Mr. Ryan Hamlin reports

POSABIT REPORTS SECOND QUARTER 2023 FINANCIAL RESULTS

Posabit Systems Corp. today released its financial results for the three and six months ended June 30, 2023.

"We delivered record results in the second quarter, growing 65 per cent year over year," said Ryan Hamlin, co-founder and chief executive officer of Posabit. "Our team continues to focus on on-boarding an increasing number of merchants to our compliant PIN debit solution and point of sale. We saw the cannabis industry begin to stabilize as we exited Q2. This is driving increasing demand for our services from both new and existing customers, resulting in an increase in same store revenue growth. During a very interesting period in the cannabis industry, Posabit remains in a strong position as a leader for point of sale and payments solutions."

Mr. Hamlin continued, "We are reaffirming our full-year 2023 revenue guidance of between $58.5[-million] and $61.5-million, which represents growth of more than 62 per cent at the midpoint compared to full year 2022, gross profit of between $12.5[-million] and $14.5-million, and adjusted EBITDA of slightly negative."

Appointment of Matt Fowler as CFO (chief financial officer)

The company also announces today, that effective Aug. 24, 2023, it has appointed Matt Fowler as chief financial officer and secretary, succeeding Stephen Gledhill. Mr. Fowler was, and will remain, CFO of Posabit U.S. Inc., the company's primary operating unit.

Recent operational highlights

• The newly acquired Hypur team and its products of PIN Debit, Comply (bank compliance service), B2C and B2B ACH payments have been fully integrated on schedule.
• Posabit has maintained a 99.9 per cent uptime in PIN Debit and has remained processing payments as planned with no interruption.
• Promoted Chris Baker to the newly created position of chief operating officer for Posabit U.S. effective Aug. 9, 2023.
• Promoted Michael J. Sinnwell Jr. to chief product officer for Posabit U.S. effective Aug. 9, 2023.

Second quarter 2023 financial highlights

• Transactional sales for payment services totaled $162.6-million, up 26 per cent compared with $129.3-million in the second quarter of 2022, and up 19 per cent compared with $136.4-million in Q1 2023.
• Total revenue was $13.5-million, up 64 per cent compared with $8.2-million in the second quarter of 2022.
• Gross profit was $2.7-million, or 20 per cent of revenue, up 39 per cent on a dollar basis compared with $2-million, or 24 per cent of revenue, in the second quarter of 2022.
• Operating loss was $(3.3)-million, inclusive of a $(120,000) non-cash change in the fair value of foreign currencies, compared with an operating loss of $(4.0)-million, inclusive of a $(2.7)-million non-cash change in the fair value of foreign currencies, in the second quarter of 2022.
• Net loss was $(1.8)-million, inclusive of a $1.6-million non-cash change in fair value of derivative liabilities, compared with a net gain of $400,000, inclusive of a $4.7-million non-cash change in fair value of derivative liabilities in the second quarter of 2022.
• Adjusted EBITDA (earnings before interest, taxes, depreciation and amortization) was $(2.2)-million, or (16) per cent of revenue, compared with $(660,000), or (8) per cent of revenue, in the second quarter of 2022.

Balance sheet

As of June 30, 2023, the company had cash and cash equivalents of $4.0-million compared with $3.1-million as of Dec. 31, 2022.

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

The company is reiterating its guidance for the full year 2023. The company's guidance does not include additional acquisitions or other strategic transactions.

Conference call information

Date:  Aug. 24, 2023

Time:   4:30 p.m. Eastern Time

Toll free:  888-506-0062

International:  973-528-0011

Participant access code:  475154

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 pass code:  48956

Financial reports

Full details of the financial and operating results are described in the company's consolidated financial statements for the three- and six-month periods ended June 30, 2023, 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 fintech, working exclusively within the cannabis industry. The company provides a best-in-class point-of-sale solution and is the leading cashless payment provider for cannabis retailers. The company works tirelessly to build better financial services and transaction methods for merchants. It brings cutting-edge software and technology to the cannabis industry so that all merchants can have a safe and compliant set of services to solve the problems of a cash-only industry.