Legend Power Systems Inc.

Good morning and welcome to the Legend Power Systems Fiscal 2025 Q1 Investor Call. I'm Randy Buckmer, Legend's Chief Executive Officer. We're really pleased to have you join us in the call today to discuss our corporate progress and financial results for the first quarter of Fiscal 2025, which were the three months ending December 31st, 2024. Please note that certain statements in this call may be forward-looking in nature. These include statements involving known and unknown risks, uncertainties, and other factors that could cause actual results to differ materially from those expressed or implied in our forward-looking statements. For more information about Legend's forward-looking statements and risk factors, please see our management discussion and analysis, which was filed on CDAR yesterday, under our company profile at cdarplus.ca. I'm pleased to be joined by Florence Tan, who is our CFO, Paul Moffitt, our COO, and Mike Ciosi, who is our VP Sales and Marketing. Florence will provide a financial overview of the quarter. Paul will update you on the great progress made while managing in a tight cash environment. The team continues to reduce operating costs. cost of goods, strengthening margins, and improving supply chain and production capabilities. Additionally, he will share our approach to addressing potential U.S. tariffs. Mike will update you on the exciting progress with the five key relationships or pillars that continue to show they will be the driving forces of Legends' future sales growth. The sales team has secured several outstanding partners that are keen to grow their business with Legend Solutions. I also want to take a moment and thank Sean Peasgood and Jonathan Lansky for leading our $1.6 million private placement, which was completed late 2024. Thank you to those who participated in the placement also. The private placement funds and deposits on orders will be used for working capital and supporting backlog and sales opportunities. Additionally, we are reducing operating costs by about $30,000 a month without impairing any of our sales opportunities. We have operated in a tight cash environment for the last couple of years, yet G1 was a particularly tight cash quarter as we had to reduce salaries and in some cases ask people to defer salaries for a few months. While some part orders were put on hold, we successfully managed our backlog by leveraging existing inventory to continue fulfilling commitments. Despite these hurdles, we've maintained strong supplier relationships, thank you, Paul, who have been supportive and patient. We're now steadily paying down outstanding accounts while prioritizing payroll and other critical needs. And for me, as a CEO, I think the dedication and resilience shown by the Legend team during a difficult Q1 has been truly commendable, and thank you, Legend team members. And collectively, we see more opportunity than ever before and see a bright Legend future. And the Legend team is absolutely committed to make Legend Power a success story. We always talk about and believe our five pillars for success are going to make Legend a very strong brand in the active power management marketplace. And just for recollection, The five pillars are the U.S. GSA or General Services Administration and Green Proving Ground, the U.S. Department of Defense, the energy performance contracts which are produced with the ESCOs or energy service companies, the City of New York led by BCAS, Department of City Administrative Services, But additional large opportunities are also being developed there, and those will be discussed later on. And finally, the fifth pillar, the GSA multiple awards schedule, and there'll be an update on that too. So what we're seeing is tangible wins across the five strategic pillars that form the backbone of our growth. Each of these pillars represents a standalone revenue growth opportunity, but together they form a synergistic foundation that will drive significant revenue growth for Legend over the next few years. and you can continue to expect exciting five-pillar progress news in 2025 and beyond. Our reseller partners hold long and deep relationships with most of our target market decision makers, and the partners are starting to increase their introductions to their customers with power challenges, which legend solutions can solve. It's a key piece of our strategy to leverage partners' key customer relationships, which decrease our sales cycle and grow the sales quickly. We're seeing great progress with our partners, and that will be discussed in detail too. The U.S. electric grid and grids globally are facing increased power quality challenges due to aging infrastructure, growing renewable penetration, and rising demand for electrification. Their grid was originally designed for centralized, one-way power flow, but today's environment requires a more dynamic, bidirectional, and resilient system. However, this shift is introducing significant power quality issues, commonly referred to as dirty power or power quality challenges driven to create demand for the smart gate system solution. And we're finding the performance of our smart gate systems in the field continue to exceed expectations, driving strong customer satisfaction and repeat business. And importantly, while the green investing sector has faced political challenges, Legend Power Systems' value proposition transcends political narratives by delivering lower costs, increased profitability, reduce risks, we provide enduring, value-rooted, and traditional business fundamentals. On that note, on to Florence.

Thank you, Randy. During this quarter, revenue recognized was $82,000 compared to $2,000 in Q1 of fiscal 24. And our gross margins for the quarter was 15% compared to a negative margin in Q1 24. Negative margin in the prior year were a result of allocated fixed costs incurred. Deferred revenue as at December 31st, 2024 is $413,000 compared to $365,000 at the end of our fiscal at September 30th, 2024 as additional sales orders were received. The company ended the quarter with $661,000 in cash, no debt, and $939,000 in working capital. And as Randy previously mentioned, we also closed a second tranche of financing in January 2025, further strengthening our working capital position. We continue to focus on the priorities critical to attaining our projections while managing our resources to support our sales growth plans and deliver for our shareholders. I'll now pass it to Paul our COO to provide some operational highlights.

Thank you, Florence. Good morning, everyone. Hello to everyone on the call. Our current backlog of systems remains very strong. We have systems complete, ready to ship or begin assembly. We're upwards of 15 systems in process right now, so proceeds from these systems continue to strengthen our working capital position over the coming months. which is excellent. We have and did have slightly lower revenues in the last quarter. So our gross margin was lower. However, I do, again, fully expect positive trends as our sales increase and our throughput becomes more predictable. We're now ordering lots of materials from lower cost suppliers. We're now going to realize those gross margin benefits, which is excellent, as those materials are received and incorporated into the finished product. And as well, with a lot of great improvements made, in factory efficiency and capacity, those fixed costs are going to be spread over even greater numbers of systems. So we'll see a positive gross margin trend in the near term and over the next 12 to 24 months. So I'm very excited about that. Work continues, as always. As you know, I've talked a lot about outsourcing and the work we've done from the beginning of my role here with Legend on looking at other regions, Canada, US, Mexico, in preparation for larger production quantities. Lots of work is behind us on that, and we have lots of partners, especially in the US, in the panel shop industry. That's basically a contract manufacturer who focuses on cabling, cable harnesses, control panel assembly, enclosure assembly, transformers right down our alley. And those are all lined up for our growth. But of course, if we need to act quicker and make those moves to avoid some tariffs, we're completely prepared to do that. So I'm happy that that work is behind us and we're in an excellent position to address any potential tariff needs. We'll have to see if energy savings and building protection systems like ours will be classified by the harmonized tariff schedule or not. But again, if we are, we're well prepared for that. Operating costs, as Randy mentions, have been further reduced. Again, very happy about that. Without impacting any of our operational or sales capabilities, just further continuous improvement and reductions where we can. We do have plans to invest strategically where needed as our backlog grows. And we have made further improvements in the way we source services, a whole variety of services to the company. So we've reduced in areas where those services are no longer needed, or we've switched or optimized the providers that we have. So there's been a great effort done there. And that's part of the $30,000 per month saving that Randy, additional that Randy mentioned. As we talked about in December, cash from the recent announced private placement warrants, ongoing deposits and accounts receivable will support our operational expense beyond fiscal 2025. So all those streams, of course, are very important. Continued deposits, continued deliveries, the support from our shareholders with private placements and the accounts receivables. We'll continue to keep our cash throughout the fiscal year. The completion and shipment and installation of our backlog, the 15 that I mentioned and the installations that we have planned and underway will bring a further $1.7 million of cash into the business. And that's beyond the deposits already received. So on top of the deposits that Mike will bring in through his sales efforts, all of this is supporting our cash position. And some great developments on the system and software development area, the functionality of our platform as we near finalization of some new enhancements. And that's going to further support all of the strategic sales pillars that Randy has mentioned, and also some of our new customer requirements. And these new software and this new functionality is added right into the existing platform. So that's a great benefit and an opportunity for recurring revenues. So I'm very happy again that operations is meeting all of today's challenges and very excited that we're completely ready for the pillar business and the new business that Mike is going to be bringing on. So we're clearly prepared for the demand that's ahead of us. Thank you. And I'll pass it over to Mike.