Calgary, Alberta--(Newsfile Corp. - November 16, 2023) - Zedcor Inc. (TSXV: ZDC) (the "Company") today announced its financial and operating results for the three months and nine Months Ended September 30, 2023.

Q3 2023 revenues were $6.4 million, the Company had adjusted EBITDA of $2.3 million and net income before income taxes of $288. This represented an 11% increase in revenues compared to Q3 2022.

During the quarter, the Company has allocated approximately 33% of its MobileyeZ security tower fleet to Ontario. These towers are being utilized at construction and automotive customer sites. Zedcor has continued to allocate security towers to Eastern Canada as it expands its service capabilities in the region.

Todd Ziniuk, President & CEO said: "We continue to diversify our customers and add new customers across Canada. We have also expanded to the United States which will further expand our assembly capabilities and also allow us to get access to a large market. We are planning to exit 2023 with approximately 45 security towers in the US while continuing to expand in Canada, with a focus on Eastern Canada. We are also seeing demand for our services across different industry verticals, with a focus on the retail sector where we believe there is a large opportunity for disruption. In April, we launched a pilot project with a large home improvement retailer and were successfully award a multiyear contract with them to provide MobileyeZ at multiple locations and distribution centers across Canada. Adding this prominent, large scale client shows the value that Zedcor is able to deliver to customers. Our team has also done an exceptional job redeploying MobileyeZ returned from our largest customer as their project ended. This has de-risked and further diversified our revenue streams."

Financial and Operating Results for the three months and six months ended September 30, 2023:

¹ Adjusted for stock based compensation, foreign exchange (gain) loss, and other income
² See Financial Measures Reconciliations below

Zedcor recorded $6,431 and $19,090 of revenue for the three and nine months Ended September 30, 2023. This compares to $5,795 and $15,682 of revenue from for the three and nine months ended September 30, 2022. The revenue growth of 11% and 22% is the result of a larger fleet of security towers located throughout the Company's six service centers in Canada. Adjusted EBITDA grew to $2,285 and $6,244 for the three and nine months ended September 30, 2023, compared to $2,121 and $5,188 for the three and nine months ended September 30, 2022. This represented a growth of 18% for the nine months ended September 30, 2023.

The Company's security and surveillance services saw increased revenues and EBITDA for the three and nine months ended September 30, 2023 compared to 2022 due largely to increased customer demand of its larger fleet of MobileyeZ security towers. The increased revenue was offset by: 1) reduced security guard revenue; and 2) reduced revenue from a large pipeline construction project that is nearing completion. A majority of the security towers returned from the pipeline construction project have been rented to new or existing customers across Canada and, therefore, reduced the Company's customer/ industry concentration risk.

Zedcor exited the period with 755 MobileyeZ security towers which was an increase of 249 when compared to December 31, 2022 and 314 units when compared to September 30, 2022. Of the 755 units, 12 are located in Zedcor's Houston, Texas service center going through an extensive retrofit program in order to meet the requirements of the US market.

Financial and operational highlights for the three and nine months ended September 30, 2023 include:

• Net income of $288 for the three months ended September 30, 2023. This compares to net income of $966 for the three months ended September 30, 2022. For the nine months ended September 30, 2023 net income was $3,512 compared to net income of $2,922 for the nine months ended September 30, 2022. The increase in net income over the nine months is directly attributable to: 1) a larger fleet of towers and strong customer demand which drove utilization and, in turn, revenues; and 2) $2,159 in other income. As part of the sale of the Company's Rental segment assets in 2021, the Company is to receive a 35% bonus for every dollar of EBITDA over certain thresholds. As a result of this agreement, the Company will receive $2,159 for the second anniversary payment.

• Continued traction across Ontario. The Company expanded to Ottawa in Q2 2022 and Toronto in Q3 2022. As at September 30, 2023, approximately 33% of the Company's MobileyeZ security tower fleet is located in Ontario. This represents a growth of 7% from the end of Q2 2023 and 22% from the start of the year. We are seeing strong demand for the Company's services in Eastern Canada and additional security towers will continue to be delivered to Ontario and Manitoba through Q4 2023.

• Diversification away from the Company's core pipeline construction customers. As the Company increases its fleet of MobileyeZ and expands geographically, our risk related to customer concentration is decreased. For the three month period ended September 30, 2023, approximately 33% of the Company's revenues were generated from it's top 3 customers, down from 72% over the three month period ended September 30, 2022. Zedcor's services are customer and industry agonistic and we continued to see that in the first nine months of the year as we continued to diversify our customers across the construction industry and into retail security.

• Expansion into retail security with a leading North American home improvement retailer. After a three-month pilot program which began in June 2023, with locations tested in British Colombia, Southern Alberta, and Southern Ontario, Zedcor entered into a master rental services agreement with to provide MobileyeZ security towers with 24/7 live, verified monitoring at numerous locations across Canada until September 2026.

• Award of Ontario O-Train construction mobile security project. Sites being secured include equipment storage yards, light maintenance and storage facilities and five LRT stations under construction on the O-Train West Extension. As at September 30, 2023 the Company has 19 MobileyeZ security towers deployed with anticipated peak demand for this project up to 26 MobileyeZ. The construction project is expected to be completed in late 2026.

• The Company continued to attract new customers across Canada. For the 3 months ended September 30, 2023, the Company provided services to more than 21 new customers. For the 9 months ended September 30, 2023, the Company has added over 138 new customers.

• On track US expansion. In Q3 2023 the Company leased a facility and hired its first employee in the US. In addition, the Company has shipped a small number of security towers for research & development purposes to help ensure supply targets are met for its 2024 expansion program. We anticipate exiting the year with approximately 45 Solar Electric MobileyeZ, which will be the preferred unit for this market going forward. Subsequent to the end of the quarter, the Company obtained its Texas security license, continued positive business development with both existing Canadian customers with operations in the US and potential US based customers, hired two sales people for the Houston market and exported additional security towers to the Houston service enter.

SELECTED QUARTERLY FINANCIAL INFORMATION

¹ See Financial Measures Reconciliations below

LIQUIDITY AND CAPITAL RESOURCES

Sources and Uses of Cash
The following table shows a summary of the Company's cash flows by source or (use) for the nine months ended September 30, 2023 and 2022:

The following table presents a summary of working capital information:

*Includes $3.2 million of debt and $2.0 million of lease liabilities in 2023 and $2.2 million of debt and $1.6 million of lease liabilities in 2022

The primary uses of funds are operating expenses, growth capital spending, interest and principal payments on debt facilities. The Company has a variety of sources available to meet these liquidity needs, including cash generated from operations. In general, the Company funds its operations with cash flow generated from operations, while growth capital and acquisitions are typically funded by issuing new equity, debt or cash flow from operations.

Principal Credit Facility

On June 6, 2023, the Company entered into a second amending agreement ("Second Amended Financing Agreement") which increased the Company's equipment financing from $6.0 million to $15.0 million. As at September 30, 2023, the Second Amended Financing Agreement provides the Company with the following:

1. A $6.1 million term loan that is fully committed for five years ("Term Loan"). The Term Loan bears interest at 5.15% and will have monthly blended principal and interest payments of $116.

2. A $15.0 million revolving equipment financing facility ("Revolving Equipment Financing"). The Company is able to draw on this facility at any time for up to 100% of new equipment purchases. The draws bear interest at Prime + 2.0% and each draw will be amortized over 5 years with blended principal and interest payments. As at September 30, 2023 the Prime Interest Rate was 7.20% and the interest rate on the Revolving Equipment Financing was 9.20%. As the Company pays down the Revolving Equipment Financing, it can borrow back up to the facility maximum of $15.0 million.

3. An authorized overdraft facility ("Authorized Overdraft") up to $3.0 million, secured by the Company's accounts receivable, up to 75%, less priority payables which are GST payable, income taxes payable, employee remittances payable and WCB payables. The Authorized Overdraft is due on demand and any outstanding overdraft bears interest at Prime + 1.5%. As at September 30, 2023 the Prime Interest Rate was 7.20% and the interest rate on the Revolving Equipment Financing was 8.70%.

The Second Amended Financing Agreement is secured with a first charge over the Company's current and after acquired equipment, a general security agreement, a subordination and postponement agreement with a director of the Company with respect to a note payable, and other standard non-financial security.

The agreement has the following quarterly financial covenant requirements, calculated on a trailing twelve month basis:

• a debt servicing covenant of no less than 1.25 to 1.00; and
• a funded debt to EBITDA covenant of no more than 3.00 to 1.00.

As at September 30, 2023, the Company is in compliance with its financial covenant requirements. The debt servicing ratio as calculated based on the Second Amended Financing Agreement was 2.61 to 1.00 and the funded debt to EBITDA was 1.48 to 1.00.

CREDIT RISK

The Company extends credit to customers, primarily comprised of pipeline construction companies and construction companies, in the normal course of its operations. Historically, bad debt expenses have been limited to specific customer circumstances. However, the volatility in economic activity may result in higher collection risk on trade receivables. The Company has reviewed its outstanding accounts receivable as at September 30, 2023 and believes the expected loss provision is sufficient.

OUTLOOK

Zedcor continues to execute its long-term strategy of growing its technology enabled security services across North America. While there were supply chain delays throughout Q1 which slowed down the Company's ability to build security towers, these were largely resolved in Q2 resulting in 68% growth in the MobileyeZ fleet from September 2022 to September 2023. Zedcor continues to effectively use a mix of cash flow and debt to build additional MobileyeZ security towers to provide surveillance services to our expanding customer base. In addition, there are inflationary pressures that the Company is actively monitoring to maintain margins and this remains a priority for management.

Utilization of the Company's surveillance towers has stayed consistent from June 2023 at above 80% in September 2023, despite the increase in tower fleet size. While we expect the utilization rates to remain strong going forward, there will be volatility on a monthly basis as the Trans Mountain Expansion Pipeline project comes to an end and equipment is redeployed to other customers throughout the Company's operating regions. The Company has grown its salesforce across Canada in order to obtain contracts for its MobileyeZ and continue to expand its service offering to different industries. With the anticipated completion of t