Market Newsdesk

AUBURN HILLS, Mich., Nov. 16, 2020 (GLOBE NEWSWIRE) — SPAR Group, Inc. (Nasdaq: SGRP), a leading supplier of retail merchandising, business technology and other marketing services in 10 countries throughout North America, Latin America, Asia Pacific and Africa, today announced financial results for the three- and nine-month periods ended September 30, 2020.

Highlights for the three- and nine-month periods ended September 30, 2020, as compared to the same periods during the prior year are as follows:

• Revenue for the third quarter of 2020 decreased $7.6 million, or 11.4 percent, to $58.9 million versus the prior year’s third quarter. Revenues increased 2.1 percent for the domestic operations; however, international operations decreased 20.4 percent.
• Revenue for the nine-month period ending September 30, 2020 decreased $20.7 million, or 10.8 percent, to $171.2 million. Revenues decreased 0.9 percent and 16.8 percent for domestic and international operations, respectively.
• Operating income for the third quarter of 2020 increased $0.3 million, or 9.6 percent, to $3.3 million, compared to $3.0 million for the same period last year.
• Operating income for the nine-month period ending September 30, 2020 decreased $2.2 million to $6.8 million, compared to $9.0 million for the same period last year. Domestic operations decreased $2.7 million, while international increased $0.5 million.
• Net income attributable to SPAR Group for the third quarter of 2020 was $1.1 million, or $0.05 per diluted share, compared to $0.9 million, or $0.04 per diluted share, during the third quarter of 2019.
• Net income attributable to SPAR Group for the nine-month period ending September 30, 2020 was $1.3 million, or $0.06 per diluted share, compared to $3.0 million, or $0.15 per diluted share, during the same period last year.

Domestic revenue during the third quarter recovered 22% sequentially from the second quarter, showing gradual improvements throughout each month of the quarter. Domestic revenue benefited from projects that were delayed earlier in the year, as well as increased demand for store reset and remodeling services in certain end markets. The improved domestic revenue performance was partially offset by the lower levels of customer activity in certain end markets related to COVID 19. The pandemic had a greater impact on international markets, with lower levels of customer activity accounting for approximately one third of the 20% decrease in international revenue. The remaining two thirds of the decrease in international revenue was related to foreign currency translation. As a result of our earlier cuts to operational expenses, discretionary spending and a delay in non-essential investments, we were able to offset a decrease in revenue and increasing labor costs to post flat comparisons with the prior year.

“We are encouraged to see a partial recovery in financial performance during the third quarter and are also encouraged that we have been able to maintain strong customer relationships. There is still a great deal of uncertainty about the pandemic’s potential impact on customer activity levels in the near term. Combined with increasing costs of labor, we are continuing a cautious approach to spending and maintaining our efforts to preserve the strength of our balance sheet and liquidity,” said Kori Belzer, chief operating officer of SPAR Group.

Financial Results by Geography (in 000’s
, except per share data
)

	Three Months Ended September 30 ,							%		Nine Months Ended September 30 ,							%
Revenue:	20 20				20 19			Change		20 20				201 9			Change
International	$	31,824			$	39,960		(20.4%)		$	98,704			$	118,681		(16.8%)
Domestic		27,041				26,480		2.1%			72,453				73,142		(0.9%)
Total	$	58,865			$	66,440		(11.4 %)		$	171,15 7			$	191,823		( 10.8 %)

	Three Months Ended September 30 ,							%		Nine Months Ended September 30 ,							%
Operating Income/(Loss) :	20 20				20 19			Change		20 20				20 19			Change
International	$	2,042			$	1,774		15.1%		$	4,859			$	4,381		10.9%
Domestic		1,299				1,273		2.0%			1,924				4,626		(58.4%)
Total	$	3,341			$	3,047		9.6%		$	6,78 3			$	9,007		(24.7%)

	Three Months Ended September 30 ,									Nine Months Ended September 30 ,
Net i ncome (loss):	20 20				201 9					20 20				201 9
International	$	738			$	360		105%		$	1,365			$	861		58.5%
Domestic		406				547		(25.8%)			(28	)			2,184		(101.3%)
Total	$	1,14 4			$	907		26.1%		$	1,33 7			$	3,045		(56.1%)
Earnings Per Basic and Diluted S hare:
	$	0.0 5			$	0.04				$	0.0 6			$	0.1 5

Margin Profile by Geography

	Three Months Ended September 30 ,			Basis Point		Nine Months Ended September 30 ,			Basis Point
Gross Margin:	20 20		201 9	Change		20 20		201 9	Change
International	18.6%		16.1%	250		17.7%		16.1%	160
Domestic	22.5%		22.7%	(20)		22.4%		24.7%	(230)
Total	20.4 %		18.7 %	170		19. 7 %		1 9.4 %	30

Opr . Income	Three Months Ended September 30 ,			Basis Point		Nine Months Ended September 30 ,			Basis Point
as a % of Sales	20 20		201 9	Change		20 20		201 9	Change
International	6.4%		4.4%	200		4.9%		3.7%	120
Domestic	4.8%		4.8%	–		2.7%		6.3%	(360)
Total	5.7 %		4 .6 %	120		4.0 %		4.7 %	(70)

International gross profit margin for the three- and nine-month periods ended September 30, 2020 were 18.6% and 17.7%, respectively, compared to 16.1% and 16.1%, respectively, for the same periods in 2019. For the three-month period ended September 30, 2020 the international subsidiaries, China and Brazil experienced favorable gross margin improvement year over year. All other international subsidiaries experienced gross margin pressure compared to the same period last year.

Domestic gross profit margin for the three-month period ended September 30, 2020, was 22.5% compared to 22.7% for the same period in 2019. For the nine-month period ended September 30, 2020, domestic gross profit margin was 22.4% compared to 24.7% for the same period in 2019. The year-over-year decrease in domestic gross profit margin was primarily attributable to lower sales, wage pressure, and an unfavorable mix in lower gross margin project work.

Balance Sheet as of
September
30, 2020

At September 30, 2020, cash and cash equivalents totaled $15.8 million. Working capital was $19.9 million and current ratio was 1.4 to 1. Total current assets and total assets were $67.3 million and $82.5 million, respectively. Total liabilities were $50.2 million and total equity was $32.3 million at September 30, 2020.

About SPAR Group

SPAR Group, Inc. is a diversified international merchandising and marketing services Company and provides a broad array of services worldwide to help companies improve their sales, operating efficiency and profits at retail locations. The Company provides merchandising and other marketing services to manufacturers, distributors and retailers worldwide and coordinates the operations through the use of multi-lingual proprietary technology which drives the logistics, communication and reporting for global operations and customers. SPAR works primarily in mass merchandiser, office supply, value, grocery, drug, independent, convenience, home improvement and electronics stores; as well as providing furniture and other product assembly services, audit services, in-store events, technology services and marketing research. The Company has supplied projects and product services in the United States since certain of its predecessors were formed in 1979 and internationally since the Company acquired its first international subsidiary in Japan, in May of 2001. Product services include restocking and adding new products, removing spoiled or outdated products, resetting categories “on the shelf” in accordance with client or store schematics, confirming and replacing shelf tags, setting new sale or promotional product displays and advertising, replenishing kiosks, providing in-store event staffing and providing assembly services in stores, homes and offices. Audit services include price audits, point of sale audits, out of stock audits, intercept surveys and planogram audits. Other merchandising services include whole store or departmental product sets or resets (including new store openings), new product launches, in-store demonstrations, special seasonal or promotional merchandising, focused product support and product recalls. The Company currently does business in ten countries that encompass approximately 50% of the total world population through its operations in the United States, Canada, Japan, South Africa, India, China, Australia, Mexico, Brazil and Turkey. For more information, please visit the SPAR Group’s website at http://www.sparinc.com.

Forward-Looking Statements

This Press Release contains and the above referenced recorded comments will contain “forward-looking statements” made by SPAR Group, Inc. (“SGRP”, and together with its subsidiaries, the “SPAR Group” or the “Company”), will be filed shortly in a Current Report on Form 10-Q by SGRP with the Securities and Exchange Commission (the “SEC”). There also are “forward looking statements” contained in SGRP’s Annual Report on Form 10-K/A for the year ended December 31, 2019 (the “Annual Report”), which was filed by SGRP with the SEC on April 14, 2020, and SGRP’s definitive Proxy Statement respecting its Annual Meeting of Stockholders held on May 13, 2020 (the “Proxy Statement”), which SGRP filed with the SEC on May 1, 2020, and SGRP’s Quarterly Reports on Form 10-Q, Current Reports on Form 8-K and other reports and statements as and when filed with the SEC (including the Annual Report and the Proxy Statement, each a “SEC Report”). “Forward-looking statements” are defined in Section 27A of the Securities Act of 1933, as amended (the “Securities Act”) and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), and other applicable federal and state securities laws, rules and regulations, as amended (together with the Securities Act and Exchange Act, collectively, “Securities Laws”).

The forward-looking statements made by the Company in this Press Release may include (without limitation) any expectations, guidance or other information respecting the pursuit or achievement of the Company’s corporate strategic objectives (growth, customer value, employee development, greater productivity & efficiency, and earnings per share). Building upon the Company’s strong foundation, leveraging compatible global opportunities, growing the Company’s client base and contacts, continuing to strengthen the Company’s balance sheet, growing revenues and improving profitability through organic growth, new business developments and strategic acquisitions, and continuing to control costs. The Company’s forward-looking statements also include, in particular and without limitation, those made in “Business”, “Risk Factors”, “Legal Proceedings”, and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in the Annual Report. You can identify forward-looking statements in such information by the Company’s use of terms such as “may”, “will”, “expect”, “intend”, “believe”, “estimate”, “anticipate”, “continue”, “plan”, “project” or similar words or variations or negatives of those words.

You should carefully consider (and not place undue reliance on) the Company’s forward-looking statements, risk factors and the other risks, cautions and information made, contained or noted in or incorporated by reference into this Press Release, the Annual Report, the Proxy Statement and the other applicable SEC Reports that could cause the Company’s actual performance or condition (including its assets, business, clients, capital, cash flow, credit, expenses, financial condition, income, liabilities, liquidity, locations, marketing, operations, performance, prospects, sales, strategies, taxation or other achievement, results, risks, trends or condition) to differ materially from the performance or condition planned, intended, anticipated, estimated or otherwise expected by the Company (collectively, “expectations”) and described in the information in the Company’s forward-looking and other statements, whether express or implied. Although the Company believes them to be reasonable, those expectations involve known and unknown risks, uncertainties and other unpredictable factors (many of which are beyond the Company’s control) that could cause those expectations to fail to occur or be realized or such actual performance or condition to be materially and adversely different from the Company’s expectations. In addition, new risks and uncertainties arise from time to time, and it is impossible for the Company to predict these matters or how they may arise or affect the Company. Accordingly, the Company cannot assure you that its expectations will be achieved in whole or in part, that the Company has identified all potential risks, or that the Company can successfully avoid or mitigate such risks in whole or in part, any of which could be significant and materially adverse to the Company and the value of your investment in SGRP’s Common Stock.

You should carefully review the risk factors described in the Annual Report (See Item 1A – Risk Factors) and any other risks, cautions or information made, contained or noted in or incorporated by reference into the Annual Report, the Proxy Statement or other applicable SEC Report. All forward-looking and other statements or information attributable to the Company or persons acting on its behalf are expressly subject to and qualified by all such risk factors and other risks, cautions and information.

The Company does not intend or promise, and the Company expressly disclaims any obligation, to publicly update or revise any forward-looking statements, risk factors or other risks, cautions or information (in whole or in part), whether as a result of new information, risks or uncertainties, future events or recognition or otherwise, except as and to the extent required by applicable law.

SPAR Group, Inc. and Subsidiaries Condensed Consolidated Statements of Income  and Comprehensive (Loss) Income (unaudited) (In thousands, except share and per share data)
	Three Months Ended								Nine Months Ended
	September 30,								September 30,
	2020				2019				2020				2019
Net revenues	$	58,865			$	66,440			$	171,157			$	191,823
Cost of revenues		46,849				53,929				137,478				154,614
Gross profit		12,016				12,511				33,679				37,209
Selling, general and administrative expense		8,145				8,940				25,287				26,639
Depreciation and amortization		530				524				1,60 9				1,563
Operating income		3,341				3,047				6,783				9,007
Interest expense		16 9				216				482				605
Other income, net		(143	)			(11	)			( 201	)			(268	)
Income before income tax expense		3,315				2,842				6,502				8,670
Income tax expense		870				760				1,830				2,745
Net income		2,445				2,082				4,672				5,925
Net (income) attributable to non-controlling interest		(1,301	)			(1,175	)			(3,335	)			(2,880	)
Net income attributable to SPAR Group, Inc.	$	1,144			$	907			$	1 ,337			$	3,045
Basic and diluted income per common share:	$	0.0 5			$	0.04			$	0.0 6			$	0.15
Weighted average common shares – basic		21,110				20,975				21,1 0 8				20,856
Weighted average common shares – diluted		21,147				21,061				21,1 52				21,096
Net income	$	2,445			$	2,082			$	4,672			$	5,925
Other comprehensive income (loss):
Foreign currency translation adjustments		71				(811	)			(3,908	)			(644	)
Comprehensive income		2,516				1,271				764				5,281
Comprehensive (income) attributable to non-controlling interest		(1,326	)			(815	)			(871	)			(2,623	)
Comprehensive income (loss) attributable to SPAR Group, Inc.	$	1,190			$	456			$	(107	)		$	2,658

SPAR Group, Inc. and Subsidiaries Condensed Consolidated Balance Sheets (In thousands, except share and per share data)
	September 30,				December 31,
	2020				2019
	(Unaudited)
Assets
Current assets:
Cash and cash equivalents	$	15,750			$	10,458
Accounts receivable, net		47,366				49,299
Prepaid expenses and other current assets		4,212				2,404
Total current assets		67,328				62,161
Property and equipment, net		2,84 6				2,848
Operating lease right-of-use assets		2,742				4,948
Goodwill		3,75 3				3,784
Intangible assets, net		2,381				2,796
Deferred income taxes		1, 388				1,883
Other assets		2,033				1,115
Total assets	$	82,471			$	79,535
Liabilities and equity
Current liabilities:
Accounts payable	$	8,377			$	9,186
Accrued expenses and other current liabilities		21,186				18,548
Due to affiliates		3,475				4,666
Customer incentives and deposits		1,052				594
Lines of credit and short-term loans		12,104				8,932
Current portion of operating lease liabilities		1,145				2,828
Total current liabilities		47,339				44,754
Operating lease liabilities, less current portion		1,597				2,120
Long-term debt and other liabilities		1,300				1,300
Total liabilities		50,236				48,174
Commitments and contingencies – See Note 8
Equity:
SPAR Group, Inc. equity
Preferred stock, $.01 par value: Authorized and available shares– 2,445,598 Issued and outstanding shares – None – Balance at June 30, 2020 and December 31, 2019		–				–
Common stock, $.01 par value: Authorized shares – 47,000,000 Issued shares – 21,111,861 – Balance at September 30, 2020, and 21,108,352 – December 31, 2019		211				211
Treasury stock, at cost 1,697 shares – Balance at September 30, 2020, and December 31, 2019		(2	)			(2	)
Additional paid-in capital		16,621				16,511
Accumulated other comprehensive loss		(5, 060	)			(3,616	)
Retained earnings		7 ,18 8				5,851
Total SPAR Group, Inc. equity		18,958				18,955
Non-controlling interest		13,277				12,406
Total equity		32,235				31,361
Total liabilities and equity	$	82,471			$	79,535

Company Contact:
Clint Morrow
(248) 364-8412

SEATTLE, Nov. 16, 2020 (GLOBE NEWSWIRE) — The leadership teams from PropTech Acquisition Corporation (NASDAQ: PTAC) (“PropTech” or “PTAC”), a special purpose acquisition company targeting businesses in the real estate technology industry, and Porch.com, Inc. (“Porch” or “the Company”), a leading software and services platform reinventing the home services industry, will host a virtual investor day on Tuesday, December 1, 2020 from 2:00 p.m. to 4:00 p.m. Eastern time.

Attendees will have the opportunity to hear from new Porch team members and customers as well as gain insights into the Company’s product roadmap.

All are invited to listen to the event by registering here. A replay of the investor day will also be available on Porch’s corporate website.

PropTech
and Porch Business Combination Summary

On July 30, 2020, Porch entered into a definitive agreement with PropTech Acquisition Corporation (NASDAQ: PTAC) (“PropTech”), a special purpose acquisition company targeting businesses in the real estate technology industry, which would result in Porch becoming a publicly listed company. Upon closing of the transaction, which is expected to occur in Q4 2020, PropTech will be renamed Porch Group, Inc. and is expected to remain listed on the Nasdaq Capital Market under the new ticker symbol “PRCH.”

About Porch
Group

Seattle-based Porch, the vertical software platform for the home, provides software and services to approximately 10,500 home services companies, such as home inspectors, moving companies, real estate agencies, utility companies, warranty companies and others. Porch helps these service providers grow their business and improve their customer experience. As a way to pay for the software and services, these companies connect their homebuyers to Porch, who in turn make the moving process easier, helping consumers save time and make better decisions about critical services, including insurance, moving, security, TV/internet, home repair and improvement, and more. To learn more about Porch, visit porchgroup.com.

About
PropTech
Acquisition Corporation

PropTech Acquisition Corporation is a special purpose acquisition company formed for the purpose of effecting a merger, capital stock exchange, asset acquisition, stock purchase, reorganization or similar business combination with one or more businesses focused on real estate technology. For more information, visit proptechacquisition.com.

Forward-Looking Statements

Certain statements in this press release may be considered “forward-looking statements” within the meaning of the “safe harbor” provisions of the United States Private Securities Litigation Reform Act of 1995. Forward-looking statements generally relate to future events or PTAC’s or Porch’s future financial or operating performance. These statements are based on the beliefs and assumptions of the management of PTAC and Porch. Although PTAC and Porch believe that their respective plans, intentions and expectations reflected in or suggested by these forward-looking statements are reasonable, neither PTAC nor Porch can assure you that either will achieve or realize these plans, intentions or expectations. Forward-looking statements are inherently subject to risks, uncertainties and assumptions. Generally, statements that are not historical facts, including statements concerning possible or assumed future actions, business strategies, events or results of operations, are forward-looking statements. These statements may be preceded by, followed by or include the words “believes,” “estimates,” “expects,” “projects,” “forecasts,” “may,” “will,” “should,” “seeks,” “plans,” “scheduled,” “anticipates,” “intends” or similar expressions. Forward-looking statements contained in this press release include, but are not limited to, statements about the anticipated merger closing timing and the ability of PTAC and Porch prior to the merger, and the combined company following the merger (“New Porch”), to: access, collect and use personal data about consumers; execute its business strategy, including monetization of services provided and expansions in and into existing and new lines of business; anticipate the impact of the coronavirus disease 2019 (“COVID-19”) pandemic and its effect on business and financial conditions; manage risks associated with operational changes in response to the COVID-19 pandemic; meet the closing conditions to the merger, including approval by stockholders of PTAC and Porch on the expected terms and schedule; realize the benefits expected from the proposed merger; anticipate the uncertainties inherent in the development of new business lines and business strategies; retain and hire necessary employees; increase brand awareness; attract, train and retain effective officers, key employees or directors; upgrade and maintain information technology systems; acquire and protect intellectual property; meet future liquidity requirements and comply with restrictive covenants related to long-term indebtedness; effectively respond to general economic and business conditions; maintain the listing on, or the delisting of PTAC’s or New Porch’s securities from, NASDAQ or an inability to have our securities listed on the NASDAQ or another national securities exchange following the merger; obtain additional capital, including use of the debt market; enhance future operating and financial results; successfully execute expansion plans; anticipate rapid technological changes; comply with laws and regulations applicable to its business, including laws and regulations related to data privacy and insurance operations; stay abreast of modified or new laws and regulations applying to its business, including copyright and privacy regulation; anticipate the impact of, and response to, new accounting standards; respond to fluctuations in foreign currency exchange rates and political unrest and regulatory changes in international markets from various events; anticipate the significance and timing of contractual obligations; maintain key strategic relationships with partners and distributors; respond to uncertainties associated with product and service development and market acceptance; anticipate the impact of new U.S. federal income tax law, including the impact on deferred tax assets; successfully defend litigation; successfully deploy the proceeds from the merger; and other risks and uncertainties set forth in the section entitled “Risk Factors” and “Cautionary Note Regarding Forward-Looking Statements” in PTAC’s Annual Report on Form 10 K for the fiscal year ended December 31, 2019, the section entitled “Risk Factors” in PTAC’s Quarterly Reports on Form 10-Q for the quarterly periods ended March 31, 2020, and June 30, 2020 and September 30, 2020, the sections entitled “Risk Factors” and “Forward-Looking Statements; Market, Ranking and Other Industry Data” in the preliminary proxy statement/consent solicitation statement/prospectus filed by PTAC and other documents of PTAC filed, or to be filed, with the SEC. Nothing in this press release should be regarded as a representation by any person that the forward-looking statements set forth herein will be achieved or that any of the contemplated results of such forward looking statements will be achieved. You should not place undue reliance on forward-looking statements, which speak only as of the date they are made. Neither PTAC nor Porch undertakes any duty to update these forward-looking statements, except as otherwise required by law.

Participants in the Solicitation

PTAC and its directors and executive officers may be deemed participants in the solicitation of proxies from PTAC’s shareholders with respect to the proposed business combination. A list of the names of those directors and executive officers and a description of their interests in PTAC is contained in PTAC’s annual report on Form 10 K for the fiscal year ended December 31, 2019, which was filed with the SEC and is available free of charge at the SEC’s web site at www.sec.gov. Additional information regarding the interests of such participants is set forth in the preliminary proxy statement/consent solicitation statement/prospectus for the proposed business combination and, once available, the definitive proxy statement/consent solicitation statement/prospectus.

Porch and its directors and executive officers may also be deemed to be participants in the solicitation of proxies from the shareholders of PTAC in connection with the proposed business combination. A list of the names of such directors and executive officers and information regarding their interests in the proposed business combination is set forth in the preliminary proxy statement/consent solicitation statement/prospectus for the proposed business combination and, once available, the definitive proxy statement/consent solicitation statement/prospectus.

Additional Information About the Proposed Business Combination and Where to Find It

The business combination will be submitted to stockholders of PTAC for their consideration. PTAC has filed a registration statement on Form S-4 with the SEC containing a preliminary proxy statement and a preliminary prospectus of PTAC and a preliminary consent solicitation statement of Porch, and after the registration statement is declared effective, PTAC will mail a definitive proxy statement/consent solicitation statement/prospectus relating to the proposed business combination to its shareholders. This press release does not contain all the information that should be considered concerning the proposed business combination and is not intended to form the basis of any investment decision or any other decision in respect of the business combination. PTAC’s shareholders and other interested persons are advised to read the preliminary proxy statement/consent solicitation statement/prospectus and, when available, the amendments thereto and the definitive proxy statement/consent solicitation statement/prospectus and other documents filed in connection with the proposed business combination, as these materials will contain important information about Porch, PTAC and the business combination. When available, the definitive proxy statement/consent solicitation statement/prospectus and other relevant materials for the proposed business combination will be mailed to shareholders of PTAC as of a record date to be established for voting on the proposed business combination. Shareholders will also be able to obtain copies of the preliminary proxy statement/consent solicitation statement/prospectus, and, when available, the definitive proxy statement/consent solicitation statement/prospectus and other documents filed with the SEC, without charge, at the SEC’s website at www.sec.gov. This press release does not constitute an offer to sell or the solicitation of an offer to buy any securities, or a solicitation of any vote or approval, nor shall there be any sale of securities in any jurisdiction in which such offer, solicitation or sale would be unlawful prior to the registration or qualification under the securities laws of any such jurisdiction. No offering of securities shall be made except by means of a prospectus meeting the requirements of Section 10 of the U.S. Securities Act of 1933, as amended.

Investor Relations
Contact
:

Gateway Investor Relations
Cody Slach, Matt Glover
(949) 574-3860
[email protected]

PropTech
Contact
:

[email protected]

SOUTH SAN FRANCISCO, Calif., Nov. 16, 2020 (GLOBE NEWSWIRE) — Sunesis Pharmaceuticals, Inc. (Nasdaq: SNSS) today reported financial results for the third quarter ended September 30, 2020. Loss from operations for the three months ended September 30, 2020 was $4.5 million. As of September 30, 2020, cash and cash equivalents totaled $26.0 million. During the third quarter, the Company raised approximately $12.6 million in net proceeds from an underwritten public offering of its common stock and repaid its outstanding debt.

“Our number one priority is our review of strategic alternatives while continuing to build value in our internal and partnered programs” said Dayton Misfeldt, Interim Chief Executive Officer of Sunesis. “We have engaged MTS Health Partners, L.P., as our financial advisor, as we are committed to ensuring we find a value-creating path for the company.”

Recent Highlights

Presented


SNS-510


Preclinical Data


from Ongoing Program


at the 32



^nd



EORTC-NCI-AACR Symposium on Molecular Targets and Cancer Therapies.
In October 2020, Sunesis presented preclinical data on its first-in-class PDK-1 inhibitor SNS-510. The observed synergies in the preclinical study support a potential role of PDK-1 inhibition to reverse resistance and/or improve activity of inhibitors of CDK4/6 in breast cancer, BCL2 in lymphoma and in KRAS G12C mutated cancers. Characterization of SNS-510 is ongoing in IND-enabling studies.

Bolstered Balance Sheet with Completion


of Public Offering


and Retiring Debt


.
In July 2020, Sunesis completed an underwritten public offering of shares of its common stock with net proceeds of approximately $12.6 million. Also in July, the Company repaid its outstanding debt with Silicon Valley Bank.

Announced Review of Strategic Alternatives.
In July 2020, the Company announced plans to review strategic alternatives to maximize shareholder value that can include asset in-licensing, partnering, and mergers and acquisitions. The Board of Directors has engaged MTS Health Partners to assist in the strategic review process. There can be no assurance that the strategic review will result in any transaction or other outcome. The Company does not currently intend to publicly discuss or disclose further developments of the strategic review unless and until its Board of Directors has approved a transaction or otherwise determined that further disclosure is appropriate.

Announced Reduction in Workforce to Streamline Resources


.
In July 2020, Sunesis announced a reduction in workforce of approximately 30% to right size the organization to achieve its objectives and preserve cash resources.

Financial Highlights

• Cash and cash equivalents totaled $26.0 million as of September 30, 2020, as compared to cash and cash equivalents and restricted cash totaled $34.6 million as of December 31, 2019. The decrease of $8.6 million was due to cash used in operating activities, mainly resulting from our net loss of $16.8 million for the nine months ended September 30, 2020, the $5.5 million principal payment of the SVB Loan Agreement, offset by the $12.6 million net proceeds from issuance of common stock and adjustments for non-cash items of $1.1 million.
• Total revenue was nil and $0.1 million for the three and nine months ended September 30, 2020, respectively, and nil for the comparable periods in 2019. The revenue during the nine months ended September 30, 2020 was primarily due to revenue recognized from the upfront payment received under the license agreement with Denovo.
• Research and development expense was $2.2 million and $10.1 million for the three and nine months ended September 30, 2020, respectively, compared to $3.5 million and $10.5 million for the same periods in 2019. The decrease of $1.3 million between the comparable three months periods was primarily due to a $0.7 million decrease in clinical expenses and a $0.4 million decrease in professional service expenses due to the decision not to advance our clinical trial for vecabrutinib into Phase 2. The decrease is further due to a $0.2 million decrease in salary and personnel expenses due to lower headcount. The $0.4 million decrease in the comparable nine months period was primarily due to a $0.9 million decrease in salary and personnel expenses due to lower headcount and a $0.6 million decrease in clinical research organization (“CRO”) related expenses, partially offset by a $1.3 million increase in professional services mainly due to progress in the SNS-510 studies.
• General and administrative expense was $2.3 million and $6.6 million for the three and nine months ended September 30, 2020, respectively, compared to $2.5 million and $7.5 million for the same periods in 2019. The decrease of $0.2 million between the comparable three months periods was primarily due to a $0.4 million decrease in salary and personnel expenses due to lower headcount and less business-related travel, offset by a $0.1 million increase in professional service expenses and a $0.1 million increase in Delaware franchise tax due to reverse split. The $0.9 million decrease in the comparable nine months periods was primarily due to a $0.6 million decrease in salary and personnel expenses due to lower headcount and less business-related travels and a $0.3 million decrease in professional service expenses due to lower patent expenses.
• Interest expense was $0.2 million and $0.3 million for the three and nine months ended September 30, 2020, compared to $0.1 million and $0.4 million for the same periods in 2019, respectively. The increase in the interest expenses in the comparable three months periods was mainly due to the final payment related to the repayment of the outstanding debt under the SVB Loan Agreement in July 2020. The decrease in the comparable nine months periods was mainly due to lower interest paid due to the lower interest rate on the lower principal amount under the SVB Loan Agreement as compared to our prior loan agreement with Western Alliance Bank and Solar Capital Ltd. in 2019.
• Net cash used in operating activities was $15.8 million for the nine months ended September 30, 2020, as compared to $18.4 million for the same period in 2019. Net cash used in operating activities in the nine months ended September 30, 2020, resulted primarily from the net loss of $16.8 million, partially offset by adjustments for non-cash items of $1.1 million. Net cash used in operating activities in the nine months ended September 30, 2019, resulted primarily from the net loss of $18.0 million and changes in operating assets and liabilities of $1.8 million, offset by adjustments for non-cash items of $1.4 million.

Conference Call Information

Sunesis will host a conference call today at 4:30 p.m. Eastern Time. The call can be accessed by dialing (844) 296-7720 (U.S. and Canada) or (574) 990-1148 (international) and entering passcode 1776248. To access the live audio webcast, or the subsequent archived recording, visit the “Investors and Media – Calendar of Events” section of the Sunesis website at www.sunesis.com. The webcast will be recorded and available for replay on the company’s website for two weeks.

About Sunesis Pharmaceuticals

Sunesis is a biopharmaceutical company developing novel targeted inhibitors for the treatment of hematologic and solid cancers. Sunesis has built an experienced drug development organization committed to improving the lives of people with cancer. The Company is focused on advancing its novel kinase inhibitor pipeline, including first-in-class PDK1 inhibitor SNS-510. SNS-510 is in IND-enabling studies.

For additional information on Sunesis, please visit www.sunesis.com.

SUNESIS and the logos are trademarks of Sunesis Pharmaceuticals, Inc.

Forward-Looking Statements

This press release contains forward-looking statements, including statements related to Sunesis’ continued development and potential of its kinase inhibitor pipeline, including
additional
IND enabling studies
related to SNS-510;
Sunesis’ ability to maximize stockholder value through Sunesis’ strategic review process;
and the
sufficiency of
Sunesis’
cash resources and financial position. Words such as “expect,” “will,” “look forward,” and similar expressions are intended to identify forward-looking statements. These forward-looking statements are based upon Sunesis’ current expectations. Forward-looking statements involve risks and uncertainties. Sunesis’ actual results and the timing of events could differ materially from those anticipated in such forward-looking statements as a result of these risks and uncertainties. These and other risk factors are discussed under “Risk Factors” in Sunesis’
Quarterly Report on Form 10-Q for the quarter ended
September
30
, 2020
 and Sunesis’ other filings with the Securities and Exchange Commission. Sunesis expressly disclaims any obligation or undertaking to release publicly any updates or revisions to any forward-looking statements contained herein to reflect any change in Sunesis’ expectations with regard thereto or any change in events, conditions or circumstances on which any such statements are based.

	SUNESIS PHARMACEUTICALS, INC.
	CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
	AND COMPREHENSIVE LOSS
	(In thousands, except per share amounts)
		Three months ended September 30,								Nine months ended September 30,
			2020				2019				2020				2019
		(Unaudited)								(Unaudited)
Revenue:
	License and other revenue	$	–			$	–			$	120			$	–
Total revenues			–				–				120				–
Operating expenses:
	Research and development		2,157				3,534				10,128				10,465
	General and administrative		2,315				2,507				6,607				7,469
Total operating expenses			4,472				6,041				16,735				17,934
Loss from operations			(4,472	)			(6,041	)			(16,615	)			(17,934	)
Interest expense			(167	)			(71	)			(302	)			(443	)
	Other income, net		1				170				114				334
Net loss			(4,638	)			(5,942	)			(16,803	)			(18,043	)
	Unrealized loss on available-for-sale securities		–				–				(1	)			–
Comprehensive loss		$	(4,638	)		$	(5,942	)		$	(16,804	)		$	(18,043	)
Basic and diluted loss per common share:
	Net loss	$	(4,638	)		$	(5,942	)		$	(16,803	)		$	(18,043	)
	Shares used in computing basic and diluted loss per common share(1)		15,929				10,507				12,748				7,897
Basic and diluted loss per common share(1)		$	(0.29	)		$	(0.57	)		$	(1.32	)		$	(2.28	)
Note 1: Share and per-share data in the condensed consolidated statement of operations and comprehensive loss have been adjusted to give retroactive effect to the Reverse Split for all periods presented.

SUNESIS PHARMACEUTICALS, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands)
	September 30,				December 31,
	2020				2019
	(Unaudited)				(Note 2)
ASSETS
Current assets:
Cash and cash equivalents	$	26,048			$	12,761
Restricted cash		–				5,500
Marketable securities		–				16,364
Prepaids and other current assets		1,576				1,697
Total current assets		27,624				36,322
Property and equipment, net		–				3
Operating lease right-of-use asset		409				817
Other assets		–				98
Total assets	$	28,033			$	37,240
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable	$	150			$	791
Accrued clinical expense		380				521
Accrued compensation		901				985
Other accrued liabilities		1,727				1,109
Notes payable		–				5,465
Operating lease liability – current		409				545
Total current liabilities		3,567				9,416
Other liabilities		–				9
Operating lease liability – long term		–				272
Total liabilities		3,567				9,697
Stockholders’ equity:
Convertible preferred stock		5,545				11,769
Common stock		2				11
Additional paid-in capital		718,522				698,562
Accumulated other comprehensive income		–				1
Accumulated deficit		(699,603	)			(682,800	)
Total stockholders’ equity		24,466				27,543
Total liabilities and stockholders’ equity	$	28,033			$	37,240
Note 2: The consolidated balance sheet as of December 31, 2019 (as adjusted for the Reverse Split), has been derived from the audited financial statements as of that date included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2019.

Investor and Media Inquiries: Maeve Conneighton Argot Partners 212-600-1902

Par Hyare Sunesis Pharmaceuticals Inc. 650-266-3784

First Quarter Fiscal Year 2021

• Record revenue increased 14.1% year-over-year to $108.8 million
• Net loss was $3.4 million (non-GAAP adjusted net income of $5.2 million)
• Adjusted EBITDA increased 41.3% to $15.6 million
• Eight new logos won and two new contact centers opened
• Company raises guidance for fiscal year 2021

WASHINGTON, Nov. 16, 2020 (GLOBE NEWSWIRE) — IBEX Limited (“ibex”), a leading global provider of outsourced CX solutions, today announced financial results for its fiscal quarter ended September 30, 2020.

“We achieved record first quarter 2021 financial results for our first quarter as a public company – driving 14.1% year-over-year revenue growth, and positioning us to raise our fiscal year 2021 guidance,” said Bob Dechant, Chief Executive Officer of ibex. “Our results are a reflection of our success with New Economy clients and large blue chip clients who are shifting their customer interactions to digital. Our broad differentiated BPO 2.0 solutions are enabling us to rapidly win strategic new logo clients across key verticals, resulting in record growth.”

Dechant continued, “Our Wave X technologies played a key role in enabling us to win new opportunities as well as had a big impact on our operational performance for our clients. The market is looking for tech-led solutions to enable digital transformation and ibex is well positioned to continue to win.”

First Quarter Fiscal Year 2021 Financial Highlights:

Revenue

• Revenue increased 14.1% to $108.8 million, compared to $95.3 million in the prior year quarter.

Net Income / (Loss)

• Net loss was $3.4 million, including $4.4 million of non-recurring costs, compared to net income of $2.3 million in the prior year quarter.
• Net margin was (3.1)%, compared to 2.4% in the prior year quarter.
• Non-GAAP adjusted net income increased to $5.2 million, compared to $3.1 million in the prior year quarter.

Adjusted EBITDA

• Non-GAAP adjusted EBITDA increased to $15.6 million, compared to $11.0 million in the prior year quarter.
• Non-GAAP adjusted EBITDA margin increased to 14.3%, compared to 11.6% in the prior year quarter.

Earnings Per Share

• IFRS basic and fully diluted loss per share was $(0.21) in the first quarter of fiscal year 2021 compared to IFRS basic and fully diluted earnings per share of $0.00 in the prior year quarter.*
• Non-GAAP pro forma fully diluted adjusted earnings per share increased to $0.31, compared to $0.18 in the prior year quarter.

* IFRS basic and fully diluted earnings per share for the first quarter of fiscal year 2020 does not reflect the recapitalization that occurred in connection with ibex’s initial public offering.

Balance Sheet and Cash Flow

• Net proceeds of $63.1 million received from our initial public offering, significantly strengthening our balance sheet.
• Operating cash flow increased to $5.9 million, compared to $0.8 million in the prior year quarter.
• Non-GAAP net debt decreased to $35.5 million, compared to $84.1 million as of June 30, 2020, primarily driven by funds received from our initial public offering.

First Quarter of Fiscal Year 2021 Business Highlights:

• Won eight new customer logos across key verticals, including fintech and logistics & delivery
• Launched nine new clients in the quarter
• Opened two new contact centers in Ocho Rios, Jamaica and Managua, Nicaragua, and added a total of approximately 1,000 new nearshore workstations.
• Top three client concentration decreased to 38.1% from 46.2% in the prior year quarter
• New Economy revenue increased by 19% compared to the prior year quarter
• Digital business increased by 5% compared to the prior year quarter
• Non-voice revenue increased by 9% compared to the prior year quarter

Raised Fiscal Year 2021 Business Outlook

We are raising our fiscal year 2021 guidance for revenue to between $440 million and $443 million, an increase of approximately 9% over the prior year, compared to $431 million to $435 million previously provided.

Adjusted EBITDA is now expected to be between $60.5 million and $62 million, an increase of approximately 12% to 14% over the prior year, compared to $59.5 million to $61 million previously provided.

Conference Call and Webcast Information

IBEX Limited will host a conference call and live webcast to discuss its first quarter of fiscal year 2021 financial results at 4:30 p.m. Eastern Time today, November 16, 2020. To access the conference call, dial (833) 614-1408 for the U.S. or Canada, or for international callers (914) 987-7129 and provide conference ID 8594841. The webcast will be available live on the Investors section of ibex’s website at: https://investors.ibex.co/.

An audio replay of the call will also be available to investors beginning at approximately 7:30 p.m. Eastern Time on November 16, 2020, until 7:30 p.m. Eastern Time on November 23, 2020, by dialing (855) 859-2056 for the U.S. or Canada, or for international callers, (404) 537-3406 and entering passcode 8594841. In addition, an archived webcast will be available on the Investors section of ibex’s website at: https://investors.ibex.co/.

Financial Information

While the financial figures included in this press release have been computed in accordance with International Financial Reporting Standards (“IFRS”) as issued by the International Accounting Standards Board (“IASB”) applicable to interim periods, this announcement does not contain sufficient information to constitute an interim financial report as defined in International Accounting Standards 34, “Interim Financial Reporting.”  The financial information in this press release has not been audited.

Non-GAAP Financial Measures

We present non-GAAP financial measures because we believe that they and other similar measures are widely used by certain investors, securities analysts and other interested parties as supplemental measures of performance and liquidity. We also use these measures internally to establish forecasts, budgets and operational goals to manage and monitor our business, as well as evaluate our underlying historical performance, as we believe that these non-GAAP financial measures depict the true performance of the business by encompassing only relevant and controllable events, enabling us to evaluate and plan more effectively for the future. The non-GAAP financial measures may not be comparable to other similarly titled measures of other companies and have limitations as analytical tools and should not be considered in isolation or as a substitute for analysis of our operating results as reported under IFRS as issued by the IASB. Non-GAAP financial measures and ratios are not measurements of our performance, financial condition or liquidity under IFRS as issued by the IASB and should not be considered as alternatives to operating profit or net income / (loss) or as alternatives to cash flow from operating, investing or financing activities for the period, or any other performance measures, derived in accordance with IFRS as issued by the IASB or any other generally accepted accounting principles.

ibex is not providing a quantitative reconciliation of forward-looking non-GAAP adjusted EBITDA to the most directly comparable IFRS measure because it is unable to predict with reasonable certainty the ultimate outcome of certain significant items without unreasonable effort. These items include, but are not limited to, non-recurring expenses, fair value adjustments, share-based compensation expense, and impairment of assets. These items are uncertain, depend on various factors, and could have a material impact on IFRS reported results for the guidance period.

About ibex

ibex helps the world’s preeminent brands more effectively engage their customers with services ranging from customer support, technical support, inbound/outbound sales, business intelligence and analytics, digital demand generation, and CX surveys and feedback analytics.

Forward Looking Statements

In addition to historical information, this release contains “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. In some cases, you can identify forward-looking statements by terminology such as “believe,” “may,” “will,” “estimate,” “continue,” “anticipate,” “intend,” “should,” “plan,” “expect,” “predict,” “potential,” or the negative of these terms or other similar expressions.  These statements include, but are not limited to, statements regarding our future financial and operating performance, including our outlook and guidance, and our strategies, priorities and business plans. Our expectations and beliefs regarding these matters may not materialize, and actual results in future periods are subject to risks and uncertainties that could cause actual results to differ materially from those projected. Factors that could impact our actual results include: developments relating to COVID-19; the Frontier restructuring and its proceedings under Chapter 11 of the United States Bankruptcy Code; our ability to attract new business and retain key clients; our ability to enter into multi-year contracts with our clients at appropriate rates; the potential for our clients or potential clients to consolidate; our clients deciding to enter into or further expand their insourcing activities; our ability to operate as an integrated company under the ibex brand; our ability to manage portions of our business that have long sales cycles and long implementation cycles that require significant resources and working capital; our ability to manage our international operations, particularly in Pakistan and the Philippines and increasingly in Jamaica and Nicaragua; our ability to comply with applicable laws and regulations, including those regarding privacy, data protection and information security; our ability to manage the inelasticity of our labor costs relative to short-term movements in client demand; our ability to realize the anticipated strategic and financial benefits of our relationship with Amazon; our ability to recruit, engage, motivate, manage and retain our global workforce; our ability to anticipate, develop and implement information technology solutions that keep pace with evolving industry standards and changing client demands; our ability to maintain and enhance our reputation and brand; and other factors discussed under the heading “Risk Factors”  in our annual report on Form 20-F filed with the U.S. Securities and Exchange Commission on October 23, 2020 and any other risk factors we include in subsequent reports on Form 6-K. Because of these uncertainties, you should not make any investment decisions based on our estimates and forward-looking statements. Except as required by law, we undertake no obligation to publicly update any forward-looking statements for any reason after the date of this press release whether as a result of new information, future events or otherwise.

Media Contact: Rosemary Hanratty, Senior Director of Marketing, ibex, 412.539.7099, [email protected]

IR Contact: Brinlea Johnson, The Blueshirt Group, 415.269.2645, [email protected]

IBEX Limited

Unaudited Consolidated Statements of Financial Position

US$ in thousands	September 30, 2020			June 30, 2020
Assets
Non-current assets
Goodwill	$	11,832		$	11,832
Other intangible assets		2,862			2,781
Property and equipment		92,548			84,588
Investment in joint venture		338			331
Deferred tax asset		2,946			2,223
Warrant asset		2,406			2,611
Other assets		5,150			4,834
Total non-current assets	$	118,082		$	109,200
Current assets
Trade and other receivables		73,840			62,579
Due from related parties		1,857			1,587
Cash and cash equivalents		79,779			21,870
Total current assets	$	155,476		$	86,036
Total assets	$	273,558		$	195,236
Equity and liabilities
Equity attributable to owners of the parent
Share capital	$	2		$	12
Additional paid-in capital		158,009			96,207
Other reserves		31,417			29,456
Accumulated deficit		(116,950	)		(109,527
Total equity	$	72,478		$	16,148
Non-current liabilities
Deferred revenue	$	1,057		$	434
Lease liabilities		68,029			62,044
Borrowings		4,535			3,782
Deferred tax liability		114			117
Other non-current liabilities		12,347			7,058
Total non-current liabilities	$	86,082		$	73,435
Current liabilities
Trade and other payables	$	59,603		$	53,213
Income tax payables		2,747			3,087
Lease liabilities		13,460			12,668
Borrowings		29,302			27,476
Deferred revenue		4,206			3,470
Due to related parties		5,680			5,739
Total current liabilities	$	114,998		$	105,653
Total liabilities	$	201,080		$	179,088
Total equity and liabilities	$	273,558		$	195,236

IBEX Limited

Unaudited Consolidated Statements of Profit or Loss and Other Comprehensive Income (Loss)

	Quarter ended September 30,
US$ in thousands, except share and per share amounts	2020			2019
Revenue	$	108,771		$	95,347
Payroll and related costs		72,264			66,055
Share-based payments		2,089			42
Reseller commission and lead expenses		4,102			4,821
Depreciation and amortization		6,439			5,700
Other operating costs		24,790			14,136
(Loss) / income from operations	$	(913	)	$	4,593
Finance expenses		(2,239	)		(2,307	)
(Loss) / income before taxation	$	(3,152	)	$	2,286
Income tax (expense) / benefit		(271	)		50
Net (loss) / income	$	(3,423	)	$	2,336
Other comprehensive (loss) / income
Item that will be subsequently reclassified to profit or loss
Foreign currency translation adjustment	$	(36	)	$	30
Cash flow hedge – changes in fair value		33			–
	$	(3	)	$	30
Total comprehensive (loss) / income	$	(3,426	)	$	2,366
(Loss) / earnings per share attributable to the ordinary equity holders of the parent
Basic	$	(0.21	)	$	–
Diluted	$	(0.21	)	$	–
Weighted average shares outstanding
Basic		16,368,143			12,387,658
Diluted		16,368,143			12,594,993

IBEX Limited

Unaudited Consolidated Statements of Cash Flows

		Quarter ended September 30,
US$ in thousands		2020				2019
CASH FLOWS FROM OPERATING ACTIVITIES
(Loss) / income before taxation		$	(3,152	)		$	2,286
Adjustments to reconcile net (loss) / income to net cash provided by operating activities:
Depreciation and amortization			6,439				5,700
Amortization of warrant asset			205				235
Gain on disposal of fixed assets			(192	)			–
Foreign currency translation loss			148				153
Share warrants			3,586				749
Phantom expense			125				13
Share-based payments			1,964				29
Provision for retirement benefit expense			78				26
Allowance for expected credit losses			243				(60	)
Share of profit from investment in joint venture			(123	)			(164	)
Finance expenses			2,239				2,307
Increase in trade and other receivables			(10,727	)			(4,663	)
Increase in prepayments and other assets			(316	)			(473	)
Increase / (decrease) in trade and other payables and other liabilities			9,153				(2,938	)
Cash generated from operations			9,670				3,200
Interest paid			(2,239	)			(2,307	)
Income taxes paid			(1,492	)			(106	)
Net cash provided by operating activities		$	5,939			$	787
CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of property and equipment		$	(2,901	)		$	(200	)
Purchase of other intangible assets			(310	)			(148	)
Capital repayment from joint venture			115				71
Net cash used in investing activities		$	(3,096	)		$	(277	)
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from line of credit		$	32,344			$	34,792
Repayments of line of credit			(31,388	)			(26,698	)
Proceeds from borrowings			1,714				1,000
Repayment of borrowings			(2,796	)			(1,699	)
Net proceeds from initial public offering			63,107				–
Payment of listing related expenses			(825	)			–
Principal payments on lease obligations			(3,055	)			(3,000	)
Dividends paid			(4,000	)			–
Net cash provided by financing activities		$	55,101			$	4,395
Effects of exchange rate difference on cash and cash equivalents			(35	)			29
Net increase in cash and cash equivalents		$	57,909			$	4,934
Cash and cash equivalents at beginning of the period		$	21,870			$	8,873
Cash and cash equivalents at end of the period		$	79,779			$	13,807

IBEX Limited

Reconciliation of IFRS Financial Measures to Non-GAAP Financial Measures

Adjusted net income and pro forma fully diluted adjusted earnings per share:

We define “Adjusted net income” as net income / (loss) before the effect of the following items: non-recurring expenses (including litigation and settlement expenses, costs related to COVID-19, and expenses related to our initial public offering), other income, fair value adjustment related to the Amazon warrant, share-based payments, foreign exchange gains or losses, and impairment losses, as applicable, net of the tax effect of such adjustments. We define “pro forma fully diluted adjusted earnings per share” as Adjusted net income for the period divided by the weighted average fully diluted shares outstanding for the current period.

		Quarter ended September 30,
US$ in thousands, except share and per share amounts		2020				2019
Net (loss) / income		$	(3,423	)		$	2,336
Non-recurring expenses			4,398				–
Other income			(151	)			(199	)
Fair value adjustment			3,586				749
Share-based payments			2,089				42
Foreign exchange losses			148				153
Total adjustments		$	10,070			$	745
Tax impact of adjustments			(1,446	)			63
Adjusted net income		$	5,201			$	3,144
Weighted average fully diluted shares outstanding, quarter ended September 30, 2020(1)			17,034,939				17,034,939
Pro forma fully diluted adjusted earnings per share ( 2)		$	0.31			$	0.18

⁽¹⁾  Fully diluted shares outstanding as of September 30, 2020 were 18,510,094.
⁽²⁾  We provide “pro forma fully diluted adjusted earnings per share” because the share structure for the prior year quarter does not reflect the recapitalization that occurred in connection with ibex’s initial public offering which occurred on August 7, 2020.  For purposes of this calculation, we have included 17,034,939 shares, the weighted average fully diluted shares outstanding for the quarter ended September 30, 2020, in both periods in order to enhance comparability between such periods. Beginning with the first quarter of fiscal year 2022, our share structure will be comparable year over year, and this measure will reflect the respective periods’ weighted average fully diluted shares outstanding.

EBITDA and Adjusted EBITDA:

We define “EBITDA” as net (loss) / income before the effect of the following items: finance expenses (including finance costs related to lease liabilities), income tax expense / (benefit), and depreciation and amortization (including depreciation of right-of-use assets). We define “Adjusted EBITDA” as EBITDA before the effect of the following items: non-recurring expenses (including litigation and settlement expenses, costs related to COVID-19, and expenses related to our initial public offering), other income, fair value adjustment related to the Amazon warrant, share-based payments, foreign exchange gains or losses, and impairment losses, as applicable.

	Quarter ended September 30,
US$ in thousands	2020				2019
Net (loss) / income	$	(3,423	)		$	2,336
Finance expenses		2,239				2,307
Income tax expense / (benefit)		271				(50	)
Depreciation and amortization		6,439				5,700
EBITDA	$	5,526			$	10,293
Non-recurring expenses		4,398				–
Other income		(151	)			(199	)
Fair value adjustment		3,586				749
Share-based payments		2,089				42
Foreign exchange losses		148				153
Adjusted EBITDA	$	15,596			$	11,038

Free cash flow:

We define “free cash flow” as net cash provided by operating activities less capital expenditures and lease payments on right-of-use assets.

	Quarter ended September 30,
US$ in thousands	2020				2019
Net cash provided by operating activities	$	5,939			$	787
Less:
Capital expenditures		4,525				9,338
Lease payments on right-of-use assets		2,328				2,389
Free cash flow	$	(914	)		$	(10,940	)

Net debt:

We define “net debt” as total borrowings less cash and cash equivalents.

US$ in thousands	September 30, 2020				June 30, 2020
Borrowings
Non-current	$	4,535			$	3,782
Current		29,302				27,476
	$	33,837			$	31,258
Leases
Non-current	$	68,029			$	62,044
Current		13,460				12,668
	$	81,489			$	74,712
Total Debt	$	115,326			$	105,970
Cash and cash equivalents		79,779				21,870
Net debt	$	35,547			$	84,100

HOUSTON, Nov. 16, 2020 (GLOBE NEWSWIRE) — Contango Oil & Gas Company (NYSE American: MCF) (“Contango” or the “Company”) announced today its financial results for the third quarter ended September 30, 2020.  

Third
Quarter
20
20
Highlights
and Recent Developments

• Achieved run rate LOE savings on Central Oklahoma properties of 48% since taking over operations in the fourth quarter of 2019 and 38% savings relative to assumptions in our 2019 year-end SEC reserves. These savings are expected to increase the PDP PV-10 of the properties at 2020 year-end by more than 50% when measured based on 2019 year-end reserves assumptions.
• Production sales of 1,587 Mboe for the quarter, or 17.2 Mboe per day, including approximately 0.5 Mboe per day produced during the second quarter and placed into excess storage capacity until sold in the third quarter at higher prices. Excluding this sale of second quarter oil inventory, our production sales were 1,537 Mboe for the quarter, or 16.7 Mboe per day, nearly three times the 5.6 Mboe per day produced in the prior year quarter, primarily due to additional production from the properties acquired from White Star Petroleum, LLC and certain affiliates (collectively, “White Star”) and Will Energy Corporation (“Will Energy”) in the fourth quarter of 2019. Production sales also came in at the high end of guidance for the quarter.
• Total operating expenses of $17.2 million for the quarter, and operating expenses exclusive of production and ad valorem taxes of $15.6 million, at approximately 10% below the low end of guidance due to ongoing internal cost savings initiatives.
• Net loss of $6.8 million compared to a net loss of $7.8 million in the prior year quarter.
• Recurring Adjusted EBITDAX (a non-GAAP measure, as defined and presented herein) of $16.2 million, compared to $5.2 million in the prior year quarter primarily due to the properties acquired from White Star and Will Energy.
• The previously disclosed Management Services Agreement (“MSA”) with Mid-Con Energy Partners, LP (“Mid-Con”), under which the Company provides technical, management, and administrative services as operator of record on Mid-Con’s oil and gas properties as part of the Company’s new, cost-effective “fee for service” management business, became effective on July 1, 2020. The Company recorded $1.0 million in revenue related to the MSA in the third quarter of 2020.
• Subsequent to quarter end, the Company entered into an Agreement and Plan of Merger with Mid-Con and Mid-Con Energy GP, LLC, the general partner of Mid-Con (“Mid-Con GP”), pursuant to which Mid-Con will merge with and into a wholly-owned, direct subsidiary of the Company (the “Mid-Con Acquisition”). The Mid-Con Acquisition is expected to close in late 2020 or early 2021, at which time the MSA will be terminated. See Note 13 – “Subsequent Events” in our recently filed Form 10-Q for the third quarter of 2020 for further information.
• Subsequent to quarter end, the Company entered into an amendment to its revolving credit agreement with JPMorgan Chase Bank N.A., as administrative agent, and the lenders party thereto (the “Credit Agreement”) under which, among other things, the Company’s borrowing base will be increased from $75 million to $130 million upon the closing of the Mid-Con Acquisition. See Note 13 – “Subsequent Events” in our recently filed Form 10-Q for the third quarter of 2020 for further information.
• Subsequent to quarter end, the Company completed a private placement with a select group of institutional and accredited investors for the sale of 26,451,988 shares of the Company’s common stock for gross proceeds of approximately $39.7 million. The immediate use of those proceeds was for the repayment of debt outstanding under our Credit Agreement and general corporate purposes, including costs and fees of the offering and future producing acquisitions. See Note 13 – “Subsequent Events” in our recently filed Form 10-Q for the third quarter of 2020 for further information.

Management Commentary  

Wilkie S. Colyer, the Company’s Chief Executive Officer, said, “We are quite pleased with our results in the third quarter. We came in at the high end of guidance on barrels produced and below the low end of guidance on both LOE and cash G&A. In spite of the continued downward pressure COVID-19 has put on our industry, along with many others, Contango has continued to find ways to accrete value to its shareholders. We were able to execute a merger agreement subsequent to quarter end at a meaningful discount to PDP PV-10 which we look forward to closing in the coming months. In conjunction with the merger, we raised additional equity capital in a very tough capital markets environment. As importantly, we were able to realize significant field level cost savings on assets acquired from White Star Petroleum via a section 363 sale process late last year, resulting in more than a 50% increase in the value of those producing reserves. We believe this process can be repeated in future acquisitions, augmenting our return expectations, particularly on assets held by non-natural owners. We view these types of costs savings as organic growth drivers to complement our inorganic acquisition strategy. Lastly, I’d like to thank our shareholders and lenders, led by JPMorgan, for their continued support, along with our dedicated employees.”

“Protecting our liquidity is also a priority for us as we look to potentially take advantage of acquisition opportunities in the current environment. Consequently, through our hedging program we have price protected approximately 71% of our forecasted PDP oil production for the remainder of 2020 with swaps at an average floor price of $55.12 per barrel and 67% of forecasted PDP gas production for the remainder of 2020 at an average floor price of $2.57 per Mmbtu. In 2021, we have approximately 69% of total forecasted PDP oil production hedged at $51.71 per barrel and 58% of currently forecasted PDP natural gas production hedged at $2.49 per Mmbtu. In October 2020, we entered into additional gas hedges and currently have approximately 65% of the first ten months of forecasted 2022 PDP natural gas production hedged at $2.59 per Mmbtu. We also entered into additional oil hedges for April through October 2022 and currently have approximately 37% of forecasted oil production for that time period hedged at $42.04 per barrel.”

Impact of the COVID-19 Pandemic and 2020 Plan Changes

The COVID-19 pandemic has resulted in a severe worldwide economic downturn, significantly disrupting the demand for oil throughout the world, and has created significant volatility, uncertainty and turmoil in the oil and gas industry. This has led to a significant global oversupply of oil and a subsequent substantial decrease in oil prices. While global oil producers, including the Organization of Petroleum Exporting Countries (“OPEC”) and other oil producing nations reached an agreement to cut oil production in April 2020, downward pressure on, and volatility in, commodity prices has remained and could continue for the foreseeable future, particularly given concerns over available storage capacity for oil. We have commodity derivative instruments in place to mitigate the effects of such price declines; however, derivatives will not entirely mitigate lower oil prices. While there has been modest recovery in oil prices, the length of this demand disruption is still unknown, and there is significant uncertainty regarding the long-term impact to global oil demand, which will ultimately depend on various factors and consequences beyond the Company’s control, such as the duration and scope of the pandemic, the length and severity of the worldwide economic downturn, additional actions by businesses and governments in response to both the pandemic and the decrease in oil prices, the speed and effectiveness of responses to combat the virus, and the time necessary to equalize oil supply and demand to restore oil pricing. In response to these developments, we have continued to implement measures to mitigate the impact of the COVID-19 pandemic on our employees, operations and financial position. These measures include, but are not limited to, the following:

• work from home initiatives for all but critical staff and the implementation of social distancing measures;
• a company-wide effort to cut costs throughout our operations;
• utilization of our available storage capacity to temporarily store, when appropriate, a portion of our production in order to market that oil at a later date and capitalize on the contango in the commodity price curve;
• suspension of any further plans for operated onshore and offshore drilling in 2020;
• pursuit of additional “fee for service” opportunities similar to the MSA entered into in June 2020 with Mid-Con, which will be terminated at the closing of the Mid-Con Acquisition; and
• potential acquisitions of PDP-heavy assets, with attractive, discounted valuations, in stressed/distressed scenarios or from non-industry owners.

Summary
of
Third
Quarter Financial Results

Net loss for the three months ended September 30, 2020 was $6.8 million, or $(0.05) per basic and diluted share, compared to a net loss of $7.8 million, or $(0.19) per basic and diluted share, for the prior year quarter. Pre-tax net loss for the three months ended September 30, 2020 was $6.1 million, compared to a pre-tax net loss of $7.8 million for the prior year quarter.

Average weighted shares outstanding were approximately 131.7 million and 41.8 million for the current and prior year quarters, respectively.  

The Company reported Adjusted EBITDAX, a non-GAAP measure defined below, of approximately $15.8 million for the three months ended September 30, 2020, compared to $3.0 million for the same period last year, an increase attributable primarily to the incremental contribution from the properties we acquired from White Star and Will Energy in the fourth quarter of 2019, offset in part by lower commodity prices. Recurring Adjusted EBITDAX (defined below as Adjusted EBITDAX exclusive of non-recurring business combination expenses and strategic advisory fees and legal judgments) was $16.2 million for the current quarter, compared to $5.2 million for the prior year quarter.

Revenues for the current quarter were approximately $31.3 million compared to $12.5 million for the prior year quarter, an increase also primarily attributable to the additional production from the acquired Will Energy and White Star properties, despite the 21% decrease in the weighted average equivalent sales price in production period over period. Current quarter revenues also included $1.0 million related to our fee for service agreement with Mid-Con.

Production sales for the third quarter were approximately 1,587 Mboe, or 17.2 Mboe per day, at the upper level of guidance for the quarter, compared to 516 Mboe, or 5.6 Mboe per day for the third quarter of 2019. The properties acquired from White Star and Will Energy contributed approximately 12.7 Mboe per day to the third quarter of 2020. During the second quarter, due to the extreme variability in oil prices ranging from a low of ($37.63) per Bbl to a high of $40.46 per Bbl, we placed into available storage approximately 50,000 barrels of oil (net to the Company) produced during the second quarter, for later sale at higher prices. These volumes were sold in the third quarter of 2020.

The weighted average equivalent sales price during the three months ended September 30, 2020 was $19.13 per Boe, compared to $24.31 per Boe for the same period last year, a decline attributable to the decrease in all realized commodity prices in the current year quarter as a result of the decrease in demand for commodity products due to the COVID-19 pandemic and the failure of OPEC and Russia to reach any agreement on oil production quotas until April 2020. In comparison to the third quarter of 2019, we experienced a 29% decline in oil prices, a 31% decline in natural gas prices and a 23% increase in natural gas liquids prices in the third quarter of 2020.

Operating expenses for the three months ended September 30, 2020 were approximately $17.2 million, compared to $5.4 million for the same period last year, an increase attributable primarily to the properties acquired from White Star and Will Energy. Included in operating expenses are direct lease operating expenses, transportation and processing costs, workover expenses and production and ad valorem taxes. Operating expenses exclusive of production and ad valorem taxes of $1.5 million and $0.7 million, respectively, were approximately $15.6 million for the current quarter, and below the low end of guidance, compared to approximately $4.8 million for the prior year quarter. Total unit costs for operating expenses and G&A expenses improved 33% quarter over quarter.

DD&A expense for the three months ended September 30, 2020 was $6.2 million, or $3.90 per Boe, compared to $8.5 million, or $16.42 per Boe, for the prior year quarter. The lower depletion expense in the current quarter was a result of lower depletable property cost as a result of the proved property impairment recorded during the first quarter of 2020.

Total G&A expenses were $6.1 million for the three months ended September 30, 2020, compared to $5.9 million for the prior year quarter. Recurring G&A expenses (defined as G&A expenses exclusive of business combination expenses and non-recurring strategic advisory fees of $0.3 million and legal judgments of $0.1 million for the current quarter) were $5.7 million, or $3.60 per Boe for the current quarter. Recurring G&A expenses exclusive of business combination expenses and non-recurring strategic advisory fees of $0.1 million and legal judgments of $2.1 million for the prior year quarter were $3.7 million, or $7.08 per Boe. The increase from the prior year is primarily due to the costs of additional personnel, systems costs and other administrative expenses added in conjunction with the acquired Will Energy and White Star properties which more than tripled our production base. Recurring Cash G&A expenses (defined as recurring G&A expenses exclusive of non-cash stock-based compensation of $1.8 million and $0.6 million for the respective current and prior-year quarters) were $4.0 million for the current quarter, compared to $3.1 million for the prior year quarter.  

Loss from our investment in affiliates (i.e., Exaro Energy III (“Exaro”)) for the three months ended September 30, 2020 was approximately $0.1 million, compared to $0.6 million for the three months ended September 30, 2019.

Loss on derivatives for the three months ended September 30, 2020 was approximately $7.4 million. Of this amount, $13.0 million was non-cash, unrealized mark-to-market losses attributable to improvement in benchmark commodity prices at the end of the current quarter compared to the benchmark prices at the end of the second quarter of 2020, offset in part by $5.6 million in realized gains on derivative settlements during the current quarter. Gain on derivatives for the three months ended September 30, 2019 was approximately $1.9 million, of which $1.0 million was non-cash, unrealized mark-to-market gains, and the remaining $0.9 million were realized gains.   

2020
Capital Program
& Capital Resources

Capital costs for the three months ended September 30, 2020 were approximately $1.6 million, of which $0.8 million was related to the completion of a salt water disposal well and associated facilities in the Southern Delaware Basin in Pecos County, Texas. The remaining costs were primarily related to capitalized workovers and leasehold acquisition costs.

We anticipate that the remainder of our 2020 capital budget will be very limited, with our focus being on preserving our financial liquidity, flexibility and identifying opportunities for cost efficiencies in all areas of our operations. Our total 2020 capital expenditure budget is currently estimated at approximately $18.7 million, including $7.7 million of the exploration expenses related to the Iron Flea prospect incurred in 2020. For the remainder of 2020, we currently expect to limit our onshore capital expenditures to $1.4 million for workovers intended to increase cashflow through enhanced production or reductions in recurring costs. We currently expect that our offshore expenditures for the remainder of 2020, which are expected to be non-material, will be focused on the evaluation and development of another exploratory prospect. We may revise our 2020 capital expenditure budget if deemed appropriate in light of changes in commodity prices or economic conditions.

As of September 30, 2020, we had approximately $66.0 million outstanding under the Company’s Credit Agreement, $1.9 million in an outstanding letter of credit and $3.0 million in cash. The borrowing base was $75 million as of September 30, 2020, with a borrowing availability of $7.1 million.

On October 25, 2020, the Company and Mid-Con entered into the Mid-Con Acquisition providing for the Company’s acquisition of Mid-Con in an all-stock merger transaction in which Mid-Con will become a direct, wholly owned subsidiary of Contango. The Mid-Con Acquisition is expected to close in late 2020 or early 2021, at which time the MSA with Mid-Con will be terminated. Concurrently with the announcement of the Mid-Con Acquisition, we announced the execution of an agreement with a select group of institutional and accredited investors to sell 26,451,988 shares of the Company’s common stock for gross proceeds of approximately $39.7 million. The proceeds were immediately used for the repayment of debt outstanding under our Credit Agreement and general corporate purposes, including costs and fees of the offering and future producing acquisitions. See Note 13 – “Subsequent Events” in our recently filed Form 10-Q for the third quarter of 2020 for further information.

On October 30, 2020, we entered into the Third Amendment to the Credit Agreement (the “Third Amendment”) under which the Company’s borrowing base will be increased from $75 million to $130 million, effective upon the closing of the Mid-Con Acquisition. The Third Amendment also provides for, among other things, a $10 million automatic reduction in the borrowing base on March 31, 2021, and postpones the November 1, 2020 scheduled borrowing base redetermination required under the Credit Agreement until December 31, 2020. See Note 13 – “Subsequent Events” in our recently filed Form 10-Q for the third quarter of 2020 for further information. The borrowing base may also be adjusted by certain events, including the incurrence of any senior unsecured debt, material asset dispositions or liquidation of hedges in excess of certain thresholds. The Credit Agreement matures on September 17, 2024. See Note 10 – “Long-Term Debt” in our recently filed Form 10-Q for the third quarter of 2020 for further information.

Derivative Instruments

As of September 30, 2020, we had the following financial derivative contracts in place with members of our bank group or third-party counterparties under an unsecured line of credit with no margin call provisions. These contracts represent approximately 71% of our currently forecasted remaining 2020 oil production from proved developed reserves (“PDP”) and 67% of our currently forecasted remaining 2020 natural gas production from PDP. We also have hedged approximately 69% of our currently forecasted 2021 PDP oil production and 58% of our currently forecasted 2021 PDP natural gas production.

Commodity		Period		Derivative		Volume/Month			Price/Unit
Oil		Oct 2020		Collar		3,442	Bbls		$	52.00 – 65.70			(1)
Oil		Oct 2020 – Dec 2020		Swap		15,000	Bbls		$	57.74			(1)
Oil		Oct 2020		Swap		2,500	Bbls		$	54.33			(1)
Oil		Nov 2020 – Dec 2020		Swap		3,500	Bbls		$	54.33			(1)
Oil		Oct 2020 – Dec 2020		Swap		35,000	Bbls		$	54.70			(1)
Oil		Oct 2020 – Dec 2020		Swap		35,000	Bbls		$	54.58			(1)
Oil		Jan 2021 – March 2021		Swap		19,000	Bbls		$	50.00			(1)
Oil		April 2021 – July 2021		Swap		12,000	Bbls		$	50.00			(1)
Oil		Aug 2021 – Sept 2021		Swap		10,000	Bbls		$	50.00			(1)
Oil		Jan 2021 – July 2021		Swap		62,000	Bbls		$	52.00			(1)
Oil		Aug 2021 – Sept 2021		Swap		55,000	Bbls		$	52.00			(1)
Oil		Oct 2021 – Dec 2021		Swap		64,000	Bbls		$	52.00			(1)
Natural Gas		Oct 2020		Swap		40,000	Mmbtus		$	2.532			(2)
Natural Gas		Nov 2020 – Dec 2020		Swap		375,000	Mmbtus		$	2.696			(2)
Natural Gas		Oct 2020 – Dec 2020		Swap		350,000	Mmbtus		$	2.53			(2)
Natural Gas		Oct 2020 – Dec 2020		Swap		350,000	Mmbtus		$	2.532			(2)
Natural Gas		Jan 2021 – March 2021		Swap		185,000	Mmbtus		$	2.505			(2)
Natural Gas		April 2021 – July 2021		Swap		120,000	Mmbtus		$	2.505			(2)
Natural Gas		Aug 2021 – Sept 2021		Swap		10,000	Mmbtus		$	2.505			(2)
Natural Gas		Jan 2021 – March 2021		Swap		185,000	Mmbtus		$	2.508			(2)
Natural Gas		April 2021 – July 2021		Swap		120,000	Mmbtus		$	2.508			(2)
Natural Gas		Aug 2021 – Sept 2021		Swap		10,000	Mmbtus		$	2.508			(2)
Natural Gas		Jan 2021 – March 2021		Swap		650,000	Mmbtus		$	2.508			(2)
Natural Gas		April 2021 – Oct 2021		Swap		400,000	Mmbtus		$	2.508			(2)
Natural Gas		Nov 2021 – Dec 2021		Swap		580,000	Mmbtus		$	2.508			(2)
Natural Gas		April 2021 – Nov 2021		Swap		70,000	Mmbtus		$	2.36			(2)
Natural Gas		Dec 2021		Swap		350,000	Mmbtus		$	2.36			(2)
Natural Gas		Jan 2022 – March 2022		Swap		780,000	Mmbtus		$	2.542			(2)

---

 ⁽¹⁾ Based on West Texas Intermediate crude oil prices.
 ⁽²⁾ Based on Henry Hub NYMEX natural gas prices.

In addition to the above financial derivative instruments, as of September 30, 2020, we had a costless swap agreement with a Midland WTI – Cushing oil differential swap price of $0.05 per barrel of crude oil. The agreement fixes the Company’s exposure to that differential on 10,000 barrels per month for October 2020 through December 2020.

As of September 30, 2020, based on strip prices at that time, the mark to market value of our hedge portfolio was $6.4 million, as reflected in the Company’s balance sheet as of September 30, 2020.

In October 2020, and subsequent to the end of the third quarter, we entered into the following additional derivative contracts:

Commodity		Period		Derivative		Volume/Month			Price/Unit
Oil		April 2022 – Oct 2022		Swap		25,000	Bbls		$	42.04			(1)
Natural Gas		April 2022 – July 2022		Swap		650,000	Mmbtus		$	2.515			(2)
Natural Gas		Aug 2022 – Oct 2022		Swap		350,000	Mmbtus		$	2.515			(2)
Natural Gas		Jan 2022 – March 2022		Swap		250,000	Mmbtus		$	3.149			(2)

---

 ⁽¹⁾ Based on West Texas Intermediate crude oil prices.
 ⁽²⁾ Based on Henry Hub NYMEX natural gas prices.

Selected Financial and Operating Data

The following table reflects certain comparative financial and operating data for the three and nine months ended September 30, 2020 and 2019:  

		Three Months Ended									Nine months ended
		September 30,									September 30,
		2020			2019			%			2020			2019			%
Offshore Volumes Sold:
Oil and condensate (Mbbls)			7			9		-22	%			25			32		-22	%
Natural gas (Mmcf)			1,365			1,545		-12	%			3,849			4,506		-15	%
Natural gas liquids (Mbbls)			21			40		-48	%			88			164		-46	%
Thousand barrels of oil equivalent (Mboe)			256			306		-16	%			754			947		-20	%
Onshore Volumes Sold:
Oil and condensate (Mbbls)			436			122		257	%			1,284			351		266	%
Natural gas (Mmcf)			3,588			313		1046	%			11,219			873		1185	%
Natural gas liquids (Mbbls)			297			36		725	%			868			102		751	%
Thousand barrels of oil equivalent (Mboe)			1,331			210		534	%			4,022			599		571	%
Total Volumes Sold:
Oil and condensate (Mbbls)			443			131		238	%			1,309			383		242	%
Natural gas (Mmcf)			4,953			1,858		167	%			15,068			5,379		180	%
Natural gas liquids (Mbbls)			318			76		318	%			956			266		259	%
Thousand barrels of oil equivalent (Mboe)			1,587			516		208	%			4,776			1,546		209	%
Daily Sales Volumes:
Oil and condensate (Mbbls)			4.8			1.4		243	%			4.8			1.4		243	%
Natural gas (Mmcf)			53.8			20.2		166	%			55.0			19.7		179	%
Natural gas liquids (Mbbls)			3.5			0.8		338	%			3.5			1.0		250	%
Thousand barrels of oil equivalent (Mboe)			17.2			5.6		207	%			17.4			5.7		205	%
Average sales prices:
Oil and condensate (per Bbl)		$	39.30		$	55.73		-29	%		$	36.76		$	55.10		-33	%
Natural gas (per Mcf)		$	1.60		$	2.31		-31	%		$	1.51		$	2.56		-41	%
Natural gas liquids (per Bbl)		$	15.73		$	12.82		23	%		$	12.47		$	16.56		-25	%
Total (per Boe)		$	19.13		$	24.31		-21	%		$	17.33		$	25.44		-32	%

		Three Months Ended											Nine Months Ended
		September 30,											September 30,
		2020				2019				%			2020				2019				%
Offshore Selected Costs ($ per Boe )
Operating expenses (1)		$	6.78			$	5.89			15	%		$	6.05			$	5.10			19	%
Production and ad valorem taxes		$	0.27			$	0.44			-39	%		$	0.36			$	0.46			-22	%
Onshore Selected Costs ($ per Boe )
Operating expenses (1)		$	10.43			$	14.15			-26	%		$	11.71			$	16.34			-28	%
Production and ad valorem taxes		$	1.10			$	2.51			-56	%		$	0.95			$	2.13			-55	%
Average Selected Costs ($ per Boe )
Operating expenses (1)		$	9.85			$	9.25			6	%		$	10.82			$	9.46			14	%
Production and ad valorem taxes		$	0.97			$	1.28			-24	%		$	0.86			$	1.10			-22	%
General and administrative expense (cash)		$	2.75			$	10.31			-73	%		$	3.12			$	8.50			-63	%
Interest expense		$	0.67			$	1.93			-65	%		$	0.93			$	2.05			-55	%
Net Loss (thousands)		$	(6,805	)		$	(7,838	)					$	(140,094	)		$	(21,417	)
Adjusted EBITDAX (2) (thousands)		$	15,827			$	3,011						$	36,936			$	11,586
Weighted Average Shares Outstanding (thousands)
Basic			131,686				41,786							131,493				36,518
Diluted			131,686				41,786							131,493				36,518

---

⁽¹⁾ Operating expense includes direct lease operating expenses, transportation and workover expenses.

⁽²⁾ Adjusted EBITDAX is a non-GAAP financial measure. See below for reconciliation to net loss.

CONTANGO OIL & GAS COMPANY
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands)

		September 30,				December 31,
		2020				2019
ASSETS			(unaudited)
Cash and cash equivalents		$	2,969			$	1,624
Accounts receivable, net			31,797				39,567
Current derivative asset			10,509				3,819
Other current assets			3,904				1,377
Net property and equipment			127,088				291,120
Investment in affiliates and other non-current assets			16,552				16,319
TOTAL ASSETS		$	192,819			$	353,826
LIABILITIES AND SHAREHOLDERS’ EQUITY (DEFICIT)
Accounts payable and accrued liabilities			87,223				104,593
Other current liabilities			6,054				5,954
Long-term debt			69,369				72,768
Asset retirement obligations			45,998				49,662
Other non-current liabilities			5,629				4,809
Total shareholders’ equity (deficit)			(21,454	)			116,040
TOTAL LIABILITIES & SHAREHOLDERS’ EQUITY (DEFICIT)		$	192,819			$	353,826

CONTANGO OIL & GAS COMPANY
CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands)

		Three Months Ended								Nine Months Ended
		September 30,								September 30,
		2020				2019				2020				2019
		(unaudited)
REVENUES
Oil and condensate sales		$	17,415			$	7,281			$	48,127			$	21,126
Natural gas sales			7,930				4,293				22,718				13,792
Natural gas liquids sales			5,003				973				11,918				4,402
Fee for service revenues			1,000				—				1,000				—
Total revenues			31,348				12,547				83,763				39,320
EXPENSES
Operating expenses			17,155				5,435				55,777				16,321
Exploration expenses			(227	)			218				11,344				691
Depreciation, depletion and amortization			6,185				8,473				24,131				23,602
Impairment and abandonment of oil and gas properties			47				1,336				145,925				3,170
General and administrative expenses			6,130				5,879				17,268				15,340
Total expenses			29,290				21,341				254,445				59,124
OTHER INCOME (EXPENSE)
Loss from investment in affiliates, net of income taxes			(126	)			(608	)			(13	)			(151	)
Gain from sale of assets			38				192				4,471				601
Interest expense			(1,057	)			(998	)			(4,421	)			(3,169	)
Gain (loss) on derivatives, net			(7,369	)			1,881				30,526				1,068
Other income			319				519				1,456				522
Total other income (expense)			(8,195	)			986				32,019				(1,129	)
NET LOSS BEFORE INCOME TAXES			(6,137	)			(7,808	)			(138,663	)			(20,933	)
Income tax provision			(668	)			(30	)			(1,431	)			(484	)
NET LOSS		$	(6,805	)		$	(7,838	)		$	(140,094	)		$	(21,417	)

Non-GAAP Financial Measures

This news release includes certain non-GAAP financial information as defined by Securities and Exchange Commission (“SEC”) rules. Pursuant to SEC requirements, reconciliations of non-GAAP financial measures to the most directly comparable financial measures calculated and presented in accordance with generally accepted accounting principles (GAAP) are included in this press release.

Adjusted EBITDAX represents net income (loss) before interest expense, taxes, depreciation, depletion and amortization, and oil and gas exploration expenses (“EBITDAX”) as further adjusted to reflect the items set forth in the table below and is a measure required to be used in determining our compliance with financial covenants under our credit facility. Recurring Adjusted EBITDAX represents Adjusted EBITDAX exclusive of non-recurring business combination and strategic advisory fees and legal judgments.

We have included Adjusted EBITDAX in this release to provide investors with a supplemental measure of our operating performance and information about the calculation of some of the financial covenants that are contained in our credit agreement. We believe Adjusted EBITDAX is an important supplemental measure of operating performance because it eliminates items that have less bearing on our operating performance and therefore highlights trends in our core business that may not otherwise be apparent when relying solely on GAAP financial measures. We also believe that securities analysts, investors and other interested parties frequently use Adjusted EBITDAX in the evaluation of companies, many of which present Adjusted EBITDAX when reporting their results. Adjusted EBITDAX is a material component of the covenants that are imposed on us by our credit agreement. We are subject to financial covenant ratios that are calculated by reference to Adjusted EBITDAX. Non-compliance with the financial covenants contained in our credit agreement could result in a default, an acceleration in the repayment of amounts outstanding and a termination of lending commitments. Our management and external users of our financial statements, such as investors, commercial banks, research analysts and others, also use Adjusted EBITDAX to assess:

• the financial performance of our assets without regard to financing methods, capital structure or historical cost basis;
• the ability of our assets to generate cash sufficient to pay interest costs and support our indebtedness;
• our operating performance and return on capital as compared to those of other companies in our industry, without regard to financing or capital structure; and
• the feasibility of acquisitions and capital expenditure projects and the overall rates of return on alternative investment opportunities.

The following table reconciles net income to EBITDAX and Adjusted EBITDAX and Recurring Adjusted EBITDAX for the periods presented:

		Three Months Ended								Nine Months Ended
		September 30,								September 30,
		2020				2019				2020				2019
		(in thousands)
Net loss		$	(6,805	)		$	(7,838	)		$	(140,094	)		$	(21,417	)
Interest expense			1,057				998				4,421				3,169
Income tax provision			668				30				1,431				484
Depreciation, depletion and amortization			6,185				8,473				24,131				23,602
Impairment of oil and gas properties			60				1,167				145,938				2,246
Exploration expense			(227	)			218				11,344				691
EBITDAX		$	938			$	3,048			$	47,171			$	8,775
Unrealized loss (gain) on derivative instruments		$	13,037			$	(1,010	)		$	(8,155	)		$	1,068
Non-cash stock-based compensation charges			1,764				557				2,378				2,193
Loss (gain) on sale of assets and investment in affiliates			88				416				(4,458	)			(450	)
Adjusted EBITDAX		$	15,827			$	3,011			$	36,936			$	11,586
Non-recurring business combination expenses and strategic fees		$	326			$	94			$	2,553			$	1,830
Non-recurring legal judgments			90				2,134				246				2,134
Recurring Adjusted EBITDAX		$	16,243			$	5,239			$	39,735			$	15,550

In addition to Adjusted EBITDAX and Recurring Adjusted EBITDAX, we may provide additional non-GAAP financial measures, including Operating expenses exclusive of production and ad valorem taxes, Recurring G&A expenses, Recurring Cash G&A expenses and production sales in the current period exclusive of second quarter oil inventory, because our management believes providing investors with this information gives additional insights into our profitability, cash flows and expenses.

Adjusted EBITDAX, Recurring Adjusted EBITDAX and other non-GAAP measures in this release are not presentations made in accordance with generally accepted accounting principles, or GAAP. As discussed above, we believe that the presentation of non-GAAP financial measures in this release is appropriate. However, when evaluating our results, you should not consider the non-GAAP financial measures in isolation of, or as a substitute for, measures of our financial performance as determined in accordance with GAAP, such as net loss. For example, Adjusted EBITDAX has material limitations as a performance measure because it excludes items that are necessary elements of our costs and operations. Because other companies may calculate Adjusted EBITDAX differently than we do, Adjusted EBITDAX as presented in this release is not, comparable to similarly-titled measures reported by other companies.

Guidance for the


Fourth


Quarter 2020

Production sales		14,000 – 16,000 Boe per day
LOE (including transportation and workovers)		$15.4 million – $17.6 million
Recurring Cash G&A (non-GAAP)		$5.3 million – $5.8 million

We do not provide a reconciliation of Recurring Cash G&A expense guidance to the corresponding GAAP measure because we are unable to predict with reasonable certainty the non-cash stock based compensation expense and non-recurring expenses associated with our strategic initiatives without unreasonable effort. These items are uncertain and depend on various factors and are not expected to be material to the results computed in accordance with GAAP.

Teleconference Call

Contango management will hold a conference call to discuss the information described in this press release on Monday, November 16, 2020 at 4:00 pm Central Standard Time. A brief presentation related to certain items to be discussed on the call will be posted to the Company’s website at ir.contango.com prior to the call. Those interested in participating in the earnings conference call may do so by clicking here to join and entering your information to be connected. The link becomes active 15 minutes prior to the scheduled start time, and the conference will call you. If you are not at a computer, you can join by dialing 1-800-309-1256, (International 1-323-347-3622) and entering participation code 732123. A replay of the call will be available Monday, November 16, 2020 at 7:00 pm CDT through Monday, November 23, 2020 at 7:00 pm CDT by clicking here.

About Contango Oil & Gas Company

Contango Oil & Gas Company is a Houston, Texas based, independent oil and natural gas company whose business is to maximize production and cash flow from its offshore properties in the shallow waters of the Gulf of Mexico and onshore properties in Texas, Oklahoma, Louisiana and Wyoming and, when determined appropriate, to use that cash flow to explore, develop, and increase production from its existing properties, to acquire additional PDP-heavy crude oil and natural gas properties or to pay down debt. Additional information is available on the Company’s website at http://contango.com. Information on our website is not part of this release.

ADDITIONAL INFORMATION AND WHERE TO FIND IT

This communication may be deemed to be solicitation material in respect of the proposed merger (the “Proposed Merger”). The Proposed Merger will be submitted to Contango’s shareholders and Mid-Con’s unitholders for their consideration. Contango and Mid-Con intend to file a preliminary consent statement/proxy statement/prospectus (the “Consent Statement/Proxy Statement/Prospectus”) with the Securities and Exchange Commission (the “SEC”) in connection with the Partnership Unitholder Approval and the Contango Shareholder Approval (each as defined in the Merger Agreement) in connection with the Proposed Merger. Contango intends to file a registration statement on Form S-4 (the “Form S-4”) with the SEC, in which the Consent Statement/Proxy Statement/Prospectus will be included as a prospectus. Contango and Mid-Con also intend to file other relevant documents with the SEC regarding the Proposed Merger. After the Form S-4 is declared effective by the SEC, the definitive Consent Statement/Proxy Statement/Prospectus will be mailed to Contango’s shareholders and Mid-Con’s unitholders. BEFORE MAKING ANY VOTING OR INVESTMENT DECISION WITH RESPECT TO THE PROPOSED MERGER, INVESTORS AND SHAREHOLDERS OF CONTANGO AND INVESTORS AND UNITHOLDERS OF MID-CON ARE URGED TO READ THE DEFINITIVE CONSENT STATEMENT/PROXY STATEMENT/PROSPECTUS REGARDING THE PROPOSED MERGER (INCLUDING ANY AMENDMENTS OR SUPPLEMENTS THERETO) AND OTHER RELEVANT MATERIALS CAREFULLY AND IN THEIR ENTIRETY WHEN THEY BECOME AVAILABLE BECAUSE THEY WILL CONTAIN IMPORTANT INFORMATION ABOUT THE PROPOSED MERGER.

The Consent Statement/Proxy Statement/Prospectus, any amendments or supplements thereto and other relevant materials, and any other documents filed by Contango or Mid-Con with the SEC, may be obtained once such documents are filed with the SEC free of charge at the SEC’s website at www.sec.gov or free of charge from Contango at www.contango.com or by directing a request to Contango’s Investor Relations Department at [email protected] or free of charge from Mid-Con at www.mceplp.com or by directing a request to Mid-Con’s Investor Relations Department at [email protected].

NO OFFER OR SOLICITATION

This communication does not constitute an offer to sell or the solicitation of an offer to buy any securities, or a solicitation of any vote or approval, nor shall there be any sale of securities in any jurisdiction in which such offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of any such jurisdiction. No offering of securities shall be made except by means of a prospectus meeting the requirements of Section 10 of the Securities Act of 1933, as amended.

PARTICIPANTS IN THE SOLICITATION

Contango, Mid-Con and certain of their respective executive officers, directors, other members of management and employees may, under the rules of the SEC, be deemed to be “participants” in the solicitation of proxies in connection with the Mid-Con Acquisition. Information regarding Contango’s directors and executive officers is available in its Proxy Statement on Schedule 14A for its 2020 Annual Meeting of Shareholders, filed with the SEC on April 28, 2020 and in its Annual Report on Form 10-K for the year ended December 31, 2019, filed with the SEC on March 20, 2020. Information regarding Mid-Con’s directors and executive officers is available in its Annual Report on Form 10-K for the year ended December 31, 2019, filed with the SEC on March 12, 2020 and its Current Reports on Form 8-K, filed with the SEC on June 10, 2020 and August 6, 2020. These documents may be obtained free of charge from the sources indicated above. Other information regarding the participants in the proxy solicitation and a description of their direct and indirect interests, by security holdings or otherwise, will be contained in the Form S-4, the Consent Statement/Proxy Statement/Prospectus and other relevant materials relating to the Mid-Con Acquisition to be filed with the SEC when they become available. Shareholders, unitholders, potential investors and other readers should read the Consent Statement/Proxy Statement/Prospectus carefully when it becomes available before making any voting or investment decisions.

Forward-Looking Statements and Cautionary Statements

This press release contains 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, as amended. These statements are based on Contango’s current expectations and include statements regarding our estimates of future production and other guidance (including information regarding production, lease operating expenses, cash G&A expenses, and DD&A Rate), the Company’s pending acquisition of Mid-Con, amendments to and borrowing base of the Company’s Credit Agreement, the Company’s drilling program and capital expenditures, our liquidity and access to capital, expected reduction in overall drilling costs, the potential impact of the COVID-19 pandemic including reduced demand for oil and natural gas, the low and volatile commodity price environment, our new fee for services offering, the impact of our derivative instruments, the accuracy of our projections of future production, future results of operations, ability to identify and complete acquisitions, ability to realize expected benefits of acquisitions the quality and nature of the asset base, our outlook in the current industry downturn, the assumptions upon which estimates are based and other expectations, beliefs, plans, objectives, assumptions, strategies or statements about future events or performance. Words and phrases used to identify our forward-looking statements include terms such as “guidance”, “expects”, “projects”, “anticipates”, “believes”, “plans”, “estimates”, “potential”, “possible”, “probable”, “intends”, “forecasts”, “view”, “efforts”, “goal”, “positions” or words and phrases stating that certain actions, events or results “may”, “will”, “should”, or “could” be taken, occur or be achieved. Statements concerning oil and gas reserves also may be deemed to be forward-looking statements in that they reflect estimates based on certain assumptions that the resources involved can be economically exploited. Forward-looking statements are based on current expectations, estimates and projections that involve a number of risks and uncertainties, which could cause actual results to differ materially from those reflected in the statements. These risks include, but are not limited to: the risks of the oil and gas industry (for example, operational risks in exploring for, developing and producing crude oil and natural gas; risks and uncertainties involving geology of oil and gas deposits; the uncertainty of reserve estimates; the uncertainty of estimates and projections relating to future production, costs and expenses; potential delays or changes in plans with respect to exploration or development projects or capital expenditures; health, safety and environmental risks and risks related to weather such as hurricanes and other natural disasters); risks relating to the Company’s pending acquisition of Mid-Con, including the risk that the acquisition will not be completed on the timeline or terms currently contemplated, that the Company’s and Mid-Con’s businesses will not be integrated successfully, that the cost savings, synergies and growth from the acquisition may not be fully realized or may take longer to realize than expected, and that management attention will be diverted to transaction-related issues; potential liability resulting from litigation related to the Mid-Con acquisition; the risk that transaction costs for the Mid-Con Acquisition may be higher than anticipated; the effect of our pending acquisition (or announcement thereof) of Mid-Con on our stock price or Mid-Con’s unit price; uncertainties as to the availability and cost of financing; our relationships with lenders; our ability to comply with financial covenants in our debt instruments, repay indebtedness and access new sources of indebtedness and/or provide additional liquidity for future capital expenditures; any reduction in our borrowing base and our ability to avoid or repay excess borrowings as a result of such reduction; our ability to execute on our strategy, including execution of acquisitions, any changes in our strategy or our fee for service offering; fluctuations in or sustained low commodity prices; availability and effect of storage of production; expected benefits of and risks associated with derivative positions; our ability to realize cost savings; our ability to execute on and realize expected value from acquisitions and to complete strategic dispositions of assets and realize the benefits of such dispositions; the need to take impairments on properties due to lower commodity prices; the limited trading volume of our common stock and general trading market volatility; outbreaks and pandemics, even outside our areas of operation, including COVID-19 and the resulting economic slowdown, governmental actions, stay-at-home orders, and other interruptions to our operations; the ability of our management team to execute its plans or to meet its goals; shortages of drilling equipment, oil field personnel and services; unavailability of gathering systems, pipelines and processing facilities; the possibility that government policies may change or governmental approvals may be delayed or withheld; and the other factors discussed in our reports filed or furnished with the SEC, including under the “Risk Factors” heading in our annual report on Form 10-K for the year ended December 31, 2019 and our quarterly reports on Form 10-Q filed with the SEC. Additional information on these and other factors, many of which may be unknown or unpredictable at this time, which could affect Contango’s operations or financial results are included in Contango’s reports on file with the SEC. Investors are cautioned that any forward-looking statements are not guarantees of future performance and actual results or developments may differ materially from the projections in the forward-looking statements. Forward-looking statements speak only as of the date they were made and are based on the estimates and opinions of management at the time the statements are made. Contango does not assume any obligation to update forward-looking statements should circumstances or management’s estimates or opinions change, except as required by law. Initial production rates are subject to decline over time and should not be regarded as reflective of sustained production levels. Initial production rates of wells and initial indications of formation performance or the benefits of any transaction are not necessarily indicative of future or long-term results. Reserves and PV-10 are not necessarily representative of future cash flows and production.

Contact:
Contango Oil & Gas Company
E. Joseph Grady – 713-236-7400
Senior Vice President and Chief Financial and Accounting Officer

AUSTIN, Texas, Nov. 16, 2020 (GLOBE NEWSWIRE) — Open Lending Corporation (NASDAQ: LPRO) (“Open Lending”), a leading provider of lending enablement and risk analytics solutions to financial institutions, today announced that the Company will be participating in a fireside chat at the Stephens Virtual Investment Conference on Tuesday, November 17, 2020. The discussion will begin at 11:00am ET and can be accessed by visiting the Company’s investor relations website at https://investors.openlending.com/ under the “Events” section.

About Open Lending

Open Lending (Nasdaq: LPRO), through its flagship product, Lenders Protection, offers loan analytics, risk-based pricing, risk modeling and default insurance, ensuring profitable auto loan portfolios for financial institutions throughout the United States. For more information, please visit www.OpenLending.com.

Contact:

ICR for Open Lending
Investors
[email protected]

BRYAN, Texas, Nov. 16, 2020 (GLOBE NEWSWIRE) — iBio, Inc. (NYSEA:IBIO) (“iBio” or the “Company”), a biotech innovator and biologics contract manufacturing organization, today announced its financial results for the fiscal quarter ended September 30, 2020.

“We made tremendous strides during the first few months of Fiscal Year 2021 in executing our strategy to transform iBio from a modestly performing contract manufacturer into a dynamic, diversified, innovative biotechnology company,” said Tom Isett, Chairman & CEO of iBio.

F
iscal
First
Q
uarter
and Recent
Business
Developments:

Research & Bioprocessing
Products
(
“
RBP
”
)

• In October 2020, iBio entered into an agreement with Safi Biosolutions, Inc. (“Safi”) to evaluate iBio’s FastPharming^® System for the expression of key proteins to be used in the bioprocessing of Safi blood cell therapy products.
• To-date, iBio has already demonstrated the ability to express more than a dozen recombinant proteins related to the project. The Company plans to commercialize cytokines and growth factors not designated as “customs” for the Safi bioprocess and offer them as part of iBio’s new catalog of proteins for research and further manufacturing uses.

Vaccines

• In August 2020, the Company announced that IBIO-201 demonstrated an ability to elicit an anti-SARS-CoV-2 immune response in preclinical studies.
• In September 2020, iBio selected IBIO-201 as its leading candidate for the prevention of SARS-CoV-2 infection.
• The Company continues preclinical development of its Virus Like Particle (VLP) platform as well as IBIO-400, a subunit vaccine for classical swine fever. Additionally, iBio has selected a Contract Research Organization to support toxicology studies for IBIO-201, and initiated discussions with the U.S. Food and Drug Administration regarding the Company’s COVID-19 vaccine programs.

Therapeutics

• In August 2020, iBio entered into an exclusive worldwide license agreement with Planet Biotechnology Inc., for the development of a COVID-19 therapeutic candidate based on an ACE2-Fc immunoadhesin.

Contract Development and Manufacturing
(“CDMO”)
Services

• Increased revenues approximately 280% over Q1 FY2020.

“We demonstrated our biopharmaceutical candidate development capabilities by creating, in-licensing, or advancing two vaccines and two therapeutics,” commented Mr. Isett. “Meanwhile, the Safi partnership represents both a new FastPharming Services customer, as well as a pathway for iBio to develop our own portfolio of recombinant protein products for RBP uses. And, despite focusing primarily on our new biopharmaceutical candidates for fibrotic and infectious diseases, we successfully increased our CDMO Services revenues in the period, while diversifying and growing our customer base.”

Fiscal
First
Quarter
and Recent
Corporate
Developments
:

• In October 2020, iBio appointed Dr. Linda Armstrong, Dr. Alexandra Kropotova and Gary Sender to its Board of Directors.
• In November 2020, the Company appointed Randy J. Maddux as its Chief Operating Officer, effective December 1, 2020.
• Fiscal year to-date, iBio increased staffing by approximately 21% to 57 employees, including the new position of Head of Animal Health Programs.

“Finally, we increased our bench strength and enhanced our leadership team, adding Randy J. Maddux as Chief Operating Officer, and welcoming three highly accomplished Directors to our Board. Their combined experience and expertise should be invaluable as we execute the next phase of our growth strategy,” said Mr. Isett.

Financial Results:

For the fiscal quarter ended September 30, 2020, iBio reported revenues of approximately $0.4 million, an increase of $0.3 million from approximately $0.1 million in the fiscal quarter ended September 30, 2019. The increase is attributable to revenue generated from two new customers. As of September 30, 2020, revenue backlog was approximately $2.4 million.

Total operating expenses, consisting primarily of research and development (“R&D”) and general and administrative (“G&A”) expenses, for the fiscal quarter ended September 30, 2020 were approximately $7.3 million, compared with approximately $4.0 million in the same period of 2019.

R&D expenses for the for the fiscal quarter ended September 30, 2020 were approximately $1.8 million, compared with approximately $1.0 million in the same period of 2019. The increase in R&D expense of approximately $0.8 million was primarily related to an increase in laboratory supplies of approximately $0.7 million and an increase in R&D personnel costs of approximately $0.1 million.

G&A expenses for the fiscal quarter ended September 30, 2020 were approximately $5.5 million, compared with approximately $3.0 million in the same period of 2019. The increase resulted primarily from higher professional and consulting fees and facility repairs and maintenance.

Other expense for the fiscal quarter ended September 30, 2020 was approximately $0.6 million, consistent with the same period of 2019.

Net loss attributable to iBio stockholders for the fiscal quarter ended September 30, 2020 was approximately $7.5 million, or $0.05 per share, compared with a net loss of approximately $4.5 million, or $0.21 per share, in the same period of 2019.

As of September 30, 2020, iBio had cash and investments in securities of approximately $83.5 million, compared with approximately $55.1 million as of June 30, 2020.

Webcast and Conference Call

iBio management will host a webcast and conference call at 4:30 p.m. Eastern Time today, November 16, 2020, to discuss these results and provide a corporate update.

The live and archived webcast may be accessed on the Company’s website at www.ibioinc.com under “News and Events” in the Investors section. The live call can be accessed by dialing (833) 672-0651 (domestic) or (929) 517-0227 (international) and entering conference code: 2546666.

About iBio, Inc.

iBio is a global leader in plant-based biologics manufacturing. Its FastPharming^® System combines vertical farming, automated hydroponics, and glycan engineering technologies to rapidly deliver high-quality monoclonal antibodies, vaccines, bioinks and other proteins. The Company’s subsidiary, iBio CDMO LLC, provides FastPharming Contract Development and Manufacturing Services. iBio’s Glycaneering Development Service™ includes an array of new glycosylation technologies for engineering high-performance recombinant proteins. Additionally, iBio is developing proprietary products, which include IBIO-100 for the treatment of fibrotic diseases, and vaccines for infectious diseases. For more information, visit www.ibioinc.com.

FORWARD-LOOKING STATEMENTS

Certain statements in this press release constitute “forward-looking statements” within the meaning of the federal securities laws. Words such as “may,” “might,” “will,” “should,” “believe,” “expect,” “anticipate,” “estimate,” “continue,” “predict,” “forecast,” “project,” “plan,” “intend” or similar expressions, or statements regarding intent, belief, or current expectations, are forward-looking statements. These forward-looking statements are based upon current estimates and assumptions and include statements regarding commercializing cytokines and growth factors not designated as “customs” for the Safi bioprocess by offering them as part of the Company’s new catalog of proteins for research and further manufacturing uses, developing its own portfolio of recombinant protein products for RBP uses, the contributions to be made by the newly appointed Chief Operating Officer and directors and executing on the next phase of our growth strategy. While the Company believes these forward-looking statements are reasonable, undue reliance should not be placed on any such forward-looking statements, which are based on information available to us on the date of this release. These forward-looking statements are subject to various risks and uncertainties, many of which are difficult to predict that could cause actual results to differ materially from current expectations and assumptions from those set forth or implied by any forward-looking statements. Important factors that could cause actual results to differ materially from current expectations include, among others, the Company’s ability to commercialize cytokines and growth factors not designated as “customs” for the Safi bioprocess, the Company’s ability to develop its own portfolio of recombinant protein products for RBP uses, the Company’s ability to leverage the experience and expertise of the newly appointed Chief Operating Officer and directors, the Company’s ability to execute on its growth strategy, the Company’s ability to obtain regulatory approvals for commercialization of its product candidates, including its COVID-19 vaccines, or to comply with ongoing regulatory requirements, regulatory limitations relating to its ability to promote or commercialize the Company’s product candidates for specific indications, acceptance of the Company’s product candidates in the marketplace and the successful development, marketing or sale of the Company’s products, the Company’s ability to maintain its license agreements, the continued maintenance and growth of its intellectual property portfolio, the Company’s ability to establish and maintain collaborations, the Company’s ability to obtain or maintain the capital or grants necessary to fund its research and development activities, competition, the Company’s ability to retain its key employees or maintain its NYSE American listing, and the other risk factors discussed in the Company’s most recent Annual Report on Form 10-K and the Company’s subsequent filings with the SEC, including subsequent periodic reports on Forms 10-Q and 8-K. The information in this release is provided only as of the date of this release, and we undertake no obligation to update any forward-looking statements contained in this release on account of new information, future events, or otherwise, except as required by law.

Contact
s
:

Stephen Kilmer
iBio, Inc.
Investor Relations
(646) 274-3580
[email protected]

iBio, Inc. and Subsidiaries
Condensed Consolidated Balance Sheets
(In Thousands, except share and per share amounts)
		September 30,				June 30,
		2020				2020
		(Unaudited)				(See Note 2)
Assets
Current assets:
Cash and cash equivalents	$	77,543			$	55,112
Accounts receivable – trade		300				75
Subscription receivable		–				5,549
Investments in securities		6,010				–
Work in process		843				798
Prepaid expenses and other current assets		263				214
Total Current Assets		84,959				61,748
Finance lease right-of-use assets, net of accumulated amortization		27,201				27,616
Fixed assets, net of accumulated depreciation		3,834				3,657
Intangible assets, net of accumulated amortization		1,236				1,144
Security deposit		24				24
Total Assets	$	117,254			$	94,189
Liabilities and Equity
Current liabilities:
Accounts payable (related parties of $124 and $6 as of September 30, 2020 and June 30, 2020, respectively)	$	1,602			$	1,759
Accrued expenses (related party of $847 and $705 as of September 30, 2020 and June 30, 2020, respectively)		1,406				1,105
Note payable – PPP Loan – current portion		362				261
Finance lease obligation – current portion		306				301
Contract liabilities		1,370				1,810
Total Current Liabilities		5,046				5,236
Note payable – PPP Loan – net of current portion		238				339
Finance lease obligation – net of current portion		31,928				32,007
Total Liabilities		37,212				37,582
Commitments and Contingencies
Equity
iBio, Inc. Stockholders’ Equity:
Preferred stock – no par value; 1,000,000 shares authorized; iBio CMO Preferred Tracking Stock; 1 share authorized, issued and outstanding as of both September 30, 2020 and June 30, 2020		–				–
Series B Convertible Preferred Stock – $1,000 stated value; 5,785 shares authorized; 0 and 5,785 shares issued and outstanding as of September 30, 2020 and June 30, 2020		–				–
Common stock – $0.001 par value; 275,000,000 shares authorized; 180,317,751 and 140,071,110 shares issued and outstanding as of September 30, 2020 and June 30, 2020, respectively		180				140
Additional paid-in capital		237,867				206,931
Accumulated other comprehensive loss		(40	)			(33	)
Accumulated deficit		(157,953	)			(150,420	)
Total iBio, Inc. Stockholders’ Equity		80,054				56,618
Noncontrolling interest		(12	)			(11	)
Total Equity		80,042				56,607
Total Liabilities and Equity	$	117,254			$	94,189

iBio, Inc. and Subsidiaries
Condensed Consolidated Statements of Operations and Comprehensive Loss
(Unaudited; in Thousands, except per share amounts)
	Three Months Ended
	September 30,
	2020				2019
Revenues	$	410			$	108
Operating expenses:
Research and development (related party of $0 and $97)		1,762				977
General and administrative (related parties of $393 and $321)		5,572				2,986
Total operating expenses		7,334				3,963
Operating loss		(6,924	)			(3,855	)
Other income (expense):
Interest expense – related party		(614	)			(620	)
Interest income		4				4
Royalty income		–				7
Total other income (expense)		(610	)			(609	)
Consolidated net loss		(7,534	)			(4,464	)
Net loss attributable to noncontrolling interest		1				1
Net loss attributable to iBio, Inc.		(7,533	)			(4,463	)
Preferred stock dividends		(66	)			(66	)
Net loss available to iBio, Inc.	$	(7,599	)		$	(4,529	)
Comprehensive loss:
Consolidated net loss	$	(7,534	)		$	(4,464	)
Other comprehensive loss – unrealized loss on securities		(7	)			–
Other comprehensive loss – foreign currency translation adjustments		–				(1	)
Comprehensive loss	$	(7,541	)		$	(4,465	)
Loss per common share attributable to iBio, Inc. stockholders – basic and diluted	$	(0.05	)		$	(0.21	)
Weighted-average common shares outstanding – basic and diluted		162,442				21,923