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Kontrol Technologies Announces Second Quarter 2022 Financial Results; Revenues Increase 599% Year over Year to $29.1 Million; 6 months Revenues of $55.8 Million

N.KNR

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, provided financial results for the three months and six months ended June 30th, 2022. A complete set of the Financial Statements and Management's Discussion & Analysis have been filed on SEDAR (www.sedar.com).

Second Quarter and Year-to-Date 2022 Highlights

  • Record Q2 revenues of $29.1 million, up 599% year-over-year
  • Revenues for the six months ended, were $55.8 million
  • Adjusted EBITDA* of $2.0 million and $4.5 million for the three and six months ended respectively
  • Net income for the six months ended, was $2.7 million, compared to net loss of $(645,597) for the same period in the prior year
  • Gross profit for the six months ended, was $13.6 million
  • Working capital of $9.1 million, an increase of $5.4 million over the year end balance at December 31, 2021
  • Launched development of Kontrol BioWater, an extension of the Kontrol BioCloud™ Technology for early viral detection in water systems
  • Completed first SmartSuite installation in Florida for a leading National USA REIT
  • Continued success in contract and letter of intent awards for HVAC and automation projects

Management Commentary

“The Company’s first half performance reflects continued operational execution as we work diligently to scale the Kontrol platform while maintaining discipline in our operations and capital structure,” said Paul Ghezzi, CEO of Kontrol Technologies. “Q2 was our highest-ever revenue quarter in our history, as we continue to drive growth within our customer relationships in the multi-residential and commercial building portfolios.”

Q2 2022 Financial Summary

Financial Results

Three months ended

Six months ended

(unaudited)

June 30

June 30

June 30

June 30

2022

2021

2022

2021

Revenue

$

29,137,061

$

4,167,452

$

55,758,594

$

7,486,646

Gross profit

$

6,886,821

$

2,490,574

$

13,628,956

$

4,261,797

Net income (loss)

$

1,090,164

$

178,135

$

2,731,838

$

(645,597

)

Basic EPS

$

0.02

$

0.00

$

0.06

$

(0.02

)

Diluted EPS

$

0.02

$

0.00

$

0.05

$

(0.02

)

Add for adjusted EBITDA reconciliation:

Amortization & depreciation

$

570,678

$

421,827

$

1,113,865

$

815,287

Finance expense

$

286,385

$

458,354

$

565,252

$

725,464

Share based compensation

$

87,297

$

0

$

124,871

$

1,216,503

Listing expense

$

0

$

47,797

$

0

$

117,797

Adjusted EBITDA*

$

2,034,524

$

1,106,113

$

4,535,826

$

2,229,454

* 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.

Working Capital

The Company’s rapid growth in the first 6 months of 2022 has led to our largest Account Receivable position which has increased overall working capital. The growth in Accounts Receivable has been funded by the Company’s operating lines.

Debentures

The Company has unsecured debentures of approximately $5.7 Million due in October, 2022. The Company’s intention is to payoff maturing debentures through any combination of internal cash generation and debt refinancing. We have an established track record of refinancing debt obligations.

Gross Margins

Gross margins have been impacted by rising material costs and impacts to the supply chain including shortages and delays for the procurement of equipment, semi-conductors, HVAC systems and continuous emission monitoring components. These impacts are anticipated to continue into the fourth quarter of 2022.

New Customer Wins in the Public Sector

Through our Kontrol Carbon platform the Company has recently won three new opportunities to assist in the development of Net Zero Emission solutions for a variety of buildings. The opportunities were won through a competitive process.

SmartSuite Installation in Florida for a National USA REIT

The Company is now providing ongoing energy management for a National USA REIT which manages thousands of buildings globally.

Kontrol BioWater

Subsequent to Q2 2022, the Company received $300,000 in funding for BioCloud technology expansion. BioCloud continues to be an important innovation which is also supported through Government funding.

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 solutions and services to its customers to improve energy management, monitor continuous emissions and accelerate the sustainability of all buildings.

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

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.

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.