PopReach Acquires OpenMoves

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

Highly profitable and growing performance marketing company expands PopReach's Performance Marketing capabilities

TORONTO, April 26, 2023 /CNW/ - PopReach Corporation ("PopReach" or the "Company") (TSXV: POPR) (OTCQX: POPRF) is pleased to announce that it has acquired 100% of the membership interests of OpenMoves, LLC ("OpenMoves"), a B2B and B2C performance and growth marketing company headquartered in New York (the "Transaction") for a total aggregate purchase price of approximately US$7.5 million, with the total consideration consisting of a combination of cash, debt and stock.

"OpenMoves has built a great business around key core categories of performance marketing that are highly complementary to our other businesses," said Jon Walsh, CEO of PopReach. "This is an important segment of adtech that I expect to be more resilient in a challenging economy as brands and advertisers look for a more direct link to ROI on their marketing spend. The opportunity to add a growing, founder-led organization in this area and to help them scale their business is a win-win for both our organizations."

Added Ted Hastings, Executive Chairman of PopReach "We're excited to be adding another great company to our portfolio with a clear path to additional revenue synergies and EBITDA growth. Once again, this deal shows how we will continue to add scale through cash flow generating assets that allow us to limit dilution and maintain healthy leverage ratios as we grow."

• Enhances Performance Marketing capabilities: Proven specialization in paid media, in particular pay-per-click across search and social channels, as well as SEO, email marketing and creative services, which expands the suite of services available to cross sell to brands and advertisers with a direct ROI driven business model.
  
  
• Attractive margins1: In 2022, OpenMoves generated Gross Profit and Adjusted EBITDA2 margins of 43% and 23%, respectively.
  
  
• Proven path to revenue synergies: Opportunities to immediately realize revenue synergies between OpenMoves and other PopReach companies as evidenced by the fact that in the weeks leading up to the closing of the Transaction (the "Closing"), OpenMoves and Q1Media, a wholly owned subsidiary of the Company, partnered to win over US$2 million in business from new customers.

Founded in 2000, OpenMoves specializes in B2B and B2C performance and growth marketing. Service offerings include paid media (search & social), SEO, email marketing services and creative services. OpenMoves is a Google Premier Partner, MetaAdvertising Expert, and Microsoft Advertising Partner. The team consists of 30+ members with long industry tenure. In 2022, OpenMoves was placed in Inc. Magazine's annual Inc. 5000 list of America's fastest-growing private companies for the third consecutive year.

The following table sets out certain unreviewed and unaudited OpenMoves financial information for the 12 months ended December 31, 2022.

Pursuant to the definitive transaction agreement (the "TransactionAgreement") entered into on April 26, 2023 among PopReach, OpenMoves Acquisition, Inc. ("AcquisitionSubsidiary"), a wholly owned subsidiary of PopReach, OpenMoves and the membership interest holders of OpenMoves (the "Sellers"), Acquisition Subsidiary acquired all of the outstanding membership interests of OpenMoves from the Sellers for aggregate consideration of approximately US$7.5 million, being comprised of US$4.0 million in cash (the "CashConsideration"), the issuance of 9,000,000 common shares of PopReach (the "InitialConsideration Shares"), and the issuance of a convertible debenture in the aggregate principal amount of US$2,000,000 (the "Debenture"). As at Closing, OpenMoves is expected to have a neutral working capital position, with no long term liabilities.

The Debenture bears interest at a rate of 7% per annum, is repayable on May 31, 2025 (the "MaturityDate") and convertible into PopReach common shares ("PopReachShares") at the option of the Sellers exercisable at any time prior to the Maturity Date at US$0.78 per PopReach Share (the "Conversion Price"). The Conversion Price represents a premium of 462% to the closing price of the PopReach Shares on April 25, 2023, being C$0.23 per PopReach Share. The Debenture is secured by a security interest granted to the Sellers over the assets of OpenMoves, which security interest ranks subordinate to PopReach's senior lender.

US$0.1 million of the Cash Consideration and 2,142,000 of the Initial Consideration Shares will be held back on Closing and released on the one year anniversary of Closing, subject to reductions, if any, in connection with the Sellers' obligations pursuant to the indemnification and net working capital adjustment provisions set forth in the Transaction Agreement.

In addition, pursuant to the Transaction Agreement, in the event PopReach does not elect, in PopReach's own discretion, to prepay the Debenture within six months following Closing, the principal amount of the Debenture will be increased by US$500,000 (the "ContingentDebenture Amount") and an additional 1,000,000 PopReach Shares (the "ContingentShares") will be issued to the Sellers.

Each of the Sellers have, pursuant to the Transaction Agreement, agreed to customary standstill provisions for a period of at least two years following Closing. Furthermore, the Sellers have agreed to certain restrictions against the transfer of the Initial Consideration Shares and any PopReach Shares issued pursuant to the Debenture over a three year period, with 1/3rd of such locked-up shares being released from such transfer restrictions every 12 months commencing on the one year anniversary of Closing. In the case of the Contingent Shares, such shares will be fully released from such transfer restrictions on the one year anniversary of Closing.

The Company has sourced bridge financing (the "Bridge Financing") in the principal amount of US$4 million from a third-party lender (the "BridgeLender") to fund the Cash Consideration payable on Closing. The Bridge Financing, together with a loan fee in the amount of US$1 million (the "LoanFee"), is repayable on the earlier to occur of any future increase to, or refinancing of, PopReach's senior debt facility and May 31, 2025 pursuant to the terms of an unsecured promissory note issued by the Company to the Bridge Lender on April 25, 2023. In the course of negotiations with the Sellers, the consideration payable in connection with the Transaction was reduced by an amount equal to the Loan Fee in order to expedite Closing by facilitating the Bridge Financing. The principal amount under the Bridge Financing does not bear interest unless repayment is not made within six months following Closing ("Early Repayment Term"). If repayment is not made within the Early Repayment Term, the principal amount outstanding will bear interest at the rate of 10% per annum until full and final repayment is made and the Company will be required, subject to approval of the TSX Venture Exchange (the "Exchange"), to grant a security interest over its assets to the Bridge Lender, which security interest will rank subordinate to PopReach's senior lender. The Bridge Lender is arm's length to PopReach and is also arm's length to OpenMoves and the Sellers.

The Transaction has been conditionally approved by the Exchange, subject to customary conditions, and remains subject to final acceptance by the Exchange.

The Company prepares its financial statements in accordance with International Financial Reporting Standards ("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".

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 OpenMoves' Adjusted EBITDA for the twelve months ended December 31, 2022, in thousands of US dollars:

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; NotifyAI, a push notification subscription and monetization platform; Q1Media, a digital media advertising services provider; Contobox, an award-winning personalization, eCommerce and creative advertising technology platform; Ubiquity, an omnichannel marketing network and technology platform; and SCS, a brand transformation company.

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.

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. Forward-looking information in this news release includes, without limitation, the anticipated benefits of the Transaction, the anticipated effect of the Transaction on PopReach's strategy, operations and financial performance, PopReach's ability to acquire and integrate new businesses and technologies and PopReach's ability retain key employees of OpenMoves.

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. PopReach has made certain material assumptions, including but not limited to: prevailing market conditions; general business, economic, competitive, political and social uncertainties; and the ability of PopReach to execute and achieve its business objectives, to develop the forward-looking information in this news release. There can be no assurance that such statements will prove to be accurate, as actual results and future events could differ materially from those anticipated in such statements. Accordingly, readers should not place undue reliance on forward-looking statements.

While considered reasonable by the Company as of the date of this news release, such opinions assumptions 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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