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PopReach Reports Financial Results for the Three Months ended June 30, 2022

V.POPR

/NOT FOR DISTRIBUTION TO US WIRE SERVICES OR FOR DISSEMINATION IN THE UNITED STATES OF AMERICA/

On a pro-forma consolidated basis1, the Company delivered $22.1M in revenue, representing 18.1% year over year and 15.5% sequential quarterly growth, a net loss of $1.7M, and Adjusted EBITDA2 of $2.9M

(All figures in US dollars, unless otherwise indicated)

TORONTO, Aug. 29, 2022 /CNW/ - PopReach Corporation ("PopReach" or the "Company") (TSXV: POPR) (OTCQX: POPRF) is pleased to announce its financial results for the three and nine month periods ended June 30, 2022.

PopReach Corporation logo (CNW Group/PopReach Corporation)

1 Please refer to "Selected Unreviewed and Unaudited Pro-Forma Consolidated Financial Information" section of this press release

2 Please refer to "Non-IFRS Measures" section of this press release

Selected quarterly highlights on an unreviewed and unaudited pro-forma consolidated basis1

  • Revenue of $22.1M for the three month period ended June 30, 2022, a $3.0M increase or 15.5% sequential growth from the three month period ended March 31, 2022
  • Revenue increased by 18.1% year-over-year from the three months ended June 30, 2021
  • Adjusted EBITDA2 of $2.9M for the three-month period ended June 30, 2022, a $1.0M increase or 50.4% sequential growth from the three-month period ended March 31, 2022
  • Net loss of $1.7M for the three-month period ended June 30, 2022, compared to a net loss of $0.5M for the three-month period ended March 31, 2022
  • Cash as at June 30, 2022 was $10.4M, with total debt outstanding of $25.0M

Significant developments for the three months ended June 30, 2022

  • On April 28, 2022, the Company completed a reverse takeover transaction (the "Transaction") with Federated Foundry Limited ("Federated", formerly 2810735 Ontario Inc.)
  • On April 18, 2022, the Company entered into a credit agreement with Bank of Montreal for $33M in senior secured credit facilities (the "Credit Facility") in order to consolidate debt, including debt assumed on closing of the Transaction, under a single lender; these new facilities are expected to significantly lower the Company's cost of capital, and support its mergers and acquisitions growth strategy via up to an additional $15M acquisition line
  • On May 12, 2022, the Company closed the Credit Facility, and paid off its prior senior secured credit facilities in their entirety as well as all debt assumed by the Company upon completion of the Transaction

Management Commentary

"I'm very pleased with the consolidated pro-forma performance of PopReach and Federated for the quarter. Collectively, we've delivered double digit quarter-over-quarter revenue and Adjusted EBITDA growth at more meaningful scale, with a diversified portfolio of complimentary assets in the digital media eco-system," said Jon Walsh, CEO of PopReach. "Our media services businesses, which are tied to digital advertising growth, and our content business, which leverages our deep domain expertise in mobile games, are driving our organic performance. We are now gearing up for the launch of PAYDAY: Crime War this fall, which represents an additional catalyst in our multi-pronged approach to generate profitable growth."

Added Christopher Locke, President of PopReach "Our platform is allowing us to evaluate investments across a broader set of opportunities as we look to consolidate assets across the digital media industry. Over the past several months, we've seen increasingly favourable M&A market conditions that have allowed us to continue to build a healthy acquisition pipeline. This provides additional fuel for our strategy to drive compelling investment returns, even within a volatile macroeconomic backdrop."

Selected Unreviewed and Unaudited Pro-Forma Consolidated Financial Information

The following table sets out certain unreviewed and unaudited pro-forma consolidated financial information had: 1) the Transaction been consummated at the beginning of the three month periods ended June 30, 2021, March 31, 2022, and June 30, 2022; and 2) Federated had acquired Notify AI, LLC ("Notify AI"), Q1Media, Inc. ("Q1Media"), and Crucial Interactive Holdings Inc. ("Contobox"), at the beginning of the same three month periods.

Figures in thousands of US Dollars Unaudited

Three months
ended June 30,
2022

Three months
ended March 31,
2022

QoQ
Growth


Three months
ended June 30,
2021

YoY
Growth









Revenue

$22,056

$19,095

15.5 %


$18,676


18.1 %

Adjusted EBITDA2

$2,850

$1,894

50.4 %


$2,868


(0.6 %)

Adjusted EBITDA2 Margin

12.9 %

9.9 %



15.4 %



Net Income (Loss)

$(1,704)

$(549)

--


$2,715


--









2 Please refer to "Non-IFRS Measures" section of this press release

Under International Financial Reporting Standards ("IFRS") 3, Federated is deemed to be the acquirer of the Company in the Transaction, and as such the consolidated interim financial statements are a continuation of the financial statements of Federated. The consolidated interim financial statements that have been filed under the Company's profile on SEDAR at www.sedar.com include consolidation of Federated for the entire three and nine month periods ending June 30, 2022, and include PopReach from April 28, 2022 (the date of the Transaction) through the end of the period ending June 30, 2022.

The following tables reconcile the financial information presented in PopReach's financial statements filed for the periods listed below, and in Management's Discussion and Analyses filed for the same periods (such financial information being referred to herein as, "As Reported"), to the selected unreviewed and unaudited pro-forma consolidated financial information provided below ("Pro-Forma").

Figures in thousands of US Dollars Unaudited


As Reported

Three months

ended



Pro-Forma

adjustments



Pro-Forma

Three months

ended



June 30,







June 30,



2022







2022

Revenue


$

20,688



$

1,368



$

22,056

Net income (loss)



(1,443)




(261)




(1,704)

Adjusted EBITDA2



2,810




40




2,850













Figures in thousands of US Dollars Unaudited


As Reported

Three months

ended



Pro-Forma

adjustments



Pro-Forma

Three months

ended



March 31,







March 31,



2022







2022

Revenue


$

14,480



$

4,615



$

19,095

Net income (loss)



(820)




271




(549)

Adjusted EBITDA2



1,017




877




1,894













Figures in thousands of US Dollars Unaudited


As Reported

Three months

ended



Pro-Forma

adjustments



Pro-Forma

Three months

ended



June 30,







June 30,



2021







2021

Revenue


$



$

18,676



$

18,676

Net income (loss)



(75)




2,789




2,715

Adjusted EBITDA2



(104)




2,972




2,868

Non-IFRS Measures

The Company prepares its financial statements in accordance with IFRS. However, the Company considers certain non-IFRS financial measures as useful additional information to assess its financial performance. These measures, which it believes are widely used by investors, securities analysts and other interested parties to evaluate its performance, do not have a standardized meaning prescribed by IFRS and therefore may not be comparable to similarly titled measures presented by other publicly traded companies, nor should they be construed as an alternative to financial measures determined in accordance with IFRS. Non-IFRS measures include "Adjusted EBITDA".

Adjusted EBITDA

Consolidated adjusted earnings before interest, taxes, depreciation and amortization ("Adjusted EBITDA") is a non-IFRS measure of financial performance. The presentation of this non-IFRS financial measure is not intended to be considered in isolation from, as a substitute for, or superior to, the financial information prepared and presented in accordance with IFRS and may be different from non-IFRS financial measures used by other companies. Company management defines Adjusted EBITDA as IFRS Net income (loss) adding back finance costs, income taxes, depreciation amortization, gain/loss on disposal of assets and extinguishment of loans, fair value gain/loss on financial liabilities and contingent consideration, and excludes discontinued operations and the effects of significant items of income and expenditure which may have an impact on the quality of earnings, such as impairments where the impairment is the result of an isolated, non-recurring event. It also excludes the effects of equity-settled share-based payments, foreign exchange gains/losses, changes in deferred revenues, changes in deferred cost of sales, and other extraordinary one-time expenses.

Management believes Adjusted EBITDA is a useful financial metric to assess its operating performance on a cash basis before the impact of non-cash and extraordinary one-time items.

The following table presents the Company's calculation of Adjusted EBITDA for each period:



As Reported - for the three months ended

Figures in thousands of US Dollars Unaudited


June 30,


March 31,


June 30,



2022


2022


2021

Net income (loss)


$

(1,443)


$

(820)


$

(75)

Add:







Finance costs


673


688


21

Income tax expense (recovery)


(356)


(672)


Depreciation and amortization


2,396


1,718


Fair value adjustment - contingent
consideration




Fair value loss (gain) on financial liabilities


(5)



(28)

Gain on disposal of property and equipment




Loss on extinguishment of loan


1,217



Share-based compensation expense


131



Change in deferred revenue of in-app
purchases


(62)



Change in deferred cost of sales


(100)



Extraordinary one-time expenses


469


518


Foreign exchange gain


(110)


(37)


(22)

Non-recurring income



(378)


Adjusted EBITDA


$

2,810


$

1,017


$

(104)



Pro-Forma - for the three months ended

Figures in thousands of US Dollars Unaudited


June 30,


March 31,


June 30,



2022


2022


2021

Net income (loss)


$

(1,704)


$

(549)


$

2,715

Add:







Finance costs


744


876


244

Income tax expense (recovery)


(347)


(643)


103

Depreciation and amortization


2,575


2,278


525

Fair value adjustment - contingent
consideration




Fair value loss (gain) on financial liabilities


(93)


(341)


(1,311)

Gain on disposal of property and equipment




(4)

Loss on extinguishment of loan


1,217



Share-based compensation expense


148


51


73

Change in deferred revenue of in-app
purchases


(42)


(160)


226

Change in deferred cost of sales


(98)


(45)


(140)

Extraordinary one-time expenses


594


805


437

Foreign exchange gain


(144)



Non-recurring income



(378)


Adjusted EBITDA


$

2,850


$

1,894


$

2,868

Financial Statements and MD&A

PopReach's Financial Statements for the three and nine months ended June 30, 2022, and Management's Discussion and Analysis for the same periods, are posted on its corporate website at www.popreach.com and available on the Company's profile on SEDAR at www.sedar.com.

About PopReach Corporation

PopReach, a Tier 1 Issuer on the TSX Venture Exchange, with shares also trading on OTCQX® Best Market, is a multi-platform technology company focused on acquiring, optimizing and growing companies and assets that provide services, technology or products within the digital media ecosystem. The Company's portfolio includes: PopReach Games, a free-to-play mobile game publisher with over 25 games enjoyed by millions of players; notifyAI, a push notification subscription and monetization platform; Q1Media, a digital media advertising services provider; and Contobox, an award-winning personalization, eCommerce and creative advertising technology platform.

Additional information about the Company is available at www.sedar.com.

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.

Cautionary Statement Regarding Forward-Looking Information

Certain information in this news release constitutes forward-looking statements and forward-looking information under applicable Canadian securities legislation (collectively, "forward-looking information"). Forward-looking information include, but are not limited to, statements with respect to and the business, financials and operations of the Company. Statements containing forward-looking information are not historical facts but instead represent management's expectations, estimates and projections regarding future events. Forward looking information is necessarily based on a number of opinions, assumptions and estimates that, while considered reasonable by the Company as of the date of this news release, are subject to known and unknown risks, uncertainties, assumptions and other factors that may cause the actual results, level of activity, performance or achievements and future events to be materially different from those expressed or implied by such forward-looking information, including but not limited to the factors described in greater detail in the public documents of the Company available at www.sedar.com. Although the Company has attempted to identify important risks, uncertainties and factors which could cause actual results to differ materially, there may be others that cause results not to be as anticipated, estimated or intended. Investors are cautioned undue reliance should not be placed on any such information, as unknown or unpredictable factors could have material adverse effects on future results, performance or achievements of the Company. The Company does not intend, and does not assume any obligation, to update this forward-looking information except as otherwise required by applicable law.

SOURCE PopReach Corporation

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