AI assistant
SonicStrategy Inc. Management Reports 2025
44792_rns_2025-04-28_dbb4cacc-3f43-471d-9dd8-7eaf7e3c404b.pdf
Management Reports
Open in viewerOpens in your device viewer
spetz
Specialists Now
SPETZ INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS
FOR THE YEAR ENDED DECEMBER 31, 2024, AND 2023
(EXPRESSED IN THOUSANDS OF UNITED STATES DOLLARS)
Dated April 28, 2025
INTRODUCTION
The following is a discussion and analysis of the activities, results of operations and financial condition of Spetz Inc. (the "Company") for the year ended December 31, 2024, and 2023.
The Company's registered office is 40 King St West Suite 5800, Toronto, ON M5H 3S1.
This Management's Discussion and Analysis ("MD&A") has been prepared with an effective date of April 28, 2025, and provides an update on matters discussed in, and should be read in conjunction with the Company's audited consolidated financial statements for the year ended, including the notes thereto, as at and for year ended December 31, 2024 (the "2024 Audited Financial Statements"), which have been prepared using International Financial Reporting Standards ("IFRS") as issued by the International Accounting Standards Board ("IASB") and Interpretations of the IFRS Interpretations Committee ("IFRIC"), available under the Company's profile at www.sedar.com. All amounts are in United States dollars unless otherwise specified. This MD&A contains forward looking statements that are based on certain estimates and assumptions and involve risks and uncertainties. Actual results may vary materially from management's expectations. See the "Caution Concerning Forward Looking Statements" section in this MD&A.
In this MD&A, reference is made to adjusted EBITDA, which is not a measure of financial performance under IFRS. For purposes of the MD&A, the Company calculates each as follows:
"Adjusted EBITDA" is equal to net income (loss) for the period before interest, financial expenses/income, taxes, depreciation and amortization, share-based compensation, research and development expenses, acquisition costs, bad debt, and foreign exchange income/loss. Management believes this measure provides useful information as it is a commonly used measure in the capital markets and as it is a close proxy for repeatable cash generated by (used for) operations.
These measures are not necessarily comparable to similarly titled measures used by other companies.
CAUTIONARY NOTE REGARDING FORWARD LOOKING INFORMATION
This MD&A contains certain forward-looking information and forward-looking statements, as defined in applicable securities laws (collectively referred to herein as "forward-looking statements"). These statements relate to future events or the Corporation's future performance. All statements other than statements of historical fact are forward-looking statements. Often, but not always, forward-looking statements can be identified by the use of words such as "plans", "expects", "is expected", "budget", "scheduled", "estimates", "continues", "forecasts", "projects", "predicts", "intends", "anticipates" or "believes", or variations of, or the negatives of, such words and phrases, or state that certain actions, events or results "may", "could", "would", "should", "might" or "will" be taken, occur or be achieved. Forward-looking statements involve known and unknown risks, uncertainties and other factors that may cause actual results to differ materially from those anticipated in such forward-looking statements. The forward-looking statements in this MD&A speak only as of the date of this MD&A or as of the date specified in such statement.
Inherent in forward-looking statements are risks, uncertainties, and other factors beyond the Corporation's ability to predict or control. Please also make reference to those risk factors referenced in the "Risk and Factors" section below. Readers are cautioned that such risk factors, uncertainties, and other factors are not exhaustive. Actual results and developments are likely to differ, and may differ materially, from those expressed or implied by the forward-looking statements contained in this MD&A.
Forward-looking statements involve known and unknown risks, uncertainties, and other factors that may cause actual results to differ materially from those anticipated in such forward-looking statements. The forward-looking statements in this MD&A speak only as of the date of this MD&A or as of the date specified in such statement. Specifically, this MD&A includes, but is not limited to, forward-looking statements regarding: the Corporation's ability to meet its working capital needs at the current level for the next twelve-month period; management's outlook regarding future trends; sensitivity analysis on financial instruments, which may vary from amounts disclosed; and general business and economic conditions.
All forward-looking statements herein are qualified by this cautionary statement. Accordingly, readers should not place undue reliance on forward-looking statements. The Corporation undertakes no obligation to update publicly or otherwise revise any forward-looking statements, whether as a result of new information or future events or otherwise, except as may be required by law. If the Corporation does update one or more forward-looking statements, no inference should be drawn that it will make additional updates with respect to those or other forward-looking statements, unless required by law.
DESCRIPTION OF BUSINESS
The Company was incorporated on December 11, 1998, under the laws of the Province of Ontario, Canada.
The Company is listed on the Canadian Securities Exchange ("CSE") under the symbol "SPTZ" (formerly "DIGI"). The Company is a multinational technology Company that operates Spetz, a global online, AI-powered marketplace platform that dynamically connects consumers to nearby top-rated service providers in around 30 seconds. Spetz operates already in the United Kingdom, Australia and Israel. On December 5, 2022 the Company launched in the United States, and opened the two Spetz applications for both sides of the market; one for consumers and one for service providers. In addition, the Company released its applications on both, the App Store and Google Play Store.
On July 31, 2023, the Company held its annual and special meeting of shareholders to ratify various matters, which included the approval of a share consolidation approval, on a basis of one post-consolidation common share for every 100 pre-consolidation common shares.
The Company completed the process on October 5, 2023, with an effective date of October 10, 2023. At the time of consolidation, the Company had 516,215,000 issued and outstanding common shares. Following the consolidation, the issued and outstanding common shares of the Company was reduced to approximately 5,162,150 common shares.
History of Spetz
The Spetz App was officially launched by Spetz Target in Israel in 2018, and was subsequently launched in the United Kingdom in 2020 and Australia in 2021. The Spetz App's technology platform was developed over 10 years prior to its official launch in 2018. Prior to the Transaction, Spetz Target had raised funding of more than US$5 million from founders, private investors, and over 1,600 crowdfunding investors.
During its decade of development, Spetz Target created multiple Beta models of both SaaS platforms, as well as: (i) an integrated multi-currency billing and payment system; (ii) a communication platform that allows service providers and consumers to communicate seamlessly and nearly immediately after a consumer call; (iii) a customized unique service provider rating system, which allows the platform to operate while integrating "Crowd Wisdom" into its algorithm; and (iv) an ability to handle millions of records on a real-time basis around the world.
As a subsequent event, during March 2025, the Company announced a leadership transition. Yossi Nevo resigned from his position as CEO and a Director of the Company. Mr. Nevo continues to act as President of the company's wholly owned subsidiary, Spetz Tech Ltd. The company appointed Mitchell Demeter as its new CEO.
On March 17, 2025, the Company completed its acquisition of Sonic Strategy Inc. (See note 26), Sonic Strategy is a blockchain staking company focused on the Sonic blockchain. With the completion of the acquisition of Sonic Strategy, Spetz further strengthened its capabilities in blockchain infrastructure and staking solutions.
Following the acquisition, the Company focuses on expanding its validator operations, increasing staking adoption, and integrating with the broader Spetz ecosystem with the goal of unlocking new blockchain-based revenue opportunities. The Company aims to drive growth in staking solutions, validator-as-a-service (VaaS), and enterprise blockchain adoption.
GOING CONCERN AND EARLY STAGE CORPORATION
As of December 31, 2024, the Company had a working capital deficiency of $3,980 (December 31, 2023 - $3,223), had not yet achieved profitable operations, had accumulated losses of $36,243 (December 31, 2023 - $34,747), and currently expects to incur further losses in the development of its business.
The Company has $1 of cash as of December 31, 2024, the Company hasn't yet achieved positive cashflow from operations, therefore there is no assurance that the operations of the Company and any future operations will be successful and profitable. These conditions raise material uncertainties which casts significant doubt as to the use of the going concern assumption in these financial statements
The 2024 Audited Financial Statements have been prepared on the basis of accounting principles applicable to a going concern, which assumes that the Company will continue its operations for the foreseeable future and will be able to realize its assets and discharge its liabilities in the normal course of operations as they come due. In assessing whether the going concern assumption is appropriate, management takes into account all available information about the future, which is at least, but is not limited to, twelve months from the end of the reporting period. Management is aware, in making its assessment, of material uncertainties related to events or conditions that cast significant doubt upon the Company's ability to continue as a going concern.
HIGHLIGHTS
Convertible Debenture- liability and equity recognition
(a) The Company closed on February 1, 2023, a private placement of $450 (CAD$600,000) of secured debentures, issued at a price of CAD$1,000 per unit with a term of nine months and due by October 31, 2023.
The major terms of the debentures are as follows:
I. The principal amount bears interest at a rate of 12% per annum. Interest was calculated from the issue date and accrued quarterly in cash on the last business day of each calendar quarter.
II. The debentures are convertible into common shares of the Company at a conversion price, subject to adjustments, of CAD$5 per share, and will mature nine months from the date of issuance. The Company will have the right to prepay or redeem a part or the entire principal amount of the convertible debentures plus any accrued and unpaid interest.
III. Following four months from the issue date of this Debenture, the Company also has the right to force the conversion of all of the principal amount of the then outstanding convertible debentures at the conversion price upon giving the debenture holders not less than 30 days advance written notice, should the volume weighted average trading price of the shares be greater than CAD$12 per share for the preceding 15 consecutive trading days.
IV. The convertible debentures are secured by way of a general security agreement made in favor of a collateral agent acting as agent for all of the holders of the debentures, granting a security interest in substantially all of the Company's assets. The Company will have the right to prepay any or part of the convertible debentures at any time prior to the maturity date by paying the principal amount of the convertible debentures.
V. On closing, the Company issued to the purchasers of the convertible debentures 333.333 share purchase warrant for each Debenture unit purchased, or 200,000 warrants in total (see note 13). The warrants are exercisable for a period of three years from issuance into shares of the Company with each warrant entitling the holder thereof to acquire one share at an exercise price of CAD$5 per share.
As a result of the contractual terms the equity features (conversion feature and warrants) meet the fix for fix criteria and therefore it is allocated to the equity section. In addition to the above, the prepayment option represents an embedded derivative liability. The prepayment option had a fair value of zero due to probability of the meeting the
price hurdle of CAD$12 before the maturity of the convertible debenture.
As a result of the above, the Company was required to first calculate the fair value of the loan as of February 1, 2023 and the residual was allocated to equity components. At each reporting date, the debenture portion gets accreted towards its face value.
Promissory note- On May 1, 2023, and May 29, 2023, respectively, the Company entered into a secured, nonconvertible promissory note for gross proceeds of $178 bears interest at a rate of 12% per annum from the date of issuance.
On November 01, 2023, the Company received extension for its convertible debentures and Promissory note from a maturity of October 31, 2023 to October 31, 2024 as part of replacing them in new debentures. In addition, the Company granted 450,000 warrants with an exercise price of CAD$0.24 per warrant with a three year expiry (see note 13). The new debentures are convertible into common shares of the Company at a conversion price, subject to adjustments, of CAD$0.24 per share.
(b) On June 10, 2024, the Company finalized a debt conversion plan, the plan includes converting a total outstanding balance of $162 (CAD$224,000) owed to an officer and service provider into secured debentures, with a term of five months and due by October 31, 2024. The Debentures shall bear interest at a rate of 1% per month, the interest shall be calculated from the issue date, in cash on the maturity date.
The principal amount of each Debenture shall be convertible, for no additional consideration, into Common Shares at the option of the holder at any time prior to the Maturity Date at a conversion price equal to $0.24 per Common Share.
In connection with the offering of Debentures, the Company has issued a total of 72,707 Warrants (see note 13). Each Warrant entitles the holder thereof to subscribe for one common share in the capital of Spetz at an exercise price of $0.24 from the date of issuance continuing up to October 31, 2026.
On November 29, 2024, the Company obtained an extension for the secured convertible debentures (see a and b above). The maturity date has been extended from October 31, 2024, to December 31, 2024.
The following table reflects the continuity of the components of the convertible debentures and equity component as of December 31, 2024 and 2023:
| Convertible debenture | Equity - convertible debenture | Promissory note | Total | |
|---|---|---|---|---|
| Balance at January 1, 2023 | $ - | $ - | $ - | $ - |
| Additions | 415 | 35 | 178 | 628 |
| Terms changes, net | 119 | 71 | (190) | - |
| Transaction costs | (11) | (1) | - | (12) |
| Interest and accretion | 113 | - | 12 | 125 |
| Balance at December 31, 2023 | 636 | 105 | - | 741 |
| Additions | 155 | 7 | - | 162 |
| Interest and accretion | 146 | - | - | 146 |
| Extension | (2) | 2 | - | - |
| Foreign exchange adjustment | (65) | - | - | (65) |
| Balance at December 31, 2024 | 870 | 114 | - | 984 |
(a) In January 2025, the Company issued new convertible debentures in the aggregate principal amount of $705 ($1,015,000 CAD), primarily replacing the principal amount of outstanding convertible debentures that were issued in February 2023 and May 2023. See note 26.
(b) The convertible debentures issued in June 2024 for the service provider were settled. See note 26.
(c) The company did not pay the loan on the maturity date as of December 31, 2024, the
company agreed with lender it will settle the outstanding balance upon request of the lender.
(d) In April 2025, one of the convertible debenture holders converted the outstanding amount of his debenture, totaling $73 ($106,000 CAD), into 532,350 common shares and 266,175 warrants. See note 26.
Related party Convertible debenture
On June 10, 2024, the Company finalized a debt conversion plan, this plan includes converting a total outstanding balance of $268 (CAD$368,000) owed to Yossi Nevo into secured debentures, with a term of five months and due by October 31, 2024. The Debentures shall bear interest at a rate of 1% per month, the interest shall be calculated from the issue date, in cash on the maturity date.
The principal amount of each Debenture shall be convertible, for no additional consideration, into Common Shares at the option of the holder at any time prior to the Maturity Date at a conversion price equal to $0.24 per Common Share.
In connection with the offering of Debentures, the Company has issued a total of 224,028 Warrants. Each Warrant entitles the holder thereof to subscribe for one common share in the capital of Spetz at an exercise price of $0.24 from the date of issuance continuing up to October 31, 2026.
On November 29, 2024, the Company obtained an extension for the related party's secured convertible debentures. The maturity date has been extended from October 31, 2024, to December 31, 2024. The company did not pay the loan on the maturity date as of December 31, 2024, the company agreed with lender it will settle the outstanding balance upon request of the lender. As a result of the contractual terms the equity features (conversion feature and warrants) meet the fix for fix criteria, and therefore it is allocated to the equity section.
The Company was required to first calculate the fair value of the loan as of June 10, 2024 and the residual was allocated to equity components.
The following table reflects the continuity of the components of the convertible debentures and equity component as of December 31, 2024:
| Convertible debenture | Equity - convertible debenture | Total | |
|---|---|---|---|
| Balance at January 1, 2024 | $ - | $ - | $ - |
| Additions | 255 | 13 | 268 |
| Extension | (5) | 5 | - |
| Interest and accretion | 36 | - | 36 |
| Foreign exchange adjustment | (13) | - | (13) |
| Balance at December 31, 2024 | 273 | 18 | 291 |
INTANGIBLE ASSETS
As of December 31, 2024 and 2023, intangible assets consisted of:
| Customer Relationships | Brand | Technology Non-Compete | Total | ||
|---|---|---|---|---|---|
| Balance at January 01, 2023 | 488 | 331 | 2,070 | 89 | 2,978 |
| Less: Amortization expense | (488) | (25) | (327) | (34) | (873) |
| Balance at December 31, 2023 | $ - | $ 306 | $ 1,743 | $ 55 | $ 2,105 |
| Less: Amortization expense | - | (22) | (297) | (32) | (351) |
| FX | - | (23) | (127) | (3) | (154) |
| Balance at December 31, 2024 | $ - | $ 261 | $ 1,319 | $ 20 | $ 1,600 |
All intangible assets were acquired in connection with the acquisition of Spetz.
GOODWILL
As of December 31, 2024, goodwill represents the excess purchase price paid for the acquisition of Spetz Tech Ltd. Over the fair value of the net tangible and intangible assets acquired net of accrued impairments..
The Company tests the recoverability of its goodwill annually, or more frequently if events or changes in circumstances indicate that they might be impaired. Goodwill recoverability is tested based on the higher of fair value less costs to sell and the value in use model. The value in use model applies a present value of expected future cashflows of the assets.
As of December 31, 2023, the Company determined an impairment of $4,304 on goodwill allocated to goodwill. As of December 31, 2024, there is no impairment, and the goodwill balance is $332 (As of December 31, 2023, $361).
OUTLOOK AND PLANS
The Company has transitioned away from its AI solutions such as Cryptohawk.ai and Coindrop. pro-solutions and evolved into focusing all of the Company's resources and creation of a new business plan that will allow the Company to focus its efforts on continuing to grow revenue and margins exclusively in the Spetz business of home and family services on a global basis.
As the Spetz division is not currently cashflow independent and therefore not considered cash-generating units and as such the Company continues to report them as one operating segment.
OVERALL FINANCIAL PERFORMANCE
(Expressed in thousands of United States dollars, except for per share amounts)
| For the periods | Year ended December 31, 2024 | Year ended December 31, 2023 | Eleven months ended December 31, 2022 |
|---|---|---|---|
| Revenue | $ 1,662 | $ 2,031 | $ 997 |
| Total Expenses | (2,485) | (8,799) | (5,704) |
| Net loss for the period | (1,496) | (7,898) * | (11,046) * |
| Comprehensive loss for the period | (1,542) | (7,864) | (10,868) |
| Adjusted EBITDA^{1} | (644) | (1,141) | (2,028) |
| Loss per share from operations - basic and dilute | (0.27) | (1.54) * | (3.01) * |
| Current assets | 352 | 582 | 1,003 |
| Total assets | 2,343 | 3,158 | 9,188 |
| Current liabilities | 4,332 | 3,805 | 2,294 |
| Total liabilities | 4,349 | 3,837 | 2,351 |
| Shareholders equity | $ (2,006) | $ (679) | $ 6,837 |
| Cash and cash equivalent | $ 1 | $ 22 | $ 397 |
| Working capital (deficiency) | $ (3,980) | $ (3,223) | $ (1,291) |
1-Non IFRS
*Reclassified
- For the year ended December 31, 2024, the Company recognized revenue of $1,662 in connection with its referral service fee compared to $2,031 for the year ended December 31, 2023. The decrease is mainly due to the war in Israel and reduced investment in Australia, the United Kingdom, and the United States.
- Total expenses decreased in the year ended December 31, 2024 to $2,485, compared to $8,799 in the year ended December 2023, primarily due to the impairment on Goodwill expenses of $4,304 in 2023, with no such impairment in 2024. Additionally, the reduction in expenses reflects the Company's efficiency activities.
- Reclassified results—According to the Company's new strategy, Spetz strengthened its capabilities in blockchain infrastructure and staking solutions, therefore, the Company classified discontinued operations and held for sale asset to the specific relevant item according to IAS32.
- The Company's adjusted EBITDA, as reconciled below, for the year ended December 31, 2024, and 2023, and for the eleven months ended December 31, 2022, was a loss of $644 and $1,141 and $2,028.
- Total assets decreased to $2,343 as of December 31, 2024, compared to $3,158 on December 31, 2023. The decrease reflects the routine amortization of intangible assets.
- Working capital deficiency as of December 31, 2024, was $3,980 compared to $3,223 as of December 31, 2023, and $1,291 as of December 31, 2022.
Adjusted EBITDA
One of the measures the Company uses to evaluate its objectives is adjusted EBITDA. Adjusted EBITDA is a non-IFRS financial measure that does not have a standard meaning prescribed by IFRS and may not be comparable to similar measures presented by other companies. The Company calculates Adjusted EBITDA as is equal to net income (loss) for the period before interest, financial expenses/income, taxes, depreciation and amortization, share-based compensation, research and development expenses, acquisition costs, bad debt, and foreign exchange income/loss.. Management believes this measure provides useful information as it is a commonly used measure in the capital markets and as it is a close proxy for repeatable cash generated by (used for) operations.
(Expressed in thousands of United States dollars)
| Year ended | Eleven months ended | ||
|---|---|---|---|
| December 31, 2024 | December 31, 2023 | December 31, 2022 | |
| Net Loss from continuing operations | $ (1,496) | $ (7,898) * | $ (11,046) * |
| Addback: | |||
| Depreciation and amortization expenses | 358 | 919 | 413 |
| Share based compensation | 21 | 243 | 819 |
| Acquisition costs, net | 253 | ||
| Bad debt | 6 | 98 | 107 |
| Impairment on Goodwill | 4,304 | 3,621 * | |
| Research and development | 175 | 507 | 468 * |
| Financial expenses | 292 | 686 * | 3,337 * |
| Adjusted EBITDA | $ (644) | $ (1,141) | $ (2,028) |
*Reclassified
For the year ended December 31, 2024, the Company had a negative Adjusted EBITDA of $644 compared to $1,141 and $2,028, respectively, for the year ended December 31, 2023, and for the eleven months ended December 31, 2022.
RESULTS OF OPERATIONS
For the year ended December 31, 2024, compared to the year ended December 31, 2023
(Expressed in thousands of United States dollars, except for per share amounts)
| Year ended | |||
|---|---|---|---|
| 'December 31, 2024 | 'December 31, 2023 | ||
| Revenue | a | $ 1,662 | $ 2,031 |
| Cost of revenues | 381 | 444 | |
| Gross margin | 1,281 | 1,587 | |
| Sales and marketing | b | 1,071 | 1,267 |
| General and administration | c | 1,239 | 2,721 |
| Impairment on Goodwill | d | - | 4,304 |
| Research and development | e | 175 | 507 |
| Total expenses | 2,485 | 8,799 | |
| Operating Loss for the period | (1,204) | (7,212) | |
| Financial expenses | (318) | (717) * | |
| Financial income | 26 | 31 * | |
| (292) | (686) | ||
| Net Loss before income tax expense | (1,496) | (7,898) | |
| Income tax recovery | - | - | |
| Net loss after income tax expense | (1,496) | (7,898) | |
| Foreign exchange gain/(loss) on translating foreign operations | (46) | 34 | |
| Comprehensive loss for the period | $ (1,542) | $ (7,864) | |
| Loss per share from operations - basic and diluted | $ (0.27) | $ (1.54) * |
*Reclassified
a. For the year ended December 31, 2024, the Company recognized revenue of $1,662 in connection with its referral service fee compared to $2,031 for the year ended December 31, 2023.
The decrease is mainly due to the war in Israel and reduced investment in Australia, the United Kingdom, and the United States.
Set out below is the revenue of the Company for 2024 year by geographical market
| Year ended | ||
|---|---|---|
| December 31,2024 | December 31,2023 | |
| Israel | $ 1,546 | $ 1,761 |
| Australia | 71 | 133 |
| United Kingdom | 43 | 100 |
| United State | 2 | 37 |
| Total | $ 1,662 | $ 2,031 |
b. Sales and marketing includes salaries to sales staff, and subcontractors, promotion marketing of the Company's applications, and brand awareness associated with Spetz application. During the year ended December 31, 2024, the Company expended $1,071 compared to $1,267 in the year ended
December 31, 2023. The Company reduced its Sales and Marketing expenses during 2024 by an efficiency plan and reduced the promotion marketing in Australia, the United Kingdom.
c. General and administrative expenses represent mainly salaries, management fees, depreciation and amortization expenses, professional fees, consulting fees, office expenses, and other expenses. During the year ended December 2024, the Company expended $1,239 compared to $2,721 in the year ended December 31, 2023.
The Decrease reflects efficiency activities by the Company, The following are the main differences-
1) Represents audit and legal fees and other professional fees. During the year ended December 31, 2024, the Company expended $155 compared to $337 for year December 31, 2023. The decrease in professional fees in the current period is related to financing activities during the year 2023, the Company had two auditors during that year (As for the subsidiaries and for the parent Company) which caused high costs, the Company noticed on April 12, 2024, Ziv Haft, CPA, BDO member firm as the auditor of the entire Group.
2) Depreciation and amortization expenses for the year ended December 31, 2024, of $358 and $919 for the year ended December 31, 2023, includes the amortization of the intangibles acquired with the acquisition of Spetz.
3) Represents the value of stock options that vested during the year ended December 31, 2024, of $21, compared to $243 in the year ended December 31, 2023. The Company reduced the number of stock option awards in the current fiscal year.
4) Consulting fee- during 2024 year, the Company's Board of Directors agreed to fully waive the planned yearly compensation for years 2023 and 2024.
d. For the year ended December 31, 2024, Spetz Tech's valuation determined that no impairment was required, and for the year ended December 2023, the Company recognized an impairment of $4,304.
e. Research expenses represent payroll and related expenses, subcontractors fees, and other expenses. During the year ended December 2024, the Company expended $175 compared to $507 in the year ended December 31, 2023. The Decrease reflects efficiency activities by the Company, including a decrease in payroll and an increase in reliance on subcontractors, leading to significant cost reduction.
SELECTED QUARTERLY FINANCIAL INFORMATION
(Expressed in thousands of United States dollars, except for per share amounts)
| Three months ended | Revenue | Net Loss before income tax expense | Net loss for the period | Loss per share from operations - basic and diluted |
|---|---|---|---|---|
| 31/Dec/24 | $ | 318 $ (417) | $ (417) | $ (0.08) |
| 30/Sep/24 | 328 (327) | (327) | (0.06) | |
| 30/Jun/24 | 473 (334) | (334) | (0.06) | |
| 31/Mar/24 | 543 (418) | (418) | (0.08) | |
| 30/Dec/23 | 399 (5,440) | (5,440) | (1.06) | |
| 30/Sep/23 | 534 (498) | (498) | (0.10) | |
| 30/Jun/23 | 580 (916) | (916) | (0.18) | |
| 31/Mar/23 | 518 (1,044) | (1,044) | (0.21) |
During the three months ended December 31, 2024, the Company recognized non-cash expenses of $86 in depreciation and amortization, $9 in stock-based compensation and $34 in accretion expense.
During the three months ended September 30, 2024, the Company recognized non-cash expenses of $90 in depreciation and amortization, $6 in stock-based compensation, and $64 in accretion expense.
During the three months ended June 30, 2024, the Company recognized non-cash expenses of $90 in depreciation, $1 in stock-based compensation, and $37 in accretion expense.
During the three months ended March 31, 2024, the Company recognized non-cash expenses of $92 in depreciation and amortization, $5 in stock-based compensation, and $47 in accretion expense.
During the three months ended December 31, 2023, the Company recognized $122 in depreciation and amortization, $4,304 in goodwill impairment, and $8 in stock-based compensation.
During the three months ended September 30, 2023, the Company recognized non-cash expenses of $223 in depreciation and amortization, $12 in stock-based compensation, and $129 in accretion expense.
During the three months ended June 30, 2023, the Company recognized non-cash expenses of $288 in depreciation and amortization, $91 in stock-based compensation, and $105 in accretion expense.
During the three months ended March 31, 2023, the Company recognized non-cash expenses of $286 in depreciation and amortization, $132 in stock-based compensation, and $26 in accretion expense.
LIQUIDITY AND CAPITAL RESOURCES
The Company manages its capital structure and adjusts it, based on the funds available to the Company, in order to support the development of its planned business activities. The Board does not establish quantitative return on capital criteria for management, but rather relies on the expertise of the Company's management to sustain future development of the business. In order to carry out the planned business activities and pay for administrative costs, the Company will spend its existing working capital and raise additional funds as needed. Management reviews its capital management approach on an ongoing basis and believes that this approach, given the relative size of the Company, is reasonable.
The Company had cash of $1, investments of $46. The Company had total current assets of $352 and current liabilities of $4,332 as of December 31, 2024. The Company had a working capital deficiency of $3,980 as of December 31, 2024, compared to working capital of $3,223 as of December 31, 2023.
| Year ended | ||
|---|---|---|
| 'December 31, 2024 | 'December 31, 2023 | |
| Operating activities used in operations activities | $ (697) | $ (1,119) |
| Financing activities provided from operations activities | 562 | 737 |
| Investing activities provided from operations activities | 117 | 5 |
| Effects of exchange rate changes on cash | (3) | 2 |
| Cash, beginning of period | 22 | 397 |
| Cash, end of period | $ 1 | $ 22 |
Cash used in operating activities
Cash used in operating activities was the result of the operating loss from operations of $697 for the FY 2024 (December 2023 - $1,119), positively adjusted for non-cash items of $845 (December 2023 – $6,206), and the negatively net change in non-cash working capital items was $46 (December 2023-$573 positive).
Cash flows provided from investing activities
During the FY 2024, the Company provided $117 cash from investing activities (December 2023 – $5)
Cash flows provided from financing activities
The Company received a net cash of $562 for the FY 2024 (December 2023- $737), $747 out of it from an increase of related party payables.
The Company's objective when managing capital is to obtain adequate levels of funding to support its business activities, to obtain corporate and administrative functions necessary to support organizational functioning and obtain sufficient funding to further the development of its business. The Company raises capital, as necessary, to meet its needs and take advantage of perceived opportunities and, therefore, does not have a numeric target for its capital structure. Funds are primarily secured through equity capital raised by way of private placements and the issuance of convertible debentures.
Management closely monitors the Company's current cash position and the short-term and long-term cash requirements. The Company may be required to obtain additional funding to take advantage of the market opportunities and an issuance of common shares or debt will most likely be a component of the funding.
OUTSTANDING SHARE DATA
As of December 31, 2024, the Company had 5,783,620 common shares issued and outstanding,60,000 stock options, 360,312 RSUs and 946,735 warrants.
The Company completed on October 5, 2023, with an effective date of October 10, 2023, a share consolidation of its issued and outstanding common shares on a basis of one post-consolidation common share for every 100 pre-consolidation common shares. At the time of consolidation, the Company had 516,215,000 issued and outstanding common shares. Following the consolidation, the issued and outstanding common shares of the Company was reduced to approximately 5,162,150 common shares.
Subsequent financial statement reporting date, on January 20, 2025, the Company closed a private placement offering 5,000,000 common shares of the Company for gross proceeds of $347 ($500,000 CAD). The Company settled $234 ($336,000 CAD) outstanding amounts in accounts payable and $76 ($110,000 CAD) convertible debentures by way of the issuance of 4,456,457 common shares of the Company.
Subsequent financial statement reporting date, on March 17, 2025, the Company announced that it has completed its acquisition of Sonic Strategy Inc. The Company has issued 13,999,999 common shares in the capital of the Company to the shareholders of Sonic Strategy in exchange for 100% of the issued and outstanding shares in the capital of Sonic Strategy. The Company has also issued an aggregate of 700,000 common shares to two arm's length entities as an advisory fee.
As at April 28, 2025 the Company has the following outstanding balances: 30,858,823 common shares, 60,000 stock options, 224,970 RSUs and 1,338,438 warrants.
FINANCIAL INSTRUMENTS
As outlined in Note 3 and Note 23 to the 2024 Audited Financial Statements, the Company recognizes all financial instruments and applies the fair value hierarchy as required under IFRS.
OFF BALANCE SHEET ARRANGEMENTS
Other than as described in Note 25 to the 2024 Audited Financial Statements, the Company is not aware of any Off-Balance Sheet arrangements.
COMMITMENTS AND CONTINGENCIES
Other than as described in Note 25 to the 2024 Audited Financial Statements, and as noted in this MD&A, the Company has no additional commitment disclosure.
RELATED PARTY TRANSACTIONS
Other than as described in Note 24 to the 2024 Audited Financial Statements, there are no additional related party transactions.
ACCOUNTING POLICIES, CRITICAL JUDGMENTS AND ESTIMATES
The preparation of the Company's 2024 Audited Financial Statements in conformity with IFRS, requires management to make judgments, estimates and assumptions that affect the reported amounts of assets, liabilities, revenues and other items in net earnings or loss, and the related disclosure of contingent assets and liabilities, if any. Critical judgments and estimates represent estimates made by management that are, by their very nature, uncertain. The Company evaluates its estimates on an ongoing basis. Such estimates are based on historical experience and on various other assumptions that the Company believes are reasonable under the circumstances, and these estimates form the basis for making judgments about the carrying values of assets and liabilities and the reported amounts of revenues and other items in net earnings or loss that are not readily apparent from other sources. Actual results
may differ from these estimates under different assumptions or conditions. Summaries of the significant accounting policies applied, and significant judgments, estimates and assumptions made by management in the preparation of its financial statements are provided in Notes 2 and 3 to the 2024 Audited Financial Statements.
CONTROLS AND PROCEDURES
Disclosure controls and procedures are designed to provide reasonable assurance that all relevant information is gathered and reported to senior management, including the Company's CEO and Chief Financial Officer ("CFO"), on a timely basis so that appropriate decisions can be made regarding public disclosure. As of December 31, 2024, covered by this management's discussion and analysis, management of the Company, with the participation of the CEO and the CFO, evaluated the effectiveness of the Company's disclosure controls and procedures as required by Canadian securities laws. Based on that evaluation, the CEO and the CFO have concluded that, as of the end of the period covered by this management's discussion and analysis, the disclosure controls and procedures were effective to provide reasonable assurance that information required to be disclosed in the Company's annual filings and interim filings (as such terms are defined under Multilateral Instrument 52-109 Certification of Disclosure in Issuers' Annual and Interim Filings) and other reports filed or submitted under Canadian securities laws is recorded, processed, summarized and reported within the time periods specified by those laws and that material information is accumulated and communicated to management of the Company, including the CEO and the CFO, as appropriate to allow timely decisions regarding required disclosure.
RISK FACTORS
Prior to making an investment decision, investors should consider the investment risks set out below and those described elsewhere in this document, which are in addition to the usual risks associated with an investment in a business at an early stage of development. The Board considers the risks set out below to be the most significant to potential investors in the Company, but the list is not exhaustive and does not include all of the risks associated with an investment in securities of the Company.
INFORMATION CONCERNING SPETZ INC.
Additional information relating to the Company may be accessed through the SEDAR website at www.sedar.com under Spetz Inc. and the Company's website at www.spetz.app.
Toronto, Ontario
April 28, 2025