VANCOUVER, BRITISH COLUMBIA – April 29, 2022 – Plurilock Security Inc. (TSXV: PLUR) (OTCQB: PLCKF) and related subsidiaries (“Plurilock” or the “Company”), an identity-centric cybersecurity solution provider for workforces, today announces its financial results for the three and twelve months ended December 31, 2021. All dollar figures are stated in Canadian dollars, unless otherwise indicated.
“During the fourth quarter, Plurilock demonstrated strong sales growth, which resulted in the Company ending fiscal 2021 with a total annual revenue of approximately C$36.6 million,” said Ian L. Paterson, CEO of PlurilockTM. “During the year, we executed on multiple growth initiatives, including expanding our product portfolio, completing our $4.6 million ‘bought deal’ financing and most notably, advancing our active M&A program. Into 2022, our focus will be to extend our sales pipeline further and complete more high-margin proprietary software sales. We aim to continue executing on our stated strategy of acquiring profitable cybersecurity companies with great customers, that can improve our operating margins and open new distribution channels for cross-selling our software products.”
Cyber attacks are already off to a growing start in 2022, with data from the Identity Theft Resource Center stating that more than 90% of data breaches are the result of a cyber attack.1 Q1 2022 also marked the third consecutive year that data breaches increased when compared to Q1 of the previous year, with the top threats remaining phishing and ransomware attacks.2 These growing numbers underscore the importance of organizations investing in innovative, zero trust identity solutions to protect networks and assets.
Additionally, late last year, the U.S. Cybersecurity and Infrastructure Security Agency (CISA) issued a binding operational directive, titled “Reducing the Significant Risk of Known Exploited Vulnerabilities”, identifying that the source of many of these attacks is related to targeted flaws in software systems.3 The U.S. federal government has also taken significant steps toward bolstering its cybersecurity infrastructure, with a January 2022 memo from the Office of Management and Budget, announcing that the government would be implementing a federal zero trust strategy, with implementation milestones taking effect by FY2024.4
Fiscal 2021 Financial Highlights
- Total revenue for the year ended December 31, 2021 was $36,624,610 as compared to $479,329 for the year ended December 31, 2020. The increase in total revenue was primarily due to the Solutions Division revenue generated from the ASC acquisition on March 31, 2021.
- Hardware sales revenue for the year ended December 31, 2021 totaled $33,546,047. No hardware revenue was recorded in the prior year. Electronic software license and maintenance sales revenue for the year ended December 31, 2021 was $2,597,826 compared to $326,322 in the prior year. Professional services revenue was $480,737 for the year ended December 31, 2021 compared to $153,007 in the prior year.
- Hardware sales revenues for the year ended December 31, 2021 accounted for 91.6% of total revenues compared to nil % for the year ended December 31, 2020. Hardware sales revenues was a new revenue stream added following the ASC acquisition. Electronic software, license and maintenance sales revenues for the year ended December 31, 2021 accounted for 7.1% compared to 68.1% for the year ended December 31, 2020. Professional services revenue for the year ended December 31, 2021 accounted for 1.3% of total revenues respectively, compared to 31.9% for the year ended December 31, 2020.
- Adjusted EBITDA for the year ended December 31, 2021 was $(4,325,914) compared to $(2,212,580) in the prior year.
- Cash & cash equivalents on December 31, 2021 was $9,468,104 compared to $1,721,179 on December 31, 2020.
- During the year ended December 31, 2021, the Company used $2,033,930 of cash from operating activities compared to $1,823,439 in the prior year.
Fourth Quarter Fiscal 2021 Operational Highlights
- On October 21, 2021, the Company announced that it had entered into definitive asset purchase agreements (the “Agreements”) to acquire certain assets (the “Purchased Assets”) of CloudCodes, a leading cloud access security vendor, (“CASB”) based in India with a global customer base. Pursuant to the terms of the Agreements, the Company has agreed to pay CloudCodes aggregate consideration of US$1,700,000 payable as follows: (i) US$1,000,000 in cash payable on closing; and (ii) US$700,000 in common shares of Plurilock (the “Consideration Shares”), less any deferred revenue. The Consideration Shares will be issued at a deemed price of C$0.59 per share and will be placed in escrow for 18 months to satisfy any indemnification obligations to the Company.
- On October 28, 2021, the Company submitted documentation to finalize a patent filed with the United States Patent and Trademark Office (“USPTO”) that covers enhancements to its continuous, zero trust identity solution.
- On November 9, 2021, Plurilock announced a strategic partnership with Absolute Software™, a leader in next generation Endpoint Resilience™ solutions, pairing their Application Persistence™ capabilities with the Company’s DEFEND continuous authentication solution for its DEFEND Persisted solution.
- On November 2, 2021, the Company announced that it has entered into an agreement (the “Offering”) with Leede Jones Gable Inc. as the lead underwriter and sole bookrunner (the “Underwriter“) pursuant to which the Underwriter has agreed to purchase, on a bought-deal basis, 8,000,000 common shares for gross proceeds to the Company of $4,000,000 at a price of $0.50 per common share (the “Offering Price”). The Underwriters were also granted an option (the “Over-Allotment Option”), exercisable in whole or in part and from time to time, at any time until 30 days after the closing of the Offering, to purchase from the Company up to 1,200,000 additional common shares at the Offering Price for additional gross proceeds of up to $600,000 to the Company. On November 10, 2021, the Company closed the Offering. Pursuant to the Offering, the Company issued an aggregate of 9,200,000 Shares at the Offering Price for aggregate gross proceeds of $4,600,000, including the exercise in full of the Over-Allotment Option. Insiders of the Company purchased 80,000 Shares under the Offering, which constituted “related party transactions” within the meaning of Multilateral Instrument 61-101 – Protection of Minority Security Holders in Special Transactions.
- On November 10, 2021, the Company paid off the Canadian Emergency Business Account (“CEBA”) term loan in the amount of $30,000. Since 75% of the CEBA term loan of $40,000 is repaid before December 31, 2023, the Company is qualified for the early payment credit and the repayment of the remaining 25% (or $10,000) of the CEBA term loan will be forgiven.
- On November 12, 2021, Plurilock granted 1,778,000 stock options at an exercise price of $0.52 per option share with various vesting periods.
- On November 30, 2021, the Company announced the availability of its Fall 2021 product release that provides additional features and enhanced functionality for Plurilock’s zero trust identity confirmation solutions, including Plurilock ADAPTTM, a standards-based login multi-factor authentication (MFA) and Plurilock DEFENDTM, a continuous authentication solution.
- On December 3, 2021, the Company announced that it was approved for graduation from Tier 2 issuer status to Tier 1 issuer status on the TSX Venture Exchange (TSXV), effective December 8, 2021.
Subsequent to the Year End:
- On March 4, 2022, Plurilock acquired all the issued and outstanding shares of Integra Networks Corporation (“INC”), a leading Canadian enterprise IT and cybersecurity solutions provider located in Ontario, Canada with a large Canadian government client network and profitable operations. Pursuant to the terms of the Share Purchase Agreement, the total consideration payable by the Company to the Vendor is $1,200,000, payable as follows: (i) $600,000 in cash payable on closing, subject to working capital adjustment; and (ii) 476,190 common shares of Plurilock, issuable at closing (the “Consideration Shares”) at $0.42 per Consideration Share, for a total value of $200,000 in Consideration Shares. $75,000 in cash and 178,571 Consideration Shares have been placed in escrow for 12 months to satisfy any indemnification obligations to the Company. Further, the Share Purchase Agreement includes future based performance-based earnout provisions, whereby up to $400,000 in common shares of Plurilock (the “Earnout Shares“) may be issued to the Vendor. The Earnout Shares will be issued at a deemed price equal to the closing trading price of the common shares of Plurilock on the TSXV on the date prior to announcement of the issuance of the Earnout Shares. The Consideration Shares are subject to certain contractual restrictions on trading for a period of 36 months from the date of issuance. On March 7, 2022, the Company issued 42,647 common shares (the “Consulting Fee Shares”) at a deemed price of $0.34 to a strategic consultant (the “Consultant”) of the Company for services provided by the Consultant to the Company in connection with the Acquisition. The Consulting Fee Shares were issued pursuant to a consulting agreement dated August 1, 2020 between the Company and the Consultant. The Consulting Fee Shares are subject to a statutory hold period of four months plus a day from the date of issuance, ending July 12, 2022. At the date of the issuance of the consolidated financial statements, the initial accounting for the business combination is incomplete; therefore, no estimate of the financial impact of the transaction on the Company or the goodwill and other intangible assets to be recognized on acquisition can be provided.
- On March 8, 2022, the Company announced that ASC obtained a revolving line of credit from Crestmark, the Commercial Finance division of MetaBank®, N.A. (the “Lender“) for up to US$2 million (collectively, the “LOC“). The proceeds of the LOC will be used by ASC for working capital purposes. The LOC is secured against all current and future assets of the Company and its subsidiaries, PL, PLUS, and ASC.
- On March 15, 2022, the SBA announced that the COVID EIDL Loan installment payment start date was further deferred to thirty months from the COVID EIDL Loan date (“Second Revised Installment Start Due Date”). The Second Revised Installment Start Due Date is now December 9, 2022.
- On March 17, 2022, Plurilock announced the appointment of Brandon Swafford to its Advisory Board.
- On March 22, 2022, Plurilock announced the appointment of Tucker Zengerle as its Chief Operating Officer.
- On March 28, 2022, the Company announced that it had submitted a non-provisional patent application with the USTPO for a multi-device user identity confirmation technology enhancement.
- On April 1, 2022, Plurilock announced the appointment of Garr Stephenson Jr. as its Chief Revenue Officer.
- On April 7, 2022, Plurilock announced that in accordance with the Share Purchase Agreement dated March 26, 2021, among the Company, PLUS and ASC, the performance- based earnout was achieved and the Company issued 1,154,676 common shares of the Company at $0.325 per share to the vendor in satisfaction of the earnout payment of US$300,000.
- On April 22, 2022, the Company announced that its wholly-owned subsidiary, Aurora Systems Consulting, Inc. (“Aurora”), received a purchase order from a California-based pension fund for Plurilock’s DEFEND zero trust identity confirmation solution, representing the first cross-selling purchase order through Aurora.
Summary of Key Financial Metrics
(1) Revenue for the year ended December 31, 2021, includes revenue from both the Solutions Division since April 1, 2021 post ASC acquisition on March 31, 2021 and the Technology Division. Revenue for year ended December 31, 2020 only includes revenue from the Technology Division.
(2) Non-GAAP measure. Earnings before interest, taxes, depreciation and amortization (“EBITDA”) and Adjusted EBITDA should not be construed as alternatives to net income/loss determined in accordance with IFRS. EBITDA and Adjusted EBITDA do not have any standardized meaning under IFRS and therefore may not be comparable to similar measures presented by other issuers. The Company defines EBITDA as earnings before interest, taxes, and amortization. Adjusted EBITDA is defined as EBITDA before share-based compensation, listing, financing and acquisition related expenses. The Company believes that EBITDA and Adjusted EBITDA is a meaningful financial metric for investors as it adjusts income to reflect amounts which the Company can use to fund working capital requirements, service future interest and principal debt repayments and fund future growth initiatives.
This news release presents information about EBITDA and Adjusted EBITDA, both of which are non-IFRS financial measures, to provide supplementary information about operating performance. Plurilock defines EBITDA as net income or loss before interest, income taxes, depreciation and amortization. Adjusted EBITDA removes non-cash share-based compensation and listing expenses from EBITDA. The Company believes that EBITDA and Adjusted EBITDA is a meaningful financial metric for investors as it adjusts income to reflect amounts which the Company can use to fund working capital requirements, service future interest and principal debt repayments and fund future growth initiatives. EBITDA and Adjusted EBITDA are not intended as a substitute for IFRS measures. A limitation of utilizing these non-IFRS measures is that the IFRS accounting effects of the adjustments do in fact reflect the underlying financial results of Plurilock’s business and these effects should not be ignored in evaluating and analyzing Plurilock’s financial results. Therefore, management believes that Plurilock’s IFRS measures of net loss and the same respective non-IFRS measure should be considered together. Non-IFRS measures do not have any standardized meaning prescribed by IFRS and are therefore unlikely to be comparable to similar measures presented by other companies. Readers should refer to the Company’s most recently filed MD&A for a more detailed discussion of these measures and their calculation.
Management’s Discussion and Analysis and Consolidated Financial Statements and the notes thereto for the fiscal year ended December 31, 2021 can be obtained from Plurilock’s corporate website at www.plurilock.com and under Plurilock’s SEDAR profile at www.sedar.com.
Plurilock provides identity-centric cybersecurity for today’s workforces. Plurilock offers world-class cybersecurity solutions paired with AI-driven, cloud-friendly security technologies that deliver persistent identity assurance with unmatched ease of use. The Plurilock family of companies enables organizations to operate safely and securely-while reducing cybersecurity friction.
For more information, visit https://www.plurilock.com or contact:
Ian L. Paterson
Chief Executive Officer
Chief Financial Officer
This press release may contain certain forward-looking statements and forward-looking information (collectively, “forward-looking statements”) which relate to future events or Plurilock’s future business, operations, and financial performance and condition. Forward- looking statements normally contain words like “will”, “intend”, “anticipate”, “could”, “should”, “may”, “might”, “expect”, “estimate”, “forecast”, “plan”, “potential”, “project”, “assume”, “contemplate”, “believe”, “shall”, “scheduled”, and similar terms. Forward-looking statements are not guarantees of future performance, actions, or developments and are based on expectations, assumptions and other factors that management currently believes are relevant, reasonable, and appropriate in the circumstances. Although management believes that the forward-looking statements herein are reasonable, actual results could be substantially different due to the risks and uncertainties associated with and inherent to Plurilock’s business. Additional material risks and uncertainties applicable to the forward-looking statements herein include, without limitation, unforeseen events, developments, or factors causing any of the aforesaid expectations, assumptions, and other factors ultimately being inaccurate or irrelevant. Many of these factors are beyond the control of Plurilock. All forward-looking statements included in this press release are expressly qualified in their entirety by these cautionary statements. The forward-looking statements contained in this press release are made as at the date hereof and Plurilock undertakes no obligation to update publicly or to revise any of the included forward-looking statements, whether as a result of new information, future events, or otherwise, except as may be required by applicable securities laws.
Neither TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release.
- https://www.securitymagazine.com/articles/97431-92-of-data-breaches-in-q1-2022-due- to-cyberattacks
- https://www.securitymagazine.com/articles/97431-92-of-data-breaches-in-q1-2022-due- to-cyberattacks