Plurilock Security Stock

Good morning, and thank you for joining us. I know it is an early start for those on the West Coast, and I appreciate you being here. My name is Ian L. Paterson, and I am CEO of Plurilock Security. We're going to be covering a corporate update today on our growing defense platform, followed by a short question-and-answer session.

A few notes on logistics. [Operator Instructions] I will take questions after the prepared remarks. A recording will be posted to the Investor Relations page on our website following today's presentation. One piece of housekeeping before we start. This is a business update only. Our second quarter 2026 financial results are due later this month. We're not going to be covering any details of that today, and we're not going to be taking any questions on that. I'd refer you to communications later this month.

So before we get to business, I'll just draw your attention to the disclaimer on the screen and remind everybody that certain statements made on this call may be forward-looking in nature. Please take a moment to review and take a screenshot as needed.

Okay. For anyone new to the story, we'll start with a quick orientation of us as a company, and then we'll get into the specifics around the growing defense platform. Plurilock Security is a cybersecurity solutions provider and systems integrator. We were founded in 2016, and we trade on the TSX Venture Exchange under the ticker PLUR and on the OTCQB under the ticker PLCKF. Last year, we generated over $60 million in revenue with increasing gross margins, driven by our growing critical services segment across our portfolio of customers, including both commercial and public sector.

We maintain strong partnerships with some of the most consequential technology and cybersecurity companies in the world and are seeing strong tailwinds from the global trends of increasing defense spending, AI disruption and cyber risk. Our strategy since we went public has been easy to state, and that is to acquire distribution and then cross-sell higher-margin products and services through it.

Distribution in this context is the right or the ability to sell to customers who are, in some cases, hard to reach. And when we're talking about the public sector and government, in particular, it usually takes a special form of master service agreement called a contract vehicle. You might have the best capability in the market, but without a way for that government customer to procure through you, there's no practical way for you to get that capability into the hands of that customer. Ultimately, if you hold one of those contract vehicles, then you have a path to that customer. And in many cases, the competition is narrowed as compared to other customers who are out there.

Over the years, we have announced sales to numerous U.S. federal agencies, state agencies as well as Canadian agencies and government customers. And these include organizations such as the U.S. Navy, Department of Energy, Department of Transportation, Federal Trade Commission in California. This has included the California state legislature in Canada, organizations like Health Canada, Treasury Board, Privy Council, D&D, et cetera.

Now we'll get on to why we are here this morning. So 2 things happened over the last couple of months that are worth touching on and explaining. The first is that on July 20, we announced that our Aurora subsidiary, our U.S. operating subsidiary, had been notified of its selection as an awardee under NASA's SEWP VI contract. Then on August 6, we announced that our Canadian operating subsidiary, Integra, had been selected as a contract holder under the NATO Communications and Information Agency's Cybersecurity Dynamic Marketplace Lot 1, also known as the CSDM contract. I'll call that agency the NCIA agency for the rest of the call.

Both of these wins are contract vehicles. So I want to cover a couple of things this morning. First is a reminder of that -- of our ultimate strategy, how our contract vehicles fit into that strategy and why we are now a platform for both United States, Canadian and NATO [ reach, ] which is both hard to assemble and highly valuable both to us as well as prospective other partners out there in the industry. So first, we'll cover SEWP, which is NASA's Solution for Enterprise-Wide Procurement program. The SEWP vehicle, S-E-W-P, is what's known as a government-wide acquisition contract, which means agencies across the U.S. federal government can buy through it, not just NASA. NASA happens to be the agency that is administrating that contract. However, the SEWP contract is a GWAC, a government-wide acquisition contract.

So our U.S. operating subsidiary, Aurora, is one of a limited group of prequalified SEWP contractors, and it gives us a direct sales path to both civilian, defense and intelligence agencies. And our current SEWP contract or what's known as SEWP V, we have been operating for a number of years, which is set to conclude towards the end of this year in advance of SEWP VI, the new win going into effect. The way that contract vehicles work and the way that SEWP in particular works is that as a prequalified vendor, as a holder of the SEWP contract, we are eligible to compete for individual orders, sometimes called task orders.

The way this works is an agency -- so a government customer will identify some requirements. They'll issue a request. Sometimes it's an RFI, request for information or an RFQ, request for quote. They'll send that to the prequalified holders who will then respond and ultimately, somebody will usually win that piece of business. We have been operating this vehicle, as I said, for a number of years. And if you look back at some of our press releases over the last few years, you'll see references to the SEWP vehicle and orders such as the software order with the U.S. Department of Defense Agency back in March. This is what it looks like in terms of the vehicle actually turning into task orders that then turn into revenue.

So again, we have successfully been operating the SEWP V contract. We have been named a winner under the SEWP VI, which is the successor contract. And the details of that SEWP VI contract are as follows: SEWP VI as posted on NASA's site is a 10-year indefinite quantity, indefinite quantity -- excuse me, 10-year indefinite delivery indefinite quantity vehicle or what's known in the industry as an IDIQ. It has an aggregate program ceiling of USD 60 billion.

So that number is the program ceiling for the program. It will be shared across a group of contract holders, which will include us as one of them over that 10-year program. And effectively, what that means is that there's a significant amount of budget that has been allocated to the program, and it gives the contract holders the ability to compete for business in that program itself. The specific value of orders are ultimately then -- it is up to the individual task orders in terms of how much those task orders are worth. So that's the SEWP V and SEWP VI contract. Again, we are very excited about being named as a SEWP VI winner.

I'll turn now to the NATO contract. This is a new contract, both for us as well as for NATO. So unlike the SEWP program, which was a successor, SEWP VI succeeding SEWP V, the NATO contract is a brand-new vehicle. And our Canadian operating subsidiary, Integra has been selected as one of the winners under those contracts. For the CSDM contract, it is a 5-year multi-award IDIQ framework covering 8 functional categories across cybersecurity. Similar to SEWP VI and SEWP V, this contract allows us to bid on individual task orders, which will get issued by the NCIA agency and then order values and revenue are determined ultimately by those task orders.

So here's why I think these are an underappreciated component of the company. And that is really how difficult and competitive it is to get these contracts. So the way that we were successful in winning these contract vehicles is through working through a competitive process. So these competitions for contract vehicles are competitive. They are not always open. And in our experience, a company that is not positioned to compete for when one of these competitions runs is very limited in its ability to get it. And in many cases, they have to wait until the next cycle. That cycle might be years away. So these contracts don't come around all the time, and you have to be there with the right proposal in order to win them.

Now eligibility is a second barrier. So in addition to the contract competitions being only open and closed for a certain period of time, you have to be eligible in order to win. Now in a lot of cases, these contract vehicles will ask for things like past performance, which means the company's prior experience working with a similar contract vehicle and having success in terms of delivering products and services to those customers. So you need both past performance and the window to be open in order to compete successfully. Third is that certification, just as a general statement, is usually a requirement and that burden has been growing steadily.

So our Aurora subsidiary achieved CMMC Level 1 for the U.S. Department of Defense back in 2024. We also hold SOC 2, along with other prequalifications that, in many cases, are either required or can assist in showing that you are a strong bidder when you're going out and trying to approach these -- or compete, I should say, for these contracts. In Canada, there's also a new program called the CPCSC, which stands for the Canadian Program for Cyber Security Certification, which sets out mandatory controls for defense suppliers with enforcement beginning later this year.

So these are things that are difficult to get. In some cases, in the case of past performance, as an example, you have to have experience of having done similar work. So it's difficult as a new entrant to be able to compete successfully and get access to these programs. But like we've talked about, if you do have access to them, in the case of the CSDM contract, it's a 5-year contract. And in the case of SEWP VI, it's a 10-year contract, which really provides a great competitive moat for us to be able to continue executing. So the last piece there is just time in market.

In our case, Integra, our operating subsidiary, has actually been in the Canadian public sector since 1985. And Aurora has a multi-decade work experience as well. These were 2 companies that we had acquired in 2021 and 2022. And so it gives us really more than 3 decades of delivery history, which has been very, very useful for us in winning these contract vehicles. So if you put all this together, you have a reason that a company like us is able to punch above its weight. And it took us 2 acquisitions more than a decade to get to where we are. And the barrier for these types of contract vehicles is high. And so that means that these contract vehicles are prized, and we actually hear regularly from other operating businesses who are interested in them.

Ultimately, if I think about what these things mean, if we add up all of these contract vehicles together, Plurilock is now a platform with the ability to reach U.S. federal, civilian defense intelligence customers, Canadian federal government -- Canadian federal customers and now NATO customers. And so for a company of our size, having all 3 is quite unusual. I'll talk a little bit about the types of revenue because with these contract vehicles, we can be selling multiple different types of things. So as a solutions provider and systems integrator, our revenue is composed of 3 segments: hardware, software and services.

And I'll give you some examples of each one. So towards the end of June this year, we announced some data center sales to U.S. federal and state customers totaling $1.1 million. Inside that number were some high-performance server components for a U.S. DoD agency and data center infrastructure and support service for a federal -- for a U.S. federal agency. We've also delivered network infrastructure for the Department of Energy. Earlier this spring in May on the commercial side, we announced on-site engineering for a national consumer storage company around their data center modernization. And that is both people as well as hardware and providing integration.

So effectively, what this shows is that we are able to deliver whole solutions, so not just one piece of hardware, not just one piece of software, not just one service, but we're really delivering multiple elements, which for our customers, they appreciate being able to go and do kind of a one-stop shop, if you will. This also speaks to the growth that we're seeing supporting some of the tailwinds like data centers, which we're seeing certainly as a key component for some of the new AI boom that we're experiencing. So we talked about hardware. We also sell software and licensing. So some examples of that this year.

Earlier, we had a state legislature data center where we supplied endpoint detection response software, data security application control as well for a DoD agency, we provided e-mail solutions on a 5-year agreement. In Canada, we did some work with Health Canada as well as the Canadian law enforcement agency around virtualization, cloud platform licensing. And then for a state-level law enforcement agency, intrusion prevention, detection. And then in February, we also announced a data security licensing agreement inside a national security-focused government agency. So we've talked about hardware, and I've just given you some examples of software capabilities.

Last and not least, and certainly, this is where we've really been focusing our time is around services. So we call our team critical services, although it shows up on our financial statements under the line item professional services. So in May, we announced critical services contracts totaling $1.3 million and $1.1 million. The work inside those contracts included engineering support for a customer's security operations center, enhancements to a data loss prevention program, some security change management, AI operations support and security assessment work.

Then slightly earlier than that in February, we renewed and expanded engagements covering insider risk, security information and event management operations and some security comms programs. We also delivered some firewall security and automation for a Canadian company through one of our alliance partners. And as well, we -- with our critical services team, we are running readiness programs for certification regimes similar to what I mentioned before. So CMMC in the United States and CPCSC in Canada. And I'll just take a moment to touch on both of those because we are seeing with this large defense tailwind, more and more companies are looking for CMMC help in the United States and CPCSC help in Canada. Both of these are areas that we work with customers on, and we're certainly looking for more to be working with.

So maybe one last point, and it follows from what we just talked about, which is that the assembling of this platform has taken time. It's been hard to do. And it's valuable not only just to us, but also to other technology companies who might not have similar experience past performance credentials or qualifications in order to win these contracts themselves. So when we announced our SEWP V extension in June, we said that technology vendors, systems integrators and partners that lack their own procurement vehicles can partner with us to reach U.S. federal clients.

That invitation is open, and it's one of the reasons that the vehicles matter beyond just the orders we win for ourselves, but also for partners. And we can see a live example of a partnership from last year, where we announced in July that Forcepoint named Plurilock a certified services partner, which puts our critical services team in front of Forcepoint's own customers and implementation. And this is a great example of a partnership that can run in both directions. not only us with our procurement vehicles, but also Plurilock being recognized as a key provider of capability in, as I say, running in both directions.

So why does this matter now more than it did before? And the answer is that the set of companies that need a route into government keeps growing, and it's looking a lot less and less traditional. So defense and security buyers are procuring categories of technology that barely existed as a procurement line item a decade ago or even 5 years ago. So think about autonomous systems, artificial intelligence, quantum capabilities, robotics. Many of the companies building in those categories are young. They might have the tech, but they don't have the vehicle. They don't have the past performance. They don't have the certifications. And this is really where partners like Plurilock can provide a lot of value.

So let me close with a summary, and then we will get into questions. So here is what we are working with against that backdrop. A 10-year U.S. federal purchasing vehicle where we have been notified of our selection as an awardee, 5-year NATO framework, an established Canadian federal position and a services practice with growing margins. On top of that, a platform other tech companies have reason to want access to. Now none of this is guarantees of orders, and none of this is a guarantee that we'll be able to win those orders and convert to revenue. However, we have a really good track record. And while the work is in front of us, it is work that we're excited to go after.

So with that, I would encourage if you have questions do use the Q&A function. So it should be at the bottom of your screen. I've got a couple of questions that have already popped up, and happy to take them as they come in.

So the first question is -- I'll read off the question first here. So considering your list of partners, is Plurilock categorized as an MSP, an MSSP or a reseller?

So that's a great question. And so the reality is that Plurilock is a solutions provider. In some cases, we might provide a piece of hardware or software. And so from that perspective, we would be reselling that technology. In other cases, we might be providing a one-off service through our critical services practice. And so from that perspective, you can think of us as a systems integrator or it might be the case that we're providing a managed capability. And so that would be more of an MSSP.

So the answer is it depends on the situation. Broadly speaking, we consider ourselves a systems integrator because it usually encompasses both resell onetime services and managed services. So it kind of bridges all those different components. And I think the other thing that I would note is that as a company, we have been growing our services practice as a percentage of revenue. So if you look at critical services revenue from last year and you compare that to where it was a couple of years prior, you'll note that the services revenue has really increased as a percentage of revenue.

So short answer, solutions provider and systems integrator, it can encompass multiple items.

So the next question is, what other industries are you seeing potential collaboration opportunities given the channels and infrastructure you have across Canada, the U.S. and NATO?

This is a great question. So we generally are a cybersecurity and cyber defense company. What that means, though, is that really every piece of technology has chips in it these days. And so our ability to create value for customers is actually quite broad.

If I think about some newer emerging technologies that might not have existed 5, 10 years ago, I think about things like quantum. I also think about the growth in autonomous vehicles, so UAS, so unmanned autonomous vehicles has also been a big growth. Cyber itself really applies to every segment of IT. And so you don't really have to go very far to find a cyber use case within most technology products. So I would just summarize that to say emerging technology, quantum AI drones as probably being the 3 that you might not immediately think about, but those certainly have a huge cyber application, particularly for where the world is today and where the world appears to be going.

So a follow-up question, are you doing any work in the private sector?

Yes. So that's a great question. So the presentation today has really focused on the public sector contract vehicles. Depending on the year, the percentage of revenue from the public sector to the private has been around 50-50, goes up and down a little bit depending on the year. So we absolutely do a lot of work in the private sector. I would say that the 3 main verticals within the private sector include financial services, health care and industrials. Within industrials, this includes things like semiconductors, aerospace and defense.

Usually within the industrial segment, it's folks who have both IT technology as well as OT technology or what's called operational technology. So certainly, we do a lot of work there, and we tend to skew more towards larger organizations. So think Global 2000 type of organizations, enterprises or organizations that have a disproportionate amount of risk from cybersecurity. So again, that's where we tend to focus.

If you were to look through our corporate presentation within the first couple of slides, you'll see some examples of the types of industries, types of customers. And then certainly, you can refer back to previous press releases where we've talked about not specific names of clients, which is a lot of times difficult in the cybersecurity industry to name. But certainly, we talk about kind of the industry that those customers are operating in.

So the next question here is SEWP V runs out in September with options through to April of next year. Is there a gap between when SEWP V ends and when SEWP VI starts?

So great question. So the answer is we don't believe there's going to be any gap. The good news is that we are holders of both contracts. So our current SEWP V contract as well as SEWP VI. There have been a number of announcements in regards to SEWP V being extended. My belief is the government doesn't want there to be any gaps. And so because we have both SEWP V as well as SEWP VI, we believe that we're in a good spot, and it's ultimately up to NASA and the government to transition that program.

I think we have time for maybe 1 or 2 more questions. So I'll try and get to these. So question is, you are a small company, how do you deliver against a NATO framework?

So great question. I mean, a couple of things that I would say. First is that, again, because of our past performance that I had listed, we're in a really good position to be able to bring experience to NATO. We've also spent a good amount of time both with the -- with our NATO reps in Canada. I was also in Brussels, I think, last year at NATO headquarters. So we're -- we feel that we're in a good position. I also think just macro -- from a macro perspective, Canada has really tried to raise its standing as increasing Canada's own investment in defense. And ultimately, its NATO 2% of GDP commitment.

So I think that both Canada is well positioned. I think that we are positioned well in Canada. And we have the benefit of being able to leverage a lot of the experience that we've done internationally to be able to bring to bear. So I think that we're in a good spot, and I think that there's great opportunity for us to pursue. So I think that there's probably time for one more question. And if you have a question and you weren't able to get it answered, happy to take questions via e-mail as well.

So the last question here that I have is, do you have a partnership program with others, other consultants, I think, is the question.

So the short answer is yes. I mean, we do have -- cybersecurity is a team sport. And so we do have a couple of different partnership programs. We've talked a little bit about some of the vendors that we work with, so companies like CrowdStrike and Forcepoint. We also have alliance partners who are actually bringing our critical services team into their customers. And then we also work with other consultants as well. So the short answer is yes. Details can be found further on the Plurilock.com website as well as through conversation with some of our business development folks.

So thank you very much for joining the session today. As I said, if we didn't get to your question or something comes up afterwards, please reach out through the Investor Relations page on our website. We'll be glad to answer those. And thank you for joining this morning, and thank you for following our story. It took us multiple years, a couple of acquisitions to build a platform to be able to reach government buyers across the United States, Canada and now NATO. The barriers that made it slow for us to do are the same ones that make it hard for others to copy. We're just getting started here, and our job now is to convert that into dollars at the end of the day.

So thank you for your time, and we will talk to you soon. Bye-bye.

Welcome to the Annual General Meeting of the Shareholders of Plurilock Securities, Inc. I'm Ali Hakimzadeh, the Executive Chair and Director of the company, in accordance with the articles of the company and with the consent of the meeting, I will act as Chair of the meeting.

I appoint Jan Urata of Take It Public Services, Inc. to act as Recording Secretary of the meeting. Odyssey Trust Company, the company's transfer agent has provided us with a scrutineer. Therefore, I appoint Jessica De La Torre to act as scrutineer of the meeting.

We will now proceed with the formal portion of today's meeting. To expedite the formal business of the meeting in accordance with the articles of the company, I will propose all motions, a seconder is not required.

Notice of the meeting. The company used notice and access to deliver the meeting materials to shareholders on May 15, 2026. A notice and access notification and proxy was mailed to all shareholders of record as of May 4, 2026, and meeting materials, including the company information circular dated May 4, 2026, were posted on the company's website and on SEDAR+.

Pursuant to notice and access a sufficient supply of printed circular copy was provided to Broadridge Financial Solutions Inc. and Odyssey for any shareholder requesting a copy. Unless there are any objections, I propose we dispense with the reading of the notice of the meeting.

The affidavit of mailing was provided by Odyssey in accordance with the articles of the company, which will be filed with the minutes of the meeting.

Scrutineers' report and quorum. I now ask the scrutineer read her report on the tenants at the meeting.

There's a total of 48 shareholders holding 12,998,634 shares at the meeting, representing 16.33% of the outstanding shares.

I adopt the report of scrutineer and declare the attendance at this meeting to be therein set out. I declare that the quorum of shareholders present and that this meeting has been regularly called and properly constituted for the transaction of business.

Financial statements. The first item of business is the presentation of the audited consolidated financial statements of the company for the year ended December 31, 2025. The report of the auditor thereon and the related management discussion and analysis. The financial materials were filed on SEDAR+ on April 20, 2026, in accordance with securities legislation.

Accordingly, unless someone specifically requests that I do so, I propose that the auditor's report not be read at the meeting and will consider them received by shareholders as submitted to the meeting.

Setting the number of directors. The next item of business is setting the number of directors at five. Is there any discussion on this motion?

Hearing none, I move to set the number of directors at five. I declare the motion carried.

Election of directors. The next item of business is the election of directors. The Board of Directors presently consists of five directors whose terms of office are deemed to have expired today pursuant to the company's articles. The circular contains the names of five persons who are proposed for election at the meeting. These 5 proposed nominees are Ian Paterson, William Edward Hammersla III, Jennifer Swindell, Blake Corbet, Ali Hakimzadeh Is there any discussion regarding this motion?

Regarding none, I declare the persons nominated have been elected directors of the company by acclamation to hold office until next Annual General Meeting of the shareholders of the company, subject to the provisions of the articles of the company or the British Columbia Business Corporations Act.

Appointment of auditors. The next item of business is the reappointment of the company's auditors, MNP LLP, Chartered Accountants, first appointed July 2, 2024. Is there any discussion on this motion?

Hearing none, I move to appoint MNP LLP, Chartered Professional Accountants as auditors of the company until the next Annual Meeting of the Shareholders of the company or until a successor is appointed at a remuneration to be fixed by directors. I declare the motion carried.

Reapprove amended Omnibus Incentive Plan. The next item of business is the consideration of ordinary resolution to satisfy and reapprove the company's amended Omnibus Incentive Plan as described in the circular. With the permission of the meeting, I will dispense with reading the resolution to the meeting, the full text of which is set forth on Page 21 of the circular. Is there any discussions on this resolution?

Hearing none, I move to approve the resolution to ratify and reapprove the amended plan. I declare the motion carried.

Termination of the meeting. This completes the formal business of the meeting and a motion for termination of this meeting is now in order. I move that this meeting to be terminated. I declare the motion carried.

Management of the company can now proceed to provide an update on the company's progress or answer any questions. Thank you.

Any questions from any of the attendees on the call?

Okay. Ian, do you want to give a brief overview of the company for those who are currently on a call?

Thank you, Ali. Yes, I would appreciate that option. So first of all, it's good to see everybody here. I think that we've seen quite a shift in the overall markets certainly from last year going into this year with the renewed focus around defense globally.

As a Canadian headquartered company and founded in Canada, we've also seen a significant change in Canada's defense posture as well as European defense posture, all of which we believe are significant tailwinds for businesses like Plurilock, which are at their core cybersecurity solutions provider.

We are increasingly seeing that organizations are under threat, both by nation states as well as criminally motivated ransomware gangs as well as insider threats. And so the existing tailwinds, which had been in place prior to this year, are also continuing. All of this, we believe, are -- sets the stage very well for Plurilock to be successful. We are encouraged by the strong shareholder support from this meeting, and we look forward to further communications from the company on our progress over the coming while. Thank you.

Okay. Great. Jan, anything else that we need to do here?

I think that's it.

Okay. Well, thank you, everybody, for coming.

Good morning, and thank you for joining us for Plurilock Securities conference call to discuss its financial results for the quarter ending September 30, 2025. I'm Ryan Freemantle from Sophic Capital, and we handle Plurilock's Investor Relations. On the call today, we have Plurilock's CEO, Ian L. Paterson; and CFO, Scott Meyers. [Operator Instructions]

Before management discusses the results, I'd like to remind everyone that certain statements in this call may be forward-looking in nature. These include statements involving known and unknown risks, uncertainties and other factors that could cause actual results to differ materially from those expressed or implied in our forward-looking statements.

For caveats about forward-looking statements and risk factors, please see Plurilock's MD&A for the quarter ending September 30, 2025, which can be found on our company profile at SEDAR+. And unless otherwise stated, all dollar amounts referred to in this call are Canadian dollars, the company's reporting currency.

I will now pass the call over to Plurilock's CEO, Ian Paterson. Ian?

Thank you, Ryan, and thank you all for joining us today. Good morning, and welcome to the Plurilock Financial Results Conference Call for the third quarter of 2025. I'm Ian L. Paterson, CEO of Plurilock. Today, as we review the quarterly results, I will provide highlights along with a business update and a brief overview of our recent financial performance.

We will conclude the prepared remarks by discussing our outlook, and we will leave some time at the end for Q&A. Before discussing the quarter in detail, I want to start with a brief view of the global cyber landscape. Threat activity continues to rise sharply, driven by AI-enabled attack automation, increasingly aggressive state-sponsored actors and systematic weaknesses buried within global supply chains.

In recent weeks, we've seen a stark reminder of how the threat landscape is shifting with the disclosure that a China-linked group used a major generative AI platform to automate portions of an espionage campaign targeting technology, financial, chemical and government organizations.

According to public reporting, attackers leveraged AI to generate code, chain tasks together and autonomously compromise networks with minimal human involvement. This is exactly the type of AI-enabled threat vector the industry has been anticipating, and it underscores why cybersecurity capabilities are now inseparable from both national security and enterprise resilience.

Public sector institutions, critical infrastructure operators and advanced manufacturers remain high priority targets because of the outsized impact a successful breach can have. This is especially true across the defense sector. Modern military platforms from vehicles to sensors to precision systems now rely heavily on embedded electronics and network components, all of which introduce cyber exposure that must be secured to ensure operational integrity.

As a result, cybersecurity is no longer a back-office IT function. It has become a strategic requirement for national readiness. Plurilock is aligned with this risk and shift. We continue to take a selective disciplined approach to the markets we pursue across North America and NATO-allied countries, focusing on environments where resilience and reliability are mission-critical.

Our pipeline remains healthy and growing, supported by long-standing relationships, deeper partner collaboration and targeted business development. During today's call, we'll be discussing 2 closely linked parts of our business. First, our solutions business, where we deliver cybersecurity technologies through our extensive partner and customer ecosystems and often serve as the initial entry point for expanding relationships into critical services engagements.

Second, Critical Services, which is our high-end services team that provides tailored high-value cybersecurity expertise to help clients solve immediate security issues and strengthen long-term operational resilience. Plurilock was founded to address one of the most persistent challenges in cybersecurity.

Enterprises and government agencies rely on dozens, sometimes hundreds of point solutions yet still struggle to extract real value or reduce risk. When we went public in 2020, our business was small and early stage. Since then, we have scaled significantly, driven by an initial strategy of acquiring IT resellers to gain customer access and then cross-selling higher-margin cybersecurity capabilities.

As we look ahead, here's how we are positioning Plurilock for its next phase of growth. Plurilock differentiation lies in our ability to operate at the intersection of critical infrastructure and mission-critical cybersecurity services, allowing us to mobilize quickly for federal, enterprise and defense sector clients.

Since launching in early 2024, critical services has become our primary growth engine, delivering higher margins, more client stickiness and an advisory role across compliance, architecture and integration. Our strategy is to convert these projects into long-term engagements while adding adjacent high-value offerings that strengthen client relationships and expand profitability.

We are now scaling this model globally, leveraging our success with U.S. and Canadian government clients to pursue opportunities across NATO and other allied defense and commercial markets, often in partnership with major integrators. This positions Plurilock to capture a meaningful share of the rapidly increasing global cyber and defense tech spend.

That strategy continues to deliver results. Our solutions business provides scale, distribution reach and long-standing client relationships, while our critical services, our highest margin business and faster growing segment is now the primary growth driver for Plurilock.

Since the inception of Critical Services, it has provided triple-digit growth year-over-year, and this quarter is no exception, up 165% year-over-year to $2.7 million, representing 17.5% of this quarter's total revenue compared to 7.1% in Q3 2024. At the same time, we have strengthened our operational foundation.

Following several acquisitions, we streamlined our cost structure, pulling out $2.7 million annualized savings, reducing duplicative roles and reshaping our operating model to support sustained margin expansion as well as leveraging global talent. We completed the divestiture of a non-core technology asset for $1.8 million, enhancing our focus and further improving our balance sheet.

Earlier this fall, we also secured a $3 million strategic investment from a long-term shareholder through a convertible debenture, adding meaningful financial flexibility to support execution. Over the last year, Plurilock has fundamentally expanded the scope of its addressable market.

In addition to maturing our core solutions and critical services businesses, we introduced 2 entirely new segments that did not meaningfully contribute in prior years. First, a formal capture process for the defense sector and a refocus on Canada given the by Canadian initiatives underway.

These teams are now pursuing new accretive opportunities that previously did not factor into our go-to-market, and the strategic shift is already resulting in accelerated pipeline growth, stronger qualification discipline and broader visibility into multiyear government and defense modernization programs.

We continue to leverage long-standing relationships with U.S. and Canadian government agencies to accelerate into both domestic and international commercial and government markets where organizations face equally complex security challenges.

Our strategic partnerships are also becoming meaningful contributors to growth. Relationships such as TD SYNNEX, Forcepoint and other OEM and channel partners we've onboarded over the past year are mature to the point where they're generating tangible qualified pipeline across both commercial and public sector accounts.

In parallel, our AI-first marketing strategy is attracting new inbound interest from larger organizations, including upper mid-market and in several cases, very large organizations within the Fortune 100. These motions are steadily expanding our reach and creating new entry points for both solutions and critical services.

Plurilock now operates with a stronger leadership bench, deeper domain expertise and a more efficient cost structure than at any point since going public. This combination of market tailwinds, strength in leadership and operational discipline positions Plurilock well as demand accelerates across enterprise, defense and critical infrastructure sectors.

At this point, I would like to walk you through some of the Q3 2025 financial results. As Ryan stated at the beginning of this call, all dollar amounts I'll refer to are in Canadian dollars, which is Plurilock's reporting currency. For more detailed information, please refer to the financial statements and management discussion and analysis document that we filed on SEDAR+.

Now turning to our third quarter financial results for the 3 months ended September 30, 2025. Total revenue for Q3 2025 increased 8% to $15.4 million as compared to $14.3 million for the third quarter ended September 30, 2025. Hardware and system sales revenue for Q3 totaled $1.5 million compared to $3.1 million, accounting for 9.8% of total revenue compared to 22% of total revenue in last year.

Software license and maintenance sales revenue for Q3 totaled $11.2 million compared to $10.1 million in 2024, accounting for 72.7% of total revenues compared to 70.9% in Q3 2024 last year. Professional services revenue for Q3 was $2.7 million compared to $1 million in the prior quarter ended June 30, 2024, accounting for 17.5% of total revenues compared to 7.1% in 2024.

Gross margin for Q3 2025 was 8.8% compared to 6.9% in Q3. EBITDA, a non-GAAP measure, improved 80% to a loss of $0.7 million versus a loss of $3.89 million in Q3. Adjusted EBITDA, a non-GAAP measure, improved 11.5% for Q3 to a loss of $1.6 million compared to a loss of $1.8 million in Q3 last year.

Cash and cash equivalents and restricted cash was $1.5 million compared to $1.4 million. And subsequent to the quarter ending, the company closed a convertible debenture for $3 million.

We've streamlined the organization and strengthened our balance sheet, positioning Plurilock to compete aggressively for new high-value business. As part of this effort, we've deliberately scaled back lower-margin resell and shifted talent investments into critical services and margin-accretive commercial work.

With a more selective bidding strategy and refined revenue recognition practices, we're creating a smoother revenue profile and building a foundation for structurally sustained margin expansion. This concludes the financial summary for the third quarter of fiscal 2025.

Looking ahead, we see a clear multiyear opportunity across both commercial and government sectors, supported by rising deal activity and an expanding pipeline. Within Critical Services, our land-and-expand model is working.

What starts as 5-figure discovery engagements with clients are progressing into larger multiphase programs. The land-and-expand motion continues to be repeatable with customers expanding their scope with us over multiple cycles.

Increased deal flow in the third quarter has carried us into the fourth quarter across both enterprise and public sector accounts, and we expect that to continue well into the new year, reinforcing demand for Plurilock's high-value cybersecurity capabilities. We are also seeing pipeline acceleration for new and expanded channel partnerships, not only with cybersecurity OEMs, but increasingly with global strategic integrators and defense primes.

These relationships create a scalable top-of-funnel motion. Partners are actively pulling us into programs, integrating us into bid teams and positioning Plurilock as a preferred service delivery arm. This is a new dynamic compared to last year and is quickly becoming one of the strongest contributors to pipeline growth across both commercial and defense markets.

Defense technology budgets globally continue to expand. The U.S. defense bill nears close to USD 1 trillion. Canada has increased its NATO commitment from 2% to 5% of GDP. Large modernization programs, submarines, missiles, defense systems, counter drone platforms are all driving significant cybersecurity requirements.

Every modern weapon system contains chips, telemetry and connectivity that must be cybersecured. We believe this macro environment plays directly to our strength with our capabilities in systems integration, security engineering and mission-critical service delivery. We are now engaging in opportunities that simply did not exist for Plurilock 12 months ago.

Our defense sector motion is unlocking access to U.S., Canadian and NATO programs where cybersecurity is embedded in nearly every modern modernization initiative. Similarly, the capture team is now qualifying RFP opportunities with periods of performing beginning earlier -- periods of performance beginning earlier 2026.

These pursuits, combined with channel partner-driven activity represent increased and incremental revenue streams on top of our existing business. We expect operating leverage to further improve as the mix shifts towards higher-margin critical services and software-enabled engagements.

With a lower operating expense run rate following restructuring and divestiture announced earlier this year, a strengthened balance sheet and a structured enterprise-grade capture process, our focus remains on expanding high-margin services and converting pipeline into awarded contracts as Plurilock progresses towards breakeven.

With that, I think, Ryan, we should turn it over to questions.

Yes. Thank you, Ian. [Operator Instructions] We'd like to thank those who have submitted their questions already. And let's start with -- in an early press release, you talked about gaining new PLCS contracts up to $10 million. Could you emphasize on that? And when can we see these contracts?

I think just to clarify quick, I don't think the contracts themselves were up to $10 million. I think it was new pipeline totaling $10 million, but I'll let you divulge that in.

Yes. So we announced, I think it was earlier this fall, late summer that we had seen significant growth in our sales pipeline. And I believe, Ryan, you are correct that it was -- it was in regards to increase in sales pipeline in a short amount of time, and that was what was notable and remarkable.

We have announced -- I mean, even over the last 6 weeks, we have been announcing a steady drive of contract wins. And I'd refer you back to the press releases that we put out. I will also say that some of the new initiatives that we talked about on -- just now during the early part of the presentation.

So things like the focus on defense, the focus on -- or the refocus on Canada, I should say, as well as the new dedicated capture team, those are things that are driving activity today, which we would expect to turn into revenue early in 2026.

So that's currently how things are shaping up.

What percentage of revenue does critical services now represent?

Yes. So maybe I'll invite Scott to chime in.

Yes. So currently, 21.2% in Q3 versus the 9.9% in Q3 of 2024. So we've increased that pretty significantly.

How much of your sales activity comes from existing clients versus new customer wins?

Yes. So that's a good question. I mean I think similar to the previous question, let me speak around what we are working on. So this is going to be sales activity. I'm not talking about revenue at this point.

But if I think about where our sales team is spending time, we are spending -- at an aggregate level, we are spending much more time on new logos than we were 12 months ago or even frankly, earlier this year.

And I would say this is really driven by probably 4 factors. First, our partnerships and alliances, like we've announced with TD SYNNEX, Forcepoint, et cetera, have matured and are generating meaningful pipeline activity. Number two, the addition of our capture process is bringing us into new conversations led by RFPs, RFIs that we are responding to.

Number three, the 2 new market segments being Europe plus NATO as well as renewed focus in Canada as a result of by Canadian initiatives that we saw this year. And then fourth, our AI-first marketing strategy is generating new conversations. And like we noted earlier, these are with some very large enterprise organizations, think Fortune 100, excuse me, sized organizations.

So all of those 4 factors are new in the second half of this year. And certainly, they are more mature in the second half of this year, if I think about where we are with our partnerships and alliances program. So all those things put together really drive more net new conversations as compared to existing client conversations, if I compare where we are today versus last year.

Great. So you had an 80% improvement in the EBITDA loss to $766,000 compared to 11.5% improvement in the adjusted EBITDA loss of $1.6 million. Can you just touch on the difference between those? It's kind of a big number gap.

Yes, [ Sean. ] The difference there was we did have a onetime positive gain from the sale of cloud codes of approximately $1.5 million, and that is listed under the discontinued operations. You'll see that on the P&L as well as in the financial statement notes.

Great. Thanks for that clarification there, Scott. A little dip in the margins this quarter compared to previous quarter, but you're still up year-over-year. Can you kind of touch on where you see those going to the end of the year and beyond?

Yes, I can give an initial answer, and then I'll maybe let Scott chime in as well. So as we think about the 2 different types of businesses that we have, the solutions business is quite a bit more transactional, whereas critical services, the aim is to build long-term either recurring or just long-term contracts with our clients.

And so we do see variability quarter-to-quarter depending on what the solutions business is doing. What we've seen certainly over the last handful of years is that there are some seasonal shifts -- so for instance, we have -- in Q3, we will typically have end of U.S. government fiscal year spending.

Similarly, in Q1, we will typically have end of Canadian federal government year-end spending. So as a result of those seasonal trends, we do see some up and down on revenue mix as well as customer mix. And so those can drive kind of up or down depending on which deals we get in win and how they get recognized.

If I zoom out, so that's on a quarterly basis. If I zoom out, the goal of the company continues to be to grow gross profits. And I think if you look at this on an annualized basis, we're making great progress towards continuing that trajectory upwards.

Scott, anything you want to chime in on there?

I think you covered that. Maybe just to reemphasize that in general, our U.S. government buying season and typically more of those deals that are -- we're focusing less and less on, but that still arrives in Q3. So you'll see that mix come in and give a lower result in Q3 versus the other quarters. But that said, I think we're -- you can see that we were improving upon that even as compared to last year.

Great. A couple of questions on OpEx. How much of that $2.7 million annualized cost savings has flowed through already?

Most of those cost savings, you'll see start in Q4 and then beyond because as they involve us reducing positions, there's always severances and whatnot that needs to write out. We expect for next year that our OpEx will be around $10 million for the full year.

And then are there any other cost optimization opportunities that we're working on that you could see?

Yes. So we're always looking for ways to improve our cost structure. I think some examples are if we have duplications of roles and systems, so we've been combining back-office systems and also just reducing the number of systems as you get new tools that do more than one thing or more than 2 things.

We take advantage of updating our tool set. We're also looking at certain AI options, particularly in marketing, we found really, really cost advantageous there. We can get a huge reach for a lot less money now, leveraging some AI tools.

And then finally, we use global talent. So we're able to shift certain work to areas that cost less.

I think just to chime in on that, I mean, we did make the announcement in regards to the $2.7 million of annualized cost savings. But I think that the 3 drivers, de-duplication of So you had an 80% improvement in the EBITDA loss to $766,000 compared to 11.5% improvement in the adjusted EBITDA loss of $1.6 million.

So you had an 80% improvement in the EBITDA loss to $766,000 compared to 11.5% improvement in the adjusted EBITDA loss of $1.6 million, taking an AI-first approach to certain departments, leveraging global talent, these are initiatives that we have been focused on since the start of this year.

And it's really the combination of these that is driving our belief that we can get our OpEx run rate to be closer to that $10 million mark number exiting this year into 2026.

Great. A couple of questions on the balance sheet. What's the current quarterly burn? And then with that $3 million you just raised, how much runway does that give us?

So our current burn is around $500,000 a quarter. And as we grow our gross margins, continue to grow our operations and reduce our OpEx, we're good on the cash flow. So we'll see that burn reduce and then have a kind of steady stream of cash is the plan for next year.

Okay. So just following up with that, the obvious, do you anticipate raising equity in the next 12 to 8 months to fund the burn? I think you answered that, but...

No.

Okay. And then how do you balance growth investment with your push towards breakeven?

Our priority on investment is critical services. And I think if you look at the numbers that we're seeing there, you'll see that we're -- we have early indication that those investments are paying off.

What level of revenue is needed to reach profitability?

Well, I think like this is a great kind of reminder that the profitability is a function of gross So you had an 80% improvement in the EBITDA loss to $766,000 compared to 11.5% improvement in the adjusted EBITDA loss of $1.6 million profit more so than revenue. I mean earlier, we noted that we've been focused more on critical services.

And to put that in perspective, we have a finite number of salespeople who have a finite number of hours in the day. And if there is a choice between $1 million hardware deal potentially at 1% or 2% gross margin versus a $0.5 million deal at 30% or 40% gross margin.

Obviously, the latter is going to be better for profitability. We might actually see a dip in revenue if we go down that road. So the way that we think about profitability, again, more a function of gross profit. And ultimately, it's a function of revenue mix and the margin rates for the different parts of the business.

Having said that, I think what you can see from the last several quarters is really a shift in focus as we've reduced focus on some of the lower-margin parts of the business, we've refocused more on the higher-margin parts of the business.

Great. A couple of questions around U.S. government NATO opportunities. How did the U.S. government shutdown and the budget delays affect either Q3 or kind of our near-term pipeline?

Well, because we're focusing more on our higher-margin business, we didn't see any significant impact from the U.S. government shutdown. There was some timing issues, which we had, which we're now catching up on because the government has been reopened for a bit.

Yes. I think in comparison, if I think about this year versus last year versus the year before, there's usually always some franticness at the end of any budget cycle, whether it's U.S. government or Canadian government or even commercial end of year. And that was no different this year, although we had the added complexity of the shutdown.

But as Scott was saying, it's really become more of a timing issue. I think for us, we have not been as negatively impacted as compared to other pure-play government contractors simply because of the diversity of our customer base and the fact that we have obviously, customers in Canada, but also a strong commercial practice as well.

Okay. Can you talk to the durability of the federal demand? There's a lot of noise out there in politics these days. So any insight there would be helpful.

Yes. I think that there's always noise in politics. I don't think this time is any different than any other time. It's -- there's different political pressures, sure, but there's always political pressures.

So our view on this is as a small agile company, volatility in the market actually presents an opportunity because larger companies can be slow to adapt to change. And we believe that overall, the change in posture from various governments and government entities, including Canada, including Europe, including NATO, including the U.S., is favorable to our business.

We've got great past performance in the United States. We've got great past performance in Canada. We have the ability to do business with some of the most discerning customers in terms of their security requirements and compliance requirements.

And we're also seeing that there's -- with this volatility in geopolitics, there's renewed interest in talking to Canadian companies like us. So on the whole, I think this is actually a great opportunity for us to take the inside -- if I think about a speed skating [ Noble, ]

I think, take the inside track and really pick up some speed here as others might be -- might find it harder to deal with the consistent change.

We talked about NATO quite a bit. How meaningful is NATO and European defense for Plurilock over the next few years here?

So it's a good question. I mean frequently, when we're talking about NATO, we're talking about the countries that are allied with the United States and Canada. And so we tend to use NATO somewhat as a blanket term to talk about those regions in the world that are allied and aligned with us.

From its very inception, Plurilock was very intentional around wanting to do business with our allies as well as commercial companies in the countries of our allies. And we were going to exclude certain markets that were neutral or questionable.

And so when we're talking about NATO, when we're talking about Europe, we're talking about a couple of different types of constituencies. We're talking obviously about the defense establishment themselves. We're also talking about the commercial companies in those countries that are themselves aligned with Canada and the United States.

So broadly, that's how we think about it from a definitions perspective. I think what we are seeing really across the board, and this is even beyond just cybersecurity. I think we see this in defense is that there is significant interest for European countries for -- even for Canada to revisit historical procurement decisions around where they go to buy.

I mean, even this morning, news in regards to the F-35 versus potentially a Swedish fighter jet is front page news. And so I think it's a signal that there are new opportunities, there's new markets that might not have existed to the same degree a year ago, 2 years ago.

So that's part of it. I think the other part is that both NATO as well as kind of Europe in general is much closer to some of the conflicts in Ukraine. And we see a lot with regards to drones, UAV or what's now called UAS systems that are a growing and rising threat.

And so there's new procurement opportunities, which will require cyber as we talked about previously. So all of that having been said, we see that there's a growth opportunity to revisit existing allies to go to new allies, both at the government level, selling into defense as well as commercially.

And all those things, I think, are fantastic tailwinds for a company like us.

Thanks, Ian. We're just a little past 11:30 here. Two more questions. Quantum, quantum hacking using quantum computing, it's a steadily growing thing and emerging. Where does Plurilock stand in this segment of the market?

Yes. So quantum as an emerging technology is something that our customers are asking about from us today. And we hear this both from customers themselves as well as partners who are looking for experts to be able to answer these questions.

So we, today, within our critical services team, we have an area of focus called PKI and the PKI team is responsible for both traditional encryption as well as post-quantum encryption. And we're actively fielding conversations with customers. We are actively working on projects in regards to helping organizations think through quantum preparedness.

Our sense is that this is very similar to Y2K in some regards. There's going to be a whole lot of companies that need to get ready for post-quantum cryptography and they're going to need experts like what we have at Plurilock to be able to help them through that journey.

So today, that's really where we sit. I think the other thing that I would point to is that the divestiture of cloud codes did go to a quantum company, and we do maintain relationships there. And so to the extent that we may partner further in the quantum space, certainly possible.

I think right now, Quantum overall, just in terms of where it's at is that there is now attention on this issue. There is starting to be budgets assigned against it, but it is still in the early stages of the innovation curve. And so most organizations are not yet allocating significant budgets to Quantum.

Outside of a handful of exceptions, obviously, central banks, financial services, defense, those would be the exceptions. But the average enterprise is not yet from what we've seen, allocating significant or material budget dollars to this issue. And so for us, we would expect to scale our investment in that area alongside what customers are needing and asking for.

Thank you. We'll wrap it up here with one final question. You've announced a couple of new hires recently. What kind of impact have those people had on the business? And are you planning any more hires in '26?

Yes. I'll take the second part first. And so the answer is we're always recruiting. That never stops. We believe that we are very well positioned to continue to attract top talent. We've talked in the past about how our Board and advisory council are a secret weapon when it comes to recruiting.

In addition to that, the mission focus that we have as an organization is very attractive to a players who have a choice of where they want to work. And so the combination of our extensive network, including management Board advisory council provides us an edge in that competition in addition to people want to go to a place that has impact.

And so for instance, our recent CTO addition came by way of an introduction from our Board of Directors. In terms of the impact they're having, I think that we've already talked about some of it.

I mean, the initiation of a new capture team, the renewed focus around defense and with that, the fact that we have relationships and experience with processes in these areas as a result of recent hires is -- it kind of goes part and parcel.

So the short answer is the hires that we make are very intentional. We're already seeing strong impact. We're always recruiting, and we believe that our human capital is definitely one of the things that separates us from other organizations.

And for sure, we'll continue to be looking to other top candidates as we find them.

Awesome. Thanks, Ian, and thanks, Scott. We'll wrap up the Q&A there. If you were unable to ask your question or you have another question after the call, please feel free to reach out to us, and we'd be happy to answer them. Contact information is up on the screen there. I'll now pass the call back to management for closing remarks.

Yes. Thanks, Ryan. I think this was -- listen, this was a good conversation. I think this was a good quarter. We're really excited about the tailwinds that we've talked about throughout this call and what we see going into 2026. We're very bullish on what the future brings.

So I appreciate the chance to share our story and look forward to continuing to share our progress in the quarters ahead.

With that, this concludes Plurilock Securities Q3 2025 Conference Call. Thank you again for joining us. Have a great day.