AI assistant
Pluribus Technologies Corp. — Interim / Quarterly Report 2024
Nov 29, 2024
48115_rns_2024-11-28_2e557d7f-e0eb-4198-b34c-f6ee82f4d4eb.pdf
Interim / Quarterly Report
Open in viewerOpens in your device viewer
pluribus
TECHNOLOGIES
Condensed consolidated interim financial statements of
Pluribus Technologies Corp.
For the three and nine months ended September 30, 2024 and 2023
[unaudited] [expressed in thousands of Canadian dollars]
NOTICE OF NO AUDITOR REVIEW OF CONDENSED INTERIM FINANCIAL STATEMENTS
Under Part 4, subsection 4.3(3)(a) of National Instrument 51-102 – Continuous Disclosure Obligations, if an auditor has not performed a review of the condensed consolidated interim financial statements, they must be accompanied by a notice indicating that the condensed consolidated interim financial statements have not been reviewed by an auditor.
The accompanying unaudited condensed consolidated interim financial statements of Pluribus Technologies Corp. (the "Company") have been prepared by and are the responsibility of the Company's management.
The Company's independent auditor has not performed a review of these condensed consolidated interim financial statements in accordance with standards established by the Canadian Institute of Chartered Accountants for a review of interim financial statements by an entity's auditor.
Pluribus Technologies Corp.
Condensed consolidated interim statements of financial position
[in thousands of Canadian dollars]
| As at | September 30, 2024 | December 31, 2023 | |
|---|---|---|---|
| Notes | $ | $ | |
| ASSETS | |||
| Current assets | |||
| Cash | 678 | 1,279 | |
| Trade and other receivables | 2,079 | 3,756 | |
| Consideration receivable | 3 | 768 | — |
| Prepaid expenses and other current assets | 829 | 777 | |
| 4,354 | 5,812 | ||
| Non-current assets | |||
| Right-of-use assets, net | 18 | 93 | |
| Property and equipment, net | 74 | 611 | |
| Intangible assets, net | 4 | 7,835 | 19,758 |
| Goodwill, net | 5 | 21,490 | 46,689 |
| Assets held for sale | 3 | 20,359 | — |
| TOTAL ASSETS | 54,130 | 72,963 | |
| LIABILITIES | |||
| Current liabilities | |||
| Trade and other payables | 3,980 | 7,213 | |
| Deferred revenue | 3,951 | 8,739 | |
| Lease obligations | 8 | 45 | |
| Borrowings | 6 | 18,886 | 22,361 |
| Contingent consideration | 716 | 820 | |
| Derivative liability | 6 | — | 49 |
| 27,541 | 39,227 | ||
| Non-current liabilities | |||
| Lease obligations | 13 | 36 | |
| Contingent consideration | — | 346 | |
| Deferred tax liability | 1,011 | 3,440 | |
| Liabilities directly associated with the assets held for sale | 3 | 10,474 | — |
| TOTAL LIABILITIES | 39,039 | 43,049 | |
| SHAREHOLDERS' EQUITY | |||
| Share capital | 7 | 72,947 | 72,947 |
| Warrants | 54 | 1,587 | |
| Contributed surplus | 5,937 | 4,351 | |
| Foreign currency translation reserve | 1,874 | 1,272 | |
| Accumulated other comprehensive income | (47) | (49) | |
| Deficit | (65,674) | (50,194) | |
| TOTAL SHAREHOLDERS' EQUITY | 15,091 | 29,914 | |
| TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY | 54,130 | 72,963 | |
| Contingencies | 10 | ||
| Subsequent events | 15 |
The accompanying notes are an integral part of these condensed consolidated interim financial statements.
On behalf of the Board:
"Signed"
Director - Alfred Apps
"Signed"
Director - Warner Sulz
Pluribus Technologies Corp.
Condensed consolidated interim statements of loss and comprehensive loss
[in thousands of Canadian dollars]
| Notes | Three months ended September 30, | Nine months ended September 30, | |||
|---|---|---|---|---|---|
| 2024 $ | 2023 $ | 2024 $ | 2023 $ | ||
| Continuing operations | |||||
| Revenue | 13 | 4,462 | 5,107 | 15,536 | 15,138 |
| Cost of revenue | 2,049 | 2,267 | 6,294 | 7,285 | |
| Gross profit | 2,413 | 2,840 | 9,242 | 7,853 | |
| Sales and marketing | 741 | 1,170 | 2,418 | 3,378 | |
| Research and development | 867 | 788 | 2,556 | 2,323 | |
| General and administrative | 1,282 | 1,418 | 4,117 | 4,385 | |
| 2,890 | 3,376 | 9,091 | 10,086 | ||
| Income before the following | (477) | (536) | 151 | (2,233) | |
| Acquisition costs | 470 | 1,349 | 2,005 | 2,611 | |
| Amortization and depreciation | 4 | 623 | 705 | 1,915 | 2,283 |
| Impairment of goodwill | — | — | 1,643 | — | |
| Share-based compensation | 8 | 4 | 95 | 53 | 373 |
| Loss (gain) on revaluation of contingent consideration | — | (332) | 330 | (332) | |
| Gain on disposal of fixed assets | — | (2) | — | (2) | |
| Finance expense, net | 6 | 760 | 680 | 2,433 | 2,110 |
| Foreign exchange loss (gain) | 614 | (29) | 943 | 407 | |
| Loss before income taxes | (2,948) | (3,002) | (9,171) | (9,683) | |
| Income tax expense (recovery) | (276) | (20) | (46) | (258) | |
| Net loss for the period from continuing operations | (2,672) | (2,982) | (9,125) | (9,425) | |
| Discontinued operations | |||||
| Net income (loss) after tax for the period from discontinued operations | 3 | 2,665 | 718 | (6,355) | 3,286 |
| Net loss for the period | (7) | (2,264) | (15,480) | (6,139) | |
| Other comprehensive income that may be reclassified to profit or loss in subsequent periods | |||||
| Exchange differences on translation of foreign operations | (33) | 476 | 602 | (6) | |
| Net change in fair value of derivatives designated as cash flow hedge | — | 51 | 2 | 45 | |
| Net other comprehensive income (loss) for the period | (33) | 527 | 604 | 39 | |
| Total comprehensive income (loss) for the period | (40) | (1,737) | (14,876) | (6,100) | |
| Loss per share - basic and diluted | 9 | $(0.00) | $(0.14) | $(0.98) | $(0.39) |
| Loss per share - basic and diluted from continuing operations | 9 | $(0.17) | $(0.19) | $(0.58) | $(0.59) |
| Weighted average number of common shares outstanding | |||||
| Basic | 9 | 15,826,593 | 15,826,593 | 15,826,593 | 15,866,249 |
The accompanying notes are an integral part of these condensed consolidated interim financial statements.
Pluribus Technologies Corp.
Condensed consolidated interim statements of changes in shareholders' equity
[in thousands of Canadian dollars, except number of shares]
| Share capital | Warrants | Contributed surplus | Foreign currency translation reserve | Accumulated other comprehensive loss | Deficit | Total shareholders' equity | ||
|---|---|---|---|---|---|---|---|---|
| # | $ | $ | $ | $ | $ | $ | $ | |
| Balance as at December 31, 2022 | 15,960,249 | 73,849 | 2,050 | 2,509 | 1,788 | — | (34,532) | 45,664 |
| Cancellation of Shares [note 7] | (133,656) | (902) | — | 902 | — | — | — | — |
| Share-based compensation [note 8] | — | — | — | 373 | — | — | — | 373 |
| Comprehensive loss for the period | — | — | — | — | (6) | 45 | (6,139) | (6,100) |
| Balance as at September 30, 2023 | 15,826,593 | 72,947 | 2,050 | 3,784 | 1,782 | 45 | (40,671) | 39,937 |
| Balance as at December 31, 2023 | 15,826,593 | 72,947 | 1,587 | 4,351 | 1,272 | (49) | (50,194) | 29,914 |
| Share-based compensation [note 8] | — | — | — | 53 | — | — | — | 53 |
| Expiration of Warrants [note 7] | — | — | (1,533) | 1,533 | — | — | — | — |
| Comprehensive loss for the period | — | — | — | — | 602 | 2 | (15,480) | (14,876) |
| Balance as at September 30, 2024 | 15,826,593 | 72,947 | 54 | 5,937 | 1,874 | (47) | (65,674) | 15,091 |
The accompanying notes are an integral part of these condensed consolidated interim financial statements.
Pluribus Technologies Corp.
Condensed consolidated interim statements of cash flows
[in thousands of Canadian dollars]
| For the nine months ended September 30, | 2024 | 2023 |
|---|---|---|
| $ | $ | |
| Operating activities | ||
| Net loss for the period from continuing operations | (9,125) | (9,425) |
| Net income (loss) for the period from discontinued operations | (6,355) | 3,286 |
| Net loss for the period | (15,480) | (6,139) |
| Adjustment to reconcile net loss to net cash used in operating activities | ||
| Income tax expense (recovery) | (95) | (970) |
| Unrealized foreign exchange (gain) loss | (14) | (13) |
| Gain on revaluation of contingent consideration | (101) | (332) |
| Gain on sale of subsidiary | (3,789) | — |
| Share-based compensation | 53 | 373 |
| Amortization and depreciation | 3,154 | 4,141 |
| Impairment of goodwill | 16,119 | — |
| Finance expense | 449 | 461 |
| 296 | (2,479) | |
| Changes in non-cash working capital items: | ||
| Trade and other receivables | 244 | 3,119 |
| Prepaid expenses and other current assets | (594) | (79) |
| Trade and other payables | (78) | (458) |
| Deferred tax liability | 100 | — |
| Derivative liability | (2) | — |
| Deferred revenue | (272) | 30 |
| Cash flows provided by operating activities | (306) | 133 |
| Investing activities | ||
| Purchase of equipment | (33) | (557) |
| Proceeds from disposal of assets held for sale | 4,505 | — |
| Cash flows provided by (used in) investing activities | 4,472 | (557) |
| Financing activities | ||
| Repayment of borrowings | (3,962) | (2,947) |
| Payment to terminate cash flow hedge | (47) | — |
| Repayment of lease obligation | (65) | (133) |
| Cash flows used in financing activities | (4,074) | (3,080) |
| Net change in cash during the period | 92 | (3,504) |
| Effect of foreign exchange on cash | (550) | (95) |
| Cash, beginning of the period | 1,279 | 5,323 |
| Cash, end of the period | 821 | 1,724 |
The accompanying notes are an integral part of these condensed consolidated interim financial statements.
Pluribus Technologies Corp.
NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS
For the three and nine months ended September 30, 2024, and 2023
(unaudited) (expressed in thousands of Canadian dollars, except share amounts)
1 Nature of business
Pluribus Technologies Corp. (the "Company" or "Pluribus"), formerly Aumento Capital IX Corp. ("Aumento") up to the completion of the Amalgamation, as defined below, is a technology company that is a value-based acquirer of small, profitable business-to-business technology companies in a range of verticals and industries.
The Company was incorporated under the Business Corporations Act (Ontario). The Company's head office is located at 1931-130 King Street West, Toronto, Ontario, Canada, M5X 2A2.
On January 13, 2022, Pluribus Technologies Inc. ("PTI") entered into a Business Combination Agreement ("BCA") with Aumento and 13515630 Canada Inc. ("Aumento Subco"), a wholly-owned subsidiary of Aumento formed solely for the purpose of completing the Amalgamation, pursuant to which PTI and Aumento Subco agreed to amalgamate in accordance with the provisions of the BCA (the "Amalgamation") to form Pluribus Technologies Holdings Inc. On February 28, 2022, Pluribus was amalgamated with Pluribus Technologies Holdings Inc.
Subsidiaries
These unaudited condensed consolidated interim financial statements are comprised of the financial results of the Company and its subsidiaries, which are the entities over which the Company has control. An investor controls an investee when it is exposed, or has rights, to variable returns from its involvement with the investee and can affect those returns through its power over the investee. The company has 100% ownership of its' subsidiaries which are domiciled in Canada, the United States, the United Kingdom, and Albania.
2 Basis of preparation
Going concern uncertainty
The Company's financial statements were prepared on a going concern basis. The going concern basis assumes that the Company will continue in operation for the foreseeable future and will be able to realize its assets and discharge its liabilities and commitments in the normal course of business. The interim condensed consolidated financial statements do not include any adjustments to the amounts and classification of assets and liabilities that would be necessary should the Company be unable to continue as a going concern. Such adjustments could be material.
For nine months ended September 30, 2024, the Company incurred a net loss from continuing and discontinued operations of $15,480 (September 30, 2023 - $6,139) and had positive operating cash flows of $125 (September 30, 2023 – positive operating cash flows of $133). At September 30, 2024, the Company had negative working capital of ($23,187), compared to ($33,415) at December 31, 2023. The Company did not comply with the covenants under its credit facility with National Bank as of September 30, 2024. The Company currently will have insufficient cash to fund its operations and service its debt obligations for the next 12 months if the Company's sales do not improve or if they decline; if the Company's margins do not improve or if they decline; and/or if the Company's selling, general and administrative expenses increases or does not decrease; without obtaining additional funding from equity financing, debt financing or through other arrangements or adjusting certain financial covenants in its credit facilities. While the Company has been successful in obtaining financing to date, and believes it will be able to obtain sufficient funds in the future and ultimately achieve profitability and positive cash flows from operations, the Company's ability to raise capital may be adversely impacted by: market conditions that have resulted in a lack of normally available financing in the industry, a more difficult environment to complete M&A transactions, increased competition and price compression across the industry; and overall negative investor sentiment in light of inflation, rising interest rates, global conflict, and negative macroeconomic impacts from the current recessionary environment.
Accordingly, there can be no assurance that the Company will achieve profitability, or secure financing/divest core/noncore assets on terms favourable to the Company or at all. Should the Company be unable to generate sufficient cash flow from financing and operating activities, the carrying value of the Company's assets could be subject to material adjustments and other adjustments may be necessary to these financial statements. There can also be no assurance that the Company can successfully amend its financial covenants under its credit facilities. As a result of the foregoing, including the reclassification of its loan noted, these conditions indicate a material uncertainty exists that may raise significant doubt upon the Company's ability to continue as a going
6
Pluribus Technologies Corp.
NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS
For the three and nine months ended September 30, 2024, and 2023
(unaudited) (expressed in thousands of Canadian dollars, except share amounts)
concern.
In November 2023, the Company announced a review and evaluation of strategic alternatives that may be available to the Company to further enhance the Company's growth, development and prosperity in the short and long term with the goal of maximizing shareholder value. The Company has established a Special Committee of the Board of Directors for such purpose and has engaged Canaccord Genuity as its strategic advisor. The Special Committee will, among other things, explore the viability of raising capital through debt financing/refinancing, equity rights offerings, and the sale of core and/or noncore assets.
Statement of compliance
These unaudited condensed consolidated interim financial statements ("financial statements") have been prepared by management on a going concern basis and have been prepared using the same accounting policies and methods as those used in the Company's audited consolidated financial statements for the year ended December 31, 2023. These financial statements have been prepared in compliance with IAS 34 – Interim Financial Reporting, as issued by the International Accounting Standards Board ("IASB"). The financial statements should be read in conjunction with the annual consolidated financial statements for the year ended December 31, 2023, which have been prepared in accordance with International Financial Reporting Standards ("IFRS"). These Financial Statements are based on accounting policies as described in the 2023 annual consolidated financial statements, except for the adoptions of new standards effective as of January 1, 2024.
These Financial Statements were approved and authorized for issuance by the Board of Directors of the Company on November 28, 2024.
Use of estimates and judgments
The preparation of these financial statements in conformity with IFRS requires management to make estimates, judgments and assumptions that affect the application of accounting policies and the reported amounts of assets and liabilities consistent with those disclosed in the audited consolidated financial statements for the year ended December 31, 2023 and described in these financial statements. Actual results could differ from those estimates. Estimates are based on management's best knowledge of current events and actions the Company may undertake in the future. Estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognized in the period in which the estimate is revised if the revision affects only that period, or in the period of the revision and future periods if the revision affects both current and future periods.
New standards, amendments and interpretations not yet adopted by the Company
Amendments to IAS 1 - In January 2020, the IASB issued Classification of Liabilities as "Current" or "Non-current," which amends IAS 1
The narrow scope amendments affect only the presentation of liabilities in the consolidated statements of financial position and not the amount or timing of its recognition. The amendments clarify that the classification of liabilities as current or non-current should be based on rights that are in existence at the end of the reporting period and align the wording in all affected paragraphs to refer to the right to defer settlement by at least 12 months. That classification is unaffected by the likelihood that an entity will exercise its deferral right. The amendments are effective for annual reporting periods beginning on or after January 1, 2024 and are to be applied retrospectively. The Company does not expect the impact of adopting these amendments on its financial statements to be material.
Amendments to IFRS 16 in September 2022, IASB issued Lease Liability in a Sale and Leaseback
The amendments specified the requirements that a seller-lessee uses in measuring the lease liability arising in a sale and leaseback transaction, to ensure the seller-lessee does not recognize any amount of the gain or loss that relates to the right of use it retains. A sale and leaseback transaction involves the transfer of an asset by an entity to another entity and the leaseback of the same asset by the seller-lessee. The amendment is intended to improve the requirements for sale and leaseback transactions in IFRS 16. The amendments are effective for annual reporting periods beginning on or after January 1, 2024. The Company does not expect the impact of adopting these amendments on its financial statements to be material.
7
Pluribus Technologies Corp.
NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS
For the three and nine months ended September 30, 2024, and 2023
(unaudited) (expressed in thousands of Canadian dollars, except share amounts)
Amendments to IAS 21 in August 2023, IASB issued Lack of Exchangeability
The amendments specify how an entity should assess whether a currency is exchangeable and how it should determine a spot exchange rate when exchangeability is lacking. The amendments note that an entity can use an observable exchange rate without adjustment or another estimation technique. The amendments will be effective for annual reporting periods beginning on or after January 1, 2025. The Company does not expect the impact of adopting these amendments on its financial statements to be material.
3 Assets held for sale and discontinued operations
HealthTech
On May 10, 2024, the Company sold substantially all the assets, tangible and intangible, of its wholly owned subsidiary, TeleMED Diagnostic Management Inc., and all of the issued and outstanding fully-diluted shares of its wholly-owned subsidiary, TDM Telehealth Technology Ltd. (together "HealthTech") (the "Sales Transaction"). The aggregate purchase price of $5,070, payable to the Company as follows: (i) $4,170 in cash on the closing date of the Sale Transaction, (ii) $400 in cash within ten business days of fulfillment of certain conditions pursuant to the purchase agreement, (iii) $200 in cash on, or within fifteen business days in which the net tangible asset amount is finalized and (iv) $300 in cash within fifteen business days of, the first anniversary of the closing date of the Sale Transaction. The first and second holdback payments are subject to potential adjustments as set out in the purchase agreement. The first holdback of $400 was earned during Q2 2024, therefore to date the Company has received $4,505, after deducting the $65 cash required to be left with HealthTech. The Company has recorded consideration receivable of $768 relating to the estimated cash flows from the second and third hold-back amounts. A gain of $3,789 was recorded relating to the Sales Transaction.
The Company paid the majority of the net proceeds from the Sales Transaction to National Bank ($3,050) pursuant to the terms of to the forbearance agreement dated January 18, 2024 and as amended with National Bank (the "Forbearance Agreement").
In accordance with IFRS 5, Non-current assets held for sale and discontinued operations, discontinued operations are excluded from the results of continuing operations and are presented as a single amount as net income after tax from discontinued operations in the consolidated statement of loss and comprehensive income. Net income from discontinued operations and cashflows for 2024 are presented to the transaction date, May 10, 2024, where 2023 is presented for the full period to September 30, 2023.
8
Pluribus Technologies Corp.
NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS
For the three and nine months ended September 30, 2024, and 2023 (unaudited) (expressed in thousands of Canadian dollars, except share amounts)
The results of the HealthTech segment including subsequent adjustments for the three and nine months ended September 30, 2024 and 2023 are as follows:
| Three months ended September 30, | Nine months ended September 30, | |||
|---|---|---|---|---|
| 2024 | 2023 | 2024 | 2023 | |
| $ | $ | $ | $ | |
| Revenue | — | 574 | 882 | 1,690 |
| Expenses | 4 | 295 | 540 | 914 |
| Income before the following | (4) | 279 | 342 | 776 |
| Other non-operating expenses | — | 0 | — | 3 |
| Transaction costs | — | — | 415 | — |
| Amortization and depreciation | — | 71 | 72 | 205 |
| Loss (gain) on lease termination | — | 2 | (14) | 2 |
| Gain on sale of the discontinued operations | — | — | (3,789) | — |
| Finance expense, net | — | 1 | 1 | 1 |
| Foreign exchange loss | — | 4 | 16 | 19 |
| Income before income taxes | (4) | 200 | 3,641 | 546 |
| Income tax expense (recovery) | — | (7) | (230) | 28 |
| Net income from discontinued operations | (4) | 207 | 3,871 | 518 |
The income (loss) per share provided by the HealthTech segment for the three and nine months ended September 30, 2024 and 2023 are as follows:
| Three months ended September 30, | Nine months ended September 30, | |||
|---|---|---|---|---|
| 2024 | 2023 | 2024 | 2023 | |
| $ | $ | $ | $ | |
| Net income and comprehensive income per common share from discontinued operations | ||||
| -Basic | (0.00) | 0.01 | 0.24 | 0.03 |
| -Diluted | (0.00) | 0.01 | 0.23 | 0.03 |
The net cash flows provided by the HealthTech segment for the nine months ended September 30, 2024 and 2023 are as follows:
| September 30, 2024 | September 30, 2023 | |
|---|---|---|
| $ | $ | |
| Operating | (4,474) | 463 |
| Investing | 4,505 | (440) |
| Financing | (36) | (42) |
| Net increase (decrease) in cash | (5) | (19) |
9
Pluribus Technologies Corp.
NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS
For the three and nine months ended September 30, 2024, and 2023
(unaudited) (expressed in thousands of Canadian dollars, except share amounts)
The Company recognized a gain on sale of the discontinued operations of $3,789 and the break-down of the consideration received or receivable is as follows:
| As at | |
|---|---|
| September 30, | |
| 2024 | |
| $ | |
| Consideration received or receivable | |
| Cash | 4,505 |
| Consideration receivable | 768 |
| Total disposal consideration | 5,273 |
| Carrying amount of net assets sold | (1,484) |
| Gain on sale | 3,789 |
The carrying amounts of assets and liabilities as at the date of sale, May 10, 2024 were as follows:
| $ | |
|---|---|
| Assets | |
| Trade and other receivables | 356 |
| Prepaid expenses and other current assets | 22 |
| Property and equipment, net | 493 |
| Intangible assets, net | 393 |
| Goodwill, net | 428 |
| Total assets | 1,692 |
| Liabilities | |
| Trade and other payables | (158) |
| Deferred revenue | (50) |
| Total liabilities | (208) |
| Net assets | 1,484 |
Digital enablement and POWR
On October 11, 2024, the Company sold all of the issued and outstanding fully-diluted shares of its wholly-owned subsidiaries, POWR Inc., Assured Software Limited and Pluribus Technologies Limited (which includes its wholly-owned subsidiaries, Rowanwood Professional Services Limited and Cranham Haig Limited) (the "Second Sales Transaction"). The aggregate purchase price of $17,000, was payable in cash on a cash-free, debt-free basis and subject to (i) a working capital holdback of $500, (ii) an indemnification holdback of $250, (iii) a performance holdback of $1,800, and (iv) applicable deductions for indebtedness, closing income tax payable, transaction expenses and an estimated working capital adjustment). In connection with the transaction, the former shareholders of Rowanwood Professional Services Limited were paid 210 British pound sterling.
The Company paid $9,049 of the net proceeds from the Sales Transaction to National Bank pursuant to the terms of the forbearance agreement dated August 16, 2024 and as amended with National Bank (the "Second Forbearance Agreement").
At June 30, 2024, Digital Enablement and POWR (previously presented as part of the eCommerce segment) were classified as a disposal group held for sale and a discontinued operation. The Company recognized an impairment loss of $14,476 on the re-measurement of the businesses at fair value less costs of disposal. The impairment loss was taken against the goodwill of Digital Enablement $2,716 and the goodwill of POWR $11,760.
10
Pluribus Technologies Corp.
NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS
For the three and nine months ended September 30, 2024, and 2023 (unaudited) (expressed in thousands of Canadian dollars, except share amounts)
The results of the Digital Enablement and POWR for the three and nine months ended September 30, 2024 and 2023 are as follows:
| Three months ended September 30, | Nine months ended September 30, | |||
|---|---|---|---|---|
| 2024 | 2023 | 2024 | 2023 | |
| $ | $ | $ | $ | |
| Revenue | 3,450 | 3,485 | 10,355 | 10,714 |
| Expenses | 1,998 | 2,166 | 5,999 | 6,410 |
| Income before the following | 1,452 | 1,319 | 4,356 | 4,304 |
| Other non-operating expenses | 4 | 4 | 159 | 41 |
| Amortization and depreciation | — | 578 | 1,167 | 1,653 |
| Impairment loss | — | — | 14,476 | — |
| Gain on revaluation of contingent consideration | (431) | — | (431) | — |
| Finance expense, net | 3 | — | 3 | (2) |
| Foreign exchange (gain) loss | (753) | 201 | (973) | (439) |
| Income (loss) before income taxes | 2,629 | 536 | (10,045) | 3,051 |
| Income tax expense (recovery) | (40) | 25 | 181 | 283 |
| Net income (loss) from discontinued operations | 2,669 | 511 | (10,226) | 2,768 |
The income per share provided by the Digital Enablement and POWR for the three and nine months ended September 30, 2024 and 2023 are as follows:
| Three months ended September 30, | Nine months ended September 30, | |||
|---|---|---|---|---|
| 2024 | 2023 | 2024 | 2023 | |
| $ | $ | $ | $ | |
| Net income (loss) and comprehensive income (loss) per common share from discontinued | ||||
| -Basic | 0.17 | 0.03 | (0.65) | 0.17 |
| -Diluted | 0.16 | 0.03 | (0.65) | 0.14 |
The net cash flows provided by the Digital Enablement and POWR for the nine months ended September 30, 2024 and 2023 are as follows:
| September 30, 2024 | September 30, 2023 | |
|---|---|---|
| $ | $ | |
| Operating | (488) | (898) |
| Investing | (5) | (37) |
| Net decrease in cash | (493) | (935) |
11
Pluribus Technologies Corp.
NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS
For the three and nine months ended September 30, 2024, and 2023
(unaudited) (expressed in thousands of Canadian dollars, except share amounts)
The major classes of assets and liabilities of the Digital Enablement and POWR classified as held for sale as at September 30, 2024 are as follows:
| $ | |
|---|---|
| Assets | |
| Cash | 143 |
| Trade and other receivables | 1,077 |
| Prepaid expenses and other current assets | 520 |
| Property and equipment, net | 34 |
| Intangible assets, net | 8,967 |
| Goodwill, net | 9,618 |
| Assets held for sale | 20,359 |
| Liabilities | |
| Trade and other payables | (3,702) |
| Deferred revenue | (4,466) |
| Contingent consideration | (381) |
| Deferred tax liability | (1,925) |
| Liabilities directly associated with assets held for sale | (10,474) |
| Net assets directly associated with disposal group | 9,885 |
4 Intangible assets
| Customer relationships $ | Software technologies $ | Trade name and trademarks $ | Total $ | |
|---|---|---|---|---|
| Cost | ||||
| Balance, December 31, 2023 | 21,602 | 11,440 | 106 | 33,148 |
| Disposal | (869) | (221) | (18) | (1,108) |
| Effects of foreign exchange | 469 | 278 | 2 | 749 |
| Assets held for sale | (7,774) | (7,915) | (11) | (15,700) |
| Balance, September 30, 2024 | 13,428 | 3,582 | 79 | 17,089 |
| Accumulated amortization and impairment | ||||
| Balance, December 31, 2023 | 8,973 | 4,417 | — | 13,390 |
| Disposal | (528) | (188) | — | (715) |
| Amortization | 2,032 | 1,012 | — | 3,044 |
| Effects of foreign exchange | 163 | 104 | — | 267 |
| Assets held for sale | (3,349) | (3,383) | — | (6,732) |
| Balance, September 30, 2024 | 7,291 | 1,962 | — | 9,254 |
| Carrying value | ||||
| Balance, December 31, 2023 | 12,629 | 7,023 | 106 | 19,758 |
| Balance, September 30, 2024 | 6,137 | 1,620 | 79 | 7,835 |
The Company determined there were indicators of impairment relating to the intangible assets and for this reason, intangible assets were tested at the business unit level. During the six months ended June 30, 2024, the eCommerce segment (i.e. POWR and Social5) underperformed against the 2024 Budget and prior year. The Company therefore assessed that an indicator of impairment existed at June 30, 2024.
In assessing intangible assets for potential risk of impairment, the Company compared the aggregate recoverable amount of the Social5 CGU to its respective carrying amount. The recoverable amount of the CGU was based on VUI, estimated using discounted cash flows. The key assumptions used in the estimation of the
Pluribus Technologies Corp.
NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS
For the three and nine months ended September 30, 2024, and 2023 (unaudited) (expressed in thousands of Canadian dollars, except share amounts)
recoverable amount are set out in Note 5. The estimated recoverable amount of the Social5 CGU was higher than the carrying amount, and as such, no intangible impairment charges were recorded.
5 Goodwill
| $ | |
|---|---|
| Balance – December 31, 2022 | 56,495 |
| Impairment | (9,384) |
| Effects of foreign exchange | (422) |
| Balance – December 31, 2023 | 46,689 |
| Disposal | (428) |
| Impairment | (1,628) |
| Effects of foreign exchange | 172 |
| Assets held for sale | (23,315) |
| Balance – September 30, 2024 | 21,490 |
At September 30, 2024, Digital Enablement and POWR (previously presented as part of the eCommerce segment) were classified as a disposal group held for sale and a discontinued operation. The Company recognized an impairment loss of $14,476 on the re-measurement of the businesses at fair value less costs of disposal at June 30, 2024, when the disposal group was first classified as held for sale and as a discontinued operation. The impairment loss was taken against the goodwill of Digital Enablement ($2,716) and the goodwill of POWR ($11,760).
The Company assesses whether there is an indication that goodwill and intangible assets are potentially impaired at every interim period. This assessment includes a review of the Company's current and expected performance, market conditions and trends, the timing and impact of external risks, and changes to the Company's share price and market capitalization. If any indication of potential risk of impairment exists, the Company estimates the recoverable amount of the asset or cash-generating unit ("CGU") to which the asset relates to determine the extent of any impairment loss. If the recoverable amount, representing the higher of its fair value less cost to sell and its value in use of the CGU is less than its carrying amount, any resulting impairment loss is first allocated to goodwill and subsequently to other assets on a pro rata basis for the CGU. Any goodwill impairment loss is recorded to the consolidated statements of loss and comprehensive loss in the period of impairment.
As outlined in Note 4, the Company assessed that an indicator of impairment existed at June 30, 2024 for eCommerce. For the purpose of impairment testing, goodwill is tested at the operating segment level, as this is the lowest level at which management monitors goodwill for internal management purposes. As POWR was part of a disposal group classified as held for sale at June 30, 2024, management allocated eCommerce goodwill between POWR and Social5 based on the respective recoverable amounts.
In assessing goodwill for potential risk of impairment, the Company compared the aggregate recoverable amount of the Social5 CGU to its respective carrying amount. The recoverable amount of the CGUs was based on VIU, estimated using discounted cash flows. The fair value measurement was categorized as a Level 3 fair value based on the inputs in the valuation technique used. The VIU calculation for the recoverable amount of the CGU includes estimates about its future financial performance based on cash flows covering a period of five years with a terminal rate. Key assumptions used in the VIU calculation are the discount rate applied and the long-term growth rate of net operating cash flows. In determining these assumptions, management has taken into consideration the current economic climate and its resulting impact on expected growth and discount rates. In determining the discount rate, management uses the Company's weighted average cost of capital as a starting point and applies adjustments to take into account specific tax rates, geographical risk and any additional company specific risks. The cash flow projections reflect management's expectations of the operating performance of the group of CGUs and growth prospects in the group of CGUs' market. Impairment losses relating to goodwill cannot be reversed in future periods. The key assumptions used in the estimation of the recoverable amount are set below. The values assigned to the key assumptions represent management's assessment of the future trends in the industry and have been based on information from both external and internal resources. The following assumptions were used
13
Pluribus Technologies Corp.
NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS
For the three and nine months ended September 30, 2024, and 2023 (unaudited) (expressed in thousands of Canadian dollars, except share amounts)
in the VIU calculation: an after-tax discount rate of 17.5% (December 31, 2023: 17.5%), terminal growth rate of 3% (December 31, 2023: 3%) and earnings growth rate from 5% to 30%.
The estimated recoverable amount of the CGU was lower than the carrying amount, and as such a goodwill impairment charge of $1,643 was booked to continuing operations. No further indicators of impairment were identified at September 30, 2024.
6 Borrowings
| September 30, 2024 $ | December 31, 2023 $ | |
|---|---|---|
| Term Loans | 19,078 | 22,791 |
| Deferred Financing Costs | (192) | (430) |
| Total Borrowings | 18,886 | 22,361 |
| Current Portion | 18,886 | 22,361 |
| Total Borrowings | 18,886 | 22,361 |
FY2022 Credit Facility
On April 27, 2022, Pluribus entered into an agreement for a three-year, $42,000 credit facility with National Bank of Canada (the "FY2022 Credit Facility"). The facility provides the Company with a $3,000 revolving credit facility, a $24,000 non-revolving term loan and a $15,000 delayed draw term loan. The facility is secured by all assets of Pluribus and all existing and future subsidiaries of the Company. It contains customary representations, warranties and covenants, including a covenant to maintain a Total Debt to EBITDA ratio at or below 3.5 times and a Fixed Charge Coverage Ratio of 1.15 or higher at all times. The interest rate is benchmarked to the Canadian Dollar Offered Rate "CDOR" for borrowings in CAD or Secured Overnight Financing Rate "SOFR" for borrowings in USD plus 2.00% – 4.00% depending on the Company's Total Debt to EBITDA ratio at the end of any given financial period-end.
On April 21, 2023, Pluribus and National Bank of Canada amended the FY2022 Credit Facility, adjusting certain financial covenants up until December 31, 2023, before they return to the original covenant targets in the credit agreement. The changes were to increase the Total Debt to EBITDA ratio that ranged from 4.0 to 4.75 times and lowering the Fixed Coverage Ratio that ranged from nil to 1.10 depending on the specific fiscal 2023 quarter.
In November 2023, the Company advised National Bank of a breach of Total Debt to EBITDA ratio and Fixed Charge Coverage ratio covenants under the FY2022 Credit Facility and National Bank issued a reservation of rights letter in relation thereto.
On January 18, 2024, the Company entered into the Forbearance Agreement, whereby National Bank agreed to forbear from exercising its rights and remedies under the Credit Agreement until the earlier of March 29, 2024 and the occurrence of any terminating event (the "Forbearance Period"). The Forbearance Agreement allowed the Company to defer the January principal payment of $824 over three payments to be fully paid by March 29, 2024. Under the Forbearance Agreement, (i) no further borrowings are permitted, (ii) the interest rate on the outstanding principal payments is benchmarked to Prime Rate for borrowings in CAD or the US Base Rate for borrowings in USD plus an applicable margin, and (iii) the two interest rate swaps were terminated. Since entering into the Forbearance Agreement, it has been amended to (i) allow the Company to defer certain principal payments and (ii) extend the Forbearance Period.
On August 16, 2024, the Company and National Bank entered into the Second Forbearance Agreement, whereby National Bank will continue to forbear from exercising its rights and remedies under the Credit Agreement. The Second Forbearance Agreement has been extended until the earlier of November 29, 2024 and the occurrence of any terminating event to allow National Bank time to consider forecast financial information submitted by the
14
Pluribus Technologies Corp.
NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS
For the three and nine months ended September 30, 2024, and 2023 (unaudited) (expressed in thousands of Canadian dollars, except share amounts)
Company. As of November 28, 2024, the Company has not received an update from National Bank regarding the status of the Second Forbearance Agreement and whether it intends to further extend the term of the Second Forbearance Agreement beyond November 29, 2024.
Term Loans – Refinance
In April 2022, as part of the FY2022 Credit Facility, a $24,000 term loan was immediately available and drawn upon at the close of the financing agreement. Of this amount, $14,500 was used to repay the balance of the previous borrowings at the time of settlement, $1,000 for transaction costs associated with the new financing, with the remaining $8,500 increasing the Company's cash balance on hand. The amortization period for repayment of the term loan is over a 7-year period on a quarterly basis. A third party has provided a partial repayment guarantee to National Bank, at a cost of $300 per annum to Pluribus.
Term Loans – Delayed Draw
As part of the FY2022 Credit Facility, a $15,000 committed delayed draw term loan is available to partially finance future acquisitions at a maximum of 50% of purchase price. The delayed draw term loan availability is subject to customary terms and conditions that are but not limited to Pluribus continuing to meet its financial covenants on a pro-forma basis and stays under 3.0 times Total Debt to trailing 12 months Adjusted EBITDA. The amortization period for repayment of the delayed draw term loan is over a 13-year period on a quarterly basis.
Pluribus drew on this facility to partially finance the closing of certain acquisitions in 2022 with the remaining borrowing under the delayed draw term loan to be $11,528 as at September 30, 2024 (December 31, 2023 – $11,398). The remaining borrowing was not drawn and the Forbearance Agreement prohibits use of the delayed draw term loan.
Revolving Line of Credit
As part of the FY2022 Credit Facility, a $3,000 revolving facility was available for use by the Company for general working capital and corporate uses. Repayment is due upon maturity of the facility. As at September 30, 2024, the Company has not drawn on this line of credit (December 31, 2023 – $nil). Under the Forbearance Agreement, the Company is not able to draw on the line of credit.
Derivative liability
On March 6, 2023, Pluribus entered into two interest rate swaps (USD and CAD), which exchange floating interest rate obligations on a notional value of $11,800 (USD $5,000 and $5,000) for fixed interest rate payments of 5.08% and 4.82%, respectively. The Company designated the interest rate swap as a cash flow hedge with any subsequent changes in value recorded in other comprehensive income beginning on the first settlement date, May 1, 2023. The Forbearance Agreement required the interest rate swaps to be terminated in January 2024.
7 Share capital
Issued and outstanding:
| Common Shares | ||
|---|---|---|
| # | $ | |
| Balance, December 31, 2022 | 15,960,249 | 73,849 |
| Cancellation of shares (i) | (133,656) | (902) |
| Balance, December 31, 2023 | 15,826,593 | 72,947 |
| Balance, September 30, 2024 | 15,826,593 | 72,947 |
i) During the year ended December 31, 2023, the Company cancelled 133,656 shares.
15
Pluribus Technologies Corp.
NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS
For the three and nine months ended September 30, 2024, and 2023 (unaudited) (expressed in thousands of Canadian dollars, except share amounts)
The following table is a summary of the Company's warrants and options outstanding as at September 30, 2024:
| Weighted average exercise price $ | Number outstanding # | Weighted average remaining contractual life (years) # | |
|---|---|---|---|
| Warrants | 3.97 | 12,593 | 1.67 |
| Options | 4.41 | 992,579 | 2.54 |
8 Share-based compensation
On June 1, 2023, the Company granted options to purchase up to 150,000 common shares as part of the overall remuneration and incentive program for its officer at a price of $1.14 per share. The options expire on June 1, 2028 and have the following vesting schedule: 1/3 vest on December 1, 2023, 1/3 vest on June 1, 2024 and 1/3 vest on June 1, 2025.
Share-based compensation expense for the three and nine months ended September 30, 2024, was $4 (2023 - $95) and $53 (2023 - $373). No options to purchase common shares were granted during the nine months ended September 30, 2024.
The weighted average fair value of share options granted during the nine months ended September 30, 2023, was estimated at the date of grant using the Black-Scholes option pricing model using the following inputs:
| September 30, 2023 | |
|---|---|
| Grant date share price | $1.05 |
| Exercise price | $1.14 |
| Expected dividend yield | $nil |
| Risk-free interest rate | 3.09% |
| Expected option life | 5 years |
| Expected volatility | 64% |
The expected volatility was estimated using the volatility of publicly traded companies that the Company considered to be comparable. The expected option life represents the period of time that options granted are expected to be outstanding. The risk-free interest rate is based on the government bonds with a term equal to the expected life of the options.
9 Loss per share
For all the periods presented, diluted loss per share equals basic loss per share due to the anti-dilutive effect of share options. The outstanding number and type of securities that could potentially dilute basic net loss per share in the future but would have decreased the loss per share (anti-dilutive) for the nine months ended September 30, 2024 and 2023 presented are as follows:
| September 30, 2024 # | September 30, 2023 # | |
|---|---|---|
| Warrants | 12,593 | 2,792,075 |
| Options | 992,579 | 1,045,641 |
| Total | 1,005,172 | 3,837,716 |
16
Pluribus Technologies Corp.
NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS
For the three and nine months ended September 30, 2024, and 2023 (unaudited) (expressed in thousands of Canadian dollars, except share amounts)
10 Contingencies
In the ordinary course of business, from time to time, the Company is involved in various claims related to operations, rights, commercial, employment or other claims. Although such matters cannot be predicted with certainty, management does not consider the Company's exposure to these claims to be material to these financial statements.
11 Employee compensation
The net employee compensation comprising salaries and benefits from continuing operations for the three and nine months ended September 30, 2024, and 2023 were $3,619 (2023 – $4,137) and $7,137 (2023 – $8,300), respectively.
Employee compensation costs for the three and six months ended June 30, 2024 and 2023 were included in the following expenses:
| Three months ended September 30, | Nine months ended September 30, | |||
|---|---|---|---|---|
| 2024 | 2023 | 2024 | 2023 | |
| $ | $ | $ | $ | |
| Cost of revenue | 2,049 | 2,267 | 6,294 | 7,285 |
| Sales and marketing | 741 | 1,170 | 2,418 | 3,378 |
| Research and development | 867 | 788 | 2,556 | 2,323 |
| General and administrative | 1,282 | 1,418 | 4,117 | 4,385 |
| Total employee compensation costs | 4,939 | 5,643 | 15,385 | 17,371 |
12 Related party transactions
Other than as disclosed below, Pluribus has not acquired any assets or received any services from any director, officer or Insider of Pluribus. Pluribus has no indebtedness owing to a related party of Pluribus or any Associate or Affiliate of Pluribus.
Miller Thomson LLP is a full-service national law firm in Canada and provides legal services to Pluribus. One of Pluribus' directors is a senior partner at this firm.
Waterstone Human Capital is an executive recruitment firm that has completed the placement of Pluribus' CFO and periodically does recruitment on an as needed basis. One of Pluribus' directors is a Managing Director at Waterstone Human capital.
One of Pluribus' directors was the Chairman, former CEO and a shareholder of Assured Software Limited ("Assured"). As part of the purchase consideration, the shareholders of Assured were compensated with Pluribus Class A Preferred Shares issued by Pluribus, which were eventually redeemed or exchanged into common shares.
Key management personnel are those persons having the authority and responsibility for planning, directing and controlling activities of the entity, directly or indirectly, including the C-level executives and Directors.
17
Pluribus Technologies Corp.
NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS
For the three and nine months ended September 30, 2024, and 2023 (unaudited) (expressed in thousands of Canadian dollars, except share amounts)
Compensation expense for the Company's key management personnel during the three and nine months ended September 30, 2024 and 2023 is as follows:
| Three months ended September 30, | Nine months ended September 30, | |||
|---|---|---|---|---|
| 2024 | 2023 | 2024 | 2023 | |
| $ | $ | $ | $ | |
| Salaries and benefits | 361 | 353 | 1,105 | 904 |
| Share-based compensation | 4 | 121 | 53 | 399 |
| Total | 365 | 474 | 1,158 | 1,303 |
For the three and nine months ended September 30, 2024, and 2023, the Company incurred $175 (2023 - $289) and $663 (2023 - $476), respectively, of professional services to related parties.
18
Pluribus Technologies Corp.
NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS
For the three and nine months ended September 30, 2024, and 2023
(unaudited) (expressed in thousands of Canadian dollars, except share amounts)
13 Segmented information
The Company reports segment information based on internal reports used by the chief operating decision maker ("CODM") to make operating and resource decisions and to assess performance. The CODM is the Chief Executive Officer. The CODM makes decisions and assesses performance of the Company on the basis such that the Company has two reportable operating segments: eLearning and eCommerce. As POWR is presented as part of the disposal group, eCommerce includes the results for Social5.
After adjusting for the sale of HealthTech, Digital Enablement, and POWR, the Company has two reporting segments. The following table presents details on the two reporting segments of the Company for the three months ended September 30, 2024:
| eLearning $ | eCommerce $ | Corporate $ | Total $ | |
|---|---|---|---|---|
| Revenue | 4,020 | 442 | — | 4,462 |
| Cost of revenue | 1,687 | 362 | — | 2,049 |
| Gross profit | 2,333 | 80 | — | 2,413 |
| Sales and marketing | 676 | 47 | 18 | 741 |
| Research and development | 867 | — | — | 867 |
| General and administrative | 236 | 8 | 1,038 | 1,282 |
| 1,779 | 55 | 1,056 | 2,890 | |
| Income (loss) before the following: | 554 | 25 | (1,056) | (477) |
| Acquisition costs | — | — | 470 | 470 |
| Amortization and depreciation | 492 | 129 | 2 | 623 |
| Share-based compensation | — | — | 4 | 4 |
| Finance expense, net | 4 | — | 756 | 760 |
| Foreign exchange loss | 165 | 16 | 433 | 614 |
| Loss before income taxes | (107) | (120) | (2,721) | (2,948) |
| Income tax expense (recovery) | (289) | 13 | — | (276) |
| Net income (loss) | 182 | (133) | (2,721) | (2,672) |
19
Pluribus Technologies Corp.
NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS
For the three and nine months ended September 30, 2024, and 2023
(unaudited) (expressed in thousands of Canadian dollars, except share amounts)
The following table presents details on the two reporting segments of the Company for the three months ended September 30, 2023:
| eLearning $ | eCommerce $ | Corporate $ | Total $ | |
|---|---|---|---|---|
| Revenue | 4,538 | 569 | — | 5,107 |
| Cost of revenue | 1,873 | 394 | — | 2,267 |
| Gross profit | 2,665 | 175 | — | 2,840 |
| Sales and marketing | 1,073 | 94 | 3 | 1,170 |
| Research and development | 788 | — | — | 788 |
| General and administrative | 231 | 54 | 1,133 | 1,418 |
| 2,092 | 148 | 1,136 | 3,376 | |
| Income (loss) before the following: | 573 | 27 | (1,136) | (536) |
| Acquisition costs | — | — | 1,349 | 1,349 |
| Amortization and depreciation | 560 | 127 | 18 | 705 |
| Share-based compensation | — | — | 95 | 95 |
| Gain on revaluation of contingent consideration | (332) | — | — | (332) |
| Gain on disposal of fixed assets | (2) | — | — | (2) |
| Finance expense, net | — | — | 680 | 680 |
| Foreign exchange loss (gain) | 195 | (19) | (205) | (29) |
| Income (loss) before income taxes | 152 | (135) | (3,073) | (3,002) |
| Income tax expense (recovery) | 7 | (27) | — | (20) |
| Net income (loss) | 145 | (54) | (3,073) | (2,982) |
20
Pluribus Technologies Corp.
NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS
For the three and nine months ended September 30, 2024, and 2023
(unaudited) (expressed in thousands of Canadian dollars, except share amounts)
The following table presents details on the two reporting segments of the Company for the nine months ended September 30, 2024:
| eLearning $ | eCommerce $ | Corporate $ | Total $ | |
|---|---|---|---|---|
| Revenue | 14,060 | 1,476 | — | 15,536 |
| Cost of revenue | 5,209 | 1,085 | — | 6,294 |
| Gross profit | 8,851 | 391 | — | 9,242 |
| Sales and marketing | 2,187 | 196 | 35 | 2,418 |
| Research and development | 2,556 | — | — | 2,556 |
| General and administrative | 732 | 50 | 3,335 | 4,117 |
| 5,475 | 246 | 3,370 | 9,091 | |
| Income (loss) before the following: | 3,376 | 145 | (3,370) | 151 |
| Acquisition costs | — | — | 2,005 | 2,005 |
| Amortization and depreciation | 1,504 | 385 | 26 | 1,915 |
| Impairment loss | — | 1,643 | — | 1,643 |
| Share-based compensation | — | — | 53 | 53 |
| Loss on revaluation of contingent consideration | 330 | — | — | 330 |
| Finance expense, net | 2 | — | 2,431 | 2,433 |
| Foreign exchange loss (gain) | 574 | 1 | 368 | 943 |
| Income (loss) before income taxes | 966 | (1,884) | (8,253) | (9,171) |
| Income tax expense (recovery) | (5) | (41) | — | (46) |
| Net income (loss) | 971 | (1,843) | (8,253) | (9,125) |
21
Pluribus Technologies Corp.
NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS
For the three and nine months ended September 30, 2024, and 2023
(unaudited) (expressed in thousands of Canadian dollars, except share amounts)
The following table presents details on the two reporting segments of the Company for the nine months ended September 30, 2023:
| eLearning $ | eCommerce $ | Corporate $ | Total $ | |
|---|---|---|---|---|
| Revenue | 13,315 | 1,823 | — | 15,138 |
| Cost of revenue | 5,945 | 1,340 | — | 7,285 |
| Gross profit | 7,370 | 483 | — | 7,853 |
| Sales and marketing | 2,980 | 310 | 88 | 3,378 |
| Research and development | 2,323 | — | — | 2,323 |
| General and administrative | 929 | 118 | 3,338 | 4,385 |
| 6,232 | 428 | 3,426 | 10,086 | |
| Income (loss) before the following: | 1,138 | 55 | (3,426) | (2,233) |
| Acquisition costs | — | — | 2,611 | 2,233 |
| Amortization and depreciation | 1,855 | 374 | 54 | 2,283 |
| Share-based compensation | — | — | 373 | 373 |
| Gain on revaluation of contingent consideration | (332) | — | — | (332) |
| Gain on disposal of fixed assets | (2) | — | — | (2) |
| Finance expense, net | (3) | — | 2,113 | 2,110 |
| Foreign exchange loss | 590 | 12 | (195) | 407 |
| Loss before income taxes | (970) | (331) | (8,382) | (9,683) |
| Income tax recovery | (190) | (68) | — | (258) |
| Net loss | (780) | (263) | (8,382) | (9,425) |
22
Pluribus Technologies Corp.
NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS
For the three and nine months ended September 30, 2024, and 2023
(unaudited) (expressed in thousands of Canadian dollars, except share amounts)
The following table presents details on revenues by geographical region for the three and nine months ended September 30, 2024 and 2023:
| Three months ended September 30, | Nine months ended September 30, | |||
|---|---|---|---|---|
| 2024 | 2023 | 2024 | 2023 | |
| $ | $ | $ | $ | |
| Canada | 1,967 | 2,538 | 6,533 | 7,567 |
| United States | 2,037 | 2,161 | 6,407 | 6,448 |
| Other | 458 | 408 | 2,596 | 1,123 |
| Total | 4,462 | 5,107 | 15,536 | 15,138 |
Long-lived assets by geographical region as at September 30, 2024 and December 31, 2023 is as follows:
| September 30, 2024 $ | December 31, 2023 $ | |
|---|---|---|
| Canada | 22,214 | 25,605 |
| United States | 7,196 | 30,940 |
| Other | 7 | 10,606 |
| Total | 29,417 | 67,151 |
14 Comparative condensed consolidated interim financial statements
The comparative condensed consolidated interim financial statements have been reclassified from statements previously presented to conform to the presentation of the 2024 condensed consolidated interim financial statements.
15 Subsequent events
Sale of Digital Enablement and POWR
On October 11, 2024, the Company sold substantially all of the issued and outstanding fully diluted shares of its wholly-owned subsidiaries, POWR Inc., Assured Software Ltd. and Pluribus Technologies Limited for an aggregate purchase price of $17,000 payable in cash, on a cash-free, debt-free basis. Certain proceeds were used to repay bank debt. Refer to note 3, Assets held for sale and discontinued operations for further discussion.
Amendment to the Forbearance Agreement
The Second Forbearance Agreement period was extended to November 29, 2024. As of November 28, 2024, the Company has not received an update from National Bank regarding the status of the Second Forbearance Agreement and whether it intends to further extend the term of the Second Forbearance Agreement beyond November 29, 2024. Refer to Debt Financing for further details.
23