Does Plurilock Security (PLUR.V) loan forgiveness signal a positive post-pandemic reversal of fortunes?

Plurilock Security (PLUR.V) received debt forgiveness from their U.S. Small Business Payroll Protection Program (PPP) loan to the tune of $199,830 in principle and $2,053.82 today, according to a press release.

The PPP is a multi-billion dollar loan program offered as part of the U.S. Coronavirus Aid, Relief and Economic Security (CARES) Act. It was implemented to help businesses with fewer than 500 employees get loans of up to $10 million to help them keep the lights on and their employees at work during the COVID-19 pandemic.

It’s honestly sounds like the kind of thing that Eisenhower had in mind when he created the Small Business Act (SBA) in 1953. There’s no way he could have predicted a pandemic, but as its function was to “aid, counsel, assist and protect small businesses and by assisting in the economic recovery of communities after disasters,” it sounds like its meeting its mandate. There’s lots to criticize about government, and plenty that’s wasteful about socialism and the excesses that come part and parcel, but this isn’t one of them. If anything, this is what government is for.

SBA loans are made through banks, credit unions and other lenders. They provide government-backed guarantee on part of the loan. Having to carry debt is one of the necessary pitfalls of being a growing company in the earliest stages of development. You have to borrow money to fund your organization in the earliest stages, and can gradually pay it back as revenues develop. But the pandemic’s put a pinch into that model.

Plurilock’s lost money on the year, but most companies (and people) have.

Fiscal 2020 financial highlights:

Total revenue for the year ended Dec. 31, 2020, was $479,329 ($646,900 in 2019), a decrease of 26 per cent over the prior fiscal year.

Licence revenue accounted for 68 per cent of total revenues for the year ended Dec. 31, 2020 (25 per cent in 2019) while government revenue accounted for 32 per cent of total revenues for the year ended Dec. 31, 2020 (75 per cent in 2019).

Licence revenue was $326,322 for the year ended Dec. 31, 2020, compared with $158,669 in the prior fiscal year.

Government revenue was $153,007 for the year ended Dec. 31, 2020, compared with $488,231 in the prior fiscal year.

Gross margin was 83.6 per cent for the year ended Dec. 31, 2020, compared with 87.6 per cent in the prior fiscal year.

Cash used for operating activities for the year ended Dec. 31, 2020, was $1,823,439, compared with $1,365,955 in the prior fiscal year.

The suffering is not unexpected for a relatively young company in the midst of a pandemic, but on the brighter side of the equation, it could have been far worse. There’s still a substantial amount of development. The company still managed to push through on some of its initiatives, and the post-pandemic future is notably brighter.

“Fiscal 2020 was a difficult year across the industry due to the global pandemic. Despite the headwinds of COVID-19, we were able to achieve our primary strategic objectives, which included a successful listing of Plurilock on the TSX Venture Exchange, capitalizing the company with $3.4-million in net financing proceeds, and laying the foundation for both organic and inorganic future growth,” said Ian L. Paterson, chief executive officer of Plurilock.

There’s still room to grow, especially since the cybersecurity market size was estimated to be worth $162.5 billion in 2020 with an anticipated compound annual growth rate of 12.5% to reach $418.3 billion by 2028, according to Quince Market Insights.