Calgary, Alberta--(Newsfile Corp. - August 29, 2024) - Katipult Technology Corp. (TSXV: FUND) ("Katipult" or the "Corporation"), provider of an industry leading and award-winning cloud-based software infrastructure for powering the exchange of capital in equity and debt markets, is pleased to announce its financial results for the three-month period ended June 30, 2024.
The following provides a summary of the results for the second quarter of 2024. The full results and related management discussion and analysis are available on the Corporation's SEDAR+ profile (www.sedarplus.ca).
Q2 2024 Summary
Revenue
Revenue consists of subscription revenue which decreased by 4.8% 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 to 2023.
Gross Profit Percentage (1)
Gross Profit Percentage was 81.6% in the second quarter of 2024 compared to 84.5% in the prior year quarter of 2023. The Corporation has been able to consistently maintain a gross profit percentage of close to 80% since 2017.
Adjusted EBITDA (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 was $69,000 in the second quarter of 2024 compared to 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 (the "2018 Debentures").
Financial Position
As at June 30, 2024, the Corporation had a cash and cash equivalents balance of $0.5 million, working capital of ($3.8 million), and total assets of $0.7 million, compared to cash and cash equivalents balance of $0.6 million, working capital of ($0.8 million), and total assets of $1.1 million as at December 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 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 fund its operating losses. While the Corporation has previously been successful in raising external capital to fund 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
Katipult (www.katipult.com) is a provider of industry leading and award-winning software infrastructure for powering the exchange of capital in equity and debt markets. Our 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.
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.
For further information: Katipult Technology Corp., Gord Breese, CEO, gbreese@katipult.com, +1 (604) 760-4000
Cautionary Note Regarding Forward-Looking Statements
Certain disclosure in this release, including statements regarding the recovery of capital markets investment activity, expectations regarding an increase in customer growth and with respect to repayment of the Loan constitute forward-looking statements. In making the forward- looking statements in this release, the Corporation has applied certain factors and assumptions that are based on the Corporation's current beliefs as well as assumptions made by and information currently available to the Corporation, including, but not limited to, the Corporation's anticipated cash needs, that the cash available to the Corporation is as expected, the Corporation's products will continue to operate as expected, the industry will continue to see value in the Corporation's products, the Corporation will be able to recruit talented and experienced sales, support and other individuals required to execute the Corporation's plans, that the Corporation's employees, consultants, customers, suppliers and other stakeholders will be able to manage their businesses successfully and that the Corporation will be able to repay the Loan. Although the Corporation considers these assumptions to be reasonable based on information currently available to it, they may prove to be incorrect, and the forward-looking statements in this release are subject to numerous risks, uncertainties and other factors that may cause future results to differ materially from those expressed or implied in such forward-looking statements. Such risk factors include, among others, the risk that cash available to the Corporation is not as expected, failure to manage growth successfully, lengthier than anticipated sales and implementation cycle, cyber risks, risks related to cloud based solutions, failure to continue to adapt to technological change and new product development, dependence on key personnel, competition, intellectual property risks, economic conditions, including any negative impacts of a slow-down in capital markets activity, privacy concerns and legislation, regulatory environment, risk associated with a change in the Corporation's pricing model, risk of defects in the Corporation's solution, dependence on market growth, operational service risk, dependence on partners and ability to obtain references, delay or failure to repay or renegotiate debt obligations, delay or failure to realize anticipated benefits of key account installations and such other risks as are noted in the Corporation's MD&A for the period ended June 30,2024. Readers are cautioned, especially in these uncertain times, not to place undue reliance on forward-looking statements. The Corporation does not intend to, and expressly disclaims any intention or obligation to, update or revise any forward-looking statements whether as a result of new information, future events or otherwise, except as required by law.
1 Non-GAAP Financial Measures
This news release refers to certain Non-GAAP financial measures that are not determined in accordance with International Financial Reporting Standards ("IFRS"). "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. See "Non-GAAP Measures and Additional GAAP Measures" in the Corporation's June 30, 2024 MD&A available on the Corporation's SEDAR+ profile at www.sedarplus.ca for a discussion of non-GAAP measures and their reconciliations.
"Gross Profit" is used by management to analyze overall and segmented operating performance. Gross Profit is not intended to represent an alternative to net earnings or other measures of financial performance calculated in accordance with IFRS. Gross Profit is calculated from the statements of operations and comprehensive income (loss) and from the segmented information contained in the notes to the financial statements. Gross Profit is defined as revenue less cost of revenue.
"Gross Profit Percentage" is used by management to analyze overall and segmented operating performance. Gross Profit Percentage is calculated from the statements of operations and comprehensive income (loss) and from the segmented information in the notes to the financial statements. Gross Profit Percentage is defined as gross profit divided by revenue.
"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 follows:
| For the three months ended June 30, | |||||||
| ($ thousands) | 2024 | 2023 | |||||
| Net income (loss) | 69 | (484 | ) | ||||
| Plus: | |||||||
| Depreciation and amortization | - | 1 | |||||
| Finance costs | 178 | 200 | |||||
| Unrealized gain on convertible debentures | (472 | ) | (13 | ) | |||
| Foreign exchange (gain) loss | (2 | ) | 42 | ||||
| Share-based payments | 7 | 16 | |||||
| Other income | (23 | ) | (1 | ) | |||
| Adjusted EBITDA | (243 | ) | (239 | ) | |||
"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 follows:
| As at | June 30, | December 31, | Increase (decrease) | |||||||||
| ($ Cdn thousands) - unaudited | 2024 | 2023 | in working capital | |||||||||
| Current assets | ||||||||||||
| Cash and cash equivalents | 540 | 602 | (62 | ) | ||||||||
| Accounts receivable | 26 | 181 | (155 | ) | ||||||||
| Unbilled revenue | 517 | 106 | 411 | |||||||||
| Prepaid expenses | 5 | 2 | 3 | |||||||||
| Total current assets | 1,088 | 891 | 197 | |||||||||
| Current liabilities | ||||||||||||
| Accounts payable and accrued liabilities | 504 | 295 | 209 | |||||||||
| Secured prommisory note | 254 | - | 254 | |||||||||
| Deferred revenue | 499 | 393 | 106 | |||||||||
| Loan payable - current portion | 7 | 60 | (53 | ) | ||||||||
| Convertible debentures - current portion | 3,638 | 3,964 | (326 | ) | ||||||||
| Total current liabilities | 4,902 | 4,712 | 190 | |||||||||
| Working capital | (3,814 | ) | (3,821 | ) | 7 | |||||||
To view the source version of this press release, please visit https://www.newsfilecorp.com/release/221582
SOURCE: Katipult Technology Corp.
