Zedcor : Announces First Quarter Results for 2023 With 39% Increase in Year Over Year Revenue, $2.1 Million in Adjusted EBITDA and Positive Earnings per Share

Zedcor Inc. Announces First Quarter Results for 2023 With 39% Increase in Year Over Year Revenue, $2.1 Million in Adjusted EBITDA and Positive Earnings per Share

CALGARY,ALBERTA-May24,2023:ZedcorInc.(the"Company")(TSXVENTURE:ZDC)todayannouncedits financialandoperatingresultsforthethreemonthsendedMarch31,2023.

Q12023revenueswere$6.4millionandtheCompanyhadnetincomebeforeincometaxesof$0.8millionor

$0.01pershare. Thisrepresenteda39%increaseinrevenuescomparedtoQ12022anda 75%increaseinnet

incomeforMarch31,2023.

Zedcor recorded $2.1 million of adjusted EBITDA for the three months ended March 31, 2023. This compares to $1.4 million of adjusted EBITDA for the three months ended March 31, 2022.

During the quarter, the Company has allocated approximately 18% 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 Eastern Canada.

Todd Ziniuk, President & CEO said: "We continue to see strong demand for our MobileyeZ security towers. We believe our integrated model of security tower rentals, coupled with uncompromising service is truly unique. We have had preliminary conversations with customers in the United States and believe there is an opportunity to expand our services to the USA. We have started to spend time researching the market and believe there is an opportunity to grow revenue. We plan to expand to the US in the second half of 2023 while continuing to expand in Canada, with a focus on Eastern Canada. We are also seeing demand for our services across different industry verticals that we are excited about. In April, we launched a pilot project with a large home improvement retailer. We are enthusiastic about this opportunity and will use it to expand our service offering to other retailers as well."

Financial and Operating Results for the three months ended March 31, 2023:

1 Adjusted for stock based compensation and foreign exchange loss

2 See Financial Measures Reconciliations below

Zedcor recorded revenue of $6,443 and $2,135 of adjusted EBITDA for the three months ended March 31, 2023. This compares to revenue of $4,631 and $1,373 of adjusted EBITDA from continuing operations for the three months ended March 31, 2022. The revenue growth of 39% and EBITDA growth of 55% shows steady year over year growth for the Company as it continues to execute on its strategy of sustained, profitable growth across North America.

The Company's security and surveillance services saw increased revenues and EBITDA for the quarter ended March 31, 2023 compared to 2022 due to robust customer demand of its larger fleet of MobileyeZ security towers. Zedcor exited the period with 564 MobileyeZ security towers which was an increase of 58 when compared to December 31, 2022 and 273 units when compared to March 31, 2022. While the Company placed

orders for equipment with plenty of lead time and anticipated exiting the quarter with more than 564 units, supply chain disruptions continue. The Company is actively looking for ways to manage supply chain disruptions, including continued investment in research and development and optimizing is MobileyeZ assembly operations.

Zedcor is actively managing the increased customer demand for security solutions by adding to its fleet of towers, expanding its geographic footprint across North America and continuing to expand into new industry verticals such as big box retail stores, car dealerships and utilities.

Financial and operational highlights for the three months ended March 31, 2023 include:

• Revenue for the quarter ended March 31, 2023 increased by $1,812 from $4,631 to $6,443. This increase was driven by a larger fleet of MobileyeZ security towers and high utilization of the Company's fleet of security towers. Zedcor maintained double digit quarter over quarter revenue growth.
• Net income from continuing operations was $752 for the three months ended March 31, 2023. This compares to net income of $428 for the three months ended March 31, 2022. The increased income is due to a larger fleet of security towers which drove revenue and higher gross margins offset by higher general and administrative costs as the Company expanded across Canada.
• Continued traction across Ontario. The Company expanded to Ottawa in Q2 2022 and Toronto in Q3 2022. As at March 31, 2023, approximately 18% of the Company's MobileyeZ security tower fleet is located in Ontario. We are seeing strong demand for the Company's services in Eastern Canada and additional security towers will be delivered to Ontario and Manitoba in 2023.
• Continued expansion in the Manitoba market. Zedcor opened its equipment and services center in Winnipeg in December 2022. In Q1 2023, the Company secured a work with a Manitoba based construction company for up to 18 electric MobileyeZ security towers across 8 locations in Manitoba. This contract will last up to 10 months with the possibility to extend indefinitely or be relocated to the customer's other construction sites.
• Diversification away from the Company's core pipeline construction customers. Zedcor's services are customer and industry agonistic and we continued to see that in Q1 2023 as we obtained customers across the construction industry and launched a pilot program with a big box retailer subsequent to Q1 2023.
• Preliminary market research and assessment on US expansion. Zedcor believes there is significant demand for its integrated, technology enabled security services in the United States and has started conversations with potential customers on service offerings.

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 three months ended March 31, 2023 and 2022:

The following table presents a summary of working capital information:

*Includes $3.2 million of debt and $1.8 million of lease liabilities in 2023 and $1.7 million of debt and $1.4 million of lease liabilities in 2022

The primary uses of funds are operating expenses, maintenance and 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 or debt.

Principal Credit Facility

On October 18, 2021, the Company repaid its existing credit facilities and entered into a new financing agreement ("Financing Agreement") which consists of:

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. $4.4 million of the proceeds of the term loan was used to repay the Company's outstanding Loan and Security Facility.
2. A $3.0 million revolving equipment financing facility ("Revolving Equipment Financing"). The Company is able to draw on this facility at any time for up to 75% 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 December 31, 2022 the Prime Interest Rate was 6.45% and the interest rate on the Revolving Equipment Financing was 8.45%. As the Company pays down the debt, it can borrow back up to the facility maximum of $3.0 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 December 31, 2022 the Prime Interest Rate was 6.45% and the interest rate on the Revolving Equipment Financing was 7.95%.

On April 27, 2022, the Company entered into an amended financing agreement with its lender (the "Amended Financing Agreement") which expanded the Revolving Equipment Financing from $3.0 million to $6.0 million.

The 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 annual financial covenant requirements for the fiscal year ends December 31,

2022 and onwards:

• 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 March 31, 2023, the Company did not have quarterly financial covenant requirements that it had to comply with.

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, we continue 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 fitted with high resolution cameras and supported by live verified, 24/7 remote monitoring, continues to be high and remained steady in Q1 2023. While we expect the utilization rates to remain strong going forward, there was a drop in utilization rates at the start of Q2 2023 as the Trans Mountain Pipeline Expansion 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 the Trans Mountain Expansion Pipeline in the first half of 2024 the Company is now situated with a growing salesforce and expanded geographical footprint to be able to diversify its customer base while maintaining utilization rates. This was evidenced in Q2 as Zedcor was able to redeploy a significant portion of the MobileyeZ returned from Trans Mountain to new customers, including starting a pilot project with a major home improvement retailer.

Priorities that the Company intends to focus on for the remainder of 2023 include:

1. Obtaining more customers, with a focus on enterprise level customers, and diversifying customer base including geographically and across different industry verticals. The Company is seeing strong demand for its MobileyeZ across Canada and has plans to expand to the United States in the second half of 2023. Based on preliminary research, there is a large market for Zedcor's integrated solution of MobileyeZ security towers with monitoring services. Due to significant spending on infrastructure in the USA, the Company believes its products, coupled with Zedcor's commitment to customer service, are perfectly situated for this market. Zedcor also intends to grow its presence in Eastern Canada.
2. Continued expansion across Canada. The Company expanded to Ontario with equipment and service centers in Ottawa and Toronto. The Company has secured customers in Ontario and Quebec and intends to allocate a sizable portion of its 2023 capital spending to expand its Eastern Canada operations and fleet size. The Company has also hired salespeople and branch managers for all of its equipment and service centers across Canada.
3. Maintaining margin levels by increasing operational efficiency and continuing to invest in technology. Zedcor has investigated a number of artificial intelligence options that will reduce the number of alarms in its monitoring center. We will be investing in technological solutions to help us exploit this and are actively testing options.
4. Building new, innovative products based on customer demand. As the Company has obtained customers in different industry verticals, it has seen an increasing number of use cases for its MobileyeZ. This includes a need for additional sensor technology in both the retail and construction industries. As a result, the Company intends to increase its product offering in sensor technology to help customers solve issues around asset security. As the Company expands into different geographies, we intend to continue to develop additional types of MobileyeZ security towers, including a full solar security tower.
5. The Company intends to continue to generate customer and shareholder value and positive earnings per share. By effectively managing its growth, executing on the above noted strategies and increasing its capital markets presence, Zedcor will be able to continue to generate positive earnings per share, grow its shareholder base and increase share price.