POSaBIT Reports Fourth Quarter and Annual 2023 Financial Results
POSaBIT Systems (CSE: PBIT, OTC: POSAF) reported 2023 financial results, highlighting a 23% overall revenue growth excluding licensing. Point of Sale revenue grew by 51%, and payment revenue increased by 20%. Despite industry-wide payment disruptions, gross profit margin fell to 21% from 42%, leading to a net loss of $13.76 million. Operating income saw a significant loss of $9.55 million. The company aims for positive free cash flow in Q2 2024. Stephen Gledhill will replace Matthew Fowler as CFO in May 2024. The company is working to list shares on the TSX Venture Exchange, but approval is uncertain. A non-cash earnings restatement for 2022 resulted in reduced revenue recognition by $3 million.
- Overall revenue growth of 23% excluding licensing fees.
- Point of Sale revenue increased by 51%.
- Payment revenue grew by 20%.
- Launch of five new payment solutions, including 'POSaBIT One'.
- Approval as Master ISO for credit card transactions in anticipation of cannabis rescheduling.
- Gross profit margin decreased from 42% to 21%.
- Net loss of $13.76 million compared to a $5.43 million profit in 2022.
- Operating income reported a loss of $9.55 million.
- Cash and cash equivalents reduced from $3.1 million to $1.5 million as of December 31, 2023.
- Non-cash earnings restatement reduced 2022 revenue by $3 million.
- Increased operating costs by 8%, totaling $18.77 million.
2023 Overall Revenue Growth of
2023 Point of Sale Revenue Growth of
2023 Payment Revenue Growth of
“Despite the challenges posed by several industry-wide payment disruptions in 2023, I am proud that we achieved a combined
Hamlin continued, “Our Point-of-Sale business continues to grow at a significant pace and remains the most used Point-of-Sale for cannabis dispensaries in
Provides Update on Application to List Common Shares on the TSX Venture Exchange
Over the past several months, POSaBIT has been working to advance the proposed listing of its common shares (“Common Shares”) on the TSX Venture Exchange (the “TSXV”). The Company remains focused on satisfying applicable regulatory and TSXV listing requirements. The listing of the Common Shares on the TSXV is contingent on the satisfaction of all listing requirements and there is no assurance that the TSXV will approve the Company’s listing application or that the Company will complete the listing on the TSXV.
Announcement of Stephen Gledhill to Chief Financial Officer Succeeding Matthew Fowler
POSaBIT today announced the appointment of Stephen Gledhill to the position of Chief Financial Officer effective May 14, 2024. Mr. Gledhill will succeed Matthew Fowler who joined POSaBIT as CFO of its US Subsidiary in May 2021, and was appointed CFO of the Company on August 24, 2023. Mr. Gledhill previously served as the Company’s Chief Financial Officer from September 17, 2018, until August 24, 2023, and has been serving in an advisory role to the Company since he vacated that office. Mr. Gledhill’s appointment is subject to the final approval of the CSE.
“I want to thank Matthew Fowler for his partnership and leadership over the past three years. I wish him the best of luck as he embarks on the next chapter of his career. Having Stephen step back into this role which he previously served as the CFO of our public holding company for several years, gives me confidence that we are in good hands. Stephen brings the expertise, continuity, and vision necessary to propel our organization forward into its next chapter of success. Together, we will continue to innovate, adapt, and drive sustainable value for our stakeholders,” said Hamlin.
Announces Non-Cash Earnings Restatement for 2022
As part of the Company’s audit process, it was determined that the discount rate associated with the 2022 software license agreement should be increased to
Recent Operational Highlights
- Recently launched five unique payment solutions to provide full redundancy moving forward for our merchants.
- Released the first multiple payment methods processing terminal branded as “POSaBIT One.”
- Recently closed our largest day of processing volume this year on 4/20 with zero interruptions or outages.
- Approved as a Master ISO for credit card transactions in anticipation of potential rescheduling of cannabis in the US as a Schedule 1 substance.
Balance Sheet
As of December 31, 2023, the Company had cash and cash equivalents of
Subsequent to quarter end, the Company received commitments of
Financial Results |
|||||||||
in US Dollars |
Twelve Months ended |
|
|
||||||
|
December 31,
|
|
December 31,
|
|
% Chg. |
||||
Revenue |
|
|
46,801,122 |
|
(7 |
)% |
|||
Cost of goods sold |
|
) |
|
) |
(26 |
)% |
|||
Gross profit |
|
|
|
|
(20 |
)% |
|||
Gross profit margin |
21 |
% |
42 |
% |
NM |
|
|||
Operating costs |
|
) |
|
) |
(8 |
)% |
|||
Operating income (loss) |
(9,547,157 |
) |
|
|
(537 |
)% |
|||
Other (expenses) income |
|
) |
|
|
(213 |
)% |
|||
Income Taxes |
|
) |
(270,890 |
) |
13 |
% |
|||
Income (loss) |
|
) |
|
|
(353 |
)% |
|||
NM - Not Meaningful |
|||||||||
The following tables reconcile Adjusted EBITDA to net loss, as reported.
in US Dollars |
Year ended |
|||||
|
December 31,
|
|
December 31,
|
|||
Income (loss), as reported |
(13,760,430 |
) |
5,433,665 |
|
||
Add back (deduct): foreign exchange gains, as reported |
(608,792 |
) |
2,790,849 |
|
||
Add back: share-based compensation, as reported |
3,471,246 |
|
2,229,402 |
|
||
Add back: impairments, as reported |
6,916,751 |
|
- |
|
||
Add back: amortization and depreciation, as reported |
303,615 |
|
36,647 |
|
||
Add back (deduct): change in expected credit loss and bad debts, as reported |
648,387 |
|
(20,697 |
) |
||
Deduct other income, as reported |
(102,720 |
) |
- |
|
||
Add back: litigation settlement, as reported |
2,214,408 |
|
- |
|
||
Add back: change in value of digital assets, as reported |
- |
|
5,513 |
|
||
Add back: interest accretion, as reported |
518,371 |
|
187,675 |
|
||
Deduct: change in fair value of derivative liability, as reported |
(5,996,544 |
) |
(4,006,369 |
) |
||
Add back: income taxes, as reported |
235,200 |
|
270,890 |
|
||
Add back: transaction costs, as reported |
588,936 |
|
519,261 |
|
||
Add back loss on disposal of assets, as reported |
- |
|
62,484 |
|
||
Deduct: gain on debt modification, as reported |
(75,975 |
) |
- |
|
||
Adjusted EBITDA |
|
) |
|
|
||
Earnings Guidance
POSaBIT will be providing earnings guidance and revenue run-rates as part of the POSaBIT Q1 earnings release and call at the end of May 2024.
Conference Call Information
Date: May 14, 2024
Time: 4:30 PM Eastern Time
Toll Free: 888-506-0062
International: 973-528-0011
Participant Access Code: 649259
Webcast URL: https://www.webcaster4.com/Webcast/Page/2708/50355
Conference Call Replay Information:
The replay will be available approximately 1 hour after the completion of the live event.
Toll Free: 877-481-4010
International: 919-882-2331
Replay Passcode: 50355
Webcast Replay URL: https://www.webcaster4.com/Webcast/Page/2708/50355
Financial Reports
Full details of the financial and operating results are described in the Company’s consolidated financial statements for the periods ended December 31, 2023 with accompanying notes. The consolidated financial statements and additional information about POSaBIT are available on the Company’s website at www.posabit.com/investor-relations or on SEDAR+ at www.sedarplus.ca.
Non-IFRS Measures
Adjusted EBITDA is a non-IFRS measure used by management that does not have any prescribed meaning by IFRS and may not be comparable to similar measures presented by other companies. The Company defines Adjusted EBITDA as net income or loss generated for the period as reported, before interest, taxes, depreciation and amortization and further adjusted to remove changes in fair values and expected credit losses, foreign exchange gains and/or losses, impairments. The Company believes this non-IFRS measure is a useful metric to evaluate its core operating performance and uses this measure to provide shareholders and others with supplemental measures of its operating performance. The Company also believes that securities analysts, investors and other interested parties, frequently use this non-IFRS measure in the evaluation of companies, many of which present similar metrics when reporting their results. We caution readers that Adjusted EBITDA should not be substituted for determining net loss as an indicator of operating results, or as a substitute for cash flows from operating and investing activities.
Forward-Looking Statements
This press release contains forward-looking statements, including statements regarding our business strategy, product development, timing of product development, events and courses of action.
Statements which are not purely historical are forward-looking statements and include any statements regarding beliefs, plans, outlook, expectations or intentions regarding the future including words or phrases such as “anticipate,” “objective,” “may,” “will,” “might,” “should,” “could,” “can,” “intend,” “expect,” “believe,” “estimate,” “predict,” “potential,” “plan,” “is designed to” or similar expressions suggesting future outcomes or the negative thereof or similar variations. Forward-looking statements may include, among other things, statements about: our expectations regarding annual cost reductions; the submission of an application for the listing of the Common Shares on the TSXV and any subsequent listing of the Common Shares on the TSXV; our future customer concentration; our anticipated cash needs and our estimates regarding our capital requirements; our ability to anticipate the future needs of our customers; our plans for future products and enhancements of existing products; our future growth strategy and growth rate; our future intellectual property; and our anticipated trends and challenges in the markets in which we operate. Such statements and information are based on numerous assumptions regarding present and future business strategies and the environment in which POSaBIT will operate in the future, including the demand for our products, anticipated costs and ability to achieve goals. Although we believe that the assumptions underlying these statements are reasonable, they may prove to be incorrect. Given these risks, uncertainties and assumptions, you should not unduly rely on these forward-looking statements.
Forward-looking statements are subject to known and unknown risks, uncertainties and other important factors that may cause the actual results to be materially different from those expressed or implied by such forward-looking statements, including but not limited to, business, economic and capital market conditions; the ability to manage our operating expenses, which may adversely affect our financial condition; our ability to remain competitive as other better financed competitors develop and release competitive products; regulatory uncertainties; market conditions and the demand and pricing for our products; our relationships with our customers, distributors and business partners; our ability to successfully define, design and release new products in a timely manner that meet our customers’ needs; our ability to attract, retain and motivate qualified personnel; competition in our industry; our ability to maintain technological leadership; our ability to manage risks inherent in foreign operations; the impact of technology changes on our products and industry; our failure to develop new and innovative products; our ability to successfully maintain and enforce our intellectual property rights and defend third-party claims of infringement of their intellectual property rights; the impact of intellectual property litigation that could materially and adversely affect our business; our ability to manage working capital; and our dependence on key personnel. POSaBIT is an early-stage company with a short operating history; it may not achieve profitability; and it may not actually achieve its plans, projections, or expectations.
Important factors that could cause actual results to differ materially from POSaBIT’s expectations include consumer sentiment towards POSaBIT’s products, litigation, global economic climate, loss of key employees and consultants, additional funding requirements, changes in laws, technology failures, competition, and failure of counterparties to perform their contractual obligations.
Neither we nor any of our representatives make any representation or warranty, express or implied, as to the accuracy, sufficiency or completeness of the information in this news release. Neither we nor any of our representatives shall have any liability whatsoever, under contract, tort, trust or otherwise resulting from the use of the information in this news release or for omissions from the information in this news release.
Related Party Disclosure
Alex Sharp is an insider of the Company and exercises control or direction over Perga. Pursuant to Multilateral Instrument 61-101 – Protection of Minority Security Holders in Special Transactions (“MI 61-101”), the amendments to the Credit Facility and the Warrants, as described herein, are each a “related party transaction” by virtue of such insider participation. The Company is exempt from the formal valuation requirement of MI 61-101 in connection with the insider participation in reliance on section 5.5(b) of MI 61-101, as no securities of the Company are listed or quoted for trading on the Toronto Stock Exchange, the New York Stock Exchange, the American Stock Exchange, the NASDAQ stock market or any other stock exchange outside of
ABOUT POSABIT
POSaBIT (CSE: PBIT, OTC: POSAF) is a FinTech, working exclusively within the cannabis industry. We provide a best-in-class Point-of-Sale solution and are the leading cashless payment provider for cannabis retailers. We work tirelessly to build better financial services and transaction methods for merchants. We bring cutting-edge software and technology to the cannabis industry so that all merchants can have a safe and compliant set of services to solve the problems of a cash-only industry. For additional information, visit www.posabit.com.
Neither the Canadian Securities Exchange nor the Canadian Investment Regulatory Organization accepts responsibility for the adequacy or accuracy of this release.
View source version on businesswire.com: https://www.businesswire.com/news/home/20240514239986/en/
Investor Relations:
investors@posabit.com
Media Relations:
Oscar Dahl
855-767-2248
hello@posabit.com
Management:
Ryan Hamlin
Co-founder and CEO of POSaBIT
855-767-2248
investors@posabit.com
Source: POSaBIT Systems Corporation
FAQ
What was POSaBIT's 2023 revenue growth excluding licensing?
How much did POSaBIT's Point of Sale revenue grow in 2023?
What was the growth in POSaBIT's payment revenue for 2023?
What was POSaBIT's gross profit margin in 2023?
What was POSaBIT's net income or loss for 2023?
Who is the new CFO of POSaBIT starting May 2024?
Is POSaBIT listing its shares on the TSX Venture Exchange?
What impact did the 2022 earnings restatement have on POSaBIT's revenue?
