EMERGE Commerce (ECOM) Investor update summary

Business Overview and Recent Performance

• Operates as an acquirer and operator of profitable e-commerce brands in Canada and the U.S., with CAD 30 million in revenue and CAD 1.6 million adjusted EBITDA, aiming for sub-CAD 2 million EBITDA this year.

• Gross margin increased to 39% from 36.5% year-over-year, with Q2 cash position at CAD 4.8 million, up from CAD 3.5 million a year ago.

• Portfolio includes leading brands in premium meat and seafood subscriptions, a 400,000-member golf business, and the recent acquisition of Viral Loops, a high-margin, cash flow positive B2B business.

• Viral Loops acquisition was strategic for boosting EBITDA and cash flow, supporting the successful refinancing.

Debt Refinancing and Improved Capital Structure

• Secured a CAD 5.85 million, seven-year facility with Desjardins, reducing the interest rate from 11% to 7.3% and extending debt maturity to September 2033.

• Year one cash flow savings estimated at CAD 400,000, with total estimated savings of CAD 3.6 million over the term, primarily allocated to debt reduction and supporting future growth initiatives.

• Access to a CAD 1 million revolving line of credit for working capital, guaranteed by Export Development Canada, at a current rate of 6.45%.

• Refinancing eliminates recurring costs from previous short-term cycles and introduces an interest-bearing account for cash balances.

• Termination fee for the previous facility settled through issuance of 800,891 common shares, valued at CAD 67,275, subject to a four-month hold period and exchange approval.

Financial Strategy and Capital Allocation

• Focus on methodically reducing debt, improving debt-to-EBITDA ratio, and enhancing cash flow.

• Convertible debenture holders converted half their notes in early 2024; remaining balance is under review for further deleveraging.

• Acquisition strategy targets cash flow positive, low-risk, accretive deals in core verticals, avoiding large, high-risk transactions.

• Additional disclosure and transparency planned for brand-level financials as the company matures.