DevvStream Corp S-1/A, filed Jun 27, 2025
DevvStream Corp. (DEVSF)
S-1/A
2025-06-27
View Original
Added on
October 21, 2026
As filed with the United States Securities and
Exchange Commission on June 27, 2025.
Registration No. 333-286070
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Pre-Effective Amendment No. 2 to
FORM
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
(Exact name of registrant as specified in its charter)
| Alberta, Canada |
001-40977
|
86-2433757 |
|
(State or other jurisdiction of incorporation or organization)
|
(Commission File Number)
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(I.R.S. Employer Identification No.)
|
|
2108 N St., Suite 4254
Sacramento, California
(Address of principal executive offices)
|
95816
(Zip Code)
|
(818) 683-2765
(Registrant’s telephone number, including area code)
Sunny Trinh, Chief Executive Officer
2108 N St., Suite 4254
Sacramento, California 95816
(647) 689-6041
With copies to:
Julio C. Esquivel, Esq.
Shumaker, Loop & Kendrick, LLP
101 East Kennedy Boulevard
Suite 2800
Tampa, Florida 33602
Telephone: (813) 229-7600
Facsimile: (813) 229-1660
Approximate date of commencement of proposed sale to the public: From time to time after this registration statement becomes effective.
If any of the securities being registered on this Form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933, other than securities offered only in connection with
dividend or interest reinvestment plans, check the following box. ☒
If this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, please check the following box and list the Securities Act registration statement number of
the earlier effective registration statement for the same offering. ☐
If this Form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective
registration statement for the same offering. ☐
If this Form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective
registration statement for the same offering. ☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large
accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
|
Large accelerated filer
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☐
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Accelerated filer
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☐
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☒
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Smaller reporting company
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Emerging growth company
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If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided to
Section 7(a)(2)(B) of the Securities Act. ☐
The Registrant hereby amends this Registration Statement on such date or dates as may be necessary to delay its effective date until the Registrant shall file a further amendment
which specifically states that the Registration Statement shall thereafter become effective in accordance with Section 8(A) of the Securities Act of 1933, or until this registration statement shall become effective on such date as the Commission,
acting pursuant to section 8(a), may determine.
EXPLANATORY NOTE
This Pre-Effective Amendment No. 2 (this “Amendment”) to the Registration Statement on Form S-1 of DevvStream Corp. (File No. 333-286070) (the “Registration
Statement”) is being filed to incorporate the Form 10-Q filed on June 23, 2025. Accordingly, this Amendment consists only of the facing page, this explanatory note, the Form 10-Q, and the signature page to the Registration Statement. The remainder
of the prospectus of the Registration Statement is unchanged and has been omitted.
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
| ☒ |
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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For the quarterly period ended April 30, 2025
OR
| ☐ |
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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For the transition period from to
DEVVSTREAM CORP.
(Exact name of registrant as specified in its charter)
|
Alberta, Canada
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001-40977
|
86-2433757
|
||
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(State or other jurisdiction of incorporation or organization)
|
(Commission File Number)
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(I.R.S. Employer Identification Number)
|
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2108 N St., Suite 4254
Sacramento, California
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95816
|
|
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(Address of principal executive offices)
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(Zip Code)
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Registrant’s telephone number, including area code: (818)-683-2765
(Former name, former address and former fiscal year, if changed since last report)
Securities registered pursuant to Section 12(b) of the Act:
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Title of each class
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Trading Symbol(s)
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Name of each exchange on which registered
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||
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Common shares
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DEVS
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The Nasdaq Stock Market LLC
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Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act
of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☐ No ☒
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule
405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting
company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
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Large accelerated filer
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☐
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Accelerated filer
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☐
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Non-accelerated filer
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☒
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Smaller reporting company
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☒
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Emerging growth company
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☒
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If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with
any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒
As of June 23, 2025, 33,461,734 common shares were issued and outstanding.
DEVVSTREAM CORP.
Quarterly Report on Form 10-Q
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Page
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1
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Item 1.
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1
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3
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4
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5
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7
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8
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Item 2.
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33
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Item 3.
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47
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Item 4.
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47
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48
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Item 1.
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48
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Item 1A.
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48 | |
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Item 2.
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48
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Item 3.
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48 | |
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Item 4.
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Item 5.
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48
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Item 6.
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49 | |
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52
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DevvStream Corp.
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CONDENSED CONSOLIDATED INTERIM BALANCE SHEETS
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(Unaudited - Expressed in United States dollars)
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As at
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April 30,
2025
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July 31,
2024
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||||||
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ASSETS
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||||||||
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Current assets
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||||||||
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Cash
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$
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$
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Trade receivable
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||||||||
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GST receivable
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Corporate taxes receivable
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Deferred financing costs
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||||||||
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Prepaid expenses
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||||||
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Deposit on carbon credits purchase
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||||||||
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Carbon credits
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||||||||
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Total current assets
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||||||
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Equipment
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||||||
| Deferred financing costs, long-term |
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| Deposit on carbon credits purchase, long-term |
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| Investment in associate |
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Total assets
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$
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$
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||||
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LIABILITIES AND SHAREHOLDERS’ DEFICIENCY
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||||||||
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Current liabilities
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||||||||
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Accounts payable and accrued liabilities
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$
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$
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||||
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Accounts payable and accrued liabilities – related parties
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||||||||
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Mandatory convertible debentures
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Convertible debentures – related parties
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Derivative liabilities
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Warrant liabilities
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||||||||
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Stock option liabilities
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||||||||
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Stop loss provision liabilities
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||||||||
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Total current liabilities
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||||||
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Shareholders’ deficiency
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||||||||
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Common shares
(
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||||||
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Additional paid in capital
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||||||
| Subscription receivable |
( |
) | ||||||
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Accumulated other comprehensive loss
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|
||||||
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Deficit
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(
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)
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(
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)
|
||||
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Total shareholders’ deficiency
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(
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)
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(
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)
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||||
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Total liabilities and shareholders’ deficiency
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$
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$
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|
||||
| Going concern (Note 2(b)) |
||||||||
| Commitments and contingencies (Note 17) |
||||||||
| Subsequent events (Note 18) |
||||||||
See accompanying notes to the condensed consolidated interim financial statements.
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DevvStream Corp.
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CONDENSED CONSOLIDATED INTERIM STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS)
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(Unaudited - Expressed in United States dollars)
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Nine months
ended
April 30,
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Nine months
ended
April 30,
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Three months
ended
April 30,
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Three months
ended
April 30,
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|||||||||||||
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2025
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2024
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2025
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2024
|
|||||||||||||
| Revenue |
$ | $ | $ | $ | ||||||||||||
| Cost of sales |
( |
) | ( |
) | ||||||||||||
| Gross profit |
||||||||||||||||
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Operating expenses
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Sales and marketing
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Depreciation
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General and administrative
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Professional fees
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||||||||||||
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Salaries and wages
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||||||||||||
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Total operating expenses
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(
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)
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(
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)
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(
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)
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(
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)
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||||||||
| Other income (loss) |
||||||||||||||||
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Interest expense
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(
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)
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(
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)
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(
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)
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(
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)
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||||||||
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Accretion expense
|
(
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)
|
(
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)
|
(
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)
|
(
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)
|
||||||||
|
Change in fair value of derivative liabilities
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|
(
|
)
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|
(
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)
|
||||||||||
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Change in fair value of warrant liabilities
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|
|
|
|
||||||||||||
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Change in fair value of mandatory convertible debentures
|
|
|
|
|
||||||||||||
|
Impairment of carbon credits
|
(
|
)
|
|
|
|
|||||||||||
|
Stop-loss provision loss
|
(
|
)
|
|
(
|
)
|
|
||||||||||
|
Equity loss on investment in associate
|
(
|
)
|
|
(
|
)
|
|
||||||||||
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Gain on settlement of debt
|
|
|
|
|
||||||||||||
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Foreign exchange gain
|
(
|
)
|
(
|
)
|
(
|
)
|
(
|
)
|
||||||||
| Total other income (loss) |
( |
) | ( |
) | ||||||||||||
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Net income (loss)
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$
|
(
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)
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$
|
(
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)
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$
|
|
$
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(
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)
|
|||||
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Other comprehensive gain (loss)
|
||||||||||||||||
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Foreign currency translation
|
|
|
(
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)
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|
|||||||||||
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Net income (loss) and comprehensive income (loss)
|
(
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)
|
(
|
)
|
|
(
|
)
|
|||||||||
|
Weighted average number of common shares outstanding – Basic
|
|
|
|
|
||||||||||||
| Weighted average number of common shares outstanding –
Diluted |
||||||||||||||||
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Income (Loss) per share – Basic
|
$
|
(
|
)
|
$
|
(
|
)
|
$
|
|
$
|
(
|
)
|
|||||
| Income (Loss) per share – Diluted | $ |
( |
) | $ |
( |
) | $ |
$ |
( |
) | ||||||
See accompanying notes to the condensed consolidated interim financial statements.
|
DevvStream Corp.
|
||||||||||||||
|
CONDENSED CONSOLIDATED INTERIM STATEMENTS OF CHANGES IN SHAREHOLDERS’ DEFICIENCY
|
||||||||||||||
|
(Unaudited - Expressed in United States dollars)
|
|
Number of
Shares
|
Additional Paid-
in Capital
|
Subscription
receivable
|
Accumulated
Deficit
|
Accumulated
other
comprehensive
income (loss)
|
Total
shareholders’
equity
(deficiency)
|
|||||||||||||||||||
| Balance, July 31, 2023 |
|
$
|
|
$ |
$
|
(
|
)
|
$
|
(
|
)
|
$
|
(
|
)
|
|||||||||||
|
Share based compensation – RSUs
|
-
|
|
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|
|||||||||||||||||||
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Share based compensation – Options
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-
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|||||||||||||||||||
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Shares issued for warrant exercises
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|
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|
|||||||||||||||||||
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Foreign currency translation
|
-
|
|
|
|
|
|||||||||||||||||||
|
Net loss
|
-
|
|
(
|
)
|
|
(
|
)
|
|||||||||||||||||
| Balance, April 30, 2024 |
|
$
|
|
$ |
$
|
(
|
)
|
$
|
(
|
)
|
$
|
(
|
)
|
|||||||||||
| Balance, July 31, 2024 |
|
$
|
|
$ |
$
|
(
|
)
|
$
|
|
$
|
(
|
)
|
||||||||||||
|
Share based compensation - RSUs
|
-
|
|
|
|
|
|||||||||||||||||||
|
Share based compensation - Options
|
-
|
|
|
|
|
|||||||||||||||||||
|
Warrants reclassified to liabilities on change in functional currency
|
-
|
(
|
)
|
|
|
(
|
)
|
|||||||||||||||||
|
Stock options reclassified to liabilities on RTO
|
-
|
(
|
)
|
|
|
(
|
)
|
|||||||||||||||||
|
Conversion option derivative transferred to equity
|
-
|
|
|
|
|
|||||||||||||||||||
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Gain on modification of debt with related parties
|
-
|
|
|
|
|
|||||||||||||||||||
|
Recapitalization on RTO
|
-
|
(
|
)
|
|
|
(
|
)
|
|||||||||||||||||
|
Shares issued for warrant exercises
|
|
|
|
|
|
|||||||||||||||||||
|
Conversion of mandatory convertible debentures
|
|
|
|
|
|
|||||||||||||||||||
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Shares for settlement of debt
|
|
|
|
|
|
|||||||||||||||||||
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Shares issued in connection with RTO
|
|
|
|
|
|
|||||||||||||||||||
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Shares issued for acquisition of associate
|
|
|
|
|
|
|||||||||||||||||||
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Shares issued for PIPE financing
|
( |
) | ||||||||||||||||||||||
|
Shares issued for carbon credit purchases
|
||||||||||||||||||||||||
|
Shares issued for ELOC commitment
|
||||||||||||||||||||||||
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Shares issued for services
|
||||||||||||||||||||||||
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Shares issued for ELOC drawdown
|
||||||||||||||||||||||||
|
Share issuance costs
|
- | ( |
) | ( |
) | |||||||||||||||||||
|
Foreign currency translation
|
- | |||||||||||||||||||||||
|
Net loss
|
- | ( |
) | ( |
) | |||||||||||||||||||
| Balance, April 30, 2025 | $ | $ |
( |
) | $ | ( |
) | $ | $ | ( |
) | |||||||||||||
|
DevvStream Corp.
|
||||||||||||||
|
CONDENSED CONSOLIDATED INTERIM STATEMENTS OF CHANGES IN SHAREHOLDERS’ DEFICIENCY
|
||||||||||||||
|
(Unaudited - Expressed in United States dollars)
|
|
Number of
Shares
|
Additional Paid-
in Capital
|
Subscription
receivable
|
Accumulated
Deficit
|
Accumulated
other
comprehensive
income (loss)
|
Total
shareholders’
equity
(deficiency)
|
|||||||||||||||||||
| Balance, January 31, 2024 |
|
$
|
|
$ |
$
|
(
|
)
|
$
|
(
|
)
|
$
|
(
|
)
|
|||||||||||
|
Share based compensation - RSUs
|
-
|
|
|
|
|
|||||||||||||||||||
|
Share based compensation - Options
|
-
|
|
|
|
|
|||||||||||||||||||
|
Foreign currency translation
|
-
|
|
|
|
|
|||||||||||||||||||
|
Net loss
|
-
|
|
(
|
)
|
|
(
|
)
|
|||||||||||||||||
|
Balance, April 30, 2024
|
|
$
|
|
$ |
$
|
(
|
)
|
$
|
(
|
)
|
$
|
(
|
)
|
|||||||||||
|
Balance, January 31, 2025
|
|
$
|
|
$ |
$
|
(
|
)
|
$
|
|
$
|
(
|
)
|
||||||||||||
|
Share based compensation - RSUs
|
-
|
|
|
|
|
|||||||||||||||||||
|
Share based compensation - Options
|
-
|
|
|
|
|
|||||||||||||||||||
|
Shares issued for PIPE financing
|
|
|
( |
) |
|
|
(
|
)
|
||||||||||||||||
|
Shares issued for ELOC commitment
|
|
|
|
|
|
|||||||||||||||||||
|
Shares issued for ELOC drawdown
|
||||||||||||||||||||||||
|
Share issuance costs
|
- | ( |
) | ( |
) | |||||||||||||||||||
|
Foreign currency translation
|
-
|
|
|
(
|
)
|
(
|
)
|
|||||||||||||||||
|
Net income
|
-
|
|
|
|
|
|||||||||||||||||||
| Balance, April 30, 2025 |
|
$
|
|
$ | ( |
) |
$
|
(
|
)
|
$
|
|
$
|
(
|
)
|
||||||||||
See accompanying notes to the condensed consolidated interim financial statements.
|
DevvStream Corp.
|
|
CONDENSED CONSOLIDATED INTERIM STATEMENTS OF CASH FLOWS
|
|
(Unaudited - Expressed in United States dollars)
|
|
For the nine months ended April 30,
|
2025
|
2024
|
||||||
|
Operating activities
|
||||||||
|
Net loss for the period
|
$
|
(
|
)
|
$
|
(
|
)
|
||
|
Items not affecting cash:
|
||||||||
|
Depreciation
|
|
|
||||||
|
Share based compensation
|
|
|
||||||
|
Change in fair value of derivative liabilities
|
(
|
)
|
|
|||||
|
Change in fair value of mandatory convertible debentures
|
(
|
)
|
|
|||||
|
Change in fair value of warrant liabilities
|
( |
) | ||||||
|
Change in fair value of stock option liabilities
|
( |
) | ||||||
|
Gain on settlement of accounts payable
|
(
|
)
|
||||||
|
Loss on investment in associate
|
||||||||
|
Impairment of carbon credits
|
||||||||
|
Stop-loss provision loss
|
||||||||
|
Non-cash general and administrative
|
|
|||||||
|
Accrued interest
|
|
|
||||||
|
Accretion expense
|
|
|
||||||
|
Changes in non-cash working capital items:
|
||||||||
|
Trade receivable
|
( |
) | ||||||
|
GST receivable
|
( |
) | ||||||
|
Other receivables
|
(
|
)
|
(
|
)
|
||||
|
Carbon credits
|
( |
) | ||||||
|
Prepaid expenses
|
(
|
)
|
|
|||||
|
Accounts payable and accrued liabilities
|
|
|
||||||
|
Net cash used in operating activities
|
(
|
)
|
(
|
)
|
||||
|
Investing activity
|
||||||||
|
Cash assumed on RTO
|
||||||||
|
Net cash provided by investing activity
|
||||||||
|
Financing activities
|
||||||||
|
Proceeds from convertible debentures
|
|
|
||||||
|
Proceeds from warrant exercise
|
|
|
||||||
|
Proceeds from PIPE financing
|
|
|||||||
| Proceeds from ELOC drawdown |
||||||||
|
Net cash provided by financing activities
|
|
|
||||||
|
Effect of exchange rate changes on cash
|
|
(
|
)
|
|||||
|
Net decrease in cash
|
(
|
)
|
(
|
)
|
||||
|
Cash, Beginning
|
|
|
||||||
|
Cash, Ending
|
$
|
|
$
|
|
||||
|
Supplemental information:
|
||||||||
|
Financing costs in accounts payable and accrued liabilities
|
$ | $ | ||||||
|
Fair value of warrants exercised
|
$ | $ | ||||||
|
Fair value of securities issued for the RTO (Note 4)
|
$ | $ | ||||||
|
Fair value of securities issued for settlement of accounts payable
|
$ | $ | ||||||
|
Fair value of securities issued for services
|
$ | $ | ||||||
|
Fair value of securities issued for carbon credits
|
$ | $ | ||||||
|
Fair value of securities issued for the acquisition of interest in associate
|
$ | $ | ||||||
|
Fair value of securities issued for ELOC commitment
|
$ | $ | ||||||
See accompanying notes to the condensed consolidated interim financial statements.
|
1.
|
Nature of operations
|
DevvStream Corp. (formerly Focus Impact Acquisition Corp.) (the “Company” or “Devv Corp.”) is a company existing under the Business Corporations Act of Alberta,
Canada. The head office is located at 2133 – 1177 West Hastings Street, Vancouver, BC V6E 2K3 and its records and registered office is located at #1700, 421 – 7th Avenue S.W., Calgary, Alberta, T2P 4K9.
The Company was a special purpose acquisition corporation incorporated in Delaware, the United States on February 23, 2021. On November 6, 2024, the Company completed a reverse takeover (“RTO”) with DevvStream Holdings Inc. (“Devv Holdings”) (Note 4) pursuant to a business combination agreement (“BCA”) entered into on September 12, 2023 (and as amended on May 1, 2024, August 10, 2024 and October 29, 2024). The transaction is also referred to as the “De-SPAC” transaction. The Company was redomiciled as an Alberta company as part of the De-SPAC transaction. Devv Holdings is an Environmental Social and Governance (“ESG”) principled, high-tech, impact investing company focused on high quality and high return carbon credit generating projects. Devv Holdings is deemed as the acquirer for accounting purposes, and therefore its assets, liabilities and operations are included in the condensed consolidated interim financial statements at their historical carrying values. The Company’s operations are considered to be a continuance of the business and operations of Devv Holdings, with the Company’s operations being included from November 6, 2024, the closing date of the De-SPAC transaction, onwards.
The Company is a public company which is listed on the Nasdaq Stock Exchange (“NASDAQ”) under the symbol “DEVS”.
The Company was a special purpose acquisition corporation incorporated in Delaware, the United States on February 23, 2021. On November 6, 2024, the Company completed a reverse takeover (“RTO”) with DevvStream Holdings Inc. (“Devv Holdings”) (Note 4) pursuant to a business combination agreement (“BCA”) entered into on September 12, 2023 (and as amended on May 1, 2024, August 10, 2024 and October 29, 2024). The transaction is also referred to as the “De-SPAC” transaction. The Company was redomiciled as an Alberta company as part of the De-SPAC transaction. Devv Holdings is an Environmental Social and Governance (“ESG”) principled, high-tech, impact investing company focused on high quality and high return carbon credit generating projects. Devv Holdings is deemed as the acquirer for accounting purposes, and therefore its assets, liabilities and operations are included in the condensed consolidated interim financial statements at their historical carrying values. The Company’s operations are considered to be a continuance of the business and operations of Devv Holdings, with the Company’s operations being included from November 6, 2024, the closing date of the De-SPAC transaction, onwards.
The Company is a public company which is listed on the Nasdaq Stock Exchange (“NASDAQ”) under the symbol “DEVS”.
|
2.
|
Basis of preparation
|
|
(a)
|
Statement of compliance
|
These unaudited condensed consolidated interim financial statements have been prepared on a going concern basis in accordance with accounting principles generally
accepted in the United States of America (“U.S. GAAP”) for interim financial information and in accordance with the instructions in Article 10 of Regulation S-X promulgated by the U.S. Securities and Exchange Commission (the “SEC”), effective
for the nine months ended April 30, 2025.
Certain information or footnote disclosures normally included in annual financial statements prepared in accordance with U.S. GAAP have been condensed or omitted,
pursuant to the rules and regulations of the SEC for interim financial reporting. Accordingly, they do not include all the information and footnotes necessary for a complete presentation of financial position, results of operations, or cash
flows. In the opinion of management, the accompanying condensed consolidated interim financial statements include all adjustments, consisting of a normal recurring nature, which are necessary for a fair presentation of the financial position,
operating results and cash flows for the periods presented.
The accompanying unaudited condensed consolidated interim financial statements should be read in conjunction with the Company’s audited consolidated financial
statements for the year ended July 31, 2024. The interim period results do not necessary indicate the results that may be expected for any other interim period or for the full fiscal year.
These unaudited condensed consolidated interim financial statements have been prepared on a historical cost basis. In addition, these condensed consolidated interim
financial statements have been prepared using the accrual basis of accounting, except for the cash flow information.
8
|
2.
|
Basis of preparation (continued)
|
|
(b)
|
Going concern
|
These unaudited condensed consolidated interim financial statements have been prepared on the basis of accounting principles applicable to a going concern, which
assume that the Company will continue in operation for the foreseeable future and will be able to realize its assets and discharge its liabilities in the normal course of operations. As at April 30, 2025, the Company has a working capital deficit
and incurred negative cash flows and losses since inception. The Company’s ability to continue its operations, realize its assets at their carrying values and discharge its liabilities is dependent upon its ability to raise adequate financing
from external sources and generate profits and positive cash flows from operations.
The Company will require additional capital to fund its operations, to evaluate strategic opportunities, and for working capital purposes. However, there is no
assurance that the Company will be able to secure such financing on favourable terms. These matters raise substantial doubt regarding the Company’s ability to continue as a going concern. These unaudited condensed consolidated interim financial
statements do not include any adjustments to the amount and classification of assets and liabilities that may be necessary should the Company not continue as a going concern. Such adjustments could be material.
|
(c)
|
Basis of consolidation
|
These unaudited condensed consolidated interim financial statements include the accounts of the Company and entities controlled by the Company. Control exists when
the Company has the power, directly or indirectly, to govern the financial and operating policies of an entity so as to obtain benefits from its activities. All intercompany balances and transactions, income and expenses have been eliminated upon
consolidation.
As of April 30, 2025, the Company’s subsidiaries were:
|
Name of subsidiary
|
Place of incorporation
|
Ownership
|
|||
|
Devv Holdings
|
Vancouver, |
% | |||
|
Devvstream, Inc. (“DESG”)
|
|
% | |||
|
DevvESG Streaming Finco Ltd (“Finco”)
|
|
% | |||
On November 10, 2022, the Company made an investment into Marmota Solutions Incorporated (“Marmota”). On the date of the initial investment, the Company owned 50 % of Marmota and accounted for the investment as an equity investment. On October 16, 2023, the Company reduced its interest in Marmota to 10 % by returning common shares to Marmota for cancellation in consideration of $19 .
On November 6, 2024, the Company made an investment into Monroe Sequestration Partners, LLC (“MSP”). The Company owns
|
(d)
|
Variable interest entities (“VIE”)
|
A VIE is an entity that does not have sufficient equity at risk to finance its activities without additional subordinated financial support or is structured such
that equity investors lack the ability to control the entity’s activities or do not substantially participate in the gains and losses of the entity. Upon inception of a contractual agreement, and thereafter, if a reconsideration event occurs, the
Company performs an assessment to determine whether the arrangement contains a variable interest in an entity and whether that entity is a VIE. The primary beneficiary of a VIE is the party that has both the power to direct the activities that
most significantly impact the VIE’s economic performance and the obligation to absorb losses or the right to receive benefits from the VIE that could potentially be significant to the VIE. Where the Company concludes that it is the primary
beneficiary of a VIE, the Company consolidates the accounts of that VIE.
9
|
2.
|
Basis of preparation (continued)
|
|
(e)
|
Functional and presentation currencies
|
Effective August 1, 2024, the Company reassessed its functional currency and the functional currency of its subsidiaries due to changes in underlying transactions,
events, and conditions. As a result of this reassessment, the Company determined that its functional currency changed from the Canadian dollar (“CAD$”) to the United States dollar (“US$”) for Devv Holdings and DESG. Finco’s functional currency
remained CAD$. This change aligns with the business’s future focus and the effective date of the Devv Corp.’s Form S-4 Registration Statement with the SEC, a crucial part of the De-SPAC transaction closing. The change in functional currency was
accounted for prospectively from August 1, 2024, with no impact on prior year comparative information. Upon the change in functional currency on August 1, 2024, 1,220,668 of the Company’s warrants which had strike prices denominated in CAD$ were reclassified as warrant liabilities (Note 11). Determining the functional currency involved significant
judgments to assess the primary economic environment in which the Company operates, including factors such as the currency of underlying transactions, the location of key operations, and the currency of expected cash flows.
The Company’s presentation currency is and continues to be the United States dollar.
|
(f)
|
Use of estimates and judgments
|
In preparing these condensed consolidated interim financial statements, management has made judgements, estimates and assumptions that affect the applicability of
the Company’s accounting policies. In preparing these condensed consolidated interim financial statements, the significant estimates and critical judgments were the same as those applied to the audited consolidated financial statements as at and
for the year ended July 31, 2024, other than the below:
Critical Judgements
Investment in Associate
In October 2024, the Company acquired a 50 % voting
interest in MSP. Even though the Company holds 50 % of the voting interest, it does not consider that it controls MSP. This is because
the remaining 50 % is held by one party and its affiliates and the operating agreement of MSP dictates that the other shareholder shall
manage the affairs of MSP. The Company considers that it has significant influence over MSP based on its share of ownership, and accounts for the investment for using the equity method of accounting.
Significant Estimates
Warrant Liabilities
Warrant liabilities are measured at fair value. Warrants are measured using the Black-Scholes option pricing model. The Black-Scholes option pricing model utilizes
subjective assumptions such as fair value of the underlying share, expected price volatility, and expected life. Changes in these input assumptions can significantly affect the fair value estimate.
Stock Option Liabilities
Stock option liabilities are measured at fair value. Stock options are measured using the Black-Scholes option pricing model. The Black-Scholes option pricing model
utilizes subjective assumptions such as fair value of the underlying share, expected price volatility, and expected life. Changes in these input assumptions can significantly affect the fair value estimate.
10
|
2.
|
Basis of preparation (continued)
|
Fair value of consideration in De-SPAC transaction
The fair value of consideration to acquire the Company in the De-SPAC transaction comprised of common shares and replacement warrants. The share price of Devv
Holdings as at the date of issuance is a significant estimate. In determining the estimate, management considered recent financings and the trading prices of the entities. The replacement warrants were valued using the Black-Scholes option
pricing model which utilizes subjective assumptions such as fair value of the underlying share, expected price volatility, expected life and estimated forfeitures.
|
(g)
|
Emerging growth company
|
The Company is an “Emerging Growth Company”, as defined in Section 2(a) of the Securities Act of 1933, as amended (the “Securities Act”), as modified by the
Jumpstart Our Business Startups Act of 2012 (the “JOBS Act”), and it has taken advantage of certain exemptions that are not applicable to other public companies that are not emerging growth companies including, but not limited to, not being
required to comply with the independent registered public accounting firm attestation requirements of Section 404 of the Sarbanes-Oxley Act, reduced disclosure obligations regarding executive compensation in its periodic reports and proxy
statements, and exemptions from the requirements of holding a nonbinding advisory vote on executive compensation and shareholder approval of any golden parachute payments not previously approved.
Further, Section 102(b) (1) of the JOBS Act exempts emerging growth companies from being required to comply with new or revised financial accounting standards until
private companies (that is, those that have not had a Securities Act registration statement declared effective or do not have a class of securities registered under the Exchange Act) are required to comply with the new or revised financial
reporting standards. The JOBS Act provides that a company can elect to opt out of the extended transition period and comply with the requirements that apply to non-emerging growth companies but any such election to opt out is irrevocable.
The Company has elected not to opt out of such extended transition period which means that when a standard is issued or revised and it has different application
dates for public and private companies, the Company, as an emerging growth company, can adopt the new or revised standard at the time private companies adopt the new or revised standard.
|
3.
|
Significant accounting policies
|
The significant accounting policies applied in the preparation of these condensed consolidated interim financial statements are consistent
with the accounting policies disclosed in the Company’s audited consolidated financial statements for the year ended July 31, 2024 except for the addition below:
Warrant liabilities
The Company accounts for warrants as either equity-classified or liability-classified instruments based on an assessment of the warrant’s
specific terms and applicable authoritative guidance ASC Topic 480, Distinguishing Liabilities from Equity (“Topic 480”) and ASC Topic 815, Derivatives and Hedging (“Topic 815”). This assessment, which requires the use of professional judgment, is conducted at the time of warrant
issuance and as of each subsequent quarterly period end date while the warrants are outstanding.
11
|
DevvStream Corp.
|
|
Notes to Condensed Consolidated Interim Financial Statements
|
|
(Unaudited - Expressed in United States dollars)
|
|
For the nine months ended April 30, 2025 and 2024
|
|
3.
|
Significant accounting policies (continued)
|
For issued or modified warrants that meet all of the criteria for equity classification, the warrants are required to be recorded as a
component of additional paid-in capital at the time of issuance or modification. For issued or modified warrants that do not meet all the criteria for equity classification, the warrants are required to be recorded at their initial fair value on the
date of issuance, and each balance sheet date thereafter. This liability is subject to re-measurement at each balance sheet date until exercised or expired, and any change in fair value is recognized in the Company’s consolidated statement of
operations.
The Company has concluded that certain warrants no longer meet the criteria for equity classification and must be recorded as a liability,
upon the change in the Company’s functional currency. Accordingly, the Company re-classified warrants denominated in functional currencies other than the Company’s functional currency as a liability at fair value and will adjust the liability to fair
value at each reporting period.
Stock option liabilities
The Company accounts for stock options as either equity-classified or liability-classified instruments based on an assessment of the stock
options’s specific terms and applicable authoritative guidance ASC Topic 480, Distinguishing Liabilities from Equity (“Topic 480”) and ASC Topic
815, Derivatives and Hedging (“Topic 815”). This assessment, which requires the use of professional judgment, is conducted at the time of stock
option issuance and as of each subsequent quarterly period end date while the stock options are outstanding.
For issued or modified stock option that meet all of the criteria for equity classification, the stock options are required to be recorded
as a component of additional paid-in capital at the time of issuance or modification. For issued or modified stock options that do not meet all the criteria for equity classification, the stock options are required to be recorded at their initial
fair value on the date of issuance, and each balance sheet date thereafter. This liability is subject to re-measurement at each balance sheet date until exercised or expired, and any change in fair value is recognized in the Company’s consolidated
statement of operations.
The Company has concluded that certain stock options no longer meet the criteria for equity classification and must be recorded as a
liability, upon the completion of the De-SPAC transaction and commencement of trading on the NASDAQ. Accordingly, the Company re-classified stock options denominated in functional currencies other than the Company’s functional currency as a liability
at fair value and will adjust the liability to fair value at each reporting period.
Carbon credits
The Company acquires carbon credits for the purposes of resale, and as such accounts for the credits as inventories of the Company under
ASC 330. Accordingly, the carbon credits are stated at the lower of cost and net realizable value.
Stop-loss provision liabilities
Certain contracts entered into for the purchase of
carbon credits which were settled in shares include stop-loss provisions that requires the Company to issue additional shares of the Company to the sellers, representing the shortfall between the agreed upon value of the purchased credits and the
market value of shares of the Company received by the sellers at the time of such stop-loss provisions being triggered. Such contractual obligations to reimburse sellers would take effect in various timeframes, up to 18 months from the date of purchase.
The Company accounts for stop-loss provision liabilities in accordance with ASC Topic 450, Contingencies (“Topic 450”) and Distinguishing Liabilities from Equity (“Topic 480”).
12
|
DevvStream Corp.
|
|
Notes to Condensed Consolidated Interim Financial Statements
|
|
(Unaudited - Expressed in United States dollars)
|
|
For the nine months ended April 30, 2025 and 2024
|
|
3.
|
Significant accounting policies (continued)
|
A loss contingency is accrued if it is both probable and reasonably estimable. Topic 450 defines “probable” as “the future event or events
are likely to occur”, and the amount to be accrued shall be a better estimate than any other estimate within the range, or the minimum amount in the range if no amount within the range is a better estimate than any other amount.
An instrument falls within the scope of Topic 480 and is accounted for as a liability if the instrument is to be settled with a variable
number of shares the monetary value of which is based solely or predominantly on a fixed monetary amount known at inception.
The Company assessed that such obligations are probable and estimable, insofar as the Company has received the carbon credits underlying
the transaction, and accordingly, the Company accrued for liabilities on the stop-loss provisions based on the price of the Company’s common stock trading on the NASDAQ, and will adjust the liability at each reporting period.
| 4. |
Reverse takeover
|
On September 12, 2023 (and as amended on May 1, 2024, August 10, 2024 and October
29, 2024), the Company entered into a Business
Combination Agreement (“BCA”) with Devv Holdings. The transaction was structured as an amalgamation of Devv Holdings into a wholly owned subsidiary of the Company, following the Company’s redomiciling as an Alberta company, in order to
effect the De-SPAC transaction.
Under the BCA, the Company consolidated all of its issued and outstanding common
stock on a 1:0.9692 basis. All the outstanding Devv Holdings subordinate voting shares (“SVS”) were exchanged for common stock of the
Company on a common conversion ratio of 0.152934 (the “Common Conversion Ratio”). All the outstanding Devv Holdings multiple voting
shares (“MVS”), being the equivalent of 10 SVS, were exchanged for common stock of the Company on the basis of the Common Conversion
Ratio. In addition, all of the outstanding convertible securities of Devv Holdings were exchanged for securities of the Company on the basis of the Common Conversion Ratio, with corresponding adjustments to exercise prices, and otherwise on
substantially the same economic terms and conditions. The De-SPAC transaction was completed on November 6, 2024.
In consideration for the De-SPAC transaction, the Company issued 4,657,479 common shares to the former holders of SVS of Devv Holdings and 7,111,405 common shares to the former holders of MVS of Devv Holdings. The former shareholders of the Company retained 5,159,209 shares. The fair value per share was estimated to be $0.61
(CAD$0.85 ) based on the last trading price of Devv Holdings on the Cboe Exchange.
As at November 6, 2024, the Company had 22,699,987 warrants outstanding, each exercisable at $1.52 for 0.9692 common shares, expiring on November 6, 2029. The fair value of the warrants was estimated to be $7,196,286 based on the Black-Scholes Option Pricing Model using the following assumptions: share price – $0.61 , expected dividend yield – 0 %, expected volatility – 87 %, risk-free interest rate – 3.12 % and
an expected remaining life – 5 years . Expected volatility was estimated by using the average of historical volatility of Devv Holdings
and of public traded companies that the Company considers to be comparable. The expected warrant life represents the period of time that warrants granted are expected to be outstanding. The risk-free interest rate is based on Canadian government
bonds with a remaining term equal to the expected life of the warrants.
Immediately after the completion of the De-SPAC transaction, the former holders of
Devv Holdings’ shares owned 70 % of the shares of the combined entity. As a result of the De-SPAC transaction, the former shareholders of
Devv Holdings acquired control of the Company, thereby constituting an RTO of the Company. The RTO was determined to be a purchase of the Company’s net assets by the shareholders of Devv Holdings.
The De-SPAC transaction was accounted for as a capital transaction of Devv
Holdings and equivalent to the issuance of shares by Devv Holdings for the net assets of the Company accompanied by a recapitalization as the Company did not qualify as a business according to the definition of ASC Topic 805, Business Combinations, and met the definition of a non-operating public shell. As a result, the transaction has been accounted for as an asset acquisition with Devv Holdings being identified as the acquirer
and the Company being treated as the accounting acquiree with the transaction being measured at the fair value of the equity consideration issued to the Company’s shareholders. Devv Holdings is the continuing entity.
The excess of the fair value of the shares issued over the value of the net
monetary assets acquired has been recognized as a reduction in equity.
13
|
DevvStream Corp.
|
|
Notes to Condensed Consolidated Interim Financial Statements
|
|
(Unaudited - Expressed in United States dollars)
|
|
For the nine months ended April 30, 2025 and 2024
|
The purchase price is allocated as follows:
|
Fair value of shares retained by former shareholders of the Company (
|
$
|
|
||
|
Fair value of replacement warrants of the Company
|
|
|||
|
Total consideration
|
$
|
|
||
|
|
||||
|
Net assets (liabilities) acquired of the Company:
|
||||
|
Cash and cash equivalents
|
$
|
|
||
|
Accounts payable and accrued liabilities
|
(
|
)
|
||
|
Promissory note payable (Note 9)
|
(
|
)
|
||
|
Total net assets (liabilities)
|
$
|
(
|
)
|
|
|
|
||||
|
Reduction to additional paid in capital as a result of the recapitalization
|
$
|
|
|
5.
|
Carbon credits
|
Between October 17, 2024 and October 28, 2024, Devv Holdings entered into multiple
agreements to acquire carbon credits in return for shares of the Company once the De-SPAC Transaction was completed. On November 6, 2024, concurrent with the completion of the business combination, the Company issued 3,249,876 common shares in consideration for these agreements. The fair value of the shares issued was $1,982,424 .
Stop-loss provision
All of the agreements contain adjustment clauses whereby if the Company’s share price
falls below the respective purchase prices outlined in the agreements, in the next 12 to 18 months, the Company is obligated to issue additional shares to cover the shortfall. The Company has assessed that the potential liability associated with the stop-loss
provision for carbon credits received as of April 30, 2025 is $1,101,248 .
Deposit on carbon credits
Consideration paid of $667,903 related to the future delivery of carbon credits is recorded as a deposit on carbon credits. The stop-loss provision related to these contracts has not been recognized.
As there is not yet certainty to the delivery of the credits, the obligation to issue additional shares is not probable as at April 30, 2025.
Impairment of carbon credits
The Company is currently in dispute with one of the vendors for which 1,200,000 shares with a fair value of
$658,800 was issued. At the date of these financial statements, the vendor has not delivered the carbon credits which are due under the
contract and the Company has issued a demand letter to the vendor. Management has assessed that it is improbable that these carbon credits will be received and has recorded an impairment charge of $658,800 during the nine months ended April 30, 2025. The stop-loss provision related to this contract has not been recognized. As the vendor is in breach of the contract, the
obligation to issue additional shares is not probable as at April 30, 2025.
14
|
DevvStream Corp.
|
|
Notes to Condensed Consolidated Interim Financial Statements
|
|
(Unaudited - Expressed in United States dollars)
|
|
For the nine months ended April 30, 2025 and 2024
|
|
6.
|
Investment in associate
|
On November 6, 2024, the Company received 2,000,000
shares in MSP, in connection with an agreement to acquire a stake in MSP in exchange for 2,000,000 shares of the Company that was
entered into on October 28, 2024. At the time of acquisition, the 2,000,000 shares of MSP received by the Company represented 50 % of shares outstanding, and the initial balance of investment was determined to be $1,220,000 being the fair value of the shares issued by the Company in consideration for the exchange. As at April 30, 2025, the Company’s share of ownership remained at 50 %. Management assessed that the Company has significant influence over MSP based on its share of ownership, and that the investment should be
accounted for using the equity method of accounting.
Summarized financial information of MSP and a reconciliation of the carrying amount of the investment set forth in the condensed
consolidated interim balance sheets are set out below:
Summarized balance sheet
|
|
April 30, 2025
|
|||
|
ASSETS
|
||||
|
Cash
|
$
|
|
||
|
Due from
|
|
|||
|
Prepaid expenses
|
|
|||
|
Start-up costs, net
|
|
|||
|
Total assets
|
$
|
|
||
|
|
||||
|
LIABILITIES
|
||||
|
Accounts payable and accrued liabilities
|
$
|
|
||
|
Convertible notes
|
|
|||
|
Total liabilities
|
$
|
|
||
Summarized statement of loss
|
|
November 6, 2024 to
April 30, 2025
|
|||
|
Operating expenses
|
||||
|
Consulting expenses
|
$
|
|
||
|
General and administrative expenses
|
|
|||
| Guaranteed payments |
||||
|
Legal and professional fees
|
|
|||
| Travel |
||||
|
Amortization
|
|
|||
|
Total operating expenses
|
(
|
)
|
||
|
|
||||
|
Interest expenses
|
(
|
)
|
||
|
Net loss
|
$
|
(
|
)
|
|
A continuity of the Company’s investment in associate is as follows:
|
Balance as at July 31, 2024
|
$
|
|
||
|
Investment by the Company
|
|
|||
|
Company’s share of loss
|
(
|
)
|
||
|
Balance as at April 30, 2025
|
$
|
|
15
|
DevvStream Corp.
|
|
Notes to Condensed Consolidated Interim Financial Statements
|
|
(Unaudited - Expressed in United States dollars)
|
|
For the nine months ended April 30, 2025 and 2024
|
| 7. |
Equity Line of Credit (“ELOC”)
|
On October 29, 2024, the
Company entered into the ELOC Agreement with Helena Global Investment Opportunities I Ltd (“Helena I”). Under the ELOC Agreement, the Company will have the right to issue and to sell to Helena I from time to time, up to $40,000,000 of the Company’s common shares following the closing of the De-SPAC Transaction and the effectiveness of the registration statement registering
the Company’s common shares being sold under the ELOC Agreement (the “Helena I Registration Statement”). As a commitment fee in connection with the execution of the ELOC Agreement, 500,000 shares of the Company was issued upon closing of the De-SPAC transaction (Note 13). Following the closing of
the De-SPAC Transaction and the Helena I Registration Statement becoming effective, the Company issued to Helena I common shares equal to $125,000
divided by the greater of (i) the lowest one-day VWAP during the trading days immediately preceding the effectiveness date of such
Registration Statement and (ii) $0.75 . On March 17, 2025, the Company issued 166,667 shares (Note 13) in satisfaction of this obligation. On March 18, 2025, the Company and Helena entered into a first amendment to ELOC Agreement, which allows Helena to permit
Secondary Advances, as defined in the amendment, as well as to update references to “Common Stock” in the ELOC Agreement to “Common Shares”.
As at April 30, 2025, $481,530 have been drawn against the ELOC through the issuance of 1,606,000 shares (Note 13).
| 8. |
Accounts payable and accrued liabilities
|
|
April 30, 2025
|
July 31, 2024
|
|||||||
|
Accounts payable
|
$
|
|
$
|
|
||||
|
Accrued liabilities
|
|
|
||||||
| Excise taxes payable |
||||||||
|
Income taxes payable
|
|
|
||||||
|
$
|
|
$
|
|
|||||
| 9. |
Convertible debentures
|
Devvio Tranche (Related Party Convertible Debt)
On January 12, 2024, the Company closed an unsecured convertible notes offering in the principal amount of $100,000 with Devvio that will bear interest at a rate of 5.3 %
per annum, is payable at maturity, subject to acceleration if the Company completes the De-SPAC transaction and the debentures are not converted. The maturity was November 6, 2024. The Company has the right to prepay the whole or any portion of
the principal amount, and together with any accrued interest, at any time prior to the maturity date without notice or a penalty payment. Devvio is a related party to the Company through its ownership of the Company’s shares, and one of Devvio’s
officers, directors and principal owners was a director of the Company during the year ended July 31, 2024 and the nine months ended April 30, 2025.
In the event the Company completes a De-SPAC transaction, the principal amount and accrued interest are convertible into SVS of the Company at the option of the
lender, as follows:
| • |
At a conversion price equal to the greater of (a) $
|
| • |
If the Company completes the De-SPAC transaction, and the convertible notes are not converted into shares, the maturity date will accelerate and the principal plus interest will become repayable within
|
In the event the Company does not complete a De-SPAC transaction at the later of October 8, 2024 (270 days from the issuance date of the notes) and the termination of the business combination agreement for the De-SPAC transaction, the principal and accrued interest are
convertible into units consisting of one SVS and of a share purchase warrant, at the option of the lender, as follows:
16
|
DevvStream Corp.
|
|
Notes to Condensed Consolidated Interim Financial Statements
|
|
(Unaudited - Expressed in United States dollars)
|
|
For the nine months ended April 30, 2025 and 2024
|
| • |
At a conversion price equal to the greater of (a) the
|
| • |
Each warrant will carry the right to purchase a share with an exercise price equal to the greater of (a) a
|
The conversion price is subject to certain anti-dilution provisions.
At issuance, the Devvio Tranche convertible debentures were determined to be a financial instrument comprising a host debt component and a conversion
feature which is an embedded derivative that required bifurcation. On initial recognition, the embedded derivative was valued first, and the residual value was assigned to the host financial debt component. The fair value of the derivative
liability at issuance was estimated to be $45,000 using the Monte Carlo model.
The prepayment option and the accelerated repayment condition were not separately accounted for as they were determined to be clearly and
closely related to the host contract.
On November 6, 2024, the Company completed the De-SPAC transaction (Note 4), and accordingly, the conversion terms of the principal amount and accrued interest
crystalized such that they are convertible, at the option of the lender, at a conversion price of $1.17 (being $7.65 multiplied by the Common Conversion Ratio). If the convertible notes are not converted into shares, the principal plus interest will become
repayable within 10 days after the closing of the De-SPAC transaction.
Upon the crystallization of the conversion price, the conversion option met the definition of equity under Topic 815 and bifurcation is no longer required. The
fair value of the conversion option was remeasured on November 6, 2024 to be $176,000 and was transferred into equity. The fair value
was estimated using the Black-Scholes Option Pricing mode using the following assumptions: expected dividend yield - 0 %, expected
volatility - 275 %, risk-free interest rate – 3.10 % and an expected remaining life – 0.6 years.
On November 12, 2024, the maturity of the Devvio Tranche was extended to May 30, 2025. As there was no change to the cash flows as a result of this change, the 10%
test was not met and therefore, there was no extinguishment of the debt as a result of this change.
Focus Impact Partners Convertible Debt (Related Party Convertible Debt)
In the prior year, the Company closed an unsecured convertible notes offering with Focus Impact Partners, LLC (“Focus Impact
Partners”). Subsequent to the closing of the De-SPAC transaction, Focus Impact Partners became a related party of the Company as one of the directors of the Company is an officer of Focus Impact Partners. The convertible notes were
initially closed on January 12, 2024 and additional advances were added under the same offering. The total initial principal amounts of $550,000
under the original Focus Impact Partners Convertible Debt were received in five installments: $150,000 on November 6, 2023, $150,000
on January 9, 2024, $100,000 on March 28, 2024, $100,000 on April 19, 2024, and $50,000 on June 13, 2024. The debentures will bear interest at a rate
of 5.3 % per annum, payable at maturity, subject to acceleration if the Company completes the De-SPAC transaction (Note 4) and the
debentures are not converted. The maturity date for all advances was November 6, 2024. The Company has the right to prepay the whole or any portion of the principal amount, together with any accrued interest, at any time prior to the maturity
date without notice or a penalty payment.
In the event the Company completes a De-SPAC transaction, the principal amount and accrued interest are convertible into SVS of the Company at the option of the
lender, as follows:
| • |
At a conversion price equal to the greater of (a) a
|
| • |
The shares are thereafter exchanged for common shares of the Company at the Common Conversion Ratio.
|
17
|
DevvStream Corp.
|
|
Notes to Condensed Consolidated Interim Financial Statements
|
|
(Unaudited - Expressed in United States dollars)
|
|
For the nine months ended April 30, 2025 and 2024
|
| • |
If the Company completes the De-SPAC transaction, and the convertible notes are not converted into shares, the maturity date will accelerate and the principal plus interest will become repayable within
|
In the event the Company does not complete a De-SPAC
transaction at the later of October 8, 2024 (270 days from the issuance date of the notes), or the termination of the BCA with Focus
Impact, the principal and accrued interest are convertible into units consisting of one SVS and of a share purchase warrant, at the option of the lender, as follows:
| • |
At a conversion price equal to the greater of (a) a
|
| • |
Each warrant will carry the right to purchase a share with an exercise price equal to the greater of (a) a
|
| • |
The warrants will expire
|
The conversion price is subject to certain anti-dilution provisions.
On June 28, 2024, the Company and Focus Impact Partners agreed to amend the Focus Impact Partners Convertible Debt (“the June 2024 Amendment”) such
that the De-SPAC Floor Price would be amended from $2.00 to CA$0.475 .
On June 28, 2024, the Company received additional proceeds of $20,000 under the June 2024 Amendment.
On August 19, 2024, October 18, 2024, October 28, 2024 and November 1, 2024, the Company received additional proceeds of $41,500 , $6,500 , $7,650 and $12,000 under the June 2024
Amendment.
The
Focus Impact Partners Convertible Debt were determined to be a financial instrument comprising a host debt component and a conversion feature which is an embedded derivative that required bifurcation. On initial recognition, the embedded
derivative was valued first, and the residual value was assigned to the host financial debt component. The total fair value of the derivative liabilities at the various issuance dates for the proceeds received during the year ended July 31,
2024 was estimated to be $25,800 as valued using the Monte Carlo model. The total fair value of the derivative liabilities at the
various issuance dates for the proceeds received during the nine months ended April 30, 2025 was estimated to be $65,750 as
valued using the Monte Carlo model.
The June 2024 Amendment had no impact on the classification of the convertible debenture and therefore, the conversion feature was considered a
derivative before and after the modification. As there was no change to the host instrument cash flows as a result of this change, the 10% test was not met and therefore, there was no extinguishment of the host debt as a result of this change.
As the conversion option was bifurcated before and after the modification, the change in the fair value of the conversion feature was recognized as
the loss on revaluation of the derivative liabilities through the consolidated statement of operations and comprehensive income (loss).
The prepayment option and the accelerated repayment condition were not separately accounted for as they were determined to be clearly and closely
related to the host contract.
On November 13, 2024, the Company issued a new $637,150
convertible note bearing interest of 5.3 % per annum, with a maturity date of November 13, 2026 (“New Focus Impact Partners
Convertible Debt”), in exchange for the cancellation of the Focus Impact Partners Convertible Debt as described above (the “November 2024 Amendment”). The principal loan amount and any accrued interest under the New Focus Impact Partners
Convertible Debt are convertible into common stock of the Company at the option of the holder at a 25 % discount to the 20-day volume weighted average price of the Company’s shares, subject to a floor of $0.867 per share. The Company retains the right to prepay the whole or any portion of the principal amount, together with any accrued interest, at any time prior to the maturity date
without notice or a penalty payment.
18
|
DevvStream Corp.
|
|
Notes to Condensed Consolidated Interim Financial Statements
|
|
(Unaudited - Expressed in United States dollars)
|
|
For the nine months ended April 30, 2025 and 2024
|
Accrued interest on the previously existing Focus Impact Partners Convertible Debt, amounting to $21,130 , were not converted into the New Focus Impact Partners Convertible Debt, and were transferred to accrued liabilities of the Company.
As a result of the November 2024 amendment, the conversion option met the definition of equity under Topic 815 and bifurcation is no longer required. As the
conversion option was bifurcated before the amendment but not bifurcated after the amendment, a change in the fair value of the conversion option of over 10 % of the of the carrying amount of the original debt without the bifurcation at inception constitutes a substantial change. Immediately prior to the November 2024 Amendment, the value of the conversion
feature associated with the Focus Impact Partners Grid Note was $2,250,000 . The fair value of the conversion feature was $59,000 after the November 2024 Amendment as estimated using the Monte Carlo model. With the 10 % test being met, extinguishment accounting was applied. The carrying value of the old debt of $637,650 was derecognized and the fair value of the new debt of $544,441
(based on a 14 % market yield) was recognized. The fair value of the conversion feature of $59,000 was transferred to equity. As Focus Impact Partners is a related party, the gain on the extinguishment of $93,209 was recognized in equity as a capital transaction pursuant to ASC 470-50-40-2.
Envviron Tranche (Related Party Convertible Debt)
On April 23, 2024, the Company closed an unsecured convertible note offering in the principal amount of $250,000 with Envviron SAS (a company controlled by a former director of the Company) that will bear interest at a rate of 5.3 % per annum, payable at maturity, subject to acceleration if the Company completes the De-SPAC transaction and the debentures are not converted
(“Envviron Tranche”). The maturity date was February 15, 2025. The Company has the right to prepay the whole or any portion of the principal amount, and together with any accrued interest, at any time prior to the maturity date without notice or
a penalty payment. The terms of the Envviron Tranche are identical to the original Focus Impact Partners Convertible Debt.
In the event the Company completes a De-SPAC transaction, the principal amount and accrued interest are convertible into SVS of the Company at the option of the
lender, as follows:
| • |
At a conversion price equal to the greater of (a) the price that is a
|
| • |
If the Company completes the De-SPAC transaction, and the convertible notes are not converted into shares, the maturity date will accelerate and the principal plus interest will become repayable within
|
In the event the Company does not complete a De-SPAC transaction at the later of January 18, 2025 (270 days from the issuance date of the notes) and the termination of the BCA for the De-SPAC transaction, the principal and accrued interest are convertible into units
consisting of one SVS and
of a share purchase warrant, at the option of the lender, as follows:
| • |
At a conversion price equal to the greater of (a) the price that is a
|
| • |
Each warrant will carry the right to purchase a share with an exercise price equal to the greater of (a) a
|
The conversion price is subject to certain anti-dilution provisions.
The Envviron Tranche convertible debentures were determined to be a financial instrument comprising a host debt component and a conversion feature
which is an embedded derivative that required bifurcation. On initial recognition, the embedded derivative was valued first, and the residual value was assigned to the host financial debt component. The fair value of the derivative liability at
issuance was estimated to be $2,750 using the Monte Carlo model.
19
|
DevvStream Corp.
|
|
Notes to Condensed Consolidated Interim Financial Statements
|
|
(Unaudited - Expressed in United States dollars)
|
|
For the nine months ended April 30, 2025 and 2024
|
|
9.
|
Convertible debentures (continued)
|
The prepayment option and the accelerated repayment condition were not separately accounted for as they were determined to be clearly and
closely related to the host contract.
On November 6, 2024, the Company completed the De-SPAC transaction (Note 4), and accordingly, the conversion terms of the principal amount and accrued interest
crystalized such that they are convertible, at the option of the lender, at a conversion price equal to the greater of (a) the price that is a 25 %
discount to the 20-day VWAP of the shares on the NASDAQ, and (b) $2.00 . If the convertible notes are not converted into shares, the principal plus interest will become repayable within 10 days after the closing of the De-SPAC transaction.
Upon the crystallization of the conversion price, the conversion option met the definition of equity under Topic 815 and bifurcation is no longer required. The
fair value of the conversion option was remeasured on November 6, 2024 to be $31,000 and was transferred into equity. The fair value was estimated using the Monte Carlo model.
On November 12, 2024, the maturity of the Envviron Tranche are extended to May 30, 2025. As there was no change to the cash flows as a result of this change, the
10% test was not met and therefore, there was no extinguishment of the debt as a result of this change.
Debt Assumed on RTO
Upon the completion of the De-SPAC transaction (Note 4), the Company assumed two unsecured promissory notes amounting to $3,000,000 issued to Focus
Impact Sponsor, LLC (the “Focus Impact Sponsor”), a significant shareholder of the Company. The promissory notes were interest-free and had a maturity date on the completion of the De-SPAC transaction (Note 4). Upon the completion of the
De-SPAC transaction, $1,500,000 of the promissory notes was convertible into warrants of the Company at a price of $1.00 per warrant. The Company also assumed $345,000
of accrued administrative fees owing to Focus Impact Partners.
On November 13, 2024, the Company issued new convertible notes totaling $3,345,000 , bearing interest of 5.3 % per annum, with a maturity date of
November 13, 2026 (“New Convertible Debt”), in exchange for the cancellation of the assumed debt described above.
The principal loan amount and any accrued interest under the New Convertible Debt are convertible into common stock of the Company at the option of the holder at a
25 % discount to the 20-day
volume weighted average price of the Company’s shares, subject to a floor of $0.867 per share. The Company has the right to prepay
the whole or any portion of the principal amount, together with any accrued interest, at any time prior to the maturity date without notice or a penalty payment.
As the conversion feature was not bifurcated before and after the amendment, a difference in the present value of cash flows under the terms of the new debt
instrument of at least 10 % from the present value of the remaining cash flows under the terms of the original debt instrument
constitutes a substantial change. The change was assessed to be in excess of 10 %. With the 10 % test being met, extinguishment accounting was applied. The carrying value of the old debt of $3,345,000 was derecognized and the fair value of the new debt of $2,856,042
(based on a 14 % market yield) was recognized. As Focus Impact Partners and the Focus Impact Sponsor are related parties, the gain on
the extinguishment of $488,957 was recognized in equity as a capital transaction pursuant to ASC 470-50-40-2.
In connection with the New Focus Impact Partners Convertible Debt and the New Convertible Debt, the Company agreed (i) to grant the Secured Parties a first ranking
security interest in all of the carbon credits and similar environmental assets held by the Company, presently existing or hereafter created or acquired, and (ii) to execute and deliver to the Secured Parties a security agreement evidencing the
Secured Parties’ security interest (the “Security Agreement”). On December 18, 2024, the Company executed and delivered to the Secured Parties the Security Agreement.
20
Additional Focus Impact Partners Convertible Debt (Related Party Convertible Debt)
On March 19, 2025, the Company closed a convertible note offering in the
principal amount of $218,000 with Focus Impact Partners that will bear interest at a rate of 5.3 % per annum, with a maturity date of March 19, 2027 (“Additional Convertible Debt”).
The principal loan amount and any accrued interest under the Additional Convertible Debt are convertible into common stock of the Company at the option of the holder at a 25 % discount to the 20-day volume weighted average price
of the Company’s shares. The Company has a right to prepay the whole or any portion of the principal amount, together with any accrued interest, at any time prior to the maturity date without notice or a penalty payment.
Due to the absence of a floor conversion price, the Additional Convertible Debt was determined to be a financial instrument comprising a host debt component and a conversion feature which is an embedded derivative that
required bifurcation. On initial recognition, the embedded derivative was valued first, and the residual value was assigned to the host financial debt component. The fair value of the derivative liabilities at issuance was estimated to be $72,500 as valued using the Monte Carlo model. The fair value of the derivative liabilities during the nine months ended April 30, 2025 was
estimated to be $72,500 as valued using the Monte Carlo model.
A continuity of the Company’s convertible debentures is as follows:
|
Balance as at August 1, 2023
|
$
|
|
||
|
Issued
|
|
|||
|
Fair value of embedded derivative
|
(
|
)
|
||
|
Transaction costs
|
(
|
)
|
||
|
Accretion
|
|
|||
|
Interest
|
|
|||
|
Balance as at July 31, 2024
|
$
|
|
||
|
Issued
|
|
|||
|
Fair value of embedded derivative
|
(
|
)
|
||
|
Accretion
|
|
|||
|
Interest
|
|
|||
| Accrued interest transferred to accrued liabilities |
( |
) | ||
| Extinguishment |
( |
) | ||
| Assumed on RTO |
||||
|
Balance as at April 30, 2025
|
$
|
|
The face value of the convertible debentures as of April 30, 2025 was $4,550,650 .
Below is a continuity of the embedded derivative liabilities:
|
Balance as at August 1, 2023
|
$
|
|
||
|
Derivative liability component
|
|
|||
|
Change in fair value of derivative liabilities
|
|
|||
|
Balance as at July 31, 2024
|
$
|
|
||
|
Derivative liability component
|
|
|||
|
Change in fair value of derivative liabilities
|
(
|
)
|
||
|
Transferred to equity
|
( |
) | ||
|
Balance as at April 30, 2025
|
$
|
|
In connection with the issuance of the convertible debentures during the year ended July 31, 2024, the Company incurred $40,227 in directly attributable transaction costs. $36,484
was allocated to the host financial liability, $3,743 was allocated to the embedded derivative and recorded immediately in the
consolidated statement of operations as general and administrative expenses.
21
The key inputs used in the Monte Carlo model for the derivative liabilities were as follows:
|
At initial
measurement (for
the year ended July
31, 2024)
|
As at
July 31, 2024
|
At initial
measurement (for
the period ended
April 30, 2025)
|
As at
April 30, 2025
|
|||||||||||||
|
Probability of De-SPAC Transaction closing
|
|
%
|
% |
|
%
|
N/A
|
||||||||||
|
Risk-free interest rate
|
|
%
|
|
%
|
|
%
|
% | |||||||||
|
Expected term (years)
|
|
|
|
|||||||||||||
|
Expected annual volatility for the Company
|
|
%
|
|
%
|
|
%
|
% | |||||||||
|
Expected annual volatility for Focus Impact
|
|
%
|
|
%
|
|
%
|
N/A
|
|||||||||
|
Common conversion ratio
|
|
|
N/A
|
|||||||||||||
|
Foreign exchange rate
|
|
|
N/A
|
|||||||||||||
As at April 30, 2025, the conversion options attached to the Devvio Tranche, the Focus Impact Partners Convertible Debt, the Envviron Tranche, and the New Convertible Debt
meet the definition of equity under Topic 815, and are accordingly no longer presented as derivative liabilities. Only the conversion option attached to the Additional Convertible Debt is presented as derivative liabilities.
|
10.
|
Mandatory convertible debentures
|
On January 12, 2024, the Company closed a tranche of unsecured convertible notes in the principal amount of $100,000 that bear interest at the rate of 15 % per annum,
payable only in Company securities on the Conversion Date, or payable in cash in connection with a Liquidating Event or Event of Default.
In the event the Company completes a De-SPAC transaction, the principal amount and accrued interest automatically convert into SVS of the Company as
follows:
| • |
At a conversion price equal to the greater of (a) $
|
| • |
The shares are thereafter exchanged for common shares of Focus Impact at the Common Conversion Ratio.
|
In the event the Company does not complete a De-SPAC transaction by October 8, 2024 (270 days from the issuance date of the notes), the principal and accrued interest are automatically convertible into units consisting of one SVS and of a share purchase warrant, as follows:
|
10.
|
Mandatory convertible debentures (continued)
|
| • |
At a conversion price equal to the greater of (a) the
|
| • |
Each warrant will carry the right to purchase a share with an exercise price equal to the greater of (a) a
|
The conversion price is subject to certain anti-dilution provisions.
The mandatory convertible debentures were liabilities classified and initially recorded at fair value with subsequent changes in fair value being
recorded in profit and loss (“FVTPL”). The initial fair value was estimated to be $100,000 . During the year ended July 31, 2024, the
Company recognized a change in fair value of $27,500 using a Monte Carlo Simulation. In October 2024, the mandatory convertible
debentures were revalued to $57,000 using a Monte Carlo Simulation and were converted to 22,448 shares of the Company. The debenture holders were also supposed to receive 11,224 warrants, which have fair value of $456 as of April 30, 2025. As of the date of these financial statements,
these warrants have not yet been issued. The Company recorded a gain on revaluation during the nine months ended April 30, 2025 of $70,500 .
22
|
DevvStream Corp.
|
|
Notes to Condensed Consolidated Interim Financial Statements
|
|
(Unaudited - Expressed in United States dollars)
|
|
For the nine months ended April 30, 2025 and 2024
|
In connection with the issuance of these mandatory convertible debentures, the Company incurred $7,545 in directly attributable transaction costs which were recorded immediately in the consolidated statement of profit and loss as general and administrative expenses.
Continuity of the Company’s mandatory convertible debentures is as follows:
|
Balance as at August 1, 2023
|
$
|
|
||
|
Issued
|
|
|||
|
Change in fair value of mandatory convertible debentures
|
|
|||
|
Balance as at July 31, 2024
|
$
|
|
||
|
Change in fair value of mandatory convertible debentures
|
(
|
)
|
||
|
Conversion of debentures
|
(
|
)
|
||
|
Balance as at April 30, 2025
|
$
|
|
The key inputs used in the Monte Carlo model for the revaluation of the mandatory convertible debentures as at July 31, 2024 are set out in the table
below. In October 2024, the mandatory convertible debentures were automatically converted into shares and warrants to be issued. Immediately prior to conversion, the Company revalued the mandatory convertible debentures. The fair value of the
shares were valued using a share price of $0.34 and the warrants using the Black-Scholes option pricing model (Note 13).
|
As at July 31, 2024
|
||||
|
Probability of De-SPAC Transaction closing by maturity date
|
|
%
|
||
|
Risk-free interest rate
|
|
%
|
||
|
Expected term (years)
|
|
|||
|
Expected annual volatility for the Company
|
|
%
|
||
|
Expected annual volatility for Focus Impact
|
|
%
|
||
|
Common conversion ratio
|
|
|||
|
Foreign exchange rate
|
|
|||
|
11.
|
Warrant liabilities
|
Impact of Change in Functional Currency on August 1, 2024
As at July 31, 2024, the Company had 1,328,846
warrants outstanding. The exercise price of these warrants is denominated in CAD. Due to the change in functional currency of the Company, a total of 1,220,668
warrants which were issued in connection with the Company’s reverse merger on November 4, 2022 and for private placements with an initial carrying value of $1,836,666 were reassessed to be derivative liabilities. The fair value of the warrants upon the change in classification on August 1, 2024 of $454,571 , was remeasured using the Black-Scholes option pricing model, with the following assumptions (weighted average): expected dividend yield - 0 %, expected volatility - 105 %,
risk-free interest rate – 3.49 % and an expected remaining life – 0.7 years. The fair value of these warrants is classified as Level 2 in the fair value hierarchy. The difference between the previous carrying value which was initially recorded as equity
and the fair value of the warrant liabilities on August 1, 2024 was $1,382,096 . Pursuant to ASC 815-40-35-9, the difference is recognized
within equity.
23
Changes to warrant liability during the nine months ended April 30, 2025
On October 8, 2024, the Company’s mandatory convertible debentures were automatically converted to shares of the Company. The debt holders were
supposed to receive 11,224 warrants exercisable at CAD$6.73 for two years . The warrants to be issued are recorded as warrant
liabilities as the exercise price is denominated in CAD. The fair value of the warrants to be issued at conversion date was estimated to be $7,500
using the Black-Scholes option pricing model, with the following assumptions: expected dividend yield - 0 %, expected volatility – 92.5 %, risk-free interest rate – 4.53 %
and an expected remaining life – 2 years .
On October 29, 2024, 91,760 liability
classified warrants were exercised at an exercise price of CAD$1.31 per share. The difference between the fair value of the warrants
immediately preceding the exercise of $303,492 and the previously measured fair value of these warrants on August 1, 2024 of $141,096 was recognized as a change in fair value of the warrant liabilities of $162,396 .
On November 4, 2024, 929,838 liability
classified warrants, and 108,178 equity classified warrants expired. The fair value of the liability classified warrants were remeasured
to $ upon expiry, and the difference to the previously measured fair value of these warrants on August 1, 2024 of $25,067 was recognized as a change in fair value of the warrant liabilities of ($25,067 ). No recognition was required for the equity classified warrants as a
result of their expiry.
On November 6, 2024, 22,699,987
warrants were issued by the Company in consideration for the De-SPAC transaction (Note 4). The warrants were assessed to be derivative liabilities of the Company due to certain settlement provisions of the warrants do not meet the criteria for
equity classification under Topic 815. The warrants are each exercisable at $1.52 for 0.9692 common stock, expiring on November 6, 2029. The fair value of the warrants were $7,196,286 upon issuance.
As at April 30, 2025, the fair value of the liability classified warrants were remeasured at $1,703,857 using the Black-Scholes option pricing model, with the following assumptions (weighted average): expected dividend yield - 0 %, expected volatility - 97 %, risk-free interest rate – 2.67 % and an expected remaining life of 4.49
years. The Company recognized ($5,788,337 ) as a change in fair value for the period ended April 30, 2025.
|
11.
|
Warrant liabilities (continued)
|
The following is a continuity of the Company’s derivative warrant liabilities:
|
Balance as at July 31, 2024
|
$
|
|
||
|
Warrants fair value upon change in functional currency (Note 2)
|
|
|||
|
Warrants issued upon De-SPAC transaction (Note 4)
|
|
|||
|
Warrants to be issued (mandatory convertible debentures)
|
|
|||
|
Change in fair value of warrant liabilities (exercised warrants)
|
|
|||
|
Change in fair value of warrant liabilities (expired warrants)
|
(
|
)
|
||
|
Fair value of warrants exercised
|
(
|
)
|
||
|
Change in fair value of warrant liabilities
|
(
|
)
|
||
|
Balance as at April 30, 2025
|
$
|
|
| 12. |
Stock option liabilities
|
Impact of listing on the NASDAQ on November 6, 2024
As at November 6, 2024, the Company had 627,786
stock options outstanding. The exercise price of these stock options is denominated in CAD. Due to the listing of the Company on the NASDAQ (Note 4) and commencement of trading of shares in the United States dollars, exemptions available under ASC
718-10-25-14 to classify stock options with strike prices in foreign currencies as equity were no longer met and all stock options outstanding were reassessed to be derivative liabilities. The fair value of the stock options upon the change in
classification on November 6, 2024 of $330,090 , was remeasured using the Black-Scholes option pricing model, with the following assumptions
(weighted average): expected dividend yield - 0 %, expected volatility - 97 %, risk-free interest rate – 3.12 % and an expected remaining life – 5.96 years. The fair value of these options is classified as Level 2 in the fair value hierarchy. The difference between the previous carrying value which
was initially recorded as equity and the fair value of the option liabilities on August 1, 2024 was $1,381,715 . Pursuant to ASC
815-40-35-9, the difference is recognized within equity.
24
Changes to stock option liability during the nine months ended April 30, 2025
As at April 30, 2025, the fair value of the liability classified stock options were remeasured at $35,649 using Black-Scholes option pricing model, with the following assumptions (weighted average): expected dividend yield - 0 %, expected volatility - 96 %, risk-free interest rate – 2.79 % and an expected remaining life of 5.48
years. The Company recognized ($294,441 ) as a change in fair value for the period ended April 30, 2025, which is presented within salaries
and wages.
The following is a continuity of the Company’s derivative stock option liabilities:
|
Balance as at July 31, 2024
|
$
|
|
||
|
Stock options fair value upon change De-SPAC transaction (Note 4)
|
|
|||
|
Change in fair value of stock option liabilities
|
(
|
)
|
||
|
Balance as at April 30, 2025
|
$
|
|
| 13. |
Share capital
|
| (a) |
Authorized
|
The Company is authorized to issue an
number of common stock without par value.
| (b) |
Shares issued
|
Shares issued during the nine months ended April 30, 2025
On September 5, 2024, the Company issued 15,963
shares with a fair value of $47,904 in settlement of accounts payable in the amount of $39,527 and recognized a loss on the settlement of $8,377 .
In October 28, 2024, the Company issued 22,448 shares
with a fair value of $49,500 for the conversion of the mandatory convertible debentures (Note 10).
On October 29, 2024, the Company issued 91,760 shares
for the exercise of 600,000 share purchase warrants, at an exercise price of CAD$1.31 per share for gross proceeds of $86,237 . The fair value of
the warrants was $303,492 .
On November 6, 2024, the Company completed the De-SPAC transaction (Note 4), with each of former Devv Holdings shares converted to securities
of the Company on a 1 to 0.152934 basis. All disclosures in these financial statements on number of shares have been accordingly
converted on the same basis. 5,159,209 shares with a fair value of $3,147,117 were retained by former shareholders of the Company as consideration for the De-SPAC transaction.
On November 6, 2024, upon completion of the De-SPAC transaction (Note 4), the Company also issued:
|
•
|
|
|
•
|
|
|
•
|
|
|
•
|
|
|
•
|
|
25
Table of Contents
|
DevvStream Corp.
|
|
Notes to Condensed Consolidated Interim Financial Statements
|
|
(Unaudited - Expressed in United States dollars)
|
|
For the nine months ended April 30, 2025 and 2024
|
| 13. |
Share capital (continued)
|
| (b) |
Shares issued (continued)
|
On November 13, 2024, the Company issued
On December 27, 2024, the Company issued 412,478
shares with a fair value of $317,608 in settlement of accounts payable and accrued liabilities with various vendors of the Company,
in the amount of $1,225,000 , and recognized a gain on settlement of $907,392 .
On March 17, 2025, the Company issued 166,667
shares with a fair value of $58,333 in accordance with the ELOC Agreement with Helena I (Note 7) in satisfaction of the $125,000 commitment (Note 17) upon the effectiveness of the Helena I Registration Statement.
In March 2025, the Company issued 1,606,000
shares in accordance with the ELOC Agreement with Helena I (Note 7) for gross proceeds of $481,530 .
Shares issued during the nine months ended April 30, 2024
On August 4, 2023 the Company issued 91,760 shares
for the exercise of 91,760 share purchase warrants, at an exercise price of CAD$1.31 per share.
On August 22, 2023 the Company issued 63,722 shares
for the exercise of 63,722 share purchase warrants, at an exercise price of CAD$1.31 per share.
On September 22, 2023 the Company issued 25,489
shares for the exercise of 25,489 share purchase warrants, at an exercise price of CAD$1.31 per share.
|
(c)
|
Share purchase warrants
|
The continuity of share purchase warrants is as follows:
|
Number of
warrants
|
Weighted Average
Exercise price
|
Remaining
life (Years)
|
||||||||||
|
Balance, July 31, 2023
|
|
$
|
|
|
||||||||
|
Exercised
|
(
|
)
|
$
|
|
-
|
|||||||
|
Balance, July 31, 2024
|
|
$
|
|
|
||||||||
|
Issued on RTO (Note 4)
|
$ |
-
|
||||||||||
|
Exercised
|
(
|
)
|
$
|
|
-
|
|||||||
|
Expired
|
( |
) | $ | - |
||||||||
|
Balance, April 30, 2025
|
|
$
|
|
|
||||||||
26
|
13.
|
Share capital (continued)
|
As at April 30, 2025, the following share purchase warrants were outstanding:
|
Number of warrants outstanding
|
Exercise price
|
Expiry date
|
|||
|
|
CAD$
|
|
|||
|
|
CAD$
|
|
|||
|
|
$
|
|
|||
|
|
*Each warrant exercisable for 0.9692
common stock .
All of the warrants outstanding are liability classified (Note 11).
The Company has 11,224 warrants
with an exercise price of CAD$6.73 to be issued as of April 30, 2025.
|
(d)
|
Options
|
The continuity of the Company’s stock options is as follows:
|
Number of
options
|
Weighted average
exercise price
|
||||
|
Outstanding, October 31, 2024 and July 31, 2024
|
|
$
|
|||
|
Forfeited
|
( |
) | $ |
||
| Granted |
$ |
||||
| Cancelled | ( |
) | $ |
||
|
Outstanding, April 30, 2025
|
|
$
|
|||
|
Exercisable, July 31, 2024
|
|
$
|
|||
|
Exercisable, April 30, 2025
|
|
$
|
|||
As at April 30, 2025, the weighted average remaining contractual life of outstanding options is 5.15 years (July 31, 2024 – 7.09 years).
As at April 30, 2025, the following stock options were outstanding and exercisable:
|
Number of options
outstanding
|
Exercise price
|
Expiry date
|
Number of
options
exercisable
|
||||||||
|
|
CAD$
|
|
|
||||||||
|
|
CAD$
|
|
|
||||||||
|
|
CAD$
|
|
|
||||||||
|
|
CAD$
|
|
|
||||||||
|
|
CAD$
|
|
|
||||||||
|
|
CAD$
|
|
|
||||||||
|
|
CAD$
|
|
|
||||||||
|
|
CAD$
|
|
|
||||||||
|
|
CAD$
|
|
|
||||||||
| $ |
|||||||||||
|
|
|
||||||||||
Stock options issued during the nine months ended April 30, 2025
27
|
13.
|
Share capital (continued)
|
On March 26, 2025, 500,000 stock options with an
exercise price of $0.23 and a term of 5 years was granted to officers of the Company. One-third of the options vest 12 months from grant date, and the
remaining two-thirds vest monthly in 24 equal installments. The stock options are equity classified.
Stock options issued during the nine months ended April 30, 2024
Share-based compensation – Options
Share-based payments relating to the vesting of options for the nine months ended April 30, 2025 was $52,855 (2024 - $572,041 ) and is recorded as salaries and wages on the
consolidated statement of operations.
As of November 6, 2024, upon the listing of the Company’s shares on the NASDAQ, 586,494 stock options outstanding are liability classified (Note 12).
As of April 30, 2025, the total intrinsic value of options outstanding and exercisable was $ and $, respectively. The intrinsic value of outstanding
stock options is based on the company’s closing stock price on April 30, 2025.
|
(e)
|
Restricted stock units (“RSUs”) |
The continuity of the Company’s RSU’s is as follows:
|
Number of RSU’s
|
||||
|
Outstanding, July 31, 2023
|
|
|||
|
Granted
|
|
|||
| Outstanding, July 31, 2024 |
||||
| Granted |
||||
| Forfeited |
( |
) | ||
|
Outstanding, April 30, 2025
|
|
|||
RSUs granted during the nine months ended April 30, 2025
On March 26, 2025, 305,867 restricted stock units
were granted to an officer of the Company. 70 % of the RSUs vest on grant date, the remaining restricted stock units vest in equal 15 % installments annually.
RSUs granted during the nine months ended April 30, 2024
As at April 30, 2025, the Company had 1,483,167 (July
31, 2024 – 1,214,841 ) restricted stock units (“RSUs”) outstanding, of which 1,009,027 (July 31, 2024 – 259,988 ) had vested. All vested RSU’s are to be
settled by December 31st of the calendar year in which the RSUs vest.
As at April 30, 2025, the following RSUs were outstanding and vested:
|
Number of RSUs
outstanding
|
Grant date
|
Number of RSUs
Vested
|
||||||
|
|
November 30, 2021
|
|
||||||
|
|
December 24, 2021
|
|
||||||
|
|
March 1, 2022
|
|
||||||
|
|
March 14, 2022
|
|
||||||
|
|
July 30, 2024
|
|
||||||
|
March 26, 2025
|
||||||||
|
|
|
|||||||
28
Stock-based compensation – RSU’s
Share-based payments relating to the vesting of RSUs for the nine months ended April 30, 2025 was $431,722 (2024 - $476,709 ) and is recorded as salaries and wages on the
consolidated statement of operations.
| 13. |
Share capital (continued)
|
|
(f)
|
Weighted average common shares outstanding |
|
Nine months
ended
April 30,
|
Nine months
ended
April 30,
|
Three months
ended
April 30,
|
Three months
ended
April 30,
|
|||||||||||||
|
2025
|
2024
|
2025
|
2024
|
|||||||||||||
|
Net income (loss)
|
$
|
(
|
)
|
$
|
(
|
)
|
$
|
|
$
|
(
|
)
|
|||||
|
Weighted average number of shares:
|
||||||||||||||||
|
Issued common shares at the beginning of the period
|
|
|
|
|
||||||||||||
|
Effect of common shares issued during the period
|
|
|
|
|
||||||||||||
|
Weighted average number of shares - basic
|
|
|
|
|
||||||||||||
|
Restricted Stock Units in issuance
|
|
|
|
|
||||||||||||
|
Weighted average number of shares - diluted
|
|
|
|
|
||||||||||||
|
Net income (loss) per share, basic
|
$
|
(
|
)
|
$
|
(
|
)
|
$
|
|
$
|
(
|
)
|
|||||
|
Net income (loss) per share, diluted
|
$
|
(
|
)
|
$
|
(
|
)
|
$
|
|
$ | ( |
) | |||||
| 14. |
Related party transactions and balances
|
Parties are considered to be related if one party has the ability, directly or indirectly, to control the other party or exercise significant influence over the
other party in making financial and operating decisions. Related parties may be individuals or corporate entities. A transaction is a related party transaction when there is a transfer of resources or obligations between related parties.
At April 30, 2025, the Company had amounts owing and accrued liabilities of $484,911 (July 31, 2024 - $478,072 ) payable to directors and officers of the
Company for salaries, expense reimbursements and professional fees. These amounts are non-interest bearing and have no terms of repayment.
During the nine months ended April 30, 2025, the Company accrued wages and management fees of $603,417 and $159,000 (2024 - $473,923 and $118,074 ), respectively, to officers of the
Company.
During the nine months ended April 30, 2025, the Company accrued interest of $149,905 (2024 - $7,224 ) on convertible debentures payable to related parties
(Note 9).
29
During the nine months ended April 30, 2025, the Company amended the terms of convertible debentures payable to Focus Impact Partners and Focus Impact Sponsor, and
issued an Additional Convertible Note to Focus Impact Partners (Note 9).
During the nine months ended April 30, 2025, the Company issued 557,290
common shares with a fair value of $585,155 to Focus Impact Partners in consideration for a strategic consulting agreement (Note 13).
| 14. |
Related party transactions and balances (continued)
|
During the year ended July 31, 2024, the Company issued convertible debentures to Devvio and Envviron (Note 9). During the nine months ended April 30, 2025, these
loans were amended to extend their maturities.
During the year ended July 31, 2024, the Company signed an amended strategic partnership agreement with Devvio (Note 17).
|
15.
|
Financial instruments
|
As at April 30, 2025, the Company’s financial instruments consist of cash, GST receivable, corporate taxes receivable, deposit on carbon credits purchase, accounts
payable and accrued liabilities, convertible debentures, mandatory convertible debentures, warrant liabilities, stock option liabilities, stop loss provision liabilities and derivative liabilities. The Company classifies cash, GST receivable,
corporate taxes receivable, and deposit on carbon credits purchase as financial assets held at amortized cost. The Company classifies accounts payable and accrued liabilities as financial liabilities which are held at amortized cost. The
Company’s mandatory convertible debentures, warrant liabilities, stock option liabilities, and stop loss provision liabilities are carried at FVTPL. The Company’s convertible debentures are hybrid instruments where the debt host component is held
at amortized cost and the embedded derivative was measured at FVTPL, until upon their amendments (Note 9), or the completion of the De-SPAC transaction (Note 4) of the Company, when they met the criteria for equity classification and were
transferred to equity.
The Company’s derivative liabilities and mandatory convertible debentures are level 3 financial instruments and its warrant liabilities and stock option liabilities
are Level 2 instruments. In determining fair value, the Company utilizes valuation techniques that maximize the use of observable inputs and minimize the use of unobservable inputs to the extent possible. Observable or market
inputs reflect market data obtained from independent sources, while unobservable inputs reflect the Company’s assumptions based on the best information available. The unobservable inputs used for valuation of the mandatory convertible debentures
and derivative liabilities included volatility and probability of De-SPAC transaction. Any significant changes in unobservable inputs could result in significantly lower or higher fair value measurements.
The risk exposure arising from these financial instruments is summarized as follows:
|
(a)
|
Credit risk
|
The Company’s financial assets are cash, trade receivable, GST receivable, corporate taxes receivable, and deposit on carbon credits purchase. The Company’s maximum
exposure to credit risk, as at period end, is the carrying value of its financial assets, being $975,650 . The Company holds its cash
with a major financial institution and with a publicly traded payment processing company therefore minimizing the Company’s credit risk.
|
(b)
|
Liquidity risk
|
Liquidity risk is the risk that the Company will not be able to meet its financial obligations as they fall due. The Company manages liquidity by maintaining
adequate cash balances and by raising equity financings. The Company has no assurance that such financings will be available on favorable terms. In general, the Company attempts to avoid exposure to liquidity risk by obtaining corporate financing
through the issuance of shares.
30
|
DevvStream Corp.
|
|
Notes to Condensed Consolidated Interim Financial Statements
|
|
(Unaudited - Expressed in United States dollars)
|
|
For the nine months ended April 30, 2025 and 2024
|
|
15.
|
Financial instruments (continued)
|
As at April 30, 2025, the Company had cash of $4,002
to settle the contractual obligation of current liabilities of $10,877,745 which fall due for payment within twelve months of the
statement of financial position. All of the Company’s contractual obligations are current and due within one year .
|
(c)
|
Market risk
|
Market risk is the risk that changes in market prices, such as foreign exchange rates, interest rates and equity prices will affect the Company’s income or value of
its holdings or financial instruments. At April 30, 2025, the Company has minimal exposure to these risks.
| 16. |
Segmented information
|
The Company operates in one no
reportable segment revenues. The Company’s assets are located in Canada.
| 17. |
Commitments and contingencies
|
| • |
On September 12, 2023, the Company amended its existing strategic partnership agreement with Devvio, a related party. The Company has committed to making specific payments to Devvio. They will
provide a minimum advance of $
|
| • |
On February 16, 2024, the Company entered into a licensing agreement with Greenlines Technology Inc. for the use of certain technologies. The Company has agreed to pay $
|
| • |
On October
29, 2024, the Company entered into the ELOC Agreement with Helena I (Note 7). Following the closing of the De-SPAC Transaction and the Helena I Registration Statement becoming effective, the Company is to issue to Helena I common shares
equal to $
|
| • |
On November 13, 2024, the Company entered into a strategic consulting agreement with Focus Impact Partners, pursuant to which the Focus Impact Partners
will provide the Company with certain consulting services (“Strategic Consulting Agreement”) in consideration of an annual consulting fee of $
|
31
|
DevvStream Corp.
|
|
Notes to Condensed Consolidated Interim Financial Statements
|
|
(Unaudited - Expressed in United States dollars)
|
|
For the nine months ended April 30, 2025 and 2024
|
|
•
|
From time to time, the Company may be involved in litigation relating to claims arising out of operations in the normal course of business. At
April 30, 2025, there were
|
| 18. |
Subsequent events
|
Issuance of shares
In May 2025, the Company issued 3,346,000
shares in accordance with the ELOC Agreement with Helena I (Note 7) for gross proceeds of $1,051,857 .
Return of carbon credits and cancellation of shares
On May 6, 2025, the Company entered into an agreement with a vendor of
carbon credits for the return of the 1,500,000 consideration shares received for cancellation in return for the carbon credits
(Note 5).
| Item 2. |
Management’s Discussion and Analysis of Financial Condition and Results of Operations.
|
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS OF DEVVSTREAM
Cautionary Note Regarding Forward-Looking Statements
The following discussion and analysis should be read in conjunction with DevvStream’s unaudited condensed consolidated interim financial
statements and related notes for the three and nine months ended April 30, 2025 and 2024 (“interim financial statements”), which have been prepared in accordance with US GAAP and are included elsewhere in this report. This discussion
contains forward-looking statements reflecting our current expectations, estimates and assumptions concerning events and financial trends that may affect our future operating results or financial position. Actual results and the timing of
events may differ materially from those contained in these forward-looking statements due to a number of factors, including those described in our other SEC filings, including those discussed in the sections titled “Risk Factors” and
“Cautionary Note Regarding Forward-Looking Statements” in our Current Report on Form 8-K/A filed with the SEC on March 7, 2025. All figures are in US dollars unless otherwise noted. Unless the context otherwise requires, for the purposes
of this section, “DevvStream,” “we,” “us,” “our,” or the “Company” refer to DevvStream Corp. , a company existing under the Laws of the Province of Alberta, Canada, and its subsidiaries.
Company Overview
DevvStream is a technology-based sustainability company that advances the development and monetization of environmental assets, with an initial focus on carbon markets. The
Company's mission is to create alignment between sustainability and profitability, helping organizations achieve their climate initiatives while directly improving their financial health.
With a diverse approach to the International Renewable Energy Certificate (“I-REC”) and carbon market, DevvStream operates across three strategic domains: (1) an offset
portfolio consisting of I-REC’s, nature-based, tech-based, and carbon sequestration credits for immediate sale to corporations and governments seeking to offset their most difficult-to-reduce emissions; (2) project investment, acquisitions,
and industry consolidation to extend the Company's reach, allowing it to become a full end-to-end solutions provider; and (3) project development, where the Company serves as project manager for eligible activities such as EV charging in
exchange for a percentage of generated credits.
Company Formation and Reverse Takeover Transaction
We are a company existing under the Business Corporations Act of Alberta, Canada. We were a special purpose acquisition corporation (“SPAC”) incorporated in Delaware, the
United States on February 23, 2021.
On September 12, 2023 (and as amended May 1, 2024, August 10, 2024, and October 29, 2024, the “Business Combination Agreement”, or “BCA”), we entered into a
Business Combination Agreement with DevvStream Holdings Inc. (the ‘‘Business Combination’’ or the ‘‘De-SPAC Transaction’’). The Business Combination was structured as an amalgamation of DevvStream
Holdings Inc. (“Devv Holdings”) into a wholly owned subsidiary of the Company, following our redomiciling as an Alberta company. We were then renamed from Focus Impact Acquisition Corp. to DevvStream Corp. and continue the business of
Devv Holdings following the amalgamation. It was a condition of the transaction that the securities of the Combined Company will be listed on NASDAQ.
On November 6, 2024, we completed the business combination with Devv Holdings, pursuant to the BCA. In connection with the completion of the business combination, we
consolidated all of our issued and outstanding common stock on a 1:0.9692 basis. All the outstanding Devv Holdings subordinate voting shares (“SVS”) were exchanged for common stock of the Company on a common conversion ratio of 0.152934
(the “Common Conversion Ratio”). All the outstanding Devv Holdings multiple voting shares (“MVS”), being the equivalent of 10 SVS, were exchanged for common stock of the Company on the basis of the Common Conversion Ratio. In addition, all
of the outstanding convertible securities of Devv Holdings were exchanged for securities of the Company on the basis of the Common Conversion Ratio, with corresponding adjustments to exercise prices, and otherwise on substantially the same
economic terms and conditions. Our common shares commenced trading on the NASDAQ under the new ticker symbol “DEVS” on November 7, 2024.
Devv Holdings is deemed as the acquirer for accounting purposes, and therefore its assets, liabilities and operations are included in the consolidated financial statements
at their historical carrying value. Our operations are considered to be a continuance of the business and operations of Devv Holdings. Our results of operations are those of Devv Holdings, with our operations being included from November 6,
2024, the closing date of the De-SPAC Transaction, onwards.
Recent Developments
Change in Functional Currency
Effective August 1, 2024, the Company reassessed its functional currency and the functional currency of its subsidiaries due to changes in underlying transactions, events, and conditions. As a
result of this reassessment, the Company determined that its functional currency changed from the Canadian dollar (“CAD$”) to the United States dollar (“US$”) for DevvStream Holdings Inc. and its subsidiary, Devv Stream Inc. (“DESG”). The
functional currency for DevvESG Streaming Finco Ltd. (“Finco”), another subsidiary of ours, remained CAD$. This change aligns with the business's future focus and the effective date of the Focus Impact Acquisition Corp.'s Form S-4
Registration Statement with the SEC, a crucial part of the De-SPAC transaction closing. The change in functional currency was accounted for prospectively from August 1, 2024, with no impact on prior year comparative information. Upon the
change in functional currency on August 1, 2024, 1,220,668 of the Company’s warrants which had strike prices denominated in CAD$ were reclassified as warrant liabilities. Determining the functional currency involved significant judgments to
assess the primary economic environment in which the Company operates, including factors such as the currency of underlying transactions, the location of key operations, and the currency of expected cash flows. Upon the completion of the
De-SPAC Transaction on November 6, 2024, 627,786 of the Company’s stock options which had strike prices denominated in CAD$ were reclassified as stock option liabilities, as exemptions from classification from derivative liability
classification under ASC 718-10-25-14 that were previously applicable upon change in functional currency no longer apply upon the commencement of trading of the Company’s common shares on the NASDAQ.
Results of Operations — Three Months Ended April 30, 2025 Comparison Against the Three Months Ended April 30, 2024
|
|
For the Three
Months Ended
April 30, 2025 $
|
For the Three
Months Ended
April 30, 2024
$
|
||||||
|
Revenue
|
|
10,164
|
|
-
|
||||
|
Cost of sales
|
(2,688
|
)
|
-
|
|||||
|
Gross profit
|
7,476
|
-
|
||||||
|
Sales and marketing
|
155,496
|
38,756
|
||||||
|
Depreciation
|
231
|
450
|
||||||
|
General and administrative
|
235,972
|
103,229
|
||||||
|
Professional fees
|
841,536
|
942,688
|
||||||
|
Salaries and wages
|
279,109
|
201,570
|
||||||
|
Share-based compensation
|
74,699
|
262,433
|
||||||
|
Total operating expenses
|
(1,587,043
|
)
|
(1,549,126
|
)
|
||||
|
Accretion and interest expense
|
(133,172
|
)
|
(33,133
|
)
|
||||
|
Loss on investment in associate
|
(298,804
|
)
|
-
|
|||||
|
Change in fair value of derivative liabilities
|
-
|
500
|
||||||
|
Change in fair value of convertible debt-FVTPL
|
-
|
(50,000
|
)
|
|||||
|
Change in the fair value of warrant liabilities
|
5,641,785
|
-
|
||||||
|
Foreign exchange gain (loss)
|
(31,100
|
)
|
(85,860
|
)
|
||||
|
Impairment of carbon credits
|
18
|
-
|
||||||
|
Stop-loss provision
|
(76,535
|
)
|
-
|
|||||
|
Net income (loss)
|
|
3,522,625
|
|
(1,717,619
|
)
|
|||
During the three months ended April 30, 2025, we incurred a net income of $3,522,625 compared to net loss of $1,717,619 for the three months ended April 30, 2024. An
analysis of the increase in net income of $5,240,244, including the major components thereof, is set forth below.
Share-based compensation
During the three months ended April 30, 2025, we incurred share-based compensation of $74,699 compared to share-based compensation of $ 262,433 for the three months ended April 30, 2024.
Share-based payments relating to the vesting of RSUs increased by $61,020. Share-based payments relating to the vesting of Options decreased by $248,754.
Due to the listing of the Company on the NASDAQ on November 7, 2024 and commencement of trading of shares in the United States dollars, exemptions available under ASC 718-10-25-14 to classify
stock options with strike prices in foreign currencies as equity were no longer met and all stock options outstanding were reassessed to be derivative liabilities. The fair value of the stock options upon the change in classification on
November 6, 2024 was $330,090. Changes in fair value due to period end fair value remeasurements are reflected in compensation expense. Please refer to Note 12 of the interim financial statements.
Professional fees
During the three months ended April 30, 2025, we incurred $841,536 in professional fees, as compared to $942,688 during the three months ended April 30, 2024. The legal fees
for both periods mainly related to the Business Combination.
Salaries and wages
During the three months ended April 30, 2025 and 2024, we incurred salaries and wages of $279,109 and $201,570, respectively, the majority of which were to officers of the
Company.
Sales and marketing
Sales and marketing expenses for the three months ended April 30, 2025 and 2024 amounted to $155,496 and $38,756, respectively. These costs primarily related to
publications, industry events and investor relations subsequent to our successful closing of the Business Combination.
General and administrative
General and administrative expenses for the three months ended April 30, 2025 and 2024 amounted to $235,972 and $103,229, respectively, and primarily comprised of insurance
costs, filing fees and rent. The increase is primarily due to an increase in filing fees as a result of listing on the NASDAQ.
Loss on investment in associate
On November 6, 2024, the Company received 2,000,000 shares in Monroe Sequestration Partners, LLC (“MSP”), in connection with an agreement to acquire a stake in MSP in
exchange for 2,000,000 shares of the Company that was entered into on October 28, 2024. At the time of acquisition, the 2,000,000 shares of MSP received by the Company represented 50% of MSP’s shares outstanding. During the 3 months ended
April 30, 2025, the Company’s share of MSP’s loss was $298,804.
Change in fair value of warrant liabilities
Effective August 1, 2024, the Company reassessed its functional currency and the functional currency of its subsidiaries due to changes in underlying transactions, events, and conditions. As a
result of this reassessment, the Company determined that its functional currency changed from the Canadian dollar (“CAD$”) to the United States dollar (“US$”) for DevvStream Holdings Inc. and DESG. Finco’s functional currency remained CAD$.
This change aligns with the business's future focus and the effective date of the Focus Impact Acquisition Corp.'s Form S-4 Registration Statement with the SEC, a crucial part of the De-SPAC transaction closing. The change in functional
currency was accounted for prospectively from August 1, 2024, with no impact on prior year comparative information. The Company’s presentation currency is and continues to be the United States dollar.
Upon the change in functional currency on August 1, 2024, 1,220,668 of the Company’s warrants which had strike prices denominated in CAD$ were reclassified as warrant liabilities with an
initial value of $454,571.
On November 6, 2024, 22,699,987 warrants were issued by the Company in connection with the De-SPAC transaction. The warrants were assessed to be derivative liabilities of the Company due to
certain settlement provisions of the warrants that do not meet the criteria for equity classification under Topic 815. The warrants are each exercisable at $1.52 for 0.9692 common stock, expiring on November 6, 2029. The fair value of the
warrants was $7,196,286 upon issuance.
During the three months ended April 30, 2025, we recognized a gain of $5,641,785 due to period end fair value remeasurement. Please refer to Note 11 of the interim financial statements.
Foreign exchange loss
During the three months ended April 30, 2025, we recognized a foreign exchange loss of $31,100. During the three months ended April 30, 2024, we recognized a foreign
exchange loss of $85,860. The foreign exchange gains result from fluctuations in the Canadian dollar against the US dollar, as we hold cash balances and have accounts payable denominated in both Canadian and US dollars.
Stop-loss provision
On November 6, 2024, concurrent with the completion of the business combination, the Company issued 3,249,876 common shares in consideration for carbon credit purchase
agreements.
All of the agreements contain adjustment clauses whereby if the Company’s share price falls below the respective purchase prices outlined in the agreements, in the 12 to 18
months following November 6, 2024, the Company is obligated to issue additional shares to cover the shortfall. The Company has assessed that the potential liability associated with the stop-loss provision for carbon credits received as of
April 30, 2025 is $1,101,248.
Results of Operations — Nine Months Ended April 30, 2025 Comparison Against the Nine Months Ended April 30, 2024
|
|
For the Nine
Months Ended
April 30, 2025
$
|
For the Nine
Months Ended
April 30, 2024
$
|
||||||
|
Revenue
|
|
10,164
|
|
-
|
||||
|
Cost of sales
|
(2,688
|
)
|
-
|
|||||
|
Gross profit
|
7,476
|
-
|
||||||
|
Sales and marketing
|
832,188
|
365,406
|
||||||
|
Depreciation
|
953
|
1,374
|
||||||
|
General and administrative
|
627,377
|
393,231
|
||||||
|
Professional fees
|
6,846,934
|
4,263,900
|
||||||
|
Salaries and wages
|
823,016
|
617,400
|
||||||
|
Share-based compensation
|
190,136
|
1,048,750
|
||||||
|
Total operating expenses
|
(9,320,604
|
)
|
(6,690,061
|
)
|
||||
|
Accretion and interest expense
|
(378,718
|
)
|
(35,676
|
)
|
||||
|
Loss on investment in associate
|
(405,654
|
)
|
-
|
|||||
|
Change in fair value of derivative liabilities
|
719,000
|
(50,700
|
)
|
|||||
|
Change in fair value of mandatory convertible debentures
|
70,500
|
-
|
||||||
|
Change in the fair value of warrant liabilities
|
5,651,008
|
-
|
||||||
|
Foreign exchange gain (loss)
|
(24,428
|
)
|
(51,756
|
)
|
||||
|
Gain on settlement of debt
|
899,015
|
-
|
||||||
|
Impairment of carbon credits
|
(1,207,782
|
)
|
-
|
|||||
|
Stop-loss provision
|
(1,101,248
|
)
|
-
|
|||||
|
Net loss
|
|
(5,091,435
|
)
|
|
(6,828,193
|
)
|
||
During the nine months ended April 30, 2025, we incurred a net loss of $5,091,435 compared to net loss of $6,828,193 for the nine months ended April 30, 2024. An analysis of
the decrease in net loss of $1,736,758, including the major components thereof, is set forth below.
Loss on investment in associate
On November 6, 2024, the Company received 2,000,000 shares in Monroe Sequestration Partners, LLC (“MSP”), in connection with an agreement to acquire a stake in MSP in
exchange for 2,000,000 shares of the Company that was entered into on October 28, 2024. At the time of acquisition, the 2,000,000 shares of MSP received by the Company represented 50% of MSP’s shares outstanding. During the nine months
ended April 30, 2025, the Company’s share of MSP’s loss was $405,654.
Share-based compensation
During the nine months ended April 30, 2025, we incurred share-based compensation of $190,136 compared to share-based compensation of $1,048,750 for the nine months ended
April 30, 2024. Share-based payments relating to the vesting of options decreased by $813,627 during the nine months ended April 30, 2025 compared to the nine months ended April 30, 2024. Share-based payments relating to the vesting of
RSU’s decreased by $44,987.
Due to the listing of the Company on the NASDAQ on November 7, 2024 and commencement of trading of shares in the United States dollars, exemptions available under ASC
718-10-25-14 to classify stock options with strike prices in foreign currencies as equity were no longer met and all stock options outstanding were reassessed to be derivative liabilities. The fair value of the stock options upon the change
in classification on November 6, 2024 was $330,090. Changes in fair value due to period end fair value remeasurements are reflected in compensation expense. Please refer to Note 12 of the interim financial statements.
Professional fees
During the nine months ended April 30, 2025, we incurred $6,846,934 in professional fees, the majority of which relate to legal, audit and accounting fees incurred
relating to the Business Combination. During the nine months ended April 30, 2024, we incurred $4,263,900 in professional fees, the majority of which relate to legal fees incurred relating to the Business Combination.
Salaries and wages
During the nine months ended April 30, 2025 and 2024, we incurred salaries and wages of $823,016 and $617,400 respectively, the majority of which were to officers of the
Company.
Sales and marketing
Sales and marketing expenses for the nine months ended April 30, 2025 and 2024 amounted to $832,188 and $365,406, respectively. These costs primarily related to
publications and industry events and investor relations subsequent to our successful closing of the Business Combination.
General and administrative
General and administrative expenses for the nine months ended April 30, 2025 and 2024 amounted to $627,377 and $393,231, respectively, and primarily comprised of insurance
costs, filing fees. The increase is a result of increased filing fees relating to the Business Combination, offset by a decrease in rent costs as the Company no longer leases office space in FY 2025.
Foreign exchange gain(loss)
During the nine months ended April 30, 2025 and 2024, we recognized a foreign exchange loss of $24,428 and a loss of $51,756, respectively. The foreign exchange gain is
the result of fluctuations in the Canadian dollar against the US dollar, as we hold cash balances and have accounts payable denominated in both Canadian and US dollars.
Change in fair value of derivative liabilities and mandatory convertible debenture
During the nine months ended April 30, 2025, we recognized a gain on derivative liabilities of $719,000 and a gain on mandatory convertible debentures of $70,500,
respectively, related to the convertible debt financings completed in January 2024 and April 2024. Please refer to Note 9 of the interim financial statements.
Loss on settlement of debt
On September 5, 2024, the Company issued 15,963 shares with a fair value of $47,904 in settlement of accounts payable in the amount of $39,527 and recognized a loss on the
settlement of $8,377.
In December 2024, the Company issued 412,478 shares with a fair value of $317,608 for the settlement of accounts payable in the amount of $1,225,000 and recognized a gain on
the settlement of $907,392.
Change in fair value of warrant liabilities
Effective August 1, 2024, the Company reassessed its functional currency and the functional currency of its subsidiaries due to changes in underlying transactions, events,
and conditions. As a result of this reassessment, the Company determined that its functional currency changed from the Canadian dollar (“CAD$”) to the United States dollar (“US$”) for DevvStream Holdings Inc. and DESG. Finco’s functional
currency remained CAD$. This change aligns with the business's future focus and the effective date of the Focus Impact Acquisition Corp.'s Form S-4 Registration Statement with the SEC, a crucial part of the De-SPAC transaction closing. The
change in functional currency was accounted for prospectively from August 1, 2024, with no impact on prior year comparative information. The Company’s presentation currency is and continues to be the United States dollar.
Upon the change in functional currency on August 1, 2024, 1,220,668 of the Company’s warrants which had strike prices denominated in CAD$ were reclassified as warrant
liabilities with an initial value of $454,571.
On November 6, 2024, 22,699,987 warrants were issued by the Company in connection with the De-SPAC transaction. The warrants were assessed to be derivative liabilities of
the Company due to certain settlement provisions of the warrants do not meet the criteria for equity classification under Topic 815. The warrants are each exercisable at $1.52 for 0.9692 common stock, expiring on November 6, 2029. The fair
value of the warrants was $7,196,286 upon issuance.
As a result of above, during the nine months ended April 30, 2025, we recognized a gain of $5,651,008 due to period end fair value remeasurement. Please refer to Note 11 of
the interim financial statements.
Impairment of carbon credits and stop-loss provision
On November 6, 2024, concurrent with the completion of the business combination, the Company issued 3,249,876 common shares in consideration for carbon credit purchase
agreements.
All of the agreements contain adjustment clauses whereby if the Company’s share price falls below the respective purchase prices outlined in the agreements, in the 12 to 18
months following November 6, 2024, the Company is obligated to issue additional shares to cover the shortfall. The Company has assessed that the potential liability associated with the stop-loss provision for carbon credits received as of
April 30, 2025 is $1,101,248.
The Company is currently in dispute with one of the vendors for which 1,200,000 shares with a fair value of $658,800 was issued. At the date of these financial statements,
the vendor has not delivered the carbon credits which are due under the contract and the Company has issued a demand letter to the vendor. Management has assessed that it is improbable that these carbon credits will be received and has
recorded an impairment charge of $658,800 during the nine months ended April 30, 2025.
One of the carbon credit purchase agreements provides for the vendor to return the consideration shares received for cancellation in return for the carbon credits if a
registration statement does not become effective within 45 days of the closing of the purchase agreement. As this deadline was not met, the vendor has triggered this clause under the agreement and is currently in negotiations with the
Company to return 1,500,000 shares with a fair value of $549,000 issued under the contract in exchange for the carbon credits that were transferred to the Company. Management has assessed that it is probable that the carbon credits will be
returned to the vendor and has recorded an impairment charge of $548,982 during the nine months ended April 30, 2025.
Liquidity and Capital Resources
We continually monitor and manage cash flow to assess the liquidity necessary to fund operations and capital projects. We manage our capital resources and adjust them to
take into account changes in economic conditions and the risk characteristics of the underlying assets. To maintain or adjust our capital resources, we may, where necessary, control the amount of working capital, pursue financing or manage
the timing of our capital expenditures. As of April 30, 2025, we had a working capital deficit of $16,424,876 (current assets of $1,143,608, less current liabilities of $17,568,484) and as of July 31, 2024, we had a working capital deficit
of $8,362,363 (current assets of $141,905, less current liabilities of $8,504,268).
Our continuing operations are dependent upon our ability to obtain debt or equity financing, of which there are no assurances, until such time that we achieve profitable
operations. There can be no assurance that we will gain adequate market acceptance for our products or be able to generate sufficient gross margins to reach profitability.
On October 29, 2024, we entered into a equity line of credit purchase agreement (the “ELOC Agreement”) with Helena Global Investment Opportunities I Ltd. (“Helena”).
Pursuant to the ELOC Agreement, the Company has the right to issue and to sell to Helena from time to time, as provided in the ELOC Agreement, up to $40,000,000 of Company’s Common Shares, subject to the conditions set forth therein.
Specifically, pursuant to the ELOC Agreement, the Company may require that Helena purchase Common Shares from the Company by delivering one or more advance notices to Helena setting forth, in each advance notice, the amount of the advance
it is requesting, which amount many not exceed an amount equal to lesser of (i) one hundred percent (100%) of the average of the daily value traded of the Common Shares over the ten (10) trading days immediately preceding such advance
notice, and (ii) eight million United States Dollars ($8,000,000). On March 18, 2025, the Company and Helena entered into a first amendment to ELOC Agreement, which provides the Company with greater flexibility by allowing Helena to permit
Secondary Advances, as defined in the amendment, as well as to update references to “Common Stock” in the ELOC Agreement to “Common Shares”. However, in no event may the number of Common Shares issuable to Helena pursuant to an advance
cause the aggregate number of shares beneficially owned (as calculated pursuant to Section 13(d) of the Exchange Act) by Helena and its affiliates as a result of previous issuances and sales of Common Shares to Helena under the ELOC
Agreement to exceed 9.99% of the then outstanding Common Shares. Additionally, the Company may not affect any sales under the ELOC Agreement and Helena will have no obligation to purchase Common Shares under the ELOC Agreement to the extent
(but only to the extent) that after giving effect to such purchase and sale the aggregate number of Common Shares issued under the ELOC Agreement would exceed 19.99% of the outstanding shares of Common Shares following the closing of the
Business Combination Agreement (the “Exchange Cap”), provided that, the Exchange Cap will not apply if the Company’s stockholders have approved issuances in excess of the Exchange Cap in accordance with the rules of the Nasdaq. The purchase
price for the Common Shares so purchased by Helena pursuant to an advance notice is the lowest intraday sale price for the Common Shares during the three (3) trading days commencing on the date of Helena’s receipt of the Common Shares
relating to such advance. Because the per share purchase price that Helena will pay for Common Shares in connection with any advance notice we have elected to deliver to Helena pursuant to the ELOC Agreement will be determined by reference
to the lowest intraday sale price for the Common Shares during the three (3) trading days commencing on the date of Helena’s receipt of the Common Shares relating to such advance, we cannot determine the actual purchase price per share that
Helena will be required to pay for any Common Shares that we may elect to sell to Helena under the ELOC Agreement until after we deliver an advance notice and, therefore, we cannot be certain how many Common Shares, in the aggregate, we may
issue and sell to Helena under the ELOC Agreement. Sales of Common Shares to Helena under the ELOC Agreement will depend on a variety of factors to be determined by us from time to time, including, among other things, market conditions, the
trading price of the Common Share and determinations by us as to the appropriate sources of funding for our business and operations. We may not be able to raise sufficient funds under the ELOC Agreement to satisfy our obligations.
Since our inception, we have incurred operating losses and have experienced negative cash flows from operations. We do not anticipate that cash on hand will be adequate to
satisfy our obligations in the ordinary course of business over the next 12 months. Based on this assessment, we have material uncertainties about our business that cast substantial doubt about our ability to continue as a going concern.
Accordingly, our ability to continue as a going concern is dependent upon our ability to raise sufficient funds to pay ongoing operating expenditures and to meet our obligations. See further discussion related to our ability to continue as
a going concern within “— Critical Accounting Policies and Estimates.”
As of April 30, 2025 and July 31, 2024, we had $4,002 and $21,106 in cash, respectively. We are actively managing current cash flows until such time that we are profitable.
The chart below highlights our cash flows for the periods indicated:
|
|
For the
Nine Months Ended
April 30, 2025
$
|
For the
Nine Months
Ended
April 30, 2024
$
|
||||||
|
Net cash provided by (used in):
|
||||||||
|
Operating activities
|
(4,763,601
|
)
|
(1,421,362
|
)
|
||||
|
Investing activities
|
1,661,645
|
-
|
||||||
|
Financing activities
|
3,083,417
|
1,039,629
|
||||||
|
Effect of exchange rate changes on cash
|
1,435
|
(5,248
|
)
|
|||||
|
(Decrease)/Increase in cash
|
(17,104
|
)
|
(386,981
|
)
|
||||
Cash Used in Operating Activities
Our net cash used in operating activities is primarily due to cash payments for operating expenses that we incur in the day-to-day operations of the business. Net cash used
in operating activities for the nine months ended April 30, 2025 was $4,763,601 compared to $1,421,362 for the nine months ended April 30, 2024. The loss for the nine months ended April 30, 2025 of $5,091,435 was offset by $4,384,826 in
changes in working capital items and increased by $4,056,992 in non-cash items consisting mainly of the gain on warrant liability and gain on derivative liability, and offset by the impairment loss and stop-loss provision on carbon
credits. This compares to a loss of $6,828,193 for the prior period, that was offset by $4,225,710 in changes in working capital items and $1,181,121 in non-cash items consisting mainly of share-based compensation.
Cash Provided by Investing Activities
Net cash provided by investing activities for the nine months ended April 30, 2025 was $1,661,645, consisting of the cash assumed upon the completion of the Business Combination. Net cash
provided by investing activities for the nine months ended April 30, 2024 was $nil.
Cash Provided by Financing Activities
We have funded our business to date from the issuance of our common stock and convertible debentures through private placements, from proceeds from the exercises of
warrants, and from loans from related parties.
Net cash provided by financing activities for the nine months ended April 30, 2025 was $3,083,417 compared to $1,039,629 for the nine months ended April 30, 2024. The
following financing activities occurred during the nine months ended April 30, 2025:
| (1) |
Exercise of share purchase warrants:
|
On October 29, 2024, the Company issued 91,760 shares for the exercise of 91,760 share purchase warrants, at an exercise price of CAD$1.31 per share for gross proceeds of
$86,237.
|
(2)
|
Non-brokered private placement of unsecured convertible notes:
|
On August 19, 2024, October 18, 2024, October 28, 2024, and November 1, 2024 the Company received additional proceeds of $41,500, $6,500, $7,650 and $12,000 under the amended terms of the Focus Impact
Partners convertible debenture. On March 19, 2025, the Company received proceeds of $218,000 under a new convertible debenture issued to Focus Impact Partners. Refer to Note 9 of our interim financial statements.
In October 2024, the mandatory convertible debentures were converted to 146,786 shares of the Company. Refer to Note 10 of the interim financial statements.
|
(3)
|
PIPE financing:
|
On November 6, 2024, the Company issued 1,694,808 shares to various investors for gross proceeds of $2,250,000, of which $20,000 remain receivable as of April 30, 2025.
|
(3)
|
ELOC drawdown:
|
In March 2025, the Company issued 1,606,000 shares in accordance with the ELOC Agreement with Helena Global Investment Opportunities I Ltd for gross proceeds of $481,530.
Related party transactions and balances
Parties are considered to be related if one party has the ability, directly or indirectly, to control the other party or exercise significant influence over the other party in making financial and operating
decisions. Related parties may be individuals or corporate entities. A transaction is a related party transaction when there is a transfer of resources or obligations between related parties.
At April 30, 2025, the Company had amounts owing and accrued liabilities of $484,911 (July 31, 2024 - $478,072) payable to directors and officers of the Company for salaries, expense reimbursements and
professional fees. These amounts are non-interest bearing and have no terms of repayment.
During the nine months ended April 30, 2025, the Company accrued wages and management fees of $603,417 and $159,000 (2024 - $473,923 and $118,074), respectively, to officers of the Company.
During the nine months ended April 30, 2025, the Company accrued interest of $149,905 (2024 - $7,224) on convertible debentures payable to related parties. Refer to Note 9 of our interim financial statements.
During the nine months ended April 30, 2025, the Company amended the terms of convertible debentures payable to Focus Impact Partners and Focus Impact Sponsor, LLC, with face values of $637,150 and
$3,345,000, respectively. The convertible debentures have an amended maturity date of November 13, 2026, and the principal and interest are convertible into common stock of the Company at the option of the holder at a 25% discount to the
20-day volume weighted average price of the Company’s shares, subject to a floor of $0.867 per share. Focus Impact Partners is owned by two of the Company’s directors: Carl Stanton and Wray Thorn.
During the nine months ended April 30, 2025, the Company issued a new convertible debenture payable to Focus Impact Partners with face value of $218,000. The convertible debenture has a maturity date of March
19, 2027, and the principal and interest are convertible into common stock of the Company at the option of the holder at a 25% discount to the 20-day volume weighted average price of the Company’s shares.
During the nine months ended April 30, 2025, the Company issued 557,290 common shares to Focus Impact Partners in consideration for services provided to the Company pursuant to the strategic consulting
agreement between the Company and Focus Impact Partners dated November 13, 2024. See, Contractual Obligations below.
During the year ended July 31, 2024, the Company issued convertible debentures to Devvio Inc. (‘Devio”) and Envviron SAS (“Envviron”), who are related parties to the Company. The Devvio convertible debt had
a principal amount of $100,000, while the Envviron convertible debt had a principal amount of $250,000. Devvio owns in excess of 10% of the outstanding shares of the Company. Envirron is controlled by Ray Quintana, a former director of the
Company who stepped down on November 7, 2024 upon completion of the Business Combination. On November 12, 2024, the maturity for the convertible debentures issued to Devvio and Envviron are extended to May 30, 2025.
During the year ended July 31, 2024, the Company signed an amended strategic partnership agreement with Devvio dated November 28, 2021.
Contractual Obligations
Prepaid Royalties Agreement with Devvio
In September 2023, we agreed to pay prepaid royalty payments to Devvio, a related party, equal to a minimum of $2,270,000, to be paid by August 1, 2025 and $1,270,000 to be
paid by August 1, 2026. On July 8, 2024, we further amended the agreement such that the minimum advances extended by one year and are now due as follows: $1,000,000 by August 1, 2025, followed by $1,270,000 by August 1, 2026 and August 1,
2027.
On February 16, 2024, we entered into a licensing agreement with Greenlines Technology Inc. for the use of certain technologies. We agreed to pay $42,000
within 15 days of the closing of the BCA. Such amount was paid on November 26, 2024. Commencing January 1, 2025, we must pay an annual fee of $12,000 of the first day of each calendar year for the use of the technology. The amounts due on January 1, 2025 are yet to be paid as of April 30, 2025. The Company has accrued $4,000 in connection with the annual fee payable as of April 30, 2025.
Equity line of credit (“ELOC”) fee commitment with Helena Global Investment Opportunities I Ltd (“Helena I”)
On October 29, 2024, we entered into the ELOC Agreement with Helena I. Following the closing of the De-SPAC Transaction and the Helena I Registration Statement becoming
effective, we are to issue to Helena I common shares equal to $125,000 divided by the greater of (i) the lowest one-day VWAP during the five trading days immediately preceding the effectiveness date of such Registration Statement and (ii)
$0.75. The Company issued 166,667 shares in satisfaction of this commitment on March 17, 2025.
Strategic Consulting Agreement with Focus Impact Partners, LLC (“Focus Impact Partners”)
On November 13, 2024, we entered into a strategic consulting agreement with Focus Impact Partners, pursuant to which the Focus Impact Partners will provide us with certain
consulting services (“Strategic Consulting Agreement”) in consideration of an annual consulting fee of $500,000, which will be payable in quarterly installments of $125,000 starting with an initial payment for the period beginning December
31, 2023. Fees due under the Strategic Consulting Agreement accrue and not be payable until (a) we have successfully raised $5,000,000 in outside debt and/or equity capital, cumulatively since the period beginning December 31, 2023 or (b)
we have 2 or more consecutive quarters of positive cash flow from operations. As of April 30, 2025, neither conditions have been met. We will pay Focus Impact Partners additional consulting fees as to be mutually agreed consistent with
market practice in connection with any acquisition, merger, consolidation, business combination, sale, divestiture, financing, refinancing, restructuring or other similar transaction. The Strategic Consulting Agreement has a term of three
years unless terminated early with at least 120 days advance notice and will be automatically extended for successive one-year periods at the end of each year unless either party provide a written notice of its desire not to automatically
extend at least 120 days prior to the end of each year during the term of the Strategic Consulting Agreement. Focus Impact Partners is owned by two of the Company’s directors: Carl Stanton and Wray Thorn.
Quantitative and Qualitative Disclosures about Market Risk
Our board of directors have overall responsibility for the establishment and oversight of our risk management policies on an annual basis. Management identifies and
evaluates our financial risks and is charged with the responsibility of establishing controls and procedures to ensure financial risks are mitigated in accordance with the approved policies.
Our financial instruments consist of cash, GST receivable, accounts payable and accrued liabilities, convertible debt. mandatory convertible debentures,
warrant liabilities and derivative liabilities. The carrying value of the Company’s cash, GST receivable and accounts payable and accrued liabilities approximate their fair value due to their short
terms to maturity.
Our risk exposures and the impact on our financial instruments are summarized below:
Credit Risk
Credit risk is the risk of an unexpected loss if a customer or third party to a financial instrument fails to meet its contractual obligations. Our credit risk is primarily
attributable to our liquid financial assets including cash. Our financial assets are cash, trade receivable, GST receivable, corporate taxes receivable, subscription receivable, and deposit on carbon credits purchase. Our maximum exposure
to credit risk, as at period end, is the carrying value of our financial assets, being $975,650 and $106,764 as of April 30, 2025 and July 31, 2024, respectively. We hold cash with major financial institutions and with a publicly traded
payment processing company therefore minimizing our credit risk.
Liquidity Risk
Liquidity risk is the risk that we will not be able to meet financial obligations as they fall due. We manage liquidity by maintaining adequate cash balances and by raising
equity and debt financings. We have no assurance that such financings will be available on favorable terms in the future. In general, we attempt to avoid exposure to liquidity risk by obtaining corporate financing through the issuance of
shares.
As of April 30, 2025, we had cash of $4,002 to settle current liabilities of $10,877,745 which fall due for payment within twelve months of the statement of financial
position. As of July 31, 2024, we had cash of $21,106 to settle current liabilities of $7,595,974 which fall due for payment within twelve months of the statement of financial position. All of our contractual obligations are current and due
within one year.
Market Risk
Market risk is the risk that changes in market prices, such as foreign exchange rates, interest rates and equity prices will affect the Company’s income or value of its
holdings or financial instruments. At April 30, 2025, the Company has minimal exposure to these risks.
Inflation Risk
We do not believe that inflation had a significant impact on our results of operations for any periods presented in our interim financial statements. Nonetheless, if our
costs were to become subject to significant inflationary pressures, we may not be able to fully offset such higher costs, and our inability or failure to do so could harm our business, financial condition and results of operations.
Capital Management
Capital is comprised of our shareholders’ deficiency and any debt that we may issue. Our objectives when managing capital are to maintain financial strength and to protect
our ability to meet ongoing liabilities, to continue as a going concern, to maintain creditworthiness and to maximize returns for our shareholders over the long term, of which there can be no assurances. Protecting the ability to pay
current and future liabilities includes maintaining capital above minimum regulatory levels, current financial strength rating requirements and internally determined capital guidelines and calculated risk management levels. We manage
capital structure to maximize financial flexibility by making adjustments in response to changes in economic conditions and the risk characteristics of the underlying assets and business opportunities. We do not presently utilize any
quantitative measures to monitor our capital, but rather we rely on our management’s expertise to sustain the future development of the business. Management reviews its capital management approach on an ongoing basis and believes that this
approach, given our size, is reasonable.
There were no changes to our approach to capital management during the period. We are not subject to externally imposed capital requirements.
Inflation Reduction Act of 2022 (the “IR Act”)
On August 16, 2022, the Inflation Reduction Act of 2022 (the “IR Act”) was signed into federal law. The IR Act provides for, among other measures, a new U.S. federal 1% excise tax on certain
repurchases (including redemptions) of stock by publicly traded domestic (i.e., U.S.) corporations. The excise tax is imposed on the repurchasing corporation and the amount of the excise tax is generally 1% of the fair market value of the
stock repurchased. However, for purposes of calculating the excise tax, repurchasing corporations are permitted to net the fair market value of certain new stock issuances against the fair market value of stock repurchases during the same
taxable year. In addition, certain exceptions apply to the excise tax. The Treasury has been given authority to provide regulations and other guidance to carry out, and prevent the abuse or avoidance of the excise tax. The IR Act applies
only to repurchases that occur after December 31, 2022.
During the second quarter of 2024, the IRS issued final regulations with respect to the timing and payment of the excise tax. Pursuant to those regulations, the Company would need to file a
return and remit payment for any liability incurred during the period from January 1, 2023 to December 31, 2023 on or before October 31, 2024. For certain taxpayers affected by Hurricane Beryl, the deadline to file such returns and remit
such payment has been extended to February 2025.
The Company is currently evaluating its options with respect to payment of this obligation. If the Company is unable to pay its obligation in full, it will be subject to additional interest
and penalties which are currently estimated at 10% interest per annum and a 5% underpayment penalty per month or portion of a month up to 25% of the total liability for any amount that is unpaid from November 1, 2024 until paid in full.
Emerging Growth Company Status
We are an “emerging growth company,” as defined in Section 2(a) of the Securities Act, as modified by the JOBS Act, and we will take advantage of certain exemptions from
various reporting requirements that are applicable to other public companies that are not emerging growth companies including, but not limited to, not being required to comply with the auditor attestation requirements of Section 404 of the
Sarbanes-Oxley Act, reduced disclosure obligations regarding executive compensation in our periodic reports and proxy statements, and exemptions from the requirements of holding a nonbinding advisory vote on executive compensation and
stockholder approval of any golden parachute payments not previously approved.
Further, Section 102(b)(1) of the JOBS Act exempts emerging growth companies from being required to comply with new or revised financial accounting standards until private
companies (that is, those that have not had a Securities Act registration statement declared effective or do not have a class of securities registered under the Exchange Act) are required to comply with the new or revised financial
accounting standards. The JOBS Act provides that a company can elect to opt out of the extended transition period and comply with the requirements that apply to non-emerging growth companies but any such election to opt out is irrevocable.
We have elected not to opt out of such extended transition period, which means that when a standard is issued or revised and it has different application dates for public or private companies, we, as an emerging growth company, can adopt
the new or revised standard at the time private companies adopt the new or revised standard.
Smaller Reporting Company
Additionally, we are a “smaller reporting company,” as defined in Item 10(f)(1) of Regulation S-K. Smaller reporting companies may take advantage of certain reduced
disclosure obligations, including, among other things, providing only two years of audited financial statements. We will remain a smaller reporting company until the last day of the fiscal year in which (i) the market value of our common
stock held by non-affiliates exceeds $250 million as of the last business day of our second fiscal quarter, or (ii) our annual revenue exceeded $100 million during such completed fiscal year and the market value of our common stock held by
non-affiliates exceeds $700 million as of the last business day of our second fiscal quarter. If we continue to be a smaller reporting company at the time we cease to be an emerging growth company, we may continue to rely on exemptions from
these certain reduced disclosure requirements that are available to smaller reporting companies.
Evaluation of Disclosure of Controls and Procedures
Based on an evaluation as of April 30, 2025, our management, including the Chief Executive Officer and Chief Financial Officer, has concluded that our disclosure controls
and procedures (as defined in Rule 13a-15(e) under the Exchange Act) were not effective to provide reasonable assurance because of a material weakness in our internal control over financial reporting as described below. There have been no
changes during the nine months ended April 30, 2025.
Material Weakness
A material weakness is a deficiency, or a combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a
material misstatement of our annual or interim financial statements will not be prevented or detected in a timely manner.
We did not design or maintain an effective control environment commensurate with financial reporting requirements. Specifically, we did not consistently have documented
evidence of review procedures and, due to resource limitations, did not always maintain segregation of duties between preparing and reviewing analyses, and reconciliations.
The above material weakness did not result in a material misstatement of our unaudited condensed consolidated financial statements or our consolidated financial statements,
however, it could result in a misstatement of our account balances or disclosures that would result in a material misstatement that would not be prevented or detected.
Remediation Activities
We are working to remediate the material weakness and are taking steps to strengthen our internal control over financial reporting through the continued hiring of additional
appropriately skilled finance and accounting personnel with the requisite technical knowledge and skills. With the additional skilled personnel, we are taking appropriate and reasonable steps to remediate this material weakness through the
implementation of appropriate segregation of duties, formalization of accounting policies and controls and retention of appropriate expertise for complex accounting transactions. We will not be able to fully remediate these control
deficiencies until these steps have been completed and have been operating effectively for a sufficient period of time. Management will continue to review and make necessary changes to the overall design of our internal control environment,
as well as policies and procedures to improve the overall effectiveness of internal control over financial reporting. The material weakness will not be considered remediated, however, until the applicable controls operate for a sufficient
period of time and management has concluded that these controls are operating effectively.
Subsequent Events
Issuance of shares
In May 2025, the Company issued 3,346,000 shares in accordance with the ELOC Agreement with Helena I for gross proceeds of $1,051,857.
Return of carbon credits and cancellation of shares
On May 6, 2025, the Company entered into an agreement with a vendor of carbon credits for the return of the 1,500,000 consideration shares received for cancellation in return for the carbon credits.
| Item 3. |
Quantitative and Qualitative Disclosures About Market Risk.
|
We are a smaller reporting company as defined by Rule 12b-2 of the Exchange Act and are not required to provide the information otherwise required under this item.
Evaluation of Disclosure Controls and Procedures
Disclosure controls and procedures are designed to ensure that information required to be disclosed by us in our Exchange Act reports is recorded, processed, summarized, and reported within
the time periods specified in the SEC’s rules and forms, and that such information is accumulated and communicated to our management, including our principal executive officer and principal financial officer or persons performing similar
functions, as appropriate to allow timely decisions regarding required disclosure.
Under the supervision and with the participation of our principal executive officer and principal financial officer, we conducted an evaluation of the effectiveness of our disclosure controls
and procedures as of the end of the fiscal period ended April 30, 2025, as such term is defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act. Based on this evaluation, our principal executive officer and principal financial
officer concluded that during the period covered by this report, our disclosure controls and procedures were not effective because we did not design or maintain an effective control environment commensurate with financial reporting
requirements. Specifically, we did not consistently have documented evidence of review procedures and, due to resource limitations, did not always maintain segregation of duties between preparing and reviewing analyses, and reconciliations.
A material weakness, as defined in the SEC regulations, is a deficiency, or combination of deficiencies, in internal control over financial reporting, such that there is a reasonable
possibility that a material misstatement of the company’s annual or interim financial statements will not be prevented or detected on a timely basis. The above material weakness did not result in a material misstatement of our unaudited
condensed consolidated financial statements or our consolidated financial statements, however, it could result in a misstatement of our account balances or disclosures that would result in a material misstatement that would not be prevented
or detected.
In light of this material weaknesses, we performed additional analysis as deemed necessary to ensure that our financial statements were prepared in accordance with U.S. generally accepted
accounting principles.
We are working to remediate the material weakness and are taking steps to strengthen our internal control over financial reporting through the continued hiring of additional appropriately
skilled finance and accounting personnel with the requisite technical knowledge and skills. With the additional skilled personnel, we are taking appropriate and reasonable steps to remediate this material weakness through the implementation
of appropriate segregation of duties, formalization of accounting policies and controls and retention of appropriate expertise for complex accounting transactions. We will not be able to fully remediate these control deficiencies until
these steps have been completed and have been operating effectively for a sufficient period of time. Management will continue to review and make necessary changes to the overall design of our internal control environment, as well as
policies and procedures to improve the overall effectiveness of internal control over financial reporting. The material weakness will not be considered remediated, however, until the applicable controls operate for a sufficient period of
time and management has concluded that these controls are operating effectively.
Changes in Internal Control over Financial Reporting
There was no change in our internal control over financial reporting that occurred during the fiscal quarter ended April 30, 2025 covered by this Quarterly Report that has materially affected,
or is reasonably likely to materially affect, our internal control over financial reporting.
| Item 1. |
Legal Proceedings
|
To the knowledge of our management, there is no litigation currently pending or contemplated against us, any of our officers or directors in their capacity as such or against any of our
property.
| Item 1A. |
Risk Factors
|
Factors that could cause our actual results to differ materially from those in this Quarterly Report are any of the risks described in our Annual Report on Form 8-K/A filed with the SEC on
March 7, 2025 and with the risks described in the our prospectus included in the Registration Statement on Form S-1 we filed on March 3, 2025. Any of these factors could result in a significant or material adverse effect on our results of
operations or financial condition. Additional risk factors not presently known to us or that we currently deem immaterial may also impair our business or results of operations. As of the date of this Quarterly Report, there have been no
material changes to the risk factors disclosed in our Annual Report.
| Item 2. |
Unregistered Sales of Equity Securities and Use of Proceeds.
|
In March 2025, the Company issued 1,606,000 Common Shares in accordance with the ELOC Agreement to Helena 1 (Note 7) for gross proceeds of $481,530. The Common Shares were issued in
reliance on the exemptions from registration provided by Section 4(a)(2) under the Securities Act and/or Regulation D promulgated thereunder. Helena has represented to the Company that it is an accredited investor, as defined in Rule 501
of Regulation D promulgated under the Securities Act.
| Item 3. |
Defaults Upon Senior Securities
|
None.
| Item 4. |
Mine Safety Disclosures.
|
Not applicable.
| Item 5. |
Other Information.
|
| Item 6. |
Exhibits
|
The following exhibits are filed as part of, or incorporated by reference into, this Report on Form 10-Q.
|
Exhibit
Number
|
Description
|
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2.1†
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2.2
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2.3
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2.4
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3.1
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3.2
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4.1
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4.2
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4.3
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10.1
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10.2
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10.3
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10.4+
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10.5
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10.6
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10.7
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10.8
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10.9
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10.10
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10.11
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10.12
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10.13
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10.14
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10.15
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10.16
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10.17+
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10.18+
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10.19+
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10.20
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10.21
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10.22
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10.23
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21.1
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Certification of Principal Executive Officer Pursuant to Securities Exchange Act Rules 13a-14(a) and 15(d)-14(a), as adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
|
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Certification of Principal Financial Officer Pursuant to Securities Exchange Act Rules 13a-14(a) and 15(d)-14(a), as adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
|
|
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Certification of Principal Executive Officer Pursuant to 18 U.S.C. Section 1350, as adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
|
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Certification of Principal Financial Officer Pursuant to 18 U.S.C. Section 1350, as adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
|
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101.INS*
|
Inline XBRL Instance Document (the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document)
|
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101.SCH*
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Inline XBRL Taxonomy Extension Schema Document
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101.DEF*
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Inline XBRL Taxonomy Extension Definition Linkbase Document
|
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101.LAB*
|
Inline XBRL Taxonomy Extension Labels Linkbase Document
|
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101.PRE*
|
Inline XBRL Taxonomy Extension Presentation Linkbase Document
|
|
104*
|
Cover Page Interactive Data File (formatted as inline XBRL and contained in Exhibit 101)
|
* Filed herewith.
** These certifications are furnished to the SEC pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 and are deemed not filed for purposes of Section 18 of the Securities Exchange Act of
1934, as amended, nor shall they be deemed incorporated by reference in any filing under the Securities Act of 1933, except as shall be expressly set forth by specific reference in such filing.
† Schedules and exhibits to this Exhibit omitted pursuant to Regulation S-K Item 601(b)(2). The Registrant agrees to furnish supplementally a copy of any omitted schedule or exhibit to the SEC upon request.
+ Indicates management contract or compensatory plan.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed
on its behalf by the undersigned thereunto duly authorized on this 23rd day of June, 2025.
|
|
DEVVSTREAM CORP.
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/s/ David Goertz
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Name:
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David Goertz
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|
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Title:
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Chief Financial Officer
|
|
|
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(Principal Financial and Accounting Officer)
|
CERTIFICATION
PURSUANT TO RULES 13a-14(a) AND 15d-14(a)
UNDER THE SECURITIES EXCHANGE ACT OF 1934, AS ADOPTED PURSUANT TO
SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002
I, Sunny Trinh, certify that:
| 1. |
I have reviewed this Quarterly Report on Form 10-Q of DevvStream Corp.;
|
| 2. |
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under
which such statements were made, not misleading with respect to the period covered by this report;
|
| 3. |
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and
cash flows of the registrant as of, and for, the periods presented in this report;
|
| 4. |
The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and
internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
|
| a) |
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the
registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
| b) |
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the
reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
| c) |
Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as
of the end of the period covered by this report based on such evaluation; and
|
| d) |
Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal
quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
|
| 5. |
The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee
of the registrant’s board of directors (or persons performing the equivalent functions):
|
| (a) |
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability
to record, process, summarize and report financial information; and
|
| (b) |
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
|
|
Date: June 23, 2025
|
By:
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/s/ Sunny Trinh
|
|
Sunny Trinh
|
||
|
Chief Executive Officer
|
||
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(Principal Executive Officer)
|
CERTIFICATION
PURSUANT TO RULES 13a-14(a) AND 15d-14(a)
UNDER THE SECURITIES EXCHANGE ACT OF 1934, AS ADOPTED PURSUANT TO
SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002
I, David Goertz, certify that:
| 1. |
I have reviewed this Quarterly Report on Form 10-Q of DevvStream Corp.;
|
| 2. |
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under
which such statements were made, not misleading with respect to the period covered by this report;
|
| 3. |
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash
flows of the registrant as of, and for, the periods presented in this report;
|
| 4. |
The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and
internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
|
| a) |
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant,
including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
| b) |
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the
reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
| c) |
Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of
the end of the period covered by this report based on such evaluation; and
|
| d) |
Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal
quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
|
| 5. |
The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of
the registrant’s board of directors (or persons performing the equivalent functions):
|
| (a) |
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to
record, process, summarize and report financial information; and
|
| (b) |
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
|
|
Date: June 23, 2025
|
By:
|
/s/ David Goertz
|
|
David Goertz
|
||
|
Chief Financial Officer
|
||
|
(Principal Financial Officer and Accounting Officer)
|
CERTIFICATION PURSUANT TO
18 U.S.C. 1350
(SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002)
In connection with the Quarterly Report of DevvStream Corp. (the “Company”) on Form 10-Q for the quarterly period ended April 30, 2025, as filed with the Securities and Exchange Commission (the “Report”), I,
Sunny Trinh, Chief Executive Officer of the Company, certify, pursuant to 18 U.S.C. §1350, as added by §906 of the Sarbanes-Oxley Act of 2002, that, to the best of my knowledge:
| 1. |
The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
|
| 2. |
The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company as of and for the period covered by the Report.
|
|
Date: June 23, 2025
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By:
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/s/ Sunny Trinh
|
|
Sunny Trinh
|
||
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Chief Executive Officer
|
||
|
(Principal Executive Officer)
|
CERTIFICATION PURSUANT TO
18 U.S.C. 1350
(SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002)
In connection with the Quarterly Report of DevvStream Corp. (the “Company”) on Form 10-Q for the quarterly period ended April 30, 2025, as filed with the Securities and Exchange Commission (the “Report”), I,
David Goertz, Chief Financial Officer of the Company, certify, pursuant to 18 U.S.C. §1350, as added by §906 of the Sarbanes-Oxley Act of 2002, that, to the best of my knowledge:
| 1. |
The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
|
| 2. |
The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company as of and for the period covered by the Report.
|
|
Date: June 23, 2025
|
By:
|
/s/ David Goertz
|
|
David Goertz
|
||
|
Chief Financial Officer
|
||
|
(Principal Financial Officer and Accounting Officer)
|
SIGNATURES
Pursuant to the requirements of the Securities Act, the registrant has duly caused this registration statement to be signed on its behalf by the undersigned, thereunto duly authorized, in
Sacramento, California, on June 27, 2025.
|
DEVVSTREAM CORP
|
||||||||
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By:
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/s/ Sunny Trinh
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|||
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Name:
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Sunny Trinh
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Title:
|
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Chief Executive Officer
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POWER OF ATTORNEY
K
NOW ALL BY THESE PRESENTS, that each person whose signature appears below hereby constitutes and appoints Sunny Trinh and David Goertz, and each of them, as his true and lawful agents,
proxies and attorneys-in-fact, with full power of substitution and resubstitution, for him or her and in his or her name, place and stead, in any and all capacities, to (i) act on, sign and file with the Securities and Exchange Commission
any and all amendments (including post-effective amendments) to this registration statement together with all schedules and exhibits thereto and any subsequent registration statement filed pursuant to Rule 462(b) under the Securities Act of
1933, as amended, together with all schedules and exhibits thereto, (ii) act on, sign and file such certificates, instruments, agreements and other documents as may be necessary or appropriate in connection therewith, (iii) act on and file
any supplement to any prospectus included in this registration statement or any such amendment or any subsequent registration statement filed pursuant to Rule 462(b) under the Securities Act of 1933, as amended, and (iv) take any and all
actions which may be necessary or appropriate to be done, as fully for all intents and purposes as he might or could do in person, hereby approving, ratifying and confirming all that such agent, proxy and attorney-in-fact or any of his
substitutes may lawfully do or cause to be done by virtue thereof.
Pursuant to the requirements of the Securities Act of 1933, this registration statement has been signed by the following persons in the capacities and on the dates indicated.
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Signature
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Title
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Date
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/s/ Sunny Trinh
|
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Chief Executive Officer
(Principal Executive Officer)
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June 27, 2025
|
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Sunny Trinh
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*
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Chief Financial Officer
(Principal Financial and Accounting Officer)
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June 27, 2025
|
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David Goertz
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*
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Director
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June 27, 2025
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Wray Thorn
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*
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Director
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June 27, 2025
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Carl Stanton
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*
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Director
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June 27, 2025
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Michael Max Bühler
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*
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Director
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June 27, 2025
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Stephen Kukucha
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*
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Director
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June 27, 2025
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Jamila Piracci
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By: /s/ Sunny Trinh
Sunny Trinh
Attorney-in-Fact