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Spectral Announces Second Quarter Results

T.EDT

TORONTO, ONTARIO--(Marketwired - Aug. 12, 2016) - Spectral Medical Inc., (TSX:EDT) (OTCQX:EDTXF), a Phase III company developing the first treatment for patients with septic shock guided by a companion diagnostic, today announced its unaudited financial results for the second quarter ended June 30, 2016.

Financial Review

Revenue for the three months ended June 30, 2016 was $870,000 compared to $818,000 for the same period in the preceding year. For the six months ended June 30, 2016 revenues were $1,932,000 compared to $1,695,000 in the first half of 2015. Revenues for both the quarter and the year were consistent with prior year levels and this trend is expected to continue for the remainder of the year.

Operating costs for the quarter ended June 30, 2016 amounted to $4,393,000 compared to $3,242,000 in 2015. Operating costs for the six months ended were $8,462,000, an increase of $2,088,000 from $6,374,000 for the first six months of 2015. The increase is almost entirely attributable to higher costs for the EUPHRATES trial, resulting from completion of patient enrolment, collection of data, and preparation of its final submission to the U. S. Food and Drug Administration (FDA). Trial related expenses are expected to decline significantly starting in the third quarter. Apart from clinical trial activities, the Company continues to maintain a low cost operating structure for its base business operations.

For the three months ended June 30, 2016, the Company reported a loss of $3,498,000 ($0.02 per share) compared to a loss of $2,400,000 ($0.01 per share) for the three months ended June 30, 2015. The loss for the six months ended June 30, 2016 was $6,492,000 ($0.03 per share) compared to $4,722,000 ($0.03 per share) for the same six month period in the prior year.

The Company concluded the second quarter of 2016 with cash on hand of $10,044,000 compared to $6,369,000 as of December 31, 2015.

The total number of shares outstanding for the Company was 206,733,209 as at June 30, 2016.

About Spectral

Spectral is a Phase III company seeking U.S. FDA approval for its unique product for the treatment of patients with septic shock, Toraymyxin™ ('PMX"). PMX is a therapeutic hemoperfusion device that removes endotoxin, which can cause sepsis, from the bloodstream. Directed by the Company's Endotoxin Activity Assay (EAA™), the only FDA cleared diagnostic for the risk of developing sepsis, Spectral's EUPHRATES trial is the world's only active and most innovative Phase III study in the area of septic shock.

PMX has been approved for therapeutic use in Japan and Europe, and has been used safely and effectively on more than 150,000 patients to date. In March 2009, Spectral obtained the exclusive development and commercial rights in the U.S. for PMX, and in November 2010, signed an exclusive distribution agreement for this product in Canada. Approximately 350,000 patients are diagnosed with severe sepsis and septic shock in North America each year, representing a greater than $3 billion market opportunity for Spectral. Spectral is listed on the Toronto Stock Exchange under the symbol EDT, and on the OTCQX under the symbol EDTXF. For more information please visit www.spectraldx.com

Forward-looking statement

Information in this news release that is not current or historical factual information may constitute forward - looking information within the meaning of securities laws. Implicit in this information, particularly in respect of the future outlook of Spectral and anticipated events or results, are assumptions based on beliefs of Spectral's senior management as well as information currently available to it. While these assumptions were considered reasonable by Spectral at the time of preparation, they may prove to be incorrect. Readers are cautioned that actual results are subject to a number of risks and uncertainties, including the availability of funds and resources to pursue R&D projects, the successful and timely completion of clinical studies, the ability of Spectral to take advantage of business opportunities in the biomedical industry, the granting of necessary approvals by regulatory authorities as well as general economic, market and business conditions, and could differ materially from what is currently expected.

The TSX has not reviewed and does not accept responsibility for the adequacy or accuracy of this statement.

   
Spectral Medical Inc.  
Condensed Interim Consolidated Statements of Financial Position  
(Unaudited)  
   
(in thousands of Canadian dollars)        
   
  June 30   December 31  
  2016   2015  
  $   $  
   
Assets        
Current assets        
Cash 10,044   6,369  
Trade and other receivables 752   630  
Inventories 436   243  
Prepayments and other assets 264   141  
  11,496   7,383  
Non-current assets        
Property and equipment 714   717  
Intangible asset 347   359  
  1,061   1,076  
   
Total assets 12,557   8,459  
   
Liabilities        
Current liabilities        
Trade and other payables 3,387   2,850  
Deferred revenue 105   176  
Total liabilities 3,492   3,026  
   
Equity        
Share capital 62,915   53,058  
Contributed surplus 7,849   7,849  
Other equity reserves 3,990   3,723  
Deficit (65,689 ) (59,197 )
Total equity 9,065   5,433  
   
Total liabilities and equity 12,557   8,459  
         
         
Spectral Medical Inc.  
Condensed Interim Consolidated Statements of Loss and Comprehensive Loss  
For the six months ended June 30, 2016 and 2015  
(Unaudited)  
   
(in thousands of Canadian dollars, except for share and per share data)  
   
  Three months ended   Six months ended  
      June 30       June 30  
  2016   2015   2016   2015  
      $       $  
   
Revenue 870   818   1,932   1,695  
   
Expenses                
Changes in inventories of finished goods and work- in-process 58   56   83   80  
Raw materials and consumables used 95   107   298   207  
Employee benefits 969   906   2,210   1,910  
Product development 67   -   67   -  
Consulting and professional fees 2,555   1,670   4,610   3,242  
Regulatory and investor relations 191   138   326   308  
Travel and entertainment 261   189   470   392  
Depreciation and amortization 49   44   91   87  
Foreign exchange loss (gain) 15   4   30   (13 )
Other expenses 133   128   277   252  
  4,393   3,242   8,462   6,465  
   
Operating loss (3,523 ) (2,424 ) (6,529 ) (4,770 )
   
Finance income 25   24   38   48  
   
Loss and comprehensive loss for the period (3,498 ) (2,400 ) (6,492 ) (4,722 )
   
Basic and diluted loss per common share (0.02 ) (0.01 ) (0.03 ) (0.03 )
   
Weighted average number of commonshares outstanding 206,733,209   190,803,548   202,334,393   185,307,431  
                 
                 
Spectral Medical Inc.  
Condensed Interim Consolidated Statements of Changes in Equity  
For the six months ended June 30, 2016 and 2015  
(Unaudited)  
   
(in thousands of Canadian dollars)  
    Issued capital   Contributed
surplus
Share-based
compensation
  Warrants Deficit   Total equity  
    Number   $   $ $   $ $   $  
Balance, January 1, 2015   179,737,241   46,879   7,849 3,542   - (49,450 ) 8,820  
Private placement   11,049,464   6,021   - -   -     6,021  
Shares repurchased under NCIB   (90,000 ) (23 )         (32 ) (55 )
Share options exercised   355,950   231   - (99 ) -     132  
Loss and comprehensive loss for the period   -   -   - -   - (4,722 ) (4,722 )
Share-based compensation   -   -   - 228   - -   228  
Balance, June 30, 2015   191,052,655   53,108   7,849 3,671   - (54,204 ) 10,424  
   
Balance, January 1, 2016   190,771,405   53,058   7,849 3,723   - (59,197 ) 5,433  
Bought deal prospectus offering   15,106,804   9,399   - -   - -   9,399  
Share options exercised   855,000   458   - (192 ) - -   266  
Loss and comprehensive loss for the period   -   -   - -   - (6,492 ) (6,492 )
Share-based compensation   -   -   - 459   - -   459  
Balance, June 30, 2016   206,733,209   62,915   7,849 3,990   - (65,689 ) 9,065  
                           
                           
Spectral Medical Inc.  
Condensed Interim Consolidated Statements of Cash Flows  
For the six months ended June 30, 2016 and 2015  
(Unaudited)  
   
(in thousands of Canadian dollars)        
      Six months ended  
  2016   2015  
  $   $  
Cash flow provided by (used in)        
         
Operating activities        
Loss and comprehensive loss for the period (6,492 ) (4,722 )
Adjustments for:        
  Depreciation on property and equipment 79   75  
  Amortization of intangible asset 12   12  
  Share-based compensation 459   228  
  Loss on disposal of property and equipment 4      
Changes in items of working capital :        
  Trade and other receivables (122 ) (197 )
  Inventories (193 ) (101 )
  Prepayments and other assets (123 ) (135 )
  Trade and other payables 537   (110 )
  Deferred revenue (71 ) (75 )
Net cash used in operating activities (5,910 ) (5,025 )
         
Investing activities        
Property and equipment expenditures (80 ) (191 )
Net cash used in investing activities (80 ) (191 )
         
Financing activities        
Bought deal prospectus offering 9,399   -  
Private placement -   6,021  
Share options exercised 266   132  
Shares repurchased under NCIB -   (55 )
Net cash provided by financing activities 9,665   6,098  
         
Increase in cash 3,675   882  
         
Cash, beginning of period 6,369   10,054  
Cash, end of period 10,044   10,936  

Anthony Businskas
Executive Vice President and CFO
Spectral Medical Inc.
416-626-3233 ext. 2200
tbusinskas@spectraldx.com

Ali Mahdavi
Capital Markets & Investor Relations
416-962-3300
am@spinnakercmi.com