Mr. Doug McCollam reports

EXO U ANNOUNCES ITS FIRST QUARTER FISCAL 2016 FINANCIAL RESULTS

EXO U Inc. has released its financial results for its first quarter ended June 30, 2015. All amounts are stated in Canadian dollars, unless otherwise noted.

                    FINANCIAL HIGHLIGHTS FOR THE THREE MONTHS ENDED JUNE 30, 2015

                                         Q1 fiscal 2016                        Q1 fiscal 2015 
                                                                                          
Revenue                                              $0                              $503,189
Adjusted negative EBITDA (1)                 (1,868,446)                           (1,135,747)
Net (loss)                                   (2,101,648)                           (1,485,066)
Basic and diluted net (loss) per share            (0.05)                                (0.04)

1. Adjusted negative EBITDA is a non-IFRS measure. Please refer to the annex of this press
release for the company's definition of such measure and for a reconciliation of net loss and
comprehensive loss as determined in accordance with IFRS to adjusted negative EBITDA.

First quarter fiscal 2016 and subsequent highlights

• The company announced on July 8, 2015, that it engaged Mackie Research Capital Corp. as sole agent for up to a $5-million convertible debt financing that was to close on or about July 29, 2015. The company subsequently reported on Aug. 5, 2015, that due to seasonality and market conditions, the closing of the offering was then targeted on or about Aug. 19, 2015. The offering has not yet closed and there is currently no certainty that it will be completed on the terms previously announced or at all. See subsequent event and financing update.
• On Aug. 14, 2015, the company announced that it had entered into a partnership agreement with Proeducacion, a leading Mexican-based provider of comprehensive, simple and reliable technology solutions for schools and universities. With the EXO U education solution, Proeducacion plans to enhance its product offering and expand its reach into the education sector in Mexico.
• On Aug. 5, 2015, the company announced the appointment of Kevin Pawsey as its new chief operating officer. Mr. Pawsey, a three-time chief executive officer in the education sector and one of the industry's most dynamic and connected executives, brings 20 years of experience to EXO U and a proven history of success in developing sustained business growth internationally in the fields of education, technology and online learning.
• During the quarter, the company conducted a number of trials and pilots of its product with educational institutions. In addition, demonstrations of the product have been made with a number of significant potential partners throughout the Americas and Europe.
• EXO U joined Panasonic's booth at the prestigious ISTE (International Society for Technology in Education) show in Philadelphia from June 28 to July 1. EXO U set up five mini classrooms to showcase its new digital education platform.
• During the quarter, the company's contract with the Institute of Economics and Management, a university located in the Russian Federation, was cancelled, after the completion of the pilot phase, by the university due to political sanctions against the Russian Federation and the deficiency in their IT infrastructure equipment.
• On May 11, 2015, the company announced that it had entered into a partnership agreement with Clever Inc., a provider of secure single sign-on access for school-based learning software and student information systems.
• On May 6, 2015, the company announced that it had entered into a strategic partnership agreement with SIGMAnet Inc., a leading provider of IT infrastructure consulting, solutions and services. This non-exclusive agreement, for an initial term of one year, is expected to strengthen EXO U's sales and distribution network. Launch of the company's New Digital Education Platform on April 6, 2015, at the ASU-GSV conference in Scottsdale, Ariz. Over 2,000 attendees from around the world in the education field as well as investors attended the three-day event.

"Though we continue to build our technology and partner base, we still have not generated, as of yet, any orders for our product offering since the start of the fiscal year," said Shan Ahdoot, president and chief executive officer of EXO U. "This, as well as the difficult financial markets, has impacted our ability to raise much needed capital. Until the financing takes place, we will actively manage our expenses and staffing levels. The external feedback we have received for our product offering has been strong and we hope to translate that into orders in the near future."

Financial results

EXO U had no revenue in the first quarter ended June 30, 2015, compared with revenues of $503,189 one year earlier. The absence of sales was attributable to the building of new sales channels with partners coupled with the timing of the launch of the new version of the company's product offering. The company continues to conduct a number of demonstrations, trials and pilots on an ongoing basis in order to develop revenue opportunities. As at June 30, 2015, the company had $386,925 of deferred revenues recorded on the unaudited interim condensed consolidated statement of financial position. These deferred revenues are related to a contract signed with the government of Panama to deliver, among other services, licences of EXO U's solution. As of June 30, 2015, the company did not recognize any revenue from this licence agreement as the revenue recognition criteria were not fully fulfilled.

Research and development (R&D) expense was $1,039,220 for the first quarter of fiscal 2016, an increase of $534,517 compared with the same period of last year. This increase is mainly due to increased staffing in the engineering group as the company drives its product development.

Selling, general and administrative expenses for the first quarter were $879,328, down $222,088 from that incurred in the same period last year.

Stock-based compensation in the first quarter decreased from $299,375 to $169,776 for the first quarter of fiscal 2016.

Adjusted negative EBITDA was $1,868,446 for the quarter, compared with a negative $1,135,747 in the same period last year, an increase of $732,699. These increases in the adjusted negative EBITDA are due to higher spending in R&D.

As of June 30, 2015, the company had a cash balance of $2,647,559, a decrease of $1,444,584 from the position it had as at March 31, 2015.

Subsequent event and financing update

The company announced on July 8, 2015, that it had engaged Mackie Research Capital Corp. as agent for a convertible debt financing of up to $5-million that was to close on or about July 29, 2015. The company subsequently reported on Aug. 5, 2015, that due to seasonality and market conditions, the closing of the offering was then targeted for on or about Aug. 19, 2015.

As at Aug. 31, 2015, the offering has not yet closed. While the company and the agent are continuing to work toward completing the offering on acceptable terms, there is currently no certainty that the offering will be completed on the terms previously announced or at all. See going concern.

Going concern

These unaudited interim condensed consolidated financial statements of the company for the three-month period ended June 30, 2015, have been prepared on a going-concern basis, which implies the company will be able to realize its assets and discharge its liabilities and its commitments in the normal course of business.

As at June 30, 2015, the company had not yet achieved profitable operations nor positive cash flows from operating activities and has accumulated losses of $23,873,422 since inception, including the net loss of $2,101,648 for the three-month period ended as at the same date. The company used $1,444,584 of cash from its operating activities for the three-month period ended June 30, 2015. The company expects to continue to incur further operating losses and negative cash flows from operating activities in the development of its business, and these material uncertainties cast significant doubt upon the company's ability to continue as a going concern. Furthermore, as at June 30, 2015, the company's committed cash obligations and expected level of expenses for the next 12 months exceed its actual cash resources.

The continuation of the company as a going concern is dependent upon, among other things, the company's ability to generate future profitable operations by securing contracts and growing its revenue base, and its ability to obtain additional financing in order to meet its obligations arising from normal business operations. The company will continue to seek additional sources of financing in the form of equity and/or debt financing and will continue to pursue joint venture or other partnership agreements. At the same time, the company expects to further reduce the company's current operating costs in order to improve its liquidity. Whether and when the company can obtain additional financing or attain profitability and positive cash flows from operating activities is uncertain, in particular as a result of current market conditions and the length of time required to generate positive cash flows from new customer or partner agreements. Management believes that the company will be able to obtain additional funds through financing or partnership agreements, but there is no assurance that it will be able to do so. Without additional financing or other revenues, the company may be forced to cease operations. The current cash balance will allow the company to continue operations to approximately the end of October, 2015, and then, if required, would also provide sufficient funds for an orderly dissolution of the company.

Accordingly, the unaudited interim condensed consolidated financial statements do not include any adjustments to the recoverability and classification of recorded asset amounts, and classification of liabilities that might be necessary should the company be unable to continue as a going concern.

The unaudited interim condensed consolidated financial statements and related notes, and management's discussion and analysis for the quarter ended June 30, 2015, and 2014, are available under the company's profile on SEDAR.

Annex

         ADJUSTED NEGATIVE EBITDA FOR THE THREE-MONTH PERIODS ENDED JUNE 30, 2015, AND 2014

                                                                               Three months ended
                                                                                          June 30, 
                                                              2015                           2014
                                                                                                 
Net (loss) and comprehensive (loss)                    $(2,101,648)                   $(1,485,066)  
Financials expenses (income), net                           (5,885)                        (4,187)
Depreciation of property and equipment                      13,037                         12,120
Amortization of intangible assets                           37,066                         37,065
Negative EBITDA                                         (2,057,430)                    (1,440,068)  
Stock-based compensation                                   169,775                        299,375
Net (loss) on foreign exchange                              19,209                          4,946
Listing costs                                                    0                              0  
Adjusted negative EBITDA                                (1,868,446)                    (1,135,747)

We seek Safe Harbor.