Mr. Paul Ghezzi reports

KONTROL TECHNOLOGIES ANNOUNCES FOURTH QUARTER AND FISCAL YEAR 2023 FINANCIAL RESULTS

Kontrol Technologies Corp. has released its results for the three months and fiscal year ended Dec. 31, 2023.

"The positive annual performance demonstrates the company's success in achieving its key strategic objectives," said Paul Ghezzi, chief executive officer of Kontrol Technologies. "On a continuing operations basis, revenue, gross profit, earnings and positive cash flow from operating activities increased for the year ended Dec. 31, 2023, compared to the prior year (comparative period excludes discontinued operations). Further, we have strengthened the balance sheet through significant debt reduction."

Fourth quarter and fiscal year 2023 highlights:

• Revenues from continuing operations for the year ended Dec. 31, 2023, were $18.8-million, up 16 per cent over the prior year. Revenues from continuing operations for the three months ended Dec. 31, 2023, were $5.1-million.
• Gross profit from continuing operations for the year ended Dec. 31, 2023, was $11.6-million, up 32 per cent over the prior year. Gross margin from continuing operations for the year ended Dec. 31, 2023, was 61 per cent, compared to 54 per cent in the prior year.
• Adjusted EBITDA (earnings before interest, taxes, depreciation and amortization) from continuing operations for the year ended Dec. 31, 2023, was $3.6-million, compared with $1.8-million in the prior year.
• Cash flows from operating activities were positive $3.7-million for the year ended Dec. 31, 2023, compared with cash flows used in operating activities of $3.9-million in the prior year.
• Net loss from continuing operations for the year ended Dec. 31, 2023, was $381.
• In Q4 2023, the company took a one-time non-cash charge in the restructuring and consolidation of its building solutions brand and services under the new brand of Kontrol Buildings (formerly New Found Air) of $2,268,753.

Credit agreement

In Q1 2024, the company entered into an amended credit agreement with its secured lender, a Schedule A Canadian bank, and exited from the forbearance agreement, thereby returning to regular commercial borrowing (see press release dated March 28, 2024).

Sale of Ortech Consulting Inc.

On Dec. 29, 2023, Kontrol completed the sale of its operating subsidiary Ortech Consulting. The structure of transaction involved the sale of operational assets to the purchaser and the purchaser assumed certain liabilities based upon the terms and conditions contained in the agreement. The sale price was $6.1-million. Working capital of approximately $600,000 was retained by the company. Cash proceeds were $6.1-million less closing costs and less an indemnity holdback of $300,000. The company recognized a gain on sale of assets of approximately $2.5-million.

Balance sheet

Following the 2023 year-end, the company has continued to pay down its secured debt obligations and anticipates that, for the start of Q2 2024, the secured debt obligations will total approximately $3.7-million (see press release dated March 28, 2024).

The global vendor takeback and the CEMSI vendor holdback are currently both in litigation and the company is disputing that the amounts are payable. According to IFRS (international financial reporting standards) accounting policy, both amounts are listed as current obligations of the company on the balance sheet. The company has no intention of paying these amounts based on its legal claims.

A complete set of the financial statements and management discussion and analysis will be filed on SEDAR+.

About Kontrol Technologies Corp.

Kontrol Technologies, a Canadian public company, is a leader in smart buildings and cities through IoT (Internet of Things), cloud and SaaS (software as a service) technology. Kontrol provides solutions and services to its customers to improve energy management, monitor continuous emissions and accelerate the sustainability of all buildings.

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