Mr. Maury Marks reports

QUORUM RELEASES FISCAL YEAR 2015 RESULTS

Quorum Information Technologies Inc. has released its fiscal year 2015 operational and financial results.

Operational results highlights for fiscal year 2015 are as follows:

• In January, fiscal year 2016, Quorum completed the successful software conversion for Sunset Country Ford in Fort Frances, Ont. This strategic client for Quorum represents an entry into a new market segment. Completion of this conversion required months of development and testing in fiscal year 2015, plus additional implementation resources to ensure a smooth conversion.
• Quorum continues to enhance three important areas of the company's software, and it tracks key dealership utilization metrics related to these areas in a dealership success scorecard:
  • Communicator features text, e-mail and instant message functionality that is integrated into the Xsellerator workflow. Aggregate data on Communicator's recent usage are shown in this press release.
  • Make More Money (M3) is an initiative which focuses on 10 Xsellerator processes that drive incremental revenue into the company's dealership customers' operations. Aggregate data from the vehicle inspection process (VIP), which is just one of the 10 M3 processes, are shown in this press release.
  • Sales CRM (Customer relationship management): Quorum continues to make significant enhancements to sales customer relationship management features within Xsellerator. Additional usage statistics will be included to the dealership success scorecard early in 2016.

Dealership success scorecard

Communicator

Dealerships utilizing Communicator:  182

Messages in fiscal year 2015:  3,260,903

Year-over-year message growth:  270 per cent

M3 (VIP only)

Dealerships utilizing VIP:  83

Total fiscal year 2015 incremental customer pay revenue:  $51,115,825

Year-over-year revenue growth:  190 per cent

Sales CRM

Dealerships trained:   30

Total number of dealerships that have moved away from third party CRM systems:  nine

• Key customer metrics are as follows:
  • A customer satisfaction index (CSI) semi-annual survey in the third quarter of fiscal year 2015 showed an average of 82 per cent of dealer principals as "satisfied" or "very satisfied," and an average of 85 per cent of end-users as "satisfied" or "very satisfied" over all. The company's survey in the first quarter of fiscal year 2015 reported "satisfied" or "very satisfied" comparative numbers of 81 per cent for dealer principals and 94 per cent for end-users. The company's survey in the first quarter of fiscal year 2014 reported "satisfied" or "very satisfied" comparative numbers of 89 per cent for dealer principals and 81 per cent for end-users. In all three surveys in the last two years almost all the remaining respondents reported as "somewhat satisfied." Any dealer principals or end-users that report as dissatisfied are immediately followed up on by the company's support teams.
  • The company's monthly support centre CSI survey continues to report an average of approximately 95 per cent "very satisfied" with the service received from the company's support team.
  • For the company's support services, on average, Quorum now closes 73 per cent of all support calls within 30 minutes (up from 60 per cent in 2008, when the company first started measuring this statistic) and 87 per cent of all calls within 24 hours (up from 81 per cent in 2008).
• Employees: None of the company's accomplishments are possible without highly motivated, engaged people. The company sincerely thanks the people that drive Quorum. Every year, the company measures its staff engagement, and it actively works toward improving job satisfaction and engagement throughout the company.

Financial results highlights for fiscal year 2015 are as follows:

• Revenue increased by 17 per cent to $10,744,000 in fiscal year 2015 from $9,216,000 in fiscal year 2014. The increase in sales is due to:
  • An increase of $870,000 in recurring support revenue as a result of having more active dealership rooftops at the end of fiscal year 2015 compared with the end of fiscal year 2014;
  • An increase of $565,000 in support plus revenue, which is add-on sales to existing customers due to an increase in training revenue;
  • An increase of $306,000 in new installation revenue, previously referred to as net new revenue, which was a result of completing more installations in fiscal year 2015 as compared with fiscal year 2014;
  • A decrease of $203,000 in transitions revenue (server and operating system upgrades) from converting the company's customers to the new Microsoft Windows and SQL Server 2012 products.
• Margin after direct costs increased to $5,571,000 in fiscal year 2015 from $5,018,000 in fiscal year 2014, an 11-per-cent increase. Margin increased 11 per cent compared with a 17-per-cent increase in revenue due to:
  • Increased salaries and benefits from the addition of employees required to meet the corporation's future business plan;
  • Significantly higher third party costs due to:
    1. Increased new implementation revenue in fiscal year 2015 -- this revenue stream has a higher cost of goods sold and lower margin compared with recurring support revenue;
    2. An increase in the foreign exchange rate, which resulted in higher hardware and software licence costs; many of the licences required for transitions and new installations are purchased in U.S. dollars, and this has had a substantial impact on third party costs.
• Earnings before interest, taxes, depreciation and amortization (EBITDA) increased to $1,716,000 in fiscal year 2015 from $1,476,000 in fiscal year 2014. Increased margin after direct costs was offset by:
  • Larger salaries and benefits expense due to increased staffing levels;
  • Increased sales and marketing costs due to a larger presence at the National Automobile Dealers Association (NADA) trade show in order to capitalize on the momentum the company has created in the market from its investments in new OEM (original equipment manufacturer) integration, M3 and Communicator;
  • Lower general and administrative expense due to lower office rental cost because the company signed a new lease for the Calgary office.
• Income before deferred income tax expense increased to $594,000 for fiscal year 2015 compared with $502,000 in fiscal year 2014.
• Comprehensive income increased to $710,000 in fiscal year 2015 compared with $309,000 in fiscal year 2014, largely due to a $168,000 lower deferred income tax expense and a $142,000 higher foreign exchange gain.
• Working capital increased to $5,129,000 at Dec. 31, 2015, compared with $1,923,000 at Dec. 31, 2014, an increase of $3,206,000, largely due to an increase in cash of $3,291,000. The increase in cash is due to:
  • The corporation receiving $3,044,000 through the issuance of shares, net of share issue costs, from a non-brokered private placement to strategic investors and $25,000 from the exercise of stock options;
  • Cash flow from operating activities of $1,713,000 that was offset by an investment in the company's software product and purchase of equipment of $1,437,000; the $276,000 net operating cash flow was further increased by $33,000 in scientific research and experimental development receipts and offset by $87,000 of long-term debt repayment to reduce the long-term debt outstanding to $166,000 at Dec. 31, 2015.

In February, fiscal year 2016, Quorum was ranked on the 2016 TSX Venture 50 list. Quorum was listed as one of the top 10 companies in the technology sector based on the criteria of market capitalization growth, share price appreciation and trading volume.

This award really belongs to the company's employees, whose innovation and dedication allowed Quorum to execute on its business plan and post record revenues. The award also belongs to the company's investors, board members and partners for their continued support and belief in Quorum's technology solutions and market vision.

Quorum has filed its 2015 consolidated financial statements and notes thereto as at and for the period ended Dec. 31, 2014, and accompanying management discussion and analysis in accordance with National Instrument 51-102, Continuous Disclosure Obligations, adopted by the Canadian securities regulatory authorities. Additional information about Quorum will be available on Quorum's SEDAR profile and Quorum's website.

                              FINANCIAL HIGHLIGHTS

                                    Year ended     Year ended     Year ended
                                       Dec. 31,       Dec. 31,       Dec. 31,
                                          2015           2014           2013

Gross revenue                     $ 10,744,478    $ 9,215,768    $ 7,986,772
Direct costs                         5,173,396      4,197,747      3,499,641
Margin after direct costs            5,571,082      5,018,021      4,487,131
Earnings before interest,
taxes, depreciation and
amortization (EBITDA)                1,716,184      1,476,110      1,254,890
Income before deferred
income tax                             593,586        502,087        470,924
Net income                             451,714        192,516        294,686
Comprehensive income                   709,727        308,761        409,402
Basic net income per share            $ 0.0107       $ 0.0046       $ 0.0075
Fully diluted net income
per share                             $ 0.0107       $ 0.0046       $ 0.0075                                   

We seek Safe Harbor.