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Plaintree Systems Inc. — Management Reports 2025
Nov 14, 2025
42658_rns_2025-11-14_ec82532c-3140-4b21-b884-0d161de06086.pdf
Management Reports
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MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS of Plaintree Systems Inc.
For the six months ending September 30, 2025 and September 30, 2024
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
PLAINTREE SYSTEMS INC.
For the three and six months ended September 30, 2025 and September 30, 2024
Date: November 13, 2025
The following discussion and analysis is the responsibility of management and has been reviewed by the Audit Committee of Plaintree Systems Inc ("Plaintree" or the "Company") and approved by the Board of Directors of Plaintree. The Board of Directors carries out its responsibilities for the financial statements and management's discussion and analysis principally through the Audit Committee, which is comprised of a majority of independent directors.
The following discussion of the financial condition, changes in financial condition, and results of operations of Plaintree is for the six months ended September 30, 2025, and 2024. Historical results of operations, percentage relationships, and any trends that may be inferred therefrom are not necessarily indicative of the operating results of any future periods. Unless otherwise stated, all amounts are in Canadian dollars following the requirements of the International Financial Reporting Standards ("IFRS"). The information contained herein is dated as of November 13, 2025, and is current to that date, unless otherwise stated. Management is responsible for ensuring that processes are in place to provide sufficient knowledge to support the representations made in the interim filings. Our Audit Committee and Board of Directors provide oversight with respect to all public financial disclosures by the Company and have reviewed this Management's Discussion and Analysis (MD&A) and the accompanying financial statements.
W. David Watson II, President and Chief Executive Officer, and Robert Turley, Chief Financial Officer, in accordance with National Instrument 52-109 ("NI52-109"), have both certified that they have reviewed the interim financial statements and this MD&A ("the interim Filings") and that, based on their knowledge having exercised reasonable diligence, (a) the interim Filings do not contain any untrue statement of a material fact or omit to state a material fact required to be stated or that is necessary to make a statement not misleading in light of the circumstances under which it was made with respect to the period covered by the interim Filings; and (b) the interim financial statements together with the other financial information included in the interim Filings fairly present in all material respects the financial condition, financial performance and cash flows of the Company, as of the dates and for the periods presented in the interim Filings.
Investors should be aware that the inherent limitations on the ability of certifying officers of a venture issuer to design and implement, on a cost-effective basis, Disclosure Controls and Procedures and Internal Controls over Financial Reporting as defined in NI 52-109 may result in additional risks to the quality, reliability, transparency and timeliness of interim and annual filings and other reports provided under securities legislation.
Caution Regarding Forward Looking Information
This MD&A of the Company contains certain statements that, to the extent not based on historical events, are forward-looking statements based on certain assumptions and reflect Plaintree's current expectations. Forward-looking statements include, without limitation, statements evaluating market and general economic conditions, and statements regarding growth strategy and future-oriented project revenue, costs and expenditures. Actual results could differ materially from those projected and should not be relied upon as a prediction of future events. A variety of inherent risks, uncertainties and factors, many of which are beyond Plaintree's control, affect the operations, performance and results of Plaintree and its business, and could cause actual results to differ materially from current expectations of estimated or anticipated events or results. Some of these risks, uncertainties and factors include the impact or unanticipated impact of: companies evaluating Plaintree's products delaying purchase
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
decisions; current, pending and proposed legislative or regulatory developments in the jurisdictions where Plaintree operates; change in tax laws; political conditions and developments; intensifying competition from established competitors and new entrants in the industry; technological change; currency value fluctuation; general economic conditions worldwide, including in China; Plaintree's success in developing and introducing new products and services, expanding existing distribution channels, developing new distribution channels and realizing increased revenue from these channels; and Plaintree's success in integrating acquired businesses. This list is not exhaustive of the factors that may affect any of Plaintree's forward-looking statements. Plaintree undertakes no obligation to update any forward-looking statement to reflect events or circumstances after the date on which such statement is made, or to reflect the occurrence of unanticipated events, whether as a result of new information, future events or results otherwise. Readers are cautioned not to put undue reliance on forward-looking statements. Readers should also carefully review the risks concerning the business of the Company and the industries in which it operates generally described in the documents filed from time to time with Canadian securities regulatory authorities.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Overview
Plaintree Systems Inc. ("Plaintree" or the "Company") was incorporated in Canada under the Canada Business Corporation Act and is publicly traded on the Canadian Securities Exchange ("CSE") under "NPT". Plaintree is a diversified company with proprietary technologies and manufacturing capabilities in structural design and aerospace. The Company operates an Applied Electronics division, consisting of the Hypernetics division and the Elmira Stove Works business, as well as a Specialty Structures division consisting of the Triodetic business and Spotton Corporation. The Hypernetics business manufactures avionic components for various applications, including aircraft anti-skid braking systems, aircraft indicators, solenoids, and permanent magnet alternators. The Triodetic business is a design/build manufacturer of steel, aluminum, and stainless-steel specialty structures such as commercial domes, free form structures, barrel vaults, space frames, and industrial dome coverings. Summit Aerospace specializes in the high-end machining of super-alloys for the aircraft and helicopter markets. Spotton's business involves the design and manufacture of high-end custom hydraulic and pneumatic cylinders for the industrial, automation, and oil and gas markets. The Elmira Stove Works business manufactures custom vintage-inspired kitchen appliances for the North American consumer market.
Until July 2025, the Applied Electronics segment included the business of Summit Aerospace USA Inc. ("Summit Aerospace"), a machine shop serving the aerospace sector. The assets and liabilities associated with this business are presented as held for sale as of September 2025.
The address of the Company's registered office and principal place of business is 10 Didak Drive, Arnprior, Ontario.
Control Activities
The Company's Chief Executive Officer and Chief Financial Officer exercise reasonable diligence around the controls and procedures designed to provide reasonable assurance that financial information disclosed is recorded, processed, and disclosed reliably.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Selected Interim Financial Information
Company's consolidated financial statements are stated in Canadian dollars and are prepared in accordance with International Financial Reporting Standards ("IFRS"). The following table sets forth selected financial information from the Company's interim financial statements:
($000s, except per share amounts)
Revenue
Net earnings (loss) and comprehensive earnings (loss)
Net earnings (loss) attributed to common shareholders
Basic and diluted earnings (loss) per share
($000s, except per share amounts)
| Three months ended | Six months ended | ||
|---|---|---|---|
| September 30, 2025 | September 30, 2024 | September 30, 2025 | September 30, 2024 |
| (unaudited) | (unaudited) | (unaudited) | (unaudited) |
| $ | $ | ||
| 4,691 | 6,230 | 10,226 | 12,840 |
| 924 | (611) | 1,927 | 516 |
| 558 | (977) | 1,194 | (217) |
| 0.04 | (0.08) | 0.09 | (0.02) |
| September 30, 2025 | March 31, 2025 | ||
| --- | --- | ||
| (unaudited) | (audited) | ||
| $ | $ | ||
| 14,403 | 13,859 | ||
| 13,393 | 14,775 | ||
| 5,002 | 5,103 | ||
| nil | nil |
Total assets
Total liabilities
Long-term liabilities
Cash dividends declared per share
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Results from Operations
($000s)
| Six months ended | ||
|---|---|---|
| September 30, 2025 | September 30, 2024 | Change from |
| (unaudited) | (unaudited) | |
| $ | $ | $ |
| 10,226 | 12,840 | (2,614) |
| 5,855 | 9,724 | (3,869) |
| 4,371 | 3,116 | 1,255 |
| 43% | 24% | |
| 923 | 880 | 43 |
| 826 | 957 | (131) |
| 670 | 746 | (76) |
| - | 27 | (27) |
| 177 | 133 | 44 |
| 449 | (38) | 487 |
| - | (122) | 122 |
| 3,046 | 2,583 | 463 |
| 1,326 | 534 | 792 |
| 601 | (18) | 619 |
| 1,927 | 516 | 1,411 |
Revenue
Cost of sales
Gross margin
Operating expenses:
Engineering and design
Finance and administration
Sales and marketing
Bad debts
Interest expense
(Gain) on foreign exchange
Gain on lease modification
Net earnings and comprehensive earnings (loss) from continuing operations
Gain on operations held for sale (Note 3)
Net earnings (loss) and comprehensive earnings (loss)
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Operations held for sale
In August 2025, the Company ceased operations at its wholly held division, Summit Aerospace, a machine shop formerly reported as part of the Applied Electronics segment. The Company has begun the liquidation of its assets, which is expected to be completed within the next 12 months. As a result, the assets and liabilities have been classified and accounted for as held for sale on the consolidated statements of financial position, and the operating results have been reported on the consolidated statements of comprehensive earnings as discontinued operations. The assets are measured at the lower of their carrying value less their respective costs to sell. Summarized financial statements for Summit Aerospace are shown below:
| September 30, 2025 | September 30, 2024 | |
|---|---|---|
| $ | $ | |
| Assets held for sale | ||
| Trade receivables and other receivables | 1,237,614 | 597,821 |
| Unbilled revenue | 0 | 236,786 |
| Taxes receivable | 61,598 | 59,730 |
| Prepaid expenses and other receivables | 42,951 | 45,360 |
| Property, plant and equipment | 367,263 | 398,796 |
| Assets held for sale | 1,709,426 | 1,338,493 |
| Liabilities related to assets held for sale | ||
| Trade and other payables | 63,524 | 127,731 |
| Long-term debt | -36,007 | 304,551 |
| Deferred government assistance | 271,554 | 332,735 |
| Total liabilities related to assets held for sale | 235,547 | 637,286 |
| Liabilities directly associated with assets held for sale | 58,354 | 581,077 |
| Six months ending | ||
| --- | --- | --- |
| September 30, 2025 | September 30, 2024 | |
| Revenue | 812,539 | 1,287,827 |
| Cost of sales | 1,200,407 | 1,271,839 |
| Gross margin | -387,868 | 15,988 |
| Operating expenses | ||
| Finance and administration | 20,813 | 4,369 |
| Sales and marketing | 0 | 3,646 |
| (Gain) on disposal of assets | -215,532 | 0 |
| Interest expense | 15,290 | 20,998 |
| (Gain) loss on foreign exchange | -809,161 | 5,111 |
| -988,591 | 34,124 | |
| Gain/(Loss) on sale of operations held for sale | 600,723 | -18,136 |
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Business segment information
The Company's chief decision maker, the CEO, tracks the Company's operations as two business segments - the design, development, manufacture, marketing and support of electronic product, and the specialty structural products. The Company determines the geographical location of revenue based on the location of its customers. Of the total balance of $2,992,569 (September 30, 2024 - $4,554,758) in property, plant and equipment, $2,625,306 (September 30, 2024 - $3,811,777) is located in Canada and $367,263 (September 30, 2024 - $742,981) in the United States. All the Company's intangible assets are primarily located in Canada.
Revenue by division
| Three months ending | Six months ending | |||
|---|---|---|---|---|
| September 30, 2025 | September 30, 2024 | September 30, 2025 | September 30, 2024 | |
| (unaudited) | (unaudited) | (unaudited) | (unaudited) | |
| $ | $ | $ | $ | |
| Applied Electronics | 1,323,186 | 1,073,291 | 2,241,897 | 2,714,997 |
| Specialty Structures | 3,367,976 | 5,156,243 | 7,984,533 | 10,125,489 |
| 4,691,162 | 6,229,534 | 10,226,430 | 12,840,486 | |
| Revenue by geographical location | Three months ending | Six months ending | ||
| September 30, 2025 | September 30, 2024 | September 30, 2025 | September 30, 2024 | |
| (unaudited) | (unaudited) | (unaudited) | (unaudited) | |
| $ | $ | $ | $ | |
| Canada | 2,576,968 | 3,819,182 | 4,177,306 | 7,183,578 |
| United States | 1,318,108 | 2,410,352 | 4,634,388 | 4,045,269 |
| Other | 796,086 | 0 | 1,414,736 | 1,611,639 |
| 4,691,162 | 6,229,534 | 10,226,430 | 12,840,486 | |
| Net earnings (loss) before taxes by divisic - Continuing operations | Three months ending | Six months ending | ||
| September 30, 2025 | September 30, 2024 | September 30, 2025 | September 30, 2024 | |
| (unaudited) | (unaudited) | (unaudited) | (unaudited) | |
| $ | $ | $ | $ | |
| Applied Electronics | 366,704 | (343,687) | 406,698 | (258,020) |
| Specialty Structures | (96,030) | (233,988) | 919,271 | 791,710 |
| 270,674 | (577,675) | 1,325,969 | 533,690 |
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Product revenue concentration (customers with revenue in excess of 10%)
| Three months ending | Six months ending | |||
|---|---|---|---|---|
| September 30, 2025 | September 30, 2024 | September 30, 2025 | September 30, 2024 | |
| Number of customers | (unaudited) | 2 | (unaudited) | (unaudited) |
| % of total revenue | 14.1%, 22.1% | 10%,13%,17%,19% | 21% | 20%, 21% |
| Assets by division | Six months ending | |||
| September 30, 2025 | September 30, 2024 | |||
| (unaudited) | (unaudited) | |||
| Applied Electronics | $ | $ | ||
| Specialty Structures | 6,445,442 | 7,322,036 | ||
| 7,957,910 | 8,968,981 | |||
| Intangibles by division | Six months ending | |||
| September 30, 2025 | September 30, 2024 | |||
| (unaudited) | (unaudited) | |||
| Applied Electronics | $ | $ | ||
| Specialty Structures | 0 | 841,576 | ||
| 0 | 0 |
Revenues
Total product revenue from ongoing operations for the first six months of fiscal 2026 was $10,226,430 compared to $12,840,486 for the first six months of fiscal 2025.
Plaintree has two diversified business divisions: Specialty Structures and Applied Electronics.
Plaintree's Applied Electronics Division revenues from operations decreased in the first six months of fiscal 2026 to $2,241,897 compared to $2,714,997 in the first six months of fiscal 2025.
Plaintree's Specialty Structures Division revenues from operations decreased to $7,984,533 in the first six months of fiscal 2026 from $10,125,489 in the first six months of fiscal 2025.
Gross Margin
Total gross margin increased during the first six months of fiscal 2026, to 43% compared to 22% for fiscal 2025 due in part to the project mix in the Specialty Structures segment and lower Applied Electronics activity. The prior year's gross margin was historically lower than typical reflecting timing and cost realizations on long-running projects.
Operating Expenses
Engineering and design expenses
Engineering and design expenses were $922,958 and $879,662 for the first six months of fiscals 2026 and 2025, respectively. Engineering and design expenditure consists primarily of development engineering and personnel expenses.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Finance and administration expenses
Finance and administration expenses were $862,272 and $957,375 for the first six months of fiscals 2026 and 2025, respectively. Finance and administration expenses consist primarily of costs associated with managing the Company's finances, which include financial staff, legal, and audit activities. The decrease is due in part to reduced use of professional services, staffing changes, and lower banking fees.
Sales and marketing expenses
Sales and marketing expenses were $670,260 and $746,408 for the first six months of fiscals 2026 and 2025, respectively. These expenses consisted primarily of personnel and related costs associated with the Company's sales and marketing departments, which include sales commissions, advertising, travel, trade shows and other promotional activities. The decrease is due in part to expenses tied to revenues.
Bad debts
An allowance for doubtful accounts has been accrued in the amount of $NIL and $26,920 for the first six months of fiscals 2026 and 2025, respectively, to reflect potentially uncollectable amounts. This relates to a tenant that has sublet office space and is more than six months in arrears. A personal guarantee from the tenant's owner has been obtained.
Interest expense
Interest expense consists of interest incurred on bank debt. Interest expenses amounted to $177,085 and $132,870 for the first six months of fiscals 2026 and 2025 respectively. The majority of the Company's debt accrues interest at variable rates based on the Company's bank prime lending rate of interest.
Loss (Gain) on foreign exchange
The Company reported a loss on foreign exchange of $448,941 and a gain of $(38,246) in the first six months of fiscals 2026 and 2025, respectively. The gain/loss on foreign exchange represents the gain/loss, realized or unrealized, of transactions and year-end foreign balances that are completed in currencies other than the Company's reporting currency.
Net earnings, Comprehensive earnings and Net earnings Attributable to Common Shareholders
Net earnings and comprehensive earnings attributed to common shareholders for first six months of fiscal 2026 was $1,193,691 and Net loss and comprehensive loss attributed to common shareholders for fiscal 2025 was $(181,175). Net income (loss) attributed to common shareholders is calculated by reducing net income by the $733,000 cumulative dividends ($366,500 per quarter) that accrue on the Class A preferred shares. The cumulative dividends accrue at 8% per annum on the face value of the $18,325,000 for the Class A preferred shares and as September 30, 2025 the accrued and unpaid dividends on the Class A preferred shares were $24,488,500 (September 30, 2024 - $23,389,000).
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Quarterly Results
The following table sets out selected unaudited consolidated financial information for the last eight quarters in fiscals 2026, 2025 and 2024:
Quarters ended (unaudited, in $000s except per share data)
| Sep-30 | Jun-30 | Mar-31 | Dec-31 | Sep-30 | Jun-30 | Mar-31 | Dec-31 | |
|---|---|---|---|---|---|---|---|---|
| 2025 | 2025 | 2025 | 2024 | 2024 | 2024 | 2024 | 2023 | |
| Q2 | Q1 | Q4 | Q3 | Q2 | Q1 | Q4 | Q3 | |
| 2026 | 2026 | 2025 | 2025 | 2025 | 2025 | 2024 | 2024 | |
| $ | $ | $ | $ | $ | $ | $ | $ | |
| Revenue (1) | 4,691 | 5,535 | 4,523 | 4,075 | 6,230 | 6,611 | 5,598 | 4,020 |
| Net earnings (loss) and total comprehensive earnings (loss) | 924 | 1055 | (2221) | 292 | (578) | 1111 | 845 | (369) |
| Net (loss) earnings attributed to common shareholders | 558 | 689 | (2,587) | (74) | (944) | 745 | 479 | (540) |
| Basic and diluted (loss) earnings per share | 0.04 | 0.05 | (0.20) | (0.01) | (0.07) | 0.06 | 0.04 | (0.04) |
(1) Revenue of discontinued operations has been removed for all periods.
Liquidity and Capital Resources
| ($000s) | September 30, 2025 (unaudited) | March 31, 2025 (audited) | Change |
|---|---|---|---|
| $ | $ | $ | |
| Cash | (2,842) | (2,700) | (142) |
| Working Capital | 3,019 | (3) | 3,022 |
| September 30, 2025 (unaudited) | September 30, 2024 (unaudited) | Change | |
| $ | $ | $ | |
| Net cash provided by (used in): | |||
| Operating activities | 1,273 | (6) | 1,279 |
| Investing activities | (136) | (172) | 36 |
| Financing activities | (1,279) | (643) | (636) |
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Cash
As at September 30, 2025, the Company had a cash deficit of $(2,841,754) an increase of $(16,411) from $(2,825,343) in September 30, 2024.
Working Capital
Working capital represents current assets less current liabilities. As at September 30, 2025, the Company had working capital of $3,019,017 compared to a working capital of $3,181,965 at September 30, 2024. The company was offside on its loan covenants as of September 30, 2025 and reclassified $1,119,413 that would otherwise be considered long-term debt as current. This was not the case for the respective period during fiscal 2025. Included in the September 30, 2025 working capital is an inventory provision of $1,043,397 compared to $NIL in the respective period during fiscal 2025. In September 2025 $239,805 of Summit loans were paid off, and $367,263 of the remaining capital assets were reclassified as held for sale.
Operating activities
Cash provided by operating activities during the first six months of fiscal 2026 was $1,272,869, representing an increase of $1,404,166 from cash (used in) of $(131,297) for the respective period during fiscal 2025. Cash provided during the period reflects strong operating profits, timing impacts from unbilled revenues, and changes in inventory, payables and receivables.
Investing activities
Cash (used in) investing activities during the first six months of fiscal 2026 was $(135,640), representing a decrease of $35,954 in investing activities from cash (used in) investing activities of $(171,594) in the respective period during fiscal 2025. Cash used in investing activities during fiscal 2026 relates primarily to the purchases of manufacturing equipment and leasehold improvements.
Financing activities
Cash (used in) financing activities during the first six months of fiscal 2026 was $(1,278,751), representing an increase of $(635,836) from cash (used in) of $(642,915) during the respective period in fiscal 2025. Cash used in financing activities during the current fiscal year relates primarily to the repayment of long-term debt and leases. Included in this amount is the payout of $239,805 of lease payments related to Summit, along with $267,263 of capital assets reclassified as assets held for sale.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Outlook
The Company has in place a credit facility of up to $4,000,000 CAD through its bank based on acceptable trade receivables and inventory. The total amount available to the Company as at September 30, 2025 was $3,313,251 CAD of which $2,700,639 was in use leaving $612,212 CAD available. The Company through its bank has in place a credit facility of up to $3,500,000 CAD for the issuance of standby letters of credit and/or letters of guarantee insured by Export Development Corporation ("EDC") Performance Security Guarantee of which $1,156,930 CAD was in use as at September 30, 2025. The Company has in place a credit facility of up to $2,000,000 CAD to assist with financing of new and used equipment. As at September 30, 2025 $1,068,570 CAD was available (Note 8 Lease obligations).
Due to related parties
Due to senior officers
Dividends payable
Due to Targa Group Inc.
Due to Tidal Quality Management Inc.
Due to Targa Group Inc, line of credit interest
Due to Targa Group Inc, demand loan interest
Less: current portion
| September 30, 2025 | March 31, 2025 |
|---|---|
| (unaudited) | (audited) |
| $ | $ |
| 3,790,208 | 3,615,401 |
| 60,000 | 60,000 |
| 247,672 | 247,672 |
| 398,388 | 398,388 |
| 242,598 | 242,598 |
| 201,393 | 201,393 |
| 4,940,258 | 4,765,451 |
| (50,000) | (50,000) |
| 4,890,258 | 4,715,451 |
Targa Group Inc. and Tidal Quality Management Inc. are companies under common control.
As at September 30, 2025, a balance of $3,790,208 ($2,654,574 principal and $1,135,634 interest); March 31, 2025 - $3,615,401 ($2,479,767 principal and $1,135,634 interest) remained owing to a current and a former senior officer of the Company. A current senior officer contributed $200,000 to Plaintree on a temporary and interest-free basis while Plaintree remains offside on its loan covenants. The parties agreed to discontinue interest payments accruing on balances as of April 1, 2016. During the first six months of fiscal 2026 payments in the amount of $25,193 were repaid to a former senior officer. As of September 30, 2025, $50,000 was classified as current. The balance of the amount is classified as long-term, as the related parties have agreed with third-party lenders to postpone repayments.
On July 14, 2011, the board of directors of the Company declared a cash dividend of $10.91405 per Class A preferred share ($200,000 in the aggregate) payable on July 22, 2011, to the holders of record at the close of business on July 18, 2011. The Class A preferred shares are held by related parties and are entitled to annual cumulative dividends of 8% on the $1,000 redemption amount of the Class A preferred share. An amount of $60,000 ($60,000 - March 31, 2025) of the dividend remains outstanding as at September 30, 2025. The balance of the amount is classified as long-term, as the related party has agreed with third-party lenders to postpone repayments.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
As at September 30, 2025, interest in the amount of $247,672 ($247,672 – March 31, 2025) on a loan from Targa remains outstanding. The balance of the amount is classified as long-term, as the related party has agreed with third-party lenders to postpone repayments.
As at September 30, 2025, a balance of $398,388 rent arrears consists of $215,227 from March 31, 2022 and $182,888 interest); March 31, 2024 - $398,388 ($215,500 rent arrears and $182,888 interest) remained owing to a related party controlled by Targa, Tidal Quality Management Corp. The party agreed to discontinue interest accruing on unpaid balances as at April 1, 2016. Until then, the interest rate was at bank prime plus 2%. The balance of the amount is classified as long-term, as the related party has agreed with third-party lenders to postpone repayments.
The Company has a revolving line of credit of up to $1,000,000 with Targa. Under the loan agreements, all amounts advanced to the Company are payable on demand and bear interest at bank prime plus 2%. The Targa Credit Line is secured by a security interest granted over the assets of the Company. As at September 30, 2025, $NIL ($NIL – March 31, 2025) remained outstanding on the line of credit with accumulated interest of $242,598 ($242,598 – March 31, 2025) outstanding for a balance of $242,598 ($242,598 – March 31, 2024). The balance of the amount is classified as long-term, as the related party has agreed with third-party lenders to postpone repayments.
Interest in the amount of $66,581 ($66,581 – March 31, 2025) remained outstanding on a demand loan with Targa. The balance of the amount is classified as long-term, as the related party has agreed with third-party lenders to postpone repayments. Accumulated interest in the amount of $134,812 ($134,812 – March 31, 2025), on a loan from Targa remains outstanding as of September 30, 2025. The balance of the amount is classified as long-term, as the related party has agreed with third-party lenders to postpone repayments.
Rents in the form of lease payments paid or payable to Tidal Quality Management Corporation during the six months ended September 30, 2025, totaled $759,078 ($286,173 – March 31, 2025). The above-related party transactions are measured at their exchange amount, which is the amount agreed to by the parties.
Facilities
The Company leases a 135,500 sq. /ft. building at 10 Didak Drive in Arnprior, Ontario and a sales office and showroom in Elmira, ON for the Elmira Stove Works Inc.
The Company along with its wholly-owned US subsidiary owns a 16,300 sq. ft. manufacturing facility in Pocono Summit, PA.
Summary of Outstanding Share Data
As at November 13, 2025 the following equity instruments of the Company were issued and outstanding:
Common Shares: 12,925,253
Class A Preferred Shares: * 18,325
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
- The Class A Preferred shares provide an 8% cumulative dividend based on a value of $1,000 per share, are redeemable at the option of the Company at any time at $1,000 per share plus accrued dividends and they are non-voting.
Convertible Debentures:** $nil principal value
** The Company has issued various tranches of convertible debentures to related parties for total outstanding value at September 30, 2025 of $247,672 in accrued interest only. Interest is convertible in cash only.
Options:*** 880,000
Additional information relating to the Company may be found on SEDAR at www.sedarplus.ca or the Company's website at www.plaintree.com.