Mr. Michael Robb reports

AIRIQ ANNOUNCES SEPTEMBER 30, 2015, FINANCIAL RESULTS

AirIQ Inc. has released its financial results for the three months and six months ended Sept. 30, 2015.

"Once again, we are pleased that the company is continuing to produce growth, profit and positive results in all areas," said Michael Robb, president and chief executive officer of AirIQ. "We will continue to focus on our key strategies to drive revenue growth and profitability for future periods," continued Mr. Robb.

(Unless otherwise noted herein, and except share and per-share amounts, all references to dollar amounts from this point forward are in thousands of Canadian dollars.)

The main highlights of the quarter were as follows with comparisons with the same quarter the previous year (except as otherwise noted):

• Revenue improved by 13 per cent to $757 from $672.
• Recurring revenue improved by 22 per cent to $564 from $463.
• Earnings before interest, taxes, depreciation and amortization, and stock-based compensation improved by 79 per cent to $159 from $89.
• Net income improved by 144 per cent to $127 from $52.
• Service contract gross profit improved by 23 per cent to $437 from $328.
• Positive cash flows from operations were $119, representing a $46 improvement.
• Positive working capital was $299 from $211 at March 31, 2015.
• Future revenue pools increased to $868 from $765 at March 31, 2015.

                         FINANCIAL HIGHLIGHTS

                                     Three months ended  Three months ended
                                         Sept. 30, 2015      Sept. 30, 2014

Total revenue                                      $757                $672
Gross margin                                       $490                $417
Gross margin %                                       65%               62.1%
Expenses                                           $331                $328
EBITDAS                                            $159                 $89
Other expenses                                      $32                 $37
Net income (loss)                                  $127                 $52
Net income (loss) per share, basic
and diluted                                       $0.01               $0.00

Business review

The company continues to focus on its key strategy elements to build revenues and reduce costs to achieve sustained profitability and positive cash flow, and to seek opportunities to form value-creating partnerships.

Overview

The company's unaudited consolidated condensed interim financial statements include the accounts of AirIQ and its subsidiaries, AirIQ U.S. Holdings Inc., AirIQ U.S. Inc. and AirIQ LLC. All intercompany balances and transactions have been eliminated on consolidation.

The company's unaudited consolidated condensed interim financial statements as at and for the three months ended June 30, 2015, including notes thereto, and management's discussion and analysis for the same period, were filed with the Canadian securities regulatory authorities on Nov. 4, 2015, and will be available on the company's website and on the System for Electronic Document Analysis and Retrieval website.

Revenues

Revenues for the three months ended Sept. 30, 2015, increased 13 per cent to $757 from $672 for the three months ended Sept. 30, 2014. Revenues for the six months ended Sept. 30, 2015, increased 17 per cent to $1,579 from $1,349 for the six months ended Sept. 30, 2014. Approximately 70 per cent of the total revenue for the period represents recurring revenue from the company's airtime customers.

Revenues received from equipment sold in connection with service contracts are recorded as deferred revenue and recognized over the initial term of the service contract.

Sales of hardware units associated with service contracts recorded to deferred revenues were approximately $200 and $418, respectively, during the three months and six months ended Sept. 30, 2015, compared with $182 and $426, respectively, during the three months and six months ended Sept. 30, 2014. Revenues recognized from deferred hardware revenues for the three months and six months ended Sept. 30, 2015, were approximately $164 and $315, respectively, compared with $149 and $271, respectively, during the three months and six months ended Sept. 30, 2014.

Over all, revenues related to service contracts sold in connection with hardware equipment increased by $101 and $169, respectively, from $463 and $937, respectively, for the three months and six months ended Sept. 30, 2014, to $564 and $1,106, respectively, for the three months and six months ended Sept. 30, 2015.

Included in the company's revenues are sales of units that were sold without a fixed-term service contract of approximately $21 and $137, respectively, during the three months and six months ended Sept. 30, 2015, compared with $58 and $133, respectively, during the three months and six months ended Sept. 30, 2014, respectively.

Included in the company's reported revenues are miscellaneous parts, repair, warranty and lost unit sales of approximately $8 and $21, respectively, during the three months and six months ended Sept. 30, 2015, compared with $2 and $8, respectively, for the three months and six months ended Sept. 30, 2014.

Gross profit

Over all, gross profit for the three months ended Sept. 30, 2015, increased by 18 per cent to $490, and 9 per cent to $935 for the six months ended Sept. 30, 2015, compared with $417 and $858 for the three months and six months ended Sept. 30, 2014.

Equipment gross profits decreased by approximately $13 and $34, respectively, to $53 and $92, respectively, during the three months and six months ended Sept. 30, 2015, from $66 and $126, respectively, for the three months and six months ended Sept. 30, 2014.

Service contract gross profits increased by approximately 33 per cent and 23 per cent, respectively, to $437 and $843, respectively, for the three months and six months ended Sept. 30, 2015, from $328 and $685, respectively, for the three months and six months ended Sept. 30, 2014.

Expenses and other items

Sales and marketing, research and development, and general and administrative expenses totalled $351 and $689, respectively, for the three months and six months ended Sept. 30, 2015, compared with $339 and $676, respectively, for the three months and six months ended Sept. 30, 2014.

Over all, these expenses were increased by $12 and $13, respectively, for the three months and six months ended Sept. 30, 2015, when compared with the three months and six months ended Sept. 30, 2014.

Expense reductions for the three months ended Sept. 30, 2015, when compared with the three months ended Sept. 30, 2014, were achieved in the following areas; (a) rent and maintenance of approximately $13, (b) public reporting costs of $5, and (c) legal expenses of approximately $1. These savings were offset by an increase in: (a) consulting fees of approximately $20, (b) wage and related expenses by $5, (c) stock-based compensation costs by $3, and (c) other increases of approximately $3 related primarily to computer operating costs and insurance costs.

Expense reductions for the six months ended Sept. 30, 2015, when compared with the six months ended Sept. 30, 2014, were achieved in the following areas; (a) rent and maintenance of approximately $16, (b) computer operating costs of approximately $6, (c) miscellaneous expenses of $7, and (d) public reporting costs of $4, These savings were offset by an increase in: (a) consulting fees of approximately $34, (b) wage and related expenses by $5, (c) stock-based compensation costs by $5, and (d) other increases of approximately $2 related primarily to legal and insurance costs.

Net income/loss

The company's generated net income for the three months and six months ended Sept. 30, 2015, was $127 and $201, respectively, or one cent and one cent, respectively, per share as compared with $52 and $106, respectively, or nil and nil per share, respectively, for the three months and six months ended Sept. 30, 2014, an improvement of $75 and $95, respectively.

The increase in net income for the three months ended Sept. 30, 2015, when compared with the three months ended Sept. 30, 2014, can be attributed to improvement in the following areas: (a) decreased interest expense of $10, (b) increased gross profits of $73 and (c) a decrease in foreign exchange of approximately $6. These improvements were offset by an increase in: (a) expense increase of approximately $12 and (b) increase in amortization of approximately $2.

The increase in net income for the six months ended Sept. 30, 2015, when compared with the six months ended Sept. 30, 2014, can be attributed to improvement in the following areas: (a) decreased interest expense of $21, (b) decrease in amortization of approximately $8, (c) a decrease in foreign exchange of approximately $2 and (d) increased gross profits of $77. These improvements were offset by an expense increase of approximately $13.

Financial statements and management's discussion and analysis

The company's unaudited consolidated condensed interim financial statements for the three months and six months ended Sept. 30, 2015, including notes thereto, and management's discussion and analysis for the same period, are being filed with the Canadian securities regulatory authorities on today's date, and will be available on the company's website and on the System for Electronic Document Analysis and Retrieval website. The company's financial statements include the accounts of AirIQ and its subsidiaries, AirIQ U.S. Holdings, AirIQ U.S. and AirIQ LLC. All intercompany balances and transactions have been eliminated on consolidation.

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