Mr. Brooks Bergreen reports

HIT TECHNOLOGIES REPORTS FOURTH QUARTER FISCAL 2016 RESULTS

Hit Technologies Inc. has released its fourth quarter and annual fiscal 2016 financial and operating results for the quarter and year ended June 30, 2016, prepared in accordance with international financial reporting standards.

                       SELECTED QUARTER AND ANNUAL INFORMATION
 
                 Q4 fiscal 2016     Q4 fiscal 2015        Fiscal 2016        Fiscal 2015

Revenue              $  262,897         $  134,115        $ 1,720,128       $  1,024,956
Gross margin %               37%              (10)%                32%                18%
Operating
expenses
(excluding
non-cash
and cost of
sales)                  544,964          1,101,806          3,348,563          3,184,633
Adjusted
EBITDA
(loss)                 (453,262)        (1,125,906)        (2,797,671)        (3,026,540)
Net (loss)
per share,
basic                $     0.01         $     0.10         $     0.07        $      0.19

"We are pleased with our Q4 and annual sales momentum and progress against our strategic plan," said Brooks Bergreen, chief executive officer of Hit Technologies. "Q4 HitCase sales were up 162 per cent year over year, more than offsetting declining sales of legacy products, which resulted in an overall increase in sales of 96 per cent. Gross margins for both Q4 and the year were strong. In addition, due to the foundation we laid previously and the momentum the business generated this year, we significantly reduced operating costs. The majority of our sales were driven by our on-line marketing activities and our ability to convert our fan base into purchasers resulted in HitCase products making up 94 per cent of total revenues. These conversions were complemented by repeat business from our boutique retailers."

Mr. Bergreen continued: "With our increased product offerings, we are starting to see our suite of HitCase products start appealing to the mass market and demonstrate the continued sales growth this market can translate into. Overwhelmingly, we continue to garner positive feedback on our products, which underscore the competitive advantages of our offering. In addition [to] the launch of iPhone 7 and the anticipation for our new offerings for it, we have seen an increase in interest from and opportunity with customers, retailers and distributors, which we are now working toward converting to new revenue growth. However, as many distributors are waiting for the availability of HitCase offerings for iPhone 7 before placing orders, we are expecting Q1 F2017 and Q2 F2017 sales to lag before returning to growth in Q3 F2017 and Q4 F2017. Earlier in the year, to improve our cash position, we completed a non-brokered private placement, raising gross proceeds of $1.18-million. In addition, we reduced our work force during the latter half of our fiscal year without impacting our ability to generate revenue. These changes allowed us to reduce salaries across the company and significantly lower overall cash operating expenses. Between Q2 and Q3, operating expenses declined by 32 per cent and a further 24 per cent in Q4."

Fourth quarter fiscal 2016 financial and operational highlights:

• HitCase product sales, excluding legacy products, increased 162 per cent compared with the corresponding quarter last year and increased 178 per cent for the year.
• The company generated sales of $262,897 in fourth quarter fiscal 2016, up 96 per cent from $134,412 in fourth quarter fiscal 2015, reflecting HitCase Pro-6, Snap and accessories sales, products that were not available in fourth quarter 2015. Due to seasonality, as expected, fourth quarter sales were lower than third quarter fiscal 2016 sales.
• Gross margin for fourth quarter was 37 per cent compared with (10) per cent in the corresponding quarter in the prior year and 32 per cent for the year compared with 18 per cent in the prior year.
• During fourth quarter, the company scaled back its work force and reduced operating expenditures (excluding non-cash items and cost of sales) by 24 per cent compared with third quarter fiscal 2016 levels. The company continues to look for additional opportunities to realize further reductions.
• The company reported an adjusted earnings before interest, taxes, depreciation and amortization loss of $453,262 for fourth quarter fiscal 2016, a 60-per-cent reduction from the loss of $1,125,906 in fourth quarter fiscal 2015.
• The company closed the quarter with working capital of $328,937, including cash and cash equivalents of $355,606 and inventory of $471,435 at June 30, 2016.
• The company completed a private placement in May, 2016, raising gross proceeds of $1.18-million.
• As part of Discovery Channel's Shark Week, an iPhone 6 equipped with a HitCase Pro 6 was used to livestream a shark dive off the coast of Florida. The livestream generated 80,000 comments, 4,500 shares and 6.4 million impressions over two days.
• Subsequent to the quarter-end, the company launched its new Shield case. The Shield is a thin, aluminum case for the iPhone 6/6s and iPhone 6plus/6splus, which extends the HitCase brand into the everyday protective-case market. The Shield's aluminum casing and unique HitCase Shockseal provide shockproof and underwater protection to depths of 10 feet. Shield is thin, has a transparent back and comes in the colours of the iPhone, which is unique to the accessories market. The Shield for iPhone 7 is expected to launch in second quarter fiscal 2017.

About Hit Technologies

Hit Technologies develops and markets a portfolio of products that transform Apple iPhones into high-performing, weather- and shock-resistant video cameras. Both its flagship product, HitCase Pro, and its newer Snap allow users to easily capture action photo and video content hands-free, using a variety of Hit Technologies-patented Railslide mounts that attach to virtually any surface. Swappable lenses and accessories provide a variety of perspectives otherwise unattainable while participating in adventure sports.

                        
                STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS                             

                                 Quarter ended June 30,           Year ended June 30,
                                    2016          2015           2016           2015

Revenue                         $262,897      $134,115     $1,720,128     $1,024,956
Cost of sales                    164,577       147,484      1,168,795        839,391
                              ----------    ----------     ----------     ----------
                                  98,320       (13,368)       551,333        185,565
Expenses
Depreciation                      49,112        51,892        207,506         90,821
Share-based compensation          30,770        88,508        252,773        328,918
General and administrative       286,286       295,553      1,683,140      1,329,754
Loss on write-off of
equipment                                       48,054                        48,054
Research and development         101,753       116,315        326,381        317,851
Selling and marketing            156,925       689,937      1,339,042      1,537,028
                              ----------    ----------     ----------     ----------
                                 624,845     1,290,259      3,808,842      3,652,426
                              ----------    ----------     ----------     ----------
(Loss) before other income
(expenses)                      (526,525)   (1,303,627)    (3,257,509)    (3,466,861)
Other income (expenses)
Reverse takeover listing
expense                                     (2,005,174)                   (2,005,174)
Finance costs                     (2,867)       (4,414)        (7,241)       (12,502)
Foreign exchange (loss)           (3,752)       (6,318)         6,801        (14,970)
                              ----------    ----------     ----------     ----------
                                  (6,619)   (2,015,906)          (441)    (2,032,646)
                              ----------    ----------     ----------     ----------
(Loss) and comprehensive
(loss) for the period           (533,144)   (3,319,534)    (3,257,950)    (5,499,507)
                              ----------    ----------     ----------     ----------
Basic and diluted (loss)
per share                          (0.01)        (0.10)         (0.07)         (0.19)
                              ----------    ----------     ----------     ----------

We seek Safe Harbor.