PR Newswire | Aug 16, 2021 04:06PM EDT

08/16 15:05 CDT

Kubient Reports Second Quarter 2021 Results NEW YORK, Aug. 16, 2021

NEW YORK, Aug. 16, 2021 /PRNewswire/ -- Kubient, Inc. (NasdaqCM: KBNT, KBNTW) ("Kubient" or the "Company"), a cloud-based software platform for digital advertising, today reported financial results for the second quarter ended June 30, 2021.

Second Quarter 2021 and Recent Operational Highlights

* Revealed figures on the state of ad fraud as identified by the company's proprietary ad fraud detection tool, Kubient Artificial Intelligence ("KAI") * Hired Mike Gavigan and Mark St. Amour as Vice Presidents of Performance Media * Joined the Russell Microcap(r) Index at the conclusion of the 2021 Russell indexes annual reconstitution * Elected digital advertising experts Jon Bond and Larry Harris as new members of the Board of Directors * Onboarded Kim Kahn as VP of People Operations * Appointed former MediaMath and DoubleVerify executive, Leon Zemel, as Chief Product Officer * Publisher inventory that Kubient can monetize, or ad impression opportunities, for the Audience Cloud, Kubient's flexible open marketplace for both advertisers and publishers to reach, monetize and connect their audiences, increased 54.6% from Q1 2020 to Q2 2021 * The number of total direct publisher partnerships that have authorized Kubient to sell their inventory is currently 3,568 * During the three months ended June 30, 2021, the number of KAI audits scheduled by prospective customers was 13. For the first six-months of 2021, the Company has scheduled 27 KAI audits

Management Commentary"The past few months have been encouraging, as we executed a non-binding LOI with an acquisition target, witnessed a surge in demand for KAI audits from prospective customers and supplemented our senior leadership team with highly experienced individuals," said Kubient Founder, Chairman, CSO, and Interim CEO Paul Roberts. "After an extensive M&A vetting process, we believe that we have identified an ad-tech company that has created a unique ad unit for publishers to monetize their traffic. This company could provide us access to the publishers, brands and DSPs that use this technology to sell and buy media, respectively, and might also help us capture all the data that flows in between those partners, thereby potentially increasing the power of KAI to identify and prevent non-human traffic. As such, we have executed a non-binding LOI in order to initiate due diligence regarding a possible acquisition or other business combination with the company. There can be no assurances that the non-binding LOI will result in any such acquisition or business transaction, but we look forward to providing public updates through the proper Regulation FD channels when and if deemed appropriate.

"Additionally, although we face macro-economic headwinds of current supply outweighing demand in the job market, we plan to be selective in our onboarding process of bringing top talent within our sales and engineering teams. As we head into the second half of the year, we're confident that our forward-looking strategies of hiring the right employees, partnering with high-quality partners and customers, an active M&A strategy with Lake Street Capital Markets, which assisted in identifying the acquisition target and will continue to assist us in identifying additional targets, and a compelling slate of industry leading products will prime us for growth in our efforts of transitioning Kubient from a start-up to an industry leading ad-tech marketplace."

Second Quarter 2021 Financial ResultsNet revenues increased to approximately $498,000 compared to approximately $92,000 in the same period last year. The year-over-year increase in net revenue was primarily due to the increase in revenue from one new customer during the three months ended June 30, 2021.

Technology expenses increased to approximately $620,000 from approximately $497,000 in the same period last year. The year-over-year increase was as a result of increases in salary expense of approximately $80,000 arising from an increase in technology personnel headcount, consulting expense of approximately $22,000 and cloud hosting costs of approximately $37,000.

General and administrative expenses increased to approximately $1.1 million compared to approximately $602,000 in the same period last year. The year-over-year increase in general and administrative expenses was primarily due to increases in salary expense of approximately $154,000 arising from an increase in general and administrative headcount, approximately $259,000 in professional fees and approximately $118,000 of insurance expense.

GAAP net loss was approximately $1.7 million, or $(0.12) loss per share, compared to a net loss of approximately $1.5 million, or $(0.42) loss per share, in the same year-ago period. The year-over-year increase in net loss was primarily due to increases in operating expenses as enumerated above.

Adjusted EBITDA, a non-GAAP measure, decreased to approximately $(1.6) million, compared to an adjusted EBITDA of approximately $(957,000) in the same period last year.

As of June 30, 2021, the Company had a cash balance of approximately $30.5 million.

Conference CallKubient will hold a conference call today (August 16, 2021) at 4:30 p.m. Eastern time (1:30 p.m. Pacific time) to discuss these results.

Kubient management will host the conference call, followed by a question and answer period.

U.S. dial-in: 1-800-915-4586International dial-in: 1-212-231-2914

Please call the conference telephone number 10 minutes prior to the start time. An operator will register your name and organization. If you have any difficulty connecting with the conference call, please contact Gateway Investor Relations at 949-574-3860.

The conference call will be broadcast live and available for replay here and via the Investor Relations section of Kubient's website.

A telephonic replay of the conference call will be available after 7:30 p.m. Eastern time on the same day through August 23, 2021.

Toll-free replay number: 1-844-512-2921International replay number: 1-412-317-6671Replay ID: 21996441

About KubientKubient is a technology company with a mission to transform the digital advertising industry to audience-based marketing. Kubient's next generation cloud-based infrastructure enables efficient marketplace liquidity for buyers and sellers of digital advertising. The Kubient Audience Cloud is a flexible open marketplace for advertisers and publishers to reach, monetize and connect their audiences. The Company's platform provides a transparent programmatic environment with proprietary artificial intelligence-powered pre-bid ad fraud prevention, and proprietary real-time bidding (RTB) marketplace automation for the digital out of home industry. The Audience Cloud is the solution for brands and publishers that demand transparency and the ability to reach audiences across all channels and ad formats. For additional information, please visit https://kubient.com.

Forward-Looking StatementsThe information contained herein includes forward-looking statements. These statements relate to future events or to our future financial performance, and involve known and unknown risks, uncertainties and other factors that may cause our actual results, levels of activity, performance, or achievements to be materially different from any future results, levels of activity, performance or achievements expressed or implied by these forward-looking statements. You should not place undue reliance on forward-looking statements since they involve known and unknown risks, uncertainties and other factors which are, in some cases, beyond our control and which could, and likely will, materially affect actual results, levels of activity, performance or achievements. Any forward-looking statement reflects our current views with respect to future events and is subject to these and other risks, uncertainties and assumptions relating to our operations, results of operations, growth strategy and liquidity. We assume no obligation to publicly update or revise these forward-looking statements for any reason, or to update the reasons actual results could differ materially from those anticipated in these forward-looking statements, even if new information becomes available in the future. The safe harbor for forward-looking statements contained in the Securities Litigation Reform Act of 1995 protects companies from liability for their forward-looking statements if they comply with the requirements of the Act.

Non-GAAP MeasuresThe Company defines EBITDA as net income (loss) before interest (including non-cash interest), taxes and depreciation and amortization. The Company defines Adjusted EBITDA as EBITDA, further adjusted to eliminate the impact of certain non-recurring items and other items that we do not consider in our evaluation of our ongoing operating performance from period to period. These items will include stock-based compensation that the Company does not believe reflects the underlying business performance.

EBITDA and Adjusted EBITDA is a financial measure that is not calculated in accordance with accounting principles generally accepted in the United States of America ("U.S. GAAP"). Management believes that because Adjusted EBITDA excludes (a) certain non-cash expenses (such as depreciation, amortization and stock-based compensation) and (b) expenses that are not reflective of the Company's core operating results over time (such as stock-based compensation expense), this measure provides investors with additional useful information to measure the Company's financial performance, particularly with respect to changes in performance from period to period. The Company's management uses EBITDA and Adjusted EBITDA (a) as a measure of operating performance, (b) for planning and forecasting in future periods, and (c) in communications with the Company's board of directors concerning the Company's financial performance. The Company's presentation of EBITDA and Adjusted EBITDA are not necessarily comparable to other similarly titled captions of other companies due to different methods of calculation and should not be used by investors as a substitute or alternative to net income or any measure of financial performance calculated and presented in accordance with U.S. GAAP. Instead, management believes EBITDA and Adjusted EBITDA should be used to supplement the Company's financial measures derived in accordance with U.S. GAAP to provide a more complete understanding of the trends affecting the business.

Although Adjusted EBITDA is frequently used by investors and securities analysts in their evaluations of companies, Adjusted EBITDA has limitations as an analytical tool, and investors should not consider it in isolation or as a substitute for, or more meaningful than, amounts determined in accordance with U.S. GAAP. Some of the limitations to using non-GAAP measures as an analytical tool are (a) they do not reflect the Company's interest income and expense, or the requirements necessary to service interest or principal payments on the Company's debt, (b) they do not reflect future requirements for capital expenditures or contractual commitments, and (c) although depreciation and amortization charges are non-cash charges, the assets being depreciated and amortized will often have to be replaced in the future, and non-GAAP measures do not reflect any cash requirements for such replacements.

Kubient Investor RelationsGateway Investor RelationsMatt Glover and John YiT: 1-949-574-3860Kubient@gatewayir.com

Kubient, Inc.

Condensed Consolidated Statements of Operations

(Unaudited)

For the Three Months Ended

June 30,

2021 2020

Net Revenues $ 497,568 $ 91,537

Operating Expenses:

Sales and marketing 504,380 110,252

Technology 619,692 497,157

General and administrative 1,108,280 601,828

Total Operating Expenses 2,232,352 1,209,237

Loss From Operations (1,734,784) (1,117,700)

Other (Expense) Income:

Interest expense (1,576) (296,516)

Interest expense - related parties - (101,637)

Interest income 33,355 33

Gain on forgiveness of accounts payable - - - supplier

Other income - 10,500

Total Other Income (Expense) 31,779 (387,620)

Net Loss $ (1,703,005) $ (1,505,320)

Net Loss Per Share - Basic and Diluted $ $ (0.12) (0.42)

Weighted Average Common Shares Outstanding -

Basic and Diluted 13,983,195 3,601,838

Kubient, Inc.

Consolidated Balance Sheets

June 30, December 31,

2021 2020

(unaudited)

Assets

Current Assets:

Cash $ 30,462,437 $ 24,782,128

Accounts receivable, net 494,940 1,373,754

Prepaid expenses and other current assets 160,417 107,651

Total Current Assets 31,117,794 26,263,533

Intangible assets, net 2,562,717 1,071,850

Property and equipment, net 23,259 17,166

Deferred offering costs 33,905 10,000

Total Assets $ 33,737,675 $ 27,362,549

Liabilities and Stockholders' Equity

Current Liabilities:

Accounts payable - suppliers $ 352,089 $ 336,028

Accounts payable - trade 715,279 1,106,604

Accrued expenses and other current liabilities 492,540 1,032,282

Notes payable 328,753 218,461

Total Current Liabilities 1,888,661 2,693,375

Notes payable, non-current portion 77,337 187,629

Total Liabilities 1,965,998 2,881,004

Commitments and contingencies (Note 6)

Stockholders' Equity:

Preferred stock, $0.00001 par value; 5,000,000 shares authorized;

No shares issued and outstanding

as of June 30, 2021 and December 31, 2020 - -

Common stock, $0.00001 par value; 95,000,000 shares authorized;

14,252,885 and 11,756,109 shares issued and outstanding

as of June 30, 2021 and December 31, 2020, respectively 143 118

Additional paid-in capital 51,560,228 40,770,504

Accumulated deficit (19,788,694) (16,289,077)

Total Stockholders' Equity 31,771,677 24,481,545

Total Liabilities and Stockholders' Equity $ 33,737,675 $ 27,362,549

Kubient, Inc.

Consolidated Statements of Cash Flows

(Unaudited)

For the Six Months Ended

June 30,

2021 2020

Cash Flows From Operating Activities:

Net loss $ (3,499,617) $ (1,563,418)

Adjustments to reconcile net loss to net cash used in operating activities:

Depreciation and amortization 159,293 139,145

Bad debt expense - 3,734

Gain on forgiveness of accounts payable - supplier - (236,248)

Stock-based compensation:

Stock options 5,085 10,817

Common stock 255,667 73,125

Amortization of debt discount and debt issuance costs - 585,409

Amortization of debt discount and debt issuance costs - related parties - 173,236

Changes in operating assets and liabilities:

Accounts receivable 878,814 (537,681)

Prepaid expenses and other current assets (52,766) (1,317)

Accounts payable - suppliers 16,061 (7,999)

Accounts payable - trade (404,930) 209,292

Accrued expenses and other current liabilities (334,280) 373,284

Accrued interest (3,975) 133,741

Accrued interest - related parties - 37,355

Net Cash Used In Operating Activities (2,980,648) (607,525)

Cash Flows From Investing Activities:

Purchase of intangible assets (1,114,072) (355,019)

Purchase of property and equipment (10,181) (2,316)

Net Cash Used In Investing Activities (1,124,253) (357,335)

Cash Flows From Financing Activities:

Proceeds from exercise of warrants [1] 9,787,149 -

Proceeds from exercise of options 8,361

Proceeds from issuance of notes payable - 406,190

Proceeds from issuance of notes payable - related parties - 585,000

Payment of deferred offering costs (10,300) (15,000)

Net Cash Provided By Financing Activities 9,785,210 976,190

Net Increase In Cash 5,680,309 11,330

Cash - Beginning of the Period 24,782,128 33,785

Cash - End of the Period $ 30,462,437 $ 45,115

Kubient, Inc.

Reconciliation Adjusted EBITDA

(Unaudited)

For the Three Months Ended

June 30,

2021 2020

Net Loss $ (1,703,005) $ (1,505,320)

Interest expense 1,576 296,516

Interest expense - related parties - 101,637

Interest income (33,355) (33)

Depreciation and amortization 81,914 88,030

EBITDA (1,652,870) (1,019,170)

Adjustments:

Stock-based compensation expense 19,538 62,423

Adjusted EBITDA $ (1,633,332) $ (956,747)

Adjusted Loss Per Share $ (0.12) $ (0.27)

Weighted Average Common Shares Outstanding -

Basic and Diluted 13,983,195 3,601,838

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SOURCE Kubient