Kontrol Technologies Announces Record Q3 2021 Financial Results

Revenues Increased 614% Year-over-Year to Record $21.5 Million; Drives Most Profitable Quarter in Company History with Net Income of Over $2 Million

Raises 2021 Outlook Due to Strong Operational Execution and Heightened Demand from Blue Chip Customer Base

Kontrol Technologies Corp. (NEO:KNR) (OTCQB:KNRLF) (FSE:1K8) (“Kontrol” or the "Company") a leader in smart buildings and cities through IoT, Cloud and SaaS technology, announces the release of its financial results for the three- and nine-month periods ended September 30, 2021. A complete set of the Financial Statements and Management's Discussion & Analysis have been filed on SEDAR (www.sedar.com).

Third Quarter and Year-to-Date 2021 Highlights:

• Record revenues of $21.5 million in the third quarter of 2021, up 614% year-over-year
• Record net income of $2.1 million in the third quarter of 2021, representing second consecutive quarter of positive net income
• Record adjusted EBITDA* of $2.8 million in the third quarter of 2021, up 224% year-over-year
• Cash flows from operating activities of $4.8 million in 2021 year-to-date
• Strengthened balance sheet by eliminating $4.0 million in debt in 2021 year-to-date
• Completed acquisition of Global HVAC & Automation Inc. (“Global”), the largest acquisition in Kontrol’s history
• Raising Fiscal Year 2021 Outlook
  • Revenues of $43 million to $46 million, up from previous $38 million estimate
  • Adjusted EBITDA of $6 million to $7 million, up from previous $3.7 million estimate

Management Commentary

“This milestone quarter was highlighted by the multiple records we set across several key metrics, driven by the momentum we delivered across our business,” said Paul Ghezzi, CEO of Kontrol. “Our ability to integrate Global into the Kontrol platform while maintaining financial discipline allowed us to not only achieve our highest-ever revenue quarter, but importantly, we also delivered the highest net income quarter in our history. We have clearly demonstrated the ability to add significant growth with profitability. We continue to drive strong organic growth supported by heightened demand from our expanding blue-chip customer base and compounded by Government policy, underscoring the importance of and necessity for enhanced intelligence to operate better, safer, and more sustainable buildings. Kontrol is uniquely positioned to capitalize on the ongoing building modernization super cycle, and I look forward to continued momentum as we execute on our operating strategy throughout the remainder of 2021 and into this next phase of growth ahead as we work to deliver sustainable value for our shareholders.”

Third Quarter and Year-to-Date 2021 Financial Results

Revenues for the three months ended September 30, 2021, were $21.5 million, an increase of 614% from the same quarter in the prior year. For the nine months ended September 30, 2021, revenues were $29.0 million, an increase of 260% from the same period in the prior year. The increase in revenues reflects growth across our verticals, the completed acquisition of Global, and heightened overall business activity during a period of reduced Government-imposed site access restrictions.

Adjusted EBITDA* for the three months ended September 30, 2021, was $2.8 million, an increase of 224% from the same quarter in the prior year. For the nine months ended September 30, 2021, adjusted EBITDA* was $5.0 million, an increase of 234% from the same period in the prior year. Net income for the three months ended September 30, 2021, was $2.1 million, representing the Company’s second consecutive quarter of reporting positive net income. Cash flows from operating activities for the nine months ended September 30, 2021, were $4.8 million. The Company eliminated $4.0 million of debt during the nine months ended September 30, 2021.

Corporate Outlook

Kontrol updated its guidance for the 2021 fiscal year following the strong performance in the third quarter of 2021.

Revenues are estimated to be in the range of $43 million to $46 million, up from its previous $38 million estimate, and compared to $13 million in 2020.

Adjusted EBITDA* is estimated to be in the range of $6 million to $7 million, up from previous $3.7 million estimate, and compared to $2.0 million in 2020.

The Company anticipates seasonality in the month of December around project cut off and revenue recognition and provides its updated outlook as a range to take into account the potential impacts of this seasonality.

Q3 2021 Financial Summary

* Adjusted EBITDA is a non-IFRS financial measure. The Company defines Adjusted EBITDA as net income or loss before interest, income taxes, amortization, and depreciation, share based compensation, acquisition related expenses, and listing expense.

Third Quarter Conference Call

The Company will host a conference call on Monday, November 15th, 2021, at 4:30 PM EST to discuss Kontrol’s third quarter 2021 financial results. To participate, please use the following information:

Please dial in at least 5 minutes before the call start time to ensure timely participation.

A recording of the Q3 2021 financial results conference call is available here:

About Kontrol Technologies Corp.

Kontrol Technologies Corp., a Canadian public company, is a leader in smart buildings and cities through IoT, Cloud and SaaS technology. Kontrol provides a combination of software, hardware, and service solutions to its customers to improve energy management, air quality and continuous emission monitoring.

Additional information about Kontrol Technologies Corp. can be found on its website at www.kontrolcorp.comand by reviewing its profile on SEDAR at www.sedar.com

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Neither IIROC nor any stock exchange or other securities regulatory authority accepts responsibility for the adequacy or accuracy of this release.

Non-IFRS Financial Measures

The Company defines Adjusted EBITDA as net income or loss before interest, income taxes, amortization, and depreciation, share based compensation, and acquisition related expenses. The Company believes Adjusted EBITDA is a useful measure as it provides information to management about the operating and financial performance of the Company and its ability to generate operating cash flow to fund future working capital needs, as well as future growth. Adjusted EBITDA may also be used by investors and analysts for the purpose of valuing the Company. Readers are cautioned that these non-IFRS definitions are not recognized measures under IFRS, do not have standardized meanings prescribed by IFRS, and should not be construed to be alternatives to net earnings determined in accordance with IFRS or as indicators of performance, liquidity, or cash flows.

Forward-Looking Statements

This news release contains “forward-looking information” within the meaning of applicable securities laws. All statements contained herein that are not clearly historical in nature may constitute forward-looking information. In some cases, forward-looking information can be identified by words or phrases such as “may”, “will”, “expect”, “likely”, “should”, “would”, “plan”, “anticipate”, “intend”, “potential”, “proposed”, “estimate”, “believe” or the negative of these terms, or other similar words, expressions, and grammatical variations thereof, or statements that certain events or conditions “may” or “will” happen, or by discussions of strategy.

Where the Company expresses or implies an expectation or belief as to future events or results, such expectation or belief is based on assumptions made in good faith and believed to have a reasonable basis. Such assumptions include, without limitation, that sufficient capital will be available to the Company and that technology will be as effective as anticipated.

However, forward-looking statements are subject to risks, uncertainties, and other factors, which could cause actual results to differ materially from future results expressed, projected, or implied by such forward-looking statements. Such risks include, but are not limited to, that sufficient capital and financing cannot be obtained on reasonable terms, or at all, that technologies will not prove as effective as expected, that customers and potential customers will not be as accepting of the Company's product and service offering as expected, and government and regulatory factors impacting the energy conservation industry. Kontrol BioCloud is an air quality technology and not a medical device. The Company is not making any express or implied claims that its product has the ability to eliminate, cure or contain the COVID-19 (or SARS-2 Coronavirus).

Accordingly, undue reliance should not be placed on forward-looking statements and the forward-looking statements contained in this press release are expressly qualified in their entirety by this cautionary statement. The forward-looking statements contained herein are made as at the date hereof and are based on the beliefs, estimates, expectations, and opinions of management on such date. Kontrol does not undertake any obligation to update publicly or revise any such forward-looking statements or any forward-looking statements contained in any other documents whether as a result of new information, future events or otherwise or to explain any material difference between subsequent actual events and such forward-looking information, except as required under applicable securities law. Readers are cautioned to consider these and other factors, uncertainties, and potential events carefully and not to put undue reliance on forward-looking information.

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