Legend Power(R) Systems Reports Q2 F2023 Financial Results

Vancouver, British Columbia--(Newsfile Corp. - May 26, 2023) - Legend Power® Systems Inc. (TSXV: LPS) (OTCQB: LPSIF) ("Legend Power" or the "Company"), a global leader in commercial electrical system solutions, reports its financial results for the three months ended March 31, 2023 ("Q2 F2023"). The Company has also scheduled a conference call to provide a business update to discuss its Q2 F2023 financial results today at 11:00 AM ET (8:00 AM PT) (details below). The call will be hosted by Randy Buchamer, President & Chief Executive Officer. 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.

Q2 F2023 Highlights

• Revenue of $74 thousand versus $344 thousand in Q2 F2022
• Adjusted EBITDA loss of $1.04 million versus a $1.32 million loss in Q1 F2022
• Net loss of $1.19 million versus a $1.48 million loss in Q2 F2022
• Cash of $1.5 million, no debt, and $3.15 million in working capital at March 31, 2023

Subsequent Events

• Green Proving Ground program for the United States General Services Administration, which operates approximately 1,800 federally owned buildings is proceeding well. The deployment and evaluation schedule is well under way, with plans to build and ship the first system in September 2023, followed by a second system shortly after.

• The Company published performance results of the first round of Gen3 SmartGATE platforms. These results included a 20% increase in energy savings performance over prior generations as well as elimination of over 99% of incoming grid fluctuations. Several customers have reported that the maintenance and repair savings are outpacing energy savings in many cases resulting in $2 of maintenance savings for every $1 of energy savings.

"Many new large opportunities continued to advance in our sales funnel, and we continue to believe we will hit our target bookings this year," said Randy Buchamer, Legend Power Systems CEO. "These include deals with ESCOs, commercial real estate companies, government agencies and electrical distribution companies. It is now evident that our sales and power analysis process is enabling us to speak directly to C-suite executives about the benefits of Active Power Management and Legend's solutions to reduce greenhouse gas emissions, save electricity, and most importantly improve the overall functionality of the entire building."

Q2 F2023 Operational Highlights

Sales activity is continuing at a strong pace and customers are engaging with deep and wide interest. We currently have new late stage large deals with very strong financial viability. The new late-stage deals are in commercial office, multifamily residential and with ESCOs. The strength in viability is driven mainly by customers articulating power quality concerns and higher visible costs. These handful of deals could bring over $10 million in new potential bookings. Partner sales efforts also continue to grow in volume, dollars and strength.

SmartGATE is deployed in several key Commercial Real Estate verticals such as Multi-family Residential, Hospitality, Big Box Retail and Commercial Office, accounting for roughly 50% of installed SmartGATE's. Additionally, Legend Power Systems is engaged in active sales processes with several of the top firms in the Commercial Real Estate space, with over 110 buildings in active sales cycles for 300 plus potential SmartGATE's.

This quarter the Company's channel sales team has grown reseller and ESCO relationships, furthering adoption of both Insights, Power Impact Reports and SmartGATE solutions. Target markets and reseller channels continue to respond positively to Legend's solutions and combined opportunities. The Company is engaged with over 50 organizations interested in becoming Legend selling partners in the U.S. and Canada. The channel sales team continued development of partner support tools for the partner portal including marketing support, sales support, technical support, and deal registration.

The Company continues to focus on onboarding, training, and streamlining of operations and procedures. Our sales order process has evolved to improve on-time delivery and lead time performance with the addition of tighter controls and implementation of key performance indicators. Initial results show improvement in on-time delivery and dramatically reduced sales order turn-around times, meaning cash sooner. Significant improvements have been realized in material requirements planning, inventory management and production planning tools and processes. The Company is evaluating an application to improve business intelligence and procurement decision-making, including supplier managed inventories and safety stock requirements. Across all areas, KPI targets have been set and progress continues toward our operational goals.

Direct sales efforts continue to grow with system bookings and new sales opportunities pipeline. The current sales booking pipeline is healthy and in-line to support booking target expectations. Continued progress on installation of Gen3 SmartGATE and positive Measurement and Verification Reports are expected to enable booking growth to expand in fiscal 2023.

Planning for increased capacity is well underway, both organically and abroad. A multi-phased approach includes a doubling of capacity in our current location through increased utilization of existing equipment and cross-training new operators in areas of constraint. In parallel, all our basic sub-assemblies are being quoted by several local assemblers to offload a significant manual operation. Candidates include our current provider plus another who is also quoting on our system level assembly and test. This candidate will form part of a dual-source arrangement with a near- or off-shore provider, discussions which have already begun. As we see growing strength in our forecast, Legend is addressing capacity and resource to match, while balancing the need to place orders for long lead time components. Although supply chains are improving somewhat, as opposed to capacity, they will ultimately gate deliveries for the near future.

Q2 F2023 Financial Highlights

Financial summary for the three and six months ended March 31, 2023 and 2022

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 three months ended March 31, 2023, was $74,006 compared with $343,573 in the same quarter of fiscal 2022. The lower revenue during Q2 of fiscal 2023 was primarily due to a timing issue. Supply chain challenges, resulted in delayed product deliveries to customers, which has pushed the deliveries into the next quarter.

Gross margin in the second quarter of fiscal 2023 was negative 7%, compared with 17% in same quarter of fiscal 2022. The decrease in gross margin experienced during Q2 of fiscal 2023 was due to inventory count adjustments as well as additional costs incurred to replace and repair a unit damaged in-transit, which the Company expects to recover the majority of. Target gross margin remains in the 40%-45% range going forward.

The Company's operating expenses for the second quarter of fiscal 2023 were $1,188,409, down from $1,536,477 in the same quarter of fiscal 2022. The primary cause for the decrease was lower salaries and consulting costs as a result of internal cost-cutting measures.

Adjusted EBITDA for the second quarter of fiscal 2023 was negative $1,035,944, compared with negative $1,317,640 in same quarter of fiscal 2022.

Net loss for the second quarter of fiscal 2023 was $1,188,091, compared with a net loss of $1,479,789 in the same quarter of fiscal 2022. A decreased operating expense in Q2 of fiscal 2023 compared with the same quarter of fiscal 2022 resulted in a lower net loss.

Cash at the end of the quarter was $1.5 million. The Company has no debt and had working capital of $3.15 million. The Company took cost cutting measures last year and continues to manage cash and working capital while working to meet sales and growth targets.

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:

Sean Peasgood, Investor Relations
+ 1 647 503 1054
sean@sophiccapital.com

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.

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