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Yangaroo Inc. — Interim / Quarterly Report 2025
May 30, 2025
45275_rns_2025-05-30_945ca498-a6eb-4ad3-a299-9e1e94cf796d.pdf
Interim / Quarterly Report
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YANGAROO Inc.
Condensed Interim Financial Statements
For the Three Months Ended March 31, 2025 and 2024
Expressed in United States Dollars ("US Dollar")
(Unaudited)
May 28, 2025
NOTICE OF NO AUDITOR REVIEW OF INTERIM FINANCIAL STATEMENTS
Under National Instrument 51-102, Part 4, subsection 4.3(3)(a), if an auditor has not performed a review of the interim financial statements, they must be accompanied by a notice indicating that the financial statements have not been reviewed by an auditor.
The accompanying unaudited condensed consolidated interim financial statements 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 interim financial statements in accordance with the standards established by the Chartered Professional Accountants of Canada for a review of interim financial statements by an entity's auditor.
YANGAROO Inc.
Condensed Interim Statements of Financial Position (Unaudited)
(Expressed in United States Dollars)
| March 31, 2025 | December 31, 2024 | |
|---|---|---|
| Assets | ||
| Current | ||
| Cash | $217,088 | $231,083 |
| Accounts Receivable (note 4) | 1,422,046 | 1,496,475 |
| Prepaid and Sundry Assets | 150,939 | 126,595 |
| Contract Assets | 60,426 | 58,985 |
| Other Receivable | 10,321 | 10,321 |
| 1,860,820 | 1,923,459 | |
| Non-current | ||
| Property and Equipment and Right of Use Assets (note 5) | 411,564 | 449,159 |
| Intangible Assets (note 6) | 1,896,947 | 1,938,212 |
| Goodwill (note 7) | 359,146 | 359,146 |
| Government Assistance Receivable | 429,977 | 429,977 |
| $4,958,454 | $5,099,953 | |
| Liabilities | ||
| Current | ||
| Trade and Other Payables (note 8) | $1,079,930 | $1,138,063 |
| Contract Liabilities | 145,643 | 87,738 |
| Current Portion of Lease Obligations (note 9) | 149,930 | 144,139 |
| Current Portion of Term Loan Facility (note 10) | 1,077,010 | 1,159,680 |
| Revolving Credit Facility (note 10) | 747,770 | 729,750 |
| Convertible Debenture (note 11) | 481,538 | 417,484 |
| Current Portion of Contingent Consideration (note 12) | 79,377 | 88,100 |
| 3,761,198 | 3,764,954 | |
| Non-current | ||
| Lease Obligations (note 9) | 271,142 | 303,920 |
| $4,032,340 | $4,068,874 | |
| Equity | ||
| Share Capital (note 13) | 27,826,282 | 27,826,282 |
| Share-Based Payments Reserve | 5,995,108 | 5,971,266 |
| Foreign Currency Translation Reserve | 1,157,622 | 1,157,622 |
| Deficit | (34,052,898) | (33,924,091) |
| 926,114 | 1,031,079 | |
| $4,958,454 | $5,099,953 |
Going concern (note 2(b))
Approved by the Board of Directors
"Shepard Boone"
Director
"Phil Benson"
Director
See accompanying notes, which are an integral part of these condensed interim financial statements
YANGAROO Inc.
Condensed Interim Statements of Net Income (Loss) and Comprehensive Income (Loss) (Unaudited)
Three Months Ended March 31, 2025 and 2024
(Expressed in United States Dollars)
| Three Months Ended March 31, | ||
|---|---|---|
| 2025 | 2024 | |
| Revenue (note 16) | $1,782,058 | $1,922,631 |
| Expenses | ||
| Salaries and Consulting (notes 14 & 17) | 1,115,958 | 1,162,017 |
| General and Administrative | 217,645 | 196,328 |
| Depreciation of Property and Equipment, Right of Use Assets and Intangible Assets (notes 5 & 6) | 215,883 | 220,212 |
| Technology and Production | 152,498 | 222,604 |
| Marketing and Promotion | 55,548 | 80,715 |
| Restructuring Expense | - | 23,384 |
| $1,757,532 | $1,905,260 | |
| Income Before Other Income (Expenses) | 24,526 | 17,371 |
| Other Income (Expenses) | ||
| Interest Expense | (70,611) | (118,979) |
| Remeasurement of Embedded Derivative Liability (note 11) | (46,267) | 28,845 |
| Foreign Exchange Gain/(Loss) | (35,546) | 90,278 |
| (152,424) | 144 | |
| Net Income/(Loss) Before Income Tax | (127,898) | 17,515 |
| Income Tax Expense | 909 | 1,950 |
| Net Income/(Loss) and Comprehensive Income/(Loss) | $(128,807) | $15,565 |
| Basic Income (Loss) per Share (note 15) | ($0.00) | $0.00 |
| Diluted Income (Loss) per Share (note 15) | ($0.00) | $0.00 |
See accompanying notes, which are an integral part of these condensed interim financial statements
YANGAROO Inc.
Condensed Interim Statements of Changes in Equity (Unaudited)
Three months ended March 31, 2025 and 2024
(Expressed in United States Dollars)
| Number of Shares | Share Capital | Share-Based Payments Reserve | Foreign Currency Translation Reserve | Deficit | Total | |
|---|---|---|---|---|---|---|
| Balance at December 31, 2023 | 62,437,140 | $27,826,282 | $5,971,266 | $1,157,622 | $(34,460,504) | $494,666 |
| Net and Comprehensive Income for the Period | - | - | - | - | 15,565 | 15,565 |
| Balance at March 31, 2024 | 62,437,140 | $27,826,282 | $5,971,266 | $1,157,622 | $(34,444,939) | $510,231 |
| Balance at December 31, 2024 | 62,437,140 | $27,826,282 | $5,971,266 | $1,157,622 | $(33,924,091) | $1,031,079 |
| Share-Based Payments | - | - | 23,842 | - | - | $23,842 |
| Net and Comprehensive Loss for the Period | - | - | - | - | (128,807) | (128,807) |
| Balance at March 31, 2025 | 62,437,140 | $27,826,282 | $5,995,108 | $1,157,622 | $(34,052,898) | $926,114 |
See accompanying notes, which are an integral part of these condensed interim financial statements
YANGAROO Inc.
Condensed Interim Statements of Cash Flows (Unaudited)
Three months ended March 31, 2025 and 2024
(Expressed in United States Dollars)
| Three Months Ended March 31, | ||
|---|---|---|
| 2025 | 2024 | |
| Cash Flow From Operating Activities | ||
| Net Income/(Loss) for the Period | $(128,807) | $15,565 |
| Items Not Affecting Cash: | ||
| Depreciation of Property and Equipment, Right of Use Assets, and Intangible Assets (notes 5 and 6) | 215,883 | 220,212 |
| Share-Based Payments (note 14) | 23,842 | - |
| Loss Allowance (note 4) | 15,000 | (11,948) |
| Accrued Interest and Accretion | 36,496 | 18,826 |
| Remeasurement of Embedded Derivative Liability (note 11) | 46,613 | (28,845) |
| Changes in Non-Cash Operating Working Capital: | ||
| Accounts Receivable | 59,429 | 3,263 |
| Prepaid and Sundry Assets | (24,344) | (65,433) |
| Contract Assets | (1,441) | 32,662 |
| Other Receivables | - | 10,765 |
| Trade and Other Payables | (58,134) | (5,861) |
| Contract Liabilities | 57,905 | 126,380 |
| Net Cash From Operating Activities | 242,442 | 315,586 |
| Cash Flow (Used In) Investing Activities | ||
| Acquisition of Property and Equipment (note 5) | (1,188) | (1,079) |
| Expenditures on Software Development Assets (note 6) | (128,720) | (170,041) |
| Net Cash Used In Investing Activities | (129,908) | (171,120) |
| Cash Flow Used in Financing Activities | ||
| Payment of Lease Obligations (note 9) | (34,101) | (42,436) |
| Principal Repayment of Term Loan | (101,725) | (153,693) |
| Proceeds of Revolving Credit Facility (note 10) | 18,020 | 125,534 |
| Payment of Contingent Consideration | (8,723) | (16,801) |
| Net Cash Used In Financing Activities | (126,529) | (87,396) |
| Net Increase (Decrease) in Cash | (13,995) | 57,070 |
| Cash, Beginning of the Period | 231,083 | 150,928 |
| Cash, End of Period | $217,088 | $207,998 |
| Supplemental Cash Flow Information: | ||
| Cash Interest Paid | $47,433 | $104,979 |
| Taxes Paid (Recovered) | $(7,244) | $5,267 |
| Capitalized Software Development Included in Trade and Other Payables | $16,045 | - |
| Right of Use Assets Acquired via Lease Obligation | $7,115 | $234,650 |
See accompanying notes, which are an integral part of these condensed interim financial statements
YANGAROO Inc.
Notes to the Condensed Interim Financial Statements (Unaudited)
For the three months ended March 31, 2025 and 2024
(Expressed in US dollars, unless otherwise noted)
1. Nature of Operations
YANGAROO Inc. ("YANGAROO" or "the Company") is a software company that provides workflow management solutions within the media and entertainment ecosystem. The Company's Digital Media Distribution System (DMDS) platform is a patented cloud-based technology that provides customers with a fully integrated workflow and broadcaster connected managed network for digital content delivery and related data management across the advertising, music, and entertainment award show markets.
YANGAROO Inc. is a publicly listed company incorporated on July 28, 1999, under the laws of Ontario as Musicrypt.com Inc. and changed to its present name on July 17, 2007. YANGAROO trades on the TSX Venture Exchange (TSX-V) under the symbol YOO.V and in the U.S. under OTCPK: YOOIF.
The address of the Company's corporate office and principal place of business is 360 Dufferin Street, Suite 203, Toronto, Ontario, M6K 1Z8.
2. Basis of Preparation
(a) Basis of Compliance
These condensed interim financial statements are in compliance with International Accounting Standard (IAS) 34, Interim Financial Reporting. Accordingly, certain information and footnote disclosures normally included in annual financial statements prepared in accordance with International Financial Reporting Standards (IFRS), as issued by the International Accounting Standards Board (IASB), have been omitted. The preparation of these unaudited condensed interim financial statements in accordance with IAS 34 requires the use of certain critical accounting estimates. It also requires management to exercise judgement in applying the Company's accounting policies.
These condensed interim financial statements should be read in conjunction with the audited financial statements for the year ended December 31, 2024.
These condensed interim financial statements were authorized for issue by the Board of Directors on May 28, 2025.
(b) Basis of Measurement
The condensed interim financial statements have been prepared on a historical cost basis except for certain financial instruments measured at fair value.
The condensed interim financial statements are presented in US dollars, which is also the Company's functional currency.
The financial statements were prepared on a going concern basis, which assumes that YANGAROO 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 Company generated net and comprehensive loss of $128,807 and positive cash flows from operations of $242,442 for the three months ended March 31, 2025, and has a working capital deficit of $1,900,378 as at March 31, 2025. The Company's ability to continue as a going concern is dependent upon the Company's ability to successfully refinance the term loan of $1,077,010, which is expected to mature on June 26, 2025, or to repay the term loan through equity financing, debt financing, or rights offerings from existing shareholders. There is no assurance that the Company will successfully raise sufficient funds through equity financing. As a result of these conditions, there is material uncertainty that may cast significant doubt regarding the Company's ability to continue as a going concern. These financial statements do not reflect the adjustments that might be necessary to the carrying amount of reported assets, liabilities, revenue, and expenses and the statement of financial position
YANGAROO Inc.
Notes to the Condensed Interim Financial Statements (Unaudited)
For the three months ended March 31, 2025 and 2024
(Expressed in US dollars, unless otherwise noted)
classification used if the Company was unable to continue operations in accordance with this assumption. Such adjustments could be material.
(c) Significant Accounting Judgements and Sources of Estimation Uncertainty
The preparation of these condensed interim financial statements in conformity with IFRS requires management to make judgements, estimates, and assumptions that affect the reported amounts and the valuation of assets and liabilities and the disclosure of contingent assets and liabilities at the date of these condensed interim financial statements and the reported amounts of revenues and expenditures during the period reported.
The most significant judgements and estimates made by management in preparing the Company's condensed interim financial statements are described as follows:
Judgements:
(i) Revenue Recognition
To the extent a contract includes multiple performance obligations, the Company applies judgement to determine whether these performance obligations are capable of being distinct in the context of the contract. If these criteria are not met, the promised services are accounted for as a combined performance obligation. Additionally, recognition of revenue requires significant judgement to determine if revenue is recognized at a point in time or over time.
(ii) Investment Tax Credits
The Company uses judgement to determine the reasonable assurance of collection and estimates the valuation of investment tax credits to be accrued.
(iii) Collectability of Accounts Receivable
The Company applies judgement to measure estimated credit loss on accounts receivable at an amount equal to the lifetime expected credit loss ("ECL"). The Company applies judgement to evaluate each receivable at year end based on factors such as the age of the receivable, payment risk, and credit risk.
(iv) Share-Based Payments
Share-based payments which include stock options and Restricted Share Units ("RSU") granted to employees, officers and directors and warrants granted to agents and debenture holders, to the extent that they are not measured at the fair value of the services received, are based on the fair value at the date of the award. Stock options are valued using the Black-Scholes option pricing model, which includes inputs that require management's estimates and assumptions, and judgement with respect to the expected forfeiture rate.
(v) Capitalized Software Development Costs
The Company uses judgement to determine when internally generated development costs are available for intended use and to assess if expenditures meet the criteria for capitalization under IAS 38.
(vi) Functional and Presentation Currency
These financial statements are presented in US dollars, which is the functional currency of the Company. Transactions in foreign currencies are translated to the respective functional currencies of the Company at exchange rates at the dates of the transactions. Monetary assets and liabilities denominated in foreign
YANGAROO Inc.
Notes to the Condensed Interim Financial Statements (Unaudited)
For the three months ended March 31, 2025 and 2024
(Expressed in US dollars, unless otherwise noted)
currencies at the reporting date are retranslated to the functional currency using the exchange rate at that date. Non-monetary assets and liabilities denominated in foreign currencies that are measured at fair value are translated to the functional currency using the exchange rate at the date that the fair value was determined. Revenues and expenses are measured using the actual exchange rates prevailing on the dates of the transactions. Gains and losses resulting from re-measurement are recorded in the Company's profit or loss as Foreign exchange (loss) gain.
Estimates:
(i) Business Combinations
On initial recognition, the assets and liabilities of the acquired business and consideration paid for them are included in the statement of financial position at their fair value. In measuring fair value, management uses estimates of future cash flows and discount rates.
(ii) Contingent Consideration
The Company measures the contingent consideration payable in a business combination at the estimated fair value at each reporting date. The fair value is estimated using a probability weighted approach, which includes inputs that require management's estimates and assumptions. The Company applies judgement annually at every anniversary of the acquisition to remeasure the contingent consideration based on the revenue history of the related Millenia3 customers.
3. Significant Accounting Policies
These condensed interim financial statements follow the same accounting policies and methods of their application as the Company's December 31, 2024, annual audited financial statements.
4. Risk Management
Capital Risk Management
The Company includes equity comprised of share capital, share-based payments reserve, foreign currency translation reserve, and deficit, in the definition of capital. As at March 31, 2025, the amount of equity was $926,114 (December 31, 2024 - $1,031,079). The Company's primary objective with respect to its capital management is to ensure that it has sufficient cash resources to further develop and market platform services, and to maintain its ongoing operations. To secure the additional capital necessary to pursue these plans, the Company may attempt to raise additional funds through the issuance of equity and warrants, debt, or by securing strategic partners.
The Company has covenants in relation to the Term Loan facility (see note 10). During the three months ended March 31, 2025, the Company was not in compliance with the covenants and the bank waived compliance with certain covenants until after June 26, 2025, the maturity of the Term Loan facility.
Financial Instruments and Risk Management
The Company is exposed to a variety of financial risks by virtue of its activities: market risk (including currency risk, interest rate risk, and other price risk), credit risk, and liquidity risk. The overall risk management program focuses on the unpredictability of financial markets and seeks to minimize potential adverse effects on financial performance.
YANGAROO Inc.
Notes to the Condensed Interim Financial Statements (Unaudited)
For the three months ended March 31, 2025 and 2024
(Expressed in US dollars, unless otherwise noted)
Risk management is carried out by management under policies approved by the Board of Directors. Management is charged with the responsibility of establishing controls and procedures to ensure that financial risks are mitigated in accordance with the approved policies. The Company's exposure to financial instrument related risks and the methods used to manage those risks have not changed significantly over the last year.
(a) Market Risk:
Market risk is the risk that the fair value or the future cash flows of a financial instrument will fluctuate because of changes in the market prices. Market risk is comprised of three types of risk such as foreign currency risk, interest rate risk, and other price risk. Two types of risk are applicable to the Company:
(i) Currency Risk:
The Company operates internationally, and the US dollar ("USD") is the presentation currency. The Company, however, does have revenues, expenses, assets, and liabilities denominated in currencies other than USD, primarily the Canadian dollar ("CAD"). The principal foreign currency risk as at March 31, 2025, is therefore the CAD.
A 5% change in exchange rates would result in a $141,604 impact on profit or loss. Financial instruments and lease obligations in CAD currency at March 31, 2025, are as follows:
| USD | |
|---|---|
| Cash | $38,169 |
| Accounts Receivable | 210,213 |
| Prepaid and Sundry Assets | 46,234 |
| Contract Assets | 5,410 |
| Total Assets | $300,026 |
| Trade and Other Payables | 537,847 |
| Revolving Credit Facility | 747,770 |
| Convertible Debentures | 481,538 |
| Term Loan | 1,077,010 |
| Capital Lease Obligation | 244,681 |
| Contract Liabilities | 43,267 |
| Total Liabilities | $3,132,113 |
| Net Liability Exposure | $2,832,087 |
(ii) Interest Rate Risk:
Interest rate risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market interest rates. Interest rate risk is limited to potential decreases on the interest rate offered on cash held with chartered Canadian financial institutions and potential increases on the prime rate applied on the revolving credit facility available to the Company. The Company's revolving credit facility, term loan and convertible debt are floating interest rate facilities. A 100 bps or 1% increase in the floating rate would result in a $22,681 impact on profit or loss assuming all other factors are kept stable
YANGAROO Inc.
Notes to the Condensed Interim Financial Statements (Unaudited)
For the three months ended March 31, 2025 and 2024
(Expressed in US dollars, unless otherwise noted)
(b) Credit Risk:
Credit risk is the risk of financial loss to the Company if a customer or counterparty to a financial instrument fails to meet its contractual obligations. Financial instruments which are potentially subject to credit risk for the Company consists primarily of non-payment of accounts receivable.
The Company mitigates this risk by monitoring the credit worthiness of its customers and by offering the platform service to numerous smaller customers. As at and during the three months ended March 31, 2025, approximately 17% (March 31, 2024 - 21%) of accounts receivable and 16% (March 31, 2024 - 21%) of revenue are from two customers, respectively.
The definition of items that are past due is determined by reference to payment terms agreed to with individual customers, which are normally within 30 to 60 days.
Aging of trade receivables are as follows:
| March 31, 2025 | December 31, 2024 | |
|---|---|---|
| 0 to 30 days | $1,026,444 | $1,097,142 |
| 31 to 60 days | 125,919 | 105,355 |
| Over 60 days | 269,683 | 293,978 |
| Total | $1,422,046 | $1,496,475 |
Continuity of expected credit losses:
| March 31, 2025 | December 31, 2024 | |
|---|---|---|
| Balance, Beginning of Period | $202,598 | $179,684 |
| Remeasurement of Loss Allowance | 15,000 | 22,914 |
| Balance, End of Period | $217,598 | $202,598 |
The Company's estimated credit loss as at March 31, 2025, is $217,598 (December 31, 2024 - $202,598) to address any anticipated collectability issues based on payment history and the expected credit loss of each customer.
(c) Liquidity Risk:
Liquidity risk is the risk that the Company will encounter difficulty in meeting obligations associated with financial liabilities that are settled by delivering cash or another financial asset. The Company's policy is to ensure that it will have sufficient cash to allow it to meet its liabilities when they become due, under both normal and stressed conditions, without incurring unacceptable losses or risking damage to the Company's reputation.
The Company manages its liquidity risk by forecasting cash flows from operations and anticipating investing and financing activities. Senior management is also actively involved in the review and approval of planned expenditures.
YANGAROO Inc.
Notes to the Condensed Interim Financial Statements (Unaudited)
For the three months ended March 31, 2025 and 2024
(Expressed in US dollars, unless otherwise noted)
Typically, the Company ensures that it has sufficient cash on demand to meet expected operational expenses. To achieve this objective, the Company prepares annual capital expenditure budgets, which are regularly monitored and updated as considered necessary.
The Company manages liquidity risk on the basis of expected maturity dates.
The following tables analyze financial liabilities and lease obligations by remaining contractual maturity (contractual and undiscounted cash flows).
| Lease Obligations | Contract Liabilities | Term Loan Facility | Trade & Other Payables | Revolving Credit Facility | Convertible Debt | Total | |
|---|---|---|---|---|---|---|---|
| < 1 year | $176,706 | $145,643 | $1,096,097 | $1,079,930 | $747,770 | - | $3,246,146 |
| 1- 3 years | 293,813 | - | - | - | - | 413,830 | 707,643 |
| Balance at March 31, 2025 | $470,519 | $145,643 | $1,096,097 | $1,079,930 | $747,770 | $413,830 | $3,953,789 |
| Lease Obligations | Contract Liabilities | Term Loan Facility | Trade & Other Payables | Revolving Credit Facility | Convertible Debt | Total | |
| --- | --- | --- | --- | --- | --- | --- | --- |
| < 1 year | $172,828 | $87,738 | $1,197,822 | $1,138,063 | $729,750 | - | $3,326,201 |
| 1- 3 years | 330,880 | - | - | - | - | 361,775 | 692,655 |
| Balance at December 31, 2024 | $503,708 | $87,738 | $1,197,822 | $1,138,063 | $729,750 | $361,775 | $4,018,856 |
At present, the Company expects to pay all liabilities at their contractual maturity. To meet these cash commitments, the Company anticipates generating sufficient cash inflows from operating activities and raising equity capital or obtaining the necessary financing to meet current and future obligations. Additionally, the Company utilizes a revolving credit facility to provide cash on an as-needed basis which is set to mature on June 26, 2025, and the Company is renegotiating the terms and covenants.
(d) Trade Barrier Risks:
The rapidly evolving landscape stemming from the executive orders signed by the President of the United States regarding new tariffs and subsequently retaliatory tariffs by the Canadian government and other trade protectionist measures implemented are expected to create volatility in the Advertising industry. The Company is actively assessing the direct and indirect future impacts to its business as this situation develops. The magnitude of the impact remains unknown as at the date.
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YANGAROO Inc.
Notes to the Condensed Interim Financial Statements (Unaudited)
For the three months ended March 31, 2025 and 2024
(Expressed in US dollars, unless otherwise noted)
- Property and Equipment and Right of Use Assets
| Office Equipment | Computer Equipment | Computer Software | Right of Use Office Property Improvements | Leasehold Total | |
|---|---|---|---|---|---|
| Cost | |||||
| Balance, January 1, 2024 | $35,580 | $748,407 | $436,619 | $1,265,660 | $45,619 |
| Additions | - | 74,026 | - | 234,650 | - |
| Derecognition of Fully Depreciated Assets | - | (343,834) | (107,946) | (973,492) | - |
| Balance, December 31, 2024 | 35,580 | 478,599 | 328,673 | 526,818 | 45,619 |
| Additions | - | 8,303 | - | - | - |
| Balance, March 31, 2025 | $35,580 | $486,902 | $328,673 | $526,818 | $45,619 |
| Accumulated Depreciation | |||||
| Balance, January 1, 2024 | 31,300 | 710,977 | 387,803 | 1,010,630 | 23,883 |
| Depreciation Expense | 1,294 | 30,228 | 47,955 | 140,218 | 7,114 |
| Derecognition of Fully Depreciated Assets | - | (343,834) | (107,946) | (973,492) | - |
| Balance, December 31, 2024 | 32,594 | 397,371 | 327,812 | 177,356 | 30,997 |
| Depreciation Expense | 298 | 9,985 | 693 | 33,250 | 1,672 |
| Balance, March 31, 2025 | $32,892 | $407,356 | $328,505 | $210,606 | $32,669 |
| Carrying Amounts | |||||
| December 31, 2024 | $2,986 | $81,228 | $861 | $349,462 | $14,622 |
| March 31, 2025 | $2,688 | $79,546 | $168 | $316,212 | $12,950 |
Included in property and equipment are computer equipment under leases with a carrying value of $72,789 (December 31, 2024 - $74,339).
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YANGAROO Inc.
Notes to the Condensed Interim Financial Statements (Unaudited)
For the three months ended March 31, 2025 and 2024
(Expressed in US dollars, unless otherwise noted)
- Intangible Assets
| Brand | Customer Relationships | Development Costs | Total | |
|---|---|---|---|---|
| Cost | ||||
| Balance, January 1, 2024 | $70,000 | $1,098,000 | $1,813,293 | $2,981,293 |
| Additions | - | - | 647,830 | 647,830 |
| Balance, December 31, 2024 | 70,000 | 1,098,000 | 2,461,123 | 3,629,123 |
| Additions | - | - | 128,720 | 128,720 |
| Balance, March 31, 2025 | $70,000 | $1,098,000 | $2,589,843 | $3,757,843 |
| Accumulated Amortization | ||||
| Balance, January 1, 2024 | 53,833 | 841,583 | 285,204 | 1,180,620 |
| Amortization Expense | 11,278 | 177,583 | 321,430 | 510,291 |
| Balance, December 31, 2024 | 65,111 | 1,019,166 | 606,634 | 1,690,911 |
| Amortization Expense | 667 | 10,750 | 158,568 | 169,985 |
| Balance, March 31, 2025 | $65,778 | $1,029,916 | $765,202 | $1,860,896 |
| Carrying Amounts | ||||
| December 31, 2025 | $4,889 | $78,834 | $1,854,489 | $1,938,212 |
| March 31, 2025 | $4,222 | $68,084 | $1,824,641 | $1,896,947 |
During the three months ended March 31, 2025, the Company capitalized internally generated software development costs of $128,720 (March 31, 2024 - $170,041). Amortization expense of $158,568 was expensed to development costs during the three-months ended March 31, 2025 (March 31, 2024 - $53,506). The Company initiated new software development projects that would generate probable future economic benefits for the analytics dashboard and the clearance platform. The costs capitalized include employee costs incurred on software development along with any relevant and appropriate overhead. These project costs resulted in interface updates, improving visibility into traffic and occurrence data and incorporating additional advertising performance metrics from third-party providers. Additionally, these project costs resulted in updates to the submission and reporting components, streamlining the tracking of submissions and any ongoing substations of the Clearance platform.
- Goodwill
| March 31, 2025 | December 31, 2024 | |
|---|---|---|
| Balance, Beginning of Period | $359,146 | $359,146 |
| Acquisitions | - | - |
| Balance, End of Period | $359,146 | $359,146 |
The goodwill balance of $359,146 is related to the business acquisitions of Digital Media Services ("DMS") in fiscal year 2021 and Millenia3 in fiscal 2023. The Company tests goodwill for impairment on an annual basis or whenever there is an indication that the goodwill may be impaired. There has been no indication that the goodwill may be impaired since the impairment analysis done at December 31, 2024.
YANGAROO Inc.
Notes to the Condensed Interim Financial Statements (Unaudited)
For the three months ended March 31, 2025 and 2024
(Expressed in US dollars, unless otherwise noted)
8. Trade and Other Payables
| March 31, 2025 | December 31, 2024 | |
|---|---|---|
| Trade Payables | $831,079 | $586,588 |
| Accrued Liabilities | 248,851 | 464,833 |
| Contingent Consideration | - | 86,642 |
| Total | $1,079,930 | $1,138,063 |
During the three months ended March 31, 2025, the company incurred $nil in restructuring expenses relating to employee severance (March 31, 2024 - $23,384).
9. Lease Obligations
The Company has lease obligations until 2029 for computer equipment and property, with purchase options at the end of each lease term for computer equipment. The lease agreements have terms ranging between 3 to 5 years at inception and carry a weighted average incremental borrowing rate of 8.44% per annum (2024 - 4.60%). The remaining contractual balance on the lease obligations at March 31, 2025, was $470,519 (note 4).
| Computer Equipment | Property | Total Lease Liability | |
|---|---|---|---|
| Balance at January 1, 2025 | $78,266 | $369,793 | $448,059 |
| Additions During the Period | 7,114 | - | 7,114 |
| Principal Payments | (4,731) | (29,370) | (34,101) |
| Balance at March 31, 2025 | $80,649 | $340,423 | $421,072 |
| Current Lease Obligation | 18,787 | 131,143 | 149,930 |
| Long-Term Lease Obligation | 61,862 | 209,280 | 271,142 |
| Balance at March 31, 2025 | $80,649 | $340,423 | $421,072 |
| Effective Annual Rate of Interest | 10.77% | 6.47% | 8.44% |
| Amount of Interest Recognized in Profit or Loss | 2,226 | 5,299 | 7,525 |
10. Loan Facility
The Company has a credit agreement (the "Credit Facility") with a tier-1 Canadian financial institution (the "Bank"). The Credit Facility is secured by a first ranking security over all present and future assets and property of the Company.
The Credit Facility includes a revolving credit facility in the amount of CAD $1,750,000 and a term loan facility with an initial principal balance of CAD $3,250,000.
Revolving Credit Facility
The revolving credit facility of USD $1,217,300 (CAD $1,750,000) is available by loan advances and is subject to standard borrowing base calculations and margining against trade accounts receivable. Interest payments are based on the Bank's prime rate plus 1.95% per annum. As at March 31, 2025, the Company has drawn $747,770 (March 31, 2024 - $976,131) of the revolving credit facility.
15
YANGAROO Inc.
Notes to the Condensed Interim Financial Statements (Unaudited)
For the three months ended March 31, 2025 and 2024
(Expressed in US dollars, unless otherwise noted)
Term Loan Facility
The term loan facility of CAD $3,250,000 was fully advanced on May 21, 2021, and was used for the purchase of DMS and for general corporate purposes. The term of the loan is 42 months, amortized over 72 months, and had an initial 6-months interest only payment component. Interest payments are based on the Bank's prime rate plus 2.45%. The term loan facility is secured by the assets of the Company.
On August 21, 2024, the Bank entered into the third amendment agreement with the Company such that the Company will be in good standing with the modified covenants related to the term loan facility. The Company incurred CAD $10,000 of amendment fees and has recorded these as deferred financing costs that are being amortized over the expected duration of the term loan facility. The amendment extended the term loan maturity date to June 26, 2025, and the Company must maintain a minimum Fixed Charge Coverage Ratio and Interest-Bearing Debt to EBITDA ratio which shall not be tested until September 30, 2025. The Company must maintain a minimum EBITDA target for the three months ended June 30, 2024, and each of quarterly periods until June 30, 2025.
During the three months ended March 31, 2025, $19,055 of deferred financing fees were amortized. The Company was not in compliance with the covenants and the bank waived the covenant reporting until June 26, 2025, the maturity of the Term Loan facility.
| March 31, 2025 | December 31, 2024 | |
|---|---|---|
| Term Loan Facility | $1,096,097 | $1,197,822 |
| Less: Unamortized Deferred Financing Costs | (19,087) | (38,142) |
| Balance, End of Period | 1,077,010 | 1,159,680 |
| Current Portion of Term Loan | 1,077,010 | 1,159,680 |
| Long-Term Portion of Term Loan | - | - |
| Balance, End of Period | $1,077,010 | $1,159,680 |
| Revolving Credit Facility Balance, End of Period | $747,770 | $729,750 |
11. Convertible Debentures
On December 2, 2022, the Company completed a non-brokered private placement offering of unsecured, convertible debentures ("the Debentures") for gross proceeds of CAD $500,000. The Debentures will mature on November 30, 2027, and each CAD $1,000 Debenture will bear interest at a simple rate of Bank's prime plus 8.00% per annum (subject to increase to Bank's prime plus 10.00% per annum in the event of certain defaults). The holders of the Debentures were required to exercise a Subordination and Postponement Agreement in favour of the term loan facility. During the term of the Subordination and Postponement Agreement, no payments to the holders of the Debentures in the form of cash will be permitted except for payments of interest. The holders of the Debentures will be entitled to convert the principal amount of the Debentures at any time on or prior to the maturity date into common shares of the Company at a conversion price of CAD $0.10. Interest will be payable within 30 days of the end of each semi-annual period ended November 30th and May 31st throughout the term of the Debentures in cash or common shares of the Company, at the discretion of the Company. As certain directors of the Company participated in the Debenture financing, the Debenture is considered a "related party" transaction. See note 17 - Related Party Transactions.
YANGAROO Inc.
Notes to the Condensed Interim Financial Statements (Unaudited)
For the three months ended March 31, 2025 and 2024
(Expressed in US dollars, unless otherwise noted)
In connection with the Debentures, the Company paid legal fees of $17,309. During the three months ended March 31, 2025, $923 (March 31, 2024 - $987) of deferred financing fees were amortized.
For accounting purposes, the debenture has been separated into a host debt liability and an embedded derivative liability component. The fair value of the derivative is calculated using a Black Scholes option model and remeasured at every period through profit or loss, with the residual being allocated as the host debt liability component. The host debt will be measured subsequently at amortized cost using the effective interest rate method.
| Host Debt Liability | Embedded Derivative Liability | |
|---|---|---|
| Convertible Debenture Balance - December 31, 2024 | $331,090 | $86,394 |
| Accretion of Convertible Debentures | 4,519 | - |
| Interest Accrued | 11,999 | - |
| Interest Paid | - | - |
| Fair Value Loss on Remeasurement of Embedded Derivative Liability | - | 46,267 |
| Foreign Exchange Loss | 249 | 97 |
| Amortization of Issuance Costs | 923 | - |
| Convertible Debenture Balance - March 31, 2025 | $348,780 | $132,758 |
12. Contingent Consideration
As part of the Millenia3 acquisition, the Company incurred contingent consideration, consisting of additional cash payments as a result of the following:
(a) Fiscal 2023
(i) 5% of revenues if revenues for the months of November and December 2023 combined are less than $166,667; or
(ii) 10% of revenues if revenues for the months of November and December 2023 combined are at least $166,667 and less than $250,000; or
(iii) 15% of revenues if revenues for the months of November and December 2023 combined are at least $250,000
(b) Fiscal 2024 and 2025
(iv) 5% of revenues if revenues for the applicable 12-month period are less than $1,000,000;
(v) 10% of revenues if revenues for the applicable 12-month period are at least $1,000,000 and less than $1,500,000; or
(vi) 15% of revenues if revenues for the applicable 12-month period are at least $1,500,000
Measurement periods: Annual periods ending on the 1st, 2nd, and 3rd of December 31, 2023, December 31, 2024, and December 31, 2025.
During the three months ended March 31, 2025, former shareholders earned $17,227 of earnout and the Company paid $8,723 to the seller of Millenia3 with respect to the earnout payment.
YANGAROO Inc.
Notes to the Condensed Interim Financial Statements (Unaudited)
For the three months ended March 31, 2025 and 2024
(Expressed in US dollars, unless otherwise noted)
13. Share Capital
The Company is authorized to issue an unlimited number of common shares, without par value.
The following is a summary of changes in common share capital:
| Number of Shares | Value | |
|---|---|---|
| Balance at December 31, 2024 | 62,437,140 | $27,826,282 |
| Balance at March 31, 2025 | 62,437,140 | $27,826,282 |
14. Share-Based Payments
The Company has an Omnibus Equity Incentive Plan (the "OEI Plan"), which was originally approved on June 29, 2021, and subsequently amended most recently in 2023. The OEI Plan permits the grant of stock options as well as restricted share units, deferred share units, performance share units, and share appreciation rights (all awards other than options referred to as the "Non-Option Awards"). Pursuant to the terms of the OEI Plan, the maximum number of common shares issuable pursuant to new options together with options granted under the Predecessor Plan cannot exceed 4,370,600 in the aggregate, being 7% of the issued and outstanding common shares of the Company at the time of amendment, for an aggregate maximum of 8,471,200 common shares (14%).
The Non-Option Awards may be settled, if and when vested, in common shares of the Company or the cash equivalent, at the election of the Company on issuance of the awards.
Stock Options
The Company has issued stock options to acquire common shares as follows:
| Weighted Average Price (CAD) | Outstanding Options | Vested Options | Weighted Average Remaining Life (Years) | |
|---|---|---|---|---|
| Balance at December 31, 2024 | $0.11 | 533,000 | 533,000 | 0.14 |
| Granted | $0.04 | 500,000 | 500,000 | 0.18 |
| Expired | $0.12 | (498,000) | (498,000) | (0.11) |
| Balance at March 31, 2025 | $0.04 | 535,000 | 535,000 | 0.21 |
During the three months ended March 31, 2025, the Company issued 500,000 stock options with a fair value of $13,260 (March 31, 2024 - $nil). The stock options vest immediately on the date of grant and have 90 days to maturity.
The estimated fair value of the options is expensed over the vesting period. Each of the 500,000 options vested immediately on the date of grant. The compensation expense and charge to share-based payment reserves relating to the stock options for the three months ended March 31, 2025, was $13,260 (March 31, 2024 - $nil).
18
YANGAROO Inc.
Notes to the Condensed Interim Financial Statements (Unaudited)
For the three months ended March 31, 2025 and 2024
(Expressed in US dollars, unless otherwise noted)
The following table shows the stock options outstanding at March 31, 2025:
| Number of Options | Number of Unvested Options | Number of Vested Options | Exercise Price (CAD) | Expiry Date |
|---|---|---|---|---|
| 35,000 | - | 35,000 | $0.11 | 15-Sep-25 |
| 500,000 | - | 500,000 | $0.04 | 10-Jun-25 |
| 535,000 | - | 535,000 | $0.04 |
Subsequent to the three months ended March 31, 2025, no outstanding options had expired unexercised.
Restricted Share Units
The Company may grant Restricted Share Units ("RSUs") to any participant under the Omnibus Equity Incentive Plan.
The fair value of RSUs is based on the closing price of the common shares of the Company on the trading day immediately preceding the date of the award and are recognized over the vesting period.
On January 2, 2025, the Company issued 500,000 RSUs to Mr. Kanniah, the Company's Chief Financial Officer. These RSUs vest fully on the second anniversary of the grant date, upon which they will be payable in cash or in common shares, or a combination of both, at the discretion of the Company, subject to the terms of the Plan. The estimated fair value has been based on the quoted market price on the date of issuance of $0.04 per common share.
On March 10, 2025, the Company issued 2,000,000 RSUs to Mr. Schuetrumpf, the Company's Chief Executive Officer. These restricted share units are expected to be settled through the issuance of 2,000,000 common shares of the Company. 1,000,000 of these RSUs are subject to certain performance requirements and as such will vest on the later of either the satisfaction of the performance requirements or March 7, 2026. The remaining 1,000,000 RSUs will vest on March 7, 2027. The estimated fair value of the RSUs has been based on the quoted market price on the date of issuance of $0.04 per common share.
The compensation expense and charge to share-based payment reserves relating to the RSUs for the three months ended March 31, 2025, was $10,582 (March 31, 2024 - $nil).
The following table shows the RSUs outstanding as at March 31, 2025:
| Number of Units | March 31, 2025 | December 31, 2024 |
|---|---|---|
| Balance, Beginning of Period | - | - |
| Granted | 2,500,000 | - |
| Balance, End of Period | 2,500,000 | - |
| Vested | - | - |
YANGAROO Inc.
Notes to the Condensed Interim Financial Statements (Unaudited)
For the three months ended March 31, 2025 and 2024
(Expressed in US dollars, unless otherwise noted)
15. Basic and Diluted Income (Loss) per Share
The income (loss) and weighted average number of common shares used in the calculation of basic and fully diluted income (loss) per share for the three months ended March 31, 2025 and 2024 were as follows:
| For the Three-Months Ended | March 31, 2025 | March 31, 2024 |
|---|---|---|
| Numerator: | ||
| Net Income (Loss) | $(128,807) | $15,565 |
| Denominator: | ||
| Weighted Average Number of Common Shares – Basic | 62,437,140 | 62,437,140 |
| Adjustments for Calculation of Diluted Income per Share: | ||
| Options in the Money | - | - |
| Weighted Average Number of Common Shares – Fully Diluted | 62,437,140 | 62,437,140 |
| Basic Income (Loss) per Share | ($0.00) | $0.00 |
| Fully Diluted Income (Loss) per Share | ($0.00) | $0.00 |
YANGAROO Inc.
Notes to the Condensed Interim Financial Statements (Unaudited)
For the three months ended March 31, 2025 and 2024
(Expressed in US dollars, unless otherwise noted)
16. Segmented Information
The Company has only one reportable segment and provides Advertising, Entertainment, and Awards Management software workflow solutions to customers across multiple geographic regions. It considers the basis on which it is organized, including geographic areas and service offerings, in identifying its reportable segments. Operating segments of the Company are defined as components of the Company for which separate financial information is available and is evaluated regularly by the chief operating decision maker in allocating resources and assessing performance. The chief operating decision maker is the Chief Executive Officer of the Company. For revenues, the amounts included are from the originating country.
Below is the breakdown of revenue, long-term assets, and payables by operating segment:
| For the Three Months Ended March 31, 2025 | Canada | US | Total |
|---|---|---|---|
| Advertising | $100,968 | $1,293,580 | $1,394,548 |
| Music | 103,547 | 122,403 | 225,950 |
| Awards Management | 13,242 | 148,318 | 161,560 |
| Total Revenue | $217,757 | $1,564,301 | $1,782,058 |
| Property and Equipment | 236,584 | 174,980 | 411,564 |
| Intangible Assets | 1,824,641 | 72,306 | 1,896,947 |
| Goodwill | - | 359,146 | 359,146 |
| Trade and Other Payables | 537,847 | 542,084 | 1,079,931 |
| For the Three Months Ended March 31, 2024 | Canada | US | Total |
| --- | --- | --- | --- |
| Advertising | $304,472 | $1,220,096 | $1,524,568 |
| Music | 102,667 | 175,212 | 277,879 |
| Awards Management | 11,505 | 108,679 | 120,184 |
| Total Revenue | $418,644 | $1,503,987 | $1,922,631 |
| Property and Equipment | 269,599 | 274,796 | 544,395 |
| Intangible Assets | 1,644,625 | 164,500 | 1,809,125 |
| Goodwill | - | 359,146 | 359,146 |
| Trade and Other Payables | 448,797 | 586,593 | 1,035,390 |
YANGAROO Inc.
Notes to the Condensed Interim Financial Statements (Unaudited)
For the three months ended March 31, 2025 and 2024
(Expressed in US dollars, unless otherwise noted)
17. Related Party Transactions
Key management personnel are comprised of the Company's directors and executive officers. In addition to their salaries, key management personnel also participate in the Company's Omnibus Incentive Plan (note 14).
Key management personnel compensation for the three months ended was:
| March 31, 2025 | March 31, 2024 | |
|---|---|---|
| Salaries and Short-Term Employee Benefits (i) | $152,880 | $178,883 |
| Share Based Payments | 23,842 | - |
| $176,722 | $178,883 |
(i) Short-term employee benefits include bonuses, vacation pay, and commission.
As at March 31, 2025, $25,216 (March 31, 2024 - $33,152) owing to officers and directors of the Company was included in trade and other payables. The amounts owing are unsecured, non-interest bearing, and due on demand.
18. Commitments and Contingencies
In the ordinary course of business activities, the Company may be contingently liable for litigation and claims with customers, suppliers, and former employees. There were no material litigation and claims against the company as at and during the three months ended March 31, 2025.