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Nanotech Security Corp
Symbol NTS
Shares Issued 51,721,685
Close 2015-03-02 C$ 1.04
Market Cap C$ 53,790,552
Recent Sedar Documents

ORIGINAL: Nanotech Security loses $931,271 in Q1

2015-03-02 18:45 ET - News Release

Received by email:

File: News Release Q1 2015 - revised final.docx

 /






Nanotech Announces First Quarter 2015 Results 
Security Features Driving International Revenue Growth


VANCOUVER, British Columbia - March 2, 2015 - Nanotech Security Corp. (TSXV: NTS) (OTCQX: NTSFF), ("Nanotech" or the "
--->Company") today released its financial results for the three month period ended December 31, 2014.  

Highlights from Q1 2015
Security Features revenues exceed $1 million.  The Fortress Optical Features Ltd. ("FOF") acquisition contributed its 
--->first full quarter, which was FOF's strongest quarter since inception.
Received sales orders from three new customers.  Total value of these orders is in excess of $1.3 million.  The improv
--->ed outlook and the growing pipeline of other new commercial opportunities has prompted Nanotech to increase capacity a
--->t the facility.
Added second shift to Thurso, Quebec facility to increase production capacity.  Integration continues to ramp smoothly
---> as pipeline expands.
Signed banknote security feature development contract with a prominent issuing authority.  The contract commenced in t
--->he first quarter and is valued at approximately $1,000,000 per year with potential for renewal.  
Granted two new patents for advanced security features.  The United States Patent and Trademark Office granted one pat
--->ent in nanotechnology and another in Optical Thin Film ("OTF").  Nanotech expects to capitalize on the OTF patent in t
--->he immediate future.

Doug Blakeway, Nanotech CEO commented, "I am extremely pleased with how the recent Fortress Optical acquisition has tr
--->ansformed our Company."  He added, "During the first ninety days, major banknote customers have reacted favourably to 
--->the new Nanotech, and we are excited about the significant revenue opportunities that the acquisition's sales channels
---> have generated.  Non-banknote prospects have also requested samples of Nanotech's portfolio of security and branding 
--->products, giving us further confidence that the acquisition was the correct strategy for the Company, and that we are 
--->executing according to plan." 

 
Selected Financial Information
All results are reported in Canadian dollars and are prepared in accordance with International Financial Reporting Sta
--->ndards ("IFRS") as issued by the International Accounting Standards Board ("IASB").  

 
  
  
  
  
  
  
  
  
 
 
 
 
 
 
 Three months ended
 
 
 
 
 
 
 
 
 December 31,
 $
 %
 
  
  
  
  
  
 2014
 2013 
 Change
 Change
 
 
 
 
 
 
 
 
 
 
 
 Revenue
 
  $    1,541,008 
  $        557,319 
  $        983,689 
 177 %
 
 
 
 
 
 
 
 
 
 
 
 Gross profit
 
  $        531,350 
  $        188,049 
  $        343,301 
 183 %
 
 Gross profit %
 
 34%
 34%
 
 2 %
 
 
 
 
 
 
 
 
 
 
 
 Net loss
 
  $      (931,271)
  $      (693,276)
  $      (237,995)
              (34) %
 
 
 
 
 
 
 
 
 
 
 
 Net earnings (loss) per share -basic and diluted
  $             (0.02)
  $             (0.02)
 $          -   
                (8) %
 
 
 
 
 
 
 
 
 
 
 
 Net cash used in operating activities
 
  $   (1,119,076)
  $      (584,041)
  $      (535,035)
              (92) %
 
 
 
 
 
 
 
 
 
 
 
 Weighted average number of common shares
  
       48,332,771 
       38,756,136 
  
  
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 December 31,
 September 30,
 $
 %
 
  
  
  
  
  
 2014
 2014 
 Change
 Change
 
 Total Assets
 
  $  28,832,034 
  $  29,749,852 
  $      (917,818)
                (3) %
 
 Total long term liabilities
 
  $    5,500,000 
  $    6,100,000 
  $      (600,000)
              (10) %
 
 Total Equity
  
  $  21,284,867 
  $  22,027,680 
  $      (742,813)
                (3) %
 
 
Revenues for the three months ended December 31, 2014 increased by $984,000 or 177% to $1,541,000 compared to $557,000
---> in the same period last year.  The increased revenues was a result of revenue generated by the new Security Features 
--->business unit which delivered revenues in excess of $1 million primarily from the delivery of Optical Thin Film and de
--->velopment contracts.  The newly acquired Thurso production facility achieved its largest quarterly revenues since the 
--->business was founded three years ago.  This growth was partially offset by a decline in Surveillance revenues of appro
--->ximately $61,000 as a number of surveillance vans were delivered in January 2015 after the December 31, 2014 quarter e
--->nd.

The net loss increased from $693,000 to $931,000 which reflected the increase in costs related to the recent Fortress 
--->Optical acquisition.  This largely represented an increase in depreciation and amortization of $233,000 related to the
---> machinery and building, an increase in share based compensation of $110,000, and general overheads, including salarie
--->s and administrative costs, offset by a gain on revaluation of contingent shares of $600,000.

Corporate Update

Subsequent to the acquisition, the Company now operates its business through two newly named business units - Security
---> Features (Nanotech and FOF operations) and Surveillance (Tactical Technologies Inc. operations).  The Company's busin
--->ess units are strategic business units that offer different products and services.  They are managed separately becaus
--->e each business is in a different stage in its life cycle and require different sales and marketing strategies.
Security Features
Security Features provides light based recognition nanotechnology and OTF for use in anti-counterfeiting, authenticati
--->on processes, and luxury goods including currency, legal documents, and commercial products.  The Company conducts res
--->earch at its Burnaby, BC head office, its research and production facility in Thurso, QC, Canada, and at 4D Labs nanof
--->abrication facility, which is a Canadian federal government sponsored facility located at Simon Fraser University in B
--->urnaby.
The nanotechnology employs arrays of billions of nano-holes that are impressed or embossed onto a substrate material s
--->uch as polymer or metal.  These arrays yield unique light signatures (visual images) that cannot be easily reproduced 
--->by a third party without access to the technology and sophisticated equipment needed to create the arrays.  These opti
--->cal features can be directly applied to products creating unique optical signatures that are both overt (naked-eye-vis
--->ible) and covert (readable only by machine).  These features are being designed to be suitable for a variety of commer
--->cial security and authentication applications and branding formats.  
Surveillance
Surveillance designs and sells a wide range of sophisticated surveillance and intelligence gathering equipment and con
--->ducts surveillance training for the law enforcement and defense industries in the United States and Canada.  Surveilla
--->nce conducts its research, production and training at its facility in Holmes, PA, USA.
During the quarter, the Surveillance segment continued to build and outfit surveillance vans for undercover operations
---> and delivered accredited classes in electronic surveillance.

Outlook

The Company completed the three months ended December 31, 2014 with approximately $2.7 million in cash and cash equiva
--->lents.  Subsequent to the quarter the Company collected a further $540,000 through the exercise of warrants that were 
--->expiring in February 2015.  
With the acquisition of FOF in September 2014, the Security Features business has become an increasingly significant c
--->omponent of the revenue of Nanotech.  Sales of OTF and development projects were strong in the first quarter, and the 
--->Company is well positioned to continue increasing the business in the second quarter.
The improved outlook and the growing pipeline of other new commercial opportunities has prompted Nanotech to increase 
--->capacity at its production facility.  During the quarter the Company delivered in excess of 100,000m2 of OTF, surpassi
--->ng the average total annual volumes prior to the acquisition.  The addition of the second shift, combined with complet
--->ing some minor equipment upgrades occurring in the next few months will increase the production capacity to 1,000,000m
--->2, with the capability to expand to over 2,000,000m2 through additional shifts, and expand capacity beyond that, throu
--->gh partnerships, or further capital investment.
Nanotech recently announced that it has signed a contract with an issuing authority of a prominent country to develop 
--->a unique, optically-variable, security feature to be incorporated into various denominations of polymer, paper-based, 
--->and composite banknotes and security documents.  The contract commenced in the first quarter and is valued at approxim
--->ately $1,000,000 per year with a potential one year renewal option.  Upon completion of this project, Nanotech's new t
--->echnology will increase security confidence beyond current, legacy, options available in the market.

 
Nanotech Security Corp.
 
 
 
 Consolidated Statements of Operations and Comprehensive Loss
 
 
 
 (Unaudited)
 
 
 
 
 
 
 
 
 
 Three months ended December 31, 2014 and 2013
 
 
 
 (In Canadian dollars)
 
 
 
 
  
  
  
 2014 
 2013 
 
 
 
 
 
 
 
 Revenue
  $ 1,541,008 
  $    557,319 
 
 Cost of sales 
     1,009,658 
        369,270 
 
 
 
 
        531,350 
        188,049 
 
 
 
 
 
 
 
 Expenses 
 
 
 
 
 Research and development 
        847,696 
        409,985 
 
 
 General and administration
     933,905
        343,134 
 
  
 Sales and marketing
      273,022 
        127,303 
 
 
 
 
     2,054,623 
        880,422 
 
 
 
 
 
 
 
 Loss before other expenses (income)
    (1,523,273)
       (692,373)
 
 Other expenses (income)
 
 
 
 Foreign exchange (gain) loss 
         (26,810)
          10,775 
 
 Finance expense
          34,808 
           (1,027)
 
 Gain on revaluation of contingent shares
       (600,000)
                    - 
 
 Gain on sale of fixed asset
                    - 
           (8,845)
 
 
 
 
       (592,002)
               903 
 
 
 
 
 
 
 
 Net loss 
       (931,271)
       (693,276)
 
 
 
 
 
 
 
 Unrealized foreign exchange gain (loss)
 
 
 
  
 on translation of foreign operation
         (23,388)
          27,467 
 
 Total comprehensive loss for the period
  
  $   (954,659)
  $    (665,809)
 
  
 
  
  
 
 
 
 
 
 
 
 
 Loss per share
 
 
 
 
 Basic and diluted
  $          (0.02)
  $          (0.02)
 
  
  
  
  
  
 
 Weighted average number of common shares
 
 
 
  
 Basic and diluted
   48,332,771 
   38,756,136 
 
 
 

Nanotech Security Corp.
 
 
 
 Consolidated Statements of Financial Position
 
 
 
 (Unaudited)
 
 
 
 
 
 
 
 
 
 
 (In Canadian dollars)
  
  
 
 
 
 
 
 December 31,
 September 30,
 
  
  
  
  
 2014 
 2014 
 
 
 
 
 
 
 
 
 Assets
 
 
 
 Current assets:
 
 
 
 
 Cash and cash equivalents
  $   2,685,418 
  $   3,964,645 
 
 
 Accounts receivable
      1,361,304 
         526,410 
 
 
 Inventory 
         545,387 
         598,526 
 
 
 Prepaid expenses and other assets
         137,586 
         188,858 
 
  
  
  
  
      4,729,695 
      5,278,439 
 
 
 
 
 
 
 
 
 
 Property, plant and equipment
     18,966,747 
     18,995,321 
 
 
 Intangible assets 
      3,747,134 
      4,087,634 
 
 
 Goodwill 
      1,388,458 
      1,388,458 
 
  
  
  
  
  $ 28,832,034 
  $ 29,749,852 
 
  
  
  
  
  
  
 
 Liabilities and shareholders' equity
 
 
 
 Current liabilities:
 
 
 
 
 Accounts payable and accrued liabilities
  $   2,022,167 
  $   1,597,172 
 
 
 Deferred revenue
           25,000 
           25,000 
 
  
  
  
  
      2,047,167 
      1,622,172 
 
 
 
 
 
 
 
 
 Long term liabilities:
 
 
 
 
 Note payable
      3,000,000 
      3,000,000 
 
 
 Contingent consideration shares
      2,500,000 
      3,100,000 
 
  
  
  
  
      7,547,167 
      7,722,172 
 
 
 
 
 
 
 
 
 Shareholders' equity
 
 
 
 
 Share capital
     39,631,316 
     39,557,066 
 
 
 Share based payment reserve
      1,281,166 
      1,143,570 
 
 
 Deficit
    (19,549,678)
    (18,618,407)
 
 
 Accumulated other comprehensive income
          (77,937)
          (54,549)
 
  
  
  
  
     21,284,867 
     22,027,680 
 
  
  
  
  
  $ 28,832,034 
  $ 29,749,852 
 
 


 
Nanotech Security Corp.
 
 
 
 Consolidated Statements of Cash Flows
 
 
 
 (Unaudited)
 
 
 
 
 
 
 
 
 
 Three months ended December 31, 2014 and 2013
 
 
 
 (In Canadian dollars)
  
  
 
 
 
 
 2014 
 2013 
 
  
  
  
 
 
 
 Operating activities:
 
 
 
 
 Net loss
  $   (931,271)
  $    (693,276)
 
 
 Items not involving cash:
 
 
 
 
 
 Depreciation and amortization
        580,087 
         346,751 
 
 
 
 Share based compensation
        137,596 
           27,946 
 
 
 
 Gain on revaluation of contingent shares
       (600,000)
                     - 
 
 
 
 Gain on sale of asset
                    - 
            (8,845)
 
 
 
 Non-cash working capital changes
       (305,488)
        (256,617)
 
 Cash used in operating activities
    (1,119,076)
        (584,041)
 
  
  
  
  
  
 
 Investing activities:
 
 
 
 
 Purchase of property and equipment, net of disposals
       (206,292)
             9,491 
 
 Cash used in investing activities
       (206,292)
             9,491 
 
 
 
 
 
 
 
 Financing activities:
 
 
 
 
 Issuance of shares for warrants exercised
           74,250 
                     - 
 
 Cash provided by financing activities
           74,250 
                    - 
 
  
  
  
  
  
 
 Effect of foreign exchange on cash and cash equivalents
         (28,109)
           26,027 
 
  
  
  
  
  
 
 Decrease in cash and cash equivalents
    (1,279,227)
        (548,523)
 
 
 
 
 
 
 
 Cash and cash equivalents, beginning of period
      3,964,645 
      4,155,811 
 
 Cash and cash equivalents, end of period
 $   2,685,418 
 $   3,607,288 
 
 



FORWARD-LOOKING STATEMENTS

The discussion and analysis in this news release contains forward-looking statements concerning anticipated developmen
--->ts in our operations in future periods, the adequacy of our financial resources, and the events or condition that may 
--->occur in the future.  Forward-looking statements are frequently, but not always, identified by words such as "expects"
--->, "anticipates", "believes", "intends", "estimates", "predicts", "potential", "targeted" "plans", "possible" and simil
--->ar expressions, or statements that events, conditions or results "will", "may", "could" or "should" occur or be achiev
--->ed.  

These forward-looking statements include, without limitation, statements about our market opportunities, strategies, c
--->ompetition, and the Company's views that its nano-optical and optical thin film technologies will continue to show pro
--->mise for mass production and commercial application.  Other forward-looking statements imply that the Company will rem
--->ain capable of being financed and/or will be able to partner development until commercial sales are eventually realize
--->d.  The principal risks related to these forward-looking statements are that the Company's intellectual property claim
--->s will not prove sufficiently broad or enforceable to provide the necessary commercial protection and to attract the n
--->ecessary capital and/or that the Company's products will not be able to displace entrenched hologram, metalized strip 
--->tagging, and other conventional anti-counterfeiting technologies sufficiently to allow for profitability.

Our forward-looking statements are based on the beliefs, expectations and opinions of management on the date the state
--->ments are made.  Consequently, all forward-looking statements made in this discussion and analysis of the financial co
--->nditions and results of operations or the documents incorporated by reference are qualified by this cautionary stateme
--->nt and there can be no assurance that actual results or developments anticipated will be realized.  For additional inf
--->ormation with respect to certain of these risks or factors reference should be made to the "Business Risks and Uncerta
--->inties" section of the MD&A and notes to the consolidated financial statements, as well as with the Company's continuo
--->us disclosure materials filed from time to time with Canadian securities regulatory authorities, which are available o
--->nline at www.sedar.com.  Nanotech disclaims any intention or obligation to update or revise any forward-looking statem
--->ents, whether as a result of new information, future events or otherwise, other than as required by law, rule or regul
--->ation.  You should not place undue reliance on forward-looking statements.

About Nanotech Security
Through its security and surveillance divisions, Nanotech Security Corp. has been a leading innovator in the design an
--->d production of advanced security products and surveillance solutions for a number of years.  Nanotech's KolourOptik(T
--->M) and Plasmogram(TM) products are nanotechnology based product platforms originally inspired by the unique optical pr
--->operties of the iridescent wings of the Blue Morpho butterfly.  Our security products produce intense, high definition
---> optically-variable images and colour-shift optical thin films.  Activated by a simple tilt or rotation, with higher r
--->esolutions than the best LED-displays, they are ideal for authentication of currency, passports, and identification ca
--->rds in addition to distinguishing branded goods from counterfeits.  Our surveillance division designs and manufactures
---> sophisticated surveillance and intelligence gathering communications and forensic equipment for the law enforcement a
--->nd intelligence community as well as a state of the art training academy where the Company provides technical surveill
--->ance training to the law enforcement community.

Additional information about Nanotech can be found at the Company's website www.nanosecurity.ca, the Canadian disclosu
--->re filings website www.sedar.com or the OTCMarkets disclosure filings website www.otcmarkets.com.


# # #

              Canada Investor Relations:                U.S. Investor Relations: 
Sean Peasgood - Sophic Capital Inc.              Dave Mossberg - Three Part Advisors, LLC
sean@SophicCapital.com                              +1. 817.310.0051
+1.416.565.2805

Media Contact: 
Jackie Henry
jp@nanosecurity.ca  
+1.778.384.3384

Neither TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in policies 
of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release.


File: News Release Q1 2015 - revised final.pdf

                                                                         News Release
                                                                                                   TSXV, Tier 1: "NTS"

                                                                                                   OTCQX:        "NTSF
--->F"
                          
                                                           
                                                           
                                                           
                                                           
     
                                                   
                             Nanotech Announces First Quarter 2015 Results  
                                Security Features Driving International Revenue Growth 
     
     
    VANCOUVER,  British  Columbia  �  March  2,  2015  �  Nanotech  Security  Corp.  (TSXV:  NTS)  (OTCQX:  NTSFF), 
    ("Nanotech"  or  the  "Company")  today  released  its  financial  results  for  the  three  month  period  ended 
    December 31, 2014.   
     
    Highlights from Q1 2015 
     Security  Features  revenues  exceed  $1  million.    The  Fortress  Optical  Features  Ltd.  ("FOF")  acquisitio
--->n 
        contributed its first full quarter, which was FOF's strongest quarter since inception. 
     Received sales orders from three new customers.  Total value of these orders is in excess of $1.3 million.  
        The  improved  outlook  and  the  growing  pipeline  of  other  new  commercial  opportunities  has  prompted 
        Nanotech to increase capacity at the facility. 
     Added second shift to Thurso, Quebec facility to increase production capacity.  Integration continues to 
        ramp smoothly as pipeline expands. 
     Signed  banknote  security  feature  development  contract  with  a  prominent  issuing  authority.    The 
        contract  commenced  in  the  first  quarter  and  is  valued  at  approximately  $1,000,000  per  year  with 
        potential for renewal.   
     Granted  two  new  patents  for  advanced  security  features.    The  United  States  Patent  and  Trademark 
        Office granted one patent in nanotechnology and another in Optical Thin Film ("OTF").  Nanotech expects 
        to capitalize on the OTF patent in the immediate future. 
     
    Doug  Blakeway,  Nanotech  CEO  commented,  "I  am  extremely  pleased  with  how  the  recent  Fortress  Optical 
    acquisition  has  transformed  our  Company."    He  added,  "During  the  first  ninety  days,  major  banknote 
    customers  have  reacted  favourably  to  the  new  Nanotech,  and  we  are  excited  about  the  significant  rev
--->enue 
    opportunities  that  the  acquisition's  sales  channels  have  generated.    Nonbanknote  prospects  have  also 
    requested  samples  of  Nanotech's  portfolio  of  security  and  branding  products,  giving  us  further  confid
--->ence 
    that the acquisition was the correct strategy for the Company, and that we are executing according to plan."  
     
                                        




                                                                                                    NANOTECH   SECURIT
--->Y   CORP.  
                                                                                                    #308   2999   Unde
--->rhill   Avenue  
                                                                                                    Burnaby,  B.C.    
--->V5A   3C2  
                                                                                                    www.nanosecurity.c
--->a  
    pg. 1                                                                                           Office:  +1.604.42
--->0.0830
 Selected Financial Information 
All  results  are  reported  in  Canadian  dollars  and  are  prepared  in  accordance  with  International  Financial
---> 
Reporting Standards ("IFRS") as issued by the International Accounting Standards Board ("IASB").   
 
     
                                                                                                                      
--->                  
 
                                                                Three months ended 
                                                                  December 31,                                        
---> $                     % 
                                                              2014           2013                                    C
--->hange                Change 

Revenue                                                  $    1,541,008            $        557,319              $    
--->    983,689                 177 % 

Gross profit                                             $        531,350          $        188,049              $    
--->    343,301                 183 % 
Gross profit %                                                       34%                       34%                    
--->                              2 % 

Net loss                                                 $      (931,271)              $      (693,276)         $     
---> (237,995)                   (34) % 

Net earnings (loss) per share basic and diluted          $             (0.02)          $             (0.02)     $     
--->                                (8) % 

Net cash used in operating activities                    $   (1,119,076)               $      (584,041)         $     
---> (535,035)                   (92) % 

Weighted average number of common shares                      48,332,771                38,756,136                    
--->                  

                                                        December 31,             September 30,                    $   
--->                          % 
                                                            2014                     2014                    Change   
--->                     Change 
Total Assets                                                $  28,832,034               $  29,749,852   $      (917,81
--->8)                             (3) % 
Total long term liabilities                                 $    5,500,000              $    6,100,000   $      (600,0
--->00)                          (10) % 
Total Equity                                                $  21,284,867               $  22,027,680   $      (742,81
--->3)                             (3) % 
 
Revenues  for  the  three  months  ended  December  31,  2014  increased  by  $984,000  or  177%  to  $1,541,000 
compared  to  $557,000  in  the  same  period  last  year.    The  increased  revenues  was  a  result  of  revenue 
generated  by  the  new  Security  Features  business  unit  which  delivered  revenues  in  excess  of  $1  million 
primarily  from  the  delivery  of  Optical  Thin  Film  and  development  contracts.    The  newly  acquired  Thurso 
production  facility  achieved  its  largest  quarterly  revenues  since  the  business  was  founded  three  years  a
--->go.  
This  growth  was  partially  offset  by  a  decline  in  Surveillance  revenues  of  approximately  $61,000  as  a  n
--->umber 
of surveillance vans were delivered in January 2015 after the December 31, 2014 quarter end. 
 
The  net  loss  increased  from  $693,000  to  $931,000  which  reflected  the  increase  in  costs  related  to  the 
---> recent 
Fortress  Optical  acquisition.    This  largely  represented  an  increase  in  depreciation  and  amortization  of 
$233,000  related  to  the  machinery  and  building,  an  increase  in  share  based  compensation  of  $110,000,  an
--->d 
general  overheads,  including  salaries  and  administrative  costs,  offset  by  a  gain  on  revaluation  of  conti
--->ngent 
shares of $600,000. 
 
Corporate Update 
 
Subsequent  to  the  acquisition,  the  Company  now  operates  its  business  through  two  newly  named  business 
units  �  Security  Features  (Nanotech  and  FOF  operations)  and  Surveillance  (Tactical  Technologies  Inc. 
operations).    The  Company's  business  units  are  strategic  business  units  that  offer  different  products  an
--->d 
services.    They  are  managed  separately  because  each  business  is  in  a  different  stage  in  its  life  cycl
--->e  and 
require different sales and marketing strategies.
                                                                                                                      
--->      NANOTECH   SECURITY   CORP.  
                                                                                                                      
--->      #308   2999  Underhill  Avenue  
                                                                                                                      
--->      Burnaby,  B.C.    V5A  3C2  
                                                                                                                      
--->      www.nanosecurity.ca  
pg. 2                                                                                                                 
--->      Office: +1.604.420.0830
 Security Features 
Security  Features  provides  light  based  recognition  nanotechnology  and  OTF  for  use  in  anticounterfeiting, 
authentication  processes,  and  luxury  goods  including  currency,  legal  documents,  and  commercial  products.  
The Company conducts research at its Burnaby, BC head office, its research and production facility in Thurso, 
QC,  Canada,  and  at  4D  Labs  nanofabrication  facility,  which  is  a  Canadian  federal  government  sponsored 
facility located at Simon Fraser University in Burnaby. 
The  nanotechnology  employs  arrays  of  billions  of  nanoholes  that  are  impressed  or  embossed  onto  a 
substrate  material  such  as  polymer  or  metal.   These  arrays  yield  unique  light  signatures  (visual  images)
--->  that 
cannot  be  easily  reproduced  by  a  third  party  without  access  to  the  technology  and  sophisticated  equipme
--->nt 
needed  to  create  the  arrays.    These  optical  features  can  be  directly  applied  to  products  creating  uniq
--->ue 
optical  signatures  that  are  both  overt  (nakedeyevisible)  and  covert  (readable  only  by  machine).    These 
features  are  being  designed  to  be  suitable  for  a  variety  of  commercial  security  and  authentication 
applications and branding formats.   
Surveillance 
Surveillance  designs  and  sells  a  wide  range  of  sophisticated  surveillance  and  intelligence  gathering 
equipment  and  conducts  surveillance  training  for  the  law  enforcement  and  defense  industries  in  the  Unite
--->d 
States  and  Canada.   Surveillance  conducts  its  research,  production  and  training  at  its  facility  in  Holme
--->s,  PA, 
USA. 
During  the  quarter,  the  Surveillance  segment  continued  to  build  and  outfit  surveillance  vans  for  underco
--->ver 
operations and delivered accredited classes in electronic surveillance. 
 
Outlook 
 

The  Company  completed  the  three  months  ended  December  31,  2014  with  approximately  $2.7  million  in 
cash and cash equivalents.  Subsequent to the quarter the Company collected a further $540,000 through the 
exercise of warrants that were expiring in February 2015.   
With  the  acquisition  of  FOF  in  September  2014,  the  Security  Features  business  has  become  an  increasingl
--->y 
significant  component  of  the  revenue  of  Nanotech.   Sales  of  OTF  and  development  projects  were  strong  in
---> 
the  first  quarter,  and  the  Company  is  well  positioned  to  continue  increasing  the  business  in  the  secon
--->d 
quarter. 
The  improved  outlook  and  the  growing  pipeline  of  other  new  commercial  opportunities  has  prompted 
Nanotech  to  increase  capacity  at  its  production  facility.   During  the  quarter  the  Company  delivered  in  
--->excess 
of  100,000m2  of  OTF,  surpassing  the  average  total  annual  volumes  prior  to  the  acquisition.   The  additio
--->n  of 
the  second  shift,  combined  with  completing  some  minor  equipment  upgrades  occurring  in  the  next  few 
months  will  increase  the  production  capacity  to  1,000,000m2,  with  the  capability  to  expand  to  over 
2,000,000m2  through  additional  shifts,  and  expand  capacity  beyond  that,  through  partnerships,  or  further 
capital investment. 
Nanotech  recently  announced  that  it  has  signed  a  contract  with  an  issuing  authority  of  a  prominent  cou
--->ntry 
to  develop  a  unique,  opticallyvariable,  security  feature  to  be  incorporated  into  various  denominations  of
---> 
polymer,  paperbased,  and  composite  banknotes  and  security  documents.   The  contract  commenced  in  the 
first  quarter  and  is  valued  at  approximately  $1,000,000  per  year  with  a  potential  one  year  renewal  opt
--->ion.  
Upon  completion  of  this  project,  Nanotech's  new  technology  will  increase  security  confidence  beyond 
current, legacy, options available in the market. 
 

                                                                                                      NANOTECH   SECUR
--->ITY   CORP.  
                                                                                                      #308   2999  Und
--->erhill  Avenue  
                                                                                                      Burnaby,  B.C.  
--->  V5A  3C2  
                                                                                                      www.nanosecurity
--->.ca  
pg. 3                                                                                                 Office: +1.604.4
--->20.0830
 Nanotech Security Corp.
Consolidated Statements of Operations and Comprehensive Loss
(Unaudited)

Three months ended December 31, 2014 and 2013
(In Canadian dollars)

                                                                       2014                2013

Revenue                                                        $ 1,541,008        $    557,319
Cost of sales                                                    1,009,658             369,270
                                                                   531,350             188,049

Expenses
  Research and development                                           847,696           409,985
  General and administration                                         933,905           343,134
  Sales and marketing                                                273,022           127,303
                                                                   2,054,623           880,422

Loss before other expenses (income)                             (1,523,273)           (692,373)

Other expenses (income)
Foreign exchange (gain) loss                                         (26,810)           10,775
Finance expense                                                       34,808            (1,027)
Gain on revaluation of contingent shares                            (600,000)                 -
Gain on sale of fixed asset                                                -            (8,845)
                                                                    (592,002)              903

Net loss                                                            (931,271)         (693,276)

Unrealized foreign exchange gain (loss)
   on translation of foreign operation                               (23,388)           27,467
Total comprehensive loss for the period                        $ (954,659)       $    (665,809)



Loss per share
  Basic and diluted                                            $       (0.02)    $         (0.02)

Weighted average number of common shares
  Basic and diluted                                            48,332,771          38,756,136
 
                                 




                                                                           NANOTECH   SECURITY   CORP.  
                                                                           #308   2999  Underhill  Avenue  
                                                                           Burnaby,  B.C.    V5A  3C2  
                                                                           www.nanosecurity.ca  
pg. 4                                                                      Office: +1.604.420.0830
  
Nanotech Security Corp.
Consolidated Statements of Financial Position
(Unaudited)

(In Canadian dollars)

                                                December 31,       September 30,
                                                   2014                   2014

Assets
Current assets:
   Cash and cash equivalents                     $ 2,685,418         $ 3,964,645
   Accounts receivable                             1,361,304             526,410
   Inventory                                         545,387             598,526
   Prepaid expenses and other assets                 137,586             188,858
                                                   4,729,695           5,278,439

    Property, plant and equipment                  18,966,747          18,995,321
    Intangible assets                               3,747,134           4,087,634
    Goodwill                                        1,388,458           1,388,458
                                                 $ 28,832,034        $ 29,749,852

Liabilities and shareholders' equity
Current liabilities:
   Accounts payable and accrued liabilities      $ 2,022,167         $ 1,597,172
   Deferred revenue                                   25,000              25,000
                                                   2,047,167           1,622,172

Long term liabilities:
   Note payable                                     3,000,000            3,000,000
   Contingent consideration shares                  2,500,000            3,100,000
                                                    7,547,167            7,722,172

Shareholders' equity
  Share capital                                    39,631,316          39,557,066
  Share based payment reserve                       1,281,166           1,143,570
  Deficit                                         (19,549,678)        (18,618,407)
  Accumulated other comprehensive income              (77,937)            (54,549)
                                                   21,284,867          22,027,680
                                                 $ 28,832,034        $ 29,749,852
 
 
 
                                     




                                                               NANOTECH   SECURITY   CORP.  
                                                               #308   2999  Underhill  Avenue  
                                                               Burnaby,  B.C.    V5A  3C2  
                                                               www.nanosecurity.ca  
pg. 5                                                          Office: +1.604.420.0830
 Nanotech Security Corp.
Consolidated Statements of Cash Flows
(Unaudited)

Three months ended December 31, 2014 and 2013
(In Canadian dollars)

                                                                                                   2014               
---> 2013

Operating activities:
  Net loss                                                                                $ (931,271)       $    (693,
--->276)
  Items not involving cash:
     Depreciation and amortization                                                             580,087            346,
--->751
     Share based compensation                                                                  137,596             27,
--->946
     Gain on revaluation of contingent shares                                                 (600,000)               
--->   -
     Gain on sale of asset                                                                            -            (8,
--->845)
     Non-cash working capital changes                                                         (305,488)          (256,
--->617)
Cash used in operating activities                                                           (1,119,076)          (584,
--->041)

Investing activities:
      Purchase of property and equipment, net of disposals                                    (206,292)              9
--->,491
Cash used in investing activities                                                             (206,292)              9
--->,491

Financing activities:
     Issuance of shares for warrants exercised                                                  74,250                
--->      -
Cash provided by financing activities                                                           74,250                
--->      -

Effect of foreign exchange on cash and cash equivalents                                        (28,109)             26
--->,027

Decrease in cash and cash equivalents                                                       (1,279,227)          (548,
--->523)

Cash and cash equivalents, beginning of period                                               3,964,645          4,155,
--->811

Cash and cash equivalents, end of period                                                 $ 2,685,418        $ 3,607,28
--->8
 
 
 
 
FORWARDLOOKING STATEMENTS 
 
The  discussion  and  analysis  in  this  news  release  contains  forwardlooking  statements  concerning  anticipated
---> 
developments in our operations in future periods, the adequacy of our financial resources, and the events or 
condition  that  may  occur  in  the  future.    Forwardlooking  statements  are  frequently,  but  not  always, 
identified  by  words  such  as  "expects",  "anticipates",  "believes",  "intends",  "estimates",  "predicts", 
"potential",  "targeted"  "plans",  "possible"  and  similar  expressions,  or  statements  that  events,  conditions 
---> or 
results "will", "may", "could" or "should" occur or be achieved.   
 
These  forwardlooking  statements  include,  without  limitation,  statements  about  our  market  opportunities, 
strategies,  competition,  and  the  Company's  views  that  its  nanooptical  and  optical  thin  film  technologies 
---> will 
continue  to  show  promise  for  mass  production  and  commercial  application.    Other  forwardlooking 
statements  imply  that  the  Company  will  remain  capable  of  being  financed  and/or  will  be  able  to  partner
---> 
development  until  commercial  sales  are  eventually  realized.    The  principal  risks  related  to  these  forwar
--->d
looking  statements  are  that  the  Company's  intellectual  property  claims  will  not  prove  sufficiently  broad 
---> or 
                                                                                                    NANOTECH   SECURIT
--->Y   CORP.  
                                                                                                    #308   2999  Under
--->hill  Avenue  
                                                                                                    Burnaby,  B.C.    
--->V5A  3C2  
                                                                                                    www.nanosecurity.c
--->a  
pg. 6                                                                                               Office: +1.604.420
--->.0830
 enforceable  to  provide  the  necessary  commercial  protection  and  to  attract  the  necessary  capital  and/or  
--->that 
the Company's products will not be able to displace entrenched hologram, metalized strip tagging, and other 
conventional anticounterfeiting technologies sufficiently to allow for profitability. 
 
Our  forwardlooking  statements  are  based  on  the  beliefs,  expectations  and  opinions  of  management  on  the 
date  the  statements  are  made.    Consequently,  all  forwardlooking  statements  made  in  this  discussion  and 
analysis of the financial conditions and results of operations or the documents incorporated by reference are 
qualified  by  this  cautionary  statement  and  there  can  be  no  assurance  that  actual  results  or  development
--->s 
anticipated  will  be  realized.    For  additional  information  with  respect  to  certain  of  these  risks  or  fa
--->ctors 
reference  should  be  made  to  the  "Business  Risks  and  Uncertainties"  section  of  the  MD&A  and  notes  to  t
--->he 
consolidated  financial  statements,  as  well  as  with  the  Company's  continuous  disclosure  materials  filed  fr
--->om 
time  to  time  with  Canadian  securities  regulatory  authorities,  which  are  available  online  at  www.sedar.com
--->.  
Nanotech  disclaims  any  intention  or  obligation  to  update  or  revise  any  forwardlooking  statements,  whether
---> 
as  a  result  of  new  information,  future  events  or  otherwise,  other  than  as  required  by  law,  rule  or  r
--->egulation.  
You should not place undue reliance on forwardlooking statements. 
 
About Nanotech Security 
Through  its  security  and  surveillance  divisions,  Nanotech  Security  Corp.  has  been  a  leading  innovator  in
--->  the 
design  and  production  of  advanced  security  products  and  surveillance  solutions  for  a  number  of  years.  
Nanotech's  KolourOptikTM  and  PlasmogramTM  products  are  nanotechnology  based  product  platforms 
originally inspired by the  unique optical properties of the iridescent wings of the Blue Morpho butterfly.  Our 
security products produce intense, high definition opticallyvariable images and colourshift optical thin films.  
Activated  by  a  simple  tilt  or  rotation,  with  higher  resolutions  than  the  best  LEDdisplays,  they  are  id
--->eal  for 
authentication  of  currency,  passports,  and  identification  cards  in  addition  to  distinguishing  branded  good
--->s 
from  counterfeits.   Our  surveillance  division  designs  and  manufactures  sophisticated  surveillance  and 
intelligence  gathering  communications  and  forensic  equipment  for  the  law  enforcement  and  intelligence 
community as well as a state of the art training academy where the Company  provides technical surveillance 
training to the law enforcement community. 
 
Additional  information  about  Nanotech  can  be  found  at  the  Company's  website  www.nanosecurity.ca,  the 
Canadian  disclosure  filings  website  www.sedar.com  or  the  OTCMarkets  disclosure  filings  website 
www.otcmarkets.com. 
                                                                 

                                                             # # # 
 
              Canada Investor Relations:                                    U.S. Investor Relations:  
              Sean Peasgood � Sophic Capital Inc.                           Dave Mossberg  Three Part Advisors, LLC 
              sean@SophicCapital.com                                        +1. 817.310.0051 
              +1.416.565.2805 
                   
                                                    Media Contact:  
                                                    Jackie Henry 
                                                    jp@nanosecurity.ca   
                                                    +1.778.384.3384 
                   
         Neither TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in policies  
            of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release. 


                                                                                                        NANOTECH   SEC
--->URITY   CORP.  
                                                                                                        #308   2999  U
--->nderhill  Avenue  
                                                                                                        Burnaby,  B.C.
--->    V5A  3C2  
                                                                                                        www.nanosecuri
--->ty.ca  
pg. 7                                                                                                   Office: +1.604
--->.420.0830
 


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