TORONTO, March 8 /CNW/ - Spectral today reported net income of $3.7 million, $0.16 per share, for the nine months ended December 31, 2006 compared to a loss of $4.6 million, $0.23 per share, for the year ended March 31, 2006. The significant earnings improvement is attributable to the Company's restructured operations pursuant to the sale of its unprofitable rapid cardiac test business in February, 2006 and a substantial gain on settlement of certain long-term debt obligations. Revenues for the nine month period ended December 31, 2006 amounted to $2,169, reflecting the fact that many of the new EAA(TM) instruments were placed in the last half of the fiscal period and target test utilization levels had not yet been achieved. The Company changed its fiscal year end to December 31 (previously March 31) to more closely align its business cycle with that of its major customers and suppliers.
"During the last nine months the Company has completely realigned its operations to focus on the commercialization of its core EAA(TM) and RapidWN(TM) products," stated Mr. Anthony Businskas, Executive Vice President and CFO of Spectral. "We have laid the foundation for revenue growth next year through some significant commercial arrangements concluded in 2006 and we anticipate gradual improvement in operating results as the year progresses," added Mr. Businskas.
Spectral is a developer of innovative technologies for comprehensive disease management. Spectral provides accurate and timely information to clinicians enabling the early initiation of appropriate and targeted therapy. Current products include Spectral's FDA approved rapid diagnostic for West Nile Virus (RapidWN(TM)) and its FDA approved rapid diagnostic for sepsis (EAA(TM)) as well as a range of other biological reagents. Spectral's common shares are listed on The Toronto Stock Exchange under the symbol SDI.
Information in this news release that is not current or historical factual information may constitute forward-looking information within the meaning of securities laws. Implicit in this information, particularly in respect of the future outlook of Spectral and anticipated events or results, are assumptions based on beliefs of Spectral's senior management as well as information currently available to it. While these assumptions were considered reasonable by Spectral at the time of preparation, they may prove to be incorrect. Readers are cautioned that actual results are subject to a number of risks and uncertainties, including the availability of funds and resources to pursue R&D projects, the successful and timely completion of clinical studies, the ability of Spectral to take advantage of business opportunities in the biomedical industry, the granting of necessary approvals by regulatory authorities as well as general economic, market and business conditions, and could differ materially from what is currently expected.
Spectral Diagnostics Inc.
Consolidated Financial Statements
December 31, 2006 and March 31, 2006
(in thousands of Canadian dollars)
Spectral Diagnostics Inc.
Consolidated Balance Sheets
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(in thousands of Canadian dollars)
December 31 March 31
2006 2006
$ $
Assets
Current assets
Cash and cash equivalents 945 4,003
Short-term investments 5,057 3,350
Accounts receivable 762 877
Inventories 253 43
Prepaid expenses 130 250
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7,147 8,523
Property, plant and equipment 166 170
Purchased technology and trademarks, net 2,022 2,353
Deferred financing costs, net - 512
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9,335 11,558
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Liabilities
Current liabilities
Accounts payable and accrued liabilities 504 1,224
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504 1,224
Convertible notes payable 1,843 9,596
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2,347 10,820
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Shareholders' Equity
Common shares 2,520 99,446
Other equity 5,489 4,963
Deficit (1,021) (103,671)
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6,988 738
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9,335 11,558
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Spectral Diagnostics Inc.
Consolidated Statements of Operations and Deficit
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(in thousands of Canadian dollars, except share and per share data)
Nine months
ended Year ended
December 31 March 31
2006 2006
$ $
Sales 2,169 7,272
Cost of sales 570 3,446
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Gross margin 1,599 3,826
Operating expenses
Selling, general and administrative 2,395 7,156
Amortization 593 1,323
Foreign exchange loss 34 227
Stock-based compensation 358 66
Research and product development, net (239) 183
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3,141 8,975
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Loss before the following (1,542) (5,149)
Interest expense on convertible notes
payable (288) (1,854)
Other net interest income (expense) 197 (37)
Gain on sale of rapid cardiac business - 2,385
Gain on settlement of convertible notes
payable 5,363 -
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Net income (loss) for the period 3,730 (4,655)
Deficit - Beginning of period (103,671) (99,016)
Restatement of capital 98,920 -
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Deficit - End of period (1,021) (103,671)
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Basic earnings (loss) per common share 0.16 (0.23)
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Diluted earnings (loss) per common share 0.14 (0.23)
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Weighted average number of common
shares outstanding 22,874,694 19,860,166
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Spectral Diagnostics Inc.
Consolidated Statements of Cash Flows
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(in thousands of Canadian dollars)
Nine months
ended Year ended
December 31 March 31
2006 2006
$ $
Cash provided by (used in)
Operating activities
Net income (loss) for the period 3,730 (4,655)
Items not affecting cash
Amortization 593 1,323
Stock-based compensation expense 358 66
Accrued interest on convertible
notes payable 288 1,854
Gain on sale of rapid cardiac business - (2,385)
Gain of settlement of convertible notes
payable (5,363) -
Changes in non-cash working capital (876) (412)
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(1,270) (4,209)
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Investing activities
Purchase of property, plant and equipment (81) (216)
Proceeds on sale of rapid cardiac business - 5,650
Increase in short term investments (1,707) -
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(1,788) 5,434
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Financing activities
Bank indebtedness - (929)
Restricted cash - 2,013
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- 1,084
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(Decrease) increase in cash and cash
equivalents during the period (3,058) 2,309
Cash and cash equivalents - Beginning
of period 4,003 1,694
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Cash and cash equivalents - End of period 945 4,003
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Non-cash investing activities
Common shares received on sale of rapid
cardiac business 3,350
Settlement of existing convertible
notes payable (9,801)
Issuance of new convertible note payable 1,761
Issuance of common shares on settlement
of convertible notes payable 1,994
Issuance of warrants on settlement of
convertible notes payable 168
%SEDAR: 00002006E