2023 Overall Revenue Growth of 23% Excluding
Licensing 2023 Point of Sale Revenue Growth of 51% 2023 Payment
Revenue Growth of 20%
POSaBIT Systems Corporation (CSE: PBIT, OTC: POSAF) (the
“Company” or “POSaBIT”), a leading provider of payments
infrastructure in the cannabis industry, today announced its
financial results for the three and twelve months ended December
31, 2023.
“Despite the challenges posed by several industry-wide payment
disruptions in 2023, I am proud that we achieved a combined 23%
growth in our core Payments and Point-of-Sale business, excluding a
one-time licensing fee booked in 2022. Our unwavering dedication to
supporting our merchants, clients, and providing best-in-class
service remains our top priority,” said Ryan Hamlin, co-founder and
CEO of POSaBIT.
Hamlin continued, “Our Point-of-Sale business continues to grow
at a significant pace and remains the most used Point-of-Sale for
cannabis dispensaries in Washington State. Our current run-rate for
company-wide revenue, and pipeline, alongside the effective
implementation of cost reduction measures, has put us on a path
towards achieving positive free cash flow in Q2 and continued
growth in revenue and operating cash flow.”
Provides Update on Application to List Common Shares on the
TSX Venture Exchange
Over the past several months, POSaBIT has been working to
advance the proposed listing of its common shares (“Common Shares”)
on the TSX Venture Exchange (the “TSXV”). The Company remains
focused on satisfying applicable regulatory and TSXV listing
requirements. The listing of the Common Shares on the TSXV is
contingent on the satisfaction of all listing requirements and
there is no assurance that the TSXV will approve the Company’s
listing application or that the Company will complete the listing
on the TSXV.
Announcement of Stephen Gledhill to Chief Financial Officer
Succeeding Matthew Fowler
POSaBIT today announced the appointment of Stephen Gledhill to
the position of Chief Financial Officer effective May 14, 2024. Mr.
Gledhill will succeed Matthew Fowler who joined POSaBIT as CFO of
its US Subsidiary in May 2021, and was appointed CFO of the Company
on August 24, 2023. Mr. Gledhill previously served as the Company’s
Chief Financial Officer from September 17, 2018, until August 24,
2023, and has been serving in an advisory role to the Company since
he vacated that office. Mr. Gledhill’s appointment is subject to
the final approval of the CSE.
“I want to thank Matthew Fowler for his partnership and
leadership over the past three years. I wish him the best of luck
as he embarks on the next chapter of his career. Having Stephen
step back into this role which he previously served as the CFO of
our public holding company for several years, gives me confidence
that we are in good hands. Stephen brings the expertise,
continuity, and vision necessary to propel our organization forward
into its next chapter of success. Together, we will continue to
innovate, adapt, and drive sustainable value for our stakeholders,”
said Hamlin.
Announces Non-Cash Earnings Restatement for 2022
As part of the Company’s audit process, it was determined that
the discount rate associated with the 2022 software license
agreement should be increased to 12%. The change in discount rate
will reduce the revenue recognized in 2022 by approximately $3
million and will shift future recognized revenue from license
revenue to interest income. However, the change in discount rate
will not affect the overall cash economics or timing of cash
receipts from such license agreement.
Recent Operational Highlights
- Recently launched five unique payment solutions to provide full
redundancy moving forward for our merchants.
- Released the first multiple payment methods processing terminal
branded as “POSaBIT One.”
- Recently closed our largest day of processing volume this year
on 4/20 with zero interruptions or outages.
- Approved as a Master ISO for credit card transactions in
anticipation of potential rescheduling of cannabis in the US as a
Schedule 1 substance.
Balance Sheet
As of December 31, 2023, the Company had cash and cash
equivalents of $1.5 million compared to $3.1 million as of December
31, 2022.
Subsequent to quarter end, the Company received commitments of
$0.6 million for a proposed secured credit facility of up to $1
million (the “Credit Facility”). The Credit Facility is
intended to be secured by certain intangible assets including a
potential tax refund. If executed, the Credit Facility would mature
at the earliest of the receipt of a certain tax refund by the
Company or December 31, 2024, and would bear interest at 12% per
annum and 2% OID.
Financial Results
in US Dollars
Twelve Months ended
December 31, 2023
December 31, 2022,
restated
% Chg.
Revenue
$43,575,060
46,801,122
(7
)%
Cost of goods sold
$(34,353,041
)
$(27,206,420
)
(26
)%
Gross profit
$9,222,019
$19,594,702
(20
)%
Gross profit margin
21
%
42
%
NM
Operating costs
$(18,769,176
)
$(17,410,868
)
(8
)%
Operating income (loss)
(9,547,157
)
$2,183,834
(537
)%
Other (expenses) income
$(3,978,073
)
$3,520,721
(213
)%
Income Taxes
$(235,200
)
(270,890
)
13
%
Income (loss)
$(13,760,430
)
$5,433,665
(353
)%
NM - Not Meaningful
The following tables reconcile Adjusted EBITDA to net loss, as
reported.
in US Dollars
Year ended
December 31,
2023
December 31, 2022,
restated
Income (loss), as reported
(13,760,430
)
5,433,665
Add back (deduct): foreign exchange gains,
as reported
(608,792
)
2,790,849
Add back: share-based compensation, as
reported
3,471,246
2,229,402
Add back: impairments, as reported
6,916,751
-
Add back: amortization and depreciation,
as reported
303,615
36,647
Add back (deduct): change in expected
credit loss and bad debts, as reported
648,387
(20,697
)
Deduct other income, as reported
(102,720
)
-
Add back: litigation settlement, as
reported
2,214,408
-
Add back: change in value of digital
assets, as reported
-
5,513
Add back: interest accretion, as
reported
518,371
187,675
Deduct: change in fair value of derivative
liability, as reported
(5,996,544
)
(4,006,369
)
Add back: income taxes, as reported
235,200
270,890
Add back: transaction costs, as
reported
588,936
519,261
Add back loss on disposal of assets, as
reported
-
62,484
Deduct: gain on debt modification, as
reported
(75,975
)
-
Adjusted EBITDA
$(5,647,547
)
$7,509,320
Earnings Guidance
POSaBIT will be providing earnings guidance and revenue
run-rates as part of the POSaBIT Q1 earnings release and call at
the end of May 2024.
Conference Call Information
Date: May 14, 2024 Time: 4:30 PM Eastern Time Toll Free:
888-506-0062 International: 973-528-0011 Participant Access Code:
649259 Webcast URL:
https://www.webcaster4.com/Webcast/Page/2708/50355
Conference Call Replay Information:
The replay will be available approximately 1 hour after the
completion of the live event.
Toll Free: 877-481-4010 International: 919-882-2331 Replay
Passcode: 50355 Webcast Replay URL:
https://www.webcaster4.com/Webcast/Page/2708/50355
Financial Reports
Full details of the financial and operating results are
described in the Company’s consolidated financial statements for
the periods ended December 31, 2023 with accompanying notes. The
consolidated financial statements and additional information about
POSaBIT are available on the Company’s website at
www.posabit.com/investor-relations or on SEDAR+ at
www.sedarplus.ca.
Non-IFRS Measures
Adjusted EBITDA is a non-IFRS measure used by management that
does not have any prescribed meaning by IFRS and may not be
comparable to 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 further adjusted to remove changes in fair values
and expected credit losses, foreign exchange gains and/or losses,
impairments. The Company believes this non-IFRS measure is a useful
metric to evaluate its core operating performance and uses this
measure 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 this non-IFRS measure in the evaluation of
companies, many of which present similar metrics when reporting
their results. We caution 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.
Forward-Looking Statements
This press release contains forward-looking statements,
including statements regarding our business strategy, product
development, timing of product development, events and courses of
action.
Statements which are not purely historical are forward-looking
statements and include any statements regarding beliefs, plans,
outlook, expectations or intentions regarding the future including
words or phrases such as “anticipate,” “objective,” “may,” “will,”
“might,” “should,” “could,” “can,” “intend,” “expect,” “believe,”
“estimate,” “predict,” “potential,” “plan,” “is designed to” or
similar expressions suggesting future outcomes or the negative
thereof or similar variations. Forward-looking statements may
include, among other things, statements about: our expectations
regarding annual cost reductions; the submission of an application
for the listing of the Common Shares on the TSXV and any subsequent
listing of the Common Shares on the TSXV; our future customer
concentration; our anticipated cash needs and our estimates
regarding our capital requirements; our ability to anticipate the
future needs of our customers; our plans for future products and
enhancements of existing products; our future growth strategy and
growth rate; our future intellectual property; and our anticipated
trends and challenges in the markets in which we operate. Such
statements and information are based on numerous assumptions
regarding present and future business strategies and the
environment in which POSaBIT will operate in the future, including
the demand for our products, anticipated costs and ability to
achieve goals. Although we believe that the assumptions underlying
these statements are reasonable, they may prove to be incorrect.
Given these risks, uncertainties and assumptions, you should not
unduly rely on these forward-looking statements.
Forward-looking statements are subject to known and unknown
risks, uncertainties and other important factors that may cause the
actual results to be materially different from those expressed or
implied by such forward-looking statements, including but not
limited to, business, economic and capital market conditions; the
ability to manage our operating expenses, which may adversely
affect our financial condition; our ability to remain competitive
as other better financed competitors develop and release
competitive products; regulatory uncertainties; market conditions
and the demand and pricing for our products; our relationships with
our customers, distributors and business partners; our ability to
successfully define, design and release new products in a timely
manner that meet our customers’ needs; our ability to attract,
retain and motivate qualified personnel; competition in our
industry; our ability to maintain technological leadership; our
ability to manage risks inherent in foreign operations; the impact
of technology changes on our products and industry; our failure to
develop new and innovative products; our ability to successfully
maintain and enforce our intellectual property rights and defend
third-party claims of infringement of their intellectual property
rights; the impact of intellectual property litigation that could
materially and adversely affect our business; our ability to manage
working capital; and our dependence on key personnel. POSaBIT is an
early-stage company with a short operating history; it may not
achieve profitability; and it may not actually achieve its plans,
projections, or expectations.
Important factors that could cause actual results to differ
materially from POSaBIT’s expectations include consumer sentiment
towards POSaBIT’s products, litigation, global economic climate,
loss of key employees and consultants, additional funding
requirements, changes in laws, technology failures, competition,
and failure of counterparties to perform their contractual
obligations.
Neither we nor any of our representatives make any
representation or warranty, express or implied, as to the accuracy,
sufficiency or completeness of the information in this news
release. Neither we nor any of our representatives shall have any
liability whatsoever, under contract, tort, trust or otherwise
resulting from the use of the information in this news release or
for omissions from the information in this news release.
Related Party Disclosure
Alex Sharp is an insider of the Company and exercises control or
direction over Perga. Pursuant to Multilateral Instrument 61-101 –
Protection of Minority Security Holders in Special Transactions
(“MI 61-101”), the amendments to the Credit Facility and the
Warrants, as described herein, are each a “related party
transaction” by virtue of such insider participation. The Company
is exempt from the formal valuation requirement of MI 61-101 in
connection with the insider participation in reliance on section
5.5(b) of MI 61-101, as no securities of the Company are listed or
quoted for trading on the Toronto Stock Exchange, the New York
Stock Exchange, the American Stock Exchange, the NASDAQ stock
market or any other stock exchange outside of Canada and the United
States. Additionally, the Company is exempt from obtaining minority
shareholder approval in connection with the amendment to the
Warrants in reliance on section 5.7(1)(a) of MI 61-101 as the
aggregate value of the insider participation does not exceed 25% of
the market capitalization of the Company. The Company is exempt
from obtaining minority shareholder approval in connection with the
amendment to the Credit Facility in reliance on section 5.7(1)(f)
of MI 61-101 as the terms of the amendment to the Credit Facility,
as determined by the board of directors of the Company, are
commercially reasonable and are not less advantageous to the
Company than if the Credit Facility was obtained from a person
dealing at arm’s length with the Company. The Company did not file
a material change report in respect of the related party
transaction at least 21 days before such amendments, which the
Company deems reasonable in the circumstances in order to complete
such amendments in an expeditious manner.
ABOUT POSABIT
POSaBIT (CSE: PBIT, OTC: POSAF) is a FinTech, working
exclusively within the cannabis industry. We provide a
best-in-class Point-of-Sale solution and are the leading cashless
payment provider for cannabis retailers. We work tirelessly to
build better financial services and transaction methods for
merchants. We bring 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. For additional information, visit www.posabit.com.
Neither the Canadian Securities Exchange nor the Canadian
Investment Regulatory Organization accepts responsibility for the
adequacy or accuracy of this release.
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version on businesswire.com: https://www.businesswire.com/news/home/20240514239986/en/
Investor Relations: investors@posabit.com Media
Relations: Oscar Dahl 855-767-2248 hello@posabit.com
Management: Ryan Hamlin Co-founder and CEO of POSaBIT
855-767-2248 investors@posabit.com