McCoy Global : 2023 Second Quarter Financial Statements

CONDENSED CONSOLIDATED INTERIM FINANCIAL

STATEMENTS

June 30, 2023

(unaudited)

Notice to Reader:

As required by National Instrument 51-102, Part 4, subsection 4.3(3)(a), readers are advised that the Corporation's independent auditors have not performed a review of these condensed consolidated interim financial statements.

Q2 2023

CONDENSED CONSOLIDATED INTERIM STATEMENTS OF FINANCIAL POSITION

(Stated in thousands of Canadian dollars) (unaudited)

As at	Note		June 30, 2023		December 31, 2022
			$		$
Assets
Current assets
Cash and cash equivalents			14,651		21,469
Restricted cash	7b		-		846
Trade and other receivables			11,030		12,976
Inventories	4		25,344		22,029
Prepaid expenses and deposits					1,139
		2,592
			53,617		58,459
Other receivables			-		39
Deferred tax assets	8		1,416		1,082
Property, plant and equipment	5		7,146		7,335
Intangible assets	6		6,278		7,175
Goodwill			3,620		3,703
Total assets			72,077		77,793
Liabilities
Current liabilities			9,592
Trade and other payables				10,862
Income taxes payable			871		94
Customer deposits			3,822		4,572
Current provisions			414		493
Current lease liabilities			1,147		1,113
Current borrowings	7		-		2,265
			15,846		19,399
Lease liabilities			3,728		4,428
Borrowings	7				2,252
	-
Total liabilities			19,574		26,079
Shareholders' equity			18,385
Share capital	9a			60,135
Contributed surplus	9a		47,759		5,758
Accumulated other comprehensive income			8,746		9,877
Accumulated deficit			(22,387)		(24,056)
Total shareholders' equity			52,503		51,714
Total liabilities and shareholders' equity			72,077		77,793

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

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Q2 2023

CONDENSED CONSOLIDATED INTERIM STATEMENTS OF EARNINGS AND COMPREHENSIVE EARNINGS

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

			Three months ended June 30		Six months ended June 30
			2023		2022		2023		2022
	10		$		$		$		$
Revenue		16,248		12,863		33,112		21,754
Cost of sales			10,844		8,786		22,880		14,985
Gross profit			5,404		4,077		10,232		6,769
General and administration			1,911		1,560		4,247		3,155
Sales and marketing			656		498		1,116		850
Product development and support			1,017		787		1,920		1,383
Finance charges, net	7		1		183		356		359
Other loss (gains), net			71		(2)		115		(203)
			3,655		3,026		7,754		5,544
Earnings before income taxes			1,749		1,051		2,478		1,225
Income tax expense (recovery)	11		562				887
Current			-			-
Deferred	11		(240)		-		(364)		-
			322		-		523		-
Net earnings			1,427		1,051		1,955		1,225
Other comprehensive (loss) earnings			(1,124)				(1,131)
Translation (loss) gain				1,223			653
Comprehensive earnings			303		2,274		824		1,878
Net earnings per share			0.05				0.07
Basic				0.04			0.04
Diluted			0.05		0.04		0.07		0.04

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

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Q2 2023

CONDENSED CONSOLIDATED INTERIM STATEMENTS OF CHANGES IN EQUITY

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

			Issued capital
											Accumulated
											other
			Number of		Share		Contributed			comprehensive			Accumulated
	Note		shares		capital		surplus				income			deficit			Total equity
		#		$		$		$		$		$
Balances at January 1, 2022		28,224,989	59,993	5,682	7,154		(32,819)	40,010
Net earnings		-		-		-		-		1,225	1,225
Translation gain on
foreign operations		-		-		-		653		-		653
Employee share-based
compensation expense		-		-		16	-		-		16
Issuance of common shares
under restricted share plan		20,000	22	(9)	-		-		13
Issuance of common shares
upon stock option exercise		72,500	63	-		-		-		63
Balances at June 30, 2022		28,317,489	60,078	5,689	7,807		(31,594)	41,980
Balances at January 1, 2023			28,391,789		60,135		5,758			9,877			(24,056)			51,714
Net earnings			-		-		-			-			1,955			1,955
Translation loss on			-		-		-			(1,131)			-			(1,131)
foreign operations
Employee share-based			-		-		8			-			-			8
compensation expense
Issuance of common shares			185,000		252		-			-			-			252
under restricted share plan
Issuance of common shares			120,000		130		(52)			-			-			78
upon stock option exercise
Repurchase of shares	9b		(62,500)		(132)		45			-			-			(87)
Reduction of stated capital	9a		-		(42,000)		42,000			-			-			-
Dividends	9c		-		-		-			-			(286)			(286)
Balances at June 30, 2023			28,634,289		18,385		47,759			8,746			(22,387)			52,503

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

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Q2 2023

CONDENSED CONSOLIDATED INTERIM STATEMENTS OF CASH FLOWS

(Stated in thousands of Canadian dollars) (unaudited)

			Three months ended June 30		Six months ended June 30
	Note
		2023			2022			2023			2022
Cash (used in) generated from			$		$			$		$
Operating activities
Net earnings			1,427		1,051			1,955		1,225
Adjustments for:
Depreciation of property, plant and equipment			471		440			921		1,036
Amortization of intangible assets			418		269			838		469
Income tax expense			322		-			523		-
Finance charges, net			1		183			356		359
Share-based compensation			74		121			501		375
Gain on disposal of property, plant and equipment	12		(20)		-			(20)		(269)
Changes in non-cash working capital balances		(6,949)		(4,165)		(5,951)		(5,695)
Change in restructuring and facility remediation provisions			(6)		(7)		(13)		(16)
Income taxes recovered (paid)			2		-			(96)		-
Finance costs paid, net			(146)		(263)		(539)		(428)
Net cash used in operating activities			(4,406)		(2,371)		(1,525)		(2,944)
Investing activities	5
Purchases of property, plant and equipment		(426)		(246)			(897)		(505)
Proceeds from sale of property, plant and equipment	6		27		-			27		351
Additions to intangible assets		(89)		(101)			(89)		(459)
Net cash used in investing activities			(488)		(347)		(959)		(613)
Financing activities

Proceeds from issuance of common shares from stock options Proceeds from issuance of common shares under restricted share plan

Repayments of borrowings	7a
Repurchase of shares	9b
Principal elements of lease payments
Funds transferred from restricted cash	7b

-	-	78	13
252	58	252	63
-	-	(4,553)	-
(87)	-	(87)	-
(273)	(126)	(557)	(231)
828	-	828	110

Net cash generated from (used in) financing activities	720	(68)	(4,039)	(45)
Effect of exchange rate changes on cash and cash equivalents	(262)	258	(295)	115
Decrease in cash and cash equivalents	(4,436)	(2,528)	(6,818)	(3,487)
Cash and cash equivalents - beginning of the period	19,087	10,180	21,469	11,139
Cash and cash equivalents - end of the period	14,651	7,652	14,651	7,652

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

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