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 |
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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.
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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 |
- 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.
- 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.
- 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.
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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.
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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.