Mr. William Long reports

EPICORE BIONETWORKS INC. REPORTS THIRD QUARTER RESULTS FOR FISCAL YEAR 2016

Epicore Bionetworks Inc. had third quarter revenue of $2.9-million (U.S.) and net income of $700,000 (U.S.), or 2.7 U.S. cents per share, for the period ended March 31, 2016. For the nine months ended March 31, 2016, Epicore reported revenues of $7.2-million (U.S.) and net income of $1-million (U.S.), or four U.S. cents per share. All amounts are in U.S. dollars unless otherwise specified.

Third quarter revenue was 14 per cent higher than last year's third quarter. Net income increased by 107 per cent. Sales increases were achieved in all areas except the non-Ecuador part of Latin America, which suffered from a weather-delayed season start. Shrimp diseases such as early mortality syndrome and a new microspordian disease called enterocytozoon hepatopenaei affected several Southeast Asian producing regions. In Southeast Asia, low prices combined with the risk of disease have resulted in a curtailment in shrimp stocking. Despite this situation, sales resumed to Vietnam, and increased in Indonesia and India. Sales were especially strong to newer sales areas like Australia, Singapore and to Africa.

Results versus prior fiscal-year third quarter were as follows:

• Revenue increased by 14 per cent to $2.9-million;
• Gross profit increased by 27 per cent to $1.8-million;
• Operating expenses increased by 6 per cent to $1-million;
• Income before taxes increased 64 per cent to $900,000;
• Net income increased 107 per cent to $700,000;
• EBITDA (earnings before interest, taxes, depreciation and amortization) increased 68 per cent to $900,000;
• Achieved basic earnings per share of 2.7 cents;
• Increased shareholders' equity to $9.2-million;
• Year-over-year cash increased 58 per cent to $2.7-million;
• Year-to-date cash flow from operations of $1.1-million.

Gross profit increased 27 per cent in the third quarter due to the increase in revenues and a slight decrease in cost of goods sold (COGS). The third quarter sales mix included a higher-than-normal proportion of higher-priced sales items. The relatively low COGS was due to sales mix and improved production efficiencies.

Operating expense increased by 6 per cent. While consulting and accounting expenses were lower in the third quarter, payroll expense increased due to inflation and to new mandated Ecuadorean payroll costs. Depreciation and maintenance expenses also increased.

Higher revenues with relatively low COGS expenses and only modest increase in operational expense combined to produce 64 per cent higher third quarter earnings before tax than prior-year third quarter. Taxes were flat compared with the prior year because of equipment tax credits. The attached table summarizes the third quarter results (rounded to thousands of U.S. dollars).

                FINANCIAL HIGHLIGHTS
 (in thousands of U.S. dollars, except where noted)

                               For the quarter ended
                                            March 31, 
                                  2016          2015

Revenue                         $2,930        $2,567
Gross profit                    $1,829        $1,440
Operating expenses                $964          $913
Net income                        $656          $317
Earnings per share              $0.027        $0.013
Shareholders' equity            $9,207        $7,939
Cash balance                    $2,715        $1,715

Epicore continues to generate positive net income from operating activities. In fiscal 2015 and early fiscal 2016, working capital increases and investments in plant and equipment decreased cash balances but, by the third quarter, the majority of planned capital spending was completed. Cash at the end of the quarter was $2.7-million, versus $2.3-million at the end of fiscal 2015. With these proceeds, expected sales revenue growth and continued relatively low operating costs, management expects there will be sufficient cash to meet the fiscal year's financial requirements, to finance expansion of aquaculture and environmental remediation marketing efforts, and to pursue new strategies for enhancing shareholder value.

Over the last two years, Epicore has invested materially in a second building and automated packaging equipment. This added space is critical to the company's ability to increase production levels. All automated packaging equipment was in place and operational in the third quarter. The board has approved a continuing capital program to enhance efficiencies and ensure redundancies in critical applications of the company's operations.

We seek Safe Harbor.