BURNABY, BRITISH COLUMBIA
-- (Marketwired)
-- 04/15/14
LED Medical Diagnostics Inc. (TSX VENTURE: LMD)(OTCQX: LEDIF)(FRANKFURT: LME) ("LED Medical" or the "Company") today announced its financial results for the fourth quarter and full year ended December 31, 2013, reported in United States dollars and in accordance with International Financial Reporting Standards ("IFRS"). The Company's results are presented in comparison to the fourth quarter and full year ended December 31, 2012. All balances are expressed in United States dollars unless otherwise stated.
Business Highlights
Notable business developments and achievements up to the reporting date included the following:
-- On December 3, 2013, the Company announced that it entered a non-
exclusive distribution partnership with Burkhart Dental Supply in the
United States market.
-- On December 10, 2013, the Company announced that it entered a non-
exclusive distribution partnership with Benco Dental Supply in the
United States market.
-- On January 14, 2014, the Company announced that it signed an agreement
with the BC Cancer Agency ("BCCA") to create and commercialize a
progression-risk assessment test for oral cancer. The test is based on a
quantifiable genetic phenomenon known as "Loss of Heterozygosity" or
"LOH".
-- On January 21, 2014, the Company announced that it entered a non-
exclusive distribution partnership with Patterson Dental in the United
States and Canadian markets.
-- On February 25, 2014, the Company announced the appointment of Lamar
Roberts as president of its wholly owned US subsidiary LED Dental Ltd.
-- On March 26, 2014, the Company announced the appointment of Dr. Jeffrey
Brooks as vice president of imaging of its wholly owned subsidiary LED
Dental Ltd.
-- On April 2, 2014, the Company announced that its wholly owned US
operating subsidiary, LED Dental Ltd. released a new brand initiative to
further its goal of providing advanced imaging technologies to dental
and specialty practices in the United States and Canada. The branding
initiative includes a new logo to further unify the business under the
LED Imaging name.
-- On April 3, 2014 the Company announced that the LED Imaging division of
its wholly owned subsidiary, LED Dental Ltd., is partnering with Ray
Co., Ltd., a subsidiary of Samsung, to sell, install and provide support
for the RAYSCAN alpha - Expert dental imaging system.
"2014 is expected to be a transformational year for LED as our new management team expands our VELscope distribution network and transitions the Company from a single product strategy to a diverse portfolio of digital imaging products," said the Company's CEO, Dr. David Gane. "The execution of our strategy, which will take an investment in time and capital in the current year, is designed to position the Company for long-term, sustainable growth and success as a leading player in the dental imaging market."
Financial Highlights
Financial Position as at December 31, 2013
Working capital as at December 31, 2013 was $4,445,795, which includes cash of $4,358,986. This is compared to negative working capital of $96,749 at December 31, 2012, which included cash of $969,584.
Three-Month Comparative Results
The Company reported revenue of $215,714 for the three months ended December 31, 2013 as compared to $1,389,994 for the three months ended December 31, 2012. Net loss was $1,460,801 for the three months ended December 31, 2013, as compared to a net loss of $174,630 for the three months ended December 31, 2013.
Inclusive of accounting adjustments, the Company's calculated gross margin was 51% for the three months ended December 31, 2013, which is slightly higher as compared to 46% in the three months ended December 31, 2012. Total operating expenses for the three months ended December 31, 2013 were $1,509,487 as compared to $740,547 for the three months ended December 31, 2012, representing a 108% increase. Core operating expenses (excluding stock-based compensation, deferred share unit compensation and other operating expenses) for the three months ended December 31, 2013 were $1,209,950, as compared to $725,989 for the three months ended December 31, 2012, representing a 67% increase.
EBITDA for the three months ended December 31, 2013 was negative $1,238,255 compared to negative $83,502 for the three months ended December 31, 2012.
Twelve-Month Comparative Results
The Company reported revenue of $2,519,574 for the year ended December 31, 2013 as compared to $6,312,754 for the year ended December 31, 2012. Net loss was $6,955,217 for the year ended December 31, 2013 as compared to a net loss of $866,933 for the year ended December 31, 2012.
Gross margin was 46% for the year ended December 31, 2013, a decrease from 57% in the year ended December 31, 2012. Total operating expenses for the year ended December 31, 2013, were $4,812,236 as compared to $4,355,188 for the year ended December 31, 2012, representing a 10% increase. Core operating expenses (excluding stock-based compensation, deferred share unit compensation and other operating expenses) for the year ended December 31, 2013 were $3,291,582, as compared to $4,295,412 for the year ended December 31, 2012, representing a 23% decrease.
EBITDA for the year ended December 31, 2013 was negative $2,120,231, as compared to negative $728,135 for the year ended December 31, 2012.
Financial Statements and Management's Discussion & Analysis
Please see the audited consolidated financial statements and related Management's Discussion & Analysis ("MD&A") for more details. The audited consolidated financial statements for the year ended December 31, 2013 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.
Non-IFRS Measures
The following and preceding discussion of financial results includes references to Gross Margin, EBITDA, Core Operating Expenses and Working Capital, which are non-IFRS financial measures. The measure of gross margin is provided as management believes this is a good indicator in evaluating the operating performance of the Company. EBITDA is defined as 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. The measure of working capital is provided as management believes this is a good indicator of the operating liquidity available to the Company.
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.
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.
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.
Consolidated Statements of Financial Position
(Expressed in U.S. Dollars)
December 31, December 31,
Notes 2013 2012
----------------------------------------------------------------------------
Assets
Current assets
Cash $ 4,358,986 $ 969,584
Restricted cash 4 - 5,026
Trade and other receivables 5 503,736 1,514,577
Inventory 412,307 296,467
Inventory held by distributor 6 165,832 518,400
Prepaid expenses and deposits 297,164 69,300
--------------------------------
Total current assets 5,738,025 3,373,354
Non-current assets
Property and equipment 7 23,150 28,015
Patents and intellectual property 8 62,362 88,167
--------------------------------
$ 5,823,537 $ 3,489,536
----------------------------------------------------------------------------
Liabilities and Shareholders'
Deficiency
Current liabilities
Trade payables and accrued
liabilities 9 $ 793,046 $ 1,689,009
Advances from distributor 6 495,494 1,778,112
Current portion of finance lease
obligation 10 3,690 2,982
--------------------------------
Total current liabilities 1,292,230 3,470,103
Non-current liabilities
Long-term portion of finance lease
obligation 10 3,190 6,879
Warrants 12 3,672,958 140,467
--------------------------------
Total liabilities 4,968,378 3,617,449
--------------------------------
Shareholders' Deficiency
Share capital 13 27,242,071 24,658,241
Stock-based payment reserve 14 970,004 62,495
Warrants reserve 4,724,698 277,748
Accumulated other comprehensive
income 474,458 474,458
Deficit (32,556,072) (25,600,855)
--------------------------------
855,159 (127,913)
--------------------------------
$ 5,823,537 $ 3,489,536
============================================================================
LED MEDICAL DIAGNOSTICS INC.
Consolidated Statements of Financial Position
(Expressed in U.S. Dollars)
Three months Three months
ended ended Year ended Year ended
December December December 31, December 31,
31, 2013 31, 2012 2013 2012
-------------------------------------------------------
Revenues $ 215,714 $ 1,389,994 $ 2,519,574 $ 6,312,754
Cost of goods sold 424,018 747,510 1,348,223 2,745,477
-------------------------------------------------------
(208,304) 642,484 1,171,351 3,567,277
-------------------------------------------------------
Expenses
Sales and marketing 434,577 349,248 1,252,688 2,564,798
Research and
development 120,623 94,980 442,880 523,492
Administration 474,750 281,761 1,596,014 1,207,122
Stock-based
compensation 309,818 - 907,509 -
Deferred share unit
compensation (149,967) - 230,613 -
Other operating
expenses 319,686 14,558 382,532 59,776
-------------------------------------------------------
1,509,487 740,547 4,812,236 4,355,188
-------------------------------------------------------
Operating loss (1,717,791) (98,063) (3,640,885) (787,911)
-------------------------------------------------------
Other expenses
Mark to market
adjustments on
Canadian 545,259 (77,729) (3,277,328) (3,843)
dollar denominated
warrants
Foreign exchange
(loss) gain (280,322) 1,161 (24,958) (64,511)
Other income - 91 - 2,172
-------------------------------------------------------
264,937 (76,477) (3,302,286) (66,182)
-------------------------------------------------------
Net loss and
comprehensive loss
before income taxes (1,452,854) (174,540) (6,943,171) (854,093)
Income taxes 7,947 12,046 12,840
-------------------------------------------------------
Net loss and
comprehensive loss
for the year $ (1,460,801) $ (174,540) $ (6,955,217) $ (866,933)
============================================================================
LED MEDICAL DIAGNOSTICS INC.
Consolidated Statements of Cash Flow
(Expressed in U.S. Dollars)
Three months Three months Year ended
ended ended Year ended December
December 31, December December 31, 31,
2013 31, 2012 2013 2012
-------------------------------------------------------
Net loss for the year ($1,460,801) $ (174,539) $ (6,955,217) $ (866,933)
Adjustments to net
loss for items not
involving cash:
Depreciation of
equipment 3,209 8,107 12,596 33,971
Amortization of
intellectual
property 6,451 6,451 25,805 25,805
Warrants issuance
costs 310,026 - 344,131 -
Loss on disposal of
assets - - - 702
Accrued interest on
shareholder loans - 31 - 2,614
Mark to market
adjustments on
Canadian dollar
denominated
warrants 96,402 77,729 3,022,165 3,843
Deferred share unit
compensation 230,613 - 230,613 -
Stock-based
compensation 309,818 - 907,509 -
-------------------------------------------------------
(504,282) (82,221) (1,902,072) (799,998)
-------------------------------------------------------
Changes in working
capital assets and
liabilities:
Receivables 191,749 (620,813) 1,010,841 (1,215,855)
Inventory 161,464 153,538 (115,840) 474,150
Inventory held by
distributor (44,632) - 352,568 (51,047)
Prepayments (137,443) 42,956 (227,864) (703)
Trades payable and
accrued
liabilities (582,986) 4,269 (895,963) 290,024
Advances from
distributor 88,077 - (1,282,618) 320,750
-------------------------------------------------------
Changes in working
capital assets and
liabilities (323,771) (420,050) (1,158,876) (182,681)
-------------------------------------------------------
Cash flows used in
operating activities (828,053) (502,271) (3,060,948) (982,679)
-------------------------------------------------------
Cash flows from
investing activities
Purchase of
equipment (4,664) (4,098) (7,731) (16,758)
Restricted cash 4,853 59 5,026 19,556
-------------------------------------------------------
Cash flows (used in)
provided by
investing activities 189 (4,039) (2,705) 2,798
-------------------------------------------------------
Cash flows from
financing activities
Issuance of common
shares, net of
issuance costs 4,209,809 1,081,513 6,451,600 1,081,513
Issuance of share
purchase warrants
in private
placement 4,436 - 4,436 -
Repayment of
finance lease
obligation (805) (651) (2,981) (2,410)
Repayment of
shareholder loans - (31) - (105,410)
-------------------------------------------------------
Cash flows (used in)
provided by
financing activities 4,213,440 1,080,831 6,453,055 973,693
-------------------------------------------------------
Increase (decrease)
in cash 3,385,576 574,521 3,389,402 (6,188)
Cash, beginning of
year 973,410 395,063 969,584 975,772
-------------------------------------------------------
Cash, end of year $ 4,358,986 $ 969,584 $ 4,358,986 $ 969,584
============================================================================
Contacts:
LED Imaging
Chris Koch
404.502.4438
chris.koch@leddental.com
LED Medical Diagnostics Inc.
Mark Komonoski - Investor Relations
403.255-8483 or Toll-Free: 877.255.8483
Cell: 403.470.8384
ark.komonoski@ledmd.com
Skype: mkomonoski
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