MindBeacon Announces Third Quarter 2021 Financial Results

THIRD QUARTER AND SUBSEQUENT HIGHLIGHTS

• CloudMD and MindBeacon have entered into a definitive arrangement agreement under which CloudMD has agreed to acquire all of MindBeacon's issued and outstanding common shares. MindBeacon shareholders will receive 2.285 common shares of CloudMD and $1.22 of cash for each common share of MindBeacon representing total consideration per share of approximately $4.78 based on the 7-day volume-weighted average price of CloudMD shares on November 12, 2021.
• Revenue of $5.2 million, an increase of 66% over the same period in 2020.
• Consolidated gross margins were 44% in the third quarter of 2021 and in the asynchronous segment 47%, in-line with our expectations due to the investments made in the short-term to ensure expedient access to treatment, grow our clinical capacity and achieve greater scale.
• MindBeacon has expanded its provider capacity and hired 65 full time clinicians year-to-date and 52 since the start of the second quarter to deliver service in the asynchronous segment. This ramp up in capacity temporarily suppressed our gross margins while the new therapists were onboarded and built their caseloads, however as we exited the quarter, our gross margins in September month-end in the asynchronous segment were 49% and we expect them to continue to expand in the fourth quarter and into 2022.
• Delivered 9,281 asynchronous cases in Q3, 2021, up 131% compared to prior year. Delivered 10,078 Synchronous sessions in Q3 2021, up 20% compared to prior year.
• On November 1, 2021, closed the acquisition of Harmony Healthcare for US$1.6 million plus near-term working capital contributions of approximately US$0.4 million. The revenue run-rate of the business, as of the acquisition date, is approximately C$8.0 million.
• MindBeacon announced the appointment of Dan Clark as President and Chief Executive Officer, effective, July 26th, 2021. Sam Duboc, the incumbent Chair and CEO, was appointed Executive Chair. Adam Kelly, Chief Commercial Officer, has assumed the additional role as President of Canada.
• In September 2021, MindBeacon signed a new service agreement with Ontario Health to continue providing our Therapist Assisted internet Cognitive Behavioral Therapy ("TAiCBT").
• In September 2021, the Toronto Stock Exchange accepted the notice filed by MindBeacon to implement a normal course issuer bid ("NCIB") for a portion of its common shares. In the third quarter of 2021, MindBeacon repurchased a total of 300,000 common shares at $3.25 per share.
• With the launch of our new Navigation program in July, MindBeacon users get enriched, personalized guidance to help them better navigate their employer-based benefits and remove any barriers to achieving optimal mental health and wellbeing.
• In October 2021 we hired and have deployed a US-based sales team to drive organic growth under the MindBeacon banner and to expand the market penetration of the Harmony business in Nevada and surrounding states.

TORONTO, Nov. 15, 2021 /CNW/ - MindBeacon Holdings Inc. ("MindBeacon" or the "Company") (TSX: MBCN), a leading provider of digital mental and behavioral health therapy across the entire continuum of care, announces its financial results for the three months ended September 30, 2021. All amounts are in thousands of Canadian dollars unless otherwise stated.

OPERATING RESULTS SUMMARY

Selected Consolidated Financial Information			Three Months Ended			Nine Months Ended
(In thousands of Canadian dollars, except per share amounts)			September 30,			September 30,
			2021	2020		2021	2020
Cases
Cases (Asynchronous)			9,281	4,010		27,285	7,073
Sessions (Synchronous)			10,078	8,381		31,593	22,650
Revenue
Asynchronous Therapist-Assisted iCBT			4,214	2,195		12,585	4,046
Synchronous Therapy			1,020	958		3,291	2,587
			5,234	3,153		15,876	6,633
Less: Client care costs
Asynchronous Therapist-Assisted iCBT			2,237	1,001		6,412	1,968
Synchronous Therapy			695	605		2,209	1,668
			2,932	1,606		8,621	3,636
Gross profit
Asynchronous Therapist-Assisted iCBT			1,977	1,194		6,173	2,078
Synchronous Therapy			325	353		1,082	919
			2,302	1,547		7,255	2,997
Gross profit margin
Asynchronous Therapist-Assisted iCBT			47%	54%		49%	51%
Synchronous Therapy			32%	37%		33%	36%
			44%	49%		46%	45%
Adjusted EBITDA			(3,096)	(1,736)		(7,263)	(5,179)
Net loss			(4,388)	(2,474)		(10,219)	(6,562)
Loss per share (basic and diluted)			($0.18)	($0.41)		($0.43)	($1.10)

"We are continuing to build on our successes and have strengthened our solid foundation once again in the third quarter as we begin our international expansion", said Dan Clark, CEO of MindBeacon. "Our acquisition of Harmony provides us with a beachhead into the U.S. Harmony increases our scale, reduces our customer concentration, while building our network and establishing us as a U.S provider of Behavioural Health with strong relationships with well known clients and unions."

"We are very excited about the transaction with CloudMD as it positions the combined company to be one of the leading integrated health providers in North America. MindBeacon's proven effectiveness in leveraging technology and personalized, multi-modal treatment to improve mental health outcomes has set us apart. Now, combined with CloudMD's, end-to-end, whole person care, our integrated solutions are truly unique and world class. I'm excited about our future together and believe CloudMD is the ideal partner for our collective patients, customers and shareholders."

"As expected, and highlighted previously, we experienced a seasonal slowdown in the quarter during the summer season. With the addition of Harmony, the annualized run-rate of the business is now over $29 million and we now have a meaningful revenue base in the U.S. We have bolstered our therapist network through additional hires. While onboarding new providers results in a slight headwind to gross margins in the near-term, we have already seen gross margins return to historical normals in October." 

SUBSEQUENT TO QUARTER END HIGHLIGHTS

CloudMD to Acquire MindBeacon

On November 14, 2021, MindBeacon has entered into a definitive arrangement agreement (the "Arrangement Agreement") with CloudMD Software & Services Inc. ("CloudMD"), under which CloudMD will acquire all of MindBeacon's issued and outstanding common shares (the "Transaction"). Under the terms of the Arrangement Agreement shareholders of MindBeacon will receive 2.285 common shares of CloudMD for each common share of MindBeacon (each, a "MindBeacon Share") and $1.22 of cash per MindBeacon Share representing total consideration per MindBeacon Share of approximately $4.78 based on the 7-day volume-weighted average price of CloudMD shares on November 12, 2021.

The transaction will be implemented by way of a court-approved plan of arrangement under the Canada Business Corporations Act. The Transaction requires the approval of two thirds of the votes cast by the holders of MindBeacon's common shares at a special meeting of shareholders anticipated to be held in January 2022.

The Transaction is also subject to the satisfaction of certain closing conditions customary in transactions of this nature, including TSX Venture Exchange approval. The Transaction is not subject to any financing condition. MindBeacon is subject to customary non-solicitation provisions under the arrangement agreement. The arrangement agreement also includes a termination fee payable in certain circumstances.

The Transaction is expected to close in the first quarter of 2022.

MindBeacon Acquires Harmony Health

On November 1, 2021, we closed the acquisition of all the issued and outstanding shares of Harmony Healthcare from Acadia Healthcare, one of the largest pure-play providers of mental health and substance abuse treatment in the United States. The purchase price was US$1.6 million and will require near-term working capital contributions of approximately C$0.5 million. The revenue run-rate of the business, as of the acquisition date, is just over C$8 million. We are targeting achieving positive EBITDA in the Harmony business in mid-2022, and don't expect the near-term use of cash to be significant. With the completion of this acquisition of Harmony our concentration of revenue in our largest customers will be meaningfully reduced.

FINANCIAL REVIEW

Revenue

(In thousands of Canadian dollars)	Three Months Ended September 30,			Nine Months Ended September 30,
	2021	2020		2021	2020
Revenue
Asynchronous Therapist-Assisted iCBT	4,214	2,195		12,585	4,046
Synchronous Therapy	1,020	958		3,291	2,587
	5,234	3,153		15,876	6,633

Asynchronous Therapist-Assisted iCBT

Asynchronous revenue for the three months ended September 30, 2021 was $4.2 million, an increase of 92% compared to $2.2 million for the same period in 2020. Asynchronous revenue for the nine months ended September 30, 2021 was $12.6 million, an increase of 211% compared to $4.0 million for the same period in 2020. The increase during both periods was due to the uptake of asynchronous services by per-case and subscription-based customers from increased market penetration. The growth in per-case revenues has benefitted significantly from the Ontario Government Program and does represent a significant percentage of revenue. The volume of our cases through the Ontario Program and success in direct-to-consumer acquisition under this program have caused the direct-to-consumer volumes, including extended healthcare benefits, to shift to the government subsidized program. Subsequent to Q3, we hired and have deployed a US-based sales team to drive organic growth under the MindBeacon banner and to expand the market penetration of the Harmony business in Nevada and surrounding states. We are focused on growth outside of Ontario and internationally, as we progress through the rest of 2021 and into 2022 and have added significantly to our sales pipeline in Canada and the US. In addition, we are increasing the scope of targeted marketing efforts to expand MindBeacon's brand awareness across Canada and in the US. Average revenue per case in the asynchronous segment in the third quarter of 2021 was $454 and year-to-date was $464. We experience variations in revenue per case quarter-to-quarter with the launch of new clients, changes in volumes from subscription clients and patient progression through interval-based fee-for-service programs. MindBeacon has historically experienced some seasonality in the business surrounding major holidays and key dates in the school calendar. For example, we see slightly lower volumes in the last week of the year and during July and August. We believe that as a result of this our revenue was marginally lower by $0.2 million or 4% when compared to second quarter of 2021.

Synchronous Therapy

Synchronous revenue for the three months ended September 30, 2021 increased by $0.1 million, or 6%, from the same period in 2020. Synchronous revenue for the nine months ended September 30, 2021 increased by $0.7 million, or 27%, to $3.3 million compared to $2.6 million for the same period in 2020. The increase in revenue year-to-date was due to a continued adoption of virtual therapy and the launch of the Company's revamped platform which offers synchronous care to a broader population across Canada. Due to the government-imposed restrictions in Canada as a result of the COVID-19 pandemic, we did not observe the full effect of seasonality that we tend to experience in July and August in 2020. In 2021, due to the high vaccination rates and reopening of the province that commenced in June 2021 we experienced a greater impact of the seasonality in the quarter and therefore had an impact on our case volumes and revenue growth for the three months ended September 30, 2021. Average revenue per session in the synchronous segment in the third quarter of 2021 was marginally lower than the same period in 2020 due to the mix of sessions completed by registered social workers versus psychologists. In 2021, we have shifted to offer more therapy sessions by registered social workers which are at lower price point in line with company vision of making mental health therapy more accessible and affordable.

Client Care Costs

(In thousands of Canadian dollars)	Three Months Ended September 30,			Nine Months Ended S eptember 30,
	2021	2020		2021	2020
Client care costs
Asynchronous Therapist-Assisted iCBT	2,237	1,001		6,412	1,968
Synchronous Therapy	695	605		2,209	1,668
	2,932	1,606		8,621	3,636

Client care costs for asynchronous therapy for the three months ended September 30, 2021 increased by $1.2 million, or 123%, to $2.2 million compared to $1.0 million for the same period in 2020. Client care costs for asynchronous therapy for the nine months ended September 30, 2021 increased by $4.4 million, or 226%, to $6.4 million compared to $2.0 million for the same period in 2020. The increase during both periods was due to higher asynchronous therapist-assisted iCBT volumes. The client care costs grew at a marginally higher rate compared to our revenue, in part due to the fact that in the second quarter and third quarter we significantly scaled-up our clinical network. Over time and with the advent of more automation, operational refinement and technology improvements, we believe our clinicians will become more productive. We are already observing clinicians hired in second and third quarter ramping up to full utilization and increasing their clinical efficiency. We expect the unit economics of a full-time clinician will be more favourable to that of an independent contractor and we expect to see margin improvement over time as a result of having more cases delivered by full-time clinicians. Clinical efficiency can also be impacted by the severity of clinical presentation of the patient populations we serve. Simply put, the more complex the case, the greater the amount of clinical time that is required to successfully treat such patients. The prevalence rate and severity levels of cases have been impacted worldwide as the COVID-19 pandemic has prolonged. While this increase in severity rates has occurred, we believe the "risk mix" will improve to more normal levels once the pandemic starts to abate. Moreover, to mitigate any downside risk associated with increases in severity, MindBeacon is tailoring its marketing approach to encourage those in need of care to seek it earlier (thereby decreasing acuity levels), has established supervisory protocols related to severity outliers to ensure effective treatment response and is also leveraging its external provider network, with whom it has capitated risk arrangements to minimize any cost of delivery variation associated with short-term risk mix variation. The clinical insights and data learned from the current "risk mix" and scaling will be crucial in developing future products and services and managing costs as we enter other markets both domestically and internationally. Year-over-year cost of delivery per-case has decreased from $278 per case for nine months ended September 30, 2020 to $236 per case for the nine months ended September 30, 2021, as we are becoming more efficient in our delivery and achieve greater scale. While we expect per case efficiencies and gross margins to continue to improve, its important to note there may be a cyclical "lag factor" as it relates to gross margins. Specifically, as our business grows rapidly, we must make prospective hires to maintain service standards. As we onboard new providers, there is a lag in time before each provider reaches full caseload capacity, which can be reflected in slightly lower gross margins during any such hiring periods. Cost of delivery in the third quarter was marginally lower than the second quarter of 2021.

Client care costs for synchronous therapy for the three months ended September 30, 2021 were $0.7 million, an increase of $0.1 million, or 15%, from $0.6 million in the same period in 2020. Client care costs for synchronous therapy for the nine months ended September 30, 2021 were $2.2 million, an increase of $0.5 million, or 32%, from $1.7 million in the same period in 2020, somewhat in-line with revenue growth which was 27% from the same period in 2020. During 2021, we made some clinical infrastructure investments to support the growing revenues in this segment. The cost of delivery per session of synchronous therapy was lower than the comparative period due to the mix of sessions completed by registered social workers versus psychologists.

Gross Profit and Gross Profit Margin

(In thousands of Canadian dollars)	Three Months Ended September 30,			Nine Months Ended September 30,
	2021	2020		2021	2020
Gross profit
Asynchronous Therapist-Assisted iCBT	1,977	1,194		6,173	2,078
Synchronous Therapy	325	353		1,082	919
	2,302	1,547		7,255	2,997
Gross profit margin
Asynchronous Therapist-Assisted iCBT	47%	54%		49%	51%
Synchronous Therapy	32%	37%		33%	36%
	44%	49%		46%	45%

Gross profit for the three months ended September 30, 2021 was $2.3 million compared to $1.5 million in 2020. This represents an increase of $0.8 million or 49%. Gross profit for the nine months ended September 30, 2021 was $7.3 million compared to $3.0 million in 2020. This represents an increase of $4.3 million or 142%. Gross profit margin for the three months ended September 30, 2021 was 44%, compared to 49% for the same period in 2020. Gross profit margins for the period were slightly lower, however in-line with our expectations as we continue our scale up of our clinical network and experience a lag in time before the clinicians reach optimal case capacity. We expect our gross margins to improve as we enter the fourth quarter and into 2022 as clinicians ramp-up to full case load capacity. Gross profit margin for the nine months ended September 30, 2021 was 46%, compared to 45% for the same period in 2020. This is attributable to the fact that asynchronous segment continues to constitute a larger portion of our overall business. For the nine months ended September 30, 2021, the asynchronous segment constituted 79% of our overall revenue compared to 61% for the same period in the prior year. We expect that asynchronous segment will continue to increase and form a larger portion of our overall business over time which will help to continue to increase our consolidated margins.

Gross profit margin in the asynchronous segment was 47% in the third quarter of 2021, compared to 54% in the comparative period in 2020. Gross profit margin in the asynchronous segment was 49% in the nine months ended September 30, 2021, compared to 51% in the comparative period in 2020.

Gross profit margin in the synchronous segment in the three and nine months ended September 30, 2021 was lower at 32% and 33% compared with 37% and 36%, respectively, for the same periods in 2020. This reduction is attributable to the expansion of our live therapy offering across Canada through the MindBeacon platform and investment hires made to our clinical team to support our future case capacity. We have required some additional clinical overhead as part of our expansion efforts. As we continue to grow, this overhead will be spread across a higher volume of cases. In addition, the Company is focused on discipline in contracting and operational delivery to ensure that we achieve healthy margins that can be invested in growing the business.

Adjusted EBITDA^[1]

For the three months ended September 30, 2021, Adjusted EBITDA decreased by 78% to ($3.1) million compared to ($1.7) million for the same period in 2020. For the nine months ended September 30, 2021, Adjusted EBITDA decreased by 40% to ($7.3) million compared to ($5.2) million for the same period in 2020. The decrease in adjusted EBITDA is within our expectations as MindBeacon continues to invest in growing the business. We continue to invest in building out our sales capabilities, developing our platform and are focussed on pursuing and implementing our growth strategy both domestically and internationally. During the three months and nine months ended September 30, 2021, gross profit increased by $0.8 million or 49% and $4.3 million or 142%, respectively. This was offset by higher selling and marketing expenses due to higher marketing spend as we grow our brand and promote our offerings, higher product and development expenses as we continue to make investments in our platform and technology and higher general and administrative expenses related to the increased costs associated with operating as a public company, administrative and recruitment costs associated with the build out of our therapist network and higher spend on employee compensation as we have added new positions over the past year, in-line with the Company's growth.               

(In thousands of Canadian dollars)	Three Months Ended September 30,			Nine Months Ended September 30,
	2021	2020		2021	2020
Net Loss	(4,388)	(2,474)		(10,219)	(6,562)
Depreciation and amortization	447	259		1,383	792
Finance costs	49	42		117	104
EBITDA ^(1)	(3,892)	(2,173)		(8,719)	(5,666)
Loss in fair value of warrant liability	---	437		---	487
Strategic consulting	268	---		558	---
Recruitment costs	---	---		245	---
Restructuring costs	382	---		382	---
Acquisition costs	146	---		146	---
Other	---	---		125	---
Adjusted EBITDA ^(1)	(3,096)	(1,736)		(7,263)	(5,179)

[1]  Represents a non-IFRS measure. For the relevant definitions, see the " CAUTIONARY NOTE REGARDING NON-IFRS MEASURES" section of this press release. Management believes non-IFRS measures, including EBITDA and Adjusted EBITDA provide supplementary information to IFRS measures used in assessing the performance of the business.

LIQUIDITY AND CAPITAL RESOURCES

Our principal cash requirements are for working capital. Excluding deferred revenue, our working capital as of September 30, 2021 was $53.2 million. Given our existing cash balances, we believe there is sufficient liquidity to meet our current and short-term financial obligations and fund our organic growth strategy.

CASH FLOW

The following table provides an overview of the Company's cash flows for the periods indicated:

In thousands of Canadian dollars	Nine Months Ended September 30,
	2021	2020
Cash provided by (used in):
Operating activities	(7,261)	(3,663)
Investing activities	(1,958)	(1,610)
Financing activities	(3,845)	460
Net decrease in cash	(13,064)	(4,813)

Operating Activities

Cash used in operating activities for the nine months ended September 30, 2021 increased by $3.6 million to $7.3 million, compared to $3.7 million for the same period in 2020. The increase was primarily attributable to an increase in non-cash expenses of $0.6 million and growth investment that increased net losses by $3.7 million for the nine months ended September 30, 2021. This was offset by to positive changes in working capital.

Investing Activities

Cash used in investing activities for the nine months ended September 30, 2021 increased by $0.3 million or 22%, to $2.0 million. The increase was due to higher additions to internally-developed software compared to the prior period of $0.2 million as we continue to invest in and develop our platform and an increase of $0.2 million related to additions to property and equipment mainly in the form of computer equipment as a result of our increased headcount.  

Financing Activities

Cash used in financing activities for the nine months ended September 30, 2021 increased by $4.3 million, compared to the same period in 2020. The increase was primarily due to settlement of amounts owing to selling shareholders who sold in the over-allotment as part of the IPO of $3.1 million, certain share issuance costs from the Company's IPO that were settled in 2021 of $0.4 million and repurchase of common shares under our Normal Course Issuer Bid program of $1.0 million. This was offset by proceeds from the exercise of stock options of $0.2 million.

Capital Expenditures

Our capital expenditures include internally-generated intangibles, information technology hardware, leasehold improvements and office furniture.

Capital expenditures for the three months ended September 30, 2021 increased by 44% to $0.7 million compared to $0.5 million for the same period in 2020. The increase was due to the investments we made in developing our platform in the quarter, and higher amount of additions to property and equipment mainly in the form of computer equipment in the third quarter of 2021 compared to the same period in 2020 as a result of our increased head count.

Capital expenditures for the nine months ended September 30, 2021 increased by 22% to $2.0 million, compared to $1.6 million for the same period in 2020. The increase was due to increased additions to property and equipment related to computer equipment of approximately $0.2 million and additional investments and investments and improvements we had made to our platform through 2021 of $0.2 million.

OUTSTANDING SHARE INFORMATION

The Company is authorized to issue an unlimited number of common shares and preferred shares. As of September 30, 2021, there are 23,492,739 Common Shares and nil Preferred Shares outstanding.

The number of Common Shares reserved for issuance under the Company's Omnibus Incentive Plan and Legacy Incentive Plan is 3,523,911. As of September 30, 2021, the number of stock options that are outstanding, including those that remain unvested, that may be converted to common shares is 2,170,586.

OUTLOOK

The pandemic has completely changed our world. It's time that mental health care embraces those changes and provides the support that patients need, when, where and how they need it. It's never been clearer that there simply isn't enough access to high-quality solutions to meet the North American health concern. We are developing solutions to help solve this problem and we aim to bridge the gap, and stand apart, by delivering the best outcomes and consumer experience available.

We are proud of our performance in the third quarter of 2021 across all aspects of our business. We expected our revenue growth to be impacted as we entered the third quarter of 2021 due to the seasonality that we have historically observed during peak holiday seasons in July and August. We are well positioned to keep the momentum going into 2022 and beyond.

The acquisition of Harmony will accelerate MindBeacon's North American expansion as it brings its digital mental health solutions to Harmony's current and future customers across the United States, supporting government, labour and trust organizations, regional health plans, and other risk-bearing providers. Harmony's clinical experience and infrastructure, coupled with MindBeacon's technology solutions will also enable MindBeacon to accelerate its organic US expansion plans. With the acquisition of Harmony and the deployment of a US-based sales force early in the fourth quarter of 2021, MindBeacon expects that the US will comprise a meaningful percentage of its revenue in 2022.

The CloudMD Transaction, and the inclusion of MindBeacon's full suite of mental health services as part of CloudMD's larger integrated health care offerings, will be one of North America's leading fully-integrated health offerings, with a clinically validated, broad continuum of care to address mild, moderate, acute and chronic mental and physical care. MindBeacon's mental health services will be integrated into CloudMD's Integrated Health Services Platform, amplifying reach and expanding the breadth of interactive technologies and tool sets within behavioural health to support clients with longitudinal multi -dimensional care.

CLOUDMD AND MINDBEACON ACQUISITION CONFERENCE CALL

CloudMD and MindBeacon will hold a conference call on Monday November 15, 2021 at 8:30 a.m. Eastern Time to discuss proposed acquisition. The call will be hosted by Dr. Essam Hamza, Chief Executive Officer (CloudMD), Karen Adams, President (CloudMD), Daniel Lee, Chief Financial Officer (CloudMD), Dan Clark, President and Chief Executive Officer (MindBeacon), and John Plunkett, Chief Financial Officer (MindBeacon).

CONFERENCE CALL DETAILS
DATE:	Monday, November 15, 2021
TIME:	8:30 a.m. Eastern Time
DIAL-IN NUMBER:	North American Toll Free: 888-390-0605, Toronto: 416-764-8609
WEBCAST LINK:	https://produceredition.webcasts.com/starthere.jsp?ei=1513071&tp_key=f350454138
TAPED REPLAY:	Number: 888-390-0541, Replay Code: 373317 #
The taped replay will be available for 7 days.

ABOUT MINDBEACON HOLDINGS INC.

MindBeacon provides a continuum of mental healthcare that includes self-guided psychoeducational and wellness content, Peer-to-Peer Support, Therapist Guided Programs and Live Therapy Sessions all offered virtually through its secure and private platform. As one of the first commercially available, digitally-native platforms to offer therapist-assisted internet-based Cognitive Behavioural Therapy in Canada, MindBeacon's professional service is designed around end users – their health, their way. Working with employers, insurance carriers and government ministries, MindBeacon offers services that are accessible, available, affordable and, most importantly, proven to be effective. MindBeacon is changing the therapy landscape by making professional care available to every Canadian, no matter when, where and how they choose to access it. With Harmony, we have expanded the capabilities that MindBeacon can offer to their current customers across Canada and the United States. Harmony's clinical expertise and infrastructure, coupled with MindBeacon's innovative technology solutions will enable MindBeacon to accelerate its US expansion plans.

CAUTIONARY NOTE REGARDING NON-IFRS MEASURES

This press release makes reference to certain non-IFRS measures. These measures are not recognized under IFRS and do not have a standardized meaning prescribed by IFRS and are therefore unlikely to be comparable to similar measures presented by other companies. Rather, these measures are provided as additional information to complement those IFRS measures by providing further understanding of our results of operations from management's perspective. Accordingly, these measures should not be considered in isolation nor as a substitute for analysis of our financial information reported under IFRS. MindBeacon uses the non-IFRS measures "EBITDA" and "adjusted EBITDA". EBITDA and adjusted EBITDA are intended to represent an indication of MindBeacon's capacity to generate profit from operations before taking into account management's financing decisions and costs of consuming intangible and tangible capital assets, which vary according to their vintage, technological currency, and management's estimate of their useful life. EBITDA represents net profit or loss before income tax expenses, finance costs and depreciation and amortization. Finance costs represent interest expense on lease liabilities and accretion of non-cash interest expense on government loans. Adjusted EBITDA represents EBITDA before taking into account certain unusual expenses. We also believe that securities analysts, investors, and other interested parties frequently use non-IFRS measures in the evaluation of issuers. Our management also uses non-IFRS measures in order to facilitate operating performance comparisons from period to period, to prepare annual operating budgets and forecasts and to determine components of management compensation.

CAUTION REGARDING FORWARD-LOOKING INFORMATION

This press release contains "forward-looking information" and "forward-looking statements" (collectively, "forward-looking information") within the meaning of applicable securities laws. Forward-looking information can, but may not always, be identified by the use of words such as "anticipate", "plan", "continue", "estimate", "expect", "may", "will", "intend", "could", "might", "would", "should", "believe", and similar references to future periods or the negatives of these words and expressions. Statements containing forward-looking information are not historical facts but instead represent management's expectations, estimates and projections regarding future events or circumstances.

Forward-looking information is necessarily based on a number of opinions, estimates and assumptions that MindBeacon considered appropriate and reasonable as of the date such statements are made, and is subject to known and unknown risks, uncertainties, assumptions and other factors that may cause the actual results, performance or achievements to be materially different from those expressed or implied by such forward-looking information, including, but not limited to, the risk factors identified under "Risk Factors" in MindBeacon's Q3, 2021 MD&A and the AIF for the year ended December 31, 2020, particularly under the heading "Risk Factors" in the AIF, and in other filings that we have made and may make in the future with applicable securities authorities, including those available under the Company's profile on SEDAR at www.sedar.com. If any of these risks or uncertainties materialize, or if the opinions, estimates or assumptions underlying the forward-looking information prove incorrect, actual results or future events might vary materially from those anticipated in the forward-looking information. 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 information. No forward-looking information is a guarantee of future results. Accordingly, you should not place undue reliance on forward-looking information, which speaks only as of the date made. The forward-looking information contained in this news release represents MindBeacon's expectations as of the date hereof, and is subject to change after such date. However, MindBeacon disclaims any intention or obligation or undertaking to update or revise any forward-looking information whether as a result of new information, future events or otherwise, except as required under applicable securities laws. All of the forward-looking information contained in this news release is expressly qualified by the foregoing cautionary statements.

Unaudited Interim Condensed Consolidated Statements of Financial Position

(In thousands of Canadian dollars)
As at September 30, 2021 and December 31, 2020

	September 30, 2021	December 31, 2020
	$	$
Assets
Current
Cash and cash equivalents	53,942	67,010
Accounts receivable	2,983	3,903
Prepaid expenses	539	268
Total current assets	57,464	71,181
Property and equipment	278	684
Right–of–use assets	498	799
Intangible assets	3,155	1,809
Total assets	61,395	74,473
Liabilities and shareholders' equity
Current
Accounts payable and accrued liabilities	4,004	6,417
Deferred revenue	403	313
Current portion of lease liabilities	208	469
Total current liabilities	4,615	7,199
Lease liabilities	350	497
Government loans	1,299	607
Total liabilities	6,264	8,303
Shareholders' equity
Issued capital	93,884	96,555
Contributed surplus	2,277	422
Other capital reserve	(4)	-
Deficit	(41,026)	(30,807)
Total shareholders' equity	55,131	66,170
Total shareholders' equity and liabilities	61,395	74,473

Unaudited Interim Condensed Consolidated Statements of Loss and Comprehensive Loss
(In thousands of Canadian dollars, except per share amounts)
For the three and nine ended September 30, 2021 and 2020

	For the 3 months ended September 30			For the 9 months ended September 30
	2021	2020		2021	2020
	$	$		$	$
Revenue	5,234	3,153		15,876	6,633
Client care costs	2,932	1,606		8,621	3,636
	2,302	1,547		7,255	2,997
Operating expenses:
Selling and marketing	1,508	1,054		4,211	2,985
Product and development	1,700	863		3,733	2,089
General and administrative	2,986	1,366		8,030	3,102
Depreciation and amortization	447	259		1,383	792
Total operating expenses	6,641	3,542		17,357	8,968
Finance costs	49	42		117	104
Loss in fair value of warrant liability	-	437		-	487
Net loss for the period	(4,388)	(2,474)		(10,219)	(6,562)
Exchange differences on the translation of foreign operations	4	-		4	-
Net comprehensive loss for the period	(4,392)	(2,474)		(10,223)	(6,562)
Loss per share
Basic and diluted	($0.18)	($0.41)		($0.43)	($1.10)

Unaudited Interim Condensed Consolidated Statements of Cash Flows
(In thousands of Canadian dollars)
For the nine months ended September 30, 2021 and 2020

	For the 9 months ended September 30
	2021	2020
	$	$
Operating activities
Net loss for the period	(10,219)	(6,562)
Add / (deduct) items not involving cash:
Depreciation of property and equipment	618	175
Depreciation of right–of–use assets	301	423
Amortization of intangible assets	464	194
Share–based payment expense	442	75
Interest expense on lease liabilities	27	75
Non–cash interest expense on government loans	90	33
Non-cash government grant recognized on government loans	(128)	(260)
Loss on fair value of warrant liability	-	487
Working capital adjustments:
Decrease in accounts receivable and prepaid expenses	481	69
Increase in accounts payable and accrued liabilities and deferred revenue	663	1,628
Cash used in operating activities	(7,261)	(3,663)
Financing activities
Payments of principal and interest on lease liabilities	(435)	(475)
Repayment of over-allotment owing to selling shareholders	(3,124)	-
Share issuance costs	(390)	-
Proceeds from stock option exercised	178	-
Repurchase of common shares under NCIB	(975)	-
Proceeds from government loans	901	935
Cash (used in) provided by financing activities	(3,845)	460
Investing activities
Additions to property and equipment	(212)	(55)
Additions to intangible assets	(1,746)	(1,555)
Cash used in investing activities	(1,958)	(1,610)
Net decrease in cash and cash equivalents during the period	(13,064)	(4,813)
Cash and cash equivalents, beginning of period	67,010	11,471
Net foreign exchange differences	(4)	-
Cash and cash equivalents, end of period	53,942	6,658

SOURCE MindBeacon Holdings Inc.

Investor relations: David Galison, (p): [phone], (e): [email protected]; Media Relations: (e): [email protected]