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Imaflex — Interim / Quarterly Report 2024
Nov 28, 2024
44808_rns_2024-11-28_11ba4e5c-7cc8-4f9c-81a7-40d64695264e.pdf
Interim / Quarterly Report
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Interim Condensed Consolidated Financial Statements of
IMAFLEX INC.
For the three and nine-month periods ended September 30, 2024 and 2023
These consolidated interim financial statements were not reviewed by our external auditors.
IMAFLEX INC.
Third Quarter 2024
Consolidated statements of comprehensive income (in thousands of Canadian dollars, except per share data) (unaudited)
| for the | Three months ended September 30, | Nine months ended September 30, | |||
|---|---|---|---|---|---|
| 2024 | 2023 | 2024 | 2023 | ||
| Revenues | (Note 3.1) | $ 28,418 | $ 22,858 | $ 84,655 | $ 70,588 |
| Cost of sales | 23,801 | 20,778 | 69,720 | 61,987 | |
| Gross profit | 4,617 | 2,080 | 14,935 | 8,601 | |
| Expenses: | |||||
| Selling | 535 | 494 | 1,626 | 1,459 | |
| Administrative | 2,072 | 1,576 | 5,403 | 4,908 | |
| Finance costs | (Note 6) | 182 | 138 | 617 | 381 |
| Other (gains) losses | (Note 7) | 340 | (360) | (457) | 31 |
| 3,129 | 1,848 | 7,189 | 6,779 | ||
| Income before income taxes | 1,488 | 232 | 7,746 | 1,822 | |
| Income taxes | 20 | 77 | 996 | 306 | |
| NET INCOME | 1,468 | 155 | 6,750 | 1,516 | |
| Other comprehensive income (loss) | |||||
| Item that will be reclassified subsequently to net income | |||||
| Exchange differences on translating foreign operations | (223) | 281 | 224 | (29) | |
| COMPREHENSIVE INCOME | $ 1,245 | $ 436 | $ 6,974 | $ 1,487 | |
| Earnings per share | (Note 8) | ||||
| Basic | $ 0.03 | $ 0.00 | $ 0.13 | $ 0.03 | |
| Diluted | $ 0.03 | $ 0.00 | $ 0.13 | $ 0.03 |
The accompanying notes are an integral part of these interim condensed consolidated financial statements. Note 4 presents additional information on consolidated comprehensive income.
IMAFLEX INC.
Third Quarter 2024
Consolidated statements of financial position
(in thousands of Canadian dollars)
(unaudited)
| As at | September 30, 2024 | December 31, 2023 | |
|---|---|---|---|
| Assets | |||
| Current assets | |||
| Cash | $ 3,686 | $ 799 | |
| Trade and other receivables | 16,208 | 12,552 | |
| Inventories | 12,966 | 13,168 | |
| Income tax receivable | 213 | 1,564 | |
| Prepaid expenses | 751 | 343 | |
| Total current assets | 33,824 | 28,426 | |
| Non-current assets | |||
| Property, plant and equipment | (Note 9) | 49,141 | 47,769 |
| Intangible assets | 2,328 | 2,255 | |
| Total non-current assets | 51,469 | 50,024 | |
| Total assets | $ 85,293 | $ 78,450 | |
| Liabilities and equity | |||
| Current liabilities | |||
| Bank indebtedness and short-term borrowings | (Note 10) | $ - | $ 2,894 |
| Trade and other payables | 9,166 | 8,504 | |
| Long-term debt, current portion | (Note 10) | 185 | 1,298 |
| Lease obligations, current portion | (Note 10, 11) | 2,525 | 1,744 |
| Total current liabilities | 11,876 | 14,440 | |
| Non-current liabilities | |||
| Deferred tax liabilities | 2,746 | 2,676 | |
| Lease obligations | (Note 10, 11) | 7,805 | 5,476 |
| Total non-current liabilities | 10,551 | 8,152 | |
| Total liabilities | 22,427 | 22,592 | |
| Equity | |||
| Share capital | (Note 12) | 12,931 | 12,931 |
| Reserves | 3,252 | 2,993 | |
| Retained earnings | 46,683 | 39,934 | |
| Total equity | 62,866 | 55,858 | |
| Total liabilities and equity | $ 85,293 | $ 78,450 |
The accompanying notes are an integral part of these interim condensed consolidated financial statements.
(s) Joseph Abbandonato
Joseph Abbandonato
Director
(s) Roberto Longo
Roberto Longo
Director
IMAFLEX INC.
Third Quarter 2024
Consolidated statements of changes in equity
For the three-month periods ended September 30, 2024 and 2023
(in thousands of Canadian dollars)
(unaudited)
| Share capital (a) | Reserves | Retained earnings | Total | ||||
|---|---|---|---|---|---|---|---|
| Share-based compensation | Accumulated foreign currency translation | Warrants | Total reserves | ||||
| Balance at July 1, 2023 | $ 12,855 | $ 1,522 | $ 992 | $ 465 | $ 2,979 | $ 40,786 | $ 56,620 |
| Net income for the period | - | - | - | - | - | 155 | 155 |
| Exchange differences on translating foreign operations | - | - | 281 | - | 281 | - | 281 |
| Comprehensive income for the period | - | - | 281 | - | 281 | 155 | 436 |
| Transactions with owners: | |||||||
| Share-based compensation (Note 13) | - | 22 | - | - | 22 | - | 22 |
| Balance at September 30, 2023 | $ 12,855 | $ 1,544 | $ 1,273 | $ 465 | $ 3,282 | $ 40,941 | $ 57,078 |
| Balance at July 1, 2024 | $ 12,931 | $ 1,574 | $ 1,433 | $ 465 | $ 3,472 | $ 45,215 | $ 61,618 |
| Net income for the period | - | - | - | - | - | 1,468 | 1,468 |
| Exchange differences on translating foreign operations | - | - | (223) | - | (223) | - | (223) |
| Comprehensive income for the period | - | - | (223) | - | (223) | 1,468 | 1,245 |
| Transactions with owners: | |||||||
| Share-based compensation (Note 13) | - | 3 | - | - | 3 | - | 3 |
| Balance at September 30, 2024 | $ 12,931 | $ 1,577 | $ 1,210 | $ 465 | $ 3,254 | $ 46,683 | $ 62,866 |
(a) Additional detail of share capital is provided in Note 12.
The accompanying notes are an integral part of these interim condensed consolidated financial statements.
IMAFLEX
Third Quarter 2024
Consolidated statements of changes in equity
For the nine-month periods ended September 30, 2024 and 2023
(in thousands of Canadian dollars)
(unaudited)
| Reserves | |||||||
|---|---|---|---|---|---|---|---|
| Share capital (a) | Share-based compensation | Accumulated foreign currency translation | Warrants | Total reserves | Retained earnings | Total | |
| Balance at January 1, 2023 | $ 12,634 | $ 1,320 | $ 1,302 | $ 465 | $ 3,087 | $ 39,425 | $ 55,146 |
| Net income for the period | - | - | - | - | - | 1,516 | 1,516 |
| Exchange differences on translating foreign operations | - | - | (29) | - | (29) | - | (29) |
| Comprehensive income for the period | - | - | (29) | - | (29) | 1,516 | 1,487 |
| Transactions with owners: | |||||||
| Issuance of shares (Note 12) | 221 | - | - | - | - | - | 221 |
| Share-based compensation (Note 13) | - | 224 | - | - | 224 | - | 224 |
| Balance at September 30, 2023 | $ 12,855 | $ 1,544 | $ 1,273 | $ 465 | $ 3,282 | $ 40,941 | $ 57,078 |
| Balance at January 1, 2024 | $ 12,931 | $ 1,544 | $ 984 | $ 465 | $ 2,993 | $ 39,934 | $ 55,858 |
| Net income for the period | - | - | - | - | - | 6,750 | 6,750 |
| Exchange differences on translating foreign operations | - | - | 224 | - | 224 | - | 224 |
| Comprehensive income for the period | - | - | 224 | - | 224 | 6,750 | 6,974 |
| Transactions with owners: | |||||||
| Share-based compensation (Note 13) | - | 34 | - | - | 34 | - | 34 |
| Balance at September 30, 2024 | $ 12,931 | $ 1,578 | $ 1,208 | $ 465 | $ 3,254 | $ 46,684 | $ 62,866 |
(a) Additional detail of share capital is provided in Note 12.
The accompanying notes are an integral part of these interim condensed consolidated financial statements.
IMAFLEX
Third Quarter 2024
Consolidated statements of cash flows
(in thousands of Canadian dollars)
(unaudited)
| for the | Three months ended September 30, | Nine months ended September 30, | ||
|---|---|---|---|---|
| 2024 | 2023 | 2024 | 2023 | |
| Operating activities: | ||||
| Net income for the period | $ 1,468 | $ 155 | $ 6,750 | $ 1,516 |
| Income tax expense | 20 | 77 | 996 | 306 |
| Depreciation and amortisation of non-current assets | 1,325 | 1,093 | 3,882 | 3,155 |
| Finance costs | 182 | 138 | 617 | 381 |
| Share-based compensation | 3 | 22 | 34 | 224 |
| Unrealized foreign exchange loss (gain) | 310 | (447) | (636) | 1 |
| 3,308 | 1,038 | 11,643 | 5,583 | |
| Net changes in working capital | ||||
| Decrease (increase) in trade and other receivables | (325) | 537 | (3,473) | (2,501) |
| Decrease (increase) in inventories | 357 | (2,049) | 348 | 923 |
| Decrease (increase) in prepaid expenses | 17 | 124 | (409) | (923) |
| Increase (decrease) in trade and other payables | 942 | (2,773) | 543 | 457 |
| 991 | (63) | (2,991) | (2,044) | |
| Cash generated by operating activities | 4,299 | 975 | 8,652 | 3,539 |
| Net income taxes received (paid) | 712 | (300) | 435 | (1,200) |
| Net cash generated by operating activities | 5,011 | 675 | 9,087 | 2,339 |
| Investing activities: | ||||
| Payments for tangible and intangible assets | (828) | (2,245) | (2,886) | (8,427) |
| Net cash used in investing activities | (828) | (2,245) | (2,886) | (8,427) |
| Financing activities: | ||||
| Net change in bank indebtedness | - | 1,287 | (2,811) | (403) |
| Issuance of share capital | - | - | - | 221 |
| Funds from lease agreements | - | 231 | 2,995 | 4,139 |
| Interest paid | (180) | (138) | (614) | (381) |
| Repayment of long-term debt | (375) | (360) | (1,113) | (1,877) |
| Repayment of leases | (612) | (468) | (1,781) | (1,121) |
| Net cash generated by (used in) financing activities | (1,167) | 552 | (3,324) | 578 |
| Net increase (decrease) in cash | 3,016 | (1,018) | 2,877 | (5,510) |
| Cash, beginning of the period | 687 | 3,017 | 799 | 7,527 |
| Effects of foreign exchange differences on cash | (17) | 12 | 10 | (6) |
| Cash, end of period | $ 3,686 | $ 2,011 | $ 3,686 | $ 2,011 |
The accompanying notes are an integral part of these interim condensed consolidated financial statements.
IMAFLEX.ORG
Third Quarter 2024
IMAFLEX
Notes to the interim condensed consolidated financial statements for the three and nine-month periods ended September 30, 2024 and 2023
Amounts in tables are expressed in thousands of Canadian dollars, except per share information (unaudited)
1. General information
Imaflex Inc. (the “Parent Company”) is incorporated under the Canada Business Corporations Act. Its registered office and headquarters are located at 5710 Notre-Dame Street West, Montreal, Quebec, Canada. The principal activities of the Parent Company and its subsidiary (together referred to as the “Company”) consist in the manufacture and sale of products for the flexible packaging industry, including polyethylene film and bags, as well as the metallization of plastic film for the agriculture and packaging industries. The common shares of the Parent Company are listed for trading on the TSX Venture Exchange under the symbol “IFX”.
2. Summary of material accounting policies
The accounting policies set out below have been applied consistently to all periods presented in these consolidated financial statements, unless specifically stated.
2.1 Basis of Presentation and statement of compliance
The interim condensed consolidated financial statements have been prepared in accordance with International Financial Reporting Standards (“IFRS”) issued by the International Accounting Standards Board (“IASB”) and with International Accounting Standard (“IAS”) 34, Interim Financial Reporting. These interim condensed consolidated financial statements were prepared using the same basis of presentation and accounting policies as outlined in Note 2, Significant accounting policies of our Consolidated financial statements for the years ended December 31, 2023 and 2022. These interim condensed consolidated financial statements do not include all the notes and disclosures required in annual financial statements. All amounts are in Canadian dollars, except where noted.
The interim condensed consolidated financial statements were approved by the board of directors and authorized for issue on November 27, 2024.
3. Segment information
The Company operates in one reportable segment, comprising the development, manufacture and sale of flexible packaging material in the form of film or bags, for various uses.
3.1 Revenues by geographical end market
The Company’s revenues by geographical end market are as follows:
| Three months ended September 30, | Nine months ended September 30, | |||
|---|---|---|---|---|
| 2024 | 2023 | 2024 | 2023 | |
| Canada | $ 8,507 | $ 8,258 | $ 24,740 | $ 24,311 |
| United States | 19,797 | 14,600 | 59,801 | 46,277 |
| Other | 114 | - | 114 | - |
| Total | $ 28,418 | $ 22,858 | $ 84,655 | $ 70,588 |
3.2 Property, plant and equipment, right-of-use assets and intangible assets per geographic location
| September 30, 2024 | December 31, 2023 | |
|---|---|---|
| Canada | $ 24,320 | $ 22,714 |
| United States | 27,149 | 27,310 |
| Total | $ 51,469 | $ 50,024 |
Third Quarter 2024
IMAFLEX
Notes to the interim condensed consolidated financial statements for the three and nine-month periods ended September 30, 2024 and 2023
Amounts in tables are expressed in thousands of Canadian dollars, except per share information (unaudited)
4. Additional information on the consolidated statements of comprehensive income
The Company's consolidated statements of comprehensive income include depreciation of production assets and accessories of $1.3 million for the quarter ended September 30, 2024 ($1.0 million in 2023) and $3.7 million for the nine-month period ended September 30, 2024 ($2.9 million in 2023) classified in Cost of sales, which includes the depreciation for right-of-use assets of $0.3 million ($0.3 million in 2023) for the quarter and $0.8 million for the nine-month period ($0.8 million in 2023). Depreciation of other property, plant and equipment and amortisation of intangible assets amounting to $0.1 million for the quarter ended September 30, 2024 ($0.1 million in 2023) and $0.2 million for the nine-month period ended September 30, 2024 ($0.1 million in 2023) is included in Administrative expenses.
The Company's consolidated statements of comprehensive income include salaries paid to its employees of $3.4 million for the quarter ended September 30, 2024 ($2.7 million in 2023) and $10.4 million for the nine-month period ended September 30, 2024 ($8.0 million in 2023) classified in Cost of sales. Administrative expenses include salaries paid to employees of $0.6 million for the quarter ended September 30, 2024 ($0.5 million in 2023) and $1.8 million for the nine-month period ended September 30, 2024 ($1.6 million in 2023). Selling expenses include salaries paid to employees of $0.2 million for the quarter ended September 30, 2024 ($0.2 million in 2023) and $0.4 million for the nine-month period ended September 30, 2024 ($0.4 million in 2023).
5. Employee benefits
The Company contributes to state-run pension plans, employment insurance, group insurance and social security for its employees. The costs incurred for the employee benefits noted above amounted to $0.7 million for the quarter ended September 30, 2024 ($0.7 million in 2023) and $2.0 million for the nine-month period ended September 30, 2024 ($2.0 million in 2023). These payments are expensed as incurred and the Company does not recognise any gains or losses subsequent to the payment of these benefits.
6. Finance costs
| Three months ended September 30, | Nine months ended September 30, | |||
|---|---|---|---|---|
| 2024 | 2023 | 2024 | 2023 | |
| Interest on bank indebtedness and long-term debt | $ 7 | $ 86 | $ 164 | $ 252 |
| Interest on lease obligations | 175 | 52 | 453 | 129 |
| $ 182 | $ 138 | $ 617 | $ 381 |
7. Other (gains) losses
| Three months ended September 30, | Nine months ended September 30, | |||
|---|---|---|---|---|
| 2024 | 2023 | 2024 | 2023 | |
| Foreign exchange (gains) losses | $ 344 | $ (331) | $ (442) | $ 146 |
| Loss on property, plant and equipment disposal | - | 9 | - | 9 |
| Interest income | (4) | (38) | (15) | (124) |
| $ 340 | $ (360) | $ (457) | $ 31 |
Third Quarter 2024
Notes to the interim condensed consolidated financial statements for the three and nine-month periods ended September 30, 2024 and 2023
Amounts in tables are expressed in thousands of Canadian dollars, except per share information (unaudited)
8. Earnings per share
| Three months ended September 30, | Nine months ended September 30, | |||
|---|---|---|---|---|
| 2024 | 2023 | 2024 | 2023 | |
| Net income for basic and diluted earnings per share | $ 1,468 | $ 155 | $ 6,750 | $ 1,516 |
| Weighted average number of common shares outstanding | 52,089 | 51,999 | 52,089 | 51,999 |
| Dilutive effect of share purchase options | 31 | 178 | 12 | 247 |
| Diluted weighted average common shares outstanding | 52,120 | 52,177 | 52,101 | 52,246 |
| Basic earnings per common share | $ 0.03 | $ 0.00 | $ 0.13 | $ 0.03 |
| Diluted earnings per common share | $ 0.03 | $ 0.00 | $ 0.13 | $ 0.03 |
There were no stock options outstanding as at September 30, 2024 and September 30, 2023 that were excluded from the calculation of earnings per share because they were antidilutive.
9. Property, plant and equipment
| Land | Building | Production equipment | Leasehold improvements | Office equipment | Computer equipment | Rolling stock | Total | |
|---|---|---|---|---|---|---|---|---|
| Cost | ||||||||
| January 1, 2023 | $ 23 | $ 5,855 | $ 78,855 | $ 3,707 | $ 94 | $ 678 | $ 318 | $ 89,530 |
| Transferts | - | (21) | (16) | (329) | (34) | (40) | 319 | (121) |
| Additions | - | 1,986 | 14,013 | 172 | 4 | 146 | 382 | 16,703 |
| Disposals | - | - | - | - | - | - | (297) | (297) |
| Investment tax credit | - | - | (285) | - | - | - | - | (285) |
| Derecognition of expired leases | - | (2,567) | - | - | - | - | (84) | (2,651) |
| Write-off of obsolete equipment | - | - | (1,752) | - | - | - | - | (1,752) |
| Foreign exchange | (1) | (124) | (1,034) | (35) | - | (1) | (2) | (1,197) |
| December 31, 2023 | 22 | 5,129 | 89,781 | 3,515 | 64 | 783 | 636 | 99,930 |
| Additions | - | 2,035 | 2,637 | 120 | 19 | 20 | - | 4,831 |
| Derecognition of expired leases | - | (1,354) | - | - | - | - | - | (1,354) |
| Foreign exchange | - | 37 | 885 | 29 | - | 1 | 3 | 955 |
| September 30, 2024 | $ 22 | $ 5,847 | $ 93,303 | $ 3,664 | $ 83 | $ 804 | $ 639 | $ 104,362 |
| Accumulated depreciation | ||||||||
| January 1, 2023 | $ - | $ (3,919) | $ (44,026) | $ (2,900) | $ (83) | $ (652) | $ (194) | $ (51,774) |
| Transferts | - | 21 | 269 | 27 | 22 | 20 | (238) | 121 |
| Depreciation | - | (682) | (3,612) | (164) | - | (30) | (70) | (4,558) |
| Disposals | - | - | - | - | - | - | 181 | 181 |
| Derecognition of expired leases | - | 2,515 | - | - | - | - | 86 | 2,601 |
| Write-off of obsolete equipment | - | - | 790 | - | - | - | - | 790 |
| Foreign exchange | - | 16 | 431 | 29 | - | 1 | 1 | 478 |
| December 31, 2023 | - | (2,049) | (46,148) | (3,008) | (61) | (661) | (234) | (52,161) |
| Depreciation | - | (732) | (2,881) | (130) | (4) | (32) | (80) | (3,859) |
| Derecognition of expired leases | - | 1,192 | - | - | - | - | - | 1,192 |
| Foreign exchange | - | (12) | (355) | (24) | - | (1) | (1) | (393) |
| September 30, 2024 | $ - | $ (1,601) | $ (49,384) | $ (3,162) | $ (65) | $ (694) | $ (315) | $ (55,221) |
| Net book value, as at December 31, 2023 | $ 22 | $ 3,080 | $ 43,633 | $ 507 | $ 3 | $ 122 | $ 402 | $ 47,769 |
| September 30, 2024 | $ 22 | $ 4,246 | $ 43,919 | $ 502 | $ 18 | $ 110 | $ 324 | $ 49,141 |
IMAFLEX JMCC
Third Quarter 2024
Notes to the interim condensed consolidated financial statements for the three and nine-month periods ended September 30, 2024 and 2023
Amounts in tables are expressed in thousands of Canadian dollars, except per share information (unaudited)
9. Property, plant and equipment (continued)
A portion of the Company's production equipment with a carrying amount of approximately $14,6 million (approximately $14,6 million as at December 31, 2023) is pledged as collateral for the Company's long-term debt.
The Company has $12.0 million as equipment in progress included in production equipment as at September 30, 2024 ($12.8 million as at December 2023).
Additions of property, plant and equipment amounting to $1.1 million as at September 30, 2024 ($1.1 million as at December 31, 2023) are included in trade and other payables.
Included in the net carrying amount of property, plant and equipment as at September 30, 2024 and December 31, 2023 are right-of-use assets as follows:
| September 30, 2024 | December 31, 2023 | |
|---|---|---|
| Buildings | $ 4 180 | $ 3,011 |
| Production equipment | 7 664 | 4,261 |
| Rolling stock | 315 | 395 |
| Total right-of-use asset | $ 12 159 | $ 7,667 |
10. Borrowings
| September 30, 2024 | December 31, 2023 | |
|---|---|---|
| Bank indebtedness (a) | $ - | $ 2,894 |
| Long-term debt | ||
| Loan, bearing interest at a fixed rate of 3.746% secured by a $3.6 million hypothec on a piece of equipment. (b) | 66 | 649 |
| Loan, bearing interest at a fixed rate of 3.75% secured by a $3.3 million hypothec on a piece of equipment. (c) | 119 | 649 |
| Total long-term debt | 185 | 1,298 |
| Lease obligations | 10,330 | 7,220 |
| Total borrowings | 10,515 | 11,412 |
| Current | ||
| Bank indebtedness | - | 2,894 |
| Long-term debt, current portion | 185 | 1,298 |
| Lease obligations, current portion | 2,525 | 1,744 |
| 2,710 | 5,936 | |
| Non-current | ||
| Lease obligations | 7,805 | 5,476 |
| 7,805 | 5,476 | |
| Total borrowings | $ 10,515 | $ 11,412 |
IMAFLEX IMAFLEX
Third Quarter 2024
IMAFLEX
Notes to the interim condensed consolidated financial statements for the three and nine-month periods ended September 30, 2024 and 2023
Amounts in tables are expressed in thousands of Canadian dollars, except per share information (unaudited)
10. Borrowings (continued)
Interest on long-term debt amounted to $4 thousand for the quarter ended September 30, 2024 ($24 thousand in 2023) and $20 thousand for the nine-month period ended September 30, 2024 ($64 thousand in 2023).
(a) The Company has an operating line of credit with its bankers to a maximum of $12.0 million, bearing interest at the prime rate for an effective interest rate of 6.45% as at September 30, 2024 and 7.20% as at December 31, 2023. The line of credit is secured by trade receivables and inventories. The line of credit may be reviewed periodically by the bank and is repayable on demand. The operating line of credit is subject to working capital and debt to equity covenants (as defined in the lending agreement), all of which were respected as at September 30, 2024 and December 31, 2023. As at September 30, 2024, the Company had totally refund the line of credit ($2.9 million drawn on December 31, 2023).
(b) The loan is repayable in blended monthly instalments of $66 thousand through October 2024. This loan is secured by a hypothec on a specific piece of equipment of the Company.
(c) The loan is repayable in blended monthly instalments of $60 thousand through November 2024. This loan is secured by a hypothec on a specific piece of equipment of the Company.
The aggregate scheduled repayment of long-term debt is as follows:
| Not later than one year | $ 185 |
|---|---|
| Later than one year and not later than five years | - |
| Later than 5 years | - |
| $ 185 |
11. Lease obligations
The Company has entered into certain lease agreements. Lease payments are due as follows:
| Not later than one year | $ 3,123 |
|---|---|
| Later than one year and not later than five years | 8,116 |
| Later than five years | 246 |
| Total minimum lease payments | 11,485 |
| Less amount representing interest | (1,155) |
| Present value of minimum lease payments | 10,330 |
| Less the long-term portion | (7,805) |
| Current portion of obligations under leases | $ 2,525 |
12. Share capital
The Company's authorized share capital consists of an unlimited number of common shares, voting, participating, without par value. As at September 30, 2024 and December 31, 2023, there were 52,088,637 common shares outstanding (51,988,637 as at September 30, 2023).
During the nine-month period ended September 30, 2023, the Company issued 100,000 shares for cash consideration of $55,000 following the exercise of options issued on September 10, 2019 and another 150,000 for cash consideration of $166,500 following the exercise of options issued on November 29, 2017.
For the year ended December 31, 2023, the Company issued another 100,000 shares for cash consideration of $76,000 following the exercise of options issued on November 28, 2017.
Third Quarter 2024
Notes to the interim condensed consolidated financial statements for the three and nine-month periods ended September 30, 2024 and 2023
Amounts in tables are expressed in thousands of Canadian dollars, except per share information (unaudited)
13. Share-based compensation
Pursuant to the Stock Option Plan (the "Plan") of the Company, 4,973,860 of the common shares are reserved for options. The Plan provides that the term of the options shall be fixed by directors. Officers and employees of the Company are eligible to receive options. Options are granted at an exercise price of not less than the fair value of the Company's shares on the date the options are granted. Options may be exercisable for a period no longer than five (5) years and the exercise price must be paid in full upon exercise of the option.
The expense related to share-based compensation totalled $3 thousand for the quarter ended September 30, 2024 ($22 thousand in 2023) and $34 thousand for the nine-month period ended September 30, 2024 ($224 thousand in 2023).
The following are the assumptions used in order to value the options as well as general information on each outstanding option grant:
| 30/05/2023 | 26/05/2022 | 26/08/2020 | 29/11/2018 | Total | |
|---|---|---|---|---|---|
| Outstanding as at 31/12/2023 | 150,000 | 300,000 | 50,000 | - | 500,000 |
| Oustanding as at 30/09/2024 | 150,000 | 300,000 | 50,000 | - | 500,000 |
| Oustanding as at 30/09/2023 | 150,000 | 300,000 | 50,000 | 150,000 | 650,000 |
| Exercisable as at 30/09/2024 | 112,500 | 300,000 | 50,000 | - | 462,500 |
| Exercisable as at 30/09/2023 | 37,500 | 225,000 | 50,000 | 150,000 | 462,500 |
| Remaining life of options (yrs) | 3.67 | 2.65 | 0.90 | - | |
| Fair value assumptions: | |||||
| Expected life of options (yrs) | 2.5 to 3.25 | 2.5 to 3.25 | 2.5 to 3.25 | 2.5 to 3.25 | |
| Expiry | 31/05/2028 | 26/05/2027 | 26/08/2025 | 29/11/2023 | |
| Expected share price volatility | 47.94 % - 56.39 % | 58.83 % - 59.93 % | 57.82 % - 60.98 % | 67.14 % - 70.41 % | |
| Dividend yield | 0 % | 0 % | 0 % | 0 % | |
| Risk free rate | 3.44% | 2.62% | 0.41% | 2.23% | |
| Exercice price | $ 1.25 | $ 1.19 | $ 0.73 | $ 0.76 | |
| Share price on grant date | $ 1.25 | $ 1.19 | $ 0.73 | $ 0.76 | |
| Fair value of option at grant | $ 0.45 | $ 0.48 | $ 0.28 | $ 0.35 |
The expected volatility was calculated using the average closing price change of the Company's shares on the TSX Venture Exchange over the expected life of the options.
IMAFLEX INC.
Third Quarter 2024
Notes to the interim condensed consolidated financial statements for the three and nine-month periods ended September 30, 2024 and 2023
Amounts in tables are expressed in thousands of Canadian dollars, except per share information (unaudited)
14. Financial instruments
14.1 Fair value and classification of financial instruments
| Carrying amount | Fair Value | |||
|---|---|---|---|---|
| September 30, 2024 | December 31, 2023 | September 30, 2024 | December 31, 2023 | |
| Financial assets | ||||
| Loans and receivables | ||||
| Cash | $ 3,686 | $ 799 | $ 3,686 | $ 799 |
| Trade and other receivables (1) | 16,194 | 11,966 | 16,194 | 11,966 |
| 19,880 | 12,765 | 19,880 | 12,765 | |
| Financial liabilities | ||||
| Financial liabilities, at amortised cost | ||||
| Bank indebtedness | $ - | $ 2,894 | $ - | $ 2,894 |
| Trade and other payables (2) | 7,781 | 7,208 | 7,781 | 7,208 |
| Long-term debt | 185 | 1,298 | 185 | 1,298 |
| $ 7,966 | $ 11,400 | $ 7,966 | $ 11,400 |
(1) Excludes sales taxes
(2) Excludes employee benefits
Fair value estimates are made as of the date of the consolidated statement of financial position, using available information about the financial instrument. These estimates are subjective in nature and often cannot be determined with precision.
The following methods and assumptions were used to determine the estimated fair value of each class of financial instruments:
- The fair value of cash, trade and other receivables, bank indebtedness, short-term borrowings and trade and other payables approximates their respective carrying amounts as at the date of the consolidated statement of financial position because of the short-term maturity of those instruments.
- The fair value of long-term debt that bears interest at floating rates approximates its carrying value as the interest rate applicable to the loan reflects the latest market rates whereas long term debt that bears interest at fixed rates is estimated using a discounted cash flows approach, which discounts the contractual cash flows using discount rates derived from observable market interest rates of similar loans with similar risks.
The Company ensures, to the extent possible, that its valuation techniques and assumptions incorporate all factors that market participants would consider in setting a price and that it is consistent with accepted economic methods for pricing financial instruments.
14.2 Fair value hierarchy
The Company categorizes its financial instruments into a three-level fair value measurement hierarchy as follows:
Level-1 - valuation based on quoted prices (unadjusted) in active markets for identical assets or liabilities;
Level-2 - valuation techniques based on inputs other than quoted prices included in Level 1 that are observable for the asset or liability, either directly (as prices) or indirectly (derived from prices);
Level-3 - valuation techniques using inputs for the asset or liability that are not based on observable market data (unobservable inputs).
IMAFLEX INC.
Third Quarter 2024
IMAFLEX
Third Quarter 2024
Notes to the interim condensed consolidated financial statements for the three and nine-month periods ended September 30, 2024 and 2023
Amounts in tables are expressed in thousands of Canadian dollars, except per share information (unaudited)
- Financial instruments (continued)
14.2 Fair value hierarchy (continued)
As at September 30, 2024 and December 31, 2023, the fair values of long-term debt and lease obligations are categorised as Level 2.
- Non-cash transactions
During the year ended December 31, 2023, the Company renewed a lease for a production facility for an amount of $2.3 million (present value of $1.9 million), which came to term in April 2023 and concluded new leases for production equipment and rolling stock, increasing its lease obligations by $4.8 million.
The financial statements for the nine-month period ended September 30, 2024 reflect the renewal of a production facility lease which came to term in May 2024 for an amount of $2.2 million (present value of $1.9 million) and concluded a new lease for production equipment, increasing its lease obligations by $3.7 million.
14