Mr. William Tatham reports

NEXJ SYSTEMS REPORTS SECOND QUARTER FISCAL 2015 RESULTS

NexJ Systems Inc. has released financial results for its second quarter ended June 30, 2015.

Financial highlights for second quarter 2015:

• Financial services revenue was $7.2-million, up 4 per cent year over year, with adjusted EBITDA (as defined below) of $142,000 compared with adjusted EBITDA of $267 for second quarter 2014;
• Health care revenue was $167,000 compared with $81,000 for the comparative period in 2014, with adjusted EBITDA (as defined below) loss of $1.1-million, an improvement compared with an adjusted EBITDA loss of $2-million for second quarter 2014;
• Total revenue was $7.4-million, up 5 per cent year over year with adjusted EBITDA (as defined below) loss of $1.2-million, or six cents per share (basic and diluted), an improvement compared with an adjusted EBITDA loss of $1.9-million, or nine cents per share (basic and diluted), for second quarter 2014;
• Net loss of $2.3-million or 11 cents per share (basic and diluted), an improvement compared with a net loss of $2.5-million or 12 cents per share (basic and diluted) for second quarter 2014;
• As part of continuing expense controls, NexJ executed a sublease arrangement, which will save the company approximately $1-million in future costs over the remaining lease term ending Dec. 31, 2017.

Financial highlights for year to date 2015:

• Financial services revenue was $13.4-million, up 8 per cent year over year, with adjusted EBITDA (as defined below) loss of $400,000, an improvement compared with adjusted EBITDA loss of $800,000 for second quarter 2014;
• Health care revenue was $292,000 compared with $1.8-million for the comparative period in 2014, with adjusted EBITDA (as defined below) loss of $2.4-million, an improvement compared with an adjusted EBITDA loss of $2.9-million for second quarter 2014;
• Total year-to-date revenue was $13.7-million, down 4 per cent year over year, with adjusted EBITDA (as defined below) loss of $3.3-million or 16 cents per share (basic and diluted), an improvement compared with an adjusted EBITDA loss of $4.2-million or 21 cents per share (basic and diluted) for second quarter 2014;
• Net loss of $4-million or 20 cents per share (basic and diluted), an improvement compared with a net loss of $4.4-million or 22 cents per share (basic and diluted) for second quarter 2014.

Strategic direction:

• NexJ will spin off the health care business into a separate entity, and is moving ahead with a financing for this business. The company has significant interest and commitment from major shareholders to participate in this financing;
• NexJ will seek Toronto Stock Exchange approval to reinstitute a normal course issuer bid.

"We are pleased to have achieved growth and profitability in our financial services business this quarter," said William M. Tatham, chief executive officer of NexJ. "We are confident the strategic direction we are taking will help us achieve the full potential of both businesses."

Conference call information

NexJ will be hosting an earnings report conference call today at 5 p.m. Eastern Time. The call can be accessed via webcast, or by phone by dialling 647-427-7450 (Toronto local or international) or 1-888-231-8191 (North America toll-free). Investors should dial in approximately 10 minutes before the teleconference is scheduled to begin. A replay of the call will be available beginning today at 8 p.m. ET through 11:59 p.m. on Aug. 7, 2015, and can be accessed by dialling 416-849-0833 (Toronto local) or toll-free at 1-855-859-2056, and using password 86442176.

Non-IFRS (international financial reporting standards) measures

This news release includes certain measures that have not been prepared in accordance with IFRS, such as adjusted EBITDA and adjusted EBITDA margin, which are used to evaluate the company's operating performance as a complement to results provided in accordance with IFRS. The company believes that adjusted EBITDA and adjusted EBITDA margin are useful supplemental information, as it provides an indication of the results generated by the company's main business activities prior to taking into consideration how those activities are financed and taxed, and also prior to taking into consideration asset depreciation and the other items listed below.

The term adjusted EBITDA refers to net income/loss before adjusting for share-based payment expense, depreciation and amortization, lease-exit charges, net, earn-out expense/recovery, foreign exchange gain/loss, finance income, finance costs, and income taxes. Adjusted EBITDA margin refers to the percentage that adjusted EBITDA for any period represents as a portion of total revenue for that period.

The terms adjusted EBITDA and adjusted EBITDA margin are not measures recognized by IFRS, and do not have standardized meanings prescribed by IFRS. Therefore, adjusted EBITDA and adjusted EBITDA margin may not be comparable with similar measures presented by other issuers. Investors are cautioned that adjusted EBITDA and adjusted EBITDA margin should not be construed as an alternative to net income/loss as determined in accordance with IFRS.

                                                                                  
               CONDENSED INTERIM CONSOLIDATED STATEMENTS OF COMPREHENSIVE (LOSS)
                     (in thousands of dollars except per-share amounts)
                                                                                                        
                                               Three months ended June,  Six months ended June,
                                                      2015        2014         2015       2014
                                                                                                 
Revenue
Licence and subscription fees                     $  1,400     $ 1,277     $  2,537    $ 1,568
Professional services                                4,661       4,211        8,647      9,713
Maintenance and support                              1,292       1,487        2,512      2,999
                                                     7,353       6,975       13,696     14,280
Expenses
Professional services                                3,324       3,082        6,205      6,857
Research and development, net                        2,180       2,469        4,610      5,144
Sales and marketing                                  1,625       1,731        3,184      3,291
General and administrative, net                      2,442       2,093        4,641      3,569
Earn-out recovery                                       --          --         (398)         --
                                                     9,571       9,375       18,242     18,861
(Loss) from operations                              (2,218)     (2,400)      (4,546)    (4,581)
Foreign exchange gain (loss)                          (174)       (155)         452         57
Finance income                                          29          68           69        151
Finance costs                                           --         (39)          --       (39)
                                                      (145)       (126)         521        169
(Loss) before income taxes                          (2,363)     (2,526)      (4,025)    (4,412)
Income tax recovery
Current                                                 --          --           --         --
Deferred                                                16          --           16         --
Net (loss) and comprehensive (loss)                 (2,347)     (2,526)      (4,009)    (4,412)
(Loss) per share
Basic and diluted                                    (0.11)      (0.12)       (0.20)     (0.22)
Share-based payment expense has
been included in expenses as follows
Professional service                                    25          36           52         81
Research and development, net                           52         (33)          85         17
Sales and marketing                                     21          23           27         37
General and administrative, net                         19          17           34         39
                                                       117          43          198        174

We seek Safe Harbor.