MOGO Mogo Inc

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

 

FORM 6-K

 

 

REPORT OF FOREIGN PRIVATE ISSUER PURSUANT TO RULE 13a-16 OR 15d-16

UNDER THE SECURITIES EXCHANGE ACT OF 1934

 

 

For the month of May 2024

 

 

Commission File Number: 001-38409

 

 

Mogo Inc.

(formerly Mogo Finance Technology Inc.)

 

516-409 Granville St.

Vancouver, British Columbia

V6C 1T2, Canada

(Address of principal executive offices)

 

Indicate by check mark whether the registrant files or will file annual reports under cover of Form 20-F or

Form 40-F.

 

	Form 20-F	☒Form 40-F

 

Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(1): 

 

Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(7): 

 

 

 

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Form 6-K Exhibit Index

 

Exhibit Number		Document Description
99.1		Unaudited interim condensed consolidated financial statements for the three months ended March 31, 2024
99.2		Management’s discussion and analysis for the three and nine months ended March 31, 2024
99.3		Form 52-109F2 - Certificate of Interim Filings (CEO)
99.4		Form 52-109F2 - Certificate of Interim Filings (CFO)

 

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SIGNATURES

 

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

 

	Mogo Inc.
Date: May 9, 2024	By:	/s/ Gregory Feller
		Name: Gregory Feller
		Title: President & Chief Financial Officer

 

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Exhibit 99.1

 

 

		Page
Interim Condensed Consolidated Statements of Financial Position as at March 31, 2024 and December 31, 2023		F-2
Interim Condensed Consolidated Statements of Operations and Comprehensive Income (Loss) for the three months ended March 31, 2024 and 2023		F-3
Interim Condensed Consolidated Statements of Changes in Equity (Deficit) for the three months ended March 31, 2024 and 2023		F-4
Interim Condensed Consolidated Statements of Cash Flows for the three months ended March 31, 2024 and 2023		F-5
Notes to the Interim Condensed Consolidated Financial Statements		F-6

 

 

 

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Mogo Inc.

Interim Condensed Consolidated Statements of Financial Position

(Unaudited)

(Expressed in thousands of Canadian Dollars)

 

		Note		March 31, 2024				December 31, 2023
Assets
Cash and cash equivalent					11,800				16,133
Restricted cash					1,952				1,737
Marketable securities		5			28,038				26,332
Loans receivable, net		4			62,542				61,717
Prepaid expenses, and other receivables and assets					14,836				13,067
Investment portfolio		6			11,630				11,436
Property and equipment		7			473				526
Right-of-use assets					644				670
Investment in sublease, net					1,222				1,228
Intangible assets		8			34,970				36,562
Goodwill					38,355				38,355
Total assets					206,462				207,763
Liabilities
Accounts payable, accruals and other					24,663				24,082
Lease liabilities					2,576				2,709
Credit facility		9			51,309				49,405
Debentures		10			36,312				36,783
Derivative financial liabilities		11			18				34
Deferred tax liability					927				1,026
Total liabilities					115,805				114,039
Equity
Share capital		18a			389,774				389,806
Contributed surplus					36,047				35,503
Foreign currency translation reserve					274				243
Deficit					(335,438	)			(331,828	)
Total equity					90,657				93,724
Total equity and liabilities					206,462				207,763

 

Approved on Behalf of the Board

Signed by “Greg Feller” , Director

Signed by “Christopher Payne” , Director

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

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Mogo Inc.

Interim Condensed Consolidated Statements of Operations and Comprehensive Income (Loss)

(Unaudited)

(Expressed in thousands of Canadian Dollars, except per share amounts)

 

				Three months ended
		Note		March 31, 2024				March 31, 2023
Revenue
Subscription and services					10,691				9,446
Interest revenue					7,234				6,431
		12a			17,925				15,877
Cost of revenue
Provision for loan losses, net of recoveries		4			4,705				2,566
Transaction costs					1,665				1,442
					6,370				4,008
Gross profit					11,555				11,869
Operating expenses
Technology and development					2,617				3,057
Marketing					1,222				566
Customer service and operations					2,818				2,849
General and administration					3,850				4,378
Stock-based compensation		18c			561				293
Depreciation and amortization		7,8			2,376				2,373
Total operating expenses		13			13,444				13,516
Loss from operations					(1,889	)			(1,647	)
Other expenses (income)
Credit facility interest expense		9			1,656				1,454
Debenture and other financing expense		10,19			806				778
Accretion related to debentures		10			178				272
Share of loss in investment accounted for using the equity method					—				3,178
Revaluation gain		14			(1,088	)			(1,253	)
Other non-operating expense		15			254				975
					1,806				5,404
Net loss before tax					(3,695	)			(7,051	)
Income tax recovery					(85	)			(167	)
Net loss					(3,610	)			(6,884	)
Other comprehensive income:
Items that are or may be reclassified subsequently to profit or loss:
Foreign currency transaction reserve gain (loss)					31				(209	)
Other comprehensive income (loss)					31				(209	)
Total comprehensive loss					(3,579	)			(7,093	)
Net loss per share
Basic loss per share					(0.15	)			(0.27	)
Diluted loss per share					(0.15	)			(0.27	)
Weighted average number of basic common shares (in 000s)					24,426				25,442
Weighted average number of fully diluted common shares (in 000s)					24,426				25,442

 

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

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Mogo Inc.

Interim Condensed Consolidated Statements of Changes in Equity (Deficit)

(Unaudited)

(Expressed in thousands of Canadian Dollars, except share amounts)

 

 

		Number of shares, net of treasury shares (000s)			Share capital		Contributed surplus		Foreign currency translation reserve		Deficit		Total
Balance, December 31, 2023		24,325			389,806		35,503		243		(331,828)		93,724
Net loss		—			—		—		—		(3,610)		(3,610)
Purchase of common shares for cancellation (Note 18a)		(17)			(47)		—		—		—		(47)
Cancellation of replacement awards		(1)			—		—		—		—		—
Foreign currency translation reserve		—			—		—		31		—		31
Stock-based compensation (Note 18c)		—			—		561		—		—		561
Options exercised or converted		2			15		(17)		—		—		(2)
Balance, March 31, 2024		24,309			389,774		36,047		274		(335,438)		90,657

 

 

		Number of shares, net of treasury shares (000s)			Share capital		Contributed surplus		Foreign currency translation reserve		Deficit		Total
Balance, December 31, 2022		24,892			391,243		33,025		559		(313,941)		110,886
Net loss		—			—		—		—		(6,884)		(6,884)
Cancellation of replacement awards		(2)			—		—				—		—
Foreign currency translation reserve		—			—		—		(209)		—		(209)
Stock-based compensation (Note 18c)		—			—		293		—		—		293
Balance, March 31, 2023		24,890			391,243		33,318		350		(320,825)		104,086

 

 

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

 

 

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Mogo Inc.

Interim Condensed Consolidated Statements of Cash Flows

(Unaudited)

(Expressed in thousands of Canadian Dollars)

				Three months ended
Cash provided by (used in) the following activities:		Note		March 31, 2024				March 31, 2023
Operating activities
Net loss					(3,610	)			(6,884	)
Items not affecting cash and other items:
Depreciation and amortization		7,8			2,376				2,373
Provision for loan losses		4			4,707				2,818
Credit facility interest expense		9			1,656				1,454
Debenture and other financing expense		10,19			806				778
Accretion related to debentures		10			178				272
Share of loss in investment accounted for using the equity method					—				3,178
Stock-based compensation expense		18c			561				293
Revaluation gain		14			(1,088	)			(1,253	)
Other non-operating expense		15			149				594
Income tax recovery					(85	)			(167	)
					5,650				3,456
Changes in:
Net issuance of loans receivable					(5,681	)			(1,068	)
Prepaid expenses, and other receivables and assets					(1,795	)			(2,208	)
Accounts payable, accruals and other					640				457
Restricted cash					(215	)			642
Net investment in sub-lease					44				—
					(1,357	)			1,279
Interest paid					(2,494	)			(2,290	)
Income taxes (returned) paid					(15	)			10
Net cash used in operating activities					(3,866	)			(1,001	)
Investing activities
Investment in intangible assets		8			(704	)			(883	)
Purchase of marketable securities		5			(816	)			—
Purchases of property and equipment		7			—				(8	)
Net cash used in investing activities					(1,520	)			(891	)
Financing activities
Lease liabilities – principal payments					(133	)			(145	)
Repayments on debentures		10			(699	)			(1,003	)
Advances on credit facility		9			1,904				—
Repayments on credit facility		9			—				(1,859	)
Net cash provided by (used in) financing activities					1,072				(3,007	)
Effect of exchange rate fluctuations on cash and cash equivalents					(19	)			(22	)
Net decrease in cash and cash equivalent					(4,333	)			(4,921	)
Cash and cash equivalent, beginning of period					16,133				29,268
Cash and cash equivalent, end of period					11,800				24,347

 

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

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Mogo Inc. (“Mogo” or the "Company") was continued under the Business Corporations Act (British Columbia) on June 21, 2019 following the combination with Mogo Finance Technology Inc. The address of the Company's registered office is Suite 1700, Park Place, 666 Burrard Street, Vancouver, British Columbia, Canada, V6C 2X8. The Company’s common shares (the “Common Shares”) are listed on the Toronto Stock Exchange (“TSX”) and the Nasdaq Capital Market under the symbol “MOGO”.

Mogo, one of Canada’s leading digital finance companies, is empowering its members with simple digital solutions to help them build wealth and achieve financial freedom. Mogo’s stock trading app, MogoTrade, offers Canadians the simplest and lowest cost way to invest while making a positive impact with every investment. Together with Moka, Mogo’s wholly-owned subsidiary bringing automated, fully-managed flat-fee investing to Canadians, they form the heart of Mogo’s digital wealth platform. Mogo also offers digital loans and mortgages. Through Mogo’s wholly-owned subsidiary, Carta Worldwide, the Company also offer a digital payments platform that powers next-generation card programs for both established global corporations and innovative fintech companies in Europe and Canada. To learn more, please visit mogo.ca.

On August 14, 2023, the Company completed a share consolidation of its share capital on the basis of one post-consolidation common share of Mogo for each three pre-consolidation common shares of Mogo (the "Share Consolidation"). Outstanding stock options and outstanding warrants were similarly adjusted by the Share Consolidation ratio. The Share Consolidation resulted in 74,610,924 pre-consolidation common shares issued and outstanding on August 11, 2023, being consolidated into 24,870,308 post-consolidation common shares on August 14, 2023. In accordance with the Share Consolidation, all common shares and per-share amounts disclosed herein reflect the post-Share Consolidation shares unless otherwise specified.

 

Statement of compliance

These interim condensed consolidated financial statements for the three months ended March 31, 2024, have been prepared in accordance with International Accounting Standard 34 Interim Financial Reporting as issued by the International Accounting Standards Board and should be read in conjunction with the Company's last annual consolidated financial statements as at and for the year ended December 31, 2023. They do not include all of the information required for a complete set of financial statements prepared in accordance with International Financial Reporting Standards ("IFRS") as issued by the International Accounting Standards Board. However, selected explanatory notes are included to explain events and transactions that are significant to an understanding of the changes in the Company's financial position and performance since the last annual financial statements.

The Company presents its interim condensed consolidated statements of financial position on a non-classified basis in order of liquidity.

These interim condensed consolidated financial statements were authorized by the Board of Directors (the “Board”) to be issued on May 9, 2024.

These interim condensed financial statements have been prepared on a going concern basis, which contemplates the realization of assets and the payment of liabilities in the ordinary course of business. Should the Company be unable to continue as a going concern, it may be unable to realize the carrying value of its assets and to meet its liabilities as they become due in the normal course.

Management routinely plans future activities which includes forecasting future cash flows. Management has reviewed their plan and has collectively formed a judgment that the Company has adequate resources to continue as a going concern for the foreseeable future, which management has defined as being at least 12 months from the date of approval of these interim condensed consolidated financial statements.

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In arriving at this judgment, management has considered the following: (i) cash flow projections of the Company, which incorporates a rolling forecast and detailed cash flow modeling through the next 12 months from the date of approval of these interim condensed consolidated financial statements, and (ii) the base of investors and debt lenders historically available to the Company. The expected cash flows have been modeled based on anticipated revenue and profit streams with debt programmed into the model. Refer to Notes 9, 10, and 17 for details on amounts that may come due in the next 12 months.

For these reasons, the Company continues to adopt a going concern basis in preparing the interim condensed consolidated financial statements.

Reclassification of prior year presentation

Certain prior year amounts have been reclassified for consistency with the current period presentation. These reclassifications had no effect on the reported results of operations.

Functional and presentation currency

These interim condensed consolidated financial statements are presented in Canadian dollars. The functional currency of each subsidiary is determined based on the currency of the primary economic environment in which that subsidiary operates. The functional currency of each subsidiary that is not in Canadian dollars is as follows: Carta Financial Services Ltd. (GBP), Carta Solutions Processing Services Cyprus Ltd. (EUR), Carta Solutions Processing Services Corp. (MAD), Carta Solutions Singapore PTE. Ltd. (SGD), Moka Financial Technologies Europe (EUR).

 

 

The accounting policies adopted in the preparation of the interim condensed consolidated financial statements are consistent with those followed in the preparation of the Company’s annual consolidated financial statements for the year ended December 31, 2023.

Significant accounting judgements, estimates and assumptions

 

The preparation of the interim condensed consolidated financial statements requires management to make

estimates, assumptions and judgments that affect the reported amount of assets and liabilities, the disclosure of

contingent assets and liabilities and the reported amount of revenues and expenses during the period. The critical accounting estimates and judgments have been set out in the notes to the Company’s consolidated financial statements for the year ended December 31, 2023.

New and amended standards and interpretations

Certain new or amended standards and interpretations became effective on January 1, 2024, but do not have an impact on the interim condensed consolidated financial statements of the Company. The Company has not adopted any standards or interpretations that have been issued but are not yet effective.

 

 

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Loans receivable represent unsecured installment loans and lines of credit advanced to customers in the normal course of business. Current loans are defined as loans to customers with terms of one year or less, while non-current loans are those with terms exceeding one year. The breakdown of the Company’s gross loans receivable as at March 31, 2024 and December 31, 2023 are as follows:

 

		As at
		March 31, 2024				December 31, 2023
Current (terms of one year or less)			76,034				74,121
Non-current (terms exceeding one year)			—				151
			76,034				74,272

 

The following table provides a breakdown of gross loans receivable and allowance for loan losses by aging bucket, which represents our assessment of credit risk exposure and by their IFRS 9 – Financial Instruments expected credit loss measurement stage. The entire loan balance of a customer is aged in the same category as its oldest individual past due payment, to align with the stage groupings used in calculating the allowance for loan losses under IFRS 9. Stage 3 gross loans receivable include net balances outstanding and still anticipated to be collected for loans previously charged off and these are carried in gross receivables at the net expected collectible amount with no associated allowance.

 

				As at March 31, 2024
Risk Category		Days past due		Stage 1				Stage 2				Stage 3				Total
Strong		Not past due			60,632				—				—				60,632
Lower risk		1-30 days past due			3,191				—				—				3,191
Medium risk		31-60 days past due			—				1,567				—				1,567
Higher risk		61-90 days past due			—				1,434				—				1,434
Non-performing		91+ days past due or bankrupt			—				—				9,210				9,210
		Gross loans receivable			63,823				3,001				9,210				76,034
		Allowance for loan losses			(6,371	)			(2,009	)			(5,112	)			(13,492	)
		Loans receivable, net			57,452				992				4,098				62,542

 

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				As at December 31, 2023
Risk Category		Days past due		Stage 1				Stage 2				Stage 3				Total
Strong		Not past due			59,938				—				—				59,938
Lower risk		1-30 days past due			3,404				—				—				3,404
Medium risk		31-60 days past due			—				1,096				—				1,096
Higher risk		61-90 days past due			—				808				—				808
Non-performing		91+ days past due or bankrupt			—				—				9,026				9,026
		Gross loans receivable			63,342				1,904				9,026				74,272
		Allowance for loan losses			(6,445	)			(1,266	)			(4,844	)			(12,555	)
		Loans receivable, net			56,897				638				4,182				61,717

 

In determination of the Company’s allowance for loan losses, internally developed models are used to factor in credit risk related metrics, including the probability of defaults, the loss given default and other relevant risk factors. Management also considered the impact of key macroeconomic factors and determined that historic loan losses are most correlated with unemployment rate, inflation rate, bank prime rate and GDP growth rate. These macroeconomic factors were used to generate various forward-looking scenarios used in the calculation of allowance for loan losses. If management were to assign 100% probability to a pessimistic scenario forecast, the allowance for credit losses would have been $1,262 higher than the reported allowance for credit losses as at March 31, 2024 (December 31, 2023 – $1,235 higher).

 

Overall changes in the allowance for loan losses are summarized below:

 

		Three months ended
		March 31, 2024				March 31, 2023
Balance, beginning of the period			12,555				13,073
Provision for loan losses
Originations			687				334
Repayments			(198	)			(276	)
Re-measurement			4,218				2,760
Charge offs			(3,770	)			(4,320	)
Balance, end of the period			13,492				11,571

 

The provision for loan losses in the interim condensed consolidated statements of operations and comprehensive income (loss) is recorded net of recoveries for the three months ended March 31, 2024 of $2 (March 31, 2023 – $252).

 

 

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5. Marketable securities

 

		As at
		March 31, 2024		December 31,  2023
WonderFi Technologies Inc.		26,089		25,654
Others		1,949		678
Total		28,038		26,332

 

Others consists of investments in public securities and includes investments in Bitcoin ETFs.

 

 

6. Investment portfolio

 

 

		As at
		March 31, 2024		December 31,  2023
Alida Inc.		3,102		3,035
Blue Ant Media Inc.		2,700		2,700
Hootsuite Inc.		2,518		2,491
Gemini		918		898
Cardiac Dimensions Pty Ltd.		843		828
Tetra Trust Company		715		715
Others		834		769
Total		11,630		11,436

 

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7. Property and equipment

 

		Computer equipment		Furniture and fixtures		Leasehold improvements		Total
Cost
Balance, December 31, 2022		3,175		1,210		2,055		6,440
Additions		214		—		—		214
Impairment		(239)		(212)		—		(451)
Disposals		(2,160)		(998)		(2,055)		(5,213)
Effects of movement in exchange rate		2		—		—		2
Balance, December 31, 2023		992		—		—		992
Additions		—		—		—		—
Disposals		—		—		—		—
Balance, March 31, 2024		992		—		—		992
Accumulated depreciation
Balance, December 31, 2022		2,313		971		2,055		5,339
Depreciation		313		27		—		340
Disposals		(2,160)		(998)		(2,055)		(5,213)
Balance, December 31, 2023		466		—		—		466
Depreciation		53		—		—		53
Balance, March 31, 2024		519		—		—		519
Net book value
Balance, December 31, 2023		526		—		—		526
Balance, March 31, 2024		473		—		—		473

 

Depreciation of $53 for the three months ended March 31, 2024 (March 31, 2023 – $108) for property and equipment is included in depreciation and amortization in the interim condensed consolidated statements of operations and comprehensive income (loss).

 

 

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8. Intangible assets

 

		Internally generated– completed		Internally generated– in progress		Software licenses		Acquired technology assets		Customer relationships		Brand		Regulatory licenses		Total
Cost
Balance, December 31, 2022		29,533		7,147		3,973		21,000		8,900		1,000		6,800		78,353
Additions		—		3,206		—		—		—		—		—		3,206
Impairment		—		—		(10)		—		—		—		—		(10)
Disposals		(13,597)		—		(3,444)		—		—		—		—		(17,041)
Transfers		8,810		(8,810)		—		—		—		—		—		—
Effects of movement in exchange rate		—		—		(32)		—		—		—		—		(32)
Balance, December 31, 2023		24,746		1,543		487		21,000		8,900		1,000		6,800		64,476
Additions		—		704		—		—		—		—		—		704
Transfers		583		(583)		—		—		—		—		—		—
Effects of movement in exchange rate		—		—		(2)		—		—		—		—		(2)
Balance, March 31, 2024		25,329		1,664		485		21,000		8,900		1,000		6,800		65,178
Accumulated amortization
Balance, December 31, 2022		24,350		—		3,612		3,822		2,493		—		2,247		36,524
Amortization		3,797		—		105		2,100		1,065		—		1,360		8,427
Disposals		(13,597)		—		(3,444)		—		—		—		—		(17,041)
Effects of movement in exchange rate		(24)				28										4
Balance, December 31, 2023		14,526		—		301		5,922		3,558		—		3,607		27,914
Amortization		1,149		—		16		525		266		—		340		2,296
Effects of movement in exchange rate		—		—		(2)		—		—		—		—		(2)
Balance, March 31, 2024		15,675		—		315		6,447		3,824		—		3,947		30,208
Net book value
Balance, December 31, 2023		10,220		1,543		186		15,078		5,342		1,000		3,193		36,562
Balance, March 31, 2024		9,654		1,664		170		14,553		5,076		1,000		2,853		34,970

 

Amortization of intangible assets of $2,296 three months ended March 31, 2024 (March 31, 2023 – $2,138) is included in depreciation and amortization in the interim condensed consolidated statements of operations and comprehensive income (loss).

 

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9. Credit facility

The credit facility consists of a $60,000 senior secured credit facility maturing on July 2, 2025. The credit facility is subject to variable interest rates that reference the Secured Overnight Financing Rate (“SOFR”), or under certain conditions, the Federal Funds Rate in effect. On December 16, 2021, the Company amended its credit facility to lower the effective interest rate from a maximum of LIBOR plus 9% (with a LIBOR floor of 1.5%) to LIBOR plus 8% with no floor, which was updated in June 2023, following the cessation of the USD LIBOR publication, to SOFR plus 8% with no floor. There is a 0.33% fee on the available but undrawn portion of the $60,000 facility. The principal and interest balance outstanding for the credit facility as at March 31, 2024 was $51,309 (December 31, 2023 – $49,405). Refer to Note 16 for details on the reform of major interest rate benchmarks.

 

The credit facility is subject to certain covenants and events of default. As at March 31, 2024 and December 31, 2023, the Company was in compliance with these covenants. Interest expense on the credit facility for the three months ended March 31, 2024 of $1,656 (March 31, 2023 – $1,454) is included in credit facility interest expense in the interim condensed consolidated statements of operations and comprehensive income (loss).

 

The Company has provided its senior lenders with a general security interest in all present and after acquired personal property of the Company, including certain pledged financial instruments, cash and cash equivalents.

 

 

 

10. Debentures

 

The Company's debentures with maturity dates of July 2, 2025 pay interest at a coupon rate between 8 - 10% per annum. Payments of interest and principal are made to debenture holders on a quarterly basis on the first business day following the end of a calendar quarter, at the Company's option either in cash or Common shares.

 

The Company’s debentures balance includes the following:

 

		As at
		March 31, 2024		December 31, 2023
Principal balance		36,456		37,020
Discount		(898)		(1,000)
		35,558		36,020
Interest payable		754		763
		36,312		36,783

The Debentures are secured by the assets of the Company, governed by the terms of a trust deed and, among other things, are subject to a subordination agreement to the credit facility which effectively extends the individual maturity dates of the debentures to July 2, 2025, being the maturity date of the credit facility.

 

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10. Debentures (Continued from previous page)

 

The debenture principal repayment dates, after giving effect to the subordination agreement referenced above, are as follows:

 

		Principal component of quarterly payment		Principal due on maturity		Total
2024		1,471		—		1,471
2025		1,558		33,427		34,985
		3,029		33,427		36,456

 

The debenture principal repayments are payable in either cash or Common Shares, at Mogo’s option. The number of Common Shares required to settle the principal repayments is variable based on the Company's share price at the repayment date.

 

 

11. Derivative financial liabilities

 

On February 24, 2021, in connection with a registered direct offering, the Company issued stock warrants to investors to purchase up to an aggregate of 891,089 Common Shares at an exercise price of US$33.00 at any time prior to three and a half years following the date of issuance.

 

On December 13, 2021, as part of a registered direct offering, the Company issued stock warrants to investors to purchase up to an aggregate of 1,018,519 Common Shares at an exercise price of US$14.10 at any time prior to three and a half years following the date of issuance.

 

The stock warrants are classified as a liability under IFRS by the sole virtue of their exercise price being denominated in USD. As such, the warrants are subject to revaluation under the Black Scholes model at each reporting date, with gains and losses recognized to the interim condensed consolidated statements of operations and comprehensive income (loss). The stock warrants are classified as a derivative liability, and not equity, due to the exercise price being denominated in USD, which is different than the Company's functional currency.

 

In the event that these warrants are fully exercised, the Company would receive cash proceeds of US$43,767, with the balance of the liability reclassified to equity at that time. If the warrants were to expire unexercised, then the liability would be extinguished through a gain in the interim condensed consolidated statements of operations and comprehensive income (loss).

 

		As at
		March 31, 2024		December 31, 2023
Balance, beginning of the period		34		419
Change in fair value due to revaluation of derivative financial liabilities		(17)		(379)
Change in fair value due to foreign exchange		1		(6)
Balance, end of the period		18		34

 

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11. Derivative financial liabilities (Continued from previous page)

 

Details of the derivative financial liabilities as at March 31, 2024 are as follows:

 

		Warrants outstanding and exercisable (000s)		Weighted average exercise price $
Balance, December 31, 2022		1,910		29.06
Warrants issued		—		—
Balance, December 31, 2023		1,910		29.06
Warrants issued		—		—
Balance, March 31, 2024		1,910		29.06

 

The 1,909,608 warrants outstanding noted above have expiry dates of August 2024 and June 2025.

 

The fair value of the warrants outstanding was estimated using the Black-Scholes option pricing model with the following assumptions:

 

		As at
		March 31, 2024		December 31, 2023
Risk-free interest rate		5.03%		4.79%
Expected life		0.4 - 1.2 years		0.7 - 1.5 years
Expected volatility in market price of shares		74 - 82%		73 - 77%
Expected dividend yield		0%		0%
Expected forfeiture rate		0%		0%

 

 

 

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12. Geographic information

Revenue presented below has been based on the geographic location of customers.

 

		Three months ended
		March 31, 2024		March 31, 2023
Canada		16,221		14,436
Europe		1,704		1,441
Total		17,925		15,877

 

 

Non-current assets presented below has been based on geographic location of the assets.

 

		As at
		March 31, 2024		December 31, 2023
Canada		75,389		77,032
Europe		238		263
Other		37		46
Total		75,664		77,341

 

13. Expense by nature and function

 

The following table summarizes the Company’s operating expenses by nature:

 

	Three months ended
	March 31, 2024		March 31, 2023
Personnel expense	5,102		5,682
Depreciation and amortization	2,376		2,373
Hosting and software licenses	1,411		1,530
Marketing	1,183		465
Professional services	878		810
Stock-based compensation	561		293
Insurance and licenses	449		666
Credit verification costs	329		419
Premises	168		322
Others	987		956
Total	13,444		13,516

 

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13. Expense by nature and function (Continued from previous page)

 

The following table summarizes the Company’s operating expenses by function including stock-based compensation and depreciation and amortization:

 

		Three months ended
		March 31, 2024				March 31, 2023
Technology and development			3,844				4,190
Marketing			1,237				553
Customer service and operations			2,985				3,090
General and administration			5,378				5,683
Total			13,444				13,516

 

14. Revaluation gain

 

		Three months ended
		March 31, 2024		March 31, 2023
Change in fair value due to revaluation of derivative financial liabilities		(17)		23
Unrealized gain on investment portfolio and marketable securities		(919)		(786)
Unrealized gain on debentures		(84)		(284)
Realized exchange loss		23		—
Unrealized exchange gain		(91)		(206)
Total		(1,088)		(1,253)

 

15. Other non-operating expense

 

		Three months ended
		March 31, 2024		March 31, 2023
Restructuring charges		14		750
Acquisition costs and other		240		225
Total		254		975

 

 

 

 

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16. Fair value of financial instruments

The fair value of a financial instrument is the price that would be received to sell an asset, or paid to transfer a liability, in an orderly transaction between market participants which takes place in the principal (or most advantageous) market at the measurement date. The fair value of a liability reflects its non-performing risk. Assets and liabilities recorded at fair value in the consolidated statements of financial position are measured and classified in a hierarchy consisting of three levels for disclosure purposes. The three levels are based on the priority of the inputs to the respective valuation technique. The fair value hierarchy gives the highest priority to quoted prices in active markets for identical assets or liabilities (Level 1) and the lowest priority to unobservable inputs (Level 3). An asset or liability's classification within the fair value hierarchy is based on the lowest level of significant input to its valuation. The input levels are defined as follows:

(a) Valuation process

The Company maximizes the use of quoted prices from active markets, when available. A market is regarded as active if transactions take place with sufficient frequency and volume to provide pricing information on an ongoing basis. Where independent quoted market prices are not available, the Company uses quoted market prices for similar instruments, other third-party evidence or valuation techniques.

The fair value of financial instruments determined using valuation techniques include the use of recent arm’s length transactions and discounted cash flow analysis for investments in unquoted securities, discounted cash flow analysis for derivatives, third-party pricing models or other valuation techniques commonly used by market participants and utilize independent observable market inputs to the maximum extent possible.

The use of valuation techniques to determine the fair value of a financial instrument requires management to make assumptions such as the amount and timing of future cash flows and discount rates and incorporate the Company’s estimate of assumptions that a market participant would make when valuing the instruments.

 

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16. Fair value of financial instruments (Continued from previous page)

(b) Accounting classifications and fair values

The following table shows the carrying amount and fair values of financial assets and financial liabilities, including their levels in the fair value hierarchy. During the three months ended March 31, 2024, there have not been any transfers between fair value hierarchy levels.

 

				Carrying amount																Fair value
As at March 31, 2024		Note		FVTPL				Financial asset at amortized cost				Other financial liabilities				Total				Level 1				Level 2				Level 3				Total
Financial assets measured at fair value
Marketable securities		5			28,038				—				—				28,038				28,038												28,038
Investment portfolio		6			11,630				—				—				11,630				—				—				11,630				11,630
					39,668				—				—				39,668
Financial assets not measured at fair value