Mr. Ryan Hamlin reports

POSABIT REPORTS FOURTH QUARTER AND FULL YEAR 2021 FINANCIAL RESULTS

Posabit Systems Corp. has released its financial results for the three and 12 months ended Dec. 31, 2021.

"We exited 2021 with record revenue and accelerating momentum towards another year of growth and expansion," said Ryan Hamlin, chief executive officer and co-founder of Posabit. "We exceeded the high end of our revenue guidance with $21.3-million in annual revenue and extended our record of doubling revenue each year since 2017. Transactional sales volume increased by more than 174 per cent in 2021, a strong indication of our expanding geographic footprint as well as the accelerating adoption of electronic payment solutions across the industry. We have grown our business with limited investment delivering exponential growth and positive adjusted EBITDA in four of the last six quarters. Increasingly, cannabis merchants are gravitating towards electronic payment solutions for increased security and convenience for their customers, and our open platform gives merchants choice on how they want to build their processing infrastructure. In addition, there are a number of emerging opportunities in the cannabis market that we are eager to explore and further develop our business."

Mr. Hamlin continued: "Looking ahead, we anticipate continued strong growth of our payments business as well as rapid expansion of our POS footprint into new states. Based on our current installed base and merchants under contract, we are raising our full-year 2022 revenue guidance to between $37- and $40-million, which represents growth of more than 80 per cent at the midpoint compared to 2021."

Recent operational highlights:

• Entered three new markets, Georgia, Texas and West Virginia, expanding geographic presence to 18 U.S. states across CBD (cannabidiol) and cannabis markets;
• Entered CBD market with point-of-sale (POS) solution, now live in more than 20 bricks and mortar CBD locations nationwide;
• Entered into an agreement with dispensary chain Lume, with 32 locations in Michigan that the company expects to be fully on boarded with Posabit by the end of Q2 2022;
• Entered into agreements with additional large multistate operators;
• Completed the company's largest processing day in its history on April 20, 2022, with 100-per-cent uptime for the sixth April 20 in a row;
• Shipped several safety related enhancements on the Posabit POS to help promote a safer work environment for all store employees.

Fourth quarter 2021 financial highlights:

• Transactional sales for card services totalled $102.6-million, up 96 per cent compared with $52.4-million in the fourth quarter of 2020.
• Total revenue was $6.4-million, up 110 per cent compared with $3.1-million in the fourth quarter of 2020.
• Gross profit was $1.5-million or 23.0 per cent of revenue, up 86 per cent on a dollar basis compared with $797,000 or 26.1 per cent of revenue in the fourth quarter of 2020.
• Net loss was $2.3-million, inclusive of a negative $519,000 non-cash change in the fair value of derivative liabilities, compared with a loss of $116,000, inclusive of a negative $78,000 non-cash change in the fair value of derivative liabilities in the fourth quarter of 2020.
• Adjusted net loss was $1.8-million, which excludes a negative $519,000 non-cash change in fair value of derivative liabilities, compared with an adjusted net loss of $38,000, which excludes a negative $78,000 non-cash change in fair value of derivative liabilities in the fourth quarter of 2020.
• Adjusted EBITDA (earnings before interest, taxes, depreciation and amortization) was negative $1.1-million or negative 17 per cent of revenue, compared with $134,000 or 4 per cent of revenue in the fourth quarter of 2020.

Full-year 2021 financial highlights:

• Transactional sales for card services totalled $362-million, up 174 per cent compared with $132-million in 2020.
• Total revenue was $21.3-million, up 172 per cent compared with $7.8-million in 2020.
• Gross profit was $5.8-million or 27.0 per cent of revenue, up 232 per cent on a dollar basis compared with $1.7-million or 22.2 per cent of revenue in 2020.
• Net loss was $10.6-million, inclusive of a negative $9.7-million non-cash change in fair value of derivative liabilities, compared with a net loss of $1.3-million, inclusive of a negative $78,000 non-cash change in fair value of derivative liabilities in 2020.
• Adjusted net loss was $800,000, which excludes a negative $9.7-million non-cash change in fair value of derivative liabilities, compared with an adjusted net loss of $1.2-million, which excludes a negative $78,000 non-cash change in fair value of derivative liabilities in 2020.
• Adjusted EBITDA was negative $1.2-million or negative 6 per cent of revenue, compared with negative $558,000 or negative 7 per cent of revenue in 2020.

Warrants and cash update

As of Dec. 31, 2021, the company had cash of approximately $4.4-million, compared with approximately $1.0-million as of Dec. 31, 2020. This increase was partially driven by approximately $3.9-million of cash received from the exercise of 20,466,927 outstanding warrants during 2021.

The attached tables reconcile adjusted EBITDA to net loss, as reported.

2022 outlook

The company has provided its guidance for the full year 2022 in the attached table.

Conference call information

Date:  April 28, 2022

Time:  4:30 p.m. Eastern Time

Toll-free:  888-506-0062

International:  973-528-0011

Entry code:  353783

Webcast:  A live webcast will be available.

Conference call replay information

The replay will be available approximately one hour after the completion of the live event.

Toll-free:  877-481-4010

International:  919-882-2331

Replay passcode:  44978

Webcast:  A replay webcast will be available.

Financial reports

Full details of the financial and operating results are described in the company's consolidated financial statements with accompanying notes, and its related management's discussion and analysis, for the three and 12 months ended Dec. 31, 2021. The full-year 2021 financial statements and MD&A and additional information about Posabit are available on the company's website and on SEDAR.

Non-IFRS (international financial reporting standards) measures

Adjusted EBITDA and adjusted net loss are non-IFRS measures used by management that do not have any prescribed meaning by IFRS and that may not be comparable with similar measures presented by other companies. The company defines adjusted EBITDA as net income or loss generated for the period as reported, before interest, taxes, depreciation and amortization, and is further adjusted to remove changes in fair values and expected credit losses, foreign exchange gains and/or losses, and impairments. The company defines adjusted net loss as net loss generated for the period as reported adjusted to remove changes in the fair values of derivative liabilities. The company believes these non-IFRS measures are useful metrics to evaluate its core operating performance and uses these measures to provide shareholders and others with supplemental measures of its operating performance. The company also believes that securities analysts, investors and other interested parties frequently use these non-IFRS measures in the evaluation of companies, many of which present similar metrics when reporting their results. The company cautions readers that adjusted EBITDA should not be substituted for determining net loss as an indicator of operating results or as a substitute for cash flows from operating and investing activities.

About Posabit Systems Corp.

Posabit is a financial technology company that delivers unique and innovative, blockchain-enabled payment processing and point-of-sale systems for cash-only businesses. Posabit specializes in resolving pain points for complex, high-risk, emerging industries like cannabis with an all-in-one solution that is compliant, user friendly and utilizes top-of-the-line hardware. Posabit's unique solution provides a safer and transparent environment for merchants while creating a better overall experience for the consumer.

We seek Safe Harbor.