Mr. Ryan Hamlin reports

POSABIT REPORTS THIRD QUARTER 2022 FINANCIAL RESULTS

Posabit Systems Corp. has released its financial results for the three and nine months ended Sept. 30, 2022. All figures in this press release are in United States dollars unless otherwise noted.

"The third quarter was very strong with a 26-per-cent sequential increase in revenue, making it the first time we have had a $10-million-plus quarter. We continue to expand our commercial footprint and announced several strategic new partnerships this quarter that validate the strength of our platform," said Ryan Hamlin, chief executive officer and co-founder of Posabit.

Mr. Hamlin commented: "We continued to onboard new merchants at record levels and secured a royalty licensing agreement for our point-of-sale software that will generate recurring guaranteed revenue of at least $20-million at virtually 100-per-cent margin over the next four years. Contrary to many in our industry and the current economic climate, our business is growing at an increased pace, our sales funnel is full and our balance sheet is as strong as it's ever been. We are increasingly optimistic about the long-term prospects for our business and are raising our 2022 gross profit guidance to $10.0[-million] to $10.5-million, reiterating our revenue guidance of $37[-million] to $40-million for the year and reiterating our prior statement that we expect positive adjusted EBITDA in 2023."

Recent operational highlights

• As previously announced, signed a four-year royalty licensing agreement with a large cannabis technology provider, for guaranteed minimum revenue of $20-million at virtually 100-per-cent margin.
• Recently announced Vermont as the newest state added and live for Posabit.
• On track to exceed target of entering eight new states in 2022 with the launch of operations in New Jersey, Connecticut and Ohio, three new states under contract and expected to go live before year-end, bringing Posabit to 10 new states in 2022.
• Launched Posabit 2.0, a new, fully redesigned version of Posabit's point-of-sale client.
• Completed integration of Posabit's platform with Onfleet (the largest cannabis delivery company) to provide real-time status of cannabis deliveries to consumers.
• Onboarded over 50 new payment and point-of-sale merchant locations in Q3.
• Ongoing discussions with over 200 potential payment and point-of-sale merchant locations.
• Cash and cash equivalents were $8.2-million on Sept. 30, 2022.

Third quarter 2022 financial highlights

• Total revenue was $10.3-million, up 62 per cent compared with $6.4-million in the third quarter of 2021.
• Transactional sales for payment services totalled $142.6-million, resulting in an annual run rate of $568-million, up 32 per cent compared with $108-million in the third quarter of 2021.
• Gross profit was $2.9-million, or 28.0 per cent of revenue, up 103 per cent on a dollar basis compared with $1.4-million, or 22.5 per cent of revenue, in the third quarter of 2021.
• Operating loss was $(7,300), inclusive of a $(900,000) non-cash change in the fair value of foreign currencies, compared with operating income of $1.1-million, inclusive of a $(1.9-million) non-cash change in the fair value of foreign currencies, in the third quarter of 2021.
• Net loss was $(1.2-million), inclusive of a $(1.0-million) non-cash change in fair value of derivative liabilities, compared with a net loss of $(6.9-million), inclusive of a $(7.9-million) non-cash change in fair value of derivative liabilities in the third quarter of 2021.
• Adjusted EBITDA (earnings before interest, taxes, depreciation and amortization) was $(290,000), or (2.8) per cent of revenue, compared with $(439,000), or (6.9) per cent of revenue, in the third quarter of 2021.

Balance sheet

As of Sept. 30, 2022, the company had cash and cash equivalents of $8.2-million compared with $4.4-million as of Dec. 31, 2021.

2022 outlook

The company is raising the high end of its gross profit guidance to $10.5-million and reiterating its revenue guidance of $37.0-million to $40.0-million for the full year 2022.

Conference call information

Date:  Nov. 29, 2022

Time:  4:30 p.m. Eastern Time

Toll-free:  888-506-0062

International:  973-528-0011

Entry code:  253740

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:  46302

Financial reports

Full details of the financial and operating results are described in the company's consolidated financial statements with accompanying notes. The consolidated financial statements and additional information about Posabit are available on the company's website or on SEDAR.

About Posabit Systems Corp.

Posabit is a financial technology company that delivers unique and innovative 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 safe and transparent environment for merchants while creating a better overall experience for the consumer.

We seek Safe Harbor.