Condensed interim consolidated financial statements

Converge Technology Solutions Corp.

For the three and nine months ended September 30, 2021 and 2020 (Unaudited)

Converge Technology Solutions Corp.

Condensed Interim Consolidated Statements of Financial Position (expressed in thousands of Canadian dollars, except share amounts) (unaudited)

Note

September 30, 2021

December 31, 2020

Assets

Current assets

Cash

$

210,344

$

64,767

Restricted cash

13

11,467

-

Trade and other receivables

358,549

364,308

Inventories

79,551

37,868

Prepaid expenses and other assets

15,466

10,376

675,377

477,319

Long-term assets

Property, equipment, and right-of-use assets, net

28,805

23,558

Intangible assets, net

238,618

108,926

Goodwill

325,988

110,068

Other non-current assets

1,272

749

$

1,270,060

$

720,620

Liabilities and shareholders' equity

Current liabilities

Trade and other payables

12

$

446,560

$

398,003

Borrowings

5

849

133,281

Other financial liabilities

7

35,808

22,125

Deferred revenue and other liabilities

34,617

17,376

Income taxes payable

5,769

764

523,603

571,549

Long-term liabilities

Other financial liabilities

7

88,303

28,858

Borrowings

5

579

5,882

Deferred tax liability

49,693

12,584

$

662,178

$

618,873

Shareholders' equity

Common shares

6

633,271

135,354

Contributed surplus

1,193

-

Exchange rights

2,614

4,853

Foreign exchange translation reserve

794

817

Deficit

(29,990)

(39,277)

607,882

101,747

$

1,270,060

$

720,620

The accompanying notes are an integral part of these condensed interim consolidated financial statements.

On behalf of the Board:

"Signed"

"Signed"

Director - Shaun Maine

Director - Brian Phillips

1

Converge Technology Solutions Corp.

Condensed Interim Consolidated Statements of Income (Loss) and Comprehensive Income (Loss) (expressed in thousands of Canadian dollars, except share amounts)

(unaudited)

For the three months ended

For the nine months ended

September 30,

September 30,

Notes

2021

2020

2021

2020

Revenues

Product

$

289,591

$

143,450

$

823,385

$

509,141

Service

77,758

46,425

199,473

150,101

Total revenue

9

367,349

189,875

1,022,858

659,242

Cost of sales

283,578

137,480

793,047

497,163

Gross profit

83,771

52,395

229,811

162,079

Selling, general and administrative expenses

66,092

38,942

173,365

128,518

Income before the following

17,679

13,453

56,446

33,561

Depreciation and amortization

10,162

5,180

24,548

16,204

Finance expense, net

5,7

1,528

5,138

5,675

15,953

Special charges

11

8,702

1,865

17,107

7,914

Share-based compensation expense

6

1,193

-

1,193

-

Other (income) expenses

(8,491)

506

(5,485)

(114)

Income (loss) before income taxes

4,585

764

13,408

(6,396)

Income tax expense (recovery)

(11)

70

4,121

(1,271)

Net Income (loss)

$

4,596

$

694

$

9,287

$

(5,125)

Other comprehensive income (loss)

Item that may be reclassified subsequently to income:

Exchange (gain) loss on translation of foreign

operations

641

(345)

23

403

641

(345)

23

403

Comprehensive income (loss)

$

3,955

$

1,039

$

9,264

$

(5,528)

Net income (loss) per share - basic

$

0.02

$

0.01

$

0.05

$

(0.05)

Net income (loss) per share - diluted

$

0.02

$

0.01

$

0.05

$

(0.05)

Weighted average number of shares outstanding - basic

197,030

100,707

191,082

93,346

Weighted average number of shares outstanding - diluted

200,169

107,079

193,190

93,346

The accompanying notes are an integral part of these condensed interim consolidated financial statements.

2

Converge Technology Solutions Corp.

Condensed Interim Consolidated Statements of Changes in Shareholders' Equity (Deficiency) (expressed in thousands of Canadian dollars, except share amounts)

(unaudited)

Foreign

exchange

Contributed

Exchange

transaction

Common shares

Warrants

surplus

rights

reserve

Deficit

Total

Notes

#

$

#

$

$

$

$

$

$

Balance, December 31, 2019

81,257,474

20,612

4,040,925

243

307

6,773

69

(37,881)

(9,877)

Warrants exercised

4,071,149

2,569

(4,040,925)

(243)

-

-

-

-

2,326

Exercise of exchange rights

3,000,000

1,920

-

-

-

(1,920)

-

-

-

Shares issued from treasury for public offering

35,628,815

58,045

-

-

-

-

-

-

58,045

Share repurchase commitment under normal

course issuer bid

(1,793,400)

565

-

-

-

-

-

2,779

3,344

Net loss and comprehensive loss

-

-

-

-

-

-

(403)

(5,125)

(5,528)

Balance, September 30, 2020

122,164,038

83,711

-

-

307

4,853

(334)

(40,227)

48,310

Balance, December 31, 2020

143,580,081

135,354

-

-

-

4,853

817

(39,277)

101,747

Share-based compensation

6[c]

-

-

-

-

1,193

-

-

-

1,193

Issuance of exchange rights

4[a]

-

-

-

-

-

1,875

-

-

1,875

Exercise of exchange rights

(i),(ii).(iii)

5,199,505

4,114

-

-

-

(4,114)

-

-

-

Shares issued from treasury for public offering

6

65,377,500

493,803

-

-

-

-

-

-

493,803

Net income and comprehensive income

-

-

-

-

-

-

(23)

9,287

9,264

Balance, September 30, 2021

214,157,086

633,271

-

-

1,193

2,614

794

(29,990)

607,882

  1. Purchase consideration for SIS included the issuance of a right to exchange 8,000,000 Class B membership interests for 8,000,000 common shares of the Company. During the nine months ended September 30, 2021, 3,000,000 Class B membership interests were exchanged to 3,000,000 common shares at $0.64 per share for a value of $1,920. As of September 30, 2021, 500,000 Class B membership interests of SIS are issued and outstanding.
  2. Purchase consideration for VSS included the issuance of a right to exchange 2,871,400 Class B membership interests for 2,871,400 common shares of the Company. During the nine months ended September 30, 2021, 2,153,550 Class B membership interests were exchanged to 2,153,550 common shares at $0.91 per share for a value of $1,960. As of September 30, 2021, 717,850 Class B membership interests of VSS are issued and outstanding.
  3. Purchase consideration for CarpeDatum included the issuance of a right to exchange 367,344 Class B membership interests for 367,644 common shares of the Company. During the nine months ended September 30, 2021, 45,955 Class B membership interests were exchanged to 45,955 common shares at $5.10 per share for a value of $234. As of September 30, 2021, 321,689 Class B membership interests of VSS are issued and outstanding.

The accompanying notes are an integral part of these condensed interim consolidated financial statements.

3

Converge Technology Solutions Corp.

Condensed Interim Consolidated Statements of Cash Flows

(expressed in thousands of Canadian dollars, except share amounts) (unaudited)

For the three months

For the nine months

ended September 30,

ended September 30,

Notes

2021

2020

2021

2020

Cash flows from operating activities

Net income (loss)

$

4,596

$

694

$

9,287

$

(5,125)

Adjustments to reconcile net income (loss) to net cash

from operating activities

Depreciation and amortization

10,324

6,479

26,635

20,277

Unrealized foreign exchange losses (gains)

(7,991)

401

(5,025)

(608)

Share-based compensation expense

1,193

-

1,193

-

Finance expense, net

5,7

1,528

5,138

5,675

15,953

Change in fair value of contingent consideration

7

3,808

-

4,405

-

Income tax expense (recovery)

(11)

70

4,121

(1,271)

13,447

12,782

46,291

29,226

Changes in non-cash working capital items

Trade and other receivables

34,045

15,887

93,065

45,947

Inventories

(7,103)

2,501

(31,290)

(1,159)

Prepaid expenses and other assets

(4,146)

(313)

(4,447)

4,927

Trade and other payables

16,896

(5,906)

(48,706)

(5,273)

Income taxes payable

(634)

(195)

(2,613)

(845)

Other financial liabilities

6

3

1,877

(405)

Deferred revenue and customer deposits

(4,390)

1,114

13,123

4,767

Cash from operating activities

48,121

25,873

67,300

77,185

Cash flows from investing activities

Purchase of property and equipment

(810)

(458)

(3,661)

(1,331)

Proceeds on disposal of property and equipment

421

(2)

552

252

Repayment of contingent consideration

7

-

-

(5,502)

(3,830)

Repayment of deferred consideration

7

(1,879)

(4,306)

(5,627)

(9,077)

Business combinations, net of cash acquired

4

(148,143)

-

(244,293)

(6,699)

Cash used in investing activities

(150,411)

(4,766)

(258,531)

(20,685)

Cash flows from financing activities

Transfers to restricted cash

(11,467)

-

(11,467)

(250)

Interest paid

(561)

(3,790)

(5,639)

(12,420)

Payments of lease liabilities

(2,584)

(2,246)

(7,001)

(7,501)

Proceeds from issuance of common shares

6

248,370

50,730

493,886

60,387

Repurchase of common shares

-

-

-

(2,125)

Repayment of notes payable

7

(376)

(83)

(3,790)

(257)

Repayment of borrowings

5

(51,900)

(42,694)

(135,448)

(56,016)

Cash from (used in) financing activities

181,482

1,917

330,541

(18,182)

Net change in cash during the period

79,192

23,024

139,310

38,318

Effect of foreign exchange on cash

6,229

(345)

6,267

143

Cash, beginning of period

124,923

36,372

64,767

20,590

Cash, end of period

$

210,344

$

59,051

$

210,344

$

59,051

The accompanying notes are an integral part of these condensed interim consolidated financial statements.

4

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Converge Technology Solutions Corp. published this content on 03 March 2022 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 03 March 2022 01:39:07 UTC.