VerticalScope Announces First Quarter 2025 Financial Results

(Unaudited)

Three Months Ended

March 31,

(in thousands of US dollars)

2025

2024

Net loss

($2,416)

($985)

Net interest and financing expense

748

1,163

Income tax recovery

(454)

(124)

Depreciation and amortization

4,424

4,565

EBITDA

2,302

4,619

Share-based compensation

1,252

421

Share performance related bonus ⁽¹⁾

—

(3)

Unrealized loss (gain) from changes in derivative fair value of financial instruments

(50)

56

Gain on sale of assets

—

(4)

Gain on sale of investments

—

(16)

Foreign exchange loss

56

27

Realized other loss

68

—

Unrealized other loss

26

—

Other charges ⁽²⁾

(12)

127

Adjusted EBITDA

3,641

5,227

Less capital expenditures

(446)

(435)

Income taxes received (paid)

(75)

377

Free Cash Flow

$3,120

$5,169

⁽¹⁾

Share performance related bonus is included in wages and consulting on the condensed consolidated interim statements of loss and comprehensive loss.

⁽²⁾

Other charges are included in general and administrative on the condensed consolidated interim statements of loss and comprehensive loss. For the three months ended March 31, 2025 and March 31, 2024, these charges include non-recurring legal related costs.

VERTICALSCOPE HOLDINGS INC.

Condensed Consolidated Interim Statements of Financial Position

(In U.S. dollars)

(Unaudited)

March 31,

December 31,

2025

2024

Assets

Current assets:

Cash

$5,014,293

$5,189,315

Restricted cash

93,915

97,244

Trade and other receivables

11,954,451

14,874,882

Lease receivable

187,936

326,267

Income taxes receivable

442,085

784,332

Prepaid expenses

891,834

761,652

18,584,514

22,033,692

Property and equipment

417,458

482,276

Right-of-use asset

1,426,728

1,564,687

Intangible assets

39,279,536

37,597,990

Goodwill

52,635,164

52,635,164

Other assets

116,556

154,497

Deferred tax asset

18,487,560

17,937,708

Total assets

$130,947,516

$132,406,014

Liabilities and Shareholders’ Equity

Current liabilities:

Accounts payable and accrued liabilities

$4,454,083

$6,864,256

Income taxes payable

423,025

426,778

Derivative instruments

95,417

145,068

Deferred revenue

987,415

1,125,592

Current portion of long-term debt

606,257

687,875

Lease liability

800,189

946,626

7,366,386

10,196,195

Long-term debt

41,000,000

38,000,000

Lease liability

1,031,312

1,180,878

Deferred tax liability

—

315,607

Other long-term liabilities

26,612

26,612

Total liabilities

49,424,310

49,719,292

Shareholders’ equity:

Share capital

166,275,747

163,250,013

Contributed surplus

23,639,378

25,413,119

Accumulated other comprehensive loss

(145,494)

(145,494)

Deficit

(108,246,425)

(105,830,916)

81,523,206

82,686,722

Total liabilities and shareholders’ equity

$130,947,516

$132,406,014

VERTICALSCOPE HOLDINGS INC.

Condensed Consolidated Interim Statements of Loss and Comprehensive Loss

(In U.S. dollars, except per share amounts)

(Unaudited)

Three Months Ended

March 31,

2025

2024

Revenue

$13,565,517

$14,723,444

Operating expenses:

Wages and consulting

7,162,204

6,940,033

Share-based compensation

1,251,993

421,241

Platform and technology

1,639,598

1,543,535

General and administrative

1,060,465

1,192,625

Depreciation and amortization

4,423,575

4,564,628

15,537,835

14,662,062

Operating income (loss)

(1,972,318)

61,382

Other expenses (income):

Gain on sale of assets

(340)

(3,620)

Net interest and financing expense

747,818

1,162,932

Gain on sale of investments

—

(16,398)

Foreign exchange loss

55,655

27,380

Realized other loss

67,577

—

Unrealized other loss

26,453

—

897,163

1,170,294

Loss before income taxes

(2,869,481)

(1,108,912)

Income tax expense (recovery)

Current

411,484

88,618

Deferred

(865,456)

(212,937)

(453,972)

(124,319)

Net loss

($2,415,509)

($984,593)

Other comprehensive loss

Items that may be reclassified to net loss:

Foreign currency differences on translation of foreign operations

—

26,245

Total comprehensive loss

($2,415,509)

($958,348)

Loss per share:

Basic

($0.11)

($0.05)

Diluted

(0.11)

(0.05)

VERTICALSCOPE HOLDINGS INC.

Condensed Consolidated Interim Statements of Cash Flows

(In U.S. dollars)

(Unaudited)

Three months ended March 31

2025

2024

Cash provided by (used in):

Operating activities:

Net loss

($2,415,509)

($984,593)

Items not involving cash:

Depreciation and amortization

4,423,575

4,564,628

Net interest and financing expense

747,818

1,162,932

Gain on sale of assets

(340)

(3,620)

Gain on sale of investments

—

(16,398)

Unrealized loss (gain) in derivative instruments

(49,651)

55,668

Unrealized other loss

26,453

—

Income tax recovery

(453,972)

(124,319)

Share-based compensation

1,251,993

421,241

3,530,367

5,075,539

Change in non-cash operating assets and liabilities

235,553

1,443,964

Interest paid

(724,547)

(1,162,852)

Income taxes received (paid)

(75,030)

377,086

2,966,343

5,733,737

Financing activities:

Repayment of term loan

—

(625,000)

Proceeds from issuance of revolving loan

3,000,000

—

Repayment of revolving loan

—

(2,375,000)

Repurchase of share capital for cancellation

—

(233,226)

Lease payments

(323,279)

(360,982)

Proceeds from sublease

140,940

150,078

2,817,661

(3,444,130)

Investing activities:

Additions to property and equipment and intangible assets

(5,902,344)

(434,611)

Proceeds from sale of assets

340

4,114

Proceeds from sale of investments

—

16,398

(5,902,004)

(414,099)

Increase (decrease) in cash

(118,000)

1,875,508

Cash, beginning of period

5,189,315

6,015,184

Change in restricted cash balances

3,329

4,266

Effect of movement of exchange rates on cash and restricted cash held

(60,351)

13,078

Cash, end of period

$5,014,293

$7,908,036