Day: November 14, 2024

• Total Revenues, EBITDA and Net Income: DeFi Technologies recorded Total Revenues of C$24.2 million (approximately US$17.8 million) and C$152.4 million (approximately US$112.0 million) for the three and nine months period ended September 30, 2024 and Net Income of C$24.9 million (approximately US$18.3 million) and C$97.2 million (approximately US$71.4 million) for three and nine months ended September 30, 2024. The Company also reports EBITDA of C$26.2 million (US$19.3 million) and C$102.3 million (US$75.2 million) for the three and nine months ended September 2024, reflecting its strong operational performance and robust revenue growth.
• Substantial Growth in Assets Under Management (AUM): AUM grew by 51.6% since December 31, 2023, to approximately C$770.5 million (US$570.8 million) as of September 30, 2024, driven by favorable market conditions, new product launches, and strategic corporate actions that enhanced trading volumes and overall financial performance. Since September 30, 2024, AUM has further increased to a record high of C$1.1 billion (US$785.4 million) as of November 13, 2024.
• 2024 Outlook: Looking ahead, DeFi Technologies projects its annualized revenues for fiscal 2024 to reach approximately C$198.6 million (US$141.5 million), supported by ongoing AUM growth, upcoming ETP launches, and the integration of new acquisitions, which are poised to capitalize on the favorable conditions in the digital asset sector. Furthermore, the Company continues to evaluate additional Defi Alpha trading opportunities.

TORONTO, Nov. 14, 2024 /PRNewswire/ – DeFi Technologies Inc. (the “Company” or “DEFI“) DEFI (GR: R9B) DEFTF, a financial technology company and the first and only publicly traded company that bridges the gap between traditional capital markets, Web3 and decentralised finance, announces its financial performance for the three and nine months ended September 30, 2024 (all amounts in Canadian dollars, unless otherwise stated).

Cash and Treasury Position

• Cash and USDT Balance: As of September 30, 2024, cash and USDT balance of approximately C$25.4 million (US$18.8 million), up from C$6.8 million (US$4.2 million) on December 31, 2023.
• Treasury Holdings: As of September 30, 2024, the Company’s holdings included 204.3 BTC, 81.3 ETH, 246,683 ADA, 86,616 DOT, 5,745 SOL, 491 UNI, 433,322 AVAX and 2,755,203 CORE tokens, totaling approximately C$36.3M (US$26.9M).
• Venture Portfolio: Investments were valued at C$45.1 million (US$33.2 million) as of September 30, 2024.

Total Value of Cash, Treasury, and Venture Portfolio: C$106.8 million (US$78.9 million) as of September 30, 2024.

For the latest update on cash and digital asset treasury holdings as of October 31, 2024, see here.

Substantial AUM Growth

• Valour’s ETP business reported AUM of C$770.5 million (US$570.8) as of September 30, 2024, a 51.6% increase from December 31, 2023, AUM of C$508 million. As of November 13, 2024, Valour’s AUM stood at a record high of C$1.1 billion (US$785.4 million), driven by favorable market conditions, new products, and strategic actions that enhanced trading volumes and financial performance.

Financial Highlights

• Total Revenue: Total Revenues were C$24.2 million (US$17.8 million) for the three months ended September 30, 2024 and C$152.4 million (US$112.0 million) for the nine months ended September 30, 2024, a significant improvement from the Total Revenues of C$6.0 million (US$4.4 million) and C$2 million (US$1.5 million) for the same respective periods in 2023.
• Net Income: Net Income was C$24.9 million (US$18.3 million) for the three months ending September 30, 2024, and C$97.2 million (US$71.4 million) for the nine months ending September 30, 2024, reflecting robust operational performance.
• EBITDA: EBITDA was C$26.2 million (US$19.3 million) for the three months ended September 30, 2024 and C$102.3 million (US$75.2 million) for the nine months ended September 30, 2024
• Valour Staking/Lending & Management Fees: In Q3 2024, Valour generated staking and lending income of C$8.8 million (US$ 6.5 million) and management fees of C$2.0 million (US$1.5 million).
• DeFi Alpha Performance: In Q3 2024 DeFi Alpha generated C$20.6 million (US$14.7 million) with zero losses to date after reporting C$111.5 Million (US$82.0 Million) in Q2 2024 totaling C$132.1 million (US$96.7 million) for the nine months ended September 30, 2024.
• Reflexivity Research: In Q3 2024, Reflexivity Research generated research revenue of C$261,741 (US$192,400) for the three months ended September 30, 2024, and C$1.1 million (US$810,197) for the nine months ended September 30, 2024.

Strategic and Business Developments

Acquisitions and Partnerships:

• DeFi Technologies acquired Stillman Digital Inc. and Stillman Digital Bermuda Ltd. (collectively doing business as “Stillman Digital“), a leading OTC desk and digital asset liquidity provider with over US$15 billion in trade volume since 2021, with US$5 billion of that occurring in Q2 2024 alone.
• DeFi Technologies and Professional Capital Management (led by Anthony Pompliano) partnered to enter and capitalize on opportunities in the fast-growing U.S. exchange-traded fund (ETF) market.
• DeFi Technologies and Zero Computing announced a strategic partnership over integrating validator, trading and ZK infrastructure.

ETPs and Geographic Expansion

• Valour announced a landmark MOU with Nairobi Securities Exchange and SovFi to develop and launch Valour ETPs in Africa.
• Valour announced the launch of the Valour NEAR ETP on the Spotlight Stock Market in Sweden.

NASDAQ Listing Progress:

• DeFi Technologies filed Form 40-F with the SEC in connection with its application to list its common shares on The Nasdaq Stock Market.

Expanded Digital Asset Treasury:

• DeFi Technologies expanded its BTC treasury holdings and diversified into Solana, CORE, Uniswap, Cardano, Avalanche, Polkadot and started participating in CORE DAO Staking.

Comment from the CEO:

Olivier Roussy Newton, CEO of DeFi Technologies, stated, “Q3 2024 reflects the significant strides DeFi Technologies has made toward becoming a leader in the digital asset space. With year-to-date revenues reaching C$152.4 million (US$112.0 million) and net income of C$97.2 million (US$71.4 million), we are among the very few profitable public companies in this sector, demonstrating the durability of our business model and the discipline of our strategic execution. This consistent profitability—combined with a strengthened balance sheet through the elimination of debt—is the foundation that allows us to accelerate growth initiatives and pursue even larger market opportunities.

We’ve strategically positioned Valour, our now debt-free subsidiary, to lead in regulated digital asset access, with a pipeline of new ETP launches planned and advanced discussions for expansion into high-growth regions like North Africa, Asia, and the Middle East. With a product lineup expected to grow to 40 ETPs by year-end and to 100 by the close of 2025, Valour’s path forward is clearer and more compelling than ever. This expansion opens the door for millions of new investors to enter the digital asset market through secure, regulated channels, placing us at the forefront of democratizing access to digital assets globally.

The acquisition and integration of Stillman Digital further highlights our commitment to building a comprehensive ecosystem. By bringing liquidity provision, trade execution, and institutional digital asset services in-house, the Company is enhancing its trading capabilities and paving the way for new revenue streams in Custody, Foreign Exchange, and Proprietary Trading. This acquisition will enable DeFi Technologies to deliver more value to institutional clients while reinforcing our DeFi Alpha trading desk with Stillman’s expertise and expanding our reach into additional high-demand markets.

Our optimism for the future is buoyed by strong industry tailwinds. With Bitcoin reaching all-time highs, we expect continued asset appreciation to translate into larger revenues for the Company. Additionally, we anticipate a favorable regulatory landscape with the potential for a crypto-friendly administration in the U.S. as we work towards our Nasdaq cross-listing. These trends are likely to catalyze further interest and investment in the digital asset market, underscoring the value of our offerings and reinforcing our leadership position in the industry.

In an environment where market fluctuations can make some investors hesitant, we are proud to say that DeFi Technologies has achieved steady, substantial growth. Our assets under management (“AUM”) have increased by over 900% from the market lows in late 2022, reflecting both our adaptability and the rising demand for digital assets. This robust growth in AUM and the additional revenue from our DeFi Alpha strategy reinforce our commitment to generating sustainable value, with a forecasted C$198.6 million (US$141.5 million) in revenue for 2024.

DeFi Technologies is setting a new standard in the digital asset sector by merging stability, innovation, and accessibility. As a company at the intersection of traditional finance and digital assets, we are uniquely equipped to capture the opportunities emerging within this rapidly transforming landscape. With a clear roadmap, solid financial standing, and an expanding product suite, we are positioned to deliver substantial long-term value for our shareholders and remain steadfast in our commitment to drive the future of finance.”

Outlook for Q4 2024:

The outlook that follows supersedes all prior financial outlook statements made by the Company, constitutes forward-looking information within the meaning of applicable securities laws, and is based on a number of assumptions and subject to a number of risks. Actual results could vary materially as a result of numerous factors, including certain risk factors, many of which are beyond the Company’s control. Please see “Cautionary note regarding forward-looking information” and “Financial Outlook Assumptions” below for more information.

Valour

The Company has experienced significant revenue growth since Q1 2024. Valour’s ETPs have witnessed over a 900% increase in AUM from the market lows in late 2022, alongside growth in trading volumes. Valour’s AUM stood at approximately C$770.5 million (US$570.8 million) as of September 30, 2024, and a record high of C$1.1 billion (US$785.4 million) as of November 13, 2024.

The Company’s staking and lending income, changes in gains and losses on digital assets and ETP payables, as well as management fees, are closely correlated with capital inflow for Valour’s ETPs and the price of digital assets underlying Valour’s ETPs, which has continued to grow since the end of 2023. Furthermore, revenue from arbitrage and liquidity provision is highly linked to overall market activity and turnover in Valour’s listed ETPs.  The Company also formed DeFi Alpha in Q2 2024, which generated approximately C$132.1 million (US$96.7 million) as of September 30, 2024. Given these factors, the Company’s annualized revenue is forecasted to be approximately C$198.6 million (US$141.5 million) for 2024. Further growth in AUM may lead to proportional revenue increases. In Q3 2024, Valour earned 8.12% of AUM in staking and management fees, based on staking an average of 67% of AUM of C$753 million (US$537 million). With recent AUM growth, an improved product mix, and strong performance from the Company’s treasury portfolio, DeFi Technologies is well-positioned to capture additional revenue growth.

For Q4 2024, it is anticipated that new ETP launches, a stronger ETP mix, and continuous inflow of funds into Valour’s ETPs, along with additional trading opportunities identified and executed by DeFi Alpha, integration of Stillman Digital and Reflexivity and further accretive acquisitions, will continue to add to Company revenues. The Company aims to close the year with approximately 40 ETP products, with an additional 60 planned for 2025, as we capitalize on favorable macro fundamentals for the digital asset ecosystem.

Nasdaq Listing

On September 16, 2024, the Company filed a Form 40-F Registration Statement with the United States Securities and Exchange Commission (the “SEC“), in connection with its application to list its common shares on The Nasdaq Stock Market. The listing of the Company’s common shares on the Nasdaq remains subject to the approval of the Nasdaq and the satisfaction of all applicable listing and regulatory requirements, including Form 40-F being declared effective by the SEC. The Company continues to progress its application to list its common shares on the Nasdaq.

ETPs and Geographic Expansion

Valour is actively expanding its product lineup to meet the rising global demand for regulated digital asset products. Currently offering 28 ETPs, Valour aims to increase this to 40 by the end of 2024 with an ambitious goal of reaching 100 ETPs by the end of 2025. In addition to broadening its product portfolio, Valour is pursuing regulatory approvals to enter new markets, including North Africa, Asia, the Middle East, and other emerging regions, to provide investors in these regions with secure access to digital assets.

DeFi Alpha Strategy

The DeFi Alpha strategy has proven instrumental in enhancing the Company’s financial resilience. Having generated C$111.5 million (US$82.0 million) in Q2 and C$20.6 million (US$14.7 million) in Q3, with zero losses to date, this arbitrage-focused approach has strengthened the Company’s financial position, facilitating debt repayment and supporting the deployment of a robust digital asset treasury strategy. The Company continues to assess multiple arbitrage opportunities, reinforcing its commitment to maximizing returns while mitigating risks in a volatile digital asset landscape.

Elimination of Debt

As of October 16, 2024, Valour has successfully eliminated all outstanding debt. This achievement culminated with a final repayment of C$5.5 million (US$4 million) on October 16, 2024, bringing total debt reduction to US$36.5 million since May.

This milestone underscores Valour’s strong financial standing and disciplined approach to capital management. With a debt-free balance sheet, Valour is now positioned to allocate resources more effectively toward growth and innovation, further establishing itself as a leader in accessible digital asset investment solutions.

While Valour is now debt-free, DeFi Technologies retains a remaining loan balance of C$8.1 million (US$6 million) with Genesis Global Capital LLC (“Genesis”). This balance is expected to be resolved upon the completion of Genesis’s bankruptcy proceedings, further enhancing DeFi Technologies’ strategic financial standing.

Importantly, the debt elimination was achieved without issuing new equity or incurring additional debt, underscoring the Company’s disciplined cash flow management. This reduction in interest liabilities enhances DeFi Technologies’ flexibility to capitalize on emerging revenue opportunities within the digital asset space.

Integration of Stillman Digital

DeFi Technologies has successfully acquired Stillman Digital, a leading digital asset liquidity provider with over US$20 billion in trade volume since 2021, including US$5 billion in Q2 2024 alone. Stillman Digital specializes in electronic trade execution, market making, and OTC block trading, offering a suite of digital asset products and services to institutional clients.

This acquisition directly aligns with DeFi Technologies’ strategic goals of enhancing trading capabilities and diversifying its customer base and revenue streams. By internalizing trading flows from portfolio companies like Valour, DeFi Technologies will leverage Stillman Digital’s expertise to strengthen and expand its global operations. Additionally, the acquisition bolsters Stillman Digital’s institutional growth strategy by providing access to DeFi Technologies’ network, balance sheet, and distribution channels.
 Looking ahead, Stillman Digital plans to expand into new business areas, including Custody, Foreign Exchange, and Proprietary Trading, with support from DeFi Technologies. These new segments are expected to drive significant future growth, capitalizing on Stillman Ditigal’s established expertise and DeFi Technologies’ expansive reach.
 For 2024, Stillman Digital anticipates revenue of approximately USD$6.7 million (C$9.3 million) with ~50% net margins, marking an average annual growth of 127% over the last two years (a 230% increase from 2022 to 2023, followed by a 25% increase from 2023 to 2024). This year has been pivotal for consolidating growth, launching Stillman Digital Bermuda to serve international clients, and implementing major technology upgrades that will enhance competitiveness in 2025. These upgrades are expected to go live in Q1 2025 which will set the infrastructure for future growth.

With DeFi Technologies’ support, Stillman Digital’s growth rate is projected to increase further in 2025 as it begins to leverage DeFi‘s distribution network, strengthened by key business development support from partners.

Earrings Conference Call

The DeFi Technologies Q3 2024 webcast will commence at 12:00 p.m. ET, Friday, November 15, 2024.

To register for the live webcast, please visit this link: https://zoom.us/webinar/register/WN__QSot0GtTC-06IIyrkLIZg

Supplemental Materials and Upcoming Communications

The Company has made available on its website materials designed to accompany the discussion of its results, along with certain supplemental financial information and other data. For important news and information regarding the Company, including investor presentations and the timing of future investor conferences, visit the Investor Relations section of the Company’s website: https://defi.tech/investor-relations.

Analyst Coverage of DeFi Technologies

A full list of DeFi Technologies analyst coverage can be found here: https://defi.tech/investor-relations#research.

Upcoming Conferences & Events

November 19–20, 2024: Roth 13th Annual Technology Conference, New York City

Wednesday, Dec. 11th, 2024: Benchmark 13th Annual Discovery One-on-One Investor Conference, New York City

Non-IFRS and Other Financial Measures

To supplement the Company’s consolidated financial statements, which are prepared and presented in accordance with IFRS Accounting Standards (“IFRS“), the Company uses EBITDA, a non-IFRS measure, to provide additional information in order to assist investors in understanding the Company’s financial and operating performance. EBITDA is not a recognized measure for financial presentation under IFRS, does not have a standardized meanings and may not be comparable to similar measures presented by other public companies.

EBITDA is a non-IFRS financial measure that is defined as net income or loss before interest, taxes, depreciation, amortization of property and equipment, right-of-use assets and other intangible assets.

The non-IFRS and other financial measures used herein be considered as a supplement to, and not a substitute for, or superior to, the corresponding measures calculated in accordance with IFRS. See the financial tables below for a reconciliation of the non-IFRS measures.

About DeFi Technologies

DeFi Technologies Inc. (CBOE CA: DEFI) (GR: R9B) ((DEFTF) is a financial technology company that pioneers the convergence of traditional capital markets with the world of decentralized finance (DeFi). With a dedicated focus on industry-leading Web3 technologies, DeFi Technologies aims to provide widespread investor access to the future of finance. Backed by an esteemed team of experts with extensive experience in financial markets and digital assets, we are committed to revolutionizing the way individuals and institutions interact with the evolving financial ecosystem. Follow DeFi Technologies on Linkedin and Twitter, and for more details, visit https://defi.tech/

About Valour

Valour Inc. and Valour Digital Securities Limited (together, “Valour“) issues exchange traded products (“ETPs”) that enable retail and institutional investors to access digital assets like Bitcoin in a simple and secure way via their traditional bank account. Valour is part of the asset management business line of DeFi Technologies Inc. (CBOE CA: DEFI) (GR: R9B) ((DEFTF).

In addition to their novel physical backed digital asset platform, which includes 1Valour Bitcoin Physical Carbon Neutral ETP, 1Valour Ethereum Physical Staking, and 1Valour Internet Computer Physical Staking, Valour offers fully hedged digital asset ETPs with low to zero management fees, with product listings across European exchanges, banks and broker platforms. Valour’s existing product range includes Valour Uniswap (UNI), Cardano (ADA), Polkadot (DOT), Solana (SOL), Avalanche (AVAX), Cosmos (ATOM), Binance (BNB), Ripple (XRP), Toncoin (TON), Internet Computer (ICP), Chainlink (LINK) Enjin (ENJ), Valour Bitcoin Staking (BTC), Bitcoin Carbon Neutral (BTCN), Valour Digital Asset Basket 10 (VDAB10) and 1Valour STOXX Bitcoin Suisse Digital Asset Blue Chip ETPs with low management fees. Valour’s flagship products are Bitcoin Zero and Ethereum Zero, the first fully hedged, passive investment products with Bitcoin (BTC) and Ethereum (ETH) as underlyings which are completely fee free.

For more information on Valour, to subscribe, or to receive updates and financial information, visit valour.com.

About Reflexivity Research

Reflexivity Research LLC is a leading research firm specializing in the creation of high-quality, in-depth research reports for the bitcoin and digital asset industry, empowering investors with valuable insights. For more information please visit https://www.reflexivityresearch.com/

About Stillman Digital

Stillman Digital is a leading digital asset liquidity provider that offers limitless liquidity solutions for businesses, focusing on industry-leading trade execution, settlement, and technology. For more information, please visit https://www.stillmandigital.com

Cautionary note regarding forward-looking information: 
This press release contains “forward-looking information” within the meaning of applicable Canadian securities legislation. Forward-looking information includes, but is not limited to the financial results of the Company; revenue outlook of the Company; revenue generation by DeFi Alpha; integration of Reflexivity Research and Stillman Digital; appreciation of digital asset prices; listing of the common shares of the Company on Nasdaq; investment and interest in the digital asset sector;  future collaborations and partnerships; development of ETPs; geographic expansion of the Company; acquisition by the Company; the regulatory environment with respect to the growth and adoption of decentralized finance; the pursuit by DeFi Technologies and its subsidiaries of business opportunities; and the merits or potential returns of any such opportunities. Forward-looking information is subject to known and unknown risks, uncertainties and other factors that may cause the actual results, level of activity, performance or achievements of the Company, as the case may be, to be materially different from those expressed or implied by such forward-looking information. Such risks, uncertainties and other factors include, but is not limited the acceptance of Valour exchange traded products by exchanges; ability of the Company to successfully integrate and grow Reflexivity Research and Stillman Digital; growth and development of DeFi and digital asset sector; rules and regulations with respect to DeFi and digital asset; general business, economic, competitive, political and social uncertainties. Although the Company has attempted to identify important factors that could cause actual results to differ materially from those contained in forward-looking information, there may be other factors that cause results not to be as anticipated, estimated or intended. There can be no assurance that such information 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 information. The Company does not undertake to update any forward-looking information, except in accordance with applicable securities laws.

Financial Outlook Assumptions

The financial outlook on revenue of the Company is based on a number of assumptions, including assumptions related to inflation, changes in interest rates, volatility of the digital asset market, current and projected market prices of digital assets, in particular the digital assets underlying the Company’s ETPs, the Company’s ability to realize staking and lending income from digital assets held by the Company, the ability of DeFi Alpha to generate yield on the Company’s excess liquidity and identify and execute accretive trading opportunities, the return realized by the Company on staking and lending income, the return on management fees earned by the Company, ongoing subscriptions of Reflexivity Research, trading volumes of Stillman Digital, successful implementation of technological upgrades at Stillman Digital, consumer interest in the Valour’s ETPs, foreign exchange rates and other macroeconomic conditions, the regulatory environment with respect to ETPs and digital assets in the jurisdictions that the Company operates in, introduction of future ETPs, “black swan events” in the digital asset industry, competitors that offer competing ETP products and market acceptance of the Company’s ETP offerings. The Company’s financial outlook, including the various underlying assumptions, constitutes forward-looking information and should be read in conjunction with the cautionary statement on forward-looking information above. Many factors may cause the Company’s actual results, level of activity, performance or achievements to differ materially from those expressed or implied by such forward-looking information, including the risks and uncertainties related to: macroeconomic factors affecting the digital asset industry, including inflation, changes in interest rates, investor confidence in digital assets; volatility of the digital assets and fluctuation in market value of digital assets; exchange rate fluctuations; any pandemic such as the COVID-19 pandemic or the mpox virus; fraud, misconduct or gross negligence by individuals within the digital asset industry; a negative regulatory environment with respect to digital assets; the Russian invasion of Ukraine and reactions thereto; the Israel-Hamas war and reactions thereto; the Company’s inability to attract purchasers of its ETPs; decrease in AUM as a result of investor selling the Company’s ETPs or a fall in the value of the underlying digital assets; Valour’s inability to launch attractive ETPs; the Valour’s inability to increase ETP sales; the Company’s inability to implement our growth strategy; the Company’s reliance on a small number of custodian and market participants to operate its ETP programs; decrease in the number of subscribers to Reflexivity Research; decrease in the number of trades or fees generated by Stillman Digital; the Company’s ability to prevent and manage information security breaches or other cyber-security threats; the Company’s ability to compete against competitors; strategic relations with third parties; changes to technologies on which ETPs are purchased and sold is reliant; Valour’s ability to distribute ETPs in jurisdictions it is not currently operating in; the Company’s ability to obtain, maintain and protect our intellectual property; The Company’s ability to execute on its acquisition strategy; the Company’s liquidity and capital resources; pending and threatened litigation and regulatory compliance; changes in tax laws and their application; the Company’s ability to expand its sales, marketing and support capability and capacity; and maintaining our customer service levels and reputation. The purpose of the forward-looking information is to provide the reader with a description of management’s expectations regarding our financial performance and may not be appropriate for other purposes.

THE CBOE CANADA EXCHANGE DOES NOT ACCEPT RESPONSIBILITY FOR THE ADEQUACY OR ACCURACY OF THIS RELEASE

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SOURCE DeFi Technologies Inc.

HOLMDEL, N.J., Nov. 14, 2024 (GLOBE NEWSWIRE) — BIO-key® International, Inc. BKYI, an innovative provider of workforce and customer Identity and Access Management (IAM) solutions featuring passwordless, phoneless and token-less Identity-Bound Biometric (IBB) authentication, announced results for its third quarter ended September 30, 2024 (Q3’24). BIO-key’s 2023 Q3 and nine month results were restated and filed with the Company’s 2023 Form 10-K and are reflected in this release. BIO-key will host an investor call tomorrow, Friday, November 15th at 10:00am ET (details below).

Financial Highlights

• Q3’24 revenues rose 18% to $2.1M from $1.8M in Q3’23, principally due to a $0.5M increase in license revenue related to expanded software deployments by long-term customers.
• Gross profit improved to $1.7M (78.3% gross margin) in Q3’24 vs. $0.3M (18.7% gross margin) in Q3’23, due to an increase in high-margin license revenue, lower costs to support deployments, and a $1M hardware reserve taken in the prior-year period.
• BIO-key trimmed Q3’24 operating expenses by $46,000 versus Q3’23, reflecting proactive reductions in administration, sales personnel costs and marketing show expenses, offset by higher professional services expenses principally related to financing activities.
• BIO-key reported a Q3’24 net loss of $0.7M compared to a Q3’23 net loss of $1.8M, due primarily to an increase in high-margin license revenue, level operating expenses, and the prior-year hardware reserve.
• Cash used in operating activities was $2.4M through the first nine months of 2024 vs. $2.3M in the prior-year period. The current-year period reflects BIO-key’s net loss through the first nine months and positive adjustments for non-cash expenses of approximately $667,000.

Recent Highlights

Commentary
BIO-key CEO, Mike DePasquale commented, “We had a very productive third quarter, with revenue increasing 18% year-over-year and $1M compared to Q2’24, supported by license fee revenue which rose to $1.4M in Q3’24 from $1.0M in Q3’23. Our Q3’24 revenues reflected strength in orders from existing customers who are expanding their deployment of BIO-key solutions. This momentum continued into Q4 with an exciting order from a long-time foreign financial services customer to utilize our biometric identification technology for customer identification within their branches.

“This firm has already enrolled the fingerprint biometrics of over 25M of its customers using BIO-key technology as part of its know your customer (KYC) process. They are now upgrading to BIO-key’s “fingerprint only” identification solution which will enable them to identify each of their customers with just a fingerprint scan, eliminating the need for a bank card, account or ID number. This highly secure and efficient identification approach is expected to save an estimated thirty seconds per client encounter, benefiting both customers and bank personnel.

“We believe this is one of the world’s largest deployments of one-to-many biometric technology in a private commercial or enterprise setting, as compared to one-to-one matching of a fingerprint scan with a biometric associated with an account, ID number or card. Working with the client and our partner at AWS, we intend to publish a more detailed whitepaper on this deployment to fully explain the unique benefits our advanced biometric identity solutions can provide to other enterprises. We are of course very excited about this large-scale adoption of our technology and look to leverage the value and benefits of use in this example for our direct and Channel Alliance Partner (CAP) sales programs.

“Given the nature of our size and the timing and impact of larger customer orders, we do expect our performance to vary on a quarter-to-quarter basis as we build a growing base of high-margin, annually recurring revenue streams from software licenses and services. We expect full year 2024 revenues to meet or exceed the $7.75M achieved in 2023, and we continue to pursue opportunities to lower our overhead and variable costs, as we progress the business toward positive operating cash flow and profitability in the coming quarters. Additionally, we continue to seek potential strategic opportunities that can leverage our core strengths and business platform to create value for our shareholders.

“From a financial perspective, we were able to raise $1.9M during the third quarter through a warrant inducement agreement, pursuant to which an existing institutional investor exercised warrants to purchase 1,030,556 BIO-key shares at $1.85 per share. Reflecting these proceeds, our cash position improved to $1.8M at close of Q3’24 vs. $0.5M at year end 2023.”

Financial Results
BIO-key’s Q3’24 revenues increased 18% to $2.1M from $1.8M in Q3’23. License revenue increased $491,000 or 52% to $1.4M and hardware sales increased 56% to $436,000, as several long-term customers expanded their license deployments and purchased additional biometric readers. Declines in recurring and non-recurring service revenues of $320,522 stemmed from the loss of one large recurring service agreement and one large customization customer from the prior-year period. For the nine months ended September 30, 2024, revenues were $5.5M compared to $5.9M in the comparable 2023 period, as increased license fees and hardware revenue was offset by lower service revenues.

Q3’24 Gross profit was $1.7M (78.3% gross margin) versus $0.3M (18.7% gross margin) in Q3’23, primarily reflecting the impact of a $1M hardware reserve in Q3’23, a higher proportion of high margin license fee revenue in Q3’24, and lower costs to support deployments, including license fees for third-party software included in BIO-key’s Swivel Secure offerings.

BIO-key trimmed operating expenses by $46,000 in Q3’24 versus Q3’23, reflecting reductions in administration expenses, including lower headquarters expense, sales personnel costs, and marketing show expenses, partially offset by an increase in professional services, principally related to the Company’s financing activities. Also offsetting lower SG&A costs was a $122,000 increase in research, development and engineering expense due to increased personnel costs to support new product development.

Reflecting higher revenue and gross profit and flat operating expenses, BIO-key’s net loss improved to $0.7M, or $0.39 per share, in Q3’24, from a net loss of $1.8M, or $3.22 per share, in Q3’23. Likewise, BIO-key reduced its net loss for the first nine months of 2024 to $2.9M, or $1.69 per share, compared to a net loss of $6.1M, or $10.79 per share, in the first nine months of 2023. Q3’23 results included the hardware reserve of $1.0M and the first nine months of 2023 included a hardware reserve of $2.5M.

Balance Sheet
At September 30, 2024, BIO-key had current assets of approximately $4.6M, including $1.8M of cash and cash equivalents, $2.0M of net accounts receivable and due from factor, and $387,000 of inventory. This compares to current assets of $2.6M at December 31, 2023, including approximately $511,000 of cash equivalents, $1.3M of net accounts receivable and due from factor, and $446,000 of inventory.

Conference Call Details
Date / Time:		Friday, November 15th at 10 a.m. ET
Call Dial In #:		1-877-418-5460 U.S. or 1-412-717-9594 Int’l
Live Webcast / Replay:		Webcast & Replay Link – Available for 3 months.
Audio Replay:		1-877-344-7529 U.S. or 1-412-317-0088 Int’l; code 7307131

About BIO-key International, Inc. (www.BIO-key.com)
BIO-key is revolutionizing authentication and cybersecurity with biometric-centric, multi-factor identity and access management (IAM) software securing access for over forty million users. BIO-key allows customers to choose the right authentication factors for diverse use cases, including phoneless, tokenless, and passwordless biometric options. Its hosted or on-premise PortalGuard IAM solution provides cost-effective, easy-to-deploy, convenient, and secure access to computers, information, applications, and high-value transactions.

BIO-key Safe Harbor Statement
All statements contained in this press release other than statements of historical facts are “forward-looking statements” as defined in the Private Securities Litigation Reform Act of 1995 (the “Act”). The words “estimate,” “project,” “intends,” “expects,” “anticipates,” “believes” and similar expressions are intended to identify forward-looking statements. Such forward-looking statements are made based on management’s beliefs, as well as assumptions made by, and information currently available to, management pursuant to the “safe-harbor” provisions of the Act. These statements are not guarantees of future performance or events and are subject to risks and uncertainties that may cause actual results to differ materially from those included within or implied by such forward-looking statements. These risks and uncertainties include, without limitation, our history of losses and limited revenue; our ability to raise additional capital to satisfy working capital needs; our ability to continue as a going concern; our ability to protect our intellectual property; changes in business conditions; changes in our sales strategy and product development plans; changes in the marketplace; continued services of our executive management team; security breaches; competition in the biometric technology industry; market acceptance of biometric products generally and our products under development; our ability to convert sales opportunities to customer contracts; our ability to expand into Asia, Africa and other foreign markets; our ability to integrate the operations and personnel of Swivel Secure into our business; fluctuations in foreign currency exchange rates; delays in the development of products, the commercial, reputational and regulatory risks to our business that may arise as a consequence the restatement of our financial statements, including any consequences of non-compliance with Securities and Exchange Commission and Nasdaq periodic reporting requirements; our temporary loss of the use of a Registration Statement on Form S-3 to register securities in the future; if we fail to increase our stockholders’ equity to at least $2.5 million, our common stock will be delisted from the Nasdaq Capital Market which could negatively impact the trading price of our common stock and impair our ability to raise capital, any disruption to our business that may occur on a longer-term basis should we be unable to remediate during fiscal year 2024 certain material weaknesses in our internal controls over financial reporting, and statements of assumption underlying any of the foregoing as well as other factors set forth under the caption “Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2023 and other filings with the SEC. Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date made. Except as required by law, we undertake no obligation to disclose any revision to these forward-looking statements whether as a result of new information, future events, or otherwise.

Investor Contacts
William Jones, David Collins
Catalyst IR
BKYI@catalyst-ir.com or 212-924-9800

BIO-KEY INTERNATIONAL, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS (Unaudited)
		Three Months Ended								Nine Months Ended
		September 30,								September 30,
		2024				2023				2024				2023
Revenues
Services		$	267,371			$	587,893			$	764,062			$	1,740,880
License fees			1,441,011				950,015				4,165,669				3,764,342
Hardware			436,422				279,200				537,562				424,582
Total revenues			2,144,804				1,817,108				5,467,293				5,929,804
Costs and other expenses
Cost of services			110,723				125,039				322,957				639,996
Cost of license fees			146,732				253,891				443,384				1,022,919
Cost of hardware			207,655				97,674				260,684				240,074
Cost of hardware – reserve			–				1,000,000				–				2,500,000
Total costs and other expenses			465,110				1,476,604				1,027,025				4,402,989
Gross profit			1,679,694				340,504				4,440,268				1,526,815
Operating Expenses
Selling, general and administrative			1,607,925				1,776,305				5,332,764				5,851,201
Research, development and engineering			652,174				529,757				1,850,929				1,778,097
Total Operating Expenses			2,260,099				2,306,062				7,183,693				7,629,298
Operating loss			(580,405	)			(1,965,558	)			(2,743,425	)			(6,102,483	)
Other income (expense)
Interest income			2				5,917				53				5,944
Loss on foreign currency transactions			–				–				–				(15,000	)
Loan fee amortization			(60,000	)			–				(64,000	)			–
Change in fair value of convertible note			–				167,283				–				264,706
Interest expense			(98,556	)			(45,655	)			(108,823	)			(159,380	)
Total other income (expense), net			(158,554	)			127,545				(172,770	)			96,270
Loss before provision for income tax			(738,959	)			(1,838,013	)			(2,916,195	)			(6,006,213	)
Provision for (income tax) tax benefit			–				189				–				(142,811	)
Net loss		$	(738,959	)		$	(1,837,824	)		$	(2,916,195	)		$	(6,149,024	)
Comprehensive loss:
Net loss		$	(738,959	)		$	(1,837,824	)		$	(2,916,195	)		$	(6,149,024	)
Other comprehensive income (loss) – Foreign currency translation adjustment			89,933				35,364				51,878				127,394
Comprehensive loss		$	(649,026	)		$	(1,802,460	)		$	(2,864,317	)		$	(6,021,630	)
Basic and Diluted Loss per Common Share		$	(0.39	)		$	(3.22	)		$	(1.69	)		$	(10.79	)
Weighted Average Common Shares Outstanding:
Basic and diluted			1,889,694				570,753				1,726,716				569,882
All BIO-key shares issued and outstanding for all periods reflect BIO-key’s 1-for-18 reverse stock split, which was effective December 21, 2023.

BIO-KEY INTERNATIONAL, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE SHEETS
		September 30,				December 31,
		2024				2023
		(Unaudited)
ASSETS
Cash and cash equivalents		$	1,801,137			$	511,400
Accounts receivable, net			1,930,258				1,201,526
Due from factor			49,018				99,320
Inventory			386,944				445,740
Prepaid expenses and other			382,866				364,171
Total current assets			4,550,223				2,622,157
Equipment and leasehold improvements, net			162,551				220,177
Capitalized contract costs, net			430,596				229,806
Deposits and other assets			7,975				–
Operating lease right-of-use assets			73,637				36,905
Intangible assets, net			1,174,721				1,407,990
Total non-current assets			1,849,480				1,894,878
TOTAL ASSETS		$	6,399,703			$	4,517,035
LIABILITIES
Accounts payable		$	1,564,654			$	1,316,014
Accrued liabilities			1,254,415				1,305,848
Note payable			2,164,693				–
Government loan – BBVA Bank, current portion			141,854				138,730
Deferred revenue, current			719,846				414,968
Operating lease liabilities, current portion			24,545				37,829
Total current liabilities			5,870,007				3,213,389
Deferred revenue, long term			240,664				28,296
Deferred tax liability			22,998				22,998
Government loan – BBVA Bank – net of current portion			83,901				188,787
Operating lease liabilities, net of current portion			49,091				–
Total non-current liabilities			396,654				240,081
TOTAL LIABILITIES			6,266,661				3,453,470
Commitments and Contingencies
STOCKHOLDERS’ EQUITY
Common stock — authorized, 170,000,000 shares; issued and outstanding; 3,109,288 and 1,032,777 of $.0001 par value at September 30, 2024 and December 31, 2023, respectively			311				103
Additional paid-in capital			127,981,436				126,047,851
Accumulated other comprehensive loss			74,699				22,821
Accumulated deficit			(127,923,404	)			(125,007,210	)
TOTAL STOCKHOLDERS’ EQUITY			133,042				1,063,565
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY		$	6,399,703			$	4,517,035
All BIO-key shares issued and outstanding for all periods reflect BIO-key’s 1-for-18 reverse stock split, which was effective December 21, 2023.

BIO-KEY INTERNATIONAL, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)
		Nine Months Ended September 30,
		2024				2023
CASH FLOW FROM OPERATING ACTIVITIES:
Net loss		$	(2,916,195	)		$	(6,149,024	)
Adjustments to reconcile net loss to net cash used for operating activities:
Depreciation			69,115				38,213
Amortization of intangible assets			233,269				217,978
Change in fair value of convertible note			–				(264,706	)
Amortization of capitalized contract costs			128,953				126,057
Amortization of Note Payable			64,000				–
Reserve for inventory			(98,875	)			2,500,000
Operating leases right-of-use assets			(58,950	)			146,890
Share and warrant-based compensation for employees and consultants			162,614				163,584
Stock based directors’ fees			9,003				39,006
Deferred income tax benefit			–				(20,000	)
Bad debts			–				550,000
Change in assets and liabilities:
Accounts receivable			(398,753	)			(434,989	)
Due from factor			50,302				(13,072	)
Capitalized contract costs			(329,743	)			(107,336	)
Deposits			(7,975	)			–
Inventory			58,796				145,156
Prepaid expenses and other			(18,695	)			(51,831	)
Accounts payable			248,640				488,417
Accrued liabilities			(51,433	)			327,131
Income taxes payable			–				62,811
Deferred revenue			517,246				128,253
Operating lease liabilities			(60,827	)			(154,460	)
Net cash used in operating activities			(2,399,508	)			(2,261,922	)
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures			(23,047	)			–
Net cash used in investing activities			(23,047	)			–
CASH FLOW FROM FINANCING ACTIVITIES:
Proceeds from Note Payable			2,000,000				–
Offering costs			(147,862	)			(25,434	)
Proceeds for exercise of warrants			1,908,099				–
Receipt of cash from Employee stock purchase plan			1,939				13,934
Repayment of government loan			(101,762	)			(113,885	)
Net cash used in financing activities			3,660,414				(125,385	)
Effect of exchange rate changes			51,878				58,871
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS			1,289,737				(2,328,436	)
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD			511,400				2,635,522
CASH AND CASH EQUIVALENTS, END OF PERIOD		$	1,801,137			$	307,086
All BIO-key shares issued and outstanding for all periods reflect BIO-key’s 1-for-18 reverse stock split, which was effective December 21, 2023.

Q3 2024 Annual Recurring Revenue Increased by 31% Annualized to $4.4 Million, a 7% Sequential Increase from Q2 2024

Q3 2024 Annualized Adjusted Net Loss Improved by $12.2 Million, a $3.0 Million Sequential Increase to ($1.45) Million, Bringing the Company Closer to Profitability

Management to Host Third Quarter 2024 Results Conference Call Today, November 14, 2024 at 5:30 p.m. Eastern Time

SEATTLE, Nov. 14, 2024 (GLOBE NEWSWIRE) — Banzai International, Inc. BNZI (“Banzai” or the “Company”), a leading marketing technology company that provides essential marketing and sales solutions, today reported financial results for the third quarter ended September 30, 2024.

Third Quarter 2024 Key Financial & Operational Highlights

• Q3 2024 Annual Recurring Revenue (ARR) of $4.4 million, a 7% sequential increase from Q2 2024. This represents a 31% annualized ARR growth rate.
• Q3 2024 Adjusted Net Loss was ($1.45) million, a $3.0 million sequential improvement from Q2 2024 Adjusted Net Loss of ($4.5) million. This represents an annualized improvement of $12.2 million.
• Net Revenue Retention (NRR) reached a historic high in Q3 2024.
• Q3 2024 Adjusted EBITDA was ($1.5) million, a $0.5 million sequential improvement from Q2 2024 EBITDA of ($2.0) million. This represents an annualized improvement of $2.0 million.
• As of September 30, 2024, cash of approximately $4.3 million was at an all-time high.
• Added 172 customers in September 2024 and 179 customers in October 2024, for a total of 1,785 customers YTD through October 2024.
• Added 26 Reach customers through October 2024, demonstrating the growth and revenue potential of the Reach product.
• Launched Curate, an AI-powered newsletter platform designed to streamline content creation and audience engagement for organizations of all sizes. Sold 10 workspace licenses in the initial weeks since launch, demonstrating the tremendous market potential of the Curate product.
• Expanded partnership with Salesforce, today’s industry leading AI CRM company, for smarter webinar campaigns with significant enhancements to its Demio platform through deeper integration with Salesforce.
• Released enhanced Demio HubSpot integration, delivering a seamless experience, with new updates focused on transforming webinar data management with advanced synchronization and tracking.
• Launched a comprehensive initiative designed to significantly improve net income by up to $13.5 million annually while maintaining its growth outlook.
• Entered into agreements with lenders and service providers to restructure and write off up to $28.8 million of outstanding liabilities including write-off of up to $5.6 million of outstanding liabilities and restructuring of a further $19.2 million of its existing debt obligations, substantially improving the Company’s overall financial position.
• Closed a $5 million private placement priced at-the-market under Nasdaq rules.
• Company’s securities were transferred from the Nasdaq Global Market to the Nasdaq Capital Market at the opening of business on October 31, 2024.

Outlook

• The Company anticipates Net Income will be approximately ($0.7) million in Q4 2024 and approximately ($0.7) million in Q1 2025, representing substantial increases driven by a reduction in operating and interest expenses due to the recently announced $28.8 million debt restructuring and $13.5 million Net Income Improvement initiative.
• The Company anticipates Adjusted EBITDA to be approximately ($1.4) million in Q4 2024, and approximately ($1.1) million in Q1 2025, representing substantially improved runway and progress towards profitability and positive cash-flow.

“It is hard to overstate how important the third quarter of 2024 was for Banzai,” said Joe Davy, Founder and CEO of Banzai. “We believe this marks a turning point for the Company in many ways. Banzai achieved a 31% annualized Annual Recurring Revenue growth rate and a historic record for Net Revenue Retention. We also made game-changing improvements to our balance sheet and cost structure to set us up for sustainable profitability in the future. Growth was driven by our focus on the Reach product through re-engineering and expanded sales efforts, leading to the addition of 1,785 customers through October 2024. In total, we now serve nearly 3,000 customers that have contributed to top and bottom-line sequential improvements from the second quarter.

“To better serve our customers, we have continued to invest in our software platforms and growth. We’ve launched a new product, Curate, to bring AI-powered newsletters that leverage OpenAI’s GPT-4o to automate the newsletter creation process by writing relevant, branded articles that resonate with target audiences. We added significant enhancements to our Demio platform through deeper integration with Salesforce, the industry leading AI CRM company, with key enhancements designed to maximize efficiency and insight, offering marketers a more scalable, data-rich experience. We also released a major improvement to the Demio HubSpot integration. This upgrade offers unparalleled flexibility and efficiency in managing webinar data, empowering marketers to streamline their webinar management and marketing efforts, leading to better decision-making and higher ROI.

“Alongside a $5.0 million private placement transaction and debt restructuring transactions we executed, we implemented a strategic initiative that we expect will enable us to significantly improve net income, substantially extend our cash runway and invest in growth. We are making significant progress on these goals and overall improvement in net income is expected to be approximately $12.2 million annually when fully implemented, while maintaining our growth outlook.

“Looking ahead, our ability to leverage deep analytics and insights to drive marketing decisions combined with leveraging AI to launch exciting new products and capabilities, will continue to drive growth. We will continue to manage costs efficiently while investing in our software platform, sales and marketing and product development. We look forward to additional updates on our anticipated milestones in the weeks and months to come,” concluded Davy.

Third Quarter 2024 Financial Results

Banzai believes its non-GAAP financial measure ARR is more meaningful in evaluating its performance. The Company’s management team evaluates its financial and operating results utilizing this non-GAAP measure. For the three months ended September 30, 2024, ARR increased 7% sequentially, representing a 31% annualized ARR growth rate.

Total revenue for the three months ended September 30, 2024, was $1.1 million, a sequential increase of 0.5% from the three months ended June 30, 2024, and a decrease of 2.5% compared to the prior year quarter.

Total cost of revenue for the three months ended September 30, 2024 was $0.3 million, compared to $0.3 million in the prior year quarter, a decrease of 1%. The decrease was proportional to the revenue for the corresponding period.

Gross profit for the three months ended September 30, 2024, was $0.7 million, compared to $0.8 million in the prior year quarter. Gross margin was 68.7% in the third quarter of 2024, compared to 69.2% in the third quarter of 2023.

Total operating expenses for the three months ended September 30, 2024, were $3.5 million, compared to $2.8 million in the prior year quarter.

Net loss for the three months ended September 30, 2024, was $8.5 million, compared to $0.8 million in the prior year quarter. The greater net loss is primarily due to the change in fair valuation of various financial instruments related to the debt restructuring in the third quarter of 2024, which increased by approximately $14.5 million over the three months ended September 30, 2024 when compared to the three months ended September 30, 2023. These non-cash valuation charges do not represent present or future cash obligations of the Company, and as a result, the Company believes Adjusted Net Loss is a better representation of the financial performance of the company for the third quarter 2024.

Adjusted Net Loss for the three months ended September 30, 2024, was ($1.45) million, compared to ($3.6) million in the prior year quarter. This improvement was driven by improvements to the Company’s efficiency and by write-off agreements entered into for certain liabilities, substantially reducing the Company’s current and future cash liabilities.

Adjusted EBITDA Loss for the three months ended September 30, 2024, was ($1.5) million, compared to Adjusted EBITDA Loss of ($2.0) million for the prior year quarter, representing an improvement of $0.5 million.

Nine Month 2024 Financial Results

Total revenue for the nine months ended September 30, 2024 and 2023, was $3.2 million and $3.5 million, respectively, a decrease of 7.2%. This decrease is primarily attributable to lower Reach revenue which declined by approximately $44 thousand due to the discontinuation of the legacy Reach 1.0 product, which was discontinued on December 31, 2023. In 2024, Banzai has revitalized its focus on the Reach product through re-engineering and expanded sales efforts. Demio revenue was lower by approximately $0.2 million for the nine months ended September 30, 2024, as compared to the nine months ended September 30, 2023, due to lower new unit sales period-over-period, due to the company’s strategic shift to focus on mid-market customers, which the Company hopes will ultimately result in higher Average Customer Value and Net Retention Rate for the Demio product. Demio Net Revenue Retention reached an all-time historic high in the three months ended September 30, 2024.

Cost of revenue for the nine months ended September 30, 2024 and 2023 was $1.0 million and $1.1 million, respectively. This represents a decrease of approximately $84 thousand, or approximately 7.4%, for the nine months ended September 30, 2024 as compared to the nine months ended September 30, 2023. This decrease is due primarily to the company’s focus on Mid-Market customers that led to an approximately 12% higher average cost per customer, driven by the increase in the streaming services costs of approximately $150 thousand that were offset by lower infrastructure costs / data licenses of approximately $117 thousand, payroll and contracted services of approximately $98 thousand, and merchant fee costs of approximately $12 thousand.

Gross profit for the nine months ended September 30, 2024 and 2023 was $2.2 million and $2.3 million, respectively. This represents a decrease of approximately $167 thousand, or approximately 7.1%, which was due to the decreases in revenue of approximately $251 thousand and decreases in cost of revenue of approximately $84 thousand described above. Gross margin for the nine months ended September 30, 2024 and 2023 was 67.5% and 67.4%, respectively.

Total operating expenses for the nine months ended September 30, 2024 and 2023, were $11.7 million and $8.9 million, respectively, an increase of 31.1%. This increase was due primarily to an overall increase in salaries and related expenses by approximately $0.3 million, marketing expenses by approximately $0.6 million, costs associated with audit, technical accounting, and legal and other professional services of approximately $1.6 million. The company has implemented a plan to reduce annualized operating expenses by up to $13.5 million by the end of the first quarter 2025.

Net loss for the nine months ended September 30, 2024 and 2023, was $23.7 million and $8.0 million, respectively. The greater net loss is primarily due to an increase in total other expenses of approximately $12.6 million, an increase in operating expenses of approximately $2.8 million, and a decrease in gross profit of approximately $0.2 million during the nine months ended September 30, 2024 compared to the nine months ended September 30, 2023.

Adjusted Net Loss for the nine months ended September 30, 2024 and 2023, was ($10.0)

million and ($10.0) million, respectively.

Net cash used in operating activities for the nine months ended September 30, 2024, was $11.9 million, compared to $5.8 million for the nine months ended September 30, 2023.

Cash totaled $4.3 million as of September 30, 2024, compared to $2.1 million as of December 31, 2023, representing a historic high.

End-of-Year 2024 Target

Banzai targets December 2024 ARR to be $8.1 – $10 million, based on the Company’s March 2024 ARR, organic growth during the year as demonstrated by year-to-date 2024 customer wins and reactivations, and currently signed non-binding LOIs to acquire other marketing technology businesses.

The midpoint target, or $9.1 million, foresees a 97% increase in ARR, which would be attributable to both organic growth and the acquisitions currently under LOI. Banzai’s management anticipates tracking the Company’s progress to its targeted December 2024 ARR as part of the Company’s 2024 quarterly earnings reports.

Annual recurring revenue refers to revenue, normalized on an annual basis, that Banzai expects to receive from its customers for providing them with products or services. The December 2024 ARR information provided above is based on Banzai’s current estimates of internal growth, the completion of acquisitions, and those companies contributing ARR based on current levels, and is not a guarantee of future performance. These statements are forward-looking and actual ARR may differ materially. Refer to the “Forward-Looking Statements” section below for information on the factors that could cause Banzai’s actual ARR to differ materially from these forward-looking statements.

Third Quarter 2024 Results Conference Call

Banzai Founder & CEO Joe Davy and Interim CFO Alvin Yip will host the conference call, followed by a question-and-answer session. The conference call will be accompanied by a presentation, which can be viewed during the webcast or accessed via the investor relations section of the Company’s website here.

To access the call, please use the following information:

Date:	Thursday, November 14, 2024
Time:	5:30 p.m. Eastern Time, 2:30 p.m. Pacific Time
Toll-free dial-in number:	1-877-425-9470
International dial-in number:	1-201-389-0878
Conference ID:	13749747

Please call the conference telephone number 5-10 minutes prior to the start time. An operator will register your name and organization. If you have any difficulty connecting with the conference call, please contact MZ Group at 1-949-491-8235.

The conference call will be broadcast live and available for replay at https://viavid.webcasts.com/starthere.jsp?ei=1694251&tp_key=65eec38e9b and via the investor relations section of the Company’s website here.

A replay of the webcast will be available after 9:30 p.m. Eastern Time through February 14, 2025.

Toll-free replay number:	1-844-512-2921
International replay number:	1-412-317-6671
Replay ID:	13749747

About Banzai

Banzai is a marketing technology company that provides essential marketing and sales solutions for businesses of all sizes. On a mission to help their customers achieve their mission, Banzai enables companies of all sizes to target, engage, and measure both new and existing customers more effectively. Banzai customers include Square, Hewlett Packard Enterprise, Thermo Fisher Scientific, Thinkific, Doodle and ActiveCampaign, among thousands of others. Learn more at www.banzai.io. For investors, please visit https://ir.banzai.io.

Forward-Looking Statements

This press release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements often use words such as “believe,” “may,” “will,” “estimate,” “target,” “continue,” “anticipate,” “intend,” “expect,” “should,” “would,” “propose,” “plan,” “project,” “forecast,” “predict,” “potential,” “seek,” “future,” “outlook,” and similar variations and expressions. Forward-looking statements are those that do not relate strictly to historical or current facts. Examples of forward-looking statements may include, among others, statements regarding Banzai International, Inc.’s (the “Company’s”): future financial, business and operating performance and goals; annualized recurring revenue and customer retention; ongoing, future or ability to maintain or improve its financial position, cash flows, and liquidity and its expected financial needs; potential financing and ability to obtain financing; acquisition strategy and proposed acquisitions and, if completed, their potential success and financial contributions; strategy and strategic goals, including being able to capitalize on opportunities; expectations relating to the Company’s industry, outlook and market trends; total addressable market and serviceable addressable market and related projections; plans, strategies and expectations for retaining existing or acquiring new customers, increasing revenue and executing growth initiatives; and product areas of focus and additional products that may be sold in the future. Because forward-looking statements relate to the future, they are subject to inherent uncertainties, risks and changes in circumstances that are difficult to predict and many of which are outside of our control. Forward-looking statements are not guarantees of future performance, and our actual results of operations, financial condition and liquidity and development of the industry in which the Company operates may differ materially from those made in or suggested by the forward-looking statements. Therefore, investors should not rely on any of these forward-looking statements. Factors that may cause actual results to differ materially include changes in the markets in which the Company operates, customer demand, the financial markets, economic, business and regulatory and other factors, such as the Company’s ability to execute on its strategy. More detailed information about risk factors can be found in the Company’s Annual Report on Form 10-K and the Company’s Quarterly Reports on Form 10-Q under the heading “Risk Factors,” and in other reports filed by the Company, including reports on Form 8-K. The Company does not undertake any duty to update forward-looking statements after the date of this press release.

Investor Relations
Chris Tyson
Executive Vice President
MZ Group – MZ North America
949-491-8235
BNZI@mzgroup.us
www.mzgroup.us

Media
Rachel Meyrowitz
Director, Demand Generation, Banzai
media@banzai.io

BANZAI INTERNATIONAL, INC. Condensed Consolidated Balance Sheets
		September 30, 2024				December 31, 2023
		(Unaudited)
ASSETS
Current assets:
Cash		$	4,263,567			$	2,093,718
Accounts receivable, net of allowance for credit losses of $5,694 and $5,748, respectively			37,386				105,049
Prepaid expenses and other current assets			753,746				741,155
Total current assets			5,054,699				2,939,922
Property and equipment, net			918				4,644
Goodwill			2,171,526				2,171,526
Operating lease right-of-use assets			2,386				134,013
Other assets			38,381				38,381
Total assets			7,267,910				5,288,486
LIABILITIES AND STOCKHOLDERS’ DEFICIT
Current liabilities:
Accounts payable			9,997,052				6,439,863
Accrued expenses and other current liabilities			3,633,072				5,194,240
Convertible notes (Yorkville)			—				1,766,000
Convertible notes – related party			—				2,540,091
Convertible notes			3,517,742				2,693,841
Notes payable			7,083,905				6,659,787
Notes payable – related party			—				2,505,137
Notes payable, carried at fair value			1,393,592				—
Deferred underwriting fees			4,000,000				4,000,000
Deferred fee			—				500,000
Warrant liability			79,000				641,000
Warrant liability – related party			230,000				575,000
Earnout liability			37,125				59,399
Due to related party			167,118				67,118
GEM commitment fee liability			—				2,000,000
Deferred revenue			1,220,572				1,214,096
Operating lease liabilities, current			2,352				234,043
Total current liabilities			31,361,530				37,089,615
Other long-term liabilities			75,000				75,000
Total liabilities			31,436,530				37,164,615
Commitments and contingencies (Note 14)
Stockholders’ deficit:
Common stock, $0.0001 par value, 275,000,000 shares authorized and 3,760,174 and 2,585,297 issued and outstanding at September 30, 2024 and December 31, 2023, respectively			410				259
Preferred stock, $0.0001 par value, 75,000,000 shares authorized, 0 shares issued and outstanding at September 30, 2024 and December 31, 2023			—				—
Additional paid-in capital			39,297,867				14,889,936
Accumulated deficit			(63,466,897	)			(46,766,324	)
Total stockholders’ deficit			(24,168,620	)			(31,876,129	)
Total liabilities and stockholders’ deficit		$	7,267,910			$	5,288,486

BANZAI INTERNATIONAL, INC. Unaudited Condensed Consolidated Statements of Operations
		For the Three Months Ended September 30,								For the Nine Months Ended September 30,
		2024				2023				2024				2023
Operating income:
Revenue		$	1,080,607			$	1,108,412			$	3,228,276			$	3,478,794
Cost of revenue			338,023				341,151				1,049,411				1,132,671
Gross profit			742,584				767,261				2,178,865				2,346,123
Operating expenses:
General and administrative expenses			2,942,008				2,838,052				11,569,951				8,937,265
Depreciation expense			900				1,571				3,725				5,596
Total operating expenses			2,942,908				2,839,623				11,573,676				8,942,861
Operating loss			(2,200,324	)			(2,072,362	)			(9,394,811	)			(6,596,738	)
Other expenses (income):
GEM settlement fee expense			60,000				—				260,000				—
Other expense (income), net			(62,927	)			14,114				(2,900	)			(70,569	)
Interest income			—				—				(10	)			(111	)
Interest expense			495,679				820,096				1,343,097				1,879,394
Interest expense – related party			589,614				678,398				1,552,601				1,614,085
Gain on extinguishment of liability			(22,282	)			—				(550,262	)			—
Loss on debt issuance			—				—				171,000				—
Loss on debt issuance of term notes			381,000				—				381,000				—
Loss on debt issuance of convertible notes			—				—				—				—
Loss on conversion and settlement of Alco promissory notes			4,808,882				—				4,808,882				—
Loss on conversion and settlement of CP BF notes			—				—				—				—
Change in fair value of warrant liability			—				—				(562,000	)			—
Change in fair value of warrant liability – related party			—				—				(345,000	)			—
Change in fair value of simple agreement for future equity			—				(276,436	)			—				(184,993	)
Change in fair value of simple agreement for future equity – related party			—				(3,139,564	)			—				(1,927,007	)
Change in fair value of bifurcated embedded derivative liabilities			—				198,728				—				36,500
Change in fair value of bifurcated embedded derivative liabilities – related party			—				413,272				—				72,359
Change in fair value of convertible notes			(77,000	)			—				501,000				—
Change in fair value of term notes			66,813				—				66,813				—
Change in fair value of convertible bridge notes			—				—				—				—
Yorkville prepayment premium expense			14,000				—				94,760				—
Total other expenses (income), net			6,253,779				(1,291,392	)			7,718,981				1,419,658
Loss before income taxes			(8,454,103	)			(780,970	)			(17,113,792	)			(8,016,396	)
Income tax expense			1,010				1,332				6,701				17,081
Net loss		$	(8,455,113	)		$	(782,302	)		$	(17,120,493	)		$	(8,033,477	)
Net loss per share
Basic and diluted		$	(2.68	)		$	(0.33	)		$	(5.99	)		$	(3.36	)
Weighted average common shares outstanding
Basic and diluted			3,150,057				2,394,122				2,857,350				2,394,067

BANZAI INTERNATIONAL, INC. Unaudited Condensed Consolidated Statements of Cash Flow
		For the Nine Months Ended September 30,
		2024				2023
Cash flows from operating activities:
Net loss		$	(17,120,493	)		$	(8,033,477	)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation expense			3,726				5,596
Provision for credit losses on accounts receivable			54				3,879
Non-cash share issuance for marketing expenses			—				—
Non-cash settlement of GEM commitment fee			200,000				—
Non-cash share issuance for Yorkville redemption premium			—				—
Non-cash interest expense			379,354				914,944
Non-cash interest expense – related party			261,775				345,382
Amortization of debt discount and issuance costs			68,459				646,684
Amortization of debt discount and issuance costs – related party			873,728				1,268,703
Amortization of operating lease right-of-use assets			131,627				129,705
Stock based compensation expense			665,409				830,791
Gain on extinguishment of liability			(550,262	)			—
Loss on debt issuance			171,000				—
Loss on debt issuance of term notes			381,000				—
Loss on debt issuance of convertible notes			—				—
Change in fair value of warrant liability			(562,000	)			—
Change in fair value of warrant liability – related party			(345,000	)			—
Change in fair value of simple agreement for future equity			—				(184,993	)
Change in fair value of simple agreement for future equity – related party			—				(1,927,007	)
Change in fair value of bifurcated embedded derivative liabilities			—				36,500
Change in fair value of bifurcated embedded derivative liabilities – related party			—				72,359
Change in fair value of convertible promissory notes			501,000				—
Change in fair value of term notes			66,813				—
Change in fair value of convertible bridge notes			—				—
Changes in operating assets and liabilities:
Accounts receivable			67,609				(29,861	)
Deferred contract acquisition costs, current			—				48,191
Prepaid expenses and other current assets			(12,591	)			120,459
Deferred offering costs			—				(766,409	)
Accounts payable			3,557,189				1,296,098
Deferred revenue			6,476				(39,428	)
Accrued expenses			(432,073	)			(128,027	)
Operating lease liabilities			(231,691	)			(211,204	)
Earnout liability			(22,274	)			(206,985	)
Net cash used in operating activities			(11,941,165	)			(5,808,100	)
Cash flows from financing activities:
Payment of GEM commitment fee			(1,200,000	)			—
Repayment of convertible notes (Yorkville)			(750,000	)			—
Proceeds from related party advance			100,000				—
Proceeds from term notes, net of issuance costs			1,000,000				—
Repayment of notes payable, carried at fair value			(412,421	)			—
Proceeds from Yorkville redemption premium			35,040				—
Proceeds from issuance of promissory notes – related party			—				1,150,000
Proceeds from issuance of convertible notes, net of issuance costs			2,502,000				1,485,000
Proceeds from issuance of convertible notes, net of issuance costs – related party			—				2,533,000
Proceeds received for exercise of Pre-Funded warrants			17				—
Proceeds from issuance of common stock and warrants			6,257,370				13,362
Net cash provided by financing activities			7,532,006				5,181,362
Net decrease in cash			(4,409,159	)			(626,738	)
Cash at beginning of period			2,093,718				1,023,499
Cash at end of period		$	(2,315,441	)		$	396,761
Supplemental disclosure of cash flow information:
Cash paid for interest			306,109				313,813
Cash paid for taxes			5,075				8,825
Non-cash investing and financing activities
Shares issued to Roth for advisory fee			578,833				—
Shares issued to GEM			529,943				—
Shares issued for marketing expenses			334,772				—
Shares issued to MZHCI for investor relations services			94,800				—
Shares issued to J.V.B for payment of outstanding debt			115,000				—
Settlement of GEM commitment fee			200,000				—
Shares issued to Yorkville for commitment fee			500,000				—
Shares issued to Yorkville for redemption premium			115,800
Shares issued for exercise of Pre-Funded warrants			866
Issuance of convertible promissory note – GEM			1,000,000				—
Conversion of convertible notes – Yorkville			2,002,000				—
Conversion of convertible notes – related party			2,540,091				—
Bifurcated embedded derivative liabilities at issuance			—				623,065
Bifurcated embedded derivative liabilities at issuance—related party			—				1,062,776

– 108 patients have completed 1-year of treatment in 1-year open-label extension (OLE) trial –

– Vocal biomarker speech latency data from RECOVER trial reinforce brilaroxazine’s improvement on negative symptoms and other key symptom domains of schizophrenia –

– Topline data from OLE trial expected in December 2024 –

CUPERTINO, Calif., Nov. 14, 2024 (GLOBE NEWSWIRE) — Reviva Pharmaceuticals Holdings, Inc. RVPH (“Reviva” or the “Company”), a late-stage pharmaceutical company developing therapies that seek to address unmet medical needs in the areas of central nervous system (CNS), inflammatory and cardiometabolic diseases, today reported financial results for the third quarter ended September 30, 2024 and summarized recent business highlights.

“We continue to advance our late-stage brilaroxazine program with initial focus in schizophrenia and expansion potential across indications driven by underlying disruption in serotonin signaling,” said Laxminarayan Bhat, Ph.D., Founder, President, and CEO of Reviva. “Our global 1-year OLE trial is progressing well, and we have over 100 patients who have completed one year of treatment which is a requirement for New Drug Application (NDA) submission. Importantly, we expect topline data from the OLE trial in December 2024. In addition to long-term safety, tolerability and efficacy, the full data analysis of the OLE trial expected in the first quarter of 2025 will also include vocal and blood biomarker data designed to support the strong efficacy of brilaroxazine for negative symptoms and other key symptom domains of schizophrenia. We remain highly encouraged by the differentiated potential of once-daily brilaroxazine to address major unmet needs for patients with schizophrenia and are targeting a potential NDA submission for brilaroxazine in the second quarter of 2026.”

Third Quarter 2024 and Recent Business Highlights

Clinical Program Highlights

• Provided an enrollment update to the ongoing 1-year open-label extension (OLE) study evaluating the long-term safety and tolerability of brilaroxazine in patients with schizophrenia (November 2024).
  • Global trial progressing well
  • 108 patients have completed 1-year (12-month) of treatment
  • Over 250 patients have completed 6-months of treatment
  • Blood and digital biomarkers designed to independently support efficacy
  • Long-term safety data from 100 patients who have completed 12 months of treatment is a requirement for brilaroxazine’s NDA submission to the FDA
  • 12 months long-term safety study expected to complete in Q1 2025
• Presented vocal biomarker data from Phase 3 RECOVER trial of brilaroxazine in schizophrenia during a virtual key opinion leader event hosted by the Company featuring Brian Kirkpatrick, MD, MSPH (Professor, Psychiatric Research Institute, University of Arkansas for Medical Sciences, Arkansas) and Mark Opler, PhD, MPH (Chief Research Officer at WCG Inc., Executive Director of the PANSS Institute, New York) (September 2024).
  • Speech latency is an emerging objective vocal biomarker that can help validate scale-based assessments completed by human raters
  • Brilaroxazine demonstrated a strong efficacy for negative symptoms and other key symptoms of schizophrenia such as total and positive symptoms, disorganization, and social functioning in the pivotal phase 3 RECOVER trial in schizophrenia
  • Statistically significant results of the vocal biomarker speech latency data analysis from the RECOVER trial further support the strong efficacy of brilaroxazine for negative symptoms and other key symptom domains of schizophrenia

Corporate Highlights

• Positive speech latency data for brilaroxazine in schizophrenia from the Phase 3 RECOVER trial presented as a poster presentation at the Central Nervous System (CNS) Summit 2024 on Tuesday, November 12th in Boston, Massachusetts

Anticipated Milestones and Events

• Topline data from 1-year OLE trial expected in December 2024
• Full data analysis of the OLE trial including long-term safety, tolerability and efficacy, as well as vocal and blood biomarker data expected in Q1 2025
• Initiation of registrational Phase 3 RECOVER-2 trial evaluating brilaroxazine for the treatment of schizophrenia expected in Q1 2025, subject to receipt of additional financing
• Potential NDA submission for brilaroxazine in schizophrenia targeted for Q2 2026
• Investigational new drug application (IND) submission for liposomal-gel formulation of brilaroxazine in psoriasis expected in 2025
• Pursue partnership opportunities for the development of our pipeline

Third Quarter 2024 Financial Results

The Company reported a net loss of approximately $8.4 million, or $0.25 per share, for the three months ended September 30, 2024, compared to a net loss of approximately $11.3 million, or $0.48 per share, for the same period in 2023 (as restated).

The Company reported a net loss of approximately $23.7 million, or $0.75 per share, for the nine months ended September 30, 2024, compared to a net loss of approximately $29.9 million, or $1.32 per share, for the same period in 2023 (as restated).

As of September 30, 2024, the Company’s cash totaled approximately $5.6 million compared to approximately $23.4 million as of December 31, 2023.

About Brilaroxazine
Brilaroxazine is an in-house discovered new chemical entity with potent affinity and selectivity against key serotonin and dopamine receptors implicated in the pathobiology of several conditions including schizophrenia, psoriasis and interstitial lung diseases like pulmonary hypertension, pulmonary arterial hypertension (PAH) and idiopathic pulmonary fibrosis (IPF).

Positive topline data from the global Phase 3 RECOVER-1 trial in schizophrenia demonstrated the trial successfully met all primary and secondary endpoints with statistically significant and clinically meaningful reductions across all major symptom domains including reduction in key proinflammatory cytokines implicated in the pathobiology of schizophrenia and comorbid inflammatory conditions at week 4 with 50 mg of brilaroxazine vs. placebo with a generally well-tolerated side effect profile comparable to placebo and discontinuation rates lower than placebo. Positive data from a clinical drug-drug interaction (DDI) study investigating the potential effect of CYP3A4 enzyme on brilaroxazine in healthy subjects supports no clinically significant interaction when combined with a CYP3A4 inhibitor. Reviva believes that a full battery of regulatory compliant toxicology and safety pharmacology studies has been completed for brilaroxazine. Reviva intends to develop brilaroxazine for other neuropsychiatric indications including bipolar disorder, major depressive disorder (MDD) and attention-deficit/hyperactivity disorder (ADHD).

Additionally, brilaroxazine has shown promising nonclinical activity for inflammatory diseases psoriasis, pulmonary arterial hypertension (PAH) and idiopathic pulmonary fibrosis (IPF) with mitigation of fibrosis and inflammation in translational animal models. Brilaroxazine has already received Orphan Drug Designation by the U.S. FDA for the treatment of PAH and IPF conditions.

To learn more about the clinical and preclinical data available for brilaroxazine, please visit revivapharma.com/publications.

About Reviva 
Reviva is a late-stage biopharmaceutical company that discovers, develops, and seeks to commercialize next-generation therapeutics for diseases representing unmet medical needs and burdens to society, patients, and their families. Reviva’s current pipeline focuses on the central nervous system (CNS), inflammatory and cardiometabolic diseases. Reviva’s pipeline currently includes two drug candidates, brilaroxazine (RP5063) and RP1208. Both are new chemical entities discovered in-house. Reviva has been granted composition of matter patents for both brilaroxazine and RP1208 in the United States, Europe, and several other countries.

Forward-Looking Statements
This press release contains certain forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934 and the Private Securities Litigation Reform Act, as amended, including those relating to the Company’s 1-year open label extension (OLE) trial evaluating the long-term safety and tolerability for brilaroxazine in schizophrenia, the registrational Phase 3 RECOVER-2 trial, the Company’s expectations regarding the anticipated clinical profile of its product candidates, including statements regarding anticipated efficacy or safety profile, and those relating to the Company’s expectations, intentions or beliefs regarding matters including product development and clinical trial plans, clinical and regulatory timelines and expenses, planned or intended additional trials or studies and the timing thereof, planned or intended regulatory submissions and the timing thereof, trial results, market opportunity, ability to raise sufficient funding, competitive position, possible or assumed future results of operations, business strategies, potential opportunities for development including partnerships, growth or expansion opportunities and other statements that are predictive in nature. These forward-looking statements are based on current expectations, estimates, forecasts and projections about the industry and markets in which we operate and management’s current beliefs and assumptions.

These statements may be identified by the use of forward-looking expressions, including, but not limited to, “expect,” “anticipate,” “intend,” “plan,” “believe,” “estimate,” “potential, “predict,” “project,” “should,” “would” and similar expressions and the negatives of those terms. These statements relate to future events or our financial performance and involve known and unknown risks, uncertainties, and other factors which may cause actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by the forward-looking statements. Such factors include those set forth in the Company’s most recent Annual Report on Form 10-K for the fiscal year ended December 31, 2023, and the Company’s other filings from time to time with the Securities and Exchange Commission. Prospective investors are cautioned not to place undue reliance on such forward-looking statements, which speak only as of the date of this press release. The Company undertakes no obligation to publicly update any forward-looking statement, whether as a result of new information, future events or otherwise.

Corporate Contact:
Reviva Pharmaceuticals Holdings, Inc.
Laxminarayan Bhat, PhD
www.revivapharma.com

Investor Relations Contact:
LifeSci Advisors, LLC
Bruce Mackle
bmackle@lifesciadvisors.com

REVIVA PHARMACEUTICALS HOLDINGS, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED)
September 30, 2024 and December 31, 2023

		September 30,				December 31,
			2024				2023
Assets
Cash and cash equivalents		$	5,558,817			$	23,367,456
Prepaid clinical trial costs			925,526				78,295
Prepaid expenses and other current assets			325,808				254,637
Total current assets			6,810,151				23,700,388
Non-current prepaid clinical trial costs			819,721				—
Total Assets		$	7,629,872			$	23,700,388
Liabilities and Stockholders’ Equity (Deficit)
Liabilities
Short-term debt		$	83,000			$	—
Accounts payable			8,777,579				3,849,108
Accrued clinical expenses			7,362,666				11,966,812
Accrued compensation			881,830				958,607
Other accrued liabilities			428,801				400,490
Total current liabilities			17,533,876				17,175,017
Warrant liabilities			77,884				806,655
Total Liabilities			17,611,760				17,981,672
Commitments and contingencies (Note 6)
Stockholders’ Equity (Deficit)
Common stock, par value of $0.0001; 115,000,000 shares authorized; 33,441,199 and 27,918,560 shares issued and outstanding as of September 30, 2024 and December 31, 2023, respectively			3,344				2,792
Preferred Stock, par value of $0.0001; 10,000,000 shares authorized; 0 shares issued and outstanding as of September 30, 2024 and December 31, 2023			—				—
Additional paid-in capital			148,028,341				140,070,172
Accumulated deficit			(158,013,573	)			(134,354,248	)
Total stockholders’ equity (deficit)			(9,981,888	)			5,718,716
Total Liabilities and Stockholders’ Equity (Deficit)		$	7,629,872			$	23,700,388

REVIVA PHARMACEUTICALS HOLDINGS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
For the Three and Nine Months Ended September 30, 2024 and 2023

		Three Months Ended								Nine Months Ended
		September 30,								September 30,
			2024				2023				2024				2023
Operating expenses						(as restated)								(as restated)
Research and development		$	6,858,285			$	9,572,180			$	18,226,497			$	23,312,661
General and administrative			1,604,249				1,991,774				6,287,786				6,571,629
Total operating expenses			8,462,534				11,563,954				24,514,283				29,884,290
Loss from operations			(8,462,534)				(11,563,954)				(24,514,283)				(29,884,290)
Other income (expense)
Gain (loss) on remeasurement of warrant liabilities			72,321				139,079				728,771				(305,972)
Interest expense			(5,146)				(5,901)				(13,786)				(20,414)
Interest income			53,248				91,763				313,956				341,854
Other income (expense), net			(23,687)				5,194				(159,202)				(15,220)
Total other income, net			96,736				230,135				869,739				248
Loss before provision for income taxes			(8,365,798)				(11,333,819)				(23,644,544)				(29,884,042)
Provision for income taxes			—				12,117				14,781				21,531
Net loss		$	(8,365,798)			$	(11,345,936)			$	(23,659,325)			$	(29,905,573)
Net loss per share:
Basic and diluted		$	(0.25)			$	(0.48)			$	(0.75)			$	(1.32)
Weighted average shares outstanding
Basic and diluted			33,804,693				23,637,367				31,424,395				22,655,737

Results Highlighted by Continued Gross Margin Improvement

NEW YORK, Nov. 14, 2024 /PRNewswire/ – Borealis Foods Inc. (“Borealis” or the “Company”) BRLS, a food-tech innovator, and creator of the popular high-protein Chef Woo ramen, Ramen Express and Woodles brand of noodles, today announced financial results for its third quarter ended September 30, 2024.

Financial & Business Highlights

• Third quarter net sales of $7.7 million, compared with $5.3 in Q2 2024, representing improvement of over 45% from $5.3 million.
• Gross margin of 17% more than doubled from 8% in the second quarter of 2024. Non-GAAP gross margin, which excludes depreciation of the Company’s manufacturing plant, reached 23% in the third quarter, compared with 15% in Q2 of 2024.
• On a year-over-year basis, gross margin of 17% in the third quarter was improved from (6)% a year ago. Improving gross margin, both sequentially and from the prior year, was driven by the Company’s focus on shifting its product mix to Chef Woo and Woodles, which are premium brand products.
• As a result of the factors cited above, third quarter gross profit grew to $1.3 million, more than tripling from $0.4 million in the second quarter.
• The Company continued to drive its national expansion, centered on its flagship Chef Woo brand, with the addition of key Walmart locations announced subsequent to Q3, bringing the total retail store count to over 23,000 in the US and Canada.
• Began full-scale shipments of Woodles to schools during the third quarter, marking a successful initial rollout with further expansion expected in the fourth quarter and into 2025.
• Launched in late Q2, Woodles gained immediate market acceptance. Together with Chef Woo, the two premium product lines accounted for approximately 39% of third quarter revenue.
• Subsequent to Q3, Borealis announced an agreement for its Palmetto Gourmet Foods subsidiary to be the exclusive US ramen manufacturing partner for a leading, global food conglomerate. The partnership is expected to begin contributing revenue in Q1 2025.

Management Commentary

Borealis CEO Reza Soltanzadeh commented, “The third quarter of 2024 marked an important inflection point for our company as our business development initiatives began delivering additional revenue streams while our focus on optimizing our sales mix helped drive continued gross margin expansion.  A key focus during the quarter was improving our business mix as we devoted more shelf space to our Chef Woo line of products and began deliveries of Woodles.  That work led to a healthy expansion of our non-GAAP gross margin to 23%.  While that is an achievement our team can be proud of, we have ample room to continue expanding our margins.”

Mr. Soltanzadeh added, “A key aspect of our strategy has been the development of a proper foundation for success, highlighted by our world-class manufacturing facility in Saluda, South Carolina, with substantial capacity for growth. Having our manufacturing here in the US is a significant advantage for our company as it qualifies us to provide products for the USDA, which oversees public school lunch programs across the country and was a key factor in our successful Woodles rollout this quarter.  We are looking forward to building on that success as we expand Woodles to more schools in the fourth quarter and into 2025.  We are also busy working on other, similar opportunities such as hospitals, correctional facilities, and universities.”

Mr. Soltanzadeh noted, “In our retail sales channel, we also recently announced an expansion of our partnership with Walmart that will see our ramen products carried at many of their best-performing stores. That announcement highlighted two exciting new ramen flavors developed by our brand ambassador Gordon Ramsay, which consumers are sure to love.  We expect those new flavors – Black Garlic Beef and Shiitake Mushroom Chicken – to really set Chef Woo apart from the other ‘run of the mill’ ramen in stores. Importantly, these are just the first two of a regular cadence of exciting new recipes and flavors from Gordon.”

Mr. Soltanzadeh further added, “As we pursue our mission to build a leading food tech company, we have focused on pioneering food science and innovation that will enable us to continue introducing new products to the market. That commitment was highlighted by our announcement in September of a Texas Tech University study which revealed that a meal containing Chef Woo’s high-protein ramen noodles significantly reduced caloric intake at the next meal. We are very proud of this result as it validates the hard work of everyone on our team while providing a foundation for further studies and future products. Our technology and platform enable continuous innovation and consumer product development.”

Mr. Soltanzadeh concluded, “We expect sequential sales growth in the fourth quarter driven by several factors. First, as the weather turns colder, sales of soup and similar products such as ramen normally see a seasonal boost in consumption. Second, we expect our further rollout with Walmart and the new flavors developed by Gordon Ramsay to stimulate additional sales. Lastly, we continue to expand our Woodles penetration in schools across the US. Driving sales of Chef Woo and Woodles products is a key focus for our team and as we do so, we expect gross margins to continue to increase, resulting in continued bottom-line improvement in the fourth quarter and in 2025. We are enthusiastic about Borealis’ long-term growth prospects and look forward to reporting on the Company’s developments.”

Third Quarter 2024 Financial Results Detail:

• Net revenues of $7.7 million, compared with $5.3 million in Q2 as the Company focused on driving sales of higher margin Chef Woo and Woodles items which together accounted for 39% of sales.
• Gross profit of $1.3 million, compared with $0.4 million in the second quarter and a gross loss of $(0.5) million in the year-ago period. Gross margin of 17%, improved from 8% in the second quarter and (6)% in the year ago period, with the improvement in both gross profit dollars and margin due to solid execution of the Company’s strategy to shift product mix in favor of higher margin items.
• Non-GAAP gross profit of $1.8 million, compared with $0.8 million in the second quarter. Non-GAAP gross profit excludes depreciation expense of $0.5 million and $0.4 million in the third and second quarters respectively.
• SG&A expense of $4.9 million, compared with $5.6 million during the second quarter of 2024, as the Company streamlined its investment in business development, expanded distribution, influencer marketing programs, and incurred public company expenses. Spending on distribution expansion, such as support for Woodles, coupled with sales and marketing, including online and in-store promotions, represented strategic investment designed to drive revenue growth in current and future periods.
• Interest expense of $1.2 million was relatively unchanged from $1.1 million in the second quarter. Interest expense levels continued to be lower than in the year ago period due to the conversion of convertible notes in conjunction with the Company’s business combination completed during the first quarter of 2024.
• Net loss of $(4.8) million, improved from a net loss of $(6.3) million in the second quarter due to the combination of increased revenues and improvement in gross margins.
• Financial position: as of September 30, 2024, the Company had $0.7 million of cash on hand and $3.5 million of borrowing capacity available on its revolving credit facility. Anticipated sales growth and margin expansion are expected to drive improving operating cash flow to support ongoing operations.

Borealis Foods Inc. and Subsidiaries
Condensed Consolidated Statements of Operations (Unaudited)

Borealis Foods Inc. and Subsidiaries
Condensed Consolidated Balance Sheets

Borealis Foods, Inc. and Subsidiaries
Condensed Consolidated Statements of Cash Flows (Unaudited)

Our adjustments to EBITDA are related to expenses and gains that we believe are not indicative of normal, ongoing operations. While these items may be recurring in nature and should not be disregarded in evaluation of our earnings performance, it is useful to exclude such items when analyzing current results and trends as these items can vary significantly from period to period depending on specific underlying transactions or events that may occur. Therefore, while we may incur or recognize these types of expenses and gains in the future, we believe that removing these items for purposes of calculating the Adjusted EBITDA financial measures provides a more focused presentation of our ongoing operating performance.

We view EBITDA as an important indicator of performance. We define EBITDA as net income/(loss) plus net interest expense, income taxes, depreciation, and amortization. We define Adjusted EBITDA as EBITDA further adjusted for any foreign exchange gains/(losses), share-based compensation expense and non-recurring items if identified. EBITDA and Adjusted EBITDA are supplemental measures utilized by our management and other users of our financial statements such as investors, research analysts and others, to assess the financial performance of our assets without regard to financing methods, capital structure or historical cost basis. Adjusted EBITDA is a key performance measure that our management uses to assess its operating performance. We facilitate internal comparisons of our operating performance on a more consistent basis. We use these performance measures for business planning purposes and forecasting. We believe that EBITDA and Adjusted EBITDA enhances an investor’s understanding of our financial performance as they are useful in assessing our operating performance from period-to-period by excluding certain items that we believe are not representative of our core business.

About Borealis Foods

Borealis Foods BRLS is a pioneering, integrated food manufacturing company with a mission to disrupt and elevate the ready-to-eat meal and dry soup categories by offering premium and super-premium, nutritious products. Known for popular ramen noodle brands like the high protein Chef Woo, Ramen Express, and Woodles, Borealis Foods brings innovative fusion flavors from diverse culinary traditions, creating delicious and nutritious meal options for consumers. With U.S.-based production facilities, the company’s portfolio reflects a commitment to quality, innovation, and sustainability.

An essential aspect of Borealis Foods’ success is its strategic partnerships with prominent national and international food producers, retailers, and distributors. Serving as an innovation partner to global food leaders, Borealis Foods leverages these collaborations to expand its offerings, enhance technological capabilities, and deliver food products that embody its values of healthy nutrition and innovation.

For more information on Borealis Foods, please visit https://borealisfoods.com/.

Forward Looking Statements

Certain statements made in this release are “forward looking statements” within the meaning of the “safe harbor” provisions of the United States Private Securities Litigation Reform Act of 1995, including statements regarding the and future financial condition and performance of Borealis, and the expected financial impacts of the Business Combination (including future revenue and pro forma enterprise value), markets, and expected future growth and market opportunities. Forward-looking statements generally relate to management’s current expectations, hopes, beliefs, intentions, strategies, plans, objections or projections about future events or Borealis’ future financial condition or operating performance. When used in this press release, the words “estimates,” “projected,” “expects,” “anticipates,” “forecasts,” “plans,” “intends,” “believes,” “seeks,” “may,” “will,” “should,” “future,” “propose” and variations of these words or similar expressions (or the negative versions of such words or expressions) are intended to identify forward-looking statements. 

These forward-looking statements are not guarantees of future performance, conditions or results, and involve a number of known and unknown risks, uncertainties, assumptions and other important factors, many of which are outside Company’s control, that could cause actual results or outcomes to differ materially from those discussed in the forward-looking statements. As such, readers are cautioned not to place undue reliance on any forward-looking statements and readers should not rely on these forward-looking statements as predictions of future events.

Forward-looking statements are based upon estimates and assumptions that, while considered reasonable by management of Borealis, are inherently uncertain. Factors that may cause actual result to differ from current expectations include, but are not limited to: financial and operating performance; changes to existing applicable laws or regulations; the possibility that Borealis or the combined company may be adversely affected by economic, business, or competitive factors; Borealis’ estimates of revenue, expenses, operating costs and profitability; the evolution of the markets in which Borealis competes and Borealis’ ability to enter new markets effectively; and the ability of Borealis to implement its strategic initiatives and continue to innovate its existing services.  

Forward-looking statements speak only as of the date they are made. Investors are cautioned not to put undue reliance on forward-looking statements and Borealis assumes no obligation and do not intend to update or revise these forward-looking statements, whether as a result of new information, future events or otherwise, except as required by securities and other applicable laws.

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SOURCE Borealis Foods, Inc.