"We also secured a number of key wins for a strong start to our fiscal year, including a two-year refresh project for a major telecommunications customer, an expansion into a new working group at this customer, an expansion by a European customer into its US manufacturing facilities, a refresh with a Canadian property assessment customer and others. These and other customers continue to find improved reliability, performance and ROI through the adoption of rugged tablet computing, further documenting the value proposition Xplore brings to a growing number of vertical industries. We continue to focus on expanding sales in key markets, including telecommunications, logistics and international opportunities, as well as working closely with a number of partners on additional initiatives to further our sales reach."

Fiscal 2018 First Quarter Financial Results
Xplore reported revenue of $20.0 million for the fiscal first quarter ended June 30, 2017, compared to revenue of $16.9 million in the fiscal fourth quarter of 2017 and compared to $16.5 million in the year-ago first quarter. The change in revenue reflected increased sales as demand for rugged tablets improved, combined with further resolution of the previously disclosed short-term supply chain constraints that limited shipments during the March 2017 quarter.

Gross profit in the first quarter was $6.2 million, or 30.9% of revenue, compared to $4.8 million, or 28.1% of revenue, in the preceding quarter and $4.9 million, or 29.5% of revenue, in the prior year first quarter. The change in gross margin was primarily attributable to product mix and improved efficiencies as revenue scales.

Operating expenses were $6.0 million for the fiscal first quarter, a further 7.3% reduction from $6.4 million in the prior year first quarter. The company believes the reduction in operating expenses by more than 20% year-over-year throughout fiscal 2017 reflects the company's focus on operating efficiency to drive profitability as revenue grows. A portion of the cost reduction benefit is being reinvested in new sales hires and marketing initiatives to drive revenue growth into fiscal 2018 and beyond.

For the quarter, Xplore reported net income of $239,000, or $0.02 per share, compared to a net loss of $488,000, or ($0.04) per basic share in the fiscal fourth quarter 2017, and a net loss of $1.7 million, or ($0.16) per basic share, in the first quarter of fiscal 2017. The shift to profitable operations reflects improved revenue and significantly lower expenses under Xplore's new operating model.

EBITDA adjusted for non-cash compensation and historical integration costs was $839,000, compared with $30,000 in the preceding quarter and negative adjusted EBITDA of $1.1 million in the fiscal first quarter 2017. A reconciliation is provided in the tables included in this release. "The first quarter of fiscal 2018 further documented the capabilities of our profit focused, low opex model implemented throughout fiscal 2017. With our significantly lower break-even point and more efficient balance sheet, we anticipate multiple profitable quarters in Fiscal 2018 on improving revenue, as well as solid free cash flow to fund operations and investment in planned platform refreshes," said Tom Wilkinson, CFO of Xplore.

Cash Flow and Balance Sheet
Net cash used in operating activities was $5.4 million for the three months ended June 30, 2017, compared to net cash generated by operating activities of $4.9 million for the three months ended March 31, 2017 and net cash used in operating activities of $6.6 million for the three months ended June 30, 2016. Net cash used by operating activities in the first quarter of fiscal 2018 was impacted by a $6.4 million increase in accounts receivable, to $16.8 million from $10.5 million at March 31, 2017, and a $3.6 million increase in inventory, to $16.5 million from $12.9 million at March 31, 2017. At quarter end, cash was $648,000 and debt under the company's line of credit was $3.1 million.

Executive Compensation and Corporate Governance
Xplore previously announced that a committee of independent board directors had engaged outside consultants to assist in a review of executive and board compensation practices, consistent with recent changes in the company's executive structure. Upon completion of the review, the board of directors determined that effective August 1, 2017 the services of Mr. Sassower as chairman of the board will be paid directly at a rate of $92,000 per year. The previous contract with SG Phoenix LLC through which Mr. Sassower had previously been compensated expired on its own terms.

Additionally, on June 21, 2017, the company filed a Form 8-K announcing that Brian Usher-Jones, an independent director, had notified the board of directors that he intends to not stand for reelection at the next annual meeting of the company's stockholders. The nomination and governance committee of the board is presently reviewing potential candidates to serve as an independent director in Mr. Usher-Jones' place.

Outlook
For fiscal 2018, Xplore maintained its revenue outlook in a range of $75 million to $85 million. Gross margin for the fiscal year is expected to be between 28% and 30%. Operating expenses are expected to be approximately $23-25 million, reflecting a full year of the company's reduced operating expense profile. The company anticipates multiple profitable quarters and positive cash flow for the full fiscal year 2018.

Xplore also maintained its previously disclosed business operating targets as revenue scales to a $120 million run-rate, assuming both organic growth and cost reduction initiatives are achieved in future periods: gross margin 28-30%, operating margin 8-10%, profit margin 6-8% and EBITDA margin 9-11%.

Conference Call
The company will conduct a conference call and webcast to review the results on Wednesday, August 9, 2017, at 4:30 p.m. ET. Interested parties in the United States can access the call by dialing 844-854-4410; interested parties outside the United States can access the call by dialing +1-412-858-4610. Callers should dial in at least 5 minutes prior to the all start time. A live and archived webcast will be available online in the investor relations section of Xplore's website at www.xploretech.com. A replay of the conference call will be available until 5 p.m. ET on August 23, 2017, by calling 877-344-7529 from the United States or +1-412-317-0088 from outside the United States and entering conference ID number 10111074.

About Xplore Technologies
Xplore is The Rugged Tablet Authority, exclusively manufacturing powerful, long-lasting, and customer-defined rugged tablet PCs since 1996. Today, Xplore offers the broadest portfolio of genuinely rugged tablets — and the most complete lineup of rugged tablet accessories on Earth. Its mobility solutions are purpose-built for the energy, utilities, telecommunications, military and defense, manufacturing, distribution, public safety, healthcare, government, and field service sectors. The company's award-winning military-grade computers are also among the most powerful and longest lasting in their class, built to withstand nearly any hazardous condition or environmental extreme for years without fail. Visit www.xploretech.com for more information on how Xplore and its global channel partners engineer complete mobility solutions to meet specialized workflow demands. Follow us on Twitter, Facebook, LinkedIn, and YouTube.

Forward Looking Statements
This news release contains forward-looking statements that involve risks and uncertainties, which may cause actual results to differ materially from the statements made. When used in this document, the words "may", "would", "could", "will", "intend", "plan", "anticipate", "believe", "estimate", "expect" and similar expressions are intended to identify forward-looking statements. Such statements reflect Xplore's current views with respect to future events and are subject to such risks and uncertainties. Many factors could cause actual results to differ materially from the statements made including those factors detailed from time to time in filings made by Xplore with securities regulatory authorities. Should one or more of these risks or uncertainties materialize, or should assumptions underlying the forward looking statements prove incorrect, actual results may vary materially from those described herein as intended, planned, anticipated or expected. Xplore does not intend and does not assume any obligation to update these forward-looking statements.

Contact Information:

Tom Wilkinson, Chief Financial Officer
Phone: (512) 637-1162
Email: twilkinson@xploretech.com

Matt Kreps, Darrow Associates Investor Relations
Phone: (512) 696-6401
Email: xplr@darrowir.com

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