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Katipult Releases Q1 2021 Results

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CALGARY, AB, May 27, 2021 /CNW/ - Katipult Technology Corp. (TSXV: FUND) ("Katipult" or the "Corporation"), provider of an industry leading and award-winning cloud-based software infrastructure for powering the exchange of capital in equity and debt markets, is pleased to announce its financial results for the three-month period ended March 31, 2021.

"Our efforts in serving the needs of tier one financial services firms in North America has resulted in the Corporation securing new customers including Raymond James & Associates in the US as well as expanding our relationship with Canaccord Genuity" said Gord Breese, Katipult's President and CEO. "This, combined with the recent $3.0 million direct investment from Canaccord Genuity fortifies our vision and puts Katipult in a strong position to execute our plan. We expect to benefit from ongoing product enhancements and new revenue streams including from our [new] transaction and payment processing capabilities."

The following provides a summary of the results for the first quarter of 2021. The full results and related management discussion and analysis are available on the Corporation's SEDAR profile (www.sedar.com).

Q1 2021 Summary











2021

2020

2019

($ Cdn thousands)

Q1

Q4

Q3

Q2

Q1

Q4

Q3

Q2

Subscription revenue

378

329

301

329

329

329

365

307

Transaction revenue

5

-

-

-

-

-

-

-

Integration revenue

-

-

-

-

31

53

22

77

Total revenue

378

329

301

329

360

382

387

384

Gross profit

305

253

232

253

295

312

311

306

Gross profit - percentage

79.6%

76.9%

77.1%

76.9%

81.9%

81.7%

80.4%

79.7%

Selling, general, and administrative

400

223

494

495

517

509

438

447

Research and development

190

195

190

219

182

161

190

212

Adjusted EBITDA

(329)

(289)

(387)

(325)

(267)

(219)

(242)

(224)

Net income (loss) and









comprehensive income (loss)

(838)

239

(768)

(620)

(728)

709

(353)

(707)

  • On March 5, 2021, Katipult announced the close and issuance of $3.0 million of unsecured subordinated convertible debentures (the "2021 Debentures") to Canaccord Genuity Group Inc. ("Canaccord Genuity" or "CG"), with no interest (0% coupon) and maturing after five years at which time the principal amount will become due and payable. Until the maturity date, the 2021 Debentures may be converted into common shares in the capital of the Corporation at a conversion price of $0.23 per common share. As part of the financing, the Corporation issued warrants to acquire 12,000,000 common shares, exercisable at any time on or prior to the March 5, 2026. Each warrant is exercisable into one common share at an exercise price of $0.25 per common share.

  • On March 8, 2021, the Corporation announced the addition of Raymond James Associates, Inc. in the US to its growing customer list. Katipult will support operations across their spectrum of offerings while streamlining and automating internal processes like assigning financial advisor allocations, distributing investor subscription documents, and standardizing regulatory compliance and reporting. This relationship is part of management's strategy to grow the Corporation's portfolio of tier 1 financial institutions and investment banks embracing fully digital capital raises and investor servicing.

  • On March 23, 2021, the Corporation announced that it entered into a multi-year software license agreement and a strategic co-marketing agreement with Canaccord Genuity. The agreements support Katipult's growth and market expansion plans with a focus on strengthening its market position in Canada and expanding its presence in the US, UK and Australian capital markets. This expanded commercial relationship serves to forge a productive relationship between Katipult and CG.

  • The Corporation continues to grow its Subscription Revenue recording its highest quarterly Subscription Revenue of $378 – a 15% increase to the same period in 2020.

  • The Corporation saw its first Transaction Revenue. This new revenue stream is the result of clients expanding their use of the platform to offer additional services to their customers.

  • Gross profit percentage was to 79.6% in the first quarter of 2021. The Corporation has been able to consistently maintain a gross profit percentage over 70%.

  • Adjusted EBITDA losses increased to $329 in three-month ended March 31, 2021 due mostly to the increased salaries, subcontractors, and benefits expenditures - as the Corporation invests in key employees - partially offset by an increase in subscription revenue.

  • The Corporation's net loss and comprehensive loss increased to $838 in first quarter of 2021. The increased loss is due to the reasons mentioned above and an additional $428 change in the non-cash fair value the Corporation's outstanding 2018 Debentures, and higher finance costs from the accretion of the 2021 Debenture.

  • Cash, cash equivalents and marketable securities balance as at March 31, 2021 was $3.75 million.

Neither the TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in the policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release.

Forward-Looking Statement

Cautionary Note Regarding Forward Looking Statements: Certain disclosure in this release, including statements regarding the increased or continued industry interest in the Corporation's product, converting existing sales interest and installations into revenue, generating new sales opportunities, effectively and efficiently utilizing the Corporation's resource and the ability to deal with business disruptions or opportunities as a result of the Covid-19 pandemic constitute forward-looking statements. In making the forward-looking statements in this release, the Corporation has applied certain factors and assumptions that are based on the Corporation's current beliefs as well as assumptions made by and information currently available to the Corporation, including, but not limited to, the Corporation's anticipated cash needs, that the cash available to the Corporation is as expected, the Corporation's product will continue to operate as expected, the industry will continue to see value in the Corporation's product, the Corporation will be able to recruit talented and experienced sales, support and other individuals required to execute the Corporation's plans, and that the Corporation's employees, consultants, customers, suppliers and other stakeholders will be able to manage successfully throughout the Covid-19 pandemic. Although the Corporation considers these assumptions to be reasonable based on information currently available to it, they may prove to be incorrect, and the forward-looking statements in this release are subject to numerous risks, uncertainties and other factors that may cause future results to differ materially from those expressed or implied in such forward-looking statements. Such risk factors may include, among others, the risk that cash available to the Corporation is not as expected, failure to manage growth successfully, lengthier than anticipated sales and implementation cycle, cyber risks, risks related to cloud based solutions, failure to continue to adapt to technological change and new product development, dependence on key personnel, competition, intellectual property risks, economic conditions, the financial and economic fallout due to the Covid-19 pandemic, privacy concerns and legislation, regulatory environment, risk associated with a change in the Corporation's pricing model, risk of defects in the Corporation's solution, dependence on market growth, operational service risk, dependence on partners and delay or failure to realize anticipated benefits of key account installations. Readers are cautioned, especially in these uncertain times, not to place undue reliance on forward-looking statements. The Corporation does not intend to, and expressly disclaims any intention or obligation to, update or revise any forward-looking statements whether as a result of new information, future events or otherwise, except as required by law.

Non-GAAP Financial Measures

This news release refers to certain Non-GAAP financial measures that are not determined in accordance with International Financial Reporting Standards ("IFRS"). "Gross profit", "adjusted EBITDA" and "churn" are not measures recognized under IFRS and do not have standardized meanings prescribed by IFRS. Management considers these to be important supplemental measures of Katipult's performance and believes these measures are frequently used by securities analysts, investors and other interested parties in the evaluation of companies in its industry. See "Non-GAAP Measures and Additional GAAP Measures" in the Corporation's December 31, 2020 and March 31, 2021 MD&A available on the Corporation's SEDAR profile at www.sedar.com for a discussion of non-GAAP measures and their reconciliations.

SOURCE Katipult Technology Corp.

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