System1, Inc./S1 Holdco LLC Unaudited Statements of Operations System1, Inc. System1, Inc. System1, Inc. System1, Inc. System1, Inc. S1 Holdco LLC S1 Holdco LLC S1 Holdco LLC S1 Holdco LLC S1 Holdco LLC Successor + Predecessor Total Successor + Predecessor Total Successor + Predecessor Total S1 Holdco LLC S1 Holdco LLC S1 Holdco LLC (in thousands) QTD QTD QTD QTD Sucessor Period Predecessor Period QTD QTD QTD QTD YTD YTD YTD YTD YTD YTD 31-Mar-23 31-Dec-22 30-Sep-22 30-Jun-22 1.27.22 - 3.31.22 1.1.22 - 1.26.22 31-Dec-21 30-Sep-21 30-Jun-21 31-Mar-21 31-Dec-22 30-Sep-22 30-Jun-22 31-Dec-21 30-Sep-21 30-Jun-21 Revenue 167,854 186,859 201,176 219,797 166,108 52,712 199,803 171,446 169,579 147,561 826,652 639,793 438,617 688,389 488,586 317,140 Operating cost and expenses: Cost of revenues 120,402 128,157 137,680 152,558 120,384 41,507 155,276 128,885 126,167 110,785 580,286 452,129 314,449 521,113 365,837 236,952 Salaries, commissions, and benefits 38,398 41,665 55,602 49,511 48,198 31,181 18,715 15,139 17,698 15,195 226,157 184,492 128,890 66,747 48,032 32,893 Selling, general, and administrative 17,172 16,224 15,419 16,747 15,088 15,665 14,650 7,936 6,277 6,950 79,143 62,919 47,500 35,813 21,163 13,227 Depreciation and amortization 29,374 32,416 32,214 32,094 21,928 1,000 3,625 3,459 3,112 3,689 119,652 87,236 55,022 13,885 10,260 6,801 Impairment of goodwill - 26,200 340,109 - - - - - - - 366,309 340,109 - - - - Total operating costs and expenses 205,346 244,662 581,024 250,910 205,598 89,353 192,266 155,419 153,254 136,619 1,371,547 1,126,885 545,861 637,558 445,292 289,873 Operating income (37,492) (57,803) (379,848) (31,113) (39,490) (36,641) 7,537 16,027 16,325 10,942 (544,895) (487,092) (107,244) 50,831 43,294 27,267 Loss (gain) on Fair Value of Warrants (1,409) (10,360) 4,489 (4,139) 13,761 - - - - - 3,751 14,111 9,622 - - - Interest expense 11,451 9,938 10,011 7,324 4,776 1,049 4,162 4,184 4,476 4,048 33,098 23,160 13,149 16,870 12,708 8,524 Income (loss) from continuing operations before income tax (47,534) (57,381) (394,348) (34,298) (58,027) (37,690) 3,375 11,843 11,849 6,894 (581,744) (524,363) (130,015) 33,961 30,586 18,743 Income tax expense (4,408) (6,224) (80,649) (454) (14,649) (629) 262 475 77 151 (102,605) (96,381) (15,732) 965 703 228 Net income (loss) from continuing operations (43,126) (51,157) (313,699) (33,844) (43,378) (37,061) 3,113 11,368 11,772 6,743 (479,139) (427,982) (114,283) 32,996 29,883 18,515 Net Income (Loss) Attributable To Noncontrolling Interest (9,174) (18,264) (72,002) (8,107) (7,309) - - - - - (105,682) (87,418) (15,416) - - - Gain (loss) from discontinued operations, net of taxes - - - - - - - - - - - - - - - - Net income (33,952) (32,893) (241,697) (25,737) (36,069) (37,061) 3,113 11,368 11,772 6,743 (373,457) (340,564) (98,867) 32,996 29,883 18,515
System1, Inc./S1 Holdco LLC Unaudited Condensed Balance Sheet (in thousands) System1, Inc. System1, Inc. System1, Inc. System1, Inc. System1, Inc. S1 Holdco LLC S1 Holdco LLC S1 Holdco LLC S1 Holdco LLC 31-Mar-23 31-Dec-22 30-Sep-22 30-Jun-22 31-Mar-22 31-Dec-21 30-Sep-21 30-Jun-21 31-Mar-21 ASSETS Current Assets: Cash and cash equivalents 8,267$ 24,606$ 31,933$ 37,442$ 42,182$ 47,896$ 36,209$ 34,567$ 30,853$ Accounts receivable, net of allowance for doubtful accounts 69,319 80,927 78,846 93,662 100,268 90,203 85,588 79,446 75,610 Restricted cash, current 7,862 9,074 7,338 4,572 4,801 - - - - Prepaid expenses and other current assets 12,061 11,901 10,817 12,298 15,409 7,689 7,236 4,870 3,996 Total current assets 97,509 126,508 128,934 147,974 162,660 145,788 129,033 118,883 110,459 Restricted cash, non-current 5,577$ 5,395$ 2,772$ 2,452$ 2,836$ 743$ -$ -$ -$ Property and equipment, net 4,469 4,022 4,372 4,330 2,855 830 836 916 976 Internal-use software development costs, net 8,630 6,948 5,690 3,610 1,344 11,213 11,012 10,578 9,764 Intangible assets, net 464,145 492,686 524,573 556,341 587,088 50,368 52,534 54,698 56,740 Goodwill 515,591 515,591 541,792 881,370 878,396 44,820 44,820 44,820 44,820 Operating lease right-of-use assets 6,050 6,484 6,893 7,533 6,388 - - - - Other assets 2,826 2,822 731 804 830 3,149 2,998 2,453 1,222 Total Assets 1,104,797$ 1,160,456$ 1,215,757$ 1,604,414$ 1,642,397$ 256,911$ 241,233$ 232,348$ 223,981$ LIABILITIES AND MEMBERS’ DEFICIT Current Liabilities: Accounts payable 11,258$ 12,068$ 12,241$ 17,286$ 76,004$ 72,846$ 64,625$ 60,659$ 57,410$ Accrued expenses and other current liabilities 85,727 95,447 91,731 97,959 59,735 31,284 20,319 18,814 9,988 Protected incentive plan liability, current 8,755 15,436 19,266 - - - - - - Deferred Revenue 76,346 70,164 68,289 68,368 64,810 1,971 2,100 2,383 2,053 Operating lease liabilities, current 2,195 2,149 2,102 2,065 1,895 - - - - Due to related party - - - - 80 - - - - Notes payable, current 15,073 15,021 14,954 14,888 14,822 170,453 171,780 4,739 9,374 Total current liabilities 199,354 210,285 208,583 200,566 217,346 276,554 258,824 86,595 78,825 Operating lease liabilities, non current 5,314$ 5,875$ 6,406$ 7,073$ 5,645$ -$ -$ -$ -$ Notes payable, non-current 395,704 399,504 402,273 406,026 409,777 - - 168,226 169,411 Warrant liability 6,389 7,798 18,158 13,669 40,773 - - - - Deferred tax liability 35,995 43,355 49,747 129,311 138,738 - - - - Protected incentive plan liability 20,037 15,824 11,517 18,163 - - - - - Other long-term liabilities 6,326 5,027 1,622 5,735 5,595 8,758 9,368 9,051 16,497 Total liabilities 669,119$ 687,668$ 698,306$ 780,543$ 817,874$ 285,312$ 268,192$ 263,872$ 264,733$ Commitments and contingencies (Note 8) Members’ deficit: Class A common stock 9$ 9$ 9$ 9$ 9$ -$ -$ -$ -$ Class C common stock 2 2 2 2 2 - - - - Additional paid-in capital 837,093 829,687 819,188 812,309 777,325 - - - - Accumulated deficit (479,579) (445,301) (411,480) (169,603) (143,867) - - - - Members’ deficit in S1 Holdco - - - - - (28,829) (27,182) (31,646) (40,850) Noncontrolling interest 78,632 88,808 109,676 181,576 190,951 - - - - Accumulated other comprehensive income (479) (417) 56 (422) 103 428 223 122 98 Total members’ deficit 435,678 472,788 517,451 823,871 824,523 (28,401) (26,959) (31,524) (40,752) Total Liabilities And Members’ Deficit 1,104,797$ 1,160,456$ 1,215,757$ 1,604,414$ 1,642,397$ 256,911$ 241,233$ 232,348$ 223,981$
System1, Inc./S1 Holdco LLC Unaudited Condensed Statements of Cash Flow System1, Inc. System1, Inc. System1, Inc. System1, Inc. System1, Inc. S1 Holdco LLC S1 Holdco LLC S1 Holdco LLC S1 Holdco LLC S1 Holdco LLC Successor + Predecessor Total Successor + Predecessor Total Successor + Predecessor Total S1 Holdco LLC S1 Holdco LLC S1 Holdco LLC (in thousands) QTD QTD QTD QTD Sucessor Period Predecessor Period QTD QTD QTD QTD YTD YTD YTD YTD YTD YTD 31-Mar-23 31-Dec-22 30-Sep-22 30-Jun-22 1.27.22 - 3.31.22 1.1.22 - 1.26.22 31-Dec-21 30-Sep-21 30-Jun-21 31-Mar-21 31-Dec-22 30-Sep-22 30-Jun-22 31-Dec-21 30-Sep-21 30-Jun-21 Cash Flows From Operating Activities: Net cash provided by operating activities of continuing operations (5,801) 4,251 7,368 22,558 (30,871) (10,605) 21,336 12,056 17,185 10,128 (7,299) (11,550) (18,918) 60,705 39,369 27,313 Net cash used for operating activities of discontinued operations - - - - - - - - - - - - - - - - Net cash provided by operating activities (5,801) 4,251 7,368 22,558 (30,871) (10,605) 21,336 12,056 17,185 10,128 (7,299) (11,550) (18,918) 60,705 39,369 27,313 Cash Flows From Investing Activities: Purchases of property and equipment (715) (326) (910) (883) (1,427) - (49) - - - (3,546) (3,220) (2,310) (49) - - Proceeds from sale of Protected - - - - - - - - - - - - - - - - Purchase of business, net of cash acquired - - - (21,100) (422,974) - - - - - (444,074) (444,074) (444,074) Expenditures for internal-use software development costs (1,677) (1,254) (1,638) (2,108) (1,389) (441) (1,585) (1,668) (1,793) (1,440) (6,830) (5,576) (3,938) (6,486) (4,901) (3,233) Net cash provided by (used in) investing activities of continuing operations (2,392) (1,580) (2,548) (24,091) (425,790) (441) (1,634) (1,668) (1,793) (1,440) (454,450) (452,870) (450,322) (6,535) (4,901) (3,233) Net cash provided by (used in) investing activities of discontinued operations - - - - - - - - - - - - - - - - Net cash provided by (used in) investing activities (2,392) (1,580) (2,548) (24,091) (425,790) (441) (1,634) (1,668) (1,793) (1,440) (454,450) (452,870) (450,322) (6,535) (4,901) (3,233) Cash Flows From Financing Activities: Proceeds from term loan and line of credit - 1,000 - - 449,000 - - - - - 450,000 449,000 449,000 - - - Repayment of line of credit - - - - - - - - - - - - - - Repayment of term loan (5,000) (5,000) (5,000) (5,000) (172,488) - (1,750) (1,750) (6,386) (1,750) (187,488) (182,488) (177,488) (11,636) (9,886) (8,136) Payments for deferred financing cost - - - - (24,845) - (382) - - - (24,845) (24,845) (24,845) (382) - - Cash received from backstop - - - - 246,484 - - - - - 246,484 246,484 246,484 - - - Member capital contributions - - - - - - (32) 109 3 147 - - - 227 259 150 Payments on contingent consideration (1,250) - - - - - - - (1,715) (5,000) - - - (6,715) (6,715) (6,715) Related party loan - - - - - - - - (1,500) - - - - (1,500) (1,500) (1,500) Redemptions of Class A common stock - - - - (510,469) - - - - - (510,469) (510,469) (510,469) - - - Distributions to members from sale of Protected - - - - - - - - - - - - - - Payments for earnouts - - - (1,715) - - - - - - (1,715) (1,715) (1,715) - - - Taxes paid related to net settlement of restricted stock awards (2,837) (54) (2,035) - - - - - - - (2,089) (2,035) Proceeds from warrant exercises - (1,122) - - - - - - (1,122) - - - - - Purchases of treasury stock - - - 5,027 - - 5,027 Distributions to members (45) (1) (10) (1,038) (463) - (4,786) (7,102) (2,691) - (1,512) (1,511) (1,501) (14,579) (9,793) (2,691) Net cash provided by financing activities (9,132) (5,177) (7,045) (2,726) (12,781) - (6,950) (8,743) (12,289) (6,603) (27,729) (27,579) (20,534) (34,585) (27,635) (18,892) Effect of exchange rate changes in cash, cash equivalents and restricted cash (44) (462) (198) (1,094) 1,708 (17) (322) (3) 611 (245) (63) 399 597 41 363 366 Net Increase In Cash (17,369) (2,968) (2,423) (5,353) (467,734) (11,063) 12,430 1,642 3,714 1,840 (489,541) (491,600) (489,177) 19,626 7,196 5,554 Cash and restricted cash: Beginning of period 39,075 42,043 44,466 49,819 517,553 48,639 36,209 34,567 30,853 29,013 48,639 48,639 48,639 29,013 29,013 29,013 End of period 21,706$ 39,075$ 42,043$ 44,466$ 49,819$ 37,576$ 48,639$ 36,209$ 34,567$ 30,853$ 39,075$ 42,043$ 44,466$ 48,639$ 36,209$ 34,567$
System1, Inc./S1 Holdco LLC Non-GAAP Financials System1, Inc. System1, Inc. System1, Inc. System1, Inc. System1, Inc. S1 Holdco LLC S1 Holdco LLC S1 Holdco LLC S1 Holdco LLC S1 Holdco LLC Successor + Predecessor Total Successor + Predecessor Total Successor + Predecessor Total S1 Holdco LLC S1 Holdco LLC S1 Holdco LLC (in thousands) Sucessor Period Sucessor Period Sucessor Period Sucessor Period Sucessor Period Predecessor Period QTD QTD QTD QTD YTD YTD YTD YTD YTD YTD 31-Mar-23 31-Dec-22 30-Sep-22 30-Jun-22 1.27.22 - 3.31.22 1.1.22 - 1.26.22 31-Dec-21 30-Sep-21 30-Jun-21 31-Mar-21 31-Dec-22 30-Sep-22 30-Jun-22 31-Dec-21 30-Sep-21 30-Jun-21 Net income (loss) from continuing operations (43,126)$ (51,158)$ (313,698)$ (33,845)$ (43,378)$ (37,061)$ 3,113$ 11,368$ 11,772$ 6,743$ (479,141)$ (427,982)$ (114,284)$ 32,996$ 29,883$ 18,515$ Income tax expense (4,408) (6,223) (80,649) (454) (14,649) (629) 262 475 77 151 (102,604) (96,381) (15,732) 965 703 228 Interest expense 11,450 9,938 10,011 7,324 4,776 1,049 4,162 4,185 4,476 4,048 33,098 23,160 13,149 16,871 12,709 8,524 Depreciation & amortization 29,374 32,416 32,214 32,094 21,928 1,000 3,625 3,458 3,113 3,689 119,653 87,236 55,022 13,884 10,259 6,801 Impairment of goodwill - 26,200 340,109 - - - - - - - 366,309 340,109 - - - - Other income/expense (1) 213 1,767 2,008 2,168 1,800 (61) 70 (25) 18 84 7,682 5,916 3,907 147 76 102 Stock-based compensation and distributions to Members (2) 6,392 7,619 8,757 7,363 32,343 23,362 3,458 673 3,342 2,118 79,444 71,825 63,068 9,591 6,133 5,460 Protected.net acquisition bonus accrual 7,533 10,477 22,620 18,163 - - 0 0 0 0 51,260 40,783 18,163 - - - Revaluation of non-cash warrant liability (1,409) (10,360) 4,489 (4,139) 13,761 - - - - - 3,751 14,111 9,622 - - - Costs related to acquisitions/business combinations 3,559 4,149 4,021 5,102 9,660 13,153 7,970 2,755 623 1,484 36,085 31,935 27,914 12,833 4,862 2,108 Acquisition earnout - - 22 72 269 9 32 31 32 63 372 372 350 158 126 95 Severance costs 587 1,759 475 153 206 - 3 118 164 330 2,593 834 359 615 612 494 Other costs, including restructuring 167 118 - 200 26 - 0 8 98 99 343 226 226 206 205 197 Adjusted EBITDA 10,334$ 26,702$ 30,380$ 34,201$ 26,742$ 822$ 22,696$ 23,046$ 23,715$ 18,809$ 118,846$ 92,144$ 61,764$ 88,265$ 65,570$ 42,524$ (1) Non-cash adjustments related to foreign exchange and asset disposals (2) Comprised of distributions to equity holders and non-cash stock-based compensation
Non-Financial Metrcis (In thousands except ratios) QTD QTD QTD QTD QTD QTD QTD QTD QTD YTD YTD YTD YTD YTD YTD O&O Advertising 31-Mar-23 31-Dec-22 30-Sep-22 30-Jun-22 31-Mar-22 31-Dec-21 30-Sep-21 30-Jun-21 31-Mar-21 31-Dec-22 30-Sep-22 30-Jun-22 31-Dec-21 30-Sep-21 30-Jun-21 Revenue 106,025$ 127,867$ 143,600$ 157,952$ 176,133$ 190,035$ 162,606$ 160,817$ 139,426$ 605,552$ 477,686$ 334,085$ 652,884$ 462,848$ 300,242$ Advertising Spend (1) 76,186$ 92,785$ 106,340$ 121,153$ 137,948$ 152,653$ 126,404$ 123,244$ 107,298$ 458,225$ 365,440$ 259,100$ 509,599$ 356,946$ 230,542$ Revenue less Advertising Spend and Agency Fees 29,839$ 35,082$ 37,261$ 36,799$ 38,186$ 37,383$ 36,202$ 37,572$ 32,128$ 147,328$ 112,246$ 74,985$ 143,284$ 105,902$ 69,700$ O&O Sessions (2) 1,026,262 1,042,908 1,077,915 1,012,761 975,025 999,975 859,392 766,293 741,122 4,108,610 3,065,702 1,987,786 3,366,783 2,366,807 1,507,415 O&O CPS (3) 0.07$ 0.09$ 0.10$ 0.12$ 0.14$ 0.15$ 0.15$ 0.16$ 0.14$ 0.11$ 0.12$ 0.13$ 0.15$ 0.15$ 0.15$ O&O RPS (4) 0.10$ 0.12$ 0.13$ 0.16$ 0.18$ 0.19$ 0.19$ 0.21$ 0.19$ 0.15$ 0.16$ 0.17$ 0.19$ 0.20$ 0.20$ Spread 39% 38% 35% 30% 28% 24% 29% 30% 30% 32% 31% 29% 28% 30% 30% Partner Network Revenue 15,093$ 12,204$ 13,295$ 19,077$ 14,812$ 9,768$ 8,840$ 8,763$ 8,135$ 59,389$ 47,185$ 33,890$ 35,505$ 25,738$ 16,898$ Agency Fees (5) 4,876$ 2,535$ 2,994$ 5,170$ 3,387$ -$ -$ -$ -$ 14,087$ 11,551$ 8,557$ -$ -$ -$ Revenue less Advertising Spend and Agency fees 10,217$ 9,669$ 10,301$ 13,908$ 11,425$ 9,768$ 8,840$ 8,763$ 8,135$ 45,302$ 35,633$ 25,333$ 35,505$ 25,738$ 16,898$ Network Sessions (6) 448,287 375,605 364,196 361,432 308,805 289,331 297,142 321,934 338,960 1,410,037 1,034,433 670,237 1,247,366$ 958,035 660,894 Network CPS (7) 0.01$ 0.01$ 0.01$ 0.01$ 0.01$ -$ -$ -$ -$ 0.01$ 0.01$ 0.01$ -$ -$ -$ Network RPS (8) 0.03$ 0.03$ 0.04$ 0.05$ 0.05$ 0.03$ 0.03$ 0.03$ 0.02$ 0.04$ 0.05$ 0.05$ 0.03$ 0.03$ 0.03$ (1) Advertising spend is the amount of advertising that is spent to acquire traffic to Owned & Operated websites (2) O&O sessions are the total number of monetizable user visits to Owned & Operated websites (3) CPS is advertising spend divided by O&O Sessions (4) RPS is O&O Revenue divided by O&O Sessions (5) Agency fees are the amount of costs for agencies acquiring traffic to Owned & Operated websites (6) Network sessions are the number of monetizable user visits delivered by network partners to RAMP (7) CPS is agency fees divided by Network Sessions (8) RPS is Partner Network revenue divided by Network Sessions
Non-Financial Metrcis (In thousands except ratios) QTD QTD QTD QTD QTD QTD QTD QTD QTD YTD YTD YTD YTD YTD YTD 31-Mar-23 31-Dec-22 30-Sep-22 30-Jun-22 31-Mar-22 31-Dec-21 30-Sep-21 30-Jun-21 31-Mar-21 31-Dec-22 30-Sep-22 30-Jun-22 31-Dec-21 30-Sep-21 30-Jun-21 Billings (1) 52,879$ 48,818$ 44,627$ 46,283$ 45,405$ 38,443$ 37,632$ 40,473$ 37,992$ 185,133$ 136,315$ 91,688$ 154,541$ 116,097$ 78,465$ Change in Deferred Revenue During Period 6,143$ 2,030$ 346$ 3,515$ 5,512$ (671)$ (567)$ 4,445$ 6,792$ 11,403$ 9,373$ 9,027$ 9,999$ 10,671$ 11,238$ Advertising Spend (2) 32,580$ 26,423$ 21,963$ 19,878$ 22,296$ 17,986$ 16,966$ 17,884$ 23,626$ 90,559$ 64,136$ 42,174$ 76,462$ 58,477$ 41,510$ Beginning Subscribers 2,419 2,296 2,305 2,284 2,208 2,208 2,187 2,128 1,905 2,208 2,208 2,208 1,905 1,905 1,905 Ending Subscribers (3) 2,617 2,419 2,296 2,305 2,284 2,208 2,208 2,187 2,128 2,419 2,296 2,305 2,208 2,208 2,187 New Subscribers (4) 531 412 338 319 388 312 298 331 462 1,457 1,045 706 1,403 1,091 793 CTA (5) 61.35$ 64.14$ 64.91$ 62.40$ 57.49$ 57.73$ 56.91$ 54.10$ 51.10$ 62.17$ 61.39$ 59.71$ 54.51$ 53.60$ 52.35$ ARPU (6) 21.00$ 20.71$ 19.40$ 20.17$ 20.22$ 17.41$ 17.13$ 18.76$ 18.84$ 80.03$ 60.53$ 40.63$ 75.15$ 56.45$ 38.35$ (1) Billings is the total amount billed to customers during a period (2) Advertising spend is the total amount spent on advertising to acquire new subscribers during a period (3) Ending subscribers are the number of paying subscribers for its products, at the end of a period (4) New subscribers are the number of new subscribers acquired for its products, during a period (5) CTA is advertising spend divided by new subscribers in a period (6) ARPU is the billings in a period divided by average of the beginning and ending subscribers during that period *Deferred revenue from billings is amortized on a straight line basis over the subscription period and recognized as revenue in the financial statements **Excludes metrics for terminated product lines
Protected.net Group Limited Unaudited Statements of Operations (in thousands) Predecessor Period QTD QTD QTD QTD QTD QTD QTD QTD YTD YTD YTD YTD YTD YTD 1.1.22 - 1.26.22 31-Dec-21 30-Sep-21 30-Jun-21 31-Mar-21 31-Dec-20 30-Sep-20 30-Jun-20 31-Mar-20 31-Dec-21 30-Sep-21 30-Jun-21 31-Dec-20 30-Sep-20 30-Jun-20 Revenue 12,016 39,115 38,199 36,028 31,199 25,149 25,415 21,965 18,379 144,541 105,426 67,227 90,908 65,759 40,345 Cost of Revenue 8,434 23,186 22,570 23,460 29,731 23,122 23,827 27,892 23,139 98,946 75,760 53,191 97,980 74,858 51,030 Gross profit (Loss) 3,582 15,929 15,629 12,568 1,469 2,027 1,587 (5,926) (4,759) 45,595 29,666 14,037 (7,072) (9,099) (10,686) - - General and administrative 1,431 4,231 3,910 5,074 2,697 2,365 1,730 1,978 637 15,912 11,681 7,771 6,711 4,346 2,616 Related party rent expense 62 208 133 180 144 111 159 116 150 665 457 324 536 425 266 Total Operating Expenses 1,493 4,440 4,042 5,254 2,841 2,476 1,889 2,094 788 16,577 12,138 8,095 7,247 4,771 2,882 - - Gain on sale of intangible assets - - - - - - (1,580) - - - - - (1,580) (1,580) - Foreign currency transaction (gains)/losses 97 225 583 209 322 (170) 37 60 207 1,341 1,115 532 135 304 267 Other operating income - - (0) (222) (121) (18) (3) (27) (0) (343) (343) (343) (48) (30) (27) Other operating expense (income) 97 225 583 (13) 201 (188) (1,546) 33 207 997 772 189 (1,494) (1,306) 240 - - Operating income (loss) 1,992 11,264 11,004 7,326 (1,574) (262) 1,244 (8,054) (5,754) 28,020 16,757 5,753 (12,826) (12,564) (13,808) - - Related party interest expense - - - - - 105 136 130 35 - - - 406 301 165 Related party interest income (83) (303) (153) (328) (157) - - - - (941) (638) (485) - - - Interest expense 230 53 144 235 151 29 - - - 583 530 386 29 - - Other non-operating expenses/(income) - - - (70) 70 (2) - - - - - - (2) - - Total non-operating expenses/(income), net 147 (250) (9) (163) 64 132 136 130 35 (358) (108) (99) 433 301 165 - - Net income (loss) before income taxes 1,844 11,514 11,013 7,489 (1,638) (394) 1,108 (8,184) (5,789) 28,378 16,865 5,852 (13,258) (12,865) (13,973) - - Income Tax Expense (Benefit) (1,688) (16,139) 966 - - - - - - (15,173) 966 - - - - - - Net income (loss) 3,532 27,653 10,047 7,489 (1,638) (394) 1,108 (8,184) (5,789) 43,551 15,899 5,852 (13,258) (12,865) (13,973)
Protected.net Group Limited Unaudited Condensed Balance Sheet (in thousands) 31-Dec-21 30-Sep-21 30-Jun-21 31-Mar-21 31-Dec-20 30-Sep-20 30-Jun-20 31-Mar-20 ASSETS Current assets: Cash 35,067$ 21,112$ 14,227$ 11,296$ 6,253$ 7,060$ 5,356$ 7,020$ Restricted cash 1,333 2,148 2,458 5,757 5,604 4,943 4,874 7,321 Prepaid expenses and other current assets 546 548 691 791 359 317 404 327 Deposits 15 3,000 3,000 3,000 3,000 3,000 3,000 - Total current assets 36,963 26,807 20,376 20,844 15,216 15,320 13,634 14,667 Due from related parties 33,082 33,115 26,249 15,719 10,230 - 244 139 Property, plant and equipment 616 398 373 370 270 195 184 196 Intangible Assets 369 386 415 62 53 54 90 108 Deferred tax assets 17,237 - - - - - - - Goodwill 284 284 284 - - - - - Total assets 88,550$ 60,991$ 47,696$ 36,995$ 25,769$ 15,568$ 14,153$ 15,112$ Liabilities and Shareholders’ Deficit: Accounts payable 216$ 3,029$ 732$ 2,876$ 3,005$ 2,698$ 3,739$ 436$ Accrued expenses 10,162 7,537 6,199 7,686 6,704 5,896 5,907 8,441 VAT tax liability 11,404 9,696 9,351 6,965 6,366 8,939 8,446 6,211 Deferred revenue 57,405 58,186 58,731 54,139 47,431 41,855 39,044 34,156 Related party deferred revenue 166 187 208 229 168 - - - Current portion of note payable 2,813 2,250 2,813 2,250 1,500 - - - Due to related party 23 - - - 4 3,501 5,599 6,243 Refund liability 537 429 449 597 512 558 405 428 Total current liabilities 82,725 81,313 78,482 74,741 65,690 63,447 63,140 55,915 Note payable, net of current portion and deferred financing costs 10,546 11,086 11,636 12,164 8,352 - - - Deferred tax liability - 966 - - - - - - Total liabilities 93,271$ 93,365$ 90,118$ 86,905$ 74,042$ 63,447$ 63,140$ 55,915$ Commitments and Contingencies Shareholders’ Deficit: Class A Preferred shares 11 11 11 11 11 11 11 11 Class B Common shares 11 11 11 11 11 11 11 11 Additional paid-in capital 40,953 40,953 40,953 40,953 40,953 40,953 40,953 40,953 Accumulated deficit (45,696) (73,349) (83,396) (90,885) (89,247) (88,854) (89,962) (81,778) Total Shareholders’ deficit (4,721) (32,374) (42,421) (49,911) (48,273) (47,879) (48,987) (40,803) Total Liabilities and Shareholders’ Deficit 88,550$ 60,991$ 47,696$ 36,995$ 25,769$ 15,568$ 14,153$ 15,112$ *Class A Preferred shares, par value £0.0001 per share, 7,992,009 shares authorized, issued, and outstanding on September 30, 2021 and December 31, 2020, respectively **Class B Common shares, par value £0.0001 per share, 7,960,105 shares authorized, issued, and outstanding on September 30, 2021 and December 31, 2020, respectively
Protected.net Group Limited Unaudited Condensed Statements of Cash Flow (in thousands) QTD QTD QTD QTD QTD QTD QTD QTD YTD YTD YTD YTD YTD YTD 31-Dec-21 30-Sep-21 30-Jun-21 31-Mar-21 31-Dec-20 30-Sep-20 30-Jun-20 31-Mar-20 31-Dec-21 30-Sep-21 30-Jun-21 31-Dec-20 30-Sep-20 30-Jun-20 Cash Flows From Operating Activities: Net income (loss) 27,653 10,047 7,489 (1,638) (394) 1,108 (8,184) (5,789) 43,551 15,899 5,852 (13,258) (12,865) (13,973) Adjustments to reconcile net loss to net cash used in operating activities: - Depreciation 49 39 36 28 24 18 17 15 151 102 63 75 51 33 Amortization 24 29 29 12 13 16 18 19 94 70 41 67 54 37 Gain on sale of Network Protected intangible assets - - - - - (1,580) - - - - - (1,580) (1,580) - Amortization of deferred financing costs 23 13 34 13 2 - - - 82 59 46 2 - - Interest income on loan with System 1 SS Protect Holdings, Inc. 638 (189) (307) (143) (2) - - - - (638) (450) (2) - - Financing fee income on loan with System 1 SS Protect Holdings, Inc. (21) (21) (21) (14) - - - - (77) (56) (35) - - - Change in operating assets and liabilities: - - - - - - - - - - - - - - Prepaid expenses and other current assets (98) 143 112 (432) (43) 188 (77) (244) (275) (177) (320) (177) (134) (321) Deposits 2,985 - - - - - (3,000) - 2,985 - - (3,000) (3,000) (3,000) Accounts payable (2,813) 2,295 (2,471) (129) 302 (1,041) 3,303 (2,620) (3,118) (305) (2,600) (56) (358) 683 Accrued expenses 2,625 1,338 (1,402) 982 808 (11) (2,534) 3,809 3,544 918 (420) 2,072 1,264 1,275 VAT tax liability 1,708 345 2,385 599 (2,573) 494 2,235 (1,957) 5,037 3,329 2,984 (1,801) 772 278 Refund liability 108 (20) (148) 85 (46) 152 (22) 11 25 (83) (63) 95 141 (11) Deferred revenue (780) (545) 4,593 6,708 5,576 2,811 4,888 4,453 9,974 10,755 11,300 17,727 12,152 9,340 Deferred tax assets (17,237) - - - - - - - (17,237) - - - - - Related party deferred revenue (21) (21) (21) 61 168 - - - (2) 19 40 168 - - Deferred tax liability (966) 966 - - - - - - - 966 - - - - Due from related party (921) 109 29 (83) (168) 244 (104) (137) (866) 55 (54) (165) 3 (241) Due to related party 23 - - (4) 1,266 (861) (644) (11) 18 (4) (4) (250) (1,516) (655) Net cash generated by (used in) operating activities 12,978 14,529 10,337 6,043 4,933 1,539 (4,105) (2,451) 43,887 30,909 16,380 (84) (5,017) (6,556) Cash Flows From Investing Activities: Purchases of intangibles, property, plant and equipment (274) (63) (40) (147) 106 (29) (5) (72) (524) (250) (187) - (106) (77) Proceeds from sale of intangibles 100 - - - 1,500 - - 100 - - 1,500 1,500 - Cash received in acquisition of Host Plus Limited, net of cash paid - - 13 - - - - - 13 13 13 - - - Loan advanced to Just Develop It (16,223) (4,981) (8,430) - - - - - (29,635) (13,411) (8,430) - - - Repayment of loan by Just Develop It 16,223 4,981 8,430 - (213) - - - 29,635 13,411 8,430 (213) - - Loan advanced to Company director (228) (1,706) (282) - 238 (238) - - (2,216) (1,988) (282) - (238) - Repayment of loan by Company director 566 1,651 - - - - - - 2,216 1,651 - - - - Loan advanced to System 1 SS Protect Holdings, Inc. - (6,711) (9,948) (5,250) (10,060) - - - (21,909) (21,909) (15,197) (10,060) - - Net cash used by investing activities 164 (6,829) (10,257) (5,397) (9,929) 1,234 (5) (72) (22,319) (22,483) (15,653) (8,773) 1,157 (77) Cash Flows From Financing Activities: Proceeds from bank loan - - - 5,000 10,000 - - - 5,000 5,000 5,000 10,000 - - Repayment of principal on bank loan - (1,125) - (375) - - - - (1,500) (1,500) (375) - - - Proceeds from related party loans - - - - 2,000 - - 9,000 - - - 11,000 9,000 9,000 Repayment of related party loans - - - - (11,000) 3,000 - (3,000) - - - (11,000) - (3,000) Repayment of loan to Just Develop It - - (449) - 4,000 (4,000) - - (449) (449) (449) - (4,000) - Payment of deferred financing costs - - - (75) (150) - - - (75) (75) (75) (150) - - Net cash (used in) provided by financing activities - (1,125) (449) 4,550 4,850 (1,000) - 6,000 2,976 2,976 4,101 9,850 5,000 6,000 Effect of exchange rate changes on cash - - - - - - - - - - - - - - Net change in cash 13,142 6,574 (368) 5,197 (147) 1,773 (4,110) 3,477 24,544 11,403 4,828 993 1,140 (633) Cash, beginning of period 23,259 16,685 17,053 11,856 12,003 10,230 14,341 10,863 11,856 11,856 11,856 10,863 10,863 10,863 Cash, end of period 36,401$ 23,259$ 16,685$ 17,053$ 11,856$ 12,003$ 10,230$ 14,341$ 36,401$ 23,259$ 16,685$ 11,856$ 12,003$ 10,230$
Protected.net Group Limited Non-GAAP Financials (in thousands) Predecessor Period QTD QTD QTD QTD QTD QTD QTD QTD YTD YTD YTD YTD YTD YTD 1.1.22 - 1.26.22 31-Dec-21 30-Sep-21 30-Jun-21 31-Mar-21 31-Dec-20 30-Sep-20 30-Jun-20 31-Mar-20 31-Dec-21 30-Sep-21 30-Jun-21 31-Dec-20 30-Sep-20 30-Jun-20 Net income (loss) 3,532$ 27,653$ 10,047$ 7,489$ (1,638)$ (394)$ 1,108$ (8,184)$ (5,789)$ 43,551$ 15,899$ 5,852$ (13,258)$ (12,865)$ (13,973)$ Income Tax Expense (1,688) (16,139) 966 - - - - - - (15,173) 966 - - - - Interest expense, net 147 (56) (131) (165) (6) 93 131 176 35 (358) (302) (171) 435 342 211 Depreciation & amortisation 19 73 69 65 39 37 35 35 34 245 172 104 141 105 70 Terminated product lines (1) 0 (13) 29 3 62 (336) (1,691) 86 163 81 94 64 (1,777) (1,441) 250 Costs related to acquisitions/business combinations 104 699 196 499 297 32 - - - 1,690 991 795 32 - - Non-cash foreign exchange adjustments 97 228 581 209 322 (194) 46 68 190 1,341 1,112 532 110 304 258 VAT accrual for previously uncollected VAT 368 956 1,110 1,492 1,116 615 866 1,408 46 4,675 3,718 2,608 2,934 2,319 1,453 Director salary payments - 922 936 949 - - - - - 2,806 1,885 949 - - - Other costs including restructuring - - - - - 424 34 - - - - - 458 34 - Adjusted EBITDA 2,581$ 14,323$ 13,803$ 10,540$ 193$ 277$ 529$ (6,411)$ (5,320)$ 38,859$ 24,536$ 10,733$ (10,925)$ (11,202)$ (11,731)$ (1) Protected terminated its Network Protect VPN product. Protected has excluded revenue, direct costs and operating expenses associated with this product line from Adjusted EBITDA for all presented periods