The First Provider Globally to Offer EWA Via its Own Fully Vertical Tech Stack

XTM Inc. (“XTM” or the “Company”) (QB: XTMIF / CSE:PAID / FSE:7XT), a Miami, Toronto, Denver and London-based Fintech creator of payment innovation including fully certified Earned Wage Access (EWA) through its QRails AnyDay™ product provided an update today on the QRails acquisition and financing.

In March 2023, XTM began the process of negotiating and acquiring QRails. XTM closed the acquisition XTM Closes QRails Acquisition in August 2023. QRails, based in Denver, CO with satellite offices in Atlanta and London, is a cloud-based, API-driven issuer-processor. QRails is widely recognized for its fully certified EWA flagship product AnyDay™ and is the first provider globally to offer EWA via its own fully vertical tech stack that powers its Earned Wage Access solution. XTM, as a publicly traded company, faced complexities in bringing together Canadian and U.S. businesses, resulting in six-months to close the transaction.

“The QRails acquisition creates both significant opportunity and risk for the company with the challenge of supporting the cost of a processor infrastructure prior to its revenue generation,” said Marilyn Schaffer, XTM, CEO. “We do believe the acquisition is worth the stretch, setting us apart from every other competitor in the Earned Wage Access (EWA) space with the ability to control user experience, fraud mitigation, and processing costs, internally. Our competitors spend generally in excess of $1.00 per user per month on processing. XTM’s processing cost will be internal, controlled and allow the company to realize profitability quickly, unsurpassed by its competitors that use third-party vendors.”

Despite the clear advantages of the vertical integration, the company has suffered devaluation as many micro-caps have in this economy but continues to focus on the fundamentals for the inevitable market come-back. The company continues the challenging process of raising operating capital with Fintech funding facing a 40 percent year-over-year funding decline since 2021.ⁱ XTM is in various stages of interaction with financiers in an effort to close near-term on operating capital that will see the company through to cash-flow positive (XTM Financing).

Enablers of Earned Wage Access present a significant opportunity in the Fintech space, as the solution transcends all demographics as the economy tightens and workers need access to their earnings on-demand.ⁱⁱ

“QRails revenue launches in December 2023 with implementation of a Fortune 50 client followed by another Fortune 500 client in quick succession,” said Cary Strange, President, XTM. “The revenue continues to grow and due to the advantage of owning the entire tech stack, the cost of the processing infrastructure becomes negligible, creating a favorable economic environment for XTM.”

The XTM AnyDay platform is the only fully-certified SAP EWA solution SAP Offers AnyDay. QRails also has earned several industry certifications such PCI DSS, SOC1 and SOC2. The XTM team will begin to license the processor to process transactions for other Fintechs and earned wage access providers thereby generating additional revenue from competitive programs.

Highlights:

• On September 28, 2023 XTM announced the securing of an up-to USD $90M debt facility for EWA lending. XTM Secures Debt Facility. The lender approval came weeks after exhaustive due diligence and audits of funds flow, financials, and the technology.
• Live in the UK/EU with 5 new UK contracts launching Q1/24.
• EWA RPU (Revenue Per User) is up 20% reflected in September’s data.
• XTM and QRails’ B2B business model results in a low cost of acquisition and the financial leverage of each integration. For example, through one of its world-class single partners, the AnyDay solution is to be rolled out to millions of prospective EWA users.
• Only fully-certified SAP earned wage access provider. AnyDay is one of only 3 EWA solutions in the SAP marketplace (Worldwide).
• QRails has integrations with most of the major payroll providers and time and attendance technologies, enabling it to have a source of truth for hours worked and net revenue reducing risk and ensuring a sustainable economic model.
• The power that the vertical integration provides in the payment ecosystem sets it apart from competitors. Controlling the processor enables competitive revenue streams, better control of payment speed, the user experience and significantly reduced COGS. The lift is heavy in the beginning, but well worth it once the volume is in place.
• To date there has been more than USD$40M over four years invested in the QRails’ fully industry certified processor including PCI DSS, SOC1 and SOC2.

About XTM

XTM is a Miami, Toronto, Denver and London-based Fintech creator of disruptive payment innovations including fully certified Earned Wage Access through its QRails AnyDay™ product.

Founded in the cloud-banking space to further support businesses to inspire their workforce in the hospitality, personal care and services staffing industries, XTM provides on-demand pay for many large brands including Earls, Maple Leaf Sports & Entertainment, Cactus Club, Marriott Hotels and Live Nation. XTM continues to innovate with further digital featurization to support businesses to inspire workers to want to work more with shift scheduling and call-outs, staff management, expense management, in-app health and financial wellness; and gamified loyalty programs. XTM's Today Financial™ is in use through POS and Payroll integrations and directly through web-portals by thousands of businesses and their workers across Canada and the United States.

About QRails / AnyDay

QRails is a fully owned subsidiary of XTM. A cloud-based, API-driven issuer-processor QRails enables payroll providers, financial institutions and other global fintech companies to keep up with the on-demand economy by delivering innovative digital payment solutions to their employees. QRails helps companies modernize and leverage payroll as a differentiator in attracting and retaining talent all at low to no cost for the employee and employer. QRails’ flagship solution, AnyDay™, is the first provider to own their full tech stack that powers their Earned Wage Access solution.

Founded in 2016, QRails, Inc., together with its U.K. subsidiary, QRails Limited is SAP-certified, QRails also has earned several industry certifications under PCI DSS, and SOC. For more information, please visit www.QRails.com.

This news release contains “forward-looking information” and “forward-looking statements” within the meaning of applicable securities laws (the “forward-looking statements”), within the meaning of applicable Canadian securities legislation, including expected performance of XTM, the expectation that businesses with which XTM does business or have committed to do business will in the expected timeline, the continuing trend toward electronic payment methods, the success of XTM’s intended geographic and business expansions, the success of XTM’s new market relationships, and the general conditions and revenues of XTM. Forward-looking statements are statements that are not historical facts and are generally, although not always, identified by words such as "expect," "plan," "anticipate," "project," "target," "potential," "schedule," "forecast," "budget," "estimate," "intend" or "believe" and similar expressions or their negative connotations, or that events or conditions "will," "would," "may," "could," "should" or "might" occur. All such forward-looking statements are based on the opinions and estimates of management as of the date such statements are made. These forward-looking statements are made as of the date of this news release. Readers are cautioned not to place undue reliance on forward-looking statements, as there can be no assurance that the future circumstances, outcomes or results anticipated in or implied by such forward-looking statements will occur or that plans, intentions or expectations upon which the forward-looking statements are based will occur.

The CSE has not approved nor disapproved the contents of this press release, and the CSE does not accept responsibility for the adequacy or accuracy of this release.

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ⁱ McKinsey: Fintech Growth

ⁱⁱ FT Partners Human Capital Management

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