Mr. Emmanuel Mounouchos reports

AVANTE LOGIXX INC. ANNOUNCES FINANCIAL RESULTS FOR THE FIRST FISCAL QUARTER ENDED JUNE 30, 2022

Avante Logixx Inc. has released its financial results for its first fiscal quarter ended June 30, 2022 (all amounts in thousands of Canadian dollars, unless otherwise indicated).

"I am pleased with the transition of this company since March 30, 2022, and we now have a solid foundation in place to continue the evolution of our business," said Manny Mounouchos, founder, chief executive officer and board chair of Avante. "I am thankful for the support received from Avante's employees, shareholders and board of directors as we continue the momentum towards achieving our objectives."

Added Stephen Rotz, chief financial officer of the company: "Reported net income in respect of the first quarter reflects the gain on sale of Logixx Security that closed during the quarter offset by restructuring and related costs arising from the change in board and management announced prior to the start of the quarter. The company's first quarter operating expenses did not benefit fully from cost reduction actions implemented during the quarter."

Financial highlights for the first fiscal quarter ended June 30, 2022

Within continuing operations, the company reported year-over-year revenue growth of 13.4 per cent or $539 during the first quarter of fiscal 2023, increasing to $4,568 from $4,029. Gross profit margins within continuing operations declined to 43.7 per cent of revenue, versus 44.1 per cent during the prior-year first quarter, with total gross profit increasing by $219. During the first quarter of fiscal 2023, revenues declined sequentially versus Q4 of fiscal 2022 by 7.5 per cent or $370, but gross profit margins improved to 43.7 per cent versus 42.3 per cent and gross profits were largely unchanged sequentially.

The company's recurring monthly revenues (RMR) from continuing operations during the last eight quarters are summarized in the attached table. The Avante Security segment delivered RMR of $2,463 during the first quarter of fiscal 2023, down slightly from $2,488 during the company's fourth quarter of fiscal 2022, but a year-over-year growth of 3.8 per cent versus the $2,372 generated during the prior-year first quarter. On a trailing-12-month basis to June 30, 2022, the company's RMR was $9,739 and total revenue was $18,695.

Gross profit margins over the last eight quarters ranged between 40.1 per cent and 45.1 per cent, and were 43.2 per cent on a trailing-12-month basis to June 30, 2022.

Segment results

The Avante Security segment reported increased adjusted EBITDA (earnings before interest, taxes, depreciation and amortization) of $765 during the first fiscal quarter ended June 30, 2023, versus $293 during the first fiscal quarter ended June 30, 2022. This increase of $472 was largely due to lower divisional operating costs and higher year-over-year revenues.

The loss from central corporate costs, net of eliminations, within continuing operations was $199 during the first quarter of fiscal 2022. This represented an improvement of $456 versus the $655 of net central costs during the first fiscal quarter ended June 30, 2021, as the current quarterly period benefited from corporate overhead reductions that began with the board and management changes initiated on March 30, 2022.

On June 1, 2022, the company sold its ownership interest in Logixx Security. During first quarter ended June 30, 2022, discontinued operations reflected two months of operations from the Logixx Security segment, whereas the first quarter of the prior fiscal year reflected three months. During the first quarter ended June 30, 2022, adjusted EBITDA of discontinued operations was $526, compared with $2,371 during the first quarter ended June 30, 2021, a decrease of $1,845. In addition to one less month of operations reflected this quarter, Logixx Security's prior-year quarterly period benefited more significantly from strong margins on COVID-19 related service revenues.

Liquidity highlights

On June 1, 2022, all remaining financed debt of the company was repaid from proceeds of the sale of Logixx Security. On the same date, the company entered into amended and restated credit facilities with its bank to provide a $2-million revolving credit facility, provided on a demand basis and subject to a customary borrowing base. To date, the company has not drawn on this credit facility.

On July 7, 2022, the company entered into a definitive loan agreement with affiliates of its largest shareholder. This agreement permits the company to draw term loans, on a non-revolving basis, for up to $10-million at a fixed rate of 5.0 per cent with terms to maturity ending July 7, 2027. Drawings are subject to a minimum senior leverage test and other conditions. A standby fee on the unused portion of the facility of 0.5 per cent is payable annually in arrears. To date, the company has not drawn on this term loan facility.

With cash balances of $12-million, and access to the senior secured revolver of $2-million and to the $10-million unsecured term loan facility, the company has excess liquidity to more than meet its existing requirements.

Readers should refer to the company's financial statements and management's discussion and analysis (MD&A) in respect of its first fiscal quarter ended June 30, 2022, for additional risk factors, accounting policies, detailed financial disclosures, reconciliation of non-IFRS (international financial reporting standards) financial measures to the most directly comparable IFRS financial measures, related party transactions, contingencies and reporting of subsequent events since the fiscal period ended June 30, 2022. Such financial statements and MD&A are incorporated by reference into this news release and are filed electronically through SEDAR.

About Avante Logixx Inc.

Avante provides high-end security services through its wholly owned subsidiary, Avante Security Inc., serving residential customers located in Toronto and Muskoka regions of Ontario, Canada. With an experienced team, a focus on customer service excellence and development of innovative solutions, the company remains committed to providing its shareholders with exceptional returns.

We seek Safe Harbor.