CALGARY,
AB, Nov. 29, 2022 /CNW/ - Nanalysis Scientific
Corp. ("the Company") (TSXV: NSCI) (OTCQX: NSCIF) (FRA: 1N1), a
leader in portable NMR machines and MRI technology for healthcare
and industrial applications, releases its second quarter results
ending September 30, 2022. Chief Executive Officer, Sean
Krakiwsky and Interim Chief Financial Officer, Randall
McRae will host a conference call at 5 P.M. Eastern
Time today to discuss the results. A second call will be
held for European investors at 8:30am ET on Wednesday, November 30th. All
interested parties are invited to join these calls.
"I am pleased to report we have returned to our strong growth
trajectory in the third quarter," said Sean Krakiwsky, Founder
and CEO of Nanalysis. "We continue to focus on growing all segments
of our organization and executing on our operational strategy. In
the third quarter we laid significant groundwork on our previously
announced multi-year airport security contract with the Canadian
Air Transportation Security Authority and have now begun operations
on that project in the fourth quarter. We believe we have also
resolved the issues that slowed our growth in our benchtop NMR
sales organization in the second quarter, returning to strong
benchtop NMR sales figures. We expect to see continued strength in
our business in the fourth quarter, which has historically been a
strong quarter for our business."
Financial highlights (unaudited) for the three months
ended September 30, 2022:
- For the three months ended September 30,
2022, the Company reported consolidated revenue of
$6,878K, an increase of $3,542K or 106% from the comparative period in
2021. This includes $6,145K in
product sales and $733K of service
revenue related to airport security services.
- Gross margin on total sales was 43% for the three months ended
September 30, 2022. This was the
result of increased training costs of personnel for the CATSA
airport security project, increased personnel and training in
Nanalysis' manufacturing group to increase manufacturing capacity,
an increase in costs due to worldwide supply chain constraints and
inflation, as well as a specific medical imaging project in our
RS2D subsidiary that had lower than normal gross margins.
Management expects margins to improve as continued investments in
manufacturing improvements continue, sales levels increase, and the
CATSA airport security project continues to phase-in to full
capacity.
- (Loss) Income before other items for the three months
ended September 30, 2022, was $(618K) versus $12K compared to the
same period last year.
- Net loss for the three months ended was $(2,599K), as
compared to the three-month loss for September 30,
2021, of $(857K).
- The Company had cash on hand of $7,925K, an undrawn credit
facility of $6,734K, working capital of $9,658K and
an undrawn government contribution funding of $4,985K as
of September 30, 2022.
Recent strategic and operational highlights during and
subsequent to the second quarter of 2022 include:
- Funding received from Prairies Economic Development
Canada: Subsequent to September 30,
2022, the Company received its first $1.5 million in funding from the Business
Scale-up Program. This program will provide Nanalysis up to
$4,985K of funding in the form of an
unsecured interest free loan. The program is designed to help fast
growing tech firms scale-up and enter new markets.
- Consolidation of credit facility: On November 18, 2022, the Company closed a credit
line with a major Canadian bank, consolidating its existing
operating facilities into a $9
million operating line. The line bears interest at a
rate of prime plus 0.65% and will allow the Company to execute on
its growth and expansion plans.
- Security Service: In November
2022, the Company began providing services under the CATSA
airport security contract and continues to execute successfully on
its phase-in plan for the entire project.
- Manufacturing: In addition to Nanalysis investing in a
state of the art five axis machining centre and wire electrical
discharge machine in the second quarter of 2022, Nanalysis has also
invested in growing out the manufacturing team allowing the Company
to meet expected growth in demand as it heads into 2023.
- Quad Systems: The company has seen continued
development with Quad System's full high-field NMR product. Module
sales have continued to increase in the third quarter and the
Company expects material revenue from the acquisition in 2023.
Operating Results
For the nine months ended September 30,
2022, the Company reported consolidated revenue of
$17,618K, an increase of $6,664K or 61% from the comparative period in
2021. The increase from Q3 2021 can be attributed to continued
increases in shipments of the 100MHz benchtop NMR unit, coupled
with revenue from the recent acquisition, K'Prime, offset by lower
RS2D revenue than in Q3 2021.
Gross profit for the nine months ended September 30, 2022, was $9,504K (a margin of 54%) compared to gross
profit of $7,152K (a margin of 65%)
for the nine months ended September 30,
2021. Margins for the nine months ended September 30, 2022, decreased over the nine
months ended September 30, 2021, as a
result of increased component costs because of world-wide supply
chain challenges, low margins on a specific Q3 project in RS2D,
training costs included in cost of services related to the CATSA
airport security project phase in, and investments made in the
Company's manufacturing workforce beginning in the second
quarter.
The Company's net loss for the nine months ended was
$(6,623K), as compared to the
nine-month loss for the period ended September 30, 2021, of $(1,127K). The increased loss was due to higher
sales and marketing expenses, increased general and administration
expenses and increased research and development expenses, both in
the Nanalysis segment and from the new acquisitions. In addition,
there were business acquisition costs from the two transactions
completed, increased depreciation and amortization expense, and
increased finance expenses partially offset by no RS2D earnout in
the quarter and increased revenues.
Outlook
"Our main objective continues to be focusing on executing our
business plan, including ramping up sales of our 100 MHz product,
completing the roll out of the CATSA airport service contract, and
capitalizing on business opportunities brought by our recent
acquisitions. We have successfully restructured and refocused our
benchtop NMR salesforce and expect growing demand in 2023 for
benchtop products, and we continue to work towards the launch of a
full multi-module high-field NMR product via Quad Systems," said
Sean Krakiwsky.
"With a slower second quarter well behind us, we have returned
to our high growth trajectory and continue to have confidence that
Nanalysis is well positioned for solid growth in 2023 and the years
to come. Operational excellence remains our mantra, as we will
continue to leverage existing customer relationships, our
innovative technologies, and a motivated and professional team to
fuel growth. We are confident that we will deliver the value we've
created by our recent acquisitions to our shareholders through the
remainder of 2022 and into the new year," concluded Mr.
Krakiwsky.
Conference Call
Investors interested in participating on the live call can dial
1-888-664-6392 or 416-764-8659 from abroad. Investors can also
access the call online through a listen-only webcast here:
https://app.webinar.net/JoLVkw4jEmX or on the investor
relations section of the Company's website HERE. The webcast
will be archived on the Company's investor relations webpage for at
least 90 days and a telephonic playback will be available for seven
days after the conference call by calling 1-888-390-0541 or
416-764-8677, conference ID # 833132.
Additionally, the Company will be hosting a Q&A session for
it's European investors tomorrow, Wednesday,
November 30th at 8:30am
ET which can be accessed by the following link: : Click here
to join the meeting, or call in (audio only) +1 437-703-4522, Phone
Conference ID: 295 204 525#.
About Nanalysis Scientific
Corp. (TSXV: NSCI, OTCQX: NSCIF, FRA:1N1)
Nanalysis trades on the TSX Venture Exchange (TSXV)
in Canada with ticker symbol 'NSCI', OTC and
the Frankfurt exchange under the ticker symbol '1N1'. The
company's business is what we term "MRI and NMR for industry". The
company develops and manufactures portable Nuclear Magnetic
Resonance (NMR) spectrometers or analyzers for laboratory and
industrial markets. The NMReady-60™ was the first full-feature
portable NMR spectrometer in a single compact enclosure requiring
no liquid helium or any other cryogens. The Company has followed up
that initial offering with new products and continues to have a
strong innovation pipeline. Nanalysis began selling a 100MHz device
in 2020. The Company's new device is the most powerful and most
advanced compact NMR device ever brought to market. Nanalysis
devices are used in many industries (oil and gas, chemical, mining,
pharma, biotech, flavor and fragrances, agrochemicals, law
enforcement, and more) as well as numerous government and
university research labs around the world. The Company continues to
exploit new global market opportunities independently and with
partners.
With the recent acquisition of K'Prime, the Company maintains a
North American sales and service company of over 40 individuals who
cover scientific instrumentation for pharma, food, chemical and oil
& gas customers, as well as imaging systems and services for
security applications. Additionally, the Company has a 43%
ownership in Quad Systems AG ("Quad Systems"), with an option to
purchase the remaining shares. Quad Systems is
a Zurich-based Nuclear Magnetic Resonance ("NMR") company
focused on high-field NMR for pharmaceutical and other vertical
markets.
Notice regarding Forward Looking
Statements and Legal Disclaimer
This news release contains certain "forward-looking statements"
within the meaning of such statements under applicable securities
law. Forward-looking statements are frequently characterized by
words such as "anticipates", "plan", "continue", "expect",
"project", "intend", "believe", "anticipate", "estimate", "may",
"will", "potential", "proposed", "positioned" and other similar
words, or statements that certain events or conditions "may" or
"will" occur. These statements are only predictions. Various
assumptions were used in drawing the conclusions or making the
projections contained in the forward-looking statements throughout
this news release. Forward-looking statements are based on the
opinions and estimates of management at the date the statements are
made and are subject to a variety of risks and uncertainties and
other factors that could cause actual events or results to differ
materially from those projected in the forward-looking statements.
The Company is under no obligation, and expressly disclaims any
intention or obligation, to update or revise any forward-looking
statements, whether as a result of new information, future events
or otherwise, except as expressly required by applicable law.
Neither TSX Venture Exchange nor its Regulation Services
Provider accepts responsibility for the adequacy or accuracy of
this release.
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SOURCE Nanalysis Scientific Corp.