Mr. Ian Paterson reports

PLURILOCK SECURITY INC. REPORTS RECORD FISCAL 2022 FINANCIAL RESULTS

Plurilock Security Inc. has released its financial results for the three and 12 months ended Dec. 31, 2022. All dollar figures are stated in Canadian dollars, unless otherwise indicated.

"Fiscal 2022 was a transformational year filled with key business milestones with respect to our revenue growth and advancing our pathway to reaching profitability in 2023," said Ian L. Paterson, chief executive officer of Plurilock. "While our full-year 2022 revenue grew to $64.6-million as compared to $36.6-million in the previous fiscal year, we have also accelerated the cross-sale process for our Plurilock platform through our existing distribution channels which have been showcased in 2023, year to date."

Mr. Paterson added: "Reaching profitability remains a key focus for our company, and we intend to roll out several new initiatives to achieve this goal. Most notably, in the near term, we will continue to further integrate the operations of our previous acquisitions, which could enable us to potentially achieve multiple operational efficiencies and produce significant cost savings in 2023. Furthermore, we aim to continue improving our gross margins for the remainder of 2023 by focusing on securing high-margin sales."

Key business milestones:

• Full-year 2022 revenue reached the $65-million threshold.
• Revenue generated in the United States accounts for approximately 95 per cent of Plurilock's total full-year 2022 revenue.
• Plurilock completed three accretive acquisitions in 2022, resulting in the expansion of its client network for potential cross-selling opportunities and the addition of new technology assets.
• Substantial foreign exchange rate gains due to revenue generated in U.S. dollars and company overhead costs paid in Canadian dollars.

Fiscal year 2022 financial highlights:

• Total revenue for the year ended Dec. 31, 2022, was $64,632,371 as compared with $36,624,610 for the year ended Dec. 31, 2021. Revenue for the year ended Dec. 31, 2022, and Dec. 31, 2021, included revenue from both the technology division and the solutions division. Revenue for year ended Dec. 31, 2022, is significantly higher than the prior year ended Dec. 31, 2021, due to the timing of the acquisitions of Aurora Systems Consulting Inc. (ASC) and Integra Networks Corp. (INC) and the increase in sales revenue volume from the technology division.
• Hardware and systems sales revenue for the year ended Dec. 31, 2022, totalled $56,919,768 and compared with $33,546,047 in the prior year ended Dec. 31, 2021. Software, licence and maintenance sales revenue for the year ended Dec. 31, 2022, was $6,970,057 compared with $2,597,826 in the prior year ended Dec. 31, 2021. Professional services revenue was $742,546 for the year ended Dec. 31, 2022, compared with $480,737 in the prior year ended Dec. 31, 2021.
• Hardware and systems sales revenues for the year ended Dec. 31, 2022, accounted for 88.1 per cent of total revenues compared with 91.6 per cent for the year ended Dec. 31, 2021. Software, licence and maintenance sales revenues for the year ended Dec. 31, 2022, accounted for 10.8 per cent compared with 7.1 per cent for the year ended Dec. 31, 2021. Professional services revenue for the year ended Dec. 31, 2022, accounted for 1.1 per cent of total revenues, compared with 1.3 per cent for the year ended Dec. 31, 2021.
• Gross margin for the year ended Dec. 31, 2022, was 7.7 per cent compared with 6.8 per cent for the year ended Dec. 31, 2021.
• Cash and cash equivalents and restricted cash on Dec. 31, 2022, were $2,853,107 compared with $9,468,104 on Dec. 31, 2021.
• During the year ended Dec. 31, 2022, the company used $9,837,363 of cash from operating activities compared with $2,033,930 in the prior year.

Fourth quarter 2022 financial highlights:

• Total revenue for the three months ended Dec. 31, 2022, was $17,822,224 as compared with $12,698,591 for the three months ended Dec. 31, 2021.
• Hardware and systems sales revenue for the three months ended Dec. 31, 2022, totalled $16,723,631 compared with $12,098,191 for the three months ended Dec. 31, 2021. Software, licence and maintenance sales revenue for the year ended Dec. 31, 2022, was $596,140 compared with $497,892 in the prior year ended Dec. 31, 2021. Professional services revenue was $502,453 for the three months ended Dec. 31, 2022, compared with $102,508 for the three months ended Dec. 31, 2021.
• Hardware and systems sales revenues for the three months ended Dec. 31, 2022, accounted for 93.8 per cent of total revenues compared with 95.3 per cent for the three months ended Dec. 31, 2021. Software, licence and maintenance sales revenues for the three months ended Dec. 31, 2022, accounted for 3.3 per cent compared with 3.9 per cent for the three months ended Dec. 31, 2021. Professional services revenue for the three months ended Dec. 31, 2022, accounted for 2.8 per cent of total revenues, compared with 0.8 per cent for the three months ended Dec. 31, 2021.
• Gross margin for the three months ended Dec. 31, 2022, was 10.3 per cent compared with 9.7 per cent for the three months ended Dec. 31, 2021.

Fourth quarter 2022 operational highlights:

• On Oct. 3, 2022, the company announced it has entered into an amended and restated consulting agreement with a strategic consultant, whereby the company has agreed to pay the consultant a fee of $30,000 for services provided by the consultant to the company in connection with the Atrion acquisition. The company intends to settle the fee part in cash and common shares of the company, whereby the company will issue to the consultant 78,947 common shares of the company at a deemed price of 19 cents per consulting share.
• On Nov. 8, 2022, the company made a payment in the amount of $300,000 (U.S.) toward the aggregate consideration of the CloudCodes acquisition. The $300,000 (U.S.) was recognized as a short-term loan on the consolidated financial statements as of Dec. 31, 2022, and was paid in full.
• On Dec. 2, 2022, the company announced a $1.5-million non-brokered private placement financing of units at a price of 14 cents per unit pursuant to the listed issuer financing exemption under Part 5A of National Instrument 45-106 -- Prospectus Exemptions. Each unit comprises one common share and one common share purchase warrant. Each warrant is exercisable at a price of 25 cents for a period of 24 months from the closing date of the units financing.
• On Dec. 20, 2022, Plurilock announced the listing of CloudCodes in a Google Cloud case study. The Google case study is designed and developed to build, test and deploy applications through its reliable and scalable infrastructure and enabling businesses to operate more efficiently.
• On Dec. 22, 2022, the company announced the closing of the first tranche of the units financing, for aggregate gross proceeds to the company of $1,213,537.

Subsequent to the fiscal year-end 2022:

• On Jan. 3, 2023, the company announced the closing of the second tranche of its unit financing for aggregate gross proceeds to the company of $342,583, consisting of 2,447,022 units at a price of 14 cents per unit and upsizing of the units financing from up to $1.5-million to $2.5-million.
• On Jan. 3, 2023, the company issued 440,277 of common shares at 12.5 cents related to the convertible debenture Dec. 31, 2022, interest payment.
• On Jan. 17, 2023, the company announced the closing of the third and final tranche of the unit financing for aggregate gross proceeds to the company of $198,995, consisting of 1,421,393 units at a price of 14 cents per unit and share issuance costs of $7,146, bringing the total gross proceeds of the unit financing to $1,755,115.
• On Feb. 1, 2023, the company announced the appointment of Blake Corbet to the board of directors.
• On Feb. 1, 2023, the company announced granting certain officers, employees and consultants of the company an aggregate of 3,609,667 options to purchase common shares at an exercise price of 15 cents per share, which will vest over four years from the grant date.
• On March 17, 2023, the company announced the resignation of Roland Sartorius, the chief financial officer and corporate secretary, effective early May, 2023.
• On March 22, 2023, the company was approved for an increase to its existing $1.5-million revolving line of credit dated July 29, 2022, from Pathward, National Association, a division of MetaBank, NA, for up to $2-million, effective March 8, 2023.
• On April 4, 2023, the company announced the appointment of Jord Tanner as the chief information officer.

Growth outlook for 2023

As part of the company's growth strategy to reach profitability, Plurilock aims to execute the following initiatives:

• Increase cross-selling of Plurilock's high-margin software solutions to the company's growing customer pipeline;
• Streamline operations by further unlocking synergies between the company and previous acquisitions to improve Plurilock's bottom line;
• Adjust pricing of technology division's products to offer competitive rates to customers while increasing gross margins;
• Advance Plurilock's merger and acquisition strategy to complete accretive acquisitions of synergistic business with strong technology assets and extensive customer networks in key regional markets.

Quarterly filings

Management's discussion and analysis and interim condensed consolidated financial statements and the notes thereto for the fiscal period ended Sept. 30, 2022, can be obtained from Plurilock's corporate website and under Plurilock's SEDAR profile.

About Plurilock Security Inc.

Plurilock provides identity-centric cybersecurity for today's work forces. Plurilock offers world-class cybersecurity solutions paired with artificial-intelligence-driven, cloud-friendly security technologies that deliver persistent identity assurance with unmatched ease of use. The Plurilock family of companies enables organizations to operate safely and securely -- while reducing cybersecurity friction.

We seek Safe Harbor.