BURNABY, BRITISH COLUMBIA--(Marketwired - Aug. 26, 2013) - LED Medical Diagnostics Inc. (TSX VENTURE:LMD)(OTCQX:LEDIF)(FRANKFURT:LME) ("LED" or the "Company") today announced its financial results for the second quarter ended June 30, 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 three months ended March 31, 2013 and June 30, 2012 (which have been restated due to the Company's transition to United States dollar ("U.S.") functional and reporting currency and for the revision of its revenue recognition policy pertaining to sales made to Henry Schein Inc.), also in accordance with IFRS all balances are expressed in U.S. dollars unless otherwise stated.
Financial Highlights
- Revenue increased by 4% to $1,083,000 for the three months ended June 30, 2013 compared to $1,038,000 over the same period in the prior year.
- EBITDA1 for three months ended June 30, 2013 of ($104,000) compared to the same period in the prior year of approximately ($495,000).
"I am pleased to report encouraging results from the second quarter of 2013. Our revenues were up considerably from the first quarter. In fact, the Company came very close to breaking even," stated Peter Whitehead, LED Founder and Chief Executive Officer. "At this stage of our development a neutral quarter can be seen as a positive result, and as confirmation that the infrastructure we've laid out for our internal sales force is beginning to show results. Demand for the VELscope Vx remains strong, and I am optimistic that between now and the end of the year our sales momentum will continue to improve."
Three Month Comparative Results
For the three months ended June 30, 2013, the Company reported revenues of approximately $1,083,000 which is higher than the approximately $310,000 for three months ended March 31, 2013 and approximately $1,038,000 for the three months ended June 30, 2012.
Gross margin2 was 59% during the three months ended June 30, 2013, compared to the three months ended March 31, 2013 of 53% and to 54% during the three months ended June 30, 2012. The Company's margin varies depending on the mix of VELscope equipment versus disposables sales for any given period.
Core operating expenses (excluding stock-based compensation, deferred share unit compensation, mark to market adjustments on Canadian dollar denominated warrants and other operating expenses)3 for the three months ended June 30, 2013 of approximately $740,000 were 8% lower than the three months ended March 31, 2013 and 30% lower than the three months ended June 30, 2012.
EBITDA1 for the three months ended June 30, 2013 was approximately ($104,000) compared to approximately ($638,000) for the three months ended March 31, 2013 and ($495,000) for the three months ended June 30, 2012. The Company reported a net loss of approximately $2.2 million for the three months ended June 30, 2013 compared to a net loss of approximately $1.33 million for the three months ended March 31, 2013 and $195,000 for the three months ended June 30, 2012.
Six Month Comparative Results
For the six months ended June 30, 2013, the Company reported revenues of approximately $1.4 million which is lower than the approximately $2.0 million for the six months ended June 30, 2012.
Gross margin2 was 57% during the six months ended June 30, 2013 compared to the six months ended June 30, 2012 of 49%.
Core operating expenses (excluding stock-based compensation, deferred share unit compensation, mark to market adjustments on Canadian dollar denominated warrants and other operating expenses)3 for the six months ended June 30, 2013 of approximately $1.5 million were lower than the six months ended June 30, 2012 of $2.5 million.
EBITDA1 for the six months ended June 30, 2013 was approximately ($742,000) compared to approximately ($1.5 million) for the six months ended June 30, 2012. The Company reported a net loss of approximately $3.5 million for the six months ended June 30, 2013 compared to a net loss of approximately $1.4 million for the six months ended June 30, 2012.
Cash was approximately $1,718,000 with net working capital4 of approximately $972,000 million as of June 30, 2013 compared to cash of approximately $607,000 with negative net working capital4 of approximately $1,109,000 as of March 31, 2013.
1 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 operating loss and excludes amortization, depreciation, stock-based compensation, deferred share unit compensation and mark to market adjustments on Canadian dollar denominated warrants. Please refer to the reconciliation of EBITDA to reported financial results attached to this press release.
2 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.
3 Non-IFRS measure that does not have a standard meaning and may not be comparable to a similar measure disclosed by other issuers. Core operating expenses excludes stock-based compensation, deferred share unit compensation, mark to market adjustments on Canadian dollar denominated warrants and other operation expenses.
4 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.
Business Highlights
Notable developments and achievements during the first quarter of fiscal 2013 included the following:
- On April 24, 2013, the Company announced the results of an independent study published in "Oral Surgery, Oral Medicine, Oral Pathology, Oral Radiology" (Vol. 114 No. 3) that confirms the use of quantitative cytology ("QC") testing, as an adjunctive tool, successfully identifying high-risk potentially malignant disorders of the oral mucosa.
- On May 7, 2013, the Company cited a recent clinical study documenting the ability of its VELscope® Vx Enhanced Oral Assessment adjunctive technology to detect cancerous and pre-cancerous lesions that are missed by conventional exams.
- On June 10, 2013, the Company announced that its patented VELscope® Vx oral examination device is currently involved in a Phase III study sponsored by the University of British Columbia in collaboration with the Terry Fox Research Institute and the British Columbia Cancer Agency.
- On June 14, 2013, the Company completed a non-brokered private placement of 17,000,000 units at an issue price of $0.15 per unit for gross proceeds of $2.55 million.
The Audit Committee of the Company has reviewed the contents of this news release.
Non-GAAP Measures
The following and preceding discussion of financial results includes reference to Gross Margin, EBITDA, Core Operating Expenses and Working Capital, which are all non-IFRS financial measures. The measure of gross margin is provided as management believes this is a good indicator in evaluation the operating performance of the Company. EBITDA is defined as operating loss less other operating expenses. The measure is provided as a proxy for the cash earnings from the operations of the business as operating loss for the Company includes non-cash amortization and depreciation expense. The measure of core operating expenses is provided as a proxy for cash expenses incurred from the operations of the business. The measure of working capital is provided as management believes this is a good indicator of the operating liquidity available to the Company.
Change in Functional and Reporting Currency
The Company has changed the functional currency of the parent company entity from Canadian dollar to United States dollar as of January 1, 2012 to reflect the transition from an entity with some operations to a holding company for the group companies upon the completion of the reverse takeover ("RTO") in November 2011. This change was effected prospectively from January 1, 2012 onwards.
The Company also changed their reporting currency on December 31, 2012 from Canadian dollars to U.S. dollars given LED's listing on the OTC stock exchange in the United States and on the Frankfurt Stock Exchange in early 2013 reflective of LED becoming a global Company. This change also results in increased comparability for LED to other global technology companies.
Revision to Revenue Recognition Policy
The Company also revised its prior revenue recognition policy pertaining to the sales of its product in fiscal 2011 and 2012 to Henry Schein from "sell to this distributor" to "sell through this distributor to their end customers". While legal title with the risks and rewards of ownership is transferred to Henry Schein as at the date at which the Company's products are sold to this distributor, the participation by the Company in the provision to this distributor of special market development pricing adjustments pertaining to LED product to increase overall market share of the Company results in the Company not being able to reasonably estimate such marketing oriented expenses at the time of sale and shipment to Henry Schein resulting in the required deferral of revenue recognition until all such marketing oriented expenses are fully determinable. There is no such issue in the Company's distribution arrangement with Denmat resulting in the Company recognizing revenue at the time of sale and shipment to Denmat. As a result, the financial results for prior periods have been restated.
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 Corporation's future plans, objectives, performance, revenues, growth, profits, operating expenses or the Corporation's underlying assumptions and the Company's intention to expand its technology beyond dental applications. The words "may", "would", "could", "will", "likely", "expect", "anticipate", "intend", "plan", "forecast", "project", "estimate" and "believe" or other similar words and phrases may identify forward-looking statements or information. Persons reading this Management's Discussion and Analysis are cautioned that such statements or information are only predictions, and that the Corporation'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; volatility of stock price; 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 Corporation's products and services; customer and industry analyst perception of the Corporation 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 Corporation 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 Corporation's reports filed on SEDAR, including its financial statements and management's discussion and analysis for the year ended December 31, 2012 and three months ended March 31, 2013. In drawing a conclusion or making a forecast or projection set out in the forward-looking information, the Corporation takes into account the following material factors and assumptions in addition to the above factors: the Corporation's ability to execute on its business plan; the acceptance of the Corporation's products and services by its customers; the timing of execution of outstanding or potential customer contracts by the Corporation; the sales opportunities available to the Corporation; the Corporation's subjective assessment of the likelihood of success of a sales lead or opportunity; the Corporation's historic ability to generate sales leads or opportunities; and that sales will be completed at or above the Corporation's estimated margins. This list is not exhaustive of the factors that may affect the Corporation'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 press release are qualified by this cautionary statement and there can be no assurance that actual results or developments anticipated by the Corporation will be realized. The Corporation 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. Through its wholly-owned subsidiary, LED Dental Inc., the company manufactures the VELscope® Vx Enhanced Oral Assessment System, the first system in the world to apply tissue fluorescence visualization technology to the oral cavity. VELscope® Vx devices are now used to conduct more screenings for oral cancer and other oral tissue abnormalities than any other adjunctive device. For more information, visit www.leddental.com.
LED MEDICAL DIAGNOSTICS INC.
Interim Condensed Consolidated Statements of Financial Position
(Unaudited and Expressed in U.S. Dollars)
| |
As at
June 30, 2013 |
As at
December 31,
2012 |
| |
|
|
| ASSETS |
|
|
| CURRENT |
|
|
| |
Cash |
$1,718,435 |
$969,584 |
| |
Restricted cash |
4,754 |
5,026 |
| |
Receivables |
940,698 |
1,514,577 |
| |
Inventory |
343,783 |
296,467 |
| |
Inventory held by the distributor |
386,400 |
518,400 |
| |
Prepayments |
57,802 |
69,300 |
| |
3,451,872 |
3,373,354 |
| PROPERTY AND EQUIPMENT |
22,828 |
28,015 |
| PATENTS AND INTELLECTUAL PROPERTY |
75,265 |
88,167 |
| |
|
|
| |
$3,549,965 |
$3,489,536 |
| |
|
|
| LIABILITIES AND SHAREHOLDERS' DEFICIT |
|
|
| CURRENT LIABILITIES |
|
|
| |
Trades payable and accrued liabilities |
$1,574,424 |
$1,689,009 |
| |
Advances from the distributor |
901,948 |
1,778,112 |
| |
Current portion of finance lease obligation |
3,317 |
2,982 |
| |
2,479,689 |
3,470,103 |
| LONG TERM LIABILITIES |
|
|
| |
Long term portion of finance lease obligation |
5,133 |
6,879 |
| |
Warrants |
2,283,899 |
140,467 |
| |
4,768,721 |
3,617,449 |
| |
|
|
| SHAREHOLDERS' DEFICIT |
|
|
| |
Share capital |
26,516,415 |
24,658,241 |
| |
Stock-based payments reserve |
614,288 |
62,495 |
| |
Warrants reserve |
311,851 |
277,748 |
| |
Accumulated other comprehensive income |
474,458 |
474,458 |
| |
Deficit |
(29,135,768) |
(25,600,855) |
| |
|
|
| |
(1,218,756) |
(127,913) |
| |
|
|
| |
$3,549,965 |
$3,489,536 |
LED MEDICAL DIAGNOSTICS INC.
Interim Condensed Consolidated Statements of Operations and Comprehensive Loss
(Unaudited and Expressed in U.S. Dollars)
For the |
Three months
ended
June 30, 2013 |
Three months
ended June 30,
2012 (Restated) |
Six months
ended
June 30, 2013 |
Six months
ended June 30,
2012 (Restated) |
| |
|
|
|
|
| SALES |
$1,082,883 |
$1,037,788 |
$1,392,473 |
$2,036,926 |
| COST OF GOODS SOLD |
446,509 |
473,343 |
592,875 |
1,035,764 |
| |
636,374 |
564,445 |
799,598 |
1,001,162 |
| |
|
|
|
|
| EXPENSES |
|
|
|
|
| |
Sales and marketing |
327,299 |
667,526 |
659,335 |
1,550,841 |
| |
Research and development |
110,794 |
141,158 |
200,551 |
315,145 |
| |
Administration |
302,145 |
250,588 |
681,873 |
591,061 |
| |
Stock-based compensation |
200,462 |
- |
551,793 |
- |
| |
Deferred share unit compensation |
27,850 |
- |
315,431 |
- |
| |
Mark to market adjustments on Canadian dollar denominated warrants |
1,795,163 |
(296,493) |
1,756,934 |
(81,293) |
| |
Other operating expenses |
43,743 |
13,105 |
53,383 |
30,378 |
| |
|
|
|
|
| |
2,807,456 |
775,884 |
4,219,300 |
2,406,132 |
| |
|
|
|
|
| OPERATING LOSS |
(2,171,082) |
(211,439) |
(3,419,702) |
(1,404,970) |
| |
|
|
|
|
| OTHER INCOME (EXPENSES) |
|
|
|
|
| |
Foreign exchange (loss) gain |
(28,615) |
17,182 |
(111,071) |
(43,126) |
| |
Interest income |
- |
- |
- |
287 |
| |
Loss on disposal of assets |
- |
(702) |
- |
(702) |
| |
Miscellaneous income |
- |
373 |
- |
2,475 |
| |
(28,615) |
16,853 |
(111,071) |
(41,066) |
| |
|
|
|
|
| NET LOSS BEFORE INCOME TAXES |
(2,199,697) |
(194,586) |
(3,530,773) |
(1,446,036) |
| |
|
|
|
|
| INCOME TAXES |
1,442 |
- |
4,140 |
- |
| |
|
|
|
|
| NET LOSS AND COMPREHENSIVE LOSS FOR THE PERIOD |
($2,201,139) |
($194,586) |
($3,534,913) |
($1,446,036) |
| |
|
|
|
|
| LOSS PER SHARE - BASIC AND FULLY DILUTED |
($0.05) |
($0.01) |
($0.08) |
($0.04) |
| |
|
|
|
|
| WEIGHTED AVERAGE NUMBER OF SHARES OUTSTANDING - BASIC AND FULLY DILUTED |
44,161,332 |
36,335,508 |
42,582,193 |
36,335,508 |
LED MEDICAL DIAGNOSTICS INC.
Interim Condensed Consolidated Statements of EBITDA and Loss
(Expressed in U.S. Dollars)
For the |
Three months
ended
June 30, 2013 |
Three months
ended June 30,
2012 (Restated) |
Six months
ended
June 30, 2013 |
Six months
ended June 30,
2012 (Restated) |
| |
|
|
|
|
| SALES |
$1,082,883 |
$1,037,788 |
$1,392,473 |
$2,036,926 |
| COST OF GOODS SOLD |
446,509 |
473,343 |
592,875 |
1,035,764 |
| |
636,374 |
564,445 |
799,598 |
1,001,162 |
| |
|
|
|
|
| EXPENSES |
|
|
|
|
| |
Sales and marketing |
327,299 |
667,526 |
659,335 |
1,550,841 |
| |
Research and development |
110,794 |
141,158 |
200,551 |
315,145 |
| |
Administration |
302,145 |
250,588 |
681,873 |
591,061 |
| |
740,238 |
1,059,272 |
1,541,759 |
2,457,047 |
| EBITDA |
(103,864) |
(494,827) |
(742,161) |
(1,455,885) |
| |
|
|
|
|
| OTHER INCOME (EXPENSES) |
|
|
|
|
| |
Stock-based compensation |
(200,462) |
- |
(551,793) |
- |
| |
Deferred share unit compensation |
(27,850) |
- |
(315,431) |
- |
| |
Mark to market adjustments on Canadian dollar denominated warrants |
(1,795,163) |
296,493 |
(1,756,934) |
81,293 |
| |
Other operating expenses |
(43,743) |
(13,105) |
(53,383) |
(30,378) |
| |
Foreign exchange gain (loss) |
(28,615) |
17,182 |
(111,071) |
(43,126) |
| |
Interest income |
- |
- |
- |
287 |
| |
Loss on disposal of assets |
- |
(702) |
- |
(702) |
| |
Miscellaneous income |
- |
373 |
- |
2,475 |
| |
(2,095,833) |
300,241 |
(2,788,612) |
9,849 |
| |
|
|
|
|
| NET LOSS BEFORE INCOME TAXES |
(2,199,697) |
(194,586) |
(3,530,773) |
(1,446,036) |
| |
|
|
|
|
| INCOME TAXES |
1,442 |
- |
4,140 |
- |
| |
|
|
|
|
| NET LOSS FOR THE PERIOD UNDER IFRS |
($2,201,139) |
($194,586) |
($3,534,913) |
($1,446,036) |
LED MEDICAL DIAGNOSTICS INC.
Interim Condensed Consolidated Statements of Changes in Shareholders' Deficit
(Unaudited and Expressed in U.S. Dollars)
| |
Number
of
Shares |
Share
Capital |
Stock-
based
Payments
Reserves |
Warrants
Reserve |
Deficit |
Other
Compre-
hensive
Income |
Total
Share-
holders'
Deficit |
| |
|
|
|
|
|
|
|
| Balance, January 1, 2013 |
40,985,508 |
$24,658,241 |
$62,495 |
$277,748 |
($25,600,855) |
$474,458 |
($127,913) |
| Stock-based compensation |
- |
- |
351,331 |
- |
- |
- |
351,331 |
| Net loss for the period |
- |
- |
- |
- |
(1,333,774) |
- |
(1,333,774) |
| Balance, March 31, 2013 |
40,985,508 |
$24,658,241 |
$413,826 |
$277,748 |
($26,934,629) |
$474,458 |
($1,110,356) |
| Shares issued for cash |
17,000,000 |
2,507,621 |
- |
- |
- |
- |
2,507,621 |
| Less allocated to share purchase warrants |
- |
(386,497) |
- |
- |
- |
- |
(386,497) |
| Share issuance costs |
- |
(262,950) |
- |
- |
- |
- |
(262,950) |
| Finder's warrants issued pursuant to private placement |
- |
- |
- |
34,103 |
- |
- |
34,103 |
| Stock-based compensation |
- |
- |
200,462 |
- |
- |
- |
200,462 |
| Net loss for the period |
- |
- |
- |
- |
(2,201,139) |
- |
(2,201,139) |
| Balance, June 30, 2013 |
57,985,508 |
$26,516,415 |
$614,288 |
$311,851 |
($29,135,768) |
$474,458 |
($1,218,756) |
| |
|
|
|
|
|
|
|
| Balance, January 1, 2012 (Restated) |
36,335,508 |
$23,713,352 |
$62,495 |
$277,748 |
($24,733,922) |
$474,458 |
($205,869) |
| Net loss for the period |
- |
- |
- |
- |
(1,251,450) |
- |
(1,251,450) |
| Reclassification of warrants |
- |
(136,624) |
- |
- |
- |
- |
(136,624) |
| Balance, March 31, 2012 (Restated) |
36,335,508 |
$23,576,728 |
$62,495 |
$277,748 |
($25,985,372) |
474,458 |
($1,593,943) |
| Net loss for the period |
- |
- |
- |
- |
(194,586) |
- |
(194,586) |
| Balance, June 30, 2012 (Restated) |
36,335,508 |
$23,576,728 |
$62,495 |
$277,748 |
($26,179,958) |
$474,458 |
($1,788,529) |
LED MEDICAL DIAGNOSTICS INC.
Interim Condensed Consolidated Statements of Cash Flows
(Unaudited and Expressed in U.S. Dollars)
For the |
Three months
ended
June 30, 2013 |
Three months
ended June 30,
2012 (Restated) |
Six months
ended
June 30, 2013 |
Six months
ended June 30,
2012 (Restated) |
| |
|
|
|
|
| CASH FLOWS FROM OPERATING ACTIVITIES |
|
|
|
|
| |
Net loss for the period |
($2,201,139) |
($194,586) |
($3,534,913) |
($1,446,036) |
| |
|
|
|
|
| Adjustments to net loss for items not involving cash: |
|
|
|
|
| |
Depreciation of equipment |
3,189 |
6,654 |
6,378 |
17,476 |
| |
Amortization of intangible assets |
6,451 |
6,451 |
12,902 |
12,902 |
| |
Warrants issuance costs |
34,103 |
- |
34,103 |
- |
| |
Loss on disposal of assets |
- |
702 |
- |
702 |
| |
Accrued interest on shareholder loans |
- |
- |
- |
2,583 |
| |
Mark to market adjustments on Canadian dollar denominated warrants |
1,795,163 |
(296,493) |
1,756,935 |
(81,293) |
| |
Stock-based compensation |
200,462 |
- |
551,793 |
- |
| |
(161,771) |
(477,272) |
(1,172,802) |
(1,493,666) |
| Changes in working capital assets and liabilities: |
|
|
|
|
| |
Receivables |
(667,340) |
(938,471) |
573,879 |
(750,580) |
| |
Inventory |
72,667 |
(37,875) |
(47,316) |
290,600 |
| |
Inventory held by distributor |
132,000 |
(195,000) |
132,000 |
(436,247) |
| |
Prepayments |
11,519 |
8,562 |
11,498 |
(29,617) |
| |
Trades payable and accrued liabilities |
(58,132) |
737,752 |
(114,585) |
665,936 |
| |
Advances from the distributor |
(460,342) |
736,170 |
(876,164) |
1,635,441 |
| |
Changes in working capital assets and liabilities |
(969,628) |
311,138 |
(320,688) |
1,375,533 |
| |
|
|
|
|
| Cash flows used in operating activities |
(1,131,399) |
(166,134) |
(1,493,490) |
(118,133) |
| |
|
|
|
|
| CASH FLOWS FROM INVESTING ACTIVITIES |
|
|
|
|
| |
Purchase of equipment |
(1,191) |
- |
(1,191) |
(16,758) |
| |
Restricted cash |
167 |
101 |
272 |
19,670 |
| |
Cash flows provided by (used in) investing activities |
(1,024) |
101 |
(919) |
2,912 |
| |
|
|
|
|
| CASH FLOWS FROM FINANCING ACTIVITIES |
|
|
|
|
| |
Issuance of common shares, net of issuance costs |
1,858,174 |
- |
1,858,174 |
- |
| |
Issuance of share purchase warrants in private placement |
386,497 |
- |
386,497 |
- |
| |
Repayment of finance lease obligation |
(723) |
(584) |
(1,411) |
(1,143) |
| |
Repayment of shareholder loans |
- |
- |
- |
(105,379) |
| Cash flows provided by (used in) financing activities |
2,243,948 |
(584) |
2,243,260 |
(106,522) |
| |
|
|
|
|
| CHANGE IN CASH AND CASH EQUIVALENTS |
1,111,525 |
(166,617) |
748,851 |
(221,743) |
| CASH - BEGINNING OF PERIOD |
606,910 |
920,646 |
969,584 |
975,772 |
| CASH - END OF PERIOD |
$1,718,435 |
$754,029 |
$1,718,435 |
$754,029 |
Restatement
In the preparation of the Company's consolidated financial statements for the year ended December 31, 2012, management identified historical errors as follows:
- the functional currency of its subsidiary, LED Dental Inc. should have been U.S. dollars rather than Canadian dollars from June 1, 2006;
- the functional currency of LED, should have been U.S. dollars rather than Canadian dollars from January 1, 2012; and,
- revenue recognition for a distributor's agreement which had previously been recognized upon shipment to the distributor has been corrected to be recognized upon sell through to the end customer.
As a result, the Company has restated its consolidated financial statements for the three and six months ended June 30, 2012.
The following table summarizes the impact of the restatement adjustments on the Company's previously reported consolidated financial statements for the three months ended June 30, 2012:
| |
As reported |
Correcting
adjustment |
As restated |
| Consolidated statements of loss and comprehensive loss |
|
|
|
| Sales |
$1,773,958 |
($736,170) |
$1,037,788 |
| Cost of goods sold |
668,343 |
(195,000) |
473,343 |
| Depreciation and amortization |
13,147 |
(42) |
13,105 |
| Mark to market adjustments on Canadian dollar denominated warrants |
- |
(296,493) |
(296,493) |
| Foreign exchange gain (loss) |
9,645 |
7,537 |
17,182 |
| Net and comprehensive income (loss) for the period |
42,540 |
(237,126) |
(194,586) |
| Loss per share - basic and diluted |
$0.00 |
($0.01) |
($0.01) |
| |
|
|
|
| Consolidated statements of shareholders' deficit |
|
|
|
| Deficit, beginning of period |
($23,730,035) |
($2,255,337) |
($25,985,372) |
| Deficit, end of period |
($23,687,495) |
($2,492,463) |
($26,179,958) |
The following table summarizes the impact of the restatement adjustments on the Company's previously reported consolidated financial statements for the six months ended June 30, 2012:
| |
As reported |
Correcting
adjustment |
As restated |
| Consolidated statements of loss and comprehensive loss |
|
|
|
| Sales |
$3,601,122 |
($1,564,196) |
$2,036,926 |
| Cost of goods sold |
1,449,164 |
(413,400) |
1,035,764 |
| Depreciation and amortization |
30,561 |
(183) |
30,378 |
| Mark to market adjustments on Canadian dollar denominated warrants |
- |
(81,293) |
(81,293) |
| Foreign exchange gain (loss) |
(11,111) |
(32,015) |
(43,126) |
| Net and comprehensive loss for the period |
(344,673) |
(1,101,363) |
(1,446,036) |
| Loss per share - basic and diluted |
($0.01) |
($0.03) |
($0.04) |
| |
|
|
|
| Consolidated statements of shareholders' deficit |
|
|
|
| Deficit, beginning of period |
($23,342,822) |
($1,391,100) |
($24,733,922) |
| Deficit, end of period |
($23,687,495) |
($2,492,463) |
($26,179,958) |