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BURNABY, BC --(Marketwired - November 28, 2014) - LED Medical Diagnostics Inc. (TSX VENTURE: LMD) LEDIF LME ("LED Medical" or the "Company") today announced its financial results for the third quarter ended September 30, 2014, reported in United States dollars and in accordance with International Financial Reporting Standards ("IFRS"). The Company's results are presented in comparison to the third quarter ended September 30, 2013. All balances are expressed in United States dollars unless otherwise stated.
"I am pleased to announce revenue growth of 86% to $4,273,818 during the nine months ended September 30, 2014 as compared to the same prior year period. We provided annual revenue guidance of $9.0 million to $11.0 million which the Company is working diligently to achieve," states Dr. David Gane, Chief Executive Officer. "Revenue growth in 2014 is a direct result of optimizing our VELscope distribution channel and by adding new third party digital imaging product lines to complement our VELscope product offering. We have made a substantial investment in our Company which includes inventory as at September 30, 2014 to fulfil the anticipated sales orders to be received in the fourth quarter of fiscal 2014. I am proud of what we have built to date inclusive of the team assembled and the progress we have made to position ourselves to capitalize on the busy sales cycle that lays ahead until the end of the year. We are closer than ever to realizing our goal of becoming a leading player in the North American digital dental imaging market."
Business Highlights
Notable business developments and achievements up to the reporting date include the following:
-- On August 13, 2014, the Company announced the availability of its new
digital intraoral camera, the LED IC100. Designed with simplicity,
functionality and versatility in mind. The LED IC100 intraoral camera
captures high-resolution images to provide practitioners with an
enhanced patient education tool.
-- On August 19 2014, the Company officially introduced the LED IC200. This
product is the second intraoral camera in the Company's product
portfolio and is elegantly designed to acquire high-resolution intraoral
and extraoral images with auto focus and a large depth of field.
-- During September 2014, the Company showcased its new Digital Imaging
products at the California Dental Association (CDA) Annual Conference
entitled "CDA Presents the Art and Science of Dentistry", the American
Association of Oral and Maxillofacial Surgeons 94th Annual Meeting and
the American Academy of Periodontology 100th Annual Meeting and
Exhibition. The CDA conference alone was attended by more than 27,000
dental professionals.
-- On October 14, 2014, LED Medical announced the renewal of its exclusive
international distribution agreement (outside North America) for the
VELscope® Vx for a three year term with DenMat Holding LLP. This
agreement requires minimum annual purchases of the VELscope® Vx product
line by DenMat and is subject to another three-year extension at the
mutual agreement of both parties.
Financial Highlights
Financial Position as at September 30 2014
Net working capital(1) as at September 30, 2014 was $2,357,635 which includes cash of $815,036.
Three-Month Comparative Results
The Company reported revenue of $1,628,643 for the three months ended September 30, 2014 as compared to $911,387 for the three months ended September 30, 2013. Operating loss was $1,977,051 for the three months ended September 30, 2014, as compared to a net loss of $260,326 for the three months ended September 30, 2013.
The Company's calculated gross margin(2) was 36% for the three months ended September 30, 2014, which is lower than the 64% gross margin during the three months ended September 30, 2013. Total operating expenses for the three months ended September, 2014 were $2,577,852 as compared to $840,383 for the three months ended September 30, 2013.
EBITDA(3) for the three months ended September 30, 2014 was negative $1,623,618 compared to negative $139,816 for the three months ended September 30, 2013.
Included in the Company's net loss of $2,693,861 for the three months ended September 30, 2014 is $777,504 in mark to market adjustments on Canadian dollar denominated warrants. Exclusive of the mark to market adjustment, the Company's net loss would be $1,916,357 for the third quarter of fiscal 2014. Included in the Company's net loss of $1,959,503 for the three months ended September 30, 2013, is a loss of $2,065,653 in mark to market adjustments on Canadian dollar denominated warrants resulting in the Company's net income of $106,150 exclusive of the mark to market adjustment loss.
Nine-Month Comparative Results
The Company reported revenue of $4,273,818 for the nine months ended September 30, 2014 as compared to $2,303,860 for the nine months ended September 30, 2013. Operating loss was $4,816,499 for the nine months ended September 30, 2014, as compared to a net loss of $1,923,094 for the nine months ended September 30, 2013.
The Company's calculated gross margin(2) was 47% for the nine months ended September 30, 2014, which is lower than the 60% gross margin during the nine months ended September 30, 2013. Total operating expenses for the nine months ended September, 2014 were $6,812,708 as compared to $3,302,749 for the nine months ended September 30, 2013.
EBITDA(3) for the nine months ended September 30, 2014 was negative $4,061,343 compared to negative $916,082 for the nine months ended September 30, 2013.
Included in the Company's net loss of $5,505,294 for the nine months ended September 30, 2014 is $693,979 in mark to market adjustments on Canadian dollar denominated warrants. Exclusive of the mark to market adjustment, the Company's net loss would be $4,811,315 for this fiscal 2014 period. Included in the Company's net loss of $5,494,416 for the nine months ended September 30, 2013 is $3,822,587 in mark to market adjustments on Canadian dollar denominated warrants. Exclusive of the mark to market adjustment, the Company's net loss would be $1,671,829.
Financial Guidance for Fiscal Year 2014
The Company is providing guidance for the full fiscal year ending December 31, 2014 ("fiscal year 2014"). This guidance is intended solely to give investors an understanding of management's expectations for the full fiscal year in light of recent industry sales trends, seasonality of the business and recognition that much of the sales generated in the dental industry occur in the fourth quarter. The guidance does not take into account, or give effect for, any events that are beyond the Company's reasonable control.
Full Fiscal Year Ending December 31, 2014 Quantitative Guidance
Net Revenues $9.0M - $11.0M
Financial Statements and Management's Discussion & Analysis
Please see the interim condensed consolidated financial statements and related Management's Discussion & Analysis ("MD&A") for more details. The interim condensed consolidated financial statements for the nine months ended September 30, 2014 and related MD&A have been reviewed and approved by the Company's Audit Committee and Board of Directors. The Company has prepared this truncated news release to alert investors to its results and that a more detailed explanation and analysis is readily available in the MD&A. These reports have been filed on SEDAR at www.sedar.com and also posted to www.ledmd.com.
About LED Medical Diagnostics Inc.
Founded in 2003 and headquartered in Burnaby, British Columbia, Canada, LED Medical Diagnostics Inc. is a leading developer of LED-based visualization technologies for the medical industry. The Company is currently listed on the Toronto Stock Exchange (TSX-V) under the symbol "LMD", the OTCQX under the symbol "LEDIF", as well as the Frankfurt Stock Exchange under the symbol "LME". For more information, visit www.ledmd.com.
LED Dental Inc., a wholly-owned subsidiary, is backed by an experienced leadership team dedicated to a higher level of service and support. LED Dental offers advanced diagnostic imaging equipment that seamlessly integrates into dental practices. The Company is committed to providing dental practitioners with the best technology available by identifying and adding strong products to its growing portfolio. Additionally, the company manufactures the award-winning VELscope® Vx Enhanced Oral Assessment System, the first system in the world to apply tissue fluorescence visualization technology to the oral cavity. The VELscope® Vx is now used to conduct more screenings for oral cancer and other oral mucosal diseases than any other adjunctive device. For more information, call 888.541.4614 or visit www.leddental.com.
(1) Net Working Capital is a non-IFRS measure that does not have a standardized meaning and may not be comparable to a similar measure disclosed by other issuers. This measure does not have a comparable IFRS measure. Working capital is defined as current assets less current liabilities. The Company believes that the inclusion of this no-IFRS measure financial measure provides investors with an alternative presentation useful to investors' understanding of the Company's core operating results and trends.
(2) Gross margin is a non-IFRS measure that does not have a standard meaning and may not be comparable to a similar measure disclosed by other issuers. Gross margin referenced here relates to revenues less cost of sales. This measure does not have a comparable IFRS measure and is used by the Company to manage and evaluate the operating performance of the Company.
(3) EBITDA or Earnings before Interest, Taxes Depreciation and Amortization is a non-IFRS measure that does not have a standardized meaning and may not be comparable to a similar measure disclosed by other issuers. This measure does not have a comparable GAAP measure. EBITDA referenced here relates to net loss and comprehensive loss and excludes interest, income taxes, depreciation, amortization, finder's warrants issuance costs, stock-based compensation, deferred share unit compensation, mark to market adjustments on Canadian dollar denominated warrants, foreign exchange gain or loss and other income. This measure does not have a comparable IFRS measure and is used by the Company to manage and evaluate the cash operating loss of the business.
Forward-Looking Statements
This press release contains statements which, to the extent that they are not recitations of historical fact, may constitute forward-looking information under applicable Canadian securities legislation. Such forward-looking statements or information includes financial and other projections as well as statements regarding the Company's future plans, objectives, performance, revenues, growth, profits, operating expenses or the Company's underlying assumptions and the Company's intention to expand its technology beyond dental applications including "costs of production", "capital expenditures", "costs and timing of the development of new products", "hedging practices", "currency exchange rate fluctuations", "requirements for additional capital", "government regulation of medical device operations" and "insurance coverage". Generally, these forward-looking statements can be identified by the use of forward-looking terminology such as "plans", "expects", "is expected", "budget", "scheduled", "estimates", "forecasts", "intends", "anticipates", "believes" or variations of such words and phrases or statements that certain actions, events or results "may", "would", "could", "might" or "will be taken", "occur" or "be achieved" or the negative connotation thereof. Persons reading this Management's Discussion and Analysis are cautioned that such statements or information are only predictions, and that the Company's actual future results or performance may be materially different. Factors that could cause actual events or results to differ materially from those suggested by these forward-looking statements include, but are not limited to: economic conditions; dilution; limited history of profits and operations; operational risk; distributor risks; working capital; potential conflicts of interest; speculative investment; intellectual property risks; disruptions in production; reliance on key personnel; seasonality; management's estimates; development of new customers and products risks; stock price volatility risk; sales and marketing risk; competitors and competition risk; regulatory requirements; reliance on few suppliers; reliance on subcontractors; operating cost and quarterly results fluctuations; fluctuations in exchange rates; product liability and medical malpractice claims; access to credit and additional financing; taxation; market acceptance of the Company's products and services; customer and industry analyst perception of the Company and its technology vision and future prospects; technological change, new products and standards; risks related to acquisitions and international expansion; reliance on large customers; concentration of sales; international operations and sales; management of growth and expansion; dependence upon key personnel and hiring; the Company not adequately protecting its intellectual property; risks related to product defects and product liability; and including, but not limited to, other factors described in the Company's reports filed on SEDAR, including its financial statements and management's discussion and analysis for the year ended December 31, 2013. In drawing a conclusion or making a forecast or projection set out in the forward-looking information, the Company takes into account the following material factors and assumptions in addition to the above factors: the Company's ability to execute on its business plan; the acceptance of the Company's products and services by its customers; the timing of execution of outstanding or potential customer contracts by the Company; the sales opportunities available to the Company; the Company's subjective assessment of the likelihood of success of a sales lead or opportunity; the Company's historic ability to generate sales leads or opportunities; and that sales will be completed at or above the Company's estimated margins. This list is not exhaustive of the factors that may affect the Company's forward-looking information. These and other factors should be considered carefully and readers should not place undue reliance on such forward-looking information. All forward-looking statements made in this Management's Discussion and Analysis are qualified by this cautionary statement and there can be no assurance that actual results or developments anticipated by the Company will be realized. The Company disclaims any intention or obligation to update or revise forward-looking information, whether as a result of new information, future events or otherwise, except as required by law.
Neither the TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in the policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release.
----------------------------------------------------------------------------
LED MEDICAL DIAGNOSTICS INC.
Condensed Interim Consolidated Statements of Financial Position
(Expressed in U.S. Dollars)
----------------------------------------------------------------------------
September 30, December 31,
2014 2013
============================================================================
Assets
Current assets
Cash $ 815,036 $ 4,358,986
Trade and other receivables 878,106 503,736
Inventory 2,514,870 412,307
Inventory held by distributor 191,165 165,832
Prepaid expenses and deposits 735,158 297,164
-----------------------------
Total current assets 5,134,335 5,738,025
Non-current assets
Letter of credit 280,000 -
Property and equipment 276,113 23,150
Patents and intellectual property 43,008 62,362
=============================
$ 5,733,456 $ 5,823,537
============================================================================
Liabilities and Shareholders' Deficiency
Current liabilities
Trade payables and accrued liabilities $ 1,745,532 $ 793,046
Advances from distributor 671,715 495,494
Deferred Revenue 1,266 -
Current portion of finance lease obligation 4,187 3,690
Warrants 354,000 -
-----------------------------
Total current liabilities 2,776,700 1,292,230
Non-current liabilities
Long-term portion of finance lease
obligation - 3,190
Warrants - 3,672,958
-----------------------------
Total liabilities 2,776,700 4,968,378
-----------------------------
Shareholders' deficiency
Share capital 34,145,786 27,242,071
Stock-based payment reserve 1,679,550 970,004
Warrants reserve 4,718,328 4,724,698
Accumulated other comprehensive income 474,458 474,458
Deficit (38,061,366) (32,556,072)
-----------------------------
2,956,756 855,159
=============================
$ 5,733,456 $ 5,823,537
============================================================================
----------------------------------------------------------------------------
LED MEDICAL DIAGNOSTICS INC.
Condensed Interim Consolidated Statements of Operations and Comprehensive
Loss
(Expressed in U.S. Dollars)
----------------------------------------------------------------------------
Three months Three months Nine months Nine months
ended ended ended ended
September 30, September 30, September 30, September 30,
2014 2013 2014 2013
----------------------------------------------------------------------------
Revenues $ 1,628,643 $ 911,387 $ 4,273,818 $ 2,303,860
Cost of goods
sold 1,027,842 331,330 2,277,609 924,205
-----------------------------------------------------------
600,801 580,057 1,996,209 1,379,655
-----------------------------------------------------------
Expenses
Sales and
marketing 1,621,028 158,776 3,910,005 818,111
Research and
development 215,625 121,706 721,548 322,257
Administration 387,766 439,391 1,425,999 1,121,264
Stock-based
compensation 331,695 45,898 709,546 597,691
Deferred share
unit
compensation - 65,149 - 380,580
Other
operating
expenses 21,738 9,463 45,610 62,846
-----------------------------------------------------------
2,577,852 840,383 6,812,708 3,302,749
-----------------------------------------------------------
Operating loss (1,977,051) (260,326) (4,816,499) (1,923,094)
-----------------------------------------------------------
Other income
(expenses)
Mark to market
adjustments
on Canadian
dollar
denominated
warrants (777,504) (2,065,653) (693,979) (3,822,587)
Foreign
exchange
(loss) gain 60,694 366,435 5,184 255,364
-----------------------------------------------------------
(716,810) (1,699,218) (688,795) (3,567,223)
-----------------------------------------------------------
Net income
(loss) before
incomes taxes (2,693,861) (1,959,544) (5,505,294) (5,490,317)
Income taxes - (41) - 4,099
-----------------------------------------------------------
Net income
(loss) and
comprehensive
income (loss)
for the period $ (2,693,861) $ (1,959,503) $ (5,505,294) $ (5,494,416)
-----------------------------------------------------------
Income (loss)
per share -
basic and
diluted ($0.03) ($0.03) ($0.07) ($0.12)
===========================================================
Weighted average
number of
shares
outstanding -
basic and
diluted 82,312,719 57,985,508 75,207,052 47,735,508
============================================================================
----------------------------------------------------------------------------
LED MEDICAL DIAGNOSTICS INC.
Consolidated Statements of Cash Flow
(Expressed in U.S. Dollars)
----------------------------------------------------------------------------
Three months Three months Nine months Nine months
ended ended ended ended
September 30, September 30, September 30, September 30,
2014 2013 2014 2013
----------------------------------------------------------------------------
Cash flows from
operating
activities
Net income
(loss) for
the period $ (2,693,861) $ (1,959,503) $ (5,505,294) $ (5,494,416)
Adjustments to
net income
(loss) for
items not
involving cash:
Depreciation
of equipment 15,287 3,010 26,256 9,387
Amortization
of
intellectual
property 6,451 6,453 19,354 19,354
Warrants
issuance
costs - - - 34,105
Mark to market
adjustments
on Canadian
dollar
denominated
warrants 777,504 1,679,155 693,979 3,436,089
Settlement of
warrant
liability
upon exercise
and expiry of
warrants 2,961,577 - 3,912,642
Stock-based
compensation 331,696 45,898 709,546 597,691
Unrealized
foreign
exchange gain (3,020,844) - (4,019,303) -
-----------------------------------------------------------
(1,622,190) (224,987) (4,162,820) (1,397,790)
-----------------------------------------------------------
Changes in
working capital
assets and
liabilities:
Trade and
other
receivables (94,065) 245,213 (374,370) 819,092
Inventory (1,129,413) (229,988) (2,102,563) (277,304)
Inventory held
by
distributor (48,709) 265,200 (25,333) 397,200
Prepaid
expenses and
deposits (440,583) (101,919) (717,993) (90,421)
Trade payables
and accrued
liabilities 260,285 (198,392) 952,482 (312,977)
Advances from
distributor 110,569 (494,531) 176,221 (1,370,695)
Deferred
revenue (6,681) - 1,266 -
-----------------------------------------------------------
Changes in
working capital
assets and
liabilities (1,348,597) (514,417) (2,090,290) (835,105)
-----------------------------------------------------------
Cash flows used
in operating
activities (2,970,787) (739,404) (6,253,110) (2,232,895)
-----------------------------------------------------------
Cash flows from
investing
activities
Purchase of
equipment (98,635) (1,876) (279,220) (3,067)
Restricted
cash - (99) - 173
-----------------------------------------------------------
Cash flows used
in investing
activities (98,635) (1,975) (279,220) (2,894)
-----------------------------------------------------------
Cash flows from
financing
activities
Issuance of
common
shares, net
of issuance
costs - (2,880) - 1,855,294
Issuance of
share
purchase
warrants in
private
placement - - - 386,497
Proceeds from
exercise of
warrants 2,047,308 - 2,991,073 -
Repayment of
finance lease
obligation (1,250) (766) (2,693) (2,176)
-----------------------------------------------------------
Cash flows
provided by
(used in)
financing
activities 2,046,058 (3,646) 2,988,380 2,239,615
-----------------------------------------------------------
(Decrease)
increase in
cash (1,023,364) (745,025) (3,543,950) 3,826
Cash, beginning
of period 1,838,400 1,718,435 4,358,986 969,584
-----------------------------------------------------------
Cash, end of
period $ 815,036 $ 973,410 $ 815,036 $ 973,410
============================================================================
FOR FURTHER INFORMATION PLEASE CONTACT:
Contacts:
For media relations, please contact:
Chris Koch
LED Dental Ltd.
Phone: 678-293-9413
E-Mail: chris.koch@leddental.com
For Investor relations, please contact:
Beverly Brooks
Investor Relations
LED Medical Diagnostics Inc.
Phone: 844-952-7327
E-Mail: investorrelations@leddental.com
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