Market Overview

3PEA Reports Full Year 2018 Financial Results

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2018 Revenue up 53.8% to a Record $23.4 Million, DrivesNet Income of
$2.6 Million and Adjusted EBITDA of $4.9 Million

3PEA International, Inc. (NASDAQ: TPNL),
a vertically integrated provider of innovative prepaid card programs and
processing services for corporate, consumer and government applications,
reported financial results for the fourth quarter and full year ended
December 31, 2018.

Financial Highlights

  • Revenue for the year ending December 31, 2018 was $23.4 million, an
    increase of 54% compared to $15.2 million the prior year.
  • Gross profit increased 70% to $11.4 million or 49% of revenues,
    compared to $6.7 million or 44% of revenues in 2017.
  • Total operating expenses were $8.9 million compared to $4.9 million
    the prior year.
  • Net Income attributable to 3PEA was $2.6 million, an increase of 44%
    compared to $1.8 million the prior year. Earnings per basic share was
    $.06 versus $.04 the prior year.
  • Non-GAAP Adjusted EBITDA was $54.9 million, an increase of 65%
    compared to $3.0 million in 2017. Non-GAAP Fully Diluted EPS was $.09
    as compared to $.06 the prior year.
  • Our revenue conversion rate of gross dollar volume loaded on cards was
    3.77%, or 377 bps in 2018 compared to 3.75% or 375 bps in the prior
    year.

Financial Guidance

  • The company reiterates its previously released revenue guidance for
    2019 of $38.0 to $40.0 million, representing a 62% to 71% increase
    compared to $23.4 million for full year 2018.
  • Today, the company sets Adjusted EBITDA guidance at $10.0 to $12.0
    million, representing a 104% to 145% increase compared to $4.9 million
    for full year 2018.

2018 Financial Results

Revenues for the year ended December 31, 2018 were $23,423,675, an
increase of $8,189,584 compared to the year ended December 31, 2017,
when revenues were $15,234,091. The increase in revenue of 54% was
primarily due to an increase in the number of new corporate incentive
prepaid card programs and growth within our existing programs.

Cost of revenues were $12,026,452, an increase of $3,492,180 compared to
2017, when cost of revenues were $8,534,272. Cost of revenues were 51%
and 56% of total revenues in 2018 and 2017, respectively. Our cost of
revenues as a percentage of revenues decreased due to improved network
interchange margins and a favorable client mix.

Selling, general and administrative expenses ("SG&A") were $7,835,074,
an increase of $3,779,238 compared to 2017, when selling, general and
administrative expenses were $4,055,836. The increase in SG&A was
primarily attributable to investments in infrastructure; additions to
our executive leadership team, salesforce and staffing; and an increase
in stock based compensation. The rate of increase is expected to slow in
2019.

Net income attributable to 3PEA International, Inc. was $2,588,054 as
compared to net income of $1,791,141 in 2017, which represents an
increase of $796,913. The overall change in net income is attributable
to the aforementioned factors.

Management Commentary

"We are very pleased with our 2018 results. We recorded record revenue,
opened new markets and produced record net profit," said Mark Newcomer,
Chief Executive Officer, 3PEA International. "In 2018 we achieved
several milestones, including the commencement of trading our common
stock on the NASDAQ Capital Market on August 10th, 2018.
Additionally, we assembled a very experienced board that includes Dan
Henry, the former CEO of Netspend as our Chairman, and Dennis Triplett,
the former CEO of Health Services at UMB Bank. We broadened our industry
focus towards the Pharmaceutical industry, where we are seeing our
traditional card based and virtual payment solutions gain significant
traction into 2019. While 2018 was an exceptional year for 3PEA, we are
even more excited about our future prospects for growth and creating
sustainable shareholder value."

"The company expects continued growth and improved performance across a
number of key financial and operating metrics in 2019. We anticipate
further expansion of gross and net margins, as favorable industry and
client mix contribute to improved cost of sales, and we benefit from
improved operating leverage," stated Mark Attinger, Chief Financial
Officer, 3PEA International.

A conference call and live webcast is scheduled for 5:00pm ET, and will
be available for at least three months at 3pea.com/IR. For more
information click
here
.

About 3PEA International

3PEA International (NASDAQ: TPNL)
is an experienced and trusted prepaid debit card payment solutions
provider as well as an integrated payment processor that has managed
millions of prepaid debit cards in its portfolio. Through its PaySign
brand, 3PEA conceptualizes, develops and manages payment solutions,
prepaid card programs, and customized payment services. 3PEA's corporate
incentive prepaid cards are changing the way corporations reward,
motivate, and engage their current and potential customers, employees,
and agents. 3PEA's customizable prepaid solutions offer significant cost
savings while improving brand recognition and customer loyalty. 3PEA's
customers include healthcare companies, major pharmaceutical companies,
large multinationals, prestigious universities, and social media
companies. PaySign is a registered trademark of 3PEA Technologies, Inc.
in the United States and other countries. For more information visit us
at https://3pea.com/ or
follow us on Linkedin,
Twitter
and Facebook.

Forward-Looking Statements

Certain statements in this news release may contain forward-looking
information within the meaning of Rule 175 under the Securities Act of
1933 and Rule 3b-6 under the Securities Exchange Act of 1934, and are
subject to the safe harbor created by those rules. All statements, other
than statements of fact, included in this release, including, without
limitation, statements regarding potential future plans and objectives
of the companies, are forward-looking statements that involve risks and
uncertainties. There is no assurance that such statements will prove to
be accurate, and actual results and future events could differ
materially. 3PEA undertakes no obligation to publicly update or revise
any statements in this release, whether as a result of new information,
future events, or otherwise.

3PEA International, Inc. Non-GAAP Measures

To supplement 3PEA's financial results presented on a GAAP basis, we use
non-GAAP measures of net income that excludes the following cash and
non-cash items – interest, taxes, stock-based compensation, amortization
and depreciation. We believe these non-GAAP measures help investors
better evaluate our past financial performance and potential future
results. Non-GAAP measures should not be considered in isolation or as a
substitute for comparable GAAP accounting and investors should read them
in conjunction with the Company's financial statements prepared in
accordance with GAAP. The non-GAAP measures of net income we use may be
different from, and not directly comparable to, similarly titled
measures used by other companies.

"EBITDA" is defined as earnings before interest, taxes, depreciation and
amortization expense. "Adjusted EBITDA" reflects the adjustment to
EBITDA to exclude stock-based compensation charges.

Adjusted EBITDA is not intended to represent cash flows from operations,
operating income (loss) or net income (loss) as defined by U.S. GAAP as
indicators of operating performances. Management cautions that amounts
presented in accordance with 3PEA's definition of Adjusted EBITDA may
not be comparable to similar measures disclosed by other companies
because not all companies calculate Adjusted EBITDA in the same manner.

CONSOLIDATED RESULTS
3PEA INTERNATIONAL, INC.,
CONSOLIDATED STATEMENTS OF INCOME
FOR THE YEARS ENDED DECEMBER 31, 2018 AND 2017
(Audited)    
  For years ended December 31,
2018 2017
 
Revenue $ 23,423,675 $ 15,234,091
 
Cost of Revenues   12,026,452     8,534,272  
 
Gross Profit 11,397,223 6,699,819
Gross Margin % 48.7 % 44.0 %
 
Operating Expense
Selling, General & Administrative 7,835,074 4,055,836
Depreciation & Amortization   1,089,521     876,191  
 
Total Operating Expense 8,924,595 4,932,027
 
Operating Income 2,472,628 1,767,792
 
Other Income/ (Expense)
Other (31,125 ) 16,315
Interest   139,738     7,603  
 
Total Other Income/ (Expense) 108,613 23,918
 
Income before noncontrolling interest 2,581,241 1,791,710
Provision for Taxes
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