Mr. Gord Breese reports

KATIPULT RELEASES 2024 Q2 RESULTS AND PROVIDES CORPORATE UPDATES

Katipult Technology Corp. has released its financial results for the three-month period ended June 30, 2024.

This news release provides a summary of the results for the second quarter (Q2) of 2024. The full results and related management's discussion and analysis (MD&A) are available on the corporation's SEDAR+ profile.

Q2 2024 summary

Revenue

Revenue consists of subscription revenue, which decreased by 4.8 per cent to $512,000 in the second quarter of 2024, from $538,000 recognized in the second quarter of 2023. Notably, the revenue from enterprise customers remained consistent in 2024, as compared with 2023.

Gross profit percentage (1)

Gross profit percentage was 81.6 per cent in the second quarter of 2024, compared with 84.5 per cent in the prior-year quarter. The corporation has been able to consistently maintain a gross profit percentage of close to 80 per cent since 2017.

Adjusted EBITDA (earnings before interest, taxes, depreciation and amortization) (1)

Adjusted EBITDA losses increased to $243,000 in the three-month period ended June 30, 2024, from $239,000 in the three-month period ended June 30, 2023, due to higher general and administrative costs, offset by higher revenue.

Net loss and comprehensive loss

Net income and comprehensive income totalled $69,000 in the second quarter of 2024, compared with net loss and comprehensive loss of $484,000 in the second 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 June 30, 2024, the corporation had a cash and cash equivalents balance of $500,000, working capital of negative $3.8-million, and total assets of $700,000, compared with cash and cash equivalents balance of $600,000, working capital of negative $800,000, and total assets of $1.1-million 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 were renegotiated subsequent to the period-end.

Katipult is continuing to progress in enhancing and expanding functionality in its core DealFlow product. Going forward, the corporation will focus on continuing to add enterprise customers, growing its monthly recurring revenue (MRR), and adding new product capabilities to make private capital markets more efficient, transparent and fully digitized. The corporation has not yet been able to generate the sales volumes required to create positive cash flows from operating activities. The corporation has incurred operating losses since inception and has historically relied on equity and debt financings to finance its operating losses. While the corporation has previously been successful in raising external capital to finance its operations, there is no guarantee it will be successful in its efforts to raise additional financing, or, if financing is available, that it will be on terms that are acceptable to the corporation. Due to these factors, there is material uncertainty that casts doubt on the corporation's ability to continue as a going concern.

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. Its 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.

(1) Non-GAAP (generally accepted accounting principles) financial measures

This news release refers to certain non-GAAP financial measures that are not determined in accordance with IFRS (international financial reporting standards). Gross profit, gross profit percentage, working capital and adjusted EBITDA 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.

Adjusted EBITDA is a measure of the corporation's operating profitability. Adjusted EBITDA provides an indication of the results generated by the corporation's principal business activities prior to how these activities are financed (including mark-to-market movements of the convertible debenture value), assets are depreciated and amortized, or how the results are taxed in various jurisdictions, prior to the effect of foreign exchange, other income and expenses, and non-cash share-based payment expense. Adjusted EBITDA is not intended to represent net earnings as calculated in accordance with IFRS.

Adjusted EBITDA is calculated as shown in an attached table.

Working capital is used by management and the investment community to analyze the operating liquidity available to the corporation. Working capital is calculated based on current assets less current liabilities.

Working capital is derived from the statements of financial positions and is calculated as shown in an attached table.

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