Mr. Gord Breese reports

KATIPULT RELEASES 2024 Q1 RESULTS AND PROVIDES CORPORATE UPDATES

Katipult Technology Corp. has released its financial results for the three-month period ended March 31, 2024.

The following provides a summary of the results for the first quarter of 2024. The full results and related management discussion and analysis are available on the corporation's SEDAR+ profile.

Q1 2023 summary

Revenue

Revenue consists of subscription revenue which increased by 7.2 per cent to $506,000 in the first quarter of 2024 from $485,000 recognized in the first quarter of 2023. Notably, the revenue from enterprise customers grew by 16 per cent in 2024 as compared with 2023.

Gross profit percentage

Gross profit percentage was 79.2 per cent in the first quarter of 2024 compared with 79.2 per cent in the prior-year quarter of 2023. The corporation has been able to consistently maintain a gross profit percentage of close to 80 per cent since 2017.

Adjusted EBITDA

Adjusted EBITDA (earnings before interest, taxes, depreciation and amortization) losses increased to ($269,000) in the three-month period ended March 31, 2024, from ($262,000) in the three-month period ended March 31, 2023, due to higher general and administrative costs offset by higher revenue.

Net loss and comprehensive loss

Net loss and comprehensive loss was ($379,000) in the first quarter of 2024 compared with net income and comprehensive income of $799,000 in the fourth quarter of 2023, the change is largely due to change in the non-cash fair value of the corporation's outstanding 2018 debentures.

Financial position

As at March 31, 2024, the corporation had a cash and cash equivalents balance of $400,000, working capital of ($4.0-million) and total assets of $700,000, compared with cash and cash equivalents balance of $600,000, working capital of ($800,000), and total assets of $800,000 as at Dec. 31, 2023. The large decline in working capital is due to the shift of the entire amount of the 2018 debentures to current liabilities. The maturity date and other terms of the 2018 debentures are being renegotiated subsequent to period end.

Related party loan

The company is also announcing today that it has entered into a secured promissory note to borrow $250,000 from Adventure Capital (2019) Ltd. The principal amount of the loan under the promissory note shall bear interest at a rate of 15 per cent per annum and the loan shall mature on the earlier of 60 days from the date of the promissory note and the receipt of certain accounts receivable (the accounts receivable) by the corporation, following which, the interest rate will increase to 25 per cent per annum. In connection with the loan, the corporation has granted the lender security in the accounts receivable. In the event that the loan is not repaid by Aug. 31, 2024, the promissory note and all related security will be terminated, and the outstanding principal and interest of the loan will be rolled over into a convertible debenture held by the lender, subject to prior TSX Venture Exchange review and approval.

The proceeds of the loan will be used for general working capital purposes.

The lender is controlled by Brian Craig, a director of the corporation. Accordingly, the loan is considered a related party transaction pursuant to Multilateral Instrument 61-101 -- Protection of Minority Security Holders in Special Transactions (MI 61-101). The corporation intends to rely on exemptions from the valuation and the minority approval requirements of MI 61-101 provided for in subsections 5.5(a) and 5.7(a) of MI 61-101, respectively, as the fair market value of the loan does not represent more than 25 per cent of the corporation's market capitalization as determined in accordance with MI 61-101. The loan has been approved by the directors of the corporation who are independent in connection with the loan.

Governance update

The company is also announcing today the departure of George Reznik as a director of Katipult effective May 28, 2024, in order to devote his attention to other professional commitments. During his time with the corporation, Mr. Reznik served as the chair of the audit committee and as a member of the compensation and governance committee. The board of directors of the corporation will assess whether it will appoint a new member to fill this vacancy before the next annual meeting of shareholders.

"On behalf of the board of directors and the management team of Katipult, I would like to thank Mr. Reznik for his valued contributions to Katipult and we wish him all the best in his future endeavours," said Gord Breese, chief executive officer of Katipult.

About Katipult Technology Corp.

Katipult is a provider of industry leading and award-winning software infrastructure for powering the exchange of capital in equity and debt markets. The company's cloud-based platform and solutions digitize investment workflow by eliminating transaction redundancy, strengthening compliance, delighting investors and accelerating deal flow. Katipult provides unparalleled adaptability for regulatory compliance, asset structure, business model and localization requirements.

We seek Safe Harbor.