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.
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):
Form 6-K Exhibit Index
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.
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Mogo Inc. |
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Date: May 9, 2024 |
By: |
/s/ Gregory Feller |
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Name: Gregory Feller |
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Title: President & Chief Financial Officer |
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Exhibit 99.1
Mogo Inc.
Interim Condensed Consolidated Statements of Financial Position
(Unaudited)
(Expressed in thousands of Canadian Dollars)
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Note |
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March 31, 2024 |
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December 31, 2023 |
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Assets |
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Cash and cash equivalent |
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11,800 |
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16,133 |
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Restricted cash |
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1,952 |
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1,737 |
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Marketable securities |
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5 |
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28,038 |
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26,332 |
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Loans receivable, net |
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4 |
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62,542 |
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61,717 |
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Prepaid expenses, and other receivables and assets |
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14,836 |
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13,067 |
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Investment portfolio |
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6 |
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11,630 |
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11,436 |
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Property and equipment |
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7 |
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473 |
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526 |
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Right-of-use assets |
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644 |
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670 |
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Investment in sublease, net |
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1,222 |
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1,228 |
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Intangible assets |
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8 |
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34,970 |
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36,562 |
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Goodwill |
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38,355 |
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38,355 |
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Total assets |
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206,462 |
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207,763 |
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Liabilities |
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Accounts payable, accruals and other |
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24,663 |
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24,082 |
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Lease liabilities |
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2,576 |
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2,709 |
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Credit facility |
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9 |
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51,309 |
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49,405 |
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Debentures |
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10 |
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36,312 |
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36,783 |
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Derivative financial liabilities |
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11 |
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18 |
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34 |
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Deferred tax liability |
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927 |
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1,026 |
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Total liabilities |
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115,805 |
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114,039 |
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Equity |
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Share capital |
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18a |
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389,774 |
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389,806 |
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Contributed surplus |
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36,047 |
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35,503 |
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Foreign currency translation reserve |
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274 |
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243 |
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Deficit |
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(335,438 |
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(331,828 |
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Total equity |
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90,657 |
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93,724 |
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Total equity and liabilities |
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206,462 |
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207,763 |
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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.
Mogo Inc.
Interim Condensed Consolidated Statements of Operations and Comprehensive Income (Loss)
(Unaudited)
(Expressed in thousands of Canadian Dollars, except per share amounts)
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Three months ended |
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Note |
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March 31, 2024 |
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March 31, 2023 |
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Revenue |
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Subscription and services |
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10,691 |
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9,446 |
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Interest revenue |
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7,234 |
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6,431 |
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12a |
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17,925 |
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15,877 |
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Cost of revenue |
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Provision for loan losses, net of recoveries |
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4 |
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4,705 |
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2,566 |
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Transaction costs |
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1,665 |
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1,442 |
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6,370 |
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4,008 |
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Gross profit |
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11,555 |
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11,869 |
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Operating expenses |
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Technology and development |
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2,617 |
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3,057 |
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Marketing |
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1,222 |
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566 |
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Customer service and operations |
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2,818 |
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2,849 |
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General and administration |
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3,850 |
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4,378 |
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Stock-based compensation |
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18c |
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561 |
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293 |
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Depreciation and amortization |
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7,8 |
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2,376 |
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2,373 |
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Total operating expenses |
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13 |
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13,444 |
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13,516 |
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Loss from operations |
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(1,889 |
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(1,647 |
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Other expenses (income) |
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Credit facility interest expense |
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9 |
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1,656 |
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1,454 |
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Debenture and other financing expense |
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10,19 |
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806 |
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778 |
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Accretion related to debentures |
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10 |
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178 |
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272 |
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Share of loss in investment accounted for using the equity method |
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— |
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3,178 |
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Revaluation gain |
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14 |
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(1,088 |
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(1,253 |
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Other non-operating expense |
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15 |
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254 |
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975 |
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1,806 |
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5,404 |
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Net loss before tax |
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(3,695 |
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(7,051 |
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Income tax recovery |
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(85 |
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(167 |
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Net loss |
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(3,610 |
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(6,884 |
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Other comprehensive income: |
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Items that are or may be reclassified subsequently to profit or loss: |
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Foreign currency transaction reserve gain (loss) |
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31 |
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(209 |
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Other comprehensive income (loss) |
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31 |
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(209 |
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Total comprehensive loss |
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(3,579 |
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(7,093 |
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Net loss per share |
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Basic loss per share |
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(0.15 |
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(0.27 |
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Diluted loss per share |
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(0.15 |
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(0.27 |
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Weighted average number of basic common shares (in 000s) |
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24,426 |
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25,442 |
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Weighted average number of fully diluted common shares (in 000s) |
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24,426 |
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25,442 |
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The accompanying notes are an integral part of these interim condensed consolidated financial statements.
Mogo Inc.
Interim Condensed Consolidated Statements of Changes in Equity (Deficit)
(Unaudited)
(Expressed in thousands of Canadian Dollars, except share amounts)
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Number of shares, net of treasury shares (000s) |
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Share capital |
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Contributed surplus |
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Foreign currency translation reserve |
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Deficit |
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Total |
Balance, December 31, 2023 |
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24,325 |
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389,806 |
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35,503 |
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243 |
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(331,828) |
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93,724 |
Net loss |
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— |
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— |
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— |
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— |
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(3,610) |
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(3,610) |
Purchase of common shares for cancellation (Note 18a) |
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(17) |
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(47) |
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— |
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— |
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— |
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(47) |
Cancellation of replacement awards |
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(1) |
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— |
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— |
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— |
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— |
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— |
Foreign currency translation reserve |
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— |
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— |
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— |
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31 |
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— |
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31 |
Stock-based compensation (Note 18c) |
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— |
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— |
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561 |
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— |
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— |
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561 |
Options exercised or converted |
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2 |
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15 |
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(17) |
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— |
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— |
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(2) |
Balance, March 31, 2024 |
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24,309 |
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389,774 |
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36,047 |
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274 |
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(335,438) |
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90,657 |
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Number of shares, net of treasury shares (000s) |
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Share capital |
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Contributed surplus |
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Foreign currency translation reserve |
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Deficit |
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Total |
Balance, December 31, 2022 |
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24,892 |
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391,243 |
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33,025 |
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559 |
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(313,941) |
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110,886 |
Net loss |
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— |
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— |
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— |
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— |
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(6,884) |
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(6,884) |
Cancellation of replacement awards |
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(2) |
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— |
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— |
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— |
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— |
Foreign currency translation reserve |
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— |
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— |
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— |
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(209) |
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— |
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(209) |
Stock-based compensation (Note 18c) |
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— |
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— |
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293 |
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— |
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— |
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293 |
Balance, March 31, 2023 |
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24,890 |
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391,243 |
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33,318 |
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350 |
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(320,825) |
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104,086 |
The accompanying notes are an integral part of these interim condensed consolidated financial statements.
Mogo Inc.
Interim Condensed Consolidated Statements of Cash Flows
(Unaudited)
(Expressed in thousands of Canadian Dollars)
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Three months ended |
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Cash provided by (used in) the following activities: |
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Note |
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March 31, 2024 |
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March 31, 2023 |
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Operating activities |
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Net loss |
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(3,610 |
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(6,884 |
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Items not affecting cash and other items: |
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Depreciation and amortization |
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7,8 |
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2,376 |
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2,373 |
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Provision for loan losses |
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4 |
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4,707 |
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2,818 |
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Credit facility interest expense |
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9 |
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1,656 |
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1,454 |
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Debenture and other financing expense |
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10,19 |
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|
806 |
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|
778 |
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Accretion related to debentures |
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10 |
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|
178 |
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|
272 |
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Share of loss in investment accounted for using the equity method |
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— |
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3,178 |
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Stock-based compensation expense |
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18c |
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|
561 |
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293 |
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Revaluation gain |
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14 |
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(1,088 |
) |
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(1,253 |
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Other non-operating expense |
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15 |
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|
149 |
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|
594 |
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Income tax recovery |
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(85 |
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(167 |
) |
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5,650 |
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3,456 |
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Changes in: |
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Net issuance of loans receivable |
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(5,681 |
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(1,068 |
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Prepaid expenses, and other receivables and assets |
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(1,795 |
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(2,208 |
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Accounts payable, accruals and other |
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640 |
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457 |
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Restricted cash |
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(215 |
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642 |
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Net investment in sub-lease |
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44 |
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— |
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(1,357 |
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1,279 |
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Interest paid |
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(2,494 |
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(2,290 |
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Income taxes (returned) paid |
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(15 |
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10 |
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Net cash used in operating activities |
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(3,866 |
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(1,001 |
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Investing activities |
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Investment in intangible assets |
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8 |
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(704 |
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(883 |
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Purchase of marketable securities |
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5 |
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(816 |
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— |
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Purchases of property and equipment |
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7 |
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— |
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(8 |
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Net cash used in investing activities |
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(1,520 |
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(891 |
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Financing activities |
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Lease liabilities – principal payments |
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(133 |
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(145 |
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Repayments on debentures |
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10 |
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(699 |
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(1,003 |
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Advances on credit facility |
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9 |
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1,904 |
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— |
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Repayments on credit facility |
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9 |
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— |
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(1,859 |
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Net cash provided by (used in) financing activities |
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1,072 |
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(3,007 |
) |
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Effect of exchange rate fluctuations on cash and cash equivalents |
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(19 |
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(22 |
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Net decrease in cash and cash equivalent |
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(4,333 |
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(4,921 |
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Cash and cash equivalent, beginning of period |
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16,133 |
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29,268 |
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Cash and cash equivalent, end of period |
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11,800 |
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24,347 |
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The accompanying notes are an integral part of these interim condensed consolidated financial statements.
Mogo Inc.
Notes to the Interim Condensed Consolidated Financial Statements
(Unaudited)
(Expressed in thousands of Canadian dollars, except per share amounts)
For the three months ended March 31, 2024 and 2023
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.
Mogo Inc.
Notes to the Interim Condensed Consolidated Financial Statements
(Unaudited)
(Expressed in thousands of Canadian dollars, except per share amounts)
For the three months ended March 31, 2024 and 2023
2.Basis of presentation (Continued from previous page)
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).
3.Material accounting policies
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.
Mogo Inc.
Notes to the Interim Condensed Consolidated Financial Statements
(Unaudited)
(Expressed in thousands of Canadian dollars, except per share amounts)
For the three months ended March 31, 2024 and 2023
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 |
|
Mogo Inc.
Notes to the Interim Condensed Consolidated Financial Statements
(Unaudited)
(Expressed in thousands of Canadian dollars, except per share amounts)
For the three months ended March 31, 2024 and 2023
4.Loans receivable (Continued from previous page)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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).
Mogo Inc.
Notes to the Interim Condensed Consolidated Financial Statements
(Unaudited)
(Expressed in thousands of Canadian dollars, except per share amounts)
For the three months ended March 31, 2024 and 2023
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 |
Mogo Inc.
Notes to the Interim Condensed Consolidated Financial Statements
(Unaudited)
(Expressed in thousands of Canadian dollars, except per share amounts)
For the three months ended March 31, 2024 and 2023
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).
Mogo Inc.
Notes to the Interim Condensed Consolidated Financial Statements
(Unaudited)
(Expressed in thousands of Canadian dollars, except per share amounts)
For the three months ended March 31, 2024 and 2023
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).
Mogo Inc.
Notes to the Interim Condensed Consolidated Financial Statements
(Unaudited)
(Expressed in thousands of Canadian dollars, except per share amounts)
For the three months ended March 31, 2024 and 2023
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.
Mogo Inc.
Notes to the Interim Condensed Consolidated Financial Statements
(Unaudited)
(Expressed in thousands of Canadian dollars, except per share amounts)
For the three months ended March 31, 2024 and 2023
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 |
Mogo Inc.
Notes to the Interim Condensed Consolidated Financial Statements
(Unaudited)
(Expressed in thousands of Canadian dollars, except per share amounts)
For the three months ended March 31, 2024 and 2023
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% |
Mogo Inc.
Notes to the Interim Condensed Consolidated Financial Statements
(Unaudited)
(Expressed in thousands of Canadian dollars, except per share amounts)
For the three months ended March 31, 2024 and 2023
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 |
Mogo Inc.
Notes to the Interim Condensed Consolidated Financial Statements
(Unaudited)
(Expressed in thousands of Canadian dollars, except per share amounts)
For the three months ended March 31, 2024 and 2023
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 |
Mogo Inc.
Notes to the Interim Condensed Consolidated Financial Statements
(Unaudited)
(Expressed in thousands of Canadian dollars, except per share amounts)
For the three months ended March 31, 2024 and 2023
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:
•Level 1: Unadjusted quoted prices in an active market for identical assets and liabilities.
•Level 2: Quoted prices in markets that are not active or inputs that are derived from quoted prices of similar (but not identical) assets or liabilities in active markets.
•Level 3: Unobservable inputs that are supported by little or no market activity and are significant to the estimated fair value of the assets or liabilities.
(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.
Mogo Inc.
Notes to the Interim Condensed Consolidated Financial Statements
(Unaudited)
(Expressed in thousands of Canadian dollars, except per share amounts)
For the three months ended March 31, 2024 and 2023
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 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|