Mr. Jonathan Hoyles reports

PERK LABS REPORTS THIRD QUARTER 2022 RESULTS

Perk Labs Inc. has released its financial results for the third quarter ended Aug. 31, 2022.

Overview

"From 2020 until the start of this year, valuations and investment were focused almost exclusively on growth, emerging Web3 technologies and pandemic-driven booms such as direct-to-consumer e-commerce. With rising inflation and interest rates there has been a shift in the way that investors value companies," said Jonathan Hoyles, chief executive officer of Perk. "More than ever before, it is paramount that we demonstrate our execution capabilities, revenue growth and show a clear path to profitability. That is what our team is laser-focused on as we've reduced our expenses and concentrated on the fundamental areas where we believe we can most effectively generate high-margin revenue reliably. While our revenue recognized in this past quarter was very modest, we signed a number of annual contracts and are tremendously encouraged to see our annual recurring software-as-a-subscription revenue increase by 61.6 per cent. While the results are still early, we are seeing signs of success as we sign up more monthly subscribing customers and see steady increased usage of our platform."

"In this fiscal quarter, the company has started to see an increase in demand for our products, confirmed by the signing of new annual contracts," said Vanessa Altamirano, interim chief financial officer. "The completion of the Deliverect POS integration will allow us to escalate revenue and growth by being able to support enterprise customers. The company's focus for the coming quarters will be to increase sales initiatives, and we have started doing so, by recruiting a new director of sales who has over 15 years of experience. We are also entering new verticals to increase our total addressable market by being able to support not only restaurants but also other businesses such as salons, health and wellness, fitness, and studios."

2022 Q3 financial highlights:

• Deferred Revenue from cash received from new annual software contracts signed within Q3 2022 encompass 6,400 of the total 14,500; which will be recognized as revenue on a monthly basis. These new contracts increase our annual recurring software-as-a-subscription revenue by 61.6 per cent.
• Net loss of $2.8-million in Q3 2022 compared with net loss of $839,000 in Q3 2021. This is primarily driven by the reduction in the valuation of marketable securities due to the decrease in the stock price and the liquidation of the comapny's investment securities held in Hero Innovation Group Inc. (formerly Euro Asia Pay Holdings Inc.) which generated an unrealized loss of $1-million.
• Working capital of $600,000 in Q3 2022 compared with $2.5-million in Q3 2021 and $2.0-million in Q4 2021.
• General and administrative expenses increased 7 per cent from $878,000 in Q3 2021 to $941,000 in Q3 2022 as the company is prioritizing investor relations through its market awareness campaign.
• Research and development expenses decreased 7 per cent from $577,000 in Q3 2021 to $538,000 in Q3 2022 as the company continued with its efforts to decrease costs and be more efficient with its resources.
• Sales and marketing expenses decreased 33 per cent from $462,000 in Q3 2021 to $309,000 in Q3 2022 as the company refocused marketing efforts on businesses and franchisees instead of end-user customers.

2022 Q3 operational highlights

• New merchants agreements: The company signed agreements with several restaurants to provide them with Perk's new on-line ordering services and to develop custom branded apps. Perk's new on-line ordering feature is an easy-to-launch ordering solution that provides everything restaurants need to quickly start accepting pickup and delivery orders through their existing website.
• Launch of custom branded app: In July, 2022, the company completed the build of custom branded apps for Chun Fun How and SoyTalk. Perk Hero has automated its platform and processes so that it takes minimal work from the development team to generate each new custom branded application within one day.
• Entered into share transfer agreement: On June 28, 2022, the company's subsidiary Perk Hero Software Inc. entered into share transfer agreement for the sale of 2,539,000 shares of Hero Innovation Group Inc. (formerly, Euro Asia Pay Holdings Inc., hereafter referred to as HRO) at eight cents per share, for total proceeds of $203,120.
• Sale of remaining HRO shares: On June 29, 2022, the company's subsidiary Perk Hero Software Inc. entered into a share purchase agreement for the sale of its remaining balance of 5.1 million common shares of HRO at eight cents for gross proceeds of $408,000. These shares are subject to an escrow agreement, to be released in tranches of 1,275,000 shares every nine months. The sale was completed on Aug. 16, 2022.
• ATM raise: Between June 1, 2022, and July 13, 2022, the company issued 3.97 million common shares through its at-the-market program at an average price of 2.3 cents for gross proceeds of $92,487. Commissions paid were $2,775 for net proceeds of $89,712.
• End of at-the-market equity program: On July 14, 2022, the company announced it has ended its at-the-market equity program. The company raised a total of gross proceeds of $3,241,596, since announcing the program on July 29, 2020.
• POS integration -- Deliverect certification: On Aug. 4, 2022, the company received certification from Deliverect for point-of-sale (POS) integration. Deliverect supports hundreds of different POS systems, including over 30 different POS systems in the Canadian market, such as Square, Clover, TouchBistro, Lightspeed, Micros and many more. POS integration is a mandatory requirement to support enterprise customers, and with this integration, the company is well positioned to demonstrate the company's value to larger restaurant chains.
• New reservation feature: On Aug. 25, 2022, the company announced a new vertical for its custom branded app with the signing of iBEAUTI Skincare, and that it will be expanding its product offering by adding a new reservation feature. The company will be able to support many new verticals with the custom app offering, including salons, health and wellness, fitness, and studios.

Highlights subsequent to Aug. 31, 2022

• Recruited a new director of sales who will be focused on signing up larger customers and enterprise accounts;
• The company is exploring ways to increase the company's cash position, including potential equity, debt financing and special bank loan programs that are available as part of government of Canada programs for start-ups.

The company's strategic priorities for the balance of 2022 include:

• Continued improvement of the Perk Hero platform;
• Developing integrations with leading restaurant point-of-sales systems;
• Growing the number of end-user customers, restaurants and franchisees using the company's platform;
• Expanding the company's digital franchise program in Canada;
• Expanding the company's digital franchise program to the United States;
• Growing the company's licensing revenue;
• Investing in sales, marketing and communication strategies to drive growth.

The company's complete financial results are available in its consolidated financial statements and management's discussion and analysis for the quarter ended Aug. 31, 2022, each filed with Canadian securities regulators at SEDAR.

IFRS

The operational and financial information in this release is based on the consolidated figures in accordance with international financial reporting standard (IFRS).

About Perk Labs Inc.

Perk Labs is the owner of Perk Hero, the mobile commerce platform on a mission to empower business owners with the digital tools to provide their customers with experiences that are more engaging, convenient and rewarding. Perk Hero is growing through a unique community-driven digital franchise business that is available to entrepreneurs at an attractive start-up price.

We seek Safe Harbor.