Yangaroo Provides Update on Reinstatement of Trading and Announces Non-Compliance with Its Term Loan Facility

Rhea-AI Summary

Yangaroo Inc. (TSXV: YOO) (OTC Pink: YOOIF), a software leader in media asset workflow and distribution solutions, has provided an update on its reinstatement application with the TSX Venture Exchange and announced non-compliance with its term loan facility. Key points:

1. The company is not in compliance with Exchange Policy 3.1 due to the lack of separation between CEO and CFO roles.
2. Yangaroo failed to meet the fixed charge coverage ratio covenant of its term loan with National Bank of Canada.
3. This resulted in reclassification of the term loan to current liabilities, leading to a working capital deficiency of $1,758,949.
4. The company is in discussions with NBC to obtain a waiver or amendment to the loan terms.
5. Management expects cash flow from operations in 2024 to cover expenses and support ongoing business operations.

Positive

• Management anticipates obtaining a waiver and/or amendment for the term loan non-compliance
• Company expects cash flow from operations in 2024 to cover expenses and support ongoing business

Negative

• Non-compliance with TSX Venture Exchange Policy 3.1 due to lack of separation between CEO and CFO roles
• Failure to meet fixed charge coverage ratio covenant of the term loan
• Reclassification of term loan to current liabilities, resulting in working capital deficiency of $1,758,949
• Working capital shortfall of $281,863 excluding the term loan balance

Toronto, Ontario--(Newsfile Corp. - July 19, 2024) - YANGAROO Inc. (TSXV: YOO) (OTC Pink: YOOIF) ("Yangaroo", "Company"), a software leader in media asset workflow and distribution solutions, today provides an update on its reinstatement application with the TSX Venture Exchange (the "Exchange"), and announces that it is not in compliance with its term loan facility (the "Term Loan") with the National Bank of Canada ("NBC"), initially due to the delayed filing of its annual audited financial statements and corresponding management's discussion and analysis for the year ended December 31, 2024 (the "Annual Filings") and the filing of its interim unaudited financial statements for the three months ended March 31, 2024 (the "Q1 Filings", together with the Annual Filings, the "Filings"), and also as a result of contravention of a financial covenant related to its first fiscal quarter ended March 31, 2024 ("Q1").

Reinstatement Application Update and CEO and CFO Roles

As previously announced, upon the resignation of the Company's Chief Financial Officer, Frank Guo, Grant Schuetrumpf, Chief Executive Officer of the Company, was appointed interim Chief Financial Officer. As a result of the current lack of the separation of the roles of Chief Executive Officer and Chief Financial Officer roles, the Company is not in compliance with Exchange Policy 3.1, section 5.9. Yangaroo is actively working to remedy this situation and anticipates the appointment of a separate Chief Financial Officer in the near term, following which the Company will be in compliance with Exchange Policy 3.1, which the Company expects will allow the Exchange to accept the reinstatement to trading of the Company's shares.

Non-Compliance with Term Loan

As a result of the review by the Exchange of the Company's reinstatement application, the Company announces its non-compliance with the Term Loan, which was disclosed in the Filings.

Although it was not identified until after March 31, 2024, effective as at March 31, 2024, the Company had failed to meet one of two financial covenants of the Term Loan, being the fixed charge coverage ratio being less than 1.2X. This has resulted in the reclassification of the Term Loan from non-current liabilities to current liabilities, leading to a working capital deficiency of $1,758,949. Excluding balance of the Term Loan, the working capital shortfall is $281,863.

Yangaroo is actively engaged in discussions with NBC to obtain a waiver of the non-compliance by means of an amendment to the terms of the Term Loan. As a result, management anticipates that a waiver and/or amendment will be obtained.

Grant Schuetrumpf, CEO of Yangaroo, commented: "We are taking proactive steps to address the non-compliance and mitigating any impact it has on our business. We remain confident in our operational capabilities and are committed to restoring compliance with our financial covenants."

Despite the current challenges, Yangaroo remains focused on its long-term strategy and growth objectives. The Company expects that the cash flow generated from operating activities in the remaining months of 2024 will be sufficient to cover operating expenses and support ongoing business operations.

The Company will provide further updates on the reinstatement application, Term Loan, and appointment of a Chief Financial Officer, as they become available.

About YANGAROO

Yangaroo is a technology provider in the media and entertainment industry, offering a cloud-based software platform for the management and distribution of digital media content. Yangaroo's Digital Media Distribution System ("DMDS") platform is a patented cloud-based platform that provides customers with a centralised and fully integrated workflow directly connecting radio and television broadcasters, digital display networks, and video publishers for centralised digital asset management, delivery and promotion. DMDS is used across the advertising, music, and entertainment awards show markets.

YANGAROO Inc. is a publicly listed company incorporated on July 28, 1999 under the laws of Ontario as Musicrypt.com Inc. and changed to its present name on July 17, 2007. YANGAROO trades on the TSX Venture Exchange ("TSX-V") under the symbol YOO and in the U.S. under OTCPK: YOOIF.

The address of the Company's corporate office and principal place of business is 360 Dufferin Street, Suite 203, Toronto, Ontario, M6K 3G1.

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For YANGAROO Investor Inquiries:
Grant Schuetrumpf
Ph: (416) 534 0607
investors@yangaroo.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 accuracy of this release.

Cautionary Note Regarding Forward-looking Statements

This news release contains certain forward-looking statements and forward-looking information (collectively referred to herein as "forward-looking statements") within the meaning of applicable Canadian securities laws. All statements other than statements of present or historical fact are forward-looking statements. Forward-looking statements are often, but not always, identified by the use of words such as "anticipate", "achieve", "could", "believe", "plan", "intend", "objective", "continuous", "ongoing", "estimate", "outlook", "expect", "may", "will", "project", "should" or similar words, including negatives thereof, suggesting future outcomes.

Forward looking statements are subject to both known and unknown risks, uncertainties and other factors, many of which are beyond the control of YANGAROO, that may cause the actual results, level of activity, performance or achievements of YANGAROO to be materially different from those expressed or implied by such forward looking statements. The Company is making forward-looking statements with respect to: the reinstatement application; the appointment of a new Chief Financial Officer; and the Term Loan, and the waiver and/or amendment thereof, including financial covenants.

Forward-looking statements are not a guarantee of future performance and involve a number of risks and uncertainties, some of which are described herein. Such forward-looking statements necessarily involve known and unknown risks and uncertainties, which may cause YANGAROO's actual performance and results to differ materially from any projections of future performance or results expressed or implied by such forward-looking statements. Any forward-looking statements are made as of the date hereof and, except as required by law, neither YANGAROO assumes no obligation to publicly update or revise such statements to reflect new information, subsequent or otherwise.

To view the source version of this press release, please visit https://www.newsfilecorp.com/release/217077

FAQ

What caused Yangaroo (YOOIF) to be non-compliant with its term loan facility?

Yangaroo (YOOIF) failed to meet the fixed charge coverage ratio covenant of its term loan with National Bank of Canada, which should be at least 1.2X, as of March 31, 2024.

How much is Yangaroo's (YOOIF) working capital deficiency as of July 19, 2024?

Yangaroo (YOOIF) reported a working capital deficiency of $1,758,949, with a working capital shortfall of $281,863 excluding the balance of the term loan.

Why is Yangaroo (YOOIF) not compliant with TSX Venture Exchange Policy 3.1?

Yangaroo (YOOIF) is not compliant with TSX Venture Exchange Policy 3.1 due to the lack of separation between the roles of Chief Executive Officer and Chief Financial Officer following the resignation of the previous CFO.

What steps is Yangaroo (YOOIF) taking to address its non-compliance issues?

Yangaroo (YOOIF) is actively working to appoint a separate Chief Financial Officer and is in discussions with National Bank of Canada to obtain a waiver or amendment to the term loan covenant.