DATATRAK International, Inc. Reports First Quarter Results of 2016

CLEVELAND, May 10, 2016

First Quarter Highlights:

• First quarter of net income in two years
• 82% gross margin for Q1 2016 compared to 77% in Q1 2015
• Dramatic 39% reduction in SG&A spending Q1 2016 vs. Q1 2015
• 90% of clients are committed to multiple products

"We are proud to report our first quarter of net income in two years. Our focus on righting previous years over spending, particularly bonus compensation and legal costs, offset slightly lower revenue.  Potential clients' response to our software platform has been overwhelmingly positive," said Jim Bob Ward, CEO and President, DATATRAK. "We are also encouraged by the strength of our existing client base. Focusing on their needs, how we can truly partner with them to maximize the potential our software offers, is deepening our relationships. Our clients' satisfaction and providing technology that truly simplifies clinical trials are our top priorities."

"2016 marks the beginning of a new era at DATATRAK. Jim Bob Ward and I have held face to face meetings with our current customers, focusing on client outreach to address industry needs, which we expect to result in increased sales and continued profitability. We are demonstrating our commitment to first class technology with the deployment of our groundbreaking CTMS product later this year, with more client-requested enhancements on the roadmap," said Scott DeMell, Vice President of Sales, DATATRAK. "We encourage current and prospective customers to reach out to the new DATATRAK. You will experience a real change and a focus on you, the client."

Financial Highlights:

The Company's revenue decreased 4% for the quarter ended March 31, 2016 compared to the quarter ended March 31, 2015.  Revenue from contracts in backlog decreased year-over-year due to lower change orders and contract expansions.  The decrease was partially offset by higher year-over-year revenue from new contract sales.  Direct costs decreased by 24% during this same time period due to lower employee costs. The Company's gross margin was 82% for the quarter ended March 31, 2016 compared to 77% for the quarter ended March 31, 2015.  SG&A expenses decreased by $1,128,000, or 39%, for the quarter ended March 31, 2016 compared to the quarter ended March 31, 2015.  The decrease was primarily due to lower employee costs, including bonus, recruitment and travel, and lower legal costs.  The first quarter of 2015 included substantial expenses related to patent defense, which was settled in early 2016.  As a result, DATATRAK had income from operations for the quarter ended March 31, 2016 of $138,000 compared to a loss from operations of $(1,015,000) for the quarter ended March 31, 2015.

DATATRAK's backlog at March 31, 2016 was $24.9 million compared to a backlog of $26.7 million at December 31, 2015, which is a 6% decrease. Backlog consists of future value from authorization letters to commence services, statements of work, technology and services agreements, change orders and other customer contracts, billed and unbilled.