Mr. Ian Paterson reports

PLURILOCK SECURITY INC. REPORTS RECORD FIRST QUARTER FISCAL 2023 FINANCIAL RESULTS

Plurilock Security Inc. has released its financial results for the three months ended March 31, 2023.

"During the first quarter of 2023, Plurilock achieved significant business milestones with respect to its revenue and gross margin, which saw double-digit growth as compared to the same period in the prior year," said Ian L. Paterson, chief executive officer of Plurilock. "Over all, Q1 fiscal 2023 was a transformational quarter attributable to the strategic and creative acquisitions closed in 2022. These strong financial results reflect our ongoing efforts to expand our margin profile through streamlining operations, securing more software sales, while focusing our attention on growth and executing on our strategy to achieve profitability."

Key business milestones during Q1 fiscal 2023:

• Revenue increased to $15.8-million in Q1 2023 from $7-million in Q1 2022, directly attributable to the strategic acquisitions of Integra and Atrion in 2022.
• Gross margins increased to 13.6 per cent in Q1 2023 from 6.6 per cent in Q1 2022, driven primarily by the company's 2022 acquisitions, pricing strategy and its focus on securing high-margin software sales.
• A total of 16 sale orders and contract renewals, including cross-sale purchase orders with two U.S. financial institutions for the company's flagship AI-driven (artificial intelligence) technology offering were announced.

First quarter fiscal 2023 financial highlights:

• Total revenue for the three months ended March 31, 2023, was $15,767,328, as compared with $6,953,052 for the three months ended March 31, 2022. Revenue for three months ended March 31, 2023, is significantly higher than the prior-year period ended March 31, 2022, as a result of the acquisitions of Integra Networks Corp. (INC) as well as the asset acquisitions of Atrion (ATR) and CloudCodes (CC), along with the increase in organic sales volume and cross-selling amongst the solutions and technology division.
• Hardware and systems sales revenue for the three months ended March 31, 2023, totalled $12,444,129, compared with $6,495,896 in the prior year for the same period. Software, licence and maintenance sales revenue for the three months ended March 31, 2023, was $2,713,578, compared with $429,456 in the prior year for the same periods. Professional services revenue was $609,621 for the three months ended March 31, 2023, compared with $27,700 in the prior year for the same periods.
• Hardware and systems sales revenues for the three months ended March 31, 2023, accounted for 78.9 per cent of total revenues, compared with 93.4 per cent for the three months ended March 31, 2022. Software, licence and maintenance sales revenues for the three months ended March 31, 2023, accounted for 17.2 per cent, compared with 6.2 per cent for the three months ended March 31, 2022. Professional services revenue for the three months ended March 31, 2023, accounted for 3.9 per cent of total revenues, compared with 0.4 per cent for the three months ended March 31, 2022.
• Gross margin for the three months ended March 31, 2023, was 13.6 per cent compared with 6.6 per cent for the three months ended March 31, 2022.
• Adjusted EBITDA (earnings before interest, taxes, depreciation and amortization) for the three months ended March 31, 2023, was negative $975,305, compared with negative $1,886,015 in the prior-year period ended March 31, 2022.
• Cash and cash equivalents and restricted cash on March 31, 2023, were $1,430,275, compared with $2,853,107 on Dec. 1, 2022.
• During the three months ended March 31, 2023, the company generated $1,699,960 of cash from operating activities, compared with $4,501,599 of cash used in the prior-year period.

First quarter fiscal 2023 operational highlights:

• 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 of $55,036.
• On Jan. 17, 2023, the company closed 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 $7,410, bringing the total gross proceeds of the unit financing to $1,755,115.
• On Feb. 1, 2023, the company appointed Blake Corbet, a seasoned veteran with over 25 years of investment banking and corporate executive experience, to its board of directors and announced granting certain officers, employees and consultants of the company an aggregate of 3,908,667 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 Feb. 2, 2023, the company announced that it received a cross-sale purchase order for its flagship software platform from a U.S. credit union.
• On Feb. 7, 2023, the company announced that it received a cross-sale purchase order for its flagship software platform from a U.S. financial institution that has been operating for over 60 years and has regional offices across multiple U.S. states.
• On Feb. 9, 2023, the company received seven new California Multiple Award Schedule (CMAS) contracts, enabling Plurilock to provide offers for its products and services to more organizations through the CMAS program and potentially secure additional customers within California.
• On March 2, 2023, the company announced the completion of the SOC 2 Type II report renewal.
• On March 22, 2023, the company was approved for an increase to its existing INC $1.5-million revolving line of credit (INC LOC) dated July 29, 2022, from Pathward National Association, a division of MetaBank N.A., for up to $2-million, effective March 8, 2023.
• On March 23, 2023, the company announced that it has received a $3.4-million purchase order for Plurilock's IT (information technology) solutions from the Department of National Defence.

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 M&A (merger and acquisition) strategy to complete accretive acquisitions of synergistic business with strong technology assets and extensive customer networks in key regional markets.

Share issuance

The company has issued 2,352,941 common shares of the company at 17 cents per share in accordance with the earnout provisions of the share purchase agreement dated March 4, 2022, between the company, Integra Networks and Integra's sole shareholder; such agreement is available under the company's SEDAR profile.

Quarterly filings

The management discussion and analysis, the interim condensed consolidated financial statements, and the notes thereto for the fiscal period ended March 31, 2023, can be obtained from Plurilock's corporate website and under Plurilock's SEDAR profile.

About Plurilock Security Inc.

Plurilock secures work forces, delivering least privilege access management and advanced IT solutions to commercial and government customers around the world. With industry-leading artificial intelligence and patented real-time identity confirmation technology, Plurilock combines next-generation cybersecurity with a comprehensive line of products and services that enable teams across North America and the globe to compute safely in a remote work world.

We seek Safe Harbor.