Victoria, British Columbia--(Newsfile Corp. - May 31, 2023) -
Tiny Ltd. (TSXV: TINY) (formerly, WeCommerce Holdings Ltd.)
("Tiny" or "the "Company"), a leading technology holding company with a
strategy of acquiring majority stakes in businesses, today announced the
financial results for Tiny Capital Ltd. for the three-month period ended
March 31, 2023 ("Q1 2023"). The financial results relate to Tiny Capital
Ltd. prior to its merger with WeCommerce Holdings Ltd., which was
completed on April 17, 2023 (the "Merger"). The Company
reported the financial results for the WeCommerce group of
companies
for the three-month period ended March 31, 2023 ("Q1 2023") on May 11,
2023. For further details regarding the Merger, please see the Company's
management information circular dated March 6, 2023, a copy of which is
available under the Company's profile on SEDAR at
www.sedar.com. Currency amounts are expressed in Canadian dollars unless otherwise
noted.
Q1 2023 Financial Results
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For the three-month period ended March 31,
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2023
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2022
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| Revenue |
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| Digital services revenue |
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16,607,979
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20,812,255
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Creative platform revenue
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16,839,931
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9,704,343
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Other revenue
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2,884,038
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3,001,501
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36,331,948
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33,518,099
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Earnings (loss) from operations
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(1,069,841)
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9,472,267
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| Net income (loss) |
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(4,080,911)
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7,032,185
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| EBITDA 1 |
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(1,114,399)
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11,082,134
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| EBITDA % 1 |
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(3%)
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33%
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Adjusted EBITDA 1
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3,022,202
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12,782,732
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Adjusted EBITDA % 1
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8%
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38%
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Revenue in Q1 2023 was $36,331,948, an increase of 8% compared
to Q1 2022, driven by an increase in creative platform revenue.
-
The increase in creative platform revenue was due to a
reclassification of marketplace revenue from a net to a gross of
marketplace content costs basis. This change to record
marketplace revenue on a gross basis accounted for $6.8M of the
revenue increase this quarter.
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Adjusted EBITDA(1) for Q1 2023 amounted to
$3,022,202, or 8% of revenue, compared to $12,782,732 or 38% of
revenue in Q1 2022.
-
Cash and cash equivalents at March 31, 2023 were $26,737,377
compared to $31,201,836 on December 31, 2022. Total long-term
debt outstanding at March 31, 2023 was $66,674,313 compared to
$66,708,864 on December 31, 2022.
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Tiny Capital Ltd. had undrawn credit facilities of $37,130,437
and Tiny Fund had uninvested but committed capital of
$71,428,220 at March 31, 2023.
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WeCommerce Holdings Ltd. had cash and cash equivalents of
$9,129,722 and undrawn credit facilities of $27,066,000 at March
31, 2023.
Management Commentary
As the Q1 earnings season comes to a
close, the broader sentiment and trends are apparent. Technology
companies are continuing to adjust to higher interest rates and lower
access to capital by reducing headcount and re-focusing their offerings,
extending sales cycles, and reducing marketing spend. At Tiny, we see a
sustained, challenging environment as a dinner bell. Now is the time to
buy solid long-term businesses with competitive moats, at great prices,
because others are looking elsewhere. We have a unique competitive
advantage - our approach to founders, and our ability to transact
quickly on terms that are founder-friendly, which we believe gives our
shareholders the ability to access businesses, opportunities and
long-term returns that would not otherwise be available. We aren't
looking at any one quarter or even any one year. Rather, we are focused
on building a portfolio of businesses that can compound returns on
capital and grow shareholder value over the long-term. Our team has a
proven track record of deal selection, execution and driving returns.
Tiny's Q1 results were impacted in the short-term by the broader
challenges facing all companies participating in the digital services
and remote hiring sectors. From an operational perspective, our digital
services business has been repositioning to serve larger enterprise
customers that provide more sustained long-term relationships and
predictable revenue streams. This quarter, we experienced a larger
magnitude of that switch that caused delays in both contracting and
executing on those services. Our businesses engaged in transactional
hiring services also experienced a slowdown in demand for technology
jobs. We believe both of the challenges faced this quarter are
short-term in nature, and we believe the work we're currently doing will
position the companies stronger from a long-term perspective.
Tiny is well-positioned. We view the current environment as an
opportunity to invest in our portfolio companies to support their growth
and profitability, as well as to execute acquisitions at attractive
valuations. Our acquisition pipeline is deep and promising and we expect
to continue executing on investment opportunities that are accretive
from a long-term value perspective as the year progresses.
We look forward to continuing our public market journey and sharing this
success with all our shareholders.
Filing of Q1 Financial Statements
Tiny has filed the
consolidated financial statements and Management's Discussion and
Analysis ("MD&A") for Tiny Capital Ltd. with respect to Q1 2023 on
SEDAR at
www.sedar.com.
Refiling of Audited Annual Financial Statements and associated
MD&A of Tiny Capital Ltd.
The Company has amended and re-filed the audited annual financial
statements of Tiny Capital Ltd. for its financial year ended December
31, 2022 as well as its corresponding MD&A relating to such period,
to restate the following items
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Statement of Financial Position and Statement of Changes in
Equity: Reclassification of $6.3 million of preferred shares (liability)
to share capital (equity) in connection with the conversion of the
preferred shares to common shares on December 1, 2022.
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Statement of Cash Flows: Reclassification of $7.7 million of
cash outflow from financing activity to operating activity as the
$7.7 million declared dividend was paid subsequent to year end and
remained as a payable as at December 31, 2022.
There were no changes to Tiny Capital Ltd.'s Statement of Net Income and
Comprehensive Income and therefore no impact to the revenue, expenses,
net income or adjusted EBITDA previously reported.
Annual General Meeting
Tiny will host its Annual General
Meeting and Investor Day on June 15, 2023. Management and board members
will be available to answer questions.
About Tiny
Tiny is a leading technology holding company with
a strategy of acquiring majority stakes in wonderful businesses. Tiny
has three core business segments, Beam, WeCommerce and Dribbble, with
other standalone businesses including a private equity investment fund.
Beam, and its subsidiary companies including MetaLab, helps start-ups to
Fortune 500 companies to design, build and ship premium digital products
for both mobile and web. The Company's capabilities as an end-to-end
product partner provide clients with intimate insight into end-user
behavior, allowing for a thorough, strategy-led approach to product
design, engineering, brand positioning and marketing.
WeCommerce provides merchants with a suite of ecommerce software tools
to start and grow their online stores. Our family of companies and
brands includes Pixel Union, Out of the Sandbox, KnoCommerce, Archetype,
Yopify, SuppleApps, Rehash, Foursixty and Stamped. As one of Shopify's
first partners since 2010, WeCommerce is focused on building, acquiring,
and investing in leading technology businesses operating in the Shopify
partner ecosystem.
Dribbble is a creative network and community that design professionals
use to meet, collaborate, and showcase their work. Dribbble also hosts
an online marketplace for graphics, fonts, templates, and other digital
assets.
Other standalone businesses include several software and internet
companies and the operation of a private equity fund where the Company
serves as the general partner (the "Tiny Fund"). The Tiny Fund commenced
operations in August 2020 and has total committed capital of US$150
million.
For more about Tiny, please visit
www.tiny.com
or refer to the public disclosure documents available under Tiny's SEDAR
profile on SEDAR at
www.sedar.com.
Company Contact:
David Charron
Chief Financial
Officer
Phone: 416-418-3881
Email:
david@tiny.com
Non-IFRS Financial Measures
This news release makes
reference to certain non-IFRS measures and ratios, hereafter, referred
to as "non-IFRS measures". These measures are not recognised measures
under IFRS, and do not have a standardized meaning prescribed by IFRS
and are therefore unlikely to be comparable to similar measures
presented by other companies. Rather, these measures are provided as
additional information to complement those IFRS measures by providing
further understanding of the results of operations from management's
perspective. Accordingly, these measures should not be considered in
isolation nor as a substitute for analysis of the financial information
reported under IFRS. The Company uses non-IFRS measures including
"EBITDA", "EBITDA %", "Adjusted EBITDA", and "Adjusted EBITDA %".
Management uses these non-IFRS measures to facilitate operating
performance comparisons from period to period, to prepare annual
operating budgets and forecasts and to determine components of
management compensation. As required by Canadian securities laws, the
Company defines and reconciles these non-IFRS measures below:
EBITDA and EBITDA %
EBITDA is defined as earnings (net
income or loss) before finance costs, income taxes, depreciation and
amortization. EBITDA is reconciled to net income (loss) from the
financial statements.
EBITDA % ratio is determined by dividing EBITDA by total revenue for the
year.
EBITDA and EBITDA % are frequently used to assess profitability before
the impact of finance costs, income taxes, depreciation and
amortization. Management uses non-IFRS measures in order to facilitate
operating performance comparisons from period to period and to prepare
annual operating budgets. EBITDA and EBITDA % are measures commonly
reported and widely used as a valuation metric.
Adjusted EBITDA and Adjusted EBITDA %
Adjusted EBITDA
removes unusual, non-cash or non-operating items from EBITDA such as
listing expenses, acquisition costs, restructuring charges, asset
impairments, non-cash stock-based compensation, fair value adjustments
to contingent consideration payable and foreign exchange gains and
losses. The Company believes adjusted EBITDA provides improved
continuity with respect to the comparison of its operating performance
over a period of time. Adjusted EBITDA is reconciled to net income
(loss) from the financial statements.
Adjusted EBITDA % is determined by dividing Adjusted EBITDA by total
revenue for the year.
Adjusted EBITDA and Adjusted EBITDA % are frequently used by securities
analysts and investors when evaluating a Company's ability to generate
liquidity from the Company's core operations. It provides a consistent
basis to evaluate profitability and performance trends by excluding
items that the Company does not consider to be controllable activities
for this purpose. Adjusted EBITDA and EBITDA % are measures commonly
reported and widely used as a valuation metric.
NON-IFRS MEASURES RECONCILIATIONS
EBITDA and Adjusted EBITDA
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For the three-month period ended March 31,
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2023
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2022
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| Net income (loss) |
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(4,080,911)
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7,032,185
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| Income tax expense |
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(281,862)
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2,787,708
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Depreciation and amortization
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1,729,243
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1,043,280
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Interest and bank charges
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1,519,131
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218,961
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| EBITDA |
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(1,114,399)
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11,082,134
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EBITDA Adjustments
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Share of gain/loss from associate
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1,180,282
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(249,996)
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Fair value gain/loss on investments
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240,239
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(263,934)
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Business acquisition costs
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52,461
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73,113
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| Share based payments |
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489,538
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1,299,762
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Other expense/income 2
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562,725
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34,000
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Acquisition-related compensation
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337,950
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-
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Non-recurring project costs 3
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807,653
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Non-recurring professional fees 4
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834,805
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Non-recurring severance expense
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438,601
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-
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Adjusted EBITDA
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3,022,202
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12,782,732
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EBITDA % and Adjusted EBITDA %
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For the three-month period ended March 31,
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2023
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2022
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| EBITDA |
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(1,114,399)
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11,082,134
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Revenue
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36,331,948
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33,518,099
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| EBITDA % |
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(3%)
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33%
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| Adjusted EBITDA |
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3,022,202
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12,782,732
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| Revenue |
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36,331,948
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33,518,099
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Adjusted EBITDA %
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8%
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38%
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Cautionary Note Regarding Forward-Looking Information
This news release contains certain forward-looking statements and
forward-looking information within the meaning of Canadian
securities law. Such forward-looking statements and information
include, but are not limited to, statements or information with
respect to: requirements for additional capital and future
financing; estimated future working capital, funds available, uses
of funds, future capital expenditures and other expenses for
specific operations and intellectual property protection; industry
demand; ability to attract and retain employees, consultants or
advisors with specialized skills and knowledge; anticipated joint
development programs; incurrence of costs; competitive conditions;
general economic conditions; anticipated revenue growth; growth
strategy; and scalability of developed technology.
Forward-looking statements and information are frequently
characterized by words such as "plan", "project", "intend",
"believe", "anticipate", "estimate", "expect" and other similar
words, or statements that certain events or conditions "may" or
"will" occur. Although the Company's management believes that the
assumptions made and the expectations represented by such statement
or information are reasonable, there can be no assurance that a
forward-looking statement or information referenced herein will
prove to be accurate. Forward-looking statements are based on the
opinions and estimates of management at the date the statements are
made and are subject to a variety of risks and uncertainties and
other factors that could cause actual events or results to differ
materially from those anticipated in the forward-looking statements.
Factors that could cause actual results to differ materially from
those in forward-looking statements include risks relating to
reliance on the Shopify platform; the Company's limited operating
history; reliance on management and key employees; conflicts of
interest in relation to the Company's officers, directors, and
consultants; additional financing requirements; resale of Common
Shares in the publicly- traded market; market price fluctuations for
the Common Shares; global financial conditions; management of
growth; risks associated with the Company's strategy of growth
through acquisitions; tax risks; currency fluctuations; competitive
markets; uncertainty and adverse changes in the economy;
unsustainability of the Company's rapid growth and inability to
attract new customers, retain revenue from existing merchants, and
increase sales to both new and existing customers; adverse effects
on the Company's revenue growth and profitability due to the
inability to attract new customers or sell additional products to
existing customers; the successful integration of the Company with
Tiny Capital; future results of operations being harmed due to
declines in recurring revenue or contracts not being renewed;
security and privacy breaches; changes in client demand; challenges
to the protection of intellectual property; infringement of
intellectual property; ineffective operations through mobile
devices, which are increasingly being used to conduct commerce; and
risks associated with internal controls over financial reporting.
The Company undertakes no obligation to update forward-looking
statements and information if circumstances or management's
estimates should change except as required by law. The reader is
cautioned not to place undue reliance on forward-looking statements
and information. More detailed information about potential factors
that could affect results is included in the documents that may be
filed from time to time with the Canadian securities regulatory
authorities by the Company.
For a more detailed discussion of certain of these risk factors,
see the Company's most recent MD&A described in the "Risk
Factors" as well as the list of risk factors in the Company's
management information circular dated March 6, 2023 available on
SEDAR at
www.sedar.com
under the Company's profile.
NEITHER THE TSX VENTURE EXCHANGE NOR ITS REGULATION SERVICES
PROVIDER (AS THAT TERM IS DEFINED IN THE POLICIES OF THE TSX VENTURE
EXCHANGE) ACCEPTS RESPONSIBILITY FOR THE ADEQUACY OR ACCURACY OF
THIS RELEASE.
SOURCE: TINY LTD.
1
Refer to "Non-IFRS Measures" for further information.
2
Other expenses / income relates to COVID-19 related government
assistance, gain/loss on FX and other minor non-operating
items.
3
Non-recurring project related to advertising and promotion
expense for a specific project that will not continue in the
future.
4
Non-recurring professional fees relates to legal fees for the
go-public transaction and amalgamation with WeCommerce.