TORONTO, May 28, 2020 /CNW/ - SQI Diagnostics Inc.
("SQI" or the "Company") (TSX-V: SQD; OTCQB:
SQIDF), today reported its financial and
operational results for the three and six months ended March 31, 2020.
SQI is a Toronto-based life
sciences and diagnostics company that develops and commercializes
proprietary technologies and products for advanced multiplexed
diagnostics.
Highlights for the Quarter
- University Health Network ("UHN) validated TORdx LUNG assay in
the operating room at the Toronto General Hospital.
- Canadian Institutes of Health Research ("CIHR") grant leads to
initiation of various COVID-19 and respiratory infection studies
with UHN utilizing RALI-Dx and RALI-fast products.
- SQI received New York State
Department of Health ("NYSDOH") approval of rheumatoid arthritis
direct-to-consumer ("DTC") test.
Said Eric Brouwer, Interim Chief
Executive Officer: "SQI had a number of positive developments
during the quarter. The global pandemic underscores our strategy of
focusing on lung and more broadly organ health. Our agility allowed
us to quickly pivot by leveraging our existing lung transplant
product to develop a COVID-19 triage test. Clinical studies in
support of regulatory approvals began in April 2020 and subject enrolment is 50% complete.
If successful, we anticipate the launch of two products that would
not only provide financial benefits to the Company but would be
critical life-saving technologies." Continued Brouwer, "We also
received approval for our rheumatoid arthritis direct-to-consumer
test which allowed our customer Microdrop to begin selling the test
to consumers in all 50 U.S. states, with testing being
allowed to commence at SQI's CLIA lab partner, Trinity Biotech, in
Buffalo, New
York."
Q2 2020 and year-to-date Financial Results Overview
For the quarter ended March 31,
2020, the Company recorded a net loss of $2,269,000 ($0.01
net loss per share) as compared to the net loss of $1,568,000 ($0.01
net loss per share) for the same period last year. For the
six-months ended March 31, 2020, the
Company recorded a net loss of $4,283,000 ($0.02
net loss per share) as compared to the net loss of $3,326,000 ($0.02
net loss per share) for the same period last year. The net losses
in the current periods are higher than the net losses in the
corresponding prior year periods primarily due to lower revenue and
higher expenses in the Research & Development ("R&D") area.
Per share values are based on the weighted average shares
outstanding in the relevant period. For the quarter and six-months
ended March 31, 2020, there was an
average of 252,040,000 and 242,022,000 shares outstanding,
respectively.
Total revenues for the quarter ended March 31, 2020 were $269,000 compared to $419,000 for the same period last year. Total
revenues for the six months ended March 31,
2020 were $476,000 compared to
$711,000 for the same period last
year. Product revenue, which includes revenue from kit sales was
$115,000 for the current quarter
compared to $287,000 for the same
period last year. Product revenue was $262,000 for the six-months ended March 31, 2020 compared to $533,000 for the same period last year. The
decrease in product revenue is due to the loss of one customer,
which accounted for a material percentage of revenue in the same
prior year period. Revenue from services in the second
quarter was $154,000 compared to
$132,000 in the same period last
year. Revenue from services for the six-months ended March 31, 2020 was $214,000 compared to $178,000 in the same period last year. Service
revenues were higher in the second quarter of 2020 compared to the
same prior year period due to recognition of the remaining portion
of a large contract to develop multiple lung transplant products
that are now transitioning to commercial sales.
Research and development expenditures, excluding amortization
and stock-based compensation, for the three months ended
March 31, 2020 were $1,196,000 compared to $695,000 for the same period last year. Research
and development expenditures, excluding amortization and
stock-based compensation, for the six-months ended March 31, 2020 were $2,202,000 compared to $1,572,000 for the same period last year.
Expenses were higher due to several factors; the absence of a SRED
tax credit in the current period that was included in the last
fiscal year's comparative period, higher salaries and wages, and
higher laboratory costs and supplies. Laboratory costs and supplies
increased during the quarter and six months ended March 31, 2020, when compared with the
corresponding quarter prior year as one of our main research and
development projects with the UHN is currently in full design phase
while it was had just been initiated last year.
Corporate and general expenses, excluding stock-based
compensation, totaled $443,000 for
the three-months ended March 31, 2020
as compared to $366,000 for the same
period last year. Corporate and general expenses, excluding
stock-based compensation, totaled $807,000 for the six-months ended March 31, 2020 as compared to $690,000 for the same period last year due to
higher professional fees. Professional fees include legal, investor
relations and consulting fees. Professional fees were higher in the
current quarter compared to the same period last year due to higher
recruiting costs and legal fees.
Sales and marketing expenses, excluding stock-based
compensation, increased to $385,000
for the three-months ended March 31,
2020 compared to $323,000 for
the same period last year. Sales and marketing expenses, excluding
stock-based compensation, were essentially flat at $644,000 for the six-months ended March 31, 2020 compared to $648,000 for the same period last year.
Non-cash, stock-based compensation charges decreased to
$108,000 for the three-months ended
March 31, 2020 compared to
$169,000 for the same period last
year. Non-cash, stock-based compensation charges decreased to
$235,000 for the six months ended
March 31, 2020 compared to
$299,000 for the same period last
year. The reduction is a result of forfeitures of stock options
associated with the departure of certain employees.
At March 31, 2020, current assets
were $3,636,000 including
$2,551,000 of cash compared to
$4,494,000 including $3,444,000 of cash at September 30, 2019. As at March 31, 2020, the Company had a $2,252,000 working capital surplus compared to a
working capital deficit of $217,000
at September 30, 2019. The higher
surplus is due to a change in the classification of debentures
which matured in the quarter and were subsequently extended; this
extension changed the classification from a current liability to a
long-term liability in the period.
Detailed financial statements and the management's
discussion and analysis (MD&A) will also be made available on
the Company website at www.sqidiagnostics.com and at
www.sedar.com.
Financial and Business Highlights for the Quarter and Year to
Date:
Corporate Financing Transactions:
Private Placements
On September 25, 2019 and
October 22, 2019, the Company
completed a non-brokered private placement of an aggregate of
32,300,000 units of the Company at $0.10 per unit for gross proceeds of $3,230,000. Each unit comprises one common share
of the Company and one common share purchase warrant. Each warrant
is exercisable at a price of $0.13
and entitles the holder thereof to acquire one common share for a
period of five years from the date of issuance.
On February 14 and March 5, 2020, the Company completed a
non-brokered private placement of an aggregate of 44,444,444 units
of the Company at $0.09 per unit for
gross proceeds of $4,000,000.
Each unit comprises one common share of the Company and one common
share purchase warrant. Each warrant is exercisable at a
price of $0.12 and entitles the
holder thereof to acquire one common share for a period of five
years from the date of issuance, subject to accelerated expiry in
certain circumstances.
The Company used a portion of the net proceeds of the Private
Placement completed in the quarter to repay $1,000,000 of the principal amount of certain 10%
secured non-convertible debentures of the Company, plus accrued
interest of $100,000. The remaining
funds are expected to be used for the Company's product
commercialization and manufacturing programs, sales and marketing
and for general working capital purposes.
Debenture Extension
On January 30, 2015 and
February 20, 2015, the Company issued
secured debentures (the "Debentures") with principal amounts of
$1,950,000 and $1,286,000, respectively. The Debentures bore
interest at a rate of 10% and were redeemable 60 months from the
date of issuance. The Debentures matured during the quarter ended
March 31, 2020 with $1,000,000 of the February tranche and
$100,000 of accrued interest related
to this amount being repaid by the Company. The maturity dates of
the existing $2,236,000 Debentures
were extended for an additional five years in agreement with the
holders of these financial instruments. In addition, $223,600 of accrued interest was added to the
principal amount of the existing debentures resulting in new
principal amounts of $2,145,000 and
$314,600 as of January 30, 2020 and February 20, 2020, respectively.
For more information, please contact:
Interim Chief Executive Officer
Eric Brouwer
416.674.9500 ext. 242
ebrouwer@sqidiagnostics.com
Chief Financial Officer
Morlan Reddock
416.674.9500 ext. 277
mreddock@sqidiagnostics.com
About SQI Diagnostics
SQI Diagnostics is a life
sciences and diagnostics company that develops clinical-grade
multiplexed microarray and molecular assays run on its automated
instrumentation for the pharmaceutical research, animal health, and
clinical diagnostics markets. SQI develops custom research and
diagnostic assays that are "multiplexed"; which means many
individual tests can now be simplified, consolidated and automated
into a single test. This significantly increases sample throughput,
reduces time, cost and chance for human error, and provides
excellent data quality. For more information, please visit
sqidiagnostics.com.
Forward-looking Statements
This press release contains certain statements including,
without limitation, the words "may", "plan", "will", "estimate",
"continue", "anticipate", "intend", "expect", "believe", "in the
process", "benefits", "leading to", "position" "possible", "is
subject to" and other similar expressions which may constitute
"forward-looking statements" within the meaning of applicable
securities laws. Forward-looking statements reflect the Company's
current expectations and assumptions, and are subject to a number
of risks and uncertainties that could cause actual results to
differ materially from those anticipated. Readers are cautioned not
to place undue reliance on these forward-looking statements. These
forward-looking statements involve risks and uncertainties
including, but not limited to: our ability to market
and sell our products including our novel multiplexing technologies
and detection platforms; our ability to maintain any
technical or product advantages; the success of our Diagnostic
Tools and Services business and our intent to build near-term
revenue streams from this business; the successful regulatory
filing and receipt of regulatory approvals for our later stage
quantitative diagnostic consumable kits; adverse changes in general
economic conditions; international risk and currency exchange
fluctuations; competitor activity; technology changes; regulatory
approvals and the impact of healthcare reform legislation; and,
SQI's ability to raise additional funds in the future.
Such statements, risks and uncertainties are detailed in the
Company's ongoing filings with the securities regulatory
authorities, and are available to the public at
www.sedar.com. The Company undertakes no obligation to publicly
update or revise any forward-looking statements either as a result
of new information, future events or otherwise, except as required
by applicable securities laws.
Neither 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.
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SOURCE SQI Diagnostics Inc.