ARC ARCpoint Inc

ARCpoint Inc. (TSXV: ARC) (the “Company” or “ARCpoint”) will host a conference call at 12:30pm Eastern time, Thursday, December 5, 2024 to review the Company’s Q3 financial results for the period ending September 30, 2024. The Company will also discuss new opportunities following the transaction with Any Lab Tests Now and the creation of CRESSO Brands, LLC., (“CRESSO”) as announced August 20, 2024.

The dial-in number for the conference call is as follows:

Canada / USA Toll Free 1-844-763-8274International Toll +1-647-484-8814

Callers should dial in 5 – 10 min prior to the scheduled start time and ask to join the ARCpoint call:

ARCpoint President and CEO, John Constantine commented “With the completion of the CRESSO transaction in mid-third quarter, we are working hard to complete integration work so that we can begin on-boarding Any Lab Test Now locations onto our MyARCpointLabs technology platform. As additional CRESSO Brands locations begin using our platform, we expect this to have a very positive impact on our financial performance”.

On Aug. 20, 2024, the Company announced that it had entered into a transaction with Any Lab Test Now (ALTN) to bring together the franchise operations of both Any Lab Test Now and ARCpoint into a new joint venture company, CRESSO Brands LLC. Any Lab Test Now, based in Atlanta, Ga., was founded in 1992 and at the time of the Aug. 20, 2024, transaction, had more than 235 U.S. franchise locations, providing direct access to clinical, DNA, and drug and alcohol lab testing services, as well as phlebotomy and other specimen collection services, through its retail storefront business model. When combined with the more than 135 ARCpoint Franchise Group locations, also at the time of the transaction, CRESSO is now the largest franchise network of its kind in the United States. At the time of the CRESSO transaction, ALTN and ARCpoint also agreed to make ARCpoint's MyARCpointLabs technology platform (“MAPL”) the systems choice for CRESSO brand franchisees.

Mr. Constantine concluded, “The addition of more locations and users of MAPL will greatly enhance the offering of the franchisees to their customer bases as well as the functionality of the health and wellness care ecosystem we are building by allowing service providers, such as telehealth and direct primary care providers, independent pharmacies and diagnostic labs, to better serve customers. In turn, we believe this will attract more health and wellness practitioners and other service providers, which will create an even more robust ecosystem."All results below are reported under International Financial Reporting Standards and in US dollars. The Company reminds readers to take into consideration that the CRESSO transaction was concluded in the third quarter of 2024 on August 20, 2024. For accounting purposes, the Company has deconsolidated ARCpoint Franchise Group and recorded its 29.5% interest in CRESSO as an equity investment going forward. The Company advises readers to see its unaudited interim Financial Statements (the “Financial Statements”) and the interim Management Discussion & Analysis of the Company (MD&A”) under the Company’s profile at www.sedarplus.ca.

As at September 30, 2024, the Company had total cash on hand of approximately US$0.2 million.

Summary of 2024 Q3 Financial Results

• Total revenues for the three months ended September 30, 2024, were $1.2 million compared to $1.6 million for the three months ended September 30, 2023. The decrease in revenue for Q3 2024 versus Q3 2023 was primarily due to decreased royalty and franchising revenues as no royalties and brand fund revenues were included after the CRESSO transaction on August 20, 2024.
• Net income for the three months ended September 30, 2024, was $5.2 million compared to a net loss of $1.5 million for the three months ended September 30, 2023. The increase in net income for Q3 2024 versus a net loss in Q3 2023 was primarily due to a gain on deconsolidation of $6.3 million related to the CRESSO Transaction, a decrease in cost of revenue of $0.8 million, a decrease in salary and wages of $0.16 million, a decrease in travel expenses of $0.07 million and a decrease in sales and marketing costs of $0.07 million, partially offset by a decrease in revenue of $0.39 million and an increase in professional fees of $0.11 million.
• Operating cash flow for the three months ended September 30, 2024 was negative $0.6 million compared to negative $1.0 million for the three months ended September 30, 2023.
• EBITDA for the three months ended September 30, 2024, was $5.5 million compared to negative $1.2 million for the three months ended September 30, 2023.
• Adjusted EBITDA for the three months ended September 30, 2024, was negative $0.6 million compared to negative $0.4 million for the three months ended September 30, 2023.

Summary of 2024 Year to Date Financial Results

• Total revenues for the nine months ended September 30, 2024, were $4.5 million compared to $4.8 million for the nine months ended September 30, 2023. The decrease in revenue was primarily due to decreased royalty and franchising revenues as no royalties and brand fund revenues were included after the CRESSO transaction on August 20, 2024.
• Net income for the nine months ended September 30, 2024, was $2.3 million compared to a net loss of $6.0 million for the nine months ended September 30, 2023. The change was primarily due to a gain on deconsolidation of $6.3 million related to the CRESSO Transaction, a decrease in cost of revenue of $1.1 million, a decrease in salary and wages of $1.0 million, a decrease in software development expenses of $0.21 million and a decrease in sales and marketing costs of $0.24 million, partially offset by a decrease in revenue of $0.36 million and an increase in professional fees of $0.05 million.
• Operating cash flow for the nine months ended September 30, 2024 was negative $2.5 million compared to negative $4.0 million for the nine months ended September 30, 2023.
• EBITDA for the nine months ended September 30, 2024, was $3.3 million compared to negative $5.0 million for the nine months ended September 30, 2023.
• Adjusted EBITDA for the nine months ended September 30, 2024, was negative $2.5 million compared to negative $3.2 million for the nine months ended September 30, 2023.

DEFINITION AND RECONCILIATION OF NON-IFRS FINANCIAL MEASURESThe Company reports certain non-IFRS measures that are used to evaluate the performance of its businesses and the performance of their respective segments. Securities regulators require such measures to be clearly defined and reconciled with their most comparable IFRS measures.

As non-IFRS measures generally do not have a standardized meaning, they may not be comparable to similar measures presented by other issuers. Rather, these are provided as additional information to complement those IFRS measures by providing further understanding of the results of the operations of the Company from management’s perspective. Accordingly, these measures should not be considered in isolation, nor as a substitute for analysis of the Company’s financial information reported under IFRS. Non-IFRS measures used to analyze the performance of the Company’s businesses include “EBITDA” and “Adjusted EBITDA”.

The Company believes that these non-IFRS financial measures provide meaningful supplemental information regarding the Company’s performances and may be useful to investors because they allow for greater transparency with respect to key metrics used by management in its financial and operational decision-making. These financial measures are intended to provide investors with supplemental measures of the Company’s operating performances and thus highlight trends in the Company’s core businesses that may not otherwise be apparent when solely relying on the IFRS measures. These non-IFRS measures are calculated as follows:

“EBITDA” is comprised as income (loss) less interest, income tax and depreciation and amortization. Management believes that EBITDA is a useful indicator for investors, and is used by management, in evaluating the operating performance of the Company. See “Consolidated EBITDA and Adjusted EBITDA Reconciliation” appended to this press release for a quantitative reconciliation of EBITDA to the most directly comparable financial measure.

“Adjusted EBITDA” is comprised as income (loss) less interest, income tax, depreciation, amortization, share-based compensation, Brand Fund revenue and expense timing difference, change in fair value of warrant liability, foreign exchange gain (loss) and other income / expenses not attributable to the operations of the Company. Management believes that EBITDA is a useful indicator for investors, and is used by management, in evaluating the operating performance of the Company. See “Consolidated EBITDA and Adjusted EBITDA Reconciliation” appended to this press release for a quantitative reconciliation of Adjusted EBITDA to the most directly comparable financial measure.

A reconciliation of how the Company calculates EBITDA and Adjusted EBITDA is provide in the table appended to this press release.

For more information, please see the unaudited interim Financial Statements (the “Financial Statements”) and the interim Management Discussion & Analysis of the Company (MD&A”) under the Company’s profile at www.sedarplus.ca.

About ARCpoint Inc.ARCpoint is an innovative US-based health care company that leverages technology along with brick-and-mortar locations to give businesses and individual consumers access to convenient, cost-effective healthcare information and solutions with transparent, up-front pricing, so that they can be proactive and preventative with their health and well-being.

For more information, please contact:

ARCpoint Inc.Jason Tong, Chief Financial OfficerPhone : (604) 889-7827E-mail : invest@arcpointlabs.com

CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING INFORMATION :

Forward-Looking Information – this news release contains “forward-looking information” within the meaning of applicable Canadian securities laws which are based on ARCpoint’s current internal expectations, estimates, projections, assumptions and beliefs and views of future events. Forward-looking information can be identified by the use of forward-looking terminology such as “expect”, “likely”, “may”, “will”, “should”, “intend”, “anticipate”, “potential”, “proposed”, “estimate” and other similar words, including negative and grammatical variations thereof, or statements that certain events or conditions “may”, “would” or “will” happen, or by discussions of strategy.

The forward-looking information in this news release is based upon the expectations, estimates, projections, assumptions and views of future events which management believes to be reasonable in the circumstances. Forward-looking information includes estimates, plans, expectations, opinions, forecasts, projections, targets, guidance or other statements that are not statements of fact. Froward-looking information necessarily involve known and unknown risks, including, without limitation, risks associated with general economic conditions; adverse industry events; loss of markets; future legislative and regulatory developments; inability to access sufficient capital from internal and external sources, and/or inability to access sufficient capital on favourable terms; the ability of the Company to implement its business strategies, the COVID-19 pandemic; competition and other risks.

Any forward-looking information speaks only as of the date on which it is made, and except as required by law, the Company does not undertake any obligation to update or revise any forward-looking information, whether as a result of new information, future events or otherwise. New factors emerge from time to time, and it is not possible for the Company to predict all such factors. When considering the forward-looking information contained herein, readers should keep in mind the risk factors and other cautionary statements in the Company’s disclosure documents filed with the applicable Canadian securities regulatory authorities on SEDAR at www.sedar.com. The risk factors and other factors noted in the disclosure documents could cause actual events or results to differ materially from those described in any forward-looking information.

Neither the TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in the policies of the Exchange) accepts responsibility for the adequacy or accuracy of this Press release.

ARCpoint Inc.Consolidated EBITDA and Adjusted EBITDA Reconciliation(Expressed in United States Dollars)

(a) Finance expense comprised of interest on bank loans, notes payable and lease liabilities (see Financial Statements).(b) Share-based compensation expense comprised of non-cash compensation (see Financial Statements).(c) See ‘Cresso Transaction’ section of this MD&A for further details.(d) The Group operated a Brand Fund established to collect and administer funds contributed for use in advertising and promotional programs designed to increase sales and enhance the reputation of the Group and its franchisees. The Group reports contributions and expenditures on a gross basis on the Group’s statement of profit and loss. Brand Fund contributions are recognized as revenue when invoiced, as the Group has full discretion on how and when the Brand Fund revenues are spent. Brand Fund revenue received may not equal advertising expenditures for the period due to timing of promotions and this difference is recognized to earnings. This adjustment is made to normalize for the timing difference of the Brand Fund revenues and Brand Fund expenditures.