TORONTO, Aug. 9 /CNW/ - Spectral Diagnostics Inc. ("Spectral") today reported a loss of $379,000 (1 cent per share) for the quarter ended June 30, 2007 compared to net income of $4,751,000 (23 cents per share) for the same period last year. The prior period earnings included a one time gain of $5,444,000 (27 cents per share) on the settlement of certain convertible notes payable.
For the six months ended June 30, 2007, the Company recorded a loss of $586,000 (2 cents per share), compared to net income of $5,138,000 (26 cents per share) last year. In addition to the aforementioned gain on settlement of convertible notes payable, last year's six month net income also included a gain of $2,385,000 (12 cents per share) on the sale of the Company's rapid cardiac business in the first quarter. Excluding these two unusual gains, the six month operating loss for the prior year was $2,691,000 (13 cents per share). On the same comparative basis, the loss from operations was reduced by 11 cents per share in the first half of 2007.
Sales of $738 in the second quarter were consistent with sales levels for the same period last year. Sales for the six months ended June 30, 2007 were $1,579,000 compared to $1,754,000 in the same prior year period. Prior year's sales included $252,000 of rapid cardiac test revenues related to the business that was sold effective February 6, 2006.
"Product sales remained relatively consistent in the second quarter and we maintained our low cost operating structure," stated Mr. Anthony Businskas, Executive Vice President and CFO of Spectral. "The commercial contracts that were concluded for our EAA(TM) and RapidWN(TM) products are substantial and provide a solid foundation for future sales growth", added Mr. Businskas.
Spectral is a developer of innovative technologies for 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 sepsis (EAA(TM)) and its FDA approved rapid diagnostic for West Nile Virus (RapidWN(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 - unaudited
Six months ended June 30, 2007
(in thousands of Canadian dollars)
Spectral Diagnostics Inc.
Consolidated Balance Sheets - unaudited
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(in thousands of Canadian dollars)
June 30 December 31
2007 2006
$ $
Assets
Current assets
Cash and cash equivalents 17 945
Short-term investments 5,159 5,057
Accounts receivable 824 762
Inventories 353 183
Prepaid expenses 191 130
-------------------------
6,544 7,077
Deferred charges 169 70
Property, plant and equipment 165 166
Purchased technology and trademarks 1,831 2,022
-------------------------
8,709 9,335
-------------------------
-------------------------
Liabilities
Current liabilities Bank indebtedness 35 -
Accounts payable and accrued liabilities 311 504
-------------------------
346 504
Convertible notes payable 1,926 1,843
-------------------------
2,272 2,347
-------------------------
Shareholders' Equity
Common shares 2,524 2,520
Other equity 5,520 5,489
Deficit (1,607) (1,021)
-------------------------
6,437 6,988
-------------------------
8,709 9,335
-------------------------
-------------------------
Spectral Diagnostics Inc.
Consolidated Statements of Operations,
Comprehensive Loss and Deficit - unaudited
For the six months ended June 30, 2007 and 2006
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(in thousands of Canadian dollars, except share and per share data)
3 Months Ended June 30 6 Months Ended June 30
2007 2006 2007 2006
$ $ $ $
Sales 738 747 1,579 1,754
Cost of sales 167 250 392 688
------------------------- -------------------------
Gross margin 571 497 1,187 1,066
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Operating expenses
Selling, general and
administrative 763 737 1,576 2,563
Amortization 137 200 273 490
Foreign exchange loss 63 41 54 113
Stock-based
compensation 2 11 31 (26)
Research and product
development, net of
tax credits - 44 (125) 235
------------------------- -------------------------
965 1,033 1,809 3,375
------------------------- -------------------------
Loss from operations (394) (536) (622) (2,309)
Interest expense on
convertible notes
payable (41) (205) (83) (439)
Investment income 56 48 119 57
Gain on settlement
of convertible
notes payable - 5,444 - 5,444
Gain on sale of rapid
cardiac business - - - 2,385
------------------------- -------------------------
Net income and
comprehensive income
(Loss and
comprehensive loss)
for the period (379) 4,751 (586) 5,138
Deficit - Beginning
of period (1,228) (103,671) (1,021) (104,058)
------------------------- -------------------------
Deficit - End of
period (1,607) (98,920) (1,607) (98,920)
------------------------- -------------------------
------------------------- -------------------------
Basic earnings (loss)
per common share (0.01) 0.23 (0.02) 0.26
------------------------- -------------------------
------------------------- -------------------------
Diluted earnings
(loss) per common
share (0.01) 0.21 (0.02) 0.23
------------------------- -------------------------
------------------------- -------------------------
Weighted average
number of common
shares outstanding 24,118,424 20,374,054 24,116,225 20,118,530
------------------------- -------------------------
------------------------- -------------------------
Spectral Diagnostics Inc.
Consolidated Statements of Cash Flows - unaudited
For the six months ended June 30, 2007 and 2006
-------------------------------------------------------------------------
(in thousands of Canadian dollars)
3 Months Ended 6 Months Ended
June 30 June 30
2007 2006 2007 2006
$ $ $ $
Cash provided by
(used in)
Operating activities
Net income and
comprehensive income
(Loss and
comprehensive loss)
for the period (379) 4,751 (586) 5,138
Items not affecting
cash
Amortization 137 200 273 490
Stock-based
compensation
expense 2 11 31 (26)
Accrued interest on
convertible notes
payable 41 205 83 439
Unrealized gain on
short-term
investments (7) - (7) -
Gain on settlement
of convertible
notes payable - (5,444) - (5,444)
Gain on sale of
rapid cardiac
business - - - (2,385)
Changes in non-cash
working capital 55 (564) (486) (649)
------------------------- -------------------------
(150) (841) (692) (2,437)
------------------------- -------------------------
Financing activities
Bank indebtedness 35 - 35 (859)
Issuance of common
shares - - 4 -
Restricted cash - - - 447
------------------------- -------------------------
35 - 39 (412)
------------------------- -------------------------
Investing activities
Increase in deferred
charges (231) (77) (99) (120)
Purchase of property,
plant and equipment (23) (52) (37) (65)
Purchase of technology
and trademarks - - (44) -
Increase in short-term
investments (32) - (95) -
Proceeds on sale of
short-term
investments - 3,350 - 3,350
Proceeds on sale of
rapid cardiac
business - - - 5,650
------------------------- -------------------------
(286) 3,221 (275) 8,815
------------------------- -------------------------
Increase (decrease) in
cash and cash
equivalents during
the period (401) 2,380 (928) 5,966
------------------------- -------------------------
Cash and cash
equivalents -
Beginning of period 418 4,003 945 417
------------------------- -------------------------
Cash and cash
equivalents - End
of period 17 6,383 17 6,383
------------------------- -------------------------
Non-cash financing
activities
Securities received
on sale of rapid
cardiac business
(note 4) 3,350
Settlement of existing
convertible notes
payable (9,801)
Issuance of new
convertible note
payable 1,840
Issuance of common
shares on settlement
of convertible notes
payable 2,083
Issuance of warrants
on settlement of
convertible notes
payable 280
%SEDAR: 00002006E