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Plurilock Security loses $9.08-million in 2023

2024-04-29 21:00 ET - News Release

Mr. Ian Paterson reports

PLURILOCK SECURITY INC. REPORTS FISCAL 2023 FINANCIAL RESULTS

Plurilock Security Inc. has released its financial results for the year ended Dec. 31, 2023. All dollar figures are stated in Canadian dollars, unless otherwise indicated.

"We made many significant changes in 2023 and continue to move forward as we grow the business and drive forward towards profitability," said Ian L. Paterson, chief executive officer of Plurilock. "While the economic outlook is unclear for 2024, cybersecurity threats are on the rise and show no signs of slowing down. Increased cyber threats are one of the main drivers of our growing sales pipeline, particularly with Plurilock Critical Services."

Mr. Paterson continued, "Our focus remains on reaching cash flow break-even by expanding the delivery of our Plurilock Critical Services to existing and new customers."

Key business milestones:

  • Revenue increased to $70.4-million for the year ended Dec. 31, 2023, as compared with $64.6-million over the same period in 2022, attributable to the strategic acquisitions of Integra and Atrion in 2022.
  • Gross margins increased to 8.3 per cent for the year ended Dec. 31, 2023, as compared with 7.7 per cent over the same period in 2022.
  • High-margin software sales and professional services for the year ended Dec. 31, 2023, increased by 165 per cent and 241 per cent, respectively, year over year, totalling $3.8-million in revenue.
  • Plurilock achieved $494,000 in cost savings for the year ended as of Dec. 31, 2023, as a result of streamlining operations and unlocking new business synergies across all acquisitions.

Fiscal 2023 financial highlights:

  • Total revenue for the year ended Dec. 31, 2023, was $70,420,131, as compared with $64,632,371 for the year ended Dec. 31, 2022. Revenue for the year ended Dec. 31, 2023, and Dec. 31, 2022, included revenue from both the technology division and the solutions division. Revenue for year ended Dec. 31, 2023, is significantly higher than the prior year ended Dec. 31, 2022, as a result of the timing of the acquisitions of the INC, as well as the asset acquisitions of Atrion (ATR) and CloudCodes (CC), along with the increase in organic sales volume and cross-selling among the solutions and technology division.
  • Hardware and systems sales revenue for the year ended Dec. 31, 2023, totalled $55,716,530, compared with $56,919,768, respectively, in the prior year ended Dec. 31, 2022. Software, licence and maintenance sales revenue for the year ended Dec. 31, 2023, was $11,921,540, compared with $6,970,057 in the prior year ended Dec. 31, 2022. Professional services revenue was $2,782,061 for the year ended Dec. 31, 2023, compared with $742,546 in the prior year ended Dec. 31, 2022.
  • Hardware and systems sales revenues for the year ended Dec. 31, 2023, accounted for 79.1 per cent of total revenues compared with 88.1 per cent for the year ended Dec. 31, 2022. Software, licence and maintenance sales revenues for the year ended Dec. 31, 2023, accounted for 16.9 per cent, compared with 10.8 per cent for the year ended Dec. 31, 2022. Professional services revenue for the year ended Dec. 31, 2023, accounted for 4.0 per cent of total revenues, compared with 1.1 per cent for the year ended Dec. 31, 2022.
  • Gross margin for the year ended Dec. 31, 2023, was 8.3 per cent, compared with 7.7 per cent for the year ended Dec. 31, 2022.
  • Adjusted EBITDA (earnings before interest, taxes, depreciation and amortization) for the year ended Dec. 31, 2023, was negative $6,470,386, compared with $6,091,476 in the prior year ended Dec. 31, 2022.
  • Cash and cash equivalents and restricted cash on Dec. 31, 2023, were $2,058,193, compared with $2,853,107 on Dec. 31, 2022.
  • During the year ended Dec. 31, 2023, the company used $2,130,536 of cash from operating activities, compared with $9,837,363 in the prior year.

Annual 2023 highlights:

  • On Jan. 3, 2023, the company issued 440,277 of common shares at 12.5 cents related to the convertible debenture Dec. 31, 2022, interest payment of $55,035.
  • On Jan. 17, 2023, the company closed the third and final tranche of the units financing for aggregate gross proceeds to the company of $198,995, consisting of 1,421,393 units at a price of 14 cents per unit and share issuance costs of $7,410, bringing the total gross proceeds of the units financing to $1,755,115.
  • On Jan. 31, 2023, the company appointed Blake Corbet, a seasoned veteran with over 25 years of investment banking and corporate experience, to its board of directors.
  • On Jan. 31, 2023, the company granted certain officers, employees and consultants of the company an aggregate of 3,908,667 options to purchase common shares at an exercise price of 15 cents per share, which will vest over four years from the grant date. As at the year ended Dec. 31, 2023, 3,857,667 options are fully vested.
  • On March 2, 2023, the company announced the completion of the SOC 2 type II report renewal.
  • On March 22, 2023, the company was approved for an increase to its existing INC $1.5-million revolving line of credit (INC LOC) dated July 29, 2022, from Pathward National Association, a division of MetaBank N.A., for up to $2.0-million effective March 8, 2023.
  • On March 23, 2023, the company announced that it has received a $3.4-million purchase order for Plurilock's IT (information technology) solutions from the Department of National Defence.
  • On April 4, 2023, the company announced the appointment of Jord Tanner as the chief information officer.
  • On June 5, 2023, the company announced the appointment of Scott Meyers as the chief financial officer.
  • On June 21, 2023, the company closed the first tranche of non-brokered private placement of 4,857,588 units at a price of 14.5 cents per unit for aggregate gross proceeds of $704,350.
  • On June 28, 2023, the company closed the second and final tranche of its non-brokered private placement of 6,499,688 units at a price of 14.5 cents per unit, for aggregate gross proceeds of $942,455.
  • On June 28, 2023, the company announced the repricing of 12,536,538 non-brokered private placement warrants and 765,000 convertible debenture warrants ranging from original exercise price of 25 cents to 40 cents to 20 cents per warrant, subject to TSX-V approval.
  • On Aug. 10, 2023, the company signed a $393,000 (U.S.) contract for a project to provide cybersecurity solutions to a California state critical infrastructure agency for a period of one year.
  • On Aug. 16, 2023, the company signed a $2.2-million (U.S.) contract with the U.S. Department of Defense (the customer) for a period of one year.
  • On Aug. 31, 2023, the company established an information security advisory council aimed at promoting AI (artificial intelligence) safety and guiding the company's strategy and technology expansion.
  • On Sept. 6, 2023, the company signed its first cross-sale order for PromptGuard with a U.S. financial services firm.
  • On Sept. 7, 2023, the company signed a contract with the State of South Carolina to expand distribution statewide in addition to signing a $791,000 (U.S.) purchase order.
  • On Oct. 3, 2023, the company received a $4.2-million (U.S.) sale order from the U.S. Department of Health and Human Services.
  • On Oct. 5, 2023, the company received a $5.1-million (U.S.) sale order from the U.S. Department of Treasury.
  • On Oct. 12, 2023, the company received a notice of allowance for the U.S. patent application covering behavioural-biometric authentication.
  • On Oct. 17, 2023, the company increased its line of credit with Pathward National Association to $7.0-million (U.S.) from $4.0-million (U.S.).
  • On Nov. 13, 2023, the company began providing cybersecurity and disaster recovery services to a leading global semiconductor provider.
  • On Nov. 14, 2023, the company announced that PlurilockAI was added to the Yubikey Catalog offered by Yubico.
  • On Dec. 5, 2023, the company announced a three-year contract renewal with the Canadia Air Transport Security Authority allowing for Plurilock to sell computing and technology peripherals.

Growth outlook for 2024

The company remains committed to reaching cash flow break-even by growing Plurilock Critical Services, as well as continuing to identify more opportunities to achieve financial and operational efficiencies across all business units. At the end of December, 2023, Plurilock enacted a plan in accordance with this strategy and expects to realize approximately $2.0-million in savings on an annualized basis.

Subsequent to fiscal year-end 2023:

  • On April 1, 2024, the company announced the appointment of Ali Hakimzadeh to the board of directors as executive chairman of the board.
  • On April 1, 2024, the company announced plans to optimize the capital structure of the company and to attract financing, the board of directors has approved a share consolidation at a ratio of one postconsolidated share for every 10 preconsolidated shares. The share consolidation is anticipated to be completed in the immediate future. Immediately following the share consolidation, the issued capital of the company will be reduced to 10,294,845 shares outstanding.
  • On April 3, 2024, the company announced in connection with the share consolidation, the company will be undertaking a financing to raise approximately $4.5-million at a price of 20 cents per unit. Each unit will comprise one share and a full 24-month warrant, with each warrant exercisable at a price of 25 cents if exercised within the first 12 months and at a price of 40 cents if exercised during months 13 to 24 of the 24-month term. The private placement units are stated in postconsolidation figures and are based on a discounted market price following the 1:10 consolidation. The company will settle debt of up to $500,000 in units (except to insiders, who will receive shares only) at a price of 20 cents per unit.
  • On April 3, 2024, the company also announces the repricing conversion price of $1.52-million of convertible debentures to 25 cents per share based on the postconsolidated market price following the 1:10 consolidation. The convertible debenture repricing is subject to the approval of the TSX Venture Exchange. It is anticipated that the repricing will also include an inducement to exercise the conversion of the debentures, which inducement will be subject to the approval of the TSX Venture Exchange. The terms associated with the inducement will be determined at the effective date of repricing.
  • On April 11, 2024, the company announced that due to the overwhelming demand, the company is undertaking an additional private placement of up to $1-million of units at a price of 22.5 cents per unit. Each unit shall comprise one share and one full warrant at 30 cents per warrant for a period of 24 months. The pricing of the placement is based upon the discounted market price of the company's shares after taking into account the proposed share consolidation of 1:10. Both private placements and the share consolidation are subject to Toronto Stock Exchange approval.
  • On April 26, 2024, the company announced the closing of the non-brokered private placement for aggregate gross proceeds to the company of $4.5-million, consisting of 22.5 million units at a price of 20 cents per unit, and share issuance costs of $203,315 and 1,016,575 finders' warrants were issued. The company also closed the non-brokered private placement for aggregate gross proceeds to the company of $1-million, consisting of 4,444,443 units at a price of 22.5 cents, and share issuance costs of $35,000 and 155,555 finders' warrants were issued, bringing the total gross proceeds of the non-brokered private placement to $5.5-million.

Annual filings

Management's discussion and analysis and consolidated financial statements and the notes thereto for the year ended Dec. 31, 2023, can be obtained from Plurilock's corporate website and under Plurilock's SEDAR+ profile.

About Plurilock Security Inc.

Plurilock sells cybersecurity solutions to the United States and Canadian federal governments along with Global 2000 companies. Through these relationships, Plurilock sells its unique brand of critical services -- aiding clients with its expertise to defend against, detect and prevent costly data breaches and cyberattacks.

We seek Safe Harbor.

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