "believes", or variations (including negative variations) of such words and phrases, or state that certain actions, events or results "may", "could", "would", "might", or "will" be taken, occur or be achieved. Forward-looking statements involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of the Company to be materially different from any future results, performance or achievements expressed or implied by the forward-looking statements. Although the Company has attempted to identify important factors that could cause actual actions, events or results to differ materially from those described in forward-looking statements, there may be other factors that cause actions, events or results to differ from those anticipated, estimated or intended. Forward-looking statements contained herein are made as of the date of this management discussion and analysis based on the opinions and estimates of management, and the Company disclaims any obligation to update any forward-looking statements, whether as a result of new information, estimates or opinions, future events or results or otherwise. There can be no assurance that forward-looking statements will prove to be accurate, as actual results and future events could differ materially from those anticipated in such statements. Accordingly, potential investors should not place undue reliance on forward-looking statements.
Direct Communication Solutions, Inc.
Management's Discussion and Analysis
For the Three Months Ended March 31, 2025
United States dollars unless otherwise stated
Overview
Direct Communication Solutions, Inc. provides Internet of Things (IoT) products, services and solutions. We deliver enhanced one-stop solutions that connect assets to increase visibility, operational efficiency, and profitability. We provide our solutions and services to a variety of industries including, Supply Chain Logistics, Transportation, Health Care, and Food & Beverages. We are a chosen global partner of service providers, value-added collaborators, system integrators, and enterprises due to our commitment to quality and demonstrated experience. We intend to continue expanding our long-standing relationships and work strategically with our partners, to jointly build leading IoT solutions based on integrated hardware, cloud-based software, and other services.
The Company's current SaaS solutions include MiFleet™, which provides fleet and vehicle SaaS telematics, MiSensors™, which provides machine-to-machine device management and service enablement for wireless sensors and MiFailover™, which provides high-speed wireless internet failover to small and medium-sized businesses as a redundancy solution to continue to run their business in the event the internet is not available. In addition, we have recently deployed MiConnectivity to provide wireless data connectivity for global connectivity through our fully integrated SIM management platform and MiServices™ to provide managed services solution that includes all-inclusive device readiness program and engineering support. These services include software development, hardware integration and logistics support from SIM to Shipment, including device preparation, custom labeling, packaging, configuration confirmation, and system-side checks.
Our corporate headquarters is in San Diego, California.
Incorporated in 2006, the Company traditionally has been a distributor of IoT components and a system integrator that assisted clients in installing such components into their installed systems and applications. The Company has focused on providing hardware items and solutions that have aided in data collection, analysis and management.
The global costs and prices of IoT sensors and products continue to drop in price and margin. As a response to this, and an interest to develop more vertically integrated, comprehensive solutions, we began to develop software applications and databases that can analyze and manage the data that its IoT hardware has traditionally just collected. This provides us the opportunity to increase its gross and net profit margins by providing more services and software – through the cloud and/or via a SaaS business model. Currently, the company has three primary business focuses on revenue stream and growth generation.
Smart Hardware Provider. The company utilizes smart hardware from an expanding group of suppliers to deploy through our strategic agreements with channel partners including AT&T, T-Mobile, U.S. Cellular, Verizon Wireless, TD Synnex and multiple Telematic Solution Providers as the basis to develop our own end-to-end SaaS based intelligent business solutions.
SaaS Software Solutions Provider. Our products and services then enable devices to communicate with each other and with server or cloud-based application infrastructures. These software applications address and solve real-world data collection and monitoring problems to best serve our customers and manage their evolving business requirements.
Industry Technology Innovation. DCS has sold to customers within various smart hardware related vertical markets that are tied to the broad IoT market. These areas have included markets such as fleet management, healthcare, retail point-of-sale, industrial, energy and utilities and safety and security. As the company applies its core competencies it can now address a broadening spectrum of software application markets.
DCS is continuing to evolve from our smart hardware distribution base of mobile broadband hardware to providing End-to-End solutions for mobile internet, M2M, and vertical markets. We serve our clients by simplifying IoT technologies, making them less costly, easier to deploy and overall, more efficient. We intend to continue to leverage our long-standing relationships with strategic partners and jointly build unique IoT solutions based on
Direct Communication Solutions, Inc.
Management's Discussion and Analysis
For the Three Months Ended March 31, 2025
United States dollars unless otherwise stated
integrated third-party equipment along with our application software. This mixed hardware and software implementation allows us to build new, move robust, solutions that address multiple customer problems operating on a single company platform.
Significant Highlights
The following highlights and developments for the three months ended March 31, 2025, and to the date of this management discussion and analysis:
- Ended the period March 31, 2025, with customer purchase backlog of $3M.
- Received 1,224 gross new recurring revenue orders, including 191 new MiFleet + Vision video telematics solutions that will generate long term, high margin recurring revenues to our growing subscriber base.
- Delivered the first shipment of a solar powered trailer security solution to a Tier 1 transportation/logistics carrier in North America.
- Delivered a customized IoT solution to IT&E in Guam to manage fuel distribution and accountability for the Port Authority of Guam.
- Approved multiple IoT devices on major cellular network operators to strengthen our IoT product portfolio and strengthen our position as a leading provider of IoT solutions to our customers and partners.
- Enabled and expanded our SaaS Solutions channel of dealers and resellers with promotions across multiple markets to position our SaaS Solutions and increase future sales.
- Restructured the company focus and operations to focus on our long-term, high margin strategy of recurring revenue through SaaS Solutions. The restructure stream-lines company resources and reduced overall expenses significantly.
Direct Communication Solutions, Inc.
Management's Discussion and Analysis
For the Three Months Ended March 31, 2025
United States dollars unless otherwise stated
Outlook
DCS is an emerging provider that offers Internet of Things ("IoT") and connectivity-related business-critical solutions and services. Our customers include technology distributors, cellular operators fleet service providers and any business that needs to monitor or draw data from their machine-based assets. We serve our clients by simplifying IoT Technologies, making them less costly, easier to deploy and overall, more efficient. Since 2018 we started to transition from a hardware reseller to a SaaS based, recurring revenue, customized solutions provider, offering turnkey IoT solutions for new and existing customers. SaaS and other services revenue accounted for approximately 21% (2024 – 37%) of total corporate revenue for the three months ended March 31, 2025.
We continue to expand the industries we serve which now include fleet management, transportation/logistics, cold chain management, asset tracking/management, public safety/municipalities, property management, restaurants, healthcare, retail, offices, and construction.
Non-IFRS Financial Measures – Adjusted EBITDA
This MD&A references adjusted EBITDA, which is a non-IFRS financial measure. Adjusted EBITDA is not a recognized measure under IFRS, has no standardized meaning prescribed by IFRS and is therefore unlikely to be comparable to adjusted EBITDA presented by other companies. Rather, it is provided as additional information to complement IFRS measures by providing further understanding of the Company's results of operations from management's perspective. Accordingly, adjusted EBITDA should not be considered in isolation nor as a substitute for analysis of our financial information reported under IFRS.
We use non-IFRS financial measures to provide investors with supplemental measures of our operating performance and thus highlight trends in our core business that may not otherwise be apparent when relying solely on IFRS financial measures. We believe that securities analysts, investors, and other interested parties frequently use non-IFRS financial measures in the evaluation of issuers. There are certain limitations related to the use of non-IFRS financial measures versus their nearest IFRS equivalents. Investors are encouraged to review our financial statements and disclosures in their entirety and are cautioned not to put undue reliance on any non-IFRS financial measure and view it in conjunction with the most comparable IFRS financial measures. In evaluating non-IFRS financial measures, you should be aware that in the future we will continue to incur expenses similar to those adjusted in non-IFRS financial measures.
Adjusted EBITDA is a non-IFRS financial measure that we calculate as net income (loss) before tax excluding depreciation and amortization expense, share based expense, unrealized gain on inventory, finance expense, other asset impairments, unrealized loss on fair value of deposits and convertible note, and listing expenses. Adjusted EBITDA is used by management to understand and evaluate the performance and trends of the Company's operations. The following table shows a reconciliation of adjusted EBITDA to net income (loss) before tax, the most comparable.
Direct Communication Solutions, Inc.
Management's Discussion and Analysis
For the Three Months Ended March 31, 2025
United States dollars unless otherwise stated
IFRS financial measure, for the three months ended March 31, 2025, and 2024:
| Three months ended March 31, 2025 | Three months ended March 31, 2024 | |
|---|---|---|
| $ | $ | |
| Gain (Loss) before tax | 204,135 | (500,952) |
| Accretion | 115,637 | 70,691 |
| Net changes in fair value | (1,532,159) | (993) |
| Depreciation and amortization | 46,426 | 47,626 |
| Finance cost for right of use assets | 9,159 | 13,763 |
| Interest expense | 376,571 | 71,815 |
| One time Tax credit | (127,603) | - |
| Provision for excess and obsolete inventory | 17,544 | 59,806 |
| Stock based compensation | 1,086,498 | (8,211) |
| Tax fees | 22 | - |
| One-time costs related to up-listing to senior exchange | - | (234,461) |
| Adjusted EBITDA | 196,230 | (480,916) |
Revenues increased by 143% (Gross Profit increased by 77%) on a year-over-year basis from the corresponding quarter of 2024. The increase in EBITDA for the three months ended March 31, 2025, compared to the same period in 2024 was primarily driven by higher products sales as customers has cleared their overstocked inventory from 2023. The Company will continue to diligently work to improve operational efficiencies. For the three months ended March 31, 2025, the Company received 1,224 gross new MiFleet Fleet Management SaaS Solutions sales that will contribute to new recurring revenue subscribers. Video Telematics remains a strong contributor of our overall strategy of focusing on SaaS recurring revenues, at high gross margins. Overall SaaS recurring revenue growth continues to grow with a significant pipeline of opportunities based on our strategy of focusing on growing the recurring revenue for the future.
Key Business Metrics
The following table shows a summary of our key business metrics as of the periods presented:
| As of March 31, 2025 | |
|---|---|
| $ | |
| Annual recurring revenue ("ARR") | 3,027,523 |
ARR
We believe that ARR is a key indicator of the trajectory of our business performance, enables measurement of the progress of our business initiatives, and serves as an indicator of future growth. We define ARR as the annualized value of subscription contracts that have commenced revenue recognition as of the measurement date. ARR highlights trends that may be less visible from the face of our financial statements due to ratable revenue recognition. ARR does not have a standardized meaning and is not necessarily comparable to similarly titled measures presented by other companies. ARR should be viewed independently of revenue and is not intended to be combined with or to replace it. ARR is not a forecast and the active contracts at the date used in calculating ARR may or may not be extended or renewed.
Results of Operations for the Three Months ended March 31, 2025
Revenues for the three months ended March 31, 2025, were $3,616,096 compared $1,882,691 for the same period last year. Product revenue of $2,848,226 has increased by 143% over the same period, driven by higher demand for as customers cleared their overstocked inventories. The Company implemented cost-cutting measures resulting in significant savings as we continue to execute on our strategy of providing SaaS Solutions to our growing sales ecosystem.
Direct Communication Solutions, Inc.
Management's Discussion and Analysis
For the Three Months Ended March 31, 2025
United States dollars unless otherwise stated
Solutions and other services revenue of $767,870 was up 8% from the same period as last year.
Cost of revenues for the three months ended March 31, 2025, were $2,453,819 compared to $1,225,279 for the same period in 2024. The following tables summarize gross profit and gross margin:
| Gross Profit | Gross Margin | |||
|---|---|---|---|---|
| Q1 2025 | Q1 2024 | Q1 2025 | Q1 2024 | |
| $ | $ | % | % | |
| Products | 692,356 | 230,002 | 24.3% | 19.6% |
| Solutions and other services | 469,921 | 427,410 | 61.2% | 60.3% |
| Total | 1,162,277 | 657,412 | 32.1% | 34.9% |
The Company went through and aggressively reworked the pricing models to achieve healthier margins. The Company also expanded the portfolio of product offerings which permitted higher margin sales.
General and administrative expenses for the three months ended March 31, 2025, were $1,916,772 compared to $920,521 for the same period in 2024. Professional services expenses increased compared to the same period last year, as the prior year included an expense recovery from a consultant crediting the company. No such recovery occurred this year. Advertising and marketing expenses decreased in 2025 as the Company did not engage in any advertising or marketing campaigns. Compensation and benefits increase in 2025 because of the vesting portion of the Company's stock options granted in the prior period. Decrease in other expense compared to the same period last years is primarily due to receiving an employee retention tax credit. The Company is currently making huge efforts in cutting costs and preserving working capital for operations.
The Company recognized $1,771 of bad debt recovery compared to $74,332 during the same quarter last year. The increase was due to a smaller reduction in the estimated allowance for doubtful accounts in the current quarter compared to the decrease recorded in the same period last year. The Company is making efforts to achieve a higher accounts receivable turnover ratio. Bad debt expense and estimated balance of allowance for doubtful accounts are determined by the aging of accounts receivable balance at each quarter end and would move in correlation with the balance of accounts receivable at the point in time.
There were no other significant changes in general and administrative expenses.
Research and development costs for the three months ended March 31, 2025, were $75,162 compared to $82,567 for the same period in 2024. The decrease was due to less R&D activities planned during the period.
Interest expense and accretion for the three months ended March 31, 2025, were $224,785 compared to $108,191 for the same period in 2024. The increase was primarily due to the interest expense of the new additional loans, promissory note, and convertible debentures that were obtained for financing during the end of last year.
Net changes in fair value of derivatives for the three months ended March 31, 2025, was an increase in liability for $1,532,159 compared to $993 for the same period in 2024. The increase in liability is primary due to the increase quantity of derivative which is correlated to the increase in promissory notes and convertible debentures.
Net income for the three months ended March 31, 2025, was $204,135 compared to $500,952 net loss for the same period in 2024. The difference was primarily the result of the net changes in fair value of derivatives for the current period.
Direct Communication Solutions, Inc.
Management's Discussion and Analysis
For the Three Months Ended March 31, 2025
United States dollars unless otherwise stated
Summary of Quarterly Results
The following table is based on the Company's financial statements prepared in accordance with IFRS. Amounts are in US$ except share numbers.
| Q1 2025 | Q4 2024 | Q3 2024 | Q2 2024 | |
|---|---|---|---|---|
| $ | $ | $ | $ | |
| Revenue | ||||
| Products | 2,848,226 | 773,470 | 819,015 | 725,876 |
| Solutions & other services | 767,870 | 744,281 | 735,737 | 727,080 |
| 3,616,096 | 1,517,751 | 1,554,752 | 1,452,956 | |
| Operating Expenses | 1,991,934 | 1,588,236, | 1,119,977 | 1,059,336 |
| Net income (loss) | 204,135 | (2,650,918) | 2,012,983 | (625,904) |
| Basic income (loss) per share | 0.09 | (1.15) | 0.87 | (0.27) |
| Fully diluted income (loss) per share | 0.06 | (1.15) | 0.75 | (0.27) |
| Weighted average number shares outstanding - basic | 2,335,746 | 2,305,079 | 2,305,079 | 2,305,079 |
| Weighted average number shares outstanding – diluted | 3,276,225 | 3,024,350 | 2,305,079 | 2,305,079 |
| Total fully diluted shares | 3,283,447 | 3,218,447 | 2,696,438 | 2,305,079 |
| Q1 2024 | Q4 2023 | Q3 2023 | Q2 2023 | |
| --- | --- | --- | --- | --- |
| $ | $ | $ | $ | |
| Revenue | ||||
| Products | 1,174,261 | 1,190,465 | 2,815,266 | 3,922,122 |
| Solutions & other services | 708,430 | 631,138 | 609,096 | 662,586 |
| 1,003,088 | 1,821,603 | 3,424,362 | 4,584,708 | |
| Operating Expenses | 1,003,088 | 2,117,435 | 2,030,931 | 2,835,343 |
| Net income (loss) | (500,952) | (1,613,805) | (1,006,837) | (1,102,297) |
| Basic income (loss) per share | (0.22) | (0.70) | (0.49) | (0.48) |
| Fully diluted income (loss) per share | (0.22) | (0.70) | (0.49) | (0.48) |
| Weighted average number shares outstanding - basic | 2,305,079 | 2,305,079 | 2,305,079 | 2,305,079 |
| Weighted average number shares outstanding – diluted | 2,305,079 | 2,305,079 | 2,305,079 | 2,305,079 |
| Total fully diluted shares | 2,305,079 | 2,305,079 | 2,305,079 | 2,305,079 |
The Company's business typically undergoes seasonal variation in the fiscal quarter ended June 30 due to disruptions in the manufacturing of hardware components in Asia driven primarily by the observance of the lunar new year holidays during that period and in the fiscal quarter ended September 30 due to summer vacations of the industrial buyers representing business or government customers.
Liquidity and Capital Resources
The Company defines capital as consisting of issued share capital, reserves and accumulated deficit. We expect to fund the operating costs of the Company over the next twelve months from expanding sales of our current products
Direct Communication Solutions, Inc.
Management's Discussion and Analysis
For the Three Months Ended March 31, 2025
United States dollars unless otherwise stated
and solutions that support the growth of the Company and raising additional capital as necessary. The Company's continuing operations and its financial viability is dependent upon the extent to which it can successfully raise the capital to implement its future plans and ultimately on generating sufficient revenue to attain profitable operations. These factors indicate the existence of an uncertainty that may cast doubt about the Company's ability to continue as a going concern. On December 31, 2024, the Company is not subject to any externally imposed capital requirements or debt covenants.
On April 7, 2022, the Company received convertible debenture financing for the aggregate amount of $100,000. Subscribers may convert all or part of the principal amount outstanding under the debentures into units of the Company. The debentures are convertible into units at the higher of $8.33 or a price equal to the price of the shares or units of the next financing carried out before the second anniversary of the closing date less a 30% discount.
The units comprise a share and one-half of one warrant, where a whole warrant shall be exercisable at $2.80 per common stock for a two-year term. The debentures have a maturity date of the second anniversary of the closing date and bear an interest rate of 10% per annum, payable semi-annually. During the year ended December 31, 2024, the Company had paid off the convertible debenture and interest in full.
In September 2022, the Company issued additional convertible promissory debentures totaling $1,500,000, bearing interest at 10% per annum (accruing annually and payable at maturity), and maturing on September 9, 2024, or a period of 24-months. The Debentures are convertible, at the option of the holder, to common stocks of DCS at a price of $8.33 or a price equal to the price of the shares of the next financing carried out before the second anniversary of the closing date at a 25% premium. Upon issuance of the debentures, the Company also issued 107,143 share purchase warrants. Each warrant entitles the holder to purchase one common stock at a price of $6.02 per share for a period of 24 months from the date of issuance of the debentures. In September 2024, the issued 107,143 share purchase warrants expired. During the year ended December 31, 2024, the Company settled this indebtedness by either issuing additional convertible promissory debentures or paying off the existing ones.
On September 13, 2024, the Company issued replacement convertible promissory debentures totaling $1,741,589, bearing interest at 15% per annum (accruing annually and payable at maturity), and maturing on September 13, 2025, or a period of 12-months to settle indebtedness related to the convertible debentures issued in 2022. The Debentures are convertible, at the option of the holder, to common stocks of DCS at a price of $6. Upon issuance of the debentures, the Company agreed to issue 196,582 share purchase warrants as additional compensation subject to CSE approval. Each warrant entitles the holder to purchase one common stock at a price of CAD$3.20 per share for a period of 24 months from the date of issuance of the warrants. The warrants had been issued during the year ended December 31, 2024.
In April 2024, the Company entered into a promissory note agreement of $100,000, bearing interest at 19% per annum (accruing semi - annually and payable every six months), and maturing on April 15, 2026, or a period of 24-months. As additional consideration, the Company issued 10,000 purchase warrants on September 11, 2024. Each warrant entitles the holder to purchase one common stock at a price of CAD $2.00 per share for a period of 24 months from the date of issuance.
In May 2024, the Company entered into a promissory note of $100,000, bearing interest at 19% per annum (accruing annually and payable at maturity date), and maturing on May 24, 2026, or a period of 24-months. As additional consideration, the Company issued 10,000 purchase warrants on September 11, 2024. Each warrant entitles the holder to purchase one common stock at a price of CAD $2.00 per share for a period of 24 months from the date of issuance.
In June 2024, the Company entered into a promissory note of $100,000, bearing interest at 15% per annum (accruing annually and payable at maturity date), and maturing on June 28, 2026, or a period of 24-months. As additional consideration, the Company issued 20,000 purchase warrants on September 11, 2024. Each warrant entitles the holder to purchase one common stock at a price of CAD $2.00 per share for a period of 24 months from the date of
Direct Communication Solutions, Inc.
Management’s Discussion and Analysis
For the Three Months Ended March 31, 2025
United States dollars unless otherwise stated
issuance.
In July 2024, the Company entered into a promissory note of $50,000, bearing interest at 15% per annum (accruing annually and payable at maturity date), and maturing on July 8, 2026, or a period of 24-months. As additional consideration, the Company issued 10,000 purchase warrants on September 11, 2024. Each warrant entitles the holder to purchase one common stock at a price of CAD $2.00 per share for a period of 24 months from the date of issuance.
In August 2024, the Company entered into a promissory note of $75,000, bearing interest at 15% per annum (accruing annually and payable at maturity date), and maturing on August 31, 2026, or a period of 24-months. As additional consideration, the Company issued 15,000 purchase warrants subject on October 9, 2024. Each warrant entitles the holder to purchase one common stock at a price of CAD $3.14 per share for a period of 24 months from the date of issuance.
In August 2024, the Company entered into another promissory note of $250,000, bearing interest at 19% per annum (accruing annually and payable at maturity date), and maturing on August 24, 2026, or a period of 24-months. As additional consideration, the Company issued 50,000 purchase warrants on October 16, 2024. Each warrant entitles the holder to purchase one common stock at a price of CAD $3.09 per share for a period of 24 months from the date of issuance.
In November 2024, the Company entered into another promissory note of $100,000, bearing interest at 19% per annum (accruing semi-annually and payable every 6 months), and maturing on November 22, 2026, or a period of 24-months. As additional consideration, the Company will issue 10,000 purchase warrants subject to CSE approval. Each warrant entitles the holder to purchase one common stock at a price of CAD $2.95 per share for a period of 24 months from the date of issuance.
In November 2024, the Company entered into another promissory note of $50,000, bearing interest at 15% per annum (accruing annually and payable at maturity date), and maturing on November 27, 2026, or a period of 24-months. As additional consideration, the Company issued 10,000 purchase warrants on January 10, 2025. Each warrant entitles the holder to purchase one common stock at a price of CAD $2.95 per share for a period of 24 months from the date of issuance.
In December 2024, the Company entered into promissory notes with an aggregated total of $200,000, bearing interest at 15% per annum (accruing annually and payable at maturity date), and maturing on December 10, 2026, or a period of 24-months. As additional consideration, the Company issued 40,000 purchase warrants on January 10, 2025. Each warrant entitles the holder to purchase one common stock at a price of CAD $2.95 per share for a period of 24 months from the date of issuance.
In December 2024, the Company entered into another promissory note of $50,000, bearing interest at 19% per annum (accruing annually and payable annually), and maturing on December 26, 2026, or a period of 24-months. As additional consideration, the Company issued 5,000 purchase warrants on January 10, 2025. Each warrant entitles the holder to purchase one common stock at a price of CAD $2.95 per share for a period of 24 months from the date of issuance.
In January 2025, the Company entered into another promissory note of $50,000, bearing interest at 15% per annum (accruing annually and payable at maturity date), and maturing on January 10, 2027, or a period of 24-months. As additional consideration, the Company issued 10,000 purchase warrants on January 10, 2025. Each warrant entitles the holder to purchase one common stock at a price of CAD $2.95 per share for a period of 24 months from the date of issuance.
Pursuant to a vendor changing its terms with the Company from billing devices and device management subscriptions from a payment term of 36 months down to 30 days reducing the frequency of occurrence for long
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Direct Communication Solutions, Inc.
Management's Discussion and Analysis
For the Three Months Ended March 31, 2025
United States dollars unless otherwise stated
term payables, the Company entered into an agreement to restructure the payables into a long-term loan with a principal of $3,200,000, bearing interest at 10%. The interest will be due quarterly, and the principal will be due in 5 years. The balance of $2,914,776 of the payables was forgiven and recognized in the Company's consolidated statement of operating loss and comprehensive loss. As of March 31, 2025, the Company recorded $279,676 (December 31, 2024 - $196,394) of accrued interest and finance fee and a carrying balance of $3,479,646 (December 31, 2024 - $3,396,394) of the loan was outstanding.
In January 2020, the Company entered into a two-year agreement with TAB Bank ("TAB") for a $2,500,000 credit facility. Under the TAB Bank credit facility, the Company is obligated to assign all its accounts receivables, and the Company may request advances up to 90% of domestic accounts less than 90 days from the invoice date and not subject to offset up to $2,000,000. Interest is payable monthly at a rate the greater of (a) 90-Day SOFR rate plus 4.50% and (b) 6.41%. In addition, there is an administration fee equal to 0.008% per diem of the outstanding daily obligations.
On March 31, 2025, and December 31, 2024, the outstanding balance on the credit facility was $111,226 and $206,084, respectively.
In May 2024, the Company entered into a loan agreement with a third party for proceeds of $250,000. The loan is repayable in 24 monthly payments starting May 2024, bearing interest at 22.2%, and is secured by a general security agreement on the Company's assets.
In August 2024, the Company entered into two loan agreements with third parties for proceeds of $174,221 and $200,000. The loans are repayable in 65 and 35 weekly payments, respectively, starting August 2024, bearing interest at 23.5% and 37.24% respectively, and are secured by a general security agreement on the Company's assets. As of March 31, 2025, the loans had been repaid.
In March 2025, the Company entered into two loan agreements with third parties for proceeds of $284,500 and $175,000. The loans are repayable in 35 and 65 weekly payments, respectively, starting April 2025, bearing interest at 47.3% and 23.1% respectively, and are secured by a general security agreement on the Company's assets.
During the year ended December 31, 2023, the Company entered into two loan agreements and pledged $110,532 of inventory as collateral. The Company entered into two additional loan agreements during the years ended December 31, 2024, and pledged an additional $234,312 of inventory as collateral. As of March 31, 2025, the first loan had been repaid in full. The loans have the following terms as of March 31, 2025.
| Loan 1 | Loan 2 | Loan 3 | |
|---|---|---|---|
| Expected term (months) | 60 | 36 | 24 |
| Interest rate | 6.77% | 19.02% | 16% |
| Payable within 12 months | $12,646 | $20,142 | $57,594 |
| Payable not due in 12 months | $31,339 | $4,885 | $11,317 |
During the three months ended March 31, 2025, the Company recorded $79,017 (2024 - $27,904) of interest expense and finance charges in the consolidated statement of loss and comprehensive loss in connection to the three loan agreements. As of March 31, 2025, a carrying balance of $137,923 (December 31, 2024 - $218,483) of the loans were outstanding.
Cash flows used in operating activities during the three months ended March 31, 2025, were $634,464 compared to provided $387,238 during the same period last year.
There were no investing activities for Cash flows during the three months ended March 31, 2025, and 2024.
Cash flows provided in financing activities during the three months ended March 31, 2025, were $192,169 compared
Direct Communication Solutions, Inc.
Management's Discussion and Analysis
For the Three Months Ended March 31, 2025
United States dollars unless otherwise stated
to using $142,099 during the same period last year. Net repayments on credit facility were $94,858 during the current period compared to borrowing $160,055 in the comparative period. During the three months ended March 31, 2025, the Company received $50,000 promissory notes, $60,000 from convertible debentures, and $774,500 from loans (2024 - $169,743) and repaid $562,572 of the loans (2024 - $94,622).
On March 31, 2025, the Company had working capital deficiency of $3,704,491 (March 31, 2024 - $5,238,936).
Capital Resources
Share Capital
The Company has authorized 5,714,286 shares with a par value of $0.00001 per share.
During the three months ended March 31, 2025, 40,000 common shares were issued pursuant to 40,000 share purchase warrants exercised at $2.95 CAD per share for gross proceeds of $83,980.
There were no transactions affecting share capital during the year ended December 31, 2024.
Warrants
In September 2022, the Company issued convertible promissory debentures and upon issuance of the debentures, the company also issued 107,143 share purchase warrants. Each warrant entitles the holder to purchase one common stock at a price of $6.02 per share for a period of 24 months from the date of issuance of the debentures. In September 2024, the issued 107,143 share purchase warrants already expired.
In September 2024, the Company issued convertible promissory debentures and upon issuance of the debentures, the company agreed to issue 196,582 share purchase warrants, subject to CSE approval. Each warrant entitles the holder to purchase one common stock at a price of $2.36 per share for a period of 24 months from the date of issuance of the warrant. The warrants were issued on October 10, 2024.
From April to August 2024, the Company entered into promissory note agreements and subsequently issued 115,000 purchase warrants during the year ended December 31, 2024. Each warrant entitles the holder to purchase one common stock at various price of CAD $2.00 to CAD $3.14 per share for a period of 24 months from the date of issuance depending on the promissory notes term. The Company determined the warrants represent an embedded derivative and has accounted for the warrants in derivative liability.
From November to December 2024, the Company entered into promissory note agreements and agreed to issue 65,000 purchase warrants in connection to the promissory note. Each warrant entitles the holder to purchase one common stock at the price of CAD $2.95 per share for a period of 24 months from the date of issuance depending on the promissory notes term. On January 10, 2025, 55,000 of the purchase warrants have been issued.
During January 2025, the Company entered into a promissory note agreement and issued 10,000 purchase warrants in connection to the promissory note. Each warrant entitles the holder to purchase one common stock at the price of CAD $2.95 per share for a period of 24 months from the date of issuance.
The Company determined the warrants represent an embedded derivative and has accounted for the warrants in derivative liability.
The following table summarizes the warrant activity for the period ended March 31, 2025, and December 31, 2024:
12
Direct Communication Solutions, Inc.
Management's Discussion and Analysis
For the Three Months Ended March 31, 2025
United States dollars unless otherwise stated
| Number of warrants | Weighted average exercise price | |
|---|---|---|
| Outstanding, December 31, 2023 | 107,143 | $ 6.02 |
| Granted | 311,582 | 2.08 |
| Expired | (107,143) | 6.02 |
| Outstanding, December 31, 2024 | 311,582 | 2.08 |
| Granted | 65,000 | 2.05 |
| Exercised | (40,000) | 2.05 |
| Outstanding, March 31, 2025 | 336,582 | $ 2.08 |
At the date of this report, the Company had outstanding and warrants as follows:
| Date of Expiry | Number of Warrants Outstanding | Exercise Price | Weighted Average Remaining Life (years) |
|---|---|---|---|
| September 11, 2026 | 50,000 | CAD $2.00 | 1.30 |
| October 9, 2026 | 15,000 | CAD $3.09 | 1.37 |
| October 10, 2026 | 196,582 | CAD $3.20 | 1.38 |
| October 16, 2026 | 50,000 | CAD $3.14 | 1.39 |
| January 10, 2027 | 25,000 | CAD $2.95 | 1.63 |
Stock Options
In October 2017, the Company's board of directors and stockholders approved the 2017 Stock Plan under which 500,000 shares of common stock are reserved for the granting of incentive stock options, non-statutory stock options, stock appreciation rights, restricted stock and performance awards to employees, directors, and consultants. Recipients of stock option awards are eligible to purchase shares of the Company's common stock at an exercise price equal to no less than the estimated fair market value of such stock on the date of grant. The maximum term of awards granted under the 2017 Plan is ten years and vesting is determined by the board of directors. Stock awards are generally not exercisable prior to the applicable vesting date, unless otherwise accelerated under the terms of the applicable stock plan agreement. Unvested shares of the Company's common stock issued in connection with an early exercise allowed by the Company may be repurchased by the Company upon termination of the optionee's service with the Company. The vesting terms of each option grant are at the discretion of the Board of Directors.
In December 2023, the Board of Directors and a majority of the stockholders approved to replace the 2017 Stock Plan with the 2023 Omnibus Plan. Any previously granted stock options shall continue to exist under the 2023 Omnibus plan, and the number of authorized shares for combined issuance of awards, including stock options, as of December 31, 2024, is 1,000,000.
The following table summarizes stock option transactions under the 2023 Omnibus Plan:
| Number of Options | Weighted average exercise price | |
|---|---|---|
| Outstanding, December 31, 2023 | 540,857 | $ 4.03 |
| Granted | 177,500 | $ 5.00 |
| Forfeited | (269,428) | $ 3.66 |
| Outstanding, December 31, 2024, and March 31, 2025 | 448,929 | $ 4.64 |
At the date of this report, the Company had outstanding, and exercisable stock options as follows:
Direct Communication Solutions, Inc.
Management's Discussion and Analysis
For the Three Months Ended March 31, 2025
United States dollars unless otherwise stated
| Date of Expiry | Number of Options Outstanding | Number of Options Exercisable | Exercise Price | Weighted Average Remaining Life (years) |
|---|---|---|---|---|
| October 5, 2027 | 178,572 | 178,572 | $ 3.29 | 2.36 |
| February 4, 2032 | 6,427 | 6,071 | $ 2.87 | 6.70 |
| February 24, 2032 | 10,715 | 10,715 | $ 2.87 | 6.75 |
| March 14, 2032 | 8,572 | 7,366 | $ 4.13 | 6.81 |
| May 9, 2027 | 52,857 | 52,857 | $ 8.40 | 1.95 |
| May 9, 2027 | 14,286 | 14,286 | $ 5.53 | 1.95 |
| December 23, 2029 | 177,500 | 177,500 | CAD $7.20 | 4.58 |
During the three months ended March 31, 2025, no options were granted.
During the year ended December 31, 2024, the Company granted 177,500 (2023 - Nil) options with an exercise price of CAD$7.20 and vesting term of 4 months, and an expiry date of 5 years to certain employees and officers of the Company.
Summary of outstanding shares data as at the date of the report:
| Number of shares | Exercise Price | Weighted Average Remaining Life | |
|---|---|---|---|
| Common stock | 2,487,222 | NA | NA |
| Stock options | 448,929 | $2.87-$8.4 | 3.43 |
| Warrants | 336,582 | $2.00 to CAD $2.95 | 1.38 |
Related Party Transactions
Key management personnel include those persons having authority and responsibility for planning, directing, and controlling the activities of the Company as a whole. The Company has determined that key management personnel consist of executive and non-executive members of the Company's Board of Directors and corporate officers.
John Hubler, previously a member of the Company's Board of Directors, is a partner of BH IoT Group. Mr. Hubler rejoined the Company as a director in April 2023 and resigned in September 2024. In November 2020, the Company entered into an agreement with BH IoT Group to assist in building complete IoT bundled solutions. The Company entered into an initial Phase 1 project expected to last 3 months. At the end of Phase1, both parties agreed to continue the relationship on a month-to-month basis. John Hubler was considered as a related party starting April 2023 up to August 2024. The Company recorded $Nil (2024 - $60,000) related party professional fees on the consolidated statement of operations for the three months ended March 31, 2025.
Mike Zhou, previously a member of the Company's Board of Directors, is the owner of MYZ Corporate Relations, Ltd. Mr. Zhou resigned in March 2024. In May 2021, the Company entered into an agreement with MYZ Corporate Relations, Ltd. to provide consulting services on strategic matters related to business development opportunities, product development and marketing strategies for a monthly fee of $4,000. The agreement is effective for one year and will automatically renew annually unless terminated by either party. Mike Zhou was considered a related party up to March 5, 2024. The Company recorded $Nil of related party professional fees on the consolidated statement of operations for the three months ended March 31, 2025, and 2024.
Mr. Lichtenwald, previously a member of the Company's Board of Directors, is a principal at Zeus Capital Ltd. In April 2022, Mr. Lichtenwald was appointed the CFO of the Company, and on June 30, 2022, Mr. Lichtenwald resigned as a director and CFO as of May 2025. In November 2021, the Company entered into an agreement with Zeus Capital Ltd.
Direct Communication Solutions, Inc.
Management's Discussion and Analysis
For the Three Months Ended March 31, 2025
United States dollars unless otherwise stated
to assist the company with corporate finance and strategic initiatives for a monthly fee of $15,000. The agreement is effective for one year and will automatically renew annually unless terminated by either party. The Company recorded $45,000 of professional fees on the consolidated statement of operations for the three months ended March 31, 2025 (2024 - $45,000). As of March 31, 2025, the Company owed $37,950 (December 31, 2024 - $32,650) to Zeus Capital Ltd.
Also, Mr. Lichtenwald is a principal of Zeus Accounting Solutions Corp., formerly known as Lichtenwald Professional Corp ("LPC"). The Company entered into an agreement with LPC to provide CFO service fees of $12,500 monthly, effective April 2022. The Company recorded $37,500 of professional fees on the consolidated statement of operations for the three months ended March 31, 2025 (March 31, 2024 - $37,500). As of March 31, 2025, the Company owed $10,100 (December 31, 2024 - $22,700) to Zeus Accounting Solutions Corp.
Julie Hajduk, a member of the Company's Board of Directors, is a principal at Purple Crown Communications Corp. Ms. Hajduk provides services and is compensated via director's fees of $2,500 monthly. Since May 2023, Ms. Hajduk provided additional service to the Company in connection to its plans for NYSE up-listing, The Company recorded $Nil of related party marketing fees professional fees on the consolidated statement of operations for the three months ended March 31, 2025 (2024 - $12,000). As of March 31, 2025, the Company owed $12,000 (December 31, 2024 - $12,000) to Purple Crown Communications Corp.
Remuneration attributed to key management personnel can be summarized as follows:
| Three months ended March 31, | ||
|---|---|---|
| 2025 | 2024 | |
| $ | $ | |
| Salary | 186,990 | 217,790 |
| Consulting fees | 82,500 | 150,000 |
| Marketing Service | - | 4,500 |
| Share-based compensation | 62,145 | 960 |
| RSU | 534,788 | - |
| Total | 866,423 | 373,250 |
As of March 31, 2025, $60,050 (December 31, 2024 – $67,350) was included in accounts payable and accrued liabilities for fees owed to related parties, and $55,500 (December 31, 2024 – $73,693) was included in accounts payable and accrued liabilities for wages and vacation accrual in connection to officers' service.
As of March 31, 2025, $Nil (December 31, 2024, $2,259) was included in prepaid for covering the Company's expenses by a related party.
During the year ended December 31, 2024, the Company granted 142,144 RSUs to certain officers and directors of the Company. During the three months ended March 31, 2025, the Company recorded share-based compensation expense of $534,788 (March 31, 2024 - $Nil) relating to the vesting portion of RSUs.
Consulting fees and salary decreased compared to the same period in 2024 primarily due to the Company's restructuring process to improve operations and departure of personnel.
Critical Accounting Estimates
Estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognized in the period in which the estimates are revised and in any future periods affected. Information about
Direct Communication Solutions, Inc.
Management's Discussion and Analysis
For the Three Months Ended March 31, 2025
United States dollars unless otherwise stated
critical estimates in applying accounting policies that have the most significant effect on the amounts recognized in the consolidated financial statements are, but not limited to the following:
- Allowance for doubtful accounts receivable - The Company makes allowances for doubtful accounts based on its best estimate of the amount of probable credit losses in existing accounts receivable. These are determined based on analyzing known uncollectible accounts, aged receivables, economic conditions, historical losses, and changes in customer payment cycles and the customers' creditworthiness.
- Provision for excess and obsolete inventory - Inventory is valued at the lower of cost and net realizable value. Net realizable value for inventories is the estimated selling price in the ordinary course of business less the estimated costs of completion and the estimated costs necessary to make the sale. All these estimates involve uncertainty relating to future pricing, demand and market conditions. Provisions are made in profit or loss of the current period on any difference between book value and net realizable value.
- Fair value of stock options and warrants, and derivative liability - Determining the fair value of warrants and stock options requires judgements related to the choice of a pricing model, the estimation of stock price volatility, the expected forfeiture rate and the expected term of the underlying instruments. Any changes in the estimates or inputs utilized to determine fair value could have a significant impact on the Company's future operating results or on other components of shareholders' equity (deficiency).
- Fair value of the liability component of hybrid financial instrument at initial recognition – Determining the fair value of the liability component requires judgement related to market rate of interest. The market rate of interest used is based on judgement including the Company's own credit risk, economic environment terms, and interest rate charged to comparable companies. Changes in assumptions can materially affect the fair value estimate of the financial instrument.
- Income taxes - Tax provisions are based on enacted or substantively enacted laws. Changes in those laws could affect amounts recognized in profit or loss both in the period of change, which would include any impact on cumulative provisions, and future periods. Deferred tax assets, if any, are recognized to the extent it is considered probable that those assets will be recoverable. This involves an assessment of when those deferred tax assets are likely to reverse.
- Estimated product returns - Revenue from product sales is recognized net of estimated sales discounts, credits, returns, rebates and allowances. The return allowance is determined based on an analysis of the historical rate of returns, industry return data, and current market conditions, which is applied directly against sales. The Company recognizes product returns when incurred due to the infrequent occurrence of returns.
- Employee retention tax credits – Under the provisions of the CARES Act, the Company is eligible for refundable employee retention credits subject to certain criteria. In connection with the CARES Act, the Company adopted a policy to recognize the employee retention credit when received given the uncertainty of when the credit will be received. The Company recorded $127,603 (2024 - $Nil) employee retention tax credit during the period end March 31, 2025.
Critical Accounting Judgements
Information about critical judgements in applying accounting policies that have the most significant effect on the amounts recognized in the consolidated financial statements are, but are not limited to, the following:
- Deferred income taxes – judgements are made by management to determine the likelihood of whether deferred income tax assets at the end of the reporting period will be realized from future taxable earnings. To the extent that assumptions regarding future profitability change, there can be an increase or decrease
Direct Communication Solutions, Inc.
Management's Discussion and Analysis
For the Three Months Ended March 31, 2025
United States dollars unless otherwise stated
in the amounts recognized in respect of deferred tax assets as well as the amounts recognized in profit or loss in the period in which the change occurs.
- Going concern – As disclosed in Note 1 to the condensed consolidated financial statements.
- Revenue Recognition - The Company sells several telematics devices bundled with a multi-year software license under the same contractual arrangement, giving rise to considerations on whether there are distinct performance obligations requiring separate recognition and whether the Company is acting as principal or agent in the contract. Key considerations in determining whether the performance obligations are distinct are whether the promise to deliver the hardware component of the contract is separately identifiable from other contractual promises as well as the level of interdependency between the components of the contract. The Company has concluded the bundled contract represents one performance obligation and that the Company is acting as principal in the arrangement, resulting in the Company recognizing revenue and cost of sales on a gross basis on delivery of the telematics device. Significant judgement is involved in the assessments made by management.
Financial Instruments
The Company's financial assets include cash and amounts receivable. The carrying value of cash and amounts receivable approximates their fair value due to their short term to maturity.
The Company's financial liabilities include accounts payables, loans, derivative liability, credit facility, and customer deposits. The carrying value of these items approximates their fair value, which is the amount recorded on the consolidated statement of financial position.
Financial Risk Factors
Credit risk
Credit risk is the risk of an unexpected loss if a customer or third party to a financial instrument fails to meet its contractual obligations. The Company places its cash with institutions of high credit worthiness. Management has assessed there to be a low level of credit risk associated with its cash balances.
The Company's exposure to credit risk is influenced mainly by the individual characteristics of each customer. However, management also considers the demographics of the Company's customer base, including the default risk of the industry and country in which customers operate, as these factors may have an influence on credit risk. Approximately 27% of the Company's revenue (December 31, 2023 - 38%) is attributable to one customer.
The Company has established a credit policy under which each major new customer is analyzed individually for creditworthiness before the Company's standard payment and delivery terms and conditions are offered. The Company's review includes external ratings, when available, and in some cases bank references. Purchase limits and terms are established for each customer and reviewed periodically. Customers that fail to meet the Company's benchmark creditworthiness may transact with the Company only on a prepayment basis.
In monitoring customer credit risk, customers are grouped according to their credit characteristics, including whether they are an individual or legal entity, whether they are a wholesale, retail or end-user customer, geographic location, industry, aging profile, maturity and existence of previous financial difficulties. Trade and other receivables relate mainly to the Company's wholesale and retail customers.
Direct Communication Solutions, Inc.
Management's Discussion and Analysis
For the Three Months Ended March 31, 2025
United States dollars unless otherwise stated
Trade and other receivables consist of:
| March 31, 2025 | December 31, 2024 | |
|---|---|---|
| Accounts receivable | $ 661,949 | $ 678,636 |
| Other receivables | 89,162 | 144,377 |
| Allowance for doubtful accounts | (58,551) | (66,055) |
| Total | $ 692,560 | $ 756,958 |
During the three months ended March 31, 2025, $1,771 (2024 - $74,332) of bad debt recovery had been recognized in the consolidated statement of operating loss and comprehensive loss.
Aged trade receivable listing:
| Days outstanding | March 31, 2025 | December 31, 2024 |
|---|---|---|
| Current | $ 589,711 | $ 2,282,645 |
| 1 – 30 | 98,458 | (1,870,748) |
| 31 – 60 | 33,775 | 114,022 |
| 61 - 90 | (35,868) | 157,872 |
| > 90 | (24,206) | (5,154) |
| Total | $ 661,870 | $ 678,637 |
The company's maximum exposure to credit risk is the combined carrying amount of its financial assets as at March 31, 2025, is $857,955 (December 31, 2024 - $1,364,647).
Liquidity risk
Liquidity risk is the risk that the Company will encounter difficulty in meeting the obligations associated with its financial liabilities that are settled by delivering cash or another financial asset. The Company's approach to managing liquidity is to ensure, as far as possible, that it will always have sufficient liquidity to meet its liabilities when due, under both normal and stressed conditions, without incurring unacceptable losses or risking damage to the Company's reputation.
The Company examines current forecasts of its liquidity requirements to make certain that there is sufficient cash for its operating needs. These forecasts take into consideration matters such as the Company's plan to use debt for financing its activity, compliance with any required financial covenants and liquidity ratios, and compliance with external requirements such as laws or regulation.
The Company has a factoring agreement with external funding. The Company's accounts payable and accrued liabilities have contractual terms of 30 to 90 days, with the exception of one vendor where payment terms of 36 months have been granted. During the year ended December 31, 2023, a vendor changed its terms with the Company from billing devices and device management subscriptions with a payment term of 36 months for six years to a payment term of 30 days for six years. The Company is exposed to liquidity risk.
Market risk
a) Currency Risk
The Company is located in the United States and virtually all transactions including the company's sales and debt are negotiated in US dollars.
Direct Communication Solutions, Inc.
Management's Discussion and Analysis
For the Three Months Ended March 31, 2025
United States dollars unless otherwise stated
b) Interest Rate Risk
The Company's debt has fixed interest rates and are not exposed to interest rate risk until maturity. The Company's credit facility is variable based on the 90-day SOFR rate. A 1% increase in the 90-day SOFR rate would not have a significant impact on profit and loss.
c) Price Risk
Price risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market prices other than those arising from interest rate risk, financial market risk or currency risk. The Company is not exposed to significant price risk.
Concentration risk
The Company derived revenue from one customer totaling 64% and 21% of the Company's total revenue for three months ended March 31, 2025, and 2024, respectively. On March 31, 2025, and December 31, 2024, one customer accounted for a total of 18% and one customer's for a total of 18% of accounts receivable, respectively.
To manage the concentration of customer risk, the Company continuously looks for opportunities to diverse revenue streams and expand client base via marketing. All contracts with customers are signed for a term, and the Company ensures the customer needs are being met by building exceptional customer service relationships.
The Company has concentrations in the purchases with its suppliers. For the three months ended March 31, 2025, and December 31, 2024, the two largest suppliers accounted for a total of 89% and 83% of total purchases, respectively.
To mitigate the concentration of vendor risk, the Company continuously looks for opportunities to build a supply chain in different geographic locations (Eastern Europe and Asia), and all vendors are selected after extensive due diligence and testing by the Company's QA team.
Off-Balance Sheet Arrangements
The Company has not entered any off-balance sheet arrangements.
Subsequent Events
Subsequent to March 31, 2025, the Company:
- Issued 142,144 shares in connection with the vesting of 142,144 RSUs.