Dealnet Reports Profitability in First Quarter 2020

• Increased earnings by $728 thousand from the first quarter of 2019
• Secured a $6.25 million 12-month term loan at prime + 4%
• Prepaid a $1.9 million Chesswood credit facility five months early
• Undertook initiatives to preserve value and conserve liquidity during COVID-19

TORONTO, May 21, 2020 (GLOBE NEWSWIRE) -- Dealnet Capital Corp. ("Dealnet" or the "Company") (TSX VENTURE: DLS), reported today its financial results for the quarter ended March 31, 2020. All results are reported under International Financial Reporting Standards ("IFRS") and in Canadian dollars, unless otherwise specified.

In the first quarter of 2020, the Company earned net income of $114 thousand – the first quarterly positive net income from continuing operations in the Company’s current history – compared to a loss of $614 thousand in the first quarter of 2019.

COVID-19

The full impact of COVID-19 is unknown. The largest impact of COVID-19 on the Company to date has been a significant reduction in the level of originations. The timeframe and degree of contraction remains uncertain and is dependent upon the resumption of business activities by our dealers. A prolonged reduction in origination activity will materially reduce the Company’s cash flows.

COVID-19 will likely increase the level of delinquencies. Delinquencies increased in the first quarter of 2020 due to COVID-19 disruptions, but the level of delinquencies declined in April 2020. To date, payment deferral inquiries have been nominal and only one consumer has submitted an application for a payment deferral so far. There may be future adjustments to our credit provisioning based on both portfolio performance and economic forecasts.

In the first quarter of 2020, One Contact had one of its best quarterly performances even though COVID-19 caused two of its customers to temporarily reduce their volumes and delayed the ramp-up of a major new account.  The call centre business has been classified as an essential service in both Canada and the United States, but there is a risk of a short-term shutdown in the event of a wide-spread COVID-19 infection.

Sufficient Liquidity to Fund On-going Operations

As reported in the fiscal 2019 financial statements, the Company’s ability to continue as a going concern was dependent upon the Company raising liquidity to fund its on-going operations and finance the impacts of COVID-19 on the business. That need for immediate liquidity has now been resolved through the following actions taken by Management: