Q3 Financial Review

In Q3 many of its customers renewed previously paused campaigns due to the COVID-19 crisis resulting in:

• revenues increasing by 64% sequentially to C$2.85M;
• gross margin improving to 50% sequentially from 37%;
• adjusted EBITDA loss improving to approximately C$(0.1)M sequentially from C$(0.6)M.

The above trends are expected to continue and to grow substantially going forward.

Data solutions revenue in Q3/2020 was C$0.7M and now accounts for 25% of the company's overall quarterly revenue. That being said, the largest ad market in the world, the U.S., currently accounts for only 7% of the company's revenue so there is unlimited potential for company growth. We await news of more U.S. deal signings.

Below is a revised summary of related company financials:

Source: Company Reports, S&P Capital IQ, eResearch Corp.

As identified above, eResearch Corp. - the new owner of munKNEE.com - projects the following growth on revenue and EBITDA:

• 2020E: Revenue $10.3 million; EBITDA -$1.1 million;
• 2021E: Revenue $17.8 million; EBITDA $3.0 million;
• 2022E: Revenue $23.2 million; EBITDA $5.6 million

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Source: Company Reports and eResearch Corp.

In addition, eResearch forecasts an equal-weighted price target of C$2.00 based on a DCF valuation of C$2.24/share and a Revenue Multiple valuation of C$1.82/share. Go here to convert the above Canadian dollar figures into other currencies. (If you are interested in eResearch's 12-page Update Report on EQ please click here.)

Stock Performance YTD (in Canadian dollars)

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