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    KDSX   CA4828461026

KADESTONE CAPITAL CORP.

(KDSX)
Delayed Bourse de Toronto  -  03:27 2022-08-18 pm EDT
1.550 CAD   -3.13%
08/04KADESTONE CAPITAL : Reports q1 2022 financial results
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08/04KADESTONE CAPITAL : Announces appointment of dr. anthony holler as chair
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06/28KADESTONE CAPITAL BRIEF : Overnight Monday Appointed Dr. Anthony Holler As Chair
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Kadestone Capital : Management Discussion & Analysis - Q1 2022

06/01/2022 | 01:22pm EDT

KADESTONE CAPITAL CORP.

MANAGEMENT DISCUSSION AND ANALYSIS

For the three months ended March 31, 2022

As of May 19, 2022

Kadestone Capital Corp.

Management Discussion and Analysis

For the three months ended March 31, 2022

About Kadestone

Kadestone Capital Corp. (the "Company" or "Kadestone") was incorporated under the British Columbia Business Corporations Act on July 2, 2019. Its principal business activity is the acquisition, development and management of residential and commercial income producing properties and the procurement and sale of building materials within major urban centres and high-growth, emerging markets in Canada, with an initial focus on the Metro Vancouver market. Its registered and records office is Suite 2600, Three Burrard Centre, 595 Burrard Street, Vancouver, BC Canada, V7X 1L3.

Basis of Discussion and Analysis

This management discussion and analysis ("MD&A") of the consolidated financial condition of Kadestone as of March 31, 2022 and the results of its operations for the three months ended March 31, 2022 was prepared as of May 19, 2022. This MD&A should be read in conjunction with the Company's condensed interim consolidated financial statements and accompanying notes for the three months ended March 31, 2022 and 2021.

The Company prepares its consolidated financial statements in accordance with International Financial Reporting Standards ("IFRS"), as issued by the International Accounting Standards Board ("IASB"). IFRS comprises IFRS, International Accounting Standards ("IAS") and interpretations issued by the IFRS Interpretations Committee ("IFRIC") and the former Standing Interpretations Committee ("SIC").

The Company's functional currency is the Canadian dollar which is also its presentation currency.

Forward-Looking Statements

This MD&A contains "forward-looking statements" that reflect the Company's current expectations and projections about its future results. When used in this MD&A, the use of words such as "estimate", "project", "belief", "anticipate", "intend", "expect", "plan", "predict", "may", "should", "will", "consider", "anticipate", "objective" and the negative of these words or such variations thereon or comparable terminology, are intended to identify forward-looking statements and information, including but not limited to statements regarding the Company's ability to raise equity financing, the generation of rental revenue or gains through capital appreciation of the properties, renewal of leases or replacement of tenants, and the Company's ability to maintain sufficient or readily available working capital to meet liquidity requirements. Forward- looking statements are, by their nature, not guarantees of the Company's future operational or financial performance and are subject to risks and uncertainties and other factors that could cause the Company's actual results, performance, prospects or opportunities to differ materially from those expressed in, or implied by, these forward-looking statements. No representation or warranty is intended with respect to anticipated future results, or that estimates, or projections will be sustained.

These forward-looking statements involve known and unknown risks and uncertainties that may cause the Company's actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied in these forward-looking statements. These risks include risks related to the real estate industry generally such as fluctuations in the market for real estate investment opportunities, availability of project financing, changes in interest rates, demand for office, industrial, and commercial rentals, illiquidity of real estate investments, non-renewal of tenant leases, risks associated with development and related zoning and other permits approvals, fluctuation in real estate values, geographic conditions, environmental matters and uninsured losses. Although the forward-looking statements contained herein are based upon what management believes to be current and reasonable assumptions, the Company cannot assure readers that actual results will be consistent with these forward- looking statements. The forward-looking statements contained herein are made as of the date of this MD&A and are expressly qualified in their entirety by this cautionary statement. Except as required by law, the Company undertakes no obligation to publicly update or revise any such forward-looking statements to reflect any change in its expectations or in events, conditions or circumstances on which any such forward- looking statements may be based, or that may affect the likelihood that actual results will differ from those

2

Kadestone Capital Corp.

Management Discussion and Analysis

For the three months ended March 31, 2022

set forth in the forward-looking statements.

Current and Prior Period Activities and Corporate Developments

  • On March 5, 2021, 481,000 stock options were issued to officers, directors and consultants of the Company.
  • On April 30, 2021, the Company made an initial deposit of $1,600,000 to acquire limited partnership units in a property located in Chilliwack, B.C. (the "Chilliwack project"). Land for the project was acquired for a purchase price of $23,432,500 and will be used for a future light industrial and commercial development. The Company has an 80% equity interest in the property and will guarantee all loans incurred in respect of the property and future development.
  • On May 12, 2021, the Company made an initial deposit of $400,000 to acquire limited partnership units in a property located in Squamish, B.C. (the "Squamish project"). Land for the project was acquired for a purchase price of $20,818,725 and will be used for a future light industrial development. The Company has an 80% equity interest in the property and will guarantee all loans incurred in respect of the property and future development.
  • On June 25, 2021, the Company made an additional equity contribution of $6,800,000 to the Squamish project, funded by cash of the Company and $1,300,000 of borrowings from a significant shareholder of the Company.
  • On July 7, 2021, the Company made an addition equity contribution of $6,800,000 to the Chilliwack project, funded by additional borrowings from a significant shareholder of the Company which increases the total borrowings to $8,100,000. The Loan was funded by way of two advances. The first advance, in the amount of $1,300,000, was received by the Company on June 25, 2021. The second advance, in the amount of $6,800,000, was received by the Company on July 7, 2021. The Loan bears interest at a rate of 10%, compounded annually and payable by Kadestone on the maturity date of July 26, 2024.
  • On August 20, 2021, 982,000 options were issued to the Chief Executive Officer, the Chief Financial Officer and three consultants of the Company.
  • On September 3, 2021, the Chilliwack project, one of the Company's associates, returned capital of $720,000 to the Company.
  • On September 9, 2021, the Company contributed additional equity of $600,000 to the Squamish project, one of the Company's associates.
  • On November 1, 2021, the Company completed the sale of the Company's industrial strata property located at Kyle Road, West Kelowna. The Company sold the property for a price of $10,100,000 less $202,000 in selling commissions and closing costs of $35,000. Concurrently, the Company repaid the remaining balance of debt on the investment property of $4,925,000 and accrued interest thereon of $18,614.
  • On November 3, 2021, the Company repaid principal of $3,930,000 of a loan payable and accrued interest thereon of $123,552 to a significant shareholder of the Company which decreased the principal amount of loan payable to $4,170,000.
  • On November 23, 2021, 100,000 options were issued to a director.
  • On December 29, 2021, the Company issued an unsecured convertible note. The principal amount of the note of $4,750,000 matures three years after issuance on December 29, 2024 and accrues interest

3

Kadestone Capital Corp.

Management Discussion and Analysis

For the three months ended March 31, 2022

at 7% per annum payable in cash on the maturity date. The Company incurred transaction costs on the debt issuance of $34,500. The holder of the note has the option to convert the principal amount of the note, in whole or in part, at any time between 180 days after the issuance date up to the maturity date. The note has a fixed conversion price of $2.50 per share.

  • On January 28, 2022, the Company repaid principal of $950,000 of a loan payable and accrued interest thereon of $52,240 to a significant shareholder of the Company which decreased the principal amount of loan payable to $3,220,000.
  • On May 2, 2022, the Company entered into with an unrelated third party an unsecured non-revolving term loan credit facility of up to $10,000,000. Interest is payable on the outstanding amounts at a rate of 5% per annum and the facility expires on March 31, 2024. The loan agreement provides the Lender with certain participation rights in future equity financings of Kadestone as well as a right of first offer with respect to the financing of future real estate development projects.

Selected Quarterly Information

Selected financial information from the statements of loss and comprehensive loss:

Three months

Three months

ended

ended

March 31, 2022

March 31, 2021

Revenue

Rental revenue

$

-

$

4,958

Net profits interest

13,144

(214)

13,144

4,744

Rental property operating expense

-

48,664

13,144

(43,920)

Operating expenses

Professional fees

282,690

33,504

Share-based compensation

290,677

125,151

Consulting fees

26,800

48,258

Salaries and wages

169,951

132,062

Directors' fees

49,992

42,559

Dues and subscriptions

18,848

42,277

Insurance

12,287

9,570

Computer

345

1,984

Marketing

8,910

36,452

Office supplies

496

1,100

Bank charges

495

743

861,491

473,660

Operating loss

(848,347)

(517,580)

Other income and expenses

Interest expense

(203,523)

(78,141)

Interest revenue

8,614

18,538

Income from associates

13,013

-

Loss and comprehensive loss

$

(1,030,243)

$

(577,183)

Rental revenue consists of rental revenue earned from the Kyle Road property.

4

Kadestone Capital Corp.

Management Discussion and Analysis

For the three months ended March 31, 2022

Net profits interest consists of the Company's 51% share of the profits of the Marine Drive property.

Rental property operating expense for the three months ended March 31, 2021 consists of expenses related to the operations of the Kyle Road property.

Professional fees mainly consist of fees paid to lawyers and auditors for professional services related to the public company filings, advisory services.

Share-based compensation represents amounts relating to stock options issued to directors, officers and consultants to the Company, which vested during the period.

Consulting fees mainly consist of amounts paid for finance and accounting and other related expenses.

Salaries and wages consist solely of salary paid to the Chief Executive Officer and the Chief Financial Officer.

Interest expense consists of interest accrued on the loan payable and the convertible note.

Income from associates relates to income from the equity accounted associate investments in the Chilliwack and Squamish projects.

Selected financial information extracted from the statements of financial position at March 31, 2022 and December 31, 2021:

March 31,

December 31,

2022

2021

Total current assets

$

4,829,900

$

6,186,052

Investment properties

1,453,500

1,453,500

Investments in associates

15,507,719

15,494,706

Total assets

$

21,791,119

$

23,134,258

Accounts payable and accrued liabilities

$

556,941

$

361,615

Total current liabilities

556,941

361,615

Loan payable

3,452,510

4,367,256

Convertible note

4,438,000

4,322,153

Shareholders' equity

13,343,668

14,083,234

Total liabilities and shareholders' equity

$

21,791,119

$

23,134,258

Current assets primarily consist of cash and cash equivalents of $3,649,411, restricted term deposits of $1,008,337 which is a restricted GIC, accounts receivable of $148,413 and prepaid expenses and deposits of $23,739.

Investment properties represents the 51% interest in the Marine Drive West Vancouver property. As of the date of this MD&A, the property is 100% leased.

Investments in associates consists of the 80% interests held by the Company in two limited partnership's which hold development properties located in Chilliwack, B.C. and Squamish, B.C. that upon completion, are expected to be accretive to the Company's earnings.

Loan payable is a promissory note from a significant shareholder of the Company. The note is unsecured and bears interest at 10% per annum, compounded annually. Accrued interest is payable on the maturity

5

This is an excerpt of the original content. To continue reading it, access the original document here.

Disclaimer

Kadestone Capital Corp. published this content on 01 June 2022 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 01 June 2022 17:21:00 UTC.


© Publicnow 2022
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Financials ()
Sales 2021 0,21  - -
Net income 2021 -2,89 M - -
Net Debt 2021 3,67 M - -
P/E ratio 2021 -28,2x
Yield 2021 -
Capitalization 72,1 M 55,8 M -
EV / Sales 2020 -
EV / Sales 2021 406 719 513x
Nbr of Employees -
Free-Float 33,5%
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Managers and Directors
Brent Billey President, Chief Executive Officer & Director
David Negus Chief Financial Officer & Secretary
Anthony F. Holler Chairman
David Negrin Independent Director
Norman Joseph Mayr Independent Director