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Silver Elephant Mining Corp. — Interim / Quarterly Report 2025
Feb 20, 2025
43875_rns_2025-02-19_9dbefe11-0806-4ede-b46e-a7c66e3e01e4.pdf
Interim / Quarterly Report
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THUNDERBIRD ENTERTAINMENT
Thunderbird Entertainment Group Inc.
Unaudited Interim Condensed Consolidated Financial Statements
For the Three and Six Months Ended December 31, 2024 and 2023
Notice of No Auditor Review of Interim Financial Statements
In accordance with National Instrument 51–102, Continuous Disclosure Obligations, Part 4, subsection 4.3(3)(a), if an auditor has not performed a review of these interim financial statements, they must be accompanied by a notice indicating that the interim financial statements have not been reviewed by an auditor.
The Company's external auditors, PricewaterhouseCoopers LLP, have not performed a review of these interim financial statements.
THUNDERBIRD ENTERTAINMENT GROUP INC.
Unaudited Interim Condensed Consolidated Statements of Financial Position
| (in thousands of Canadian dollars) | Notes | As at December 31, 2024 | As at June 30, 2024 |
|---|---|---|---|
| ASSETS | |||
| Current | |||
| Cash and cash equivalents | 16 | $ 33,164 | $ 25,216 |
| Trade receivables and other | 4 | 77,525 | 74,234 |
| Lease receivable | 10 | 26 | 78 |
| Income taxes recoverable | 2,525 | 2,742 | |
| 113,240 | 102,270 | ||
| Non-current | |||
| Long-term trade receivables and other | 4 | 5,183 | 2,106 |
| Investment in content | 5 | 29,758 | 26,486 |
| Deferred tax assets | 8,576 | 8,516 | |
| Property and equipment | 6 | 19,323 | 20,681 |
| Goodwill and intangible assets | 7 | 12,402 | 12,538 |
| Total Assets | $ 188,482 | $ 172,597 | |
| LIABILITIES AND SHAREHOLDERS' EQUITY | |||
| Current | |||
| Accounts payable and accrued liabilities | $ 51,488 | $ 38,700 | |
| Income taxes payable | 1,239 | 1,553 | |
| Interim production financing | 8 | 8,347 | 19,818 |
| Deferred revenue | 14 | 31,729 | 17,682 |
| Current portion of lease obligations | 10 | 4,065 | 4,592 |
| Redeemable preferred shares | 11 | 367 | 367 |
| 97,235 | 82,712 | ||
| Non-current | |||
| Long-term lease obligations | 10 | 14,451 | 15,422 |
| Deferred tax liabilities | 4,647 | 5,170 | |
| Total Liabilities | 116,333 | 103,304 | |
| Shareholders' Equity | |||
| Preferred shares | 11 | 52 | 52 |
| Common shares | 12 | 71,684 | 71,260 |
| Accumulated other comprehensive income | 442 | 258 | |
| Contributed surplus | 5,343 | 5,425 | |
| Deficit | (5,372) | (7,702) | |
| Total Shareholders' Equity | 72,149 | 69,293 | |
| Total Liabilities and Shareholders' Equity | $ 188,482 | $ 172,597 |
Commitments and contingencies - Note 18
Approved on behalf of the Board:
"Jennifer Twiner McCarron"
Jennifer Twiner McCarron, Chair
"Lisa Coulman"
Lisa Coulman, CPA, CA; CPA (Illinois), Audit Chair
See accompanying notes to the interim condensed consolidated financial statements.
THUNDERBIRD ENTERTAINMENT GROUP INC.
Unaudited Interim Condensed Consolidated Statements of Operations and Comprehensive Income (Loss)
| (in thousands of Canadian dollars except for share data) | Notes | Three months ended December 31, | Six months ended December 31, | ||
|---|---|---|---|---|---|
| 2024 | 2023 | 2024 | 2023 | ||
| Revenue | 14 | $ 47,175 | $ 44,539 | $ 92,844 | $ 78,139 |
| Expenses | |||||
| Direct operating | 20 | 37,106 | 34,645 | 73,832 | 60,358 |
| Distribution and marketing | 309 | 204 | 521 | 488 | |
| General and administrative | 20 | 5,677 | 5,920 | 10,407 | 11,058 |
| Share-based compensation | 12 | 269 | 247 | 358 | 429 |
| Amortization of property and equipment and intangible assets | 20 | 1,948 | 2,340 | 3,947 | 4,808 |
| Finance costs, net | 21 | (148) | 104 | 230 | 679 |
| Foreign exchange loss (gain) | 551 | (139) | 460 | 18 | |
| Loss (gain) on termination and modification of leases | - | 29 | - | (25) | |
| Loss (gain) on disposal of property and equipment | - | 6 | (356) | 6 | |
| 45,712 | 43,356 | 89,399 | 77,819 | ||
| Income before income taxes | 1,463 | 1,183 | 3,445 | 320 | |
| Income tax expense | 713 | 564 | 1,115 | 429 | |
| Net income (loss) for the period | 750 | 619 | 2,330 | (109) | |
| Other comprehensive income (loss) | |||||
| Items that may be subsequently reclassified to net income (loss) | |||||
| Foreign currency translation adjustment | 219 | (116) | 184 | 12 | |
| 219 | (116) | 184 | 12 | ||
| Comprehensive income (loss) for the period | $ 969 | $ 503 | $ 2,514 | $ (97) | |
| Basic income per share | 12 | $ 0.02 | $ 0.01 | $ 0.05 | $ - |
| Diluted income per share | 12 | $ 0.01 | $ 0.01 | $ 0.04 | $ - |
See accompanying notes to the interim condensed consolidated financial statements.
THUNDERBIRD ENTERTAINMENT GROUP INC.
Unaudited Interim Condensed Consolidated Statements of Changes in Shareholders' Equity
| (in thousands of Canadian dollars) | Notes | Preferred shares | Common shares | Accumulated other comprehensive income | Contributed surplus | Deficit | Total |
|---|---|---|---|---|---|---|---|
| Balance at June 30, 2023 | $ 52 | $ 71,147 | $ 149 | $ 5,016 | $ (9,694) | $ 66,670 | |
| Comprehensive income (loss) | - | - | 12 | - | (109) | (97) | |
| Share-based compensation | 12 | - | - | - | 413 | - | 413 |
| Purchase of common shares under Normal Course Issuer Bid | 12 | - | (287) | - | - | (161) | (448) |
| Exercise of options | 12 | - | 515 | - | (157) | - | 358 |
| Balance at December 31, 2023 | 52 | 71,375 | 161 | 5,272 | (9,964) | 66,896 | |
| Balance at June 30, 2024 | 52 | 71,260 | 258 | 5,425 | (7,702) | 69,293 | |
| Comprehensive income | - | - | 184 | - | 2,330 | 2,514 | |
| Share-based compensation | 12 | - | - | - | 342 | - | 342 |
| Settlement of restricted share units ("RSUs") | 12 | - | 424 | - | (424) | - | - |
| Balance at December 31, 2024 | $ 52 | $ 71,684 | $ 442 | $ 5,343 | $ (5,372) | $ 72,149 |
See accompanying notes to the interim condensed consolidated financial statements.
THUNDERBIRD ENTERTAINMENT GROUP INC.
Unaudited Interim Condensed Consolidated Statements of Cash Flows
| (in thousands of Canadian dollars) | Notes | Six months ended December 31, | |
|---|---|---|---|
| 2024 | 2023 | ||
| OPERATING ACTIVITIES | |||
| Net income (loss) for the year | $ 2,330 | $ (109) | |
| Items not involving cash: | |||
| Amortization of investment in content | 5 | 2,443 | 9,927 |
| Amortization of property and equipment | 6 | 772 | 985 |
| Amortization of right-of-use assets | 6 | 3,039 | 3,688 |
| Amortization of intangible assets | 7 | 136 | 135 |
| Share-based compensation | 12 | 358 | 429 |
| Deferred income tax expense (recovery) | (577) | 654 | |
| Unrealized foreign exchange loss | 502 | 52 | |
| Loss (gain) on disposal of property and equipment | (356) | 6 | |
| Gain on termination of leases | - | (25) | |
| Impairment of development costs | 5 | 637 | 52 |
| Changes in non-cash working capital | 19 | 14,401 | 10,480 |
| Investment in content | (1,136) | (6,053) | |
| Cash flows provided by operating activities | 22,549 | 20,221 | |
| FINANCING ACTIVITIES | |||
| Repayment of interim production financing | 19 | (17,777) | (29,572) |
| Proceeds from interim production financing | 19 | 6,306 | 7,575 |
| Repayment of obligations under leases | 19 | (2,863) | (3,437) |
| Proceeds from exercise of share options | 12 | - | 358 |
| Purchase of common shares under Normal Course Issuer Bid | 12 | - | (448) |
| Cash flows used in financing activities | (14,334) | (25,524) | |
| INVESTING ACTIVITIES | |||
| Purchase of property and equipment | (1,126) | (222) | |
| Proceeds of disposal of property and equipment | 362 | - | |
| Cash flows used in investing activities | (764) | (222) | |
| Effect of exchange rate changes on cash and cash equivalents | 497 | (7) | |
| Net increase (decrease) in cash and cash equivalents during the period | 7,948 | (5,532) | |
| Cash and cash equivalents, beginning of period | 25,216 | 25,364 | |
| $ 33,164 | $ 19,832 |
See accompanying notes to the interim condensed consolidated financial statements.
THUNDERBIRD ENTERTAINMENT GROUP INC.
Notes to the Unaudited Interim Condensed Consolidated Financial Statements
For the three and six months ended December 31, 2024 and 2023
(in thousands of Canadian dollars, except for amounts per share and as noted)
- NATURE OF BUSINESS
Thunderbird Entertainment Group Inc. (the "Company"), the ultimate parent, and its primary wholly owned subsidiaries: Thunderbird Entertainment Inc.; Great Pacific Media Inc.; and Atomic Cartoons Inc., are an integrated group of companies that develop, produce, and distribute film and television programming for domestic and international markets. As an independent distribution company, the Company also acquires and licenses distribution rights. Thunderbird Entertainment Group Inc. is incorporated under the laws of British Columbia, Canada. The Company's head office is located at 123 West 7th Avenue, Vancouver, B.C., V5Y 1L8.
- BASIS OF PRESENTATION
Statement of compliance
These interim condensed consolidated financial statements have been prepared in accordance with International Financial Reporting Standards as issued by the International Accounting Standards Board ("IFRS Accounting Standards") and interpretations of the International Financial Reporting Interpretations Committee ("IFRIC"), including International Accounting Standard ("IAS") 34, Interim Financial Reporting. Certain disclosures required by IFRS have been condensed or omitted in the following note disclosures as they are disclosed or have been disclosed on an annual basis only. Accordingly, these interim condensed consolidated financial statements should be read in conjunction with the Company's consolidated financial statements for the years ended June 30, 2024 and 2023, which have been prepared in accordance with IFRS and can be found on www.sedar.com.
These interim condensed consolidated financial statements were approved and authorized for issuance by the Board of Directors on February 19, 2025.
Functional and presentation currency
These interim condensed consolidated financial statements are presented in Canadian dollars ("CA$") which is also the Company's functional currency.
- SUMMARY OF MATERIAL ACCOUNTING POLICIES
These interim condensed consolidated financial statements have been prepared using the same accounting policies and methods as the Company's consolidated financial statements for the year ended June 30, 2024.
Significant accounting estimates and judgments
The preparation of these interim condensed consolidated financial statements requires management to make estimates, judgments and assumptions that affect the application of policies and reported amounts. Estimates and judgments are continually evaluated and are based on historical experience and other factors including expectations of future events that are believed to be reasonable. Actual results may differ materially from these estimates.
New accounting pronouncements issued but not yet effective
Certain new accounting standards and interpretations have been published that are not mandatory for the current period and have not been early adopted. The IASB issued Lack of Exchangeability (amendments to IAS 21, The Effects of Changes in Foreign Exchange Rates) (effective January 1, 2025), amendments to the Classification and Measurement of Financial Instruments (amendments to IFRS 9, Financial Instruments and IFRS 7, Financial Instruments: Disclosures) (effective January 1, 2026), IFRS 18, Presentation and Disclosure in Financial Statements (effective January 1, 2027) and IFRS 19, Subsidiaries without Public Accountability: Disclosures (effective January 1, 2027). The Company is currently evaluating the impact these pronouncements will have on its interim condensed consolidated financial statements.
Page | 1
THUNDERBIRD ENTERTAINMENT GROUP INC.
Notes to the Unaudited Interim Condensed Consolidated Financial Statements
For the three and six months ended December 31, 2024 and 2023
(in thousands of Canadian dollars, except for amounts per share and as noted)
4. TRADE RECEIVABLES AND OTHER
| Current | December 31, | June 30, | |
|---|---|---|---|
| 2024 | 2024 | ||
| Trade receivables | $ | 3,547 | $ 7,517 |
| Deposits, prepaids and other | 5,268 | 8,409 | |
| Contract acquisition costs | 360 | 416 | |
| Federal and provincial film and television tax credits receivable | 68,350 | 57,892 | |
| $ | 77,525 | $ 74,234 | |
| Non-current | December 31, | June 30, | |
| 2024 | 2024 | ||
| Trade receivables | $ | 1,585 | $ 911 |
| Deposits, prepaids and other | 3,598 | 1,195 | |
| $ | 5,183 | $ 2,106 |
Federal and provincial film and television tax credits receivable ("tax credits") from government agencies are subject to audit by the applicable government agency. Management believes that the net amounts recorded are fully collectible. The Company adjusts amounts receivable from government agencies quarterly for any known differences arising from internal or external audits of these balances.
The aging of current trade receivables is as follows:
| December 31, | June 30, | ||
|---|---|---|---|
| 2024 | 2024 | ||
| Less than 60 days | $ | 3,301 | $ 7,494 |
| Over 61 days | 246 | 23 | |
| $ | 3,547 | $ 7,517 |
Page | 2
THUNDERBIRD ENTERTAINMENT GROUP INC.
Notes to the Unaudited Interim Condensed Consolidated Financial Statements
For the three and six months ended December 31, 2024 and 2023
(in thousands of Canadian dollars, except for amounts per share and as noted)
5. INVESTMENT IN CONTENT
Investment in content represents the unamortized costs of film and television projects in development, content in production, released content and acquired content.
| Development costs | Content in production | Released content | Acquired content | Total | |
|---|---|---|---|---|---|
| Cost | |||||
| Balance June 30, 2023 | $ 1,643 | $ 21,354 | $ 194,296 | $ 7,408 | $ 224,701 |
| Additions¹ | 783 | 13,413 | - | 1,097 | 15,293 |
| Impairment | (131) | - | - | - | (131) |
| Transferred | - | (20,827) | 20,827 | - | - |
| Balance June 30, 2024 | 2,295 | 13,940 | 215,123 | 8,505 | 239,863 |
| Additions¹ | 882 | 5,084 | - | 386 | 6,352 |
| Impairment | (637) | - | - | - | (637) |
| Transferred | - | (1,181) | 1,181 | - | - |
| Balance December 31, 2024 | $ 2,540 | $ 17,843 | $ 216,304 | $ 8,891 | $ 245,578 |
| Amortization | |||||
| Balance June 30, 2023 | $ - | $ - | $ 186,451 | $ 6,836 | $ 193,287 |
| Additions | - | - | 19,630 | 460 | 20,090 |
| Balance June 30, 2024 | - | - | 206,081 | 7,296 | 213,377 |
| Additions | - | - | 2,278 | 165 | 2,443 |
| Balance December 31, 2024 | $ - | $ - | $ 208,359 | $ 7,461 | $ 215,820 |
| Net book value | |||||
| June 30, 2024 | $ 2,295 | $ 13,940 | $ 9,042 | $ 1,209 | $ 26,486 |
| December 31, 2024 | $ 2,540 | $ 17,843 | $ 7,945 | $ 1,430 | $ 29,758 |
¹ Net of government and third-party assistance (note 13).
Interest charges capitalized to the cost of film and television productions for the six months ended December 31, 2024 amounted to $156 (year ended June 30, 2024 - $552).
Page | 3
THUNDERBIRD ENTERTAINMENT GROUP INC.
Notes to the Unaudited Interim Condensed Consolidated Financial Statements
For the three and six months ended December 31, 2024 and 2023
(in thousands of Canadian dollars, except for amounts per share and as noted)
6. PROPERTY AND EQUIPMENT
| Computer equipment | Furniture and equipment | Leasehold improvements | Vehicles | Right-of-use ("ROU") assets | Total | |
|---|---|---|---|---|---|---|
| Cost | ||||||
| Balance June 30, 2023 | $ 6,574 | $ 3,293 | $ 4,453 | $ 707 | $ 51,937 | $ 66,964 |
| Additions | 1,204 | 196 | 21 | 78 | 2,782 | 4,281 |
| Reclass of assets¹ | (1,041) | - | - | - | 1,041 | - |
| Disposals | (29) | - | - | (76) | (2,358) | (2,463) |
| Modifications | - | - | - | - | (439) | (439) |
| Impact of foreign exchange | 4 | - | 19 | - | 108 | 131 |
| Balance June 30, 2024 | 6,712 | 3,489 | 4,493 | 709 | 53,071 | 68,474 |
| Additions | 780 | 213 | 35 | 98 | 1,169 | 2,295 |
| Disposals | - | (17) | - | (16) | (1,717) | (1,750) |
| Modifications | - | - | - | - | 1 | 1 |
| Impact of foreign exchange | 2 | - | 25 | - | 137 | 164 |
| Balance December 31, 2024 | $ 7,494 | $ 3,685 | $ 4,553 | $ 791 | $ 52,661 | $ 69,184 |
| Amortization | ||||||
| Balance June 30, 2023 | $ 5,518 | $ 2,853 | $ 1,197 | $ 405 | $ 30,370 | $ 40,343 |
| Additions | 929 | 236 | 447 | 122 | 7,086 | 8,820 |
| Reclass of assets¹ | (208) | - | - | - | 208 | - |
| Disposals | - | - | - | (58) | (1,305) | (1,363) |
| Impact of foreign exchange | - | - | - | - | (7) | (7) |
| Balance June 30, 2024 | 6,239 | 3,089 | 1,644 | 469 | 36,352 | 47,793 |
| Additions | 338 | 138 | 229 | 67 | 3,039 | 3,811 |
| Disposals | - | (10) | - | (15) | (1,717) | (1,742) |
| Impact of foreign exchange | - | - | (1) | - | - | - |
| Balance December 31, 2024 | $ 6,577 | $ 3,217 | $ 1,872 | $ 521 | $ 37,674 | $ 49,862 |
| Net book value | ||||||
| June 30, 2024 | $ 473 | $ 400 | $ 2,849 | $ 240 | $ 16,719 | $ 20,681 |
| December 31, 2024 | $ 917 | $ 468 | $ 2,681 | $ 270 | $ 14,987 | $ 19,323 |
¹ Reclass of assets consists of existing computer equipment assets that have been converted to ROU assets under finance leases.
There were no impairment write-downs or any reversals of previous write-downs during the periods presented.
Page | 4
THUNDERBIRD ENTERTAINMENT GROUP INC.
Notes to the Unaudited Interim Condensed Consolidated Financial Statements
For the three and six months ended December 31, 2024 and 2023
(in thousands of Canadian dollars, except for amounts per share and as noted)
7. GOODWILL AND INTANGIBLE ASSETS
The continuity of goodwill and intangible assets is as follows:
| Goodwill | Distribution libraries | Customer relationships | Total | |
|---|---|---|---|---|
| Cost | ||||
| Balance December 31, 2024 and June 30, 2024 and 2023 | $ 12,402 | $ 2,700 | $ 1,470 | $ 16,572 |
| Amortization | ||||
| Balance June 30, 2023 | $ - | $ 2,294 | $ 1,470 | $ 3,764 |
| Additions | - | 270 | - | 270 |
| Balance June 30, 2024 | - | 2,564 | 1,470 | 4,034 |
| Additions | - | 136 | - | 136 |
| Balance December 31, 2024 | $ - | $ 2,700 | $ 1,470 | $ 4,170 |
| Net book value | ||||
| June 30, 2024 | $ 12,402 | $ 136 | $ - | $ 12,538 |
| December 31, 2024 | $ 12,402 | $ - | $ - | $ 12,402 |
8. INTERIM PRODUCTION FINANCING
Interim production financing represents individual loans for film and television programs that the Company produces. All facilities are repayable on demand and secured by General Security Agreements.
| December 31, 2024 | June 30, 2024 | |
|---|---|---|
| Interim production credit facilities with Royal Bank of Canada (“RBC”), bearing interest at RBC’s prime rate plus 0.50% (June 30, 2024 - 0.50%). Secured by assignment and direction of trade receivables and tax credit receivables of approximately $9,104 (June 30, 2024 - $10,047). | $ 5,361 | $ 6,610 |
| Revolving term loan with RBC, bearing interest at RBC’s prime rate plus 1.25% (June 30, 2024 - 1.25%). Maximum funds available of $5,000. Repayable on the earlier of 15 days after the closing of the applicable single purpose production company (“SPPC”) production facility or 180 days after the first draw has been made. | - | 4,500 |
| Revolving production operating line of credit with RBC, bearing interest at RBC’s prime rate plus 0.50% (June 30, 2024 - 0.50%). Maximum funds available of $40,000 and secured by assignment of federal and provincial tax credit receivables of approximately $4,837 (June 30, 2024 - $12,574). Interest only is payable monthly in arrears with the principal repayment to be made upon the receipt of the tax credits for each SPPC. | 2,986 | 8,708 |
| $ 8,347 | $ 19,818 |
THUNDERBIRD ENTERTAINMENT GROUP INC.
Notes to the Unaudited Interim Condensed Consolidated Financial Statements
For the three and six months ended December 31, 2024 and 2023
(in thousands of Canadian dollars, except for amounts per share and as noted)
9. LONG-TERM DEBT
As at December 31, 2024, the Company also has the following credit facilities with RBC which have not been drawn on. All facilities are secured by General Security Agreements.
- A $5,000 revolving term loan to finance distribution advances being made to greenlit Canadian content eligible productions owned by an SPPC of the Company, providing the financing of the distribution advance for each production does not exceed 20% of the production budget. The facility is repayable on demand.
- An $8,000 revolving un margined line of credit bearing interest at RBC’s prime rate plus 1.25%. The facility is repayable on demand.
- A $4,200 revolving facility by way of leases to finance regular ongoing capital asset purchases.
- A $750 foreign exchange line of credit available to hedge against fluctuating exchange rates.
Under the terms of the RBC credit facilities disclosed above and in note 8, the Company is required to meet certain covenants. As at December 31, 2024, the Company was in compliance with all of the covenants.
10. LEASES
ROU assets
The continuity of ROU assets is as follows:
| Premises | Equipment | Vehicles | Total | |
|---|---|---|---|---|
| Balance June 30, 2023 | $ 15,881 | $ 5,678 | $ 8 | $ 21,567 |
| Additions | 415 | 3,408 | - | 3,823 |
| Lease modifications | (459) | 20 | - | (439) |
| Lease terminations | (1,962) | (396) | - | (2,358) |
| Amortization¹ | (685) | (5,289) | (8) | (5,982) |
| Impact of foreign exchange | 95 | 13 | - | 108 |
| Balance June 30, 2024 | 13,285 | 3,434 | - | 16,719 |
| Additions | 122 | 1,047 | - | 1,169 |
| Lease modifications | - | 1 | - | 1 |
| Amortization¹ | (841) | (2,198) | - | (3,039) |
| Impact of foreign exchange | 129 | 8 | - | 137 |
| Balance December 31, 2024 | $ 12,695 | $ 2,292 | $ - | $ 14,987 |
¹Refer to note 6, ROU assets for details.
Lease obligations
The continuity of lease obligations is as follows:
| Premises | Equipment | Vehicles | Total | |
|---|---|---|---|---|
| Balance June 30, 2023 | $ 18,486 | $ 5,607 | $ 9 | $ 24,102 |
| Additions | 415 | 3,408 | - | 3,823 |
| Lease modifications | (459) | 20 | - | (439) |
| Lease terminations | (799) | (157) | - | (956) |
| Amortization | (1,575) | (5,074) | (9) | (6,658) |
| Impact of foreign exchange | 124 | 18 | - | 142 |
| Balance June 30, 2024 | 16,192 | 3,822 | - | 20,014 |
| Additions | 122 | 1,047 | - | 1,169 |
| Lease modifications | - | 1 | - | 1 |
| Amortization | (865) | (1,999) | - | (2,864) |
| Impact of foreign exchange | 182 | 14 | - | 196 |
| Balance December 31, 2024 | $ 15,631 | $ 2,885 | $ - | $ 18,516 |
Page | 6
THUNDERBIRD ENTERTAINMENT GROUP INC.
Notes to the Unaudited Interim Condensed Consolidated Financial Statements
For the three and six months ended December 31, 2024 and 2023
(in thousands of Canadian dollars, except for amounts per share and as noted)
The Company has applied the practical expedient to designate leases with terms of less than 12 months as short-term and leases under a certain threshold as low-value. As a result, for the six months ended December 31, 2024, $57 was expensed to general and administrative under the low-value exemption (year ended June 30, 2024 - $94).
The following table presents a reconciliation of the Company's undiscounted cash flows as at December 31, 2024 and June 30, 2024, to their present value for the Company's lease obligations:
| December 31, | June 30, | ||
|---|---|---|---|
| 2024 | 2024 | ||
| Within one year | $ | 4,939 | $ 5,542 |
| Between one and five years | 9,725 | 9,987 | |
| Beyond five years | 9,157 | 10,271 | |
| Total undiscounted lease obligations | 23,821 | 25,800 | |
| Less future interest charges | (5,305) | (5,786) | |
| Total discounted lease obligations | 18,516 | 20,014 | |
| Less current portion of lease obligations | $ | (4,065) | $ (4,592) |
| Non-current portion of lease obligations | $ | 14,451 | $ 15,422 |
As at December 31, 2024, the total discounted lease obligations related to contracts with RBC amounted to $1,106, with $638 classified as current and $468 as non-current (June 30, 2024 - $1,408, with $616 classified as current and $792 as non-current).
Lease receivable
In January 2024, the Company entered into an assignment agreement for one of its leases for office space. As the Company has not been fully discharged from the original lease, the assignment was accounted for as a sublease. The assignment is effective from February 1, 2024 to the end of the lease term on March 30, 2025.
As the sublease was assessed as a finance sublease, the ROU asset previously recognized was derecognized and the Company recognized a lease receivable. The lease receivable was measured at the present value of the future lease payments to be made by the assignee using an incremental borrowing rate of 5.64%.
The continuity of the lease receivable is as follows:
| December 31, | June 30, | ||
|---|---|---|---|
| 2024 | 2024 | ||
| Opening balance | $ | 78 | $ |
| Additions | - | 121 | |
| Interest accrual (note 21) | 1 | 2 | |
| Lease recoveries | (53) | (45) | |
| Ending balance | $ | 26 | $ 78 |
11. REDEEMABLE PREFERRED SHARES
Issued and outstanding:
| Number of shares | Amount | ||
|---|---|---|---|
| Liability component | Equity component | ||
| Balance December 31, 2024 and June 30, 2024 and 2023 | 415,000 | $ 367 | $ 52 |
The Company pays a quarterly dividend of $0.0175 per redeemable preferred share which is disclosed in note 21.
Page | 7
THUNDERBIRD ENTERTAINMENT GROUP INC.
Notes to the Unaudited Interim Condensed Consolidated Financial Statements
For the three and six months ended December 31, 2024 and 2023
(in thousands of Canadian dollars, except for amounts per share and as noted)
12. SHARE CAPITAL
Authorized
Unlimited number of common shares without par value
Unlimited number of preferred shares without par value
Common shares
Issued:
| Number of shares | Amount | |
|---|---|---|
| Balance June 30, 2023 | 49,996,487 | $ 71,147 |
| Exercise of options | 412,500 | 957 |
| Purchase of common shares under Normal Course Issuer Bid | (591,400) | (844) |
| Balance June 30, 2024 | 49,817,587 | $ 71,260 |
| Settlement of RSUs | 236,617 | 424 |
| Balance December 31, 2024 | 50,054,204 | $ 71,684 |
Normal Course Issuer Bid
On December 4, 2024, the Company announced its application was approved for a Normal Course Issuer Bid (the "2025 NCIB") to purchase, through the facilities of the TSX-V, up to 3,190,236 common shares, over a twelve-month period commencing on December 9, 2024 and ending December 8, 2025. This represents approximately 10% of the public float of the Company's common shares. The purchases will be effected on the open market through the facilities of the TSX-V exchange only.
The Company previously received approval for and maintained a Normal Course Issuer Bid (the "2024 NCIB") to purchase, through the facilities of the TSX-V, up to 3,418,509 common shares, over a twelve-month period which commenced on December 7, 2023 and ended on December 6, 2024.
During the year ended June 30, 2024, the Company repurchased for cancellation, 591,400 common shares under the 2024 NCIB then in effect for a total consideration of $1,230, representing an average price of $2.08 per common share. The Company's capital stock was reduced by $844 and the remaining $386 was accounted for as a decrease in retained earnings.
Earnings per share
The following table calculates basic and diluted net earnings per share:
| Three months ended December 31, | Six months ended December 31, | |||
|---|---|---|---|---|
| 2024 | 2023 | 2024 | 2023 | |
| Net income (loss) | $ 750 | $ 619 | $ 2,330 | $ (109) |
| Dividend expense | 7 | 7 | 15 | 15 |
| Diluted net income (loss) | $ 757 | $ 626 | $ 2,345 | $ (94) |
| Basic weighted average number of common shares | 49,905,714 | 50,167,330 | 49,839,800 | 50,065,406 |
| Diluted weighted average number of common shares | 52,184,047 | 52,895,413 | 52,118,133 | 52,793,489 |
| Basic income per share | $ 0.02 | $ 0.01 | $ 0.05 | $ - |
| Diluted income per share | $ 0.01 | $ 0.01 | $ 0.04 | $ - |
Share option plan
The Company has established a Share Option Plan (the "option plan") which provides for options to purchase common shares to be granted by the Company to directors, officers, employees and consultants of the Company. Options will generally vest over a period of 36 months. The maximum number of common shares issuable under the
Page | 8
THUNDERBIRD ENTERTAINMENT GROUP INC.
Notes to the Unaudited Interim Condensed Consolidated Financial Statements
For the three and six months ended December 31, 2024 and 2023
(in thousands of Canadian dollars, except for amounts per share and as noted)
option plan together with the number of shares issuable under the equity incentive plan is 10% of the total number of issued and outstanding shares at the grant date of an option.
The following table summarizes the changes in stock options outstanding:
| Number of options | Weighted average exercise price | |
|---|---|---|
| Balance June 30, 2023 | 3,343,500 | $ 2.61 |
| Issued | 40,000 | 1.91 |
| Exercised | (412,500) | 1.59 |
| Expired | (90,000) | 2.00 |
| Forfeited | (16,500) | 4.90 |
| Cancelled | (22,500) | 4.90 |
| Balance June 30, 2024 | 2,842,000 | 2.73 |
| Forfeited | (25,000) | 3.50 |
| Cancelled | (572,000) | 2.95 |
| Balance December 31, 2024 | 2,245,000 | $ 2.66 |
During the six months ended December 31, 2024, nil stock options were exercised (six months ended December 31, 2023 – 187,500 stock options exercised for proceeds of $358, and $157 transferred from contributed surplus to common shares).
The following table summarizes the stock options outstanding as at December 31, 2024:
| Exercise price | Number of options | Expiry date | Weighted average remaining contractual life (years) | Weighted average exercise price | Number of options exercisable | Weighted average exercise price |
|---|---|---|---|---|---|---|
| $ 0.50 | 10,000 | Mar 2026 | 1.19 | $ 0.50 | 10,000 | $ 0.50 |
| $ 1.91 | 40,000 | Feb 2031 | 6.09 | 1.91 | 10,000 | 1.91 |
| $ 2.00 | 1,171,000 | July 2025 to Mar 2026 | 0.69 | 2.00 | 1,171,000 | 2.00 |
| $ 3.00 | 30,000 | Dec 2027 | 2.94 | 3.00 | 30,000 | 3.00 |
| $ 3.07 | 525,000 | Jan 2028 | 3.02 | 3.07 | 525,000 | 3.07 |
| $ 3.20 | 30,000 | Mar 2028 | 3.20 | 3.20 | 30,000 | 3.20 |
| $ 3.40 | 40,000 | Mar 2030 | 5.18 | 3.40 | 20,000 | 3.40 |
| $ 3.50 | 215,000 | Jan 2025 to Mar 2030 | 3.02 | 3.49 | 170,000 | 3.49 |
| $ 4.27 | 40,000 | Jan 2029 | 4.04 | 4.27 | 30,000 | 4.27 |
| $ 4.90 | 144,000 | May 2028 | 3.40 | 4.90 | 144,000 | 4.90 |
| 2,245,000 | 1.93 | $ 2.66 | 2,140,000 | $ 2.63 |
Equity incentive compensation plan
The Company has established an Equity Incentive Compensation Plan (the "equity incentive plan") which provides restricted share units ("RSUs") or performance share units ("PSUs") to be issued to directors, officers, employees, and consultants of the Company. Subject to the specific provisions of the equity incentive plan, eligibility, vesting period, terms of the RSUs and PSUs and the number of RSUs or PSUs granted are to be determined by the Board of Directors at the time of the grant. On the vesting date, the Company will be obligated to redeem the RSUs and PSUs in cash or by issuing one common share for each RSU or PSU. The maximum number of common shares issuable under the equity incentive plan together with the number of shares issuable under the option plan is 10% of the total number of issued and outstanding shares at the grant date of a RSU or PSU.
Page | 9
THUNDERBIRD ENTERTAINMENT GROUP INC.
Notes to the Unaudited Interim Condensed Consolidated Financial Statements
For the three and six months ended December 31, 2024 and 2023
(in thousands of Canadian dollars, except for amounts per share and as noted)
The following table summarizes the changes in RSUs outstanding:
| Equity Settled | Cash Settled | Total | |
|---|---|---|---|
| Balance June 30, 2023 | 111,960 | 121,000 | 232,960 |
| Issued | 108,831 | - | 108,831 |
| Settled | - | (40,333) | (40,333) |
| Balance June 30, 2024 | 220,791 | 80,667 | 301,458 |
| Issued | 494,399 | - | 494,399 |
| Settled | (236,617) | (40,333) | (276,950) |
| Forfeited | - | (3,333) | (3,333) |
| Cancelled | (18,660) | - | (18,660) |
| Balance December 31, 2024 | 459,913 | 37,001 | 496,914 |
During the six months ended December 31, 2024, the Company granted 494,399 equity settled RSUs. 179,476 of the RSUs vest on the first anniversary of the grant date, 171,606 of the RSUs vest over a period of 36 months, with one-third vesting over each anniversary date, and 143,317 of the RSUs vested within the six months ended December 31, 2024 (six months ended December 31, 2023 – the Company granted nil equity settled RSUs). The RSUs will be settled in common shares of the Company.
The outstanding accrued liability related to cash settled RSUs at December 31, 2024 was $46 (June 30, 2024 - $96).
The following table summarizes the changes in PSUs outstanding:
| Equity Settled | Total | |
|---|---|---|
| Balance June 30, 2024 and 2023 | - | - |
| Issued | 400,412 | 400,412 |
| Balance December 31, 2024 | 400,412 | 400,412 |
During the six months ended December 31, 2024, the Company granted 400,412 equity settled PSUs which vest on the first anniversary of the grant date, provided that the performance conditions attached to the PSUs are met. The PSUs will be settled in common shares of the Company.
Share-based compensation
Share-based compensation expense recognized in the consolidated statements of operations and comprehensive income (loss) is comprised of the following:
| Three months ended December 31, | Six months ended December 31, | |||
|---|---|---|---|---|
| 2024 | 2023 | 2024 | 2023 | |
| Stock options | $ 23 | $ 111 | $ 45 | $ 203 |
| RSUs – equity settled grants | 252 | 105 | 290 | 210 |
| PSUs – equity settled grants | 7 | - | 7 | - |
| Total equity settled share-based compensation expense | 282 | 216 | 342 | 413 |
| RSUs – cash settled grants | (13) | 31 | 16 | 16 |
| Total share-based compensation | $ 269 | $ 247 | $ 358 | $ 429 |
Page | 10
THUNDERBIRD ENTERTAINMENT GROUP INC.
Notes to the Unaudited Interim Condensed Consolidated Financial Statements
For the three and six months ended December 31, 2024 and 2023
(in thousands of Canadian dollars, except for amounts per share and as noted)
13. GOVERNMENT FINANCING AND ASSISTANCE
Investment in content and direct operating expenses have been reduced by the following:
| Six months ended December 31, | ||
|---|---|---|
| 2024 | 2023 | |
| Non-repayable contributions from license fee programs | $ 2,552 | $ 3,120 |
| Tax credits relating to production activities | 12,582 | 13,922 |
| Equity investment from third parties | - | 1 |
| $ 15,134 | $ 17,043 |
During the six months ended December 31, 2024, investment in content was reduced by $8,434 and direct operating expenses were reduced by $6,700 (six months ended December 31, 2023 - $12,337 and $4,706, respectively).
The Company is subject to routine inquiries and review by regulatory authorities of its various incentive claims which have been received or are receivable. Adjustments of claims, if any, as a result of such inquiries or reviews will be recorded at the time of such determination. There have been no material adjustments to date.
14. REVENUE
The following table presents components of revenue:
| Three months ended December 31, | Six months ended December 31, | |||
|---|---|---|---|---|
| 2024 | 2023 | 2024 | 2023 | |
| Production services | $ 44,300 | $ 31,139 | $ 88,750 | $ 61,609 |
| Licensing and distribution | 2,857 | 13,393 | 4,035 | 16,465 |
| Other | 18 | 7 | 59 | 65 |
| $ 47,175 | $ 44,539 | $ 92,844 | $ 78,139 |
Revenues are derived from the following geographical sources, by location of customer:
| Three months ended December 31, | Six months ended December 31, | |||
|---|---|---|---|---|
| 2024 | 2023 | 2024 | 2023 | |
| Canada | $ 5,383 | $ 6,774 | $ 12,381 | $ 13,469 |
| U.S. | 41,697 | 36,802 | 80,126 | 63,114 |
| France | 75 | 963 | 230 | 1,529 |
| China | - | - | 44 | - |
| Denmark | - | - | - | 27 |
| Other countries | 20 | - | 63 | - |
| $ 47,175 | $ 44,539 | $ 92,844 | $ 78,139 |
THUNDERBIRD ENTERTAINMENT GROUP INC.
Notes to the Unaudited Interim Condensed Consolidated Financial Statements
For the three and six months ended December 31, 2024 and 2023
(in thousands of Canadian dollars, except for amounts per share and as noted)
The Company's only contract related liability is deferred revenue, which reflects the timing difference between the receipt of cash and the recognition of revenue. The following table reflects the movement in deferred revenue:
| December 31, | June 30, | ||
|---|---|---|---|
| 2024 | 2024 | ||
| Opening balance | $ | 17,682 | $ 30,381 |
| Revenue recognized that was included in the deferred revenue balance at the beginning of the period | (3,695) | (27,814) | |
| Increases due to cash received, excluding amounts recognized as revenue during the period | 17,742 | 15,115 | |
| Ending balance | $ | 31,729 | $ 17,682 |
15. FINANCIAL INSTRUMENTS AND FINANCIAL RISK MANAGEMENT
The Company's financial assets and liabilities are classified and measured as follows:
| Financial instrument | Category | Measurement |
|---|---|---|
| Cash and cash equivalents | Amortized cost | Amortized cost |
| Trade receivables | Amortized cost | Amortized cost |
| Accounts payable and accrued liabilities | Amortized cost | Amortized cost |
| Interim production financing | Amortized cost | Amortized cost |
| Redeemable preferred shares | Amortized cost | Amortized cost |
The Company's cash and cash equivalents are transacted in active markets. The carrying amounts reported on the interim condensed consolidated financial statements for cash and cash equivalents, trade receivables and accounts payable and accrued liabilities approximate their fair values due to their immediate or short-term nature and are classified as Level 2. The carrying value of interim production financing approximates their fair value as the interim production financing and debt bear interest at rates that fluctuate with market rates and are classified as Level 2.
The Company's Class A redeemable preferred shares are classified as Level 3. The redeemable preferred shares have a liability and equity component. The fair value of the liability component was determined by discounting cash flows from expected future dividend payments using a rate of 8%.
Assessment of the significance of a particular input to the fair value measurement requires judgment and may affect the placement within the fair value hierarchy.
The Company is exposed to credit risk, liquidity risk and market risk in the normal course of operations. The Company does not use derivative instruments to reduce its exposure.
The Board of Directors has overall responsibility for the establishment and oversight of the Company's financial risk management framework and monitors risk management activities. The Company identifies and analyzes the risks faced by the Company and may utilize financial instruments to mitigate these risks.
16. CAPITAL MANAGEMENT
The Company's objectives when managing capital are to maintain financial flexibility in order to pursue its strategy of organic growth combined with strategic and/or synergistic acquisitions, and to maximize the return to shareholders through the optimization of reasonable debt and equity balances commensurate with current operating requirements.
As at December 31, 2024, cash includes $18,688 (June 30, 2024 - $13,717) that is required for the funding of ongoing productions and is not accessible for other purposes. Interim production financing is not considered within the
Page | 12
THUNDERBIRD ENTERTAINMENT GROUP INC.
Notes to the Unaudited Interim Condensed Consolidated Financial Statements
For the three and six months ended December 31, 2024 and 2023
(in thousands of Canadian dollars, except for amounts per share and as noted)
scope of the Company’s capital management programs as these loans are specific to individual productions and are repaid by funds earmarked to the individual productions such as license fees, production services agreements, film and television tax credits and other forms of support. The remaining cash balance of $14,476 (June 30, 2024 - $11,499) is strategically allocated for general working capital needs and to support the Company’s continuous development and growth initiatives.
| December 31, | June 30, | ||
|---|---|---|---|
| 2024 | 2024 | ||
| Net capital, being cash and cash equivalents | $ | 33,164 | $ 25,216 |
| Total Shareholders’ equity | $ | 72,149 | $ 69,293 |
To facilitate the management of its capital structure, the Company prepares an annual budget that is updated quarterly. The annual budget is reviewed and approved by the Board of Directors and the quarterly reforecasts are reviewed by the Board of Directors.
The Company expects that its current capital resources will be sufficient to carry out operations beyond its current reporting period. The overall strategy with respect to capital risk management remains unchanged from the year ended June 30, 2024.
17. RELATED PARTY TRANSACTIONS
Key management personnel compensation
Key management includes directors and former directors, as well as the Chief Executive Officer, Chief Financial Officer, President of Global Distribution and Consumer Products, and General Counsel.
The remuneration of directors and officers is as follows:
| Three months ended December 31, | Six months ended December 31, | ||||
|---|---|---|---|---|---|
| 2024 | 2023 | 2024 | 2023 | ||
| Short-term benefits | $ | 832 | $ 1,046 | $ 1,720 | $ 1,848 |
| Share-based payments (note 12) | 344 | 184 | 396 | 343 | |
| $ | 1,176 | $ 1,230 | $ 2,116 | $ 2,191 |
18. COMMITMENTS AND CONTINGENCIES
Commitments
The Company has commitments related to lease obligations which are disclosed in note 10.
Litigation
The Company and its subsidiaries may from time to time be a party to certain legal disputes and claims arising from commercial issues in the normal course of business. There are currently no legal disputes or claims, other than those described below, that may have a material adverse effect on the financial position or results of operations of the Company.
A proposed claim has been made against the Company relating to the alleged unauthorized exploitation of a television series. Management believes the claim to be without merit and will be defending the action.
Page | 13
THUNDERBIRD ENTERTAINMENT GROUP INC.
Notes to the Unaudited Interim Condensed Consolidated Financial Statements
For the three and six months ended December 31, 2024 and 2023
(in thousands of Canadian dollars, except for amounts per share and as noted)
19. SUPPLEMENTAL CASH FLOW INFORMATION
The following table reconciles the changes in non-cash working capital as disclosed in the interim condensed consolidated statements of cash flows:
| Six months ended December 31, | ||
|---|---|---|
| 2024 | 2023 | |
| Operating activities | ||
| Changes in non-cash working capital | ||
| Accounts receivable | $ (6,381) | $ 16,773 |
| Income taxes recoverable | 217 | 800 |
| Accounts payable and accrued liabilities | 7,469 | (1,436) |
| Income taxes payable | (314) | (72) |
| Deferred revenue | 13,410 | (5,585) |
| $ 14,401 | $ 10,480 |
The following table reconciles the changes in liabilities arising from financing activities as disclosed in the interim condensed consolidated statements of cash flows:
| Balance June 30, 2024 | Cash flows from (used in) | Non-cash changes | Balance December 31, 2024 | |||
|---|---|---|---|---|---|---|
| Proceeds | Repayments | Disposals | Foreign exchange movement | |||
| Interim production financing | $ 19,818 | $ 6,306 | $ (17,777) | $ - | $ - | $ 8,347 |
| Lease obligations – current¹ | $ 4,592 | $ 1,148 | $ (1,715) | $ - | $ 40 | $ 4,065 |
| Lease obligations – non-current¹ | $ 15,422 | $ 22 | $ (1,148) | $ - | $ 155 | $ 14,451 |
¹ Included within proceeds of obligations under leases is $1,170 of non-cash property and equipment additions related to leases.
Additional supplemental cash flow information:
| Six months ended December 31, | ||
|---|---|---|
| 2024 | 2023 | |
| Interest and debt service costs paid¹ | $ 548 | $ 1,817 |
| Income taxes paid (recovered) | $ 1,581 | $ (1,015) |
¹ Included in interest and debt service costs paid is interest costs capitalized to the cost of film and television productions (note 5).
Page | 14
THUNDERBIRD ENTERTAINMENT GROUP INC.
Notes to the Unaudited Interim Condensed Consolidated Financial Statements
For the three and six months ended December 31, 2024 and 2023
(in thousands of Canadian dollars, except for amounts per share and as noted)
20. EXPENSES BY NATURE
The following sets out the expenses by nature:
| Three months ended December 31, | Six months ended December 31, | |||
|---|---|---|---|---|
| 2024 | 2023 | 2024 | 2023 | |
| Direct operating | ||||
| Direct costs | $ 34,674 | $ 25,549 | $ 70,419 | $ 50,146 |
| Amortization of investment in content | 1,982 | 8,985 | 2,443 | 9,927 |
| Development expenses and other | 450 | 111 | 970 | 285 |
| 37,106 | 34,645 | 73,832 | 60,358 | |
| General and administrative | ||||
| Salaries, employee benefits and contractors | 4,052 | 4,160 | 7,125 | 7,921 |
| Office and administrative | 1,140 | 1,122 | 2,367 | 2,150 |
| Legal and professional | 485 | 638 | 915 | 987 |
| 5,677 | 5,920 | 10,407 | 11,058 | |
| Amortization of property and equipment and intangible assets | ||||
| Amortization of property and equipment and intangible assets | 480 | 555 | 908 | 1,120 |
| Amortization of ROU assets¹ | 1,468 | 1,785 | 3,039 | 3,688 |
| 1,948 | 2,340 | 3,947 | 4,808 | |
| Distribution and marketing | 309 | 204 | 521 | 488 |
| Share-based compensation | 269 | 247 | 358 | 429 |
| Finance costs, net | (148) | 104 | 230 | 679 |
| Foreign exchange loss (gain) | 551 | (139) | 460 | 18 |
| Loss (gain) on termination of leases | - | 29 | - | (25) |
| Loss (gain) on disposal of property and equipment | - | 6 | (356) | 6 |
| $ 45,712 | $ 43,356 | $ 89,399 | $ 77,819 |
¹ Amortization of ROU assets relating to non-finance leases for the three and six months ended December 31, 2024, was $1,307 and $2,690, respectively (three and six months ended December 31, 2023 – $1,507 and $3,108, respectively).
Page | 15
THUNDERBIRD ENTERTAINMENT GROUP INC.
Notes to the Unaudited Interim Condensed Consolidated Financial Statements
For the three and six months ended December 31, 2024 and 2023
(in thousands of Canadian dollars, except for amounts per share and as noted)
21. FINANCE COSTS, NET
| Three months ended December 31, | Six months ended December 31, | |||
|---|---|---|---|---|
| 2024 | 2023 | 2024 | 2023 | |
| Dividends on redeemable preferred shares | $ 7 | $ 7 | $ 15 | $ 15 |
| Interest on interim production financing | (12) | 384 | 118 | 694 |
| Interest on lease obligations¹ | 276 | 311 | 562 | 636 |
| Interest income | (419) | (591) | (464) | (699) |
| Interest income on lease receivable | - | - | (1) | - |
| Unrealized foreign exchange loss (gain) on interim production financing | - | (7) | - | 33 |
| $ (148) | $ 104 | $ 230 | $ 679 |
¹ Included in interest on lease obligations for the three and six months ended December 31, 2024, is interest related to non-finance leases of $255 and $518, respectively (three and six months ended December 31, 2023 - $291 and $600, respectively).
Page | 16