Legend Power(R) Reports Q3 2021 Financial Results

VANCOUVER, BC / ACCESSWIRE / August 26, 2021 / Legend Power® Systems Inc. (TSXV:LPS)(OTCQB:LPSIF) ("Legend Power" or the "Company"), a global leader in commercial electrical system solutions, today reported its Q3 2021 financial results for the three and nine months ended June 30, 2021. The Company has also scheduled a conference call to provide a business update and discuss its Q3 2021 financial results for Thursday, August 26, 2021 at 5:00 PM ET (2:00 PM PT). The call will be hosted by Randy Buchamer, President & Chief Executive Officer and Steve Vanry, Chief Financial Officer (details below). A complete set of Financial Statements and Management's Discussion & Analysis has been filed at www.sedar.com. All dollar figures are quoted in Canadian dollars.

Financial Highlights for the quarter ending June 30, 2021 (Q3 2021)

• Sales bookings of $896,000¹ compared with $nil in Q3 2020
• Revenue of $1.27 million versus $1.5k in Q3 2020
• Gross profit of $345k versus $1.5k in Q3 2020
• Adjusted EBITDA loss of $706k versus a $856k loss in Q3 2020
• Net loss of $947k versus a $1.02 million loss in Q3 2020
• Cash of $10.38 million, no debt, and $11.32 million in working capital at June 30, 2021.

Q3 Fiscal 2021 Growth Highlights:

• Added five new channel sales partners
• Achieved largest sales booking in Company history
• Entered demonstration agreement with City of New York
• Exceeded Q3 fiscal 2021 goal of 90 SmartGATE Insights engagements
• Exceeding goal of 50% conversion rate from SmartGATE Insights to full SmartGATE Platform sales bookings with 100% conversion from some customers

"Much like the trend established in Q2 2021, the Company's growth trajectory in Q3 2021 was driven by our new "Insights-led" sales model, which continues to be the key driver of new customer and channel partner engagements," said Randy Buchamer, CEO of Legend Power Systems. "This is evidenced by our ability to exceed the SmartGATE Insights engagement and conversion goals we established in our last quarter, as well as achieving the Company's largest sales booking ever, with a follow-on order for 10 SmartGATE platforms from a multi-family residential property owner. Our ESCO sales partners continue to promote our solutions and generate leads, increasing our confidence in achieving significant sales growth."

Legend's SmartGATE Insights and Power Impact Report are valuable tools that provide building owners a better understanding of the financial impact the power grid is having on their buildings and how SmartGATE solutions can solve these challenges for them. The Power Impact Report details these excessive costs across each building in a property portfolio and demonstrates how SmartGATE solutions can reduce these costs.

Financial summary for the three and six months ended March 31, 2021 and 2020

¹ Gross margin is based on a blend of both equipment and installation revenue.
² Adjusted EBITDA is a non-IFRS financial measure. See EBDITA Reconciliation for details.

Revenue for the third quarter of 2021 was $1,272,192, up significantly from $1,548 in the same quarter of fiscal 2020, which was adversely impacted by COVID related lock downs. Revenue for the nine months ended June 30, 2021 was $2,520,562, up 50% from $1,681,236 in the same period of fiscal 2020. Revenue for the three months ended June 30, 2021 primarily realized in relation to installations completed pursuant to a large sale booked in Q1 of fiscal 2021 and, to a lesser extent, 5 units purchased by a reseller in Q1. Revenue for the nine months ended June 30, 2021 was up over the same period in fiscal 2020 due to stronger sales bookings and improved flexibility in customer install completion scheduling. Inventory supply chain delays continue to be a timing constraint on revenue recognition but is expected to improve in fiscal 2022.

Gross margin in the third quarter of fiscal 2021 was 27%, compared with nil% in same quarter of fiscal 2020. Gross margin for the nine months ended June 30, 2021 was 25%, compared with 21% in the same period of fiscal 2020 due in most part to economies of scale achieved through higher production throughput and comparatively very low gross margin in Q1 of fiscal 2020. Management believes that in the short-term, margins may continue to be impacted by widespread supply chain cost increases, COVID-19 supplier surcharges, and component raw material (metal) costs, but as the Company scales through fiscal 2022 and supply chains return to normal, and sales bookings convert to revenue, margins should improve and be closer to long-term average results.

The Company's operating expenses for the third quarter of fiscal 2021 were $1,285,769, up 31% from $983,658 in the same quarter of fiscal 2020. Operating expenses for the nine months ended June 30, 2021 were $3,431,307, down from $4,340,180 in the same period of fiscal 2020. The primary cause for the increase in operating costs during Q3 2021 was the Company's decision to end certain cost cutting measures implemented during the onset of COVID-19, higher share-based compensation and product development costs. The decrease in the nine-month comparative fiscal periods is the result of COVID-19 cost cutting measures still in effect during Q1 and Q2 of fiscal 2021.

Adjusted EBITDA for the third quarter of fiscal 2021 was negative $706,011, compared with negative $856,386 in same quarter of fiscal 2020. Adjusted EBITDA for the nine months ended June 30, 2021 was negative $2,091,643, compared with negative $3,658,701 in the same period of fiscal 2020.

Net loss for the third quarter of fiscal 2021 was $946,616, compared with a net loss of $1,015,242 in the same quarter of fiscal 2020. Net loss for the nine months ended June 30, 2021 was $2,803,237, compared with $4,014,067 in the same period of fiscal 2020. The reduced net loss in the third quarter comparative periods was due to a gross margin of $345,583 realized in Q3 of 2021 vs $nil in Q3 of 2020, which was offset slightly by higher operating costs in Q3 2021. Significantly reduced operating costs and a gross margin increase of 79% were the largest contributing factors to the significantly lower net loss in in the year over year comparative nine-month periods.

¹$374k of which in a deferred purchase order

CONFERENCE CALL DETAILS:

About Legend Power® Systems Inc.

Legend Power® Systems Inc. (www.legendpower.com) 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 proactive 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.

For further information, please contact:

Steve Vanry, CFO
+1 (604) 671-9522
[email protected]

Sean Peasgood, Investor Relations
+1 (647) 503-1054
[email protected]

Neither the TSX Venture Exchange nor the Investment Industry Regulatory Organization of Canada accepts responsibility for the adequacy or accuracy of this release.

Forward-Looking Statements

This Press Release may contain statements which constitute "forward-looking information", including statements regarding the plans, intentions, beliefs and current expectations of the Company, its directors, or its officers with respect to the future business activities and operating performance of the Company. The words "may," "would," "could," "will," "intend," "plan," "anticipate," "believe," "estimate," "expect" and similar expressions, as they relate to the Company, or its management, are intended to identify such forward-looking statements. Investors are cautioned that any such forward-looking statements are not guarantees of future business activities or performance and involve risks and uncertainties, and that the Company's future business activities may differ materially from those in the forward-looking statements as a result of various factors. Such risks, uncertainties and factors are described in the periodic filings with the Canadian securities regulatory authorities, including the Company's quarterly and annual Management's Discussion & Analysis, which may be viewed on SEDAR at www.sedar.com. Should one or more of these risks or uncertainties materialize, or should assumptions underlying the forward-looking statements prove incorrect, actual results may vary materially from those described herein as intended, planned, anticipated, believed, estimated or expected. Although the Company has attempted to identify important risks, uncertainties and factors which could cause actual results to differ materially, there may be others that cause results to not be as anticipated, estimated or intended. The Company does not intend, and does not assume any obligation, to update these forward-looking statements other than as may be required by applicable law.

SOURCE: Legend Power Systems Inc.