TORONTO, Nov. 16, 2017 /CNW/ - SQI Diagnostics Inc.
("SQI" or the "Company") (TSX-V: SQD; OTCQX: SQIDF), today reported its financial and operational results for the fourth
quarter and fiscal year ended September 30, 2017.
SQI is a Toronto-based life sciences and diagnostics company that develops and commercializes
proprietary technologies and products for advanced multiplexed diagnostics.
Commercial Highlights
- Achieved revenues of $968,000 continuing the momentum from 2016.
- Added 3 additional revenue-producing customers in fiscal 2017.
- Built a revenue pipeline with a total of 14 customers.
"Three new customers in fiscal 2017 with a solid and growing pipeline demonstrate the significant potential for our future,"
said Andrew Morris, SQI's President and CEO. "We have continued to transition our key,
revenue-generating customers through commercialization. At the same time we have built a solid pipeline with new customers who
are well-advanced to provide ongoing revenues in the coming fiscal year."
Financial and Business Highlights for the Fourth Quarter and Fiscal 2017 Year
- We progressed significantly in the technology transfer for our predictive diagnostic customer which was announced in
March. We believe the technology risk for this process is low. We are advancing steadily towards a finished product that
will lead to selling kits to this customer who is currently running tests for thousands of patients each month in its CLIA lab
in California. To begin generating significant revenues from kit sales, SQI needs to transfer
the developed test to this customer for their final in-house product acceptance testing.
- The large comparative study we reported last quarter for our human diagnostic DNA customer was launched during the
second half of 2017 and is well underway. This study and other final validation work is ongoing at the customer site
and could be completed in the next four months. Management believes this will lead to commercial production of this product and
recurring sales of kits following successful validation.
- We have a total of five customers that are generating revenues, in addition to three in "contracting", plus one with an
Letter of Intent and a near-term pipeline of five additional opportunities and continue to advance additional customers along
our sales pipeline. All told, there are now 14 customers in our revenue pipeline - up from seven at this time last year.
- In fiscal 2017 we raised approximately $3.7 million in an oversubscribed private placement.
- Subsequent to year-end we announced a private placement of up to 30,000,000 units of the Company at a price of $0.15 per Unit for gross proceeds of up to $4.5 million, subject to regulatory
and stock exchange approval. The Company also announced an annual and special meeting of shareholders to be held on
December 18 th to, among other things, approve the creation of new control
persons.
Q4 and Fiscal 2017 Financial Results Overview
Revenue for the year ended September 30, 2017 was $968,000 versus
$1,421,000 for the year ended September 30, 2016. Revenue for the
three months ended September 30, 2017 was $126,000 compared to
$709,000 for the same period last year. Revenues from the fourth quarter in fiscal 2017 were lower
than those recorded in the fourth quarter of 2016 owing to the two platform sales made in the last quarter of 2016 and larger
development revenues in 2016. Our revenues for the first nine months of fiscal 2017 were greater than in 2016. In the
last quarter of fiscal 2017 we were transitioning customers out of development and into customer site validation causing a
decrease in quarter over quarter revenue in the fourth quarter of 2017. The sale of the platform announced in July of 2017 has
not been recorded for accounting purposes as accounting rules require the completion of certain validation and training
activities. This platform was delivered in the fourth quarter of 2017 and customer validation testing has pushed the recognition
of platform revenue to the first quarter of fiscal 2018. In fiscal 2017, we continued to make commercial progress with our
customers, albeit at a slower rate than originally anticipated. There was a decrease in service revenue in fiscal 2017 compared
to fiscal 2016 as our customer activities in fiscal 2017 transitioned from development projects into product validation in
advance of the expected ramp up of commercial purchases. Kit sales during validation studies have, as expected, been small but we
expect will grow as the projects advance into commercial use.
The net loss for the year ended September 30, 2017 was $5,929,000
($0.06 net loss per share) as compared to $5,039,000 ($0.07 net loss per share) for the year ended September 30, 2016. For the quarter,
the Company recorded a net loss of $1,536,000 ($0.01 net loss per
share) as compared to the net loss of $1,248,000 ($0.02 net loss per
share) for the quarter-ended September 30, 2016. The increase in net loss for the year and quarter
ended September 30, 2017 compared to the prior periods is a result of the lower 2017 fourth quarter
revenues, increased marketing costs and increased research and development costs.
Research and development ("R&D") costs, excluding amortization and stock based compensation were $3,030,000 for the year ending September 30, 2017 (three month - $757,000) compared to $2,786,000 for the year ending September 30, 2016 (three month - $775,000). In fiscal 2017, R&D efforts were
focused on development work for customer projects in our Pharma and diagnostic businesses. R&D costs were higher for fiscal
2017 as compared to fiscal 2016 due to additional personnel costs including specialized scientific professionals hired in 2016 to
achieve customer goals. Research and development expenditures focused on two customer projects, the xPlex product development as
well as an internal development project that, if successful, will significantly reduce our overall consumable kit costs. Also,
R&D expenditures were reduced in 2016 by SR&ED investment tax credits of $360,000 which
represented tax credits claimed for the 2014 and 2015 tax years. R&D expenditures in 2017 were offset by SR&ED investment
tax credits of $229,000 related to the 2016 tax year.
Corporate and general expenses excluding stock-based compensation totaled $1,332,000 for the
year ended September 30, 2017 and $1,503,000 for the year ended
September 30, 2016. Corporate and general expenses excluding stock-based compensation, totaled
$383,000 for the three months ended September 30, 2017 as compared to
$360,000 for the three months ended September 30, 2016. Corporate and
general expenses are higher for the three months ended September 30, 2017 as compared to the prior
period due to a loss on sale of certain equipment. This increase in expenses was partially offset by lower administrative
personnel costs and lower professional fees. Corporate and general expenses are lower over the comparable fiscal periods due to
reduced administrative personnel costs and lower professional fees.
Sales and marketing expenses, excluding stock based compensation, totaled $1,067,000 for the
year ended September 30, 2017 compared to $685,000 for the year ended
September 30, 2016. Sales and marketing expenses, excluding stock based compensation, totaled
$258,000 for the three months ended September 30, 2017 compared to
$200,000 for the three months ended September 30, 2016. The increase
in sales and marketing costs is a result of the addition of two sales contractors in fiscal 2017 as well as the payment of
retention bonuses.
At September 30, 2017, current assets were $2,414,000 compared to
$4,244,000 at September 30, 2016. As at September 30, 2017, the Company's current assets exceeded current liabilities by $1,919,000 compared to a surplus of $3,420,000 at September 30, 2016.
Conference Call Details
President and CEO, Andrew Morris, along with Company management, will host a conference call to
review financial results and discuss business developments for the period. Details are as below:
An archived copy of the conference call will be available for 90 days on the Company website at www.sqidiagnostics.com/about/investors and also at
http://event.on24.com/r.htm?e=1544316&s=1&k=9AA7FC76B9563A0482298E8B3CCA5F12
Detailed financial statements and the management's discussion and analysis (MD&A) will also be made available on the
Company website at www.sqidiagnostics.com and at
www.sedar.com.
For more information, please contact:
Chief Executive Officer
Andrew Morris
416.674.9500 ext. 229
amorris@sqidiagnostics.com
Vice President of Finance
Patricia Lie
416.674.9500 ext. 277
plie@sqidiagnostics.com
About SQI Diagnostics
SQI Diagnostics is a life sciences and diagnostics company that develops clinical grade multiplexed microarray and
molecular assays run on its automated instrumentation for the pharmaceutical research, animal health, and clinical diagnostics
markets. SQI develops custom research and diagnostic assays that are multiplexed; meaning the simplification, consolidation and
automation of many individual tests into one. This increases sample throughput, reduces time, cost and chance for human error,
and provides excellent data quality. For more information, please visit sqidiagnostics.com.
Forward-looking Statements
This press release contains certain statements including, without limitation, the words "may", "plan", "will", "estimate",
"continue", "anticipate", "intend", "expect", "believe", "in the process", "benefits", "leading to", "position" "possible", "is
subject to" and other similar expressions which may constitute "forward-looking statements" within the meaning of applicable
securities laws. Forward-looking statements reflect the Company's current expectations and assumptions, and are subject to a
number of risks and uncertainties that could cause actual results to differ materially from those anticipated. Readers are
cautioned not to place undue reliance on these forward-looking statements. These forward-looking statements involve risks and
uncertainties including, but not limited to: our ability to market and sell our products including our novel multiplexing
technologies and detection platforms; our ability to maintain any technical or product advantages; the success of our
Diagnostic Tools and Services business and our intent to build near-term revenue streams from this business; the successful
regulatory filing and receipt of regulatory approvals for our later stage quantitative diagnostic consumable kits; adverse
changes in general economic conditions; international risk and currency exchange fluctuations; competitor activity; technology
changes; regulatory approvals and the impact of healthcare reform legislation; and, SQI's ability to raise additional funds in
the future.
Such statements, risks and uncertainties are detailed in the Company's ongoing filings with the securities regulatory
authorities, and are available to the public at www.sedar.com . The Company undertakes no obligation to publicly update or revise any forward-looking
statements either as a result of new information, future events or otherwise, except as required by applicable securities
laws.
Neither TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in the policies of the TSX
Venture Exchange) accepts responsibility for the adequacy or accuracy of this release.
SOURCE SQI Diagnostics Inc.
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