Mr. Randy Buchamer reports

LEGEND POWER SYSTEMS REPORTS Q3 F2023 FINANCIAL RESULTS

Legend Power Systems Inc. has released its financial results for the three months ended June 30, 2023. The company has also scheduled a conference call to provide a business update to discuss its fiscal Q3 2023 financial results today at 11 a.m. ET (8 a.m. PT) (details herein). The call will be hosted by Randy Buchamer, president and chief executive officer. A complete set of financial statements and management discussion and analysis has been filed on SEDAR+.

Fiscal Q3 2023 highlights:

• Revenue of $470,000 versus $1.02-million in fiscal Q3 2022;
• Adjusted EBITDA (earnings before interest, taxes, depreciation and amortization) loss of $884,000 versus a $1.24-million loss in fiscal Q3 2022;
• Net loss of $1-million versus a $1.49-million loss in fiscal Q3 2022;
• Cash of $522,000, no debt and $2.22-million in working capital at June 30, 2023.

Subsequent event:

• The company completed a non-brokered private placement for gross proceeds of $2,541,080.

"Our focus this quarter remained around advancing sales opportunities, and we currently have new late-stage large deals with very strong financial viability," said Mr. Buchamer. "The handful of late-stage deals could bring over $10-million in new potential bookings near term, with the long-term total pipeline now north of $100-million. More recently, we completed a non-brokered financing for $2.5-million that bolsters the balance sheet and sets the company up financially to execute on the strong pipeline of business we see coming into the end of this year and 2024."

Fiscal Q3 2023 operational highlights:

• The Green Proving Ground program for the U.S. General Services Administration, which operates approximately 1,800 federally owned buildings, is proceeding well. The deployment and evaluation schedule is well under way. Two initial sites have been selected and installations are expected in late 2023.
• The company's channel sales team has grown reseller and ESCO (energy service company) relationships, furthering adoption of both Insights, Power Impact Reports and SmartGate solutions. Target markets and reseller channels continue to respond positively to Legend's solutions and combined opportunities. The company is engaged with more than 50 organizations interested in becoming Legend selling partners in the United States and Canada.
• In Q3, strategic direct sales efforts continued to grow with system bookings and new sales opportunities in the pipeline. The current sales booking pipeline is healthy and in line to support booking target expectations. Continued progress on installation of Gen3 SmartGate and positive measurement and verification reports are expected to enable booking growth to expand.
• Preparation efforts continue for scaling production to handle increasing demand. Both local and international contractors have provided subassembly outsourcing proposals, and, internally, plans have been established for increased product assembly and test capacity. Manufacturing engineering and production staff are undergoing reviews of existing procedures, documentation and data collection requirements to further streamline production and error-proof the process. Significant improvements have been realized in material requirement planning, inventory management and production planning tools and processes.

Revenue for the three months ended June 30, 2023, was $470,310, compared with $1,026,412 in the same quarter of fiscal 2022. The lower revenue during Q3 of fiscal 2023 was primarily due to a timing issue. Supply chain challenges resulted in delayed product deliveries to customers, which have pushed some deliveries.

Gross margin in the third quarter of fiscal 2023 was 22 per cent, compared with 5 per cent in same quarter of fiscal 2022. The increase in gross margin experienced during Q3 of fiscal 2023 was due to an increase in the average selling price of SmartGate units. The company continues to drive toward 40-per-cent-plus gross margins as revenue scales.

The company's operating expenses for the third quarter of fiscal 2023 were $1,128,015, down from $1,542,575 in the same quarter of fiscal 2022. The primary cause for the decrease was lower salaries and consulting costs as a result of internal cost-cutting measures.

Adjusted EBITDA for the third quarter of fiscal 2023 was negative $883,821, compared with negative $1,237,352 in same quarter of fiscal 2022.

Net loss for the third quarter of fiscal 2023 was $1,018,568, compared with a net loss of $1,492,181 in the same quarter of fiscal 2022. A decreased operating expense in Q3 of fiscal 2023 compared with the same quarter of fiscal 2022 resulted in a lower net loss.

Conference call details

Date:   Friday, Aug. 25, 2023

Time:  11 a.m. ET (8 a.m. PT)

North America toll-free dial-in number:  888-886-7786

On-line listening:  register on-line for webcast participation

Conference ID:  48101200

Replay:   available on Legend Power's website

About Legend Power Systems Inc.

Legend Power Systems provides an intelligent energy management platform that analyzes and improves building energy challenges, significantly impacting asset management and corporate performance. Legend Power's proven solutions support pro-active executive decision making in a complex and volatile business and energy environment. The proprietary and patented system reduces total energy consumption and power costs while also maximizing the life of electrical equipment. Legend Power's unique solution is also a key contributor to both corporate sustainability efforts and the meeting of utility energy efficiency targets.

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