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Nanotech Announces Fiscal 2019 Fourth Quarter and Year-End Results
Tuesday, December 17, 2019Company Profile | Follow Company
Burnaby, BC, December 17, 2019--(T-Net)--Nanotech Security Corp. (TSXV: NTS), a leader in the development of secure and memorable nano-optic security features used in the government and banknote and brand protection markets, today released its financial results for the fourth quarter and year ended September 30, 2019.
Unless otherwise stated, all dollar amounts are expressed in Canadian dollars.
Financial Highlights
"In 2019 we achieved several significant strategic goals as we transitioned to a product-based strategy," said President and CEO Troy Bullock. "We began building our sales team, developed new products that are gaining traction and expanded sales of our existing products, while continuing to advance the new banknote security feature for our contract services central bank customer. Looking ahead to 2020, we are poised for revenue growth while we continue to advance our growth and commercialization strategies."
Report on 2019 Strategic Initiatives
In 2019, the Company shifted its focus to near-term revenue growth by commercializing its technology into products specifically designed for the banknote and secure document market and for the brand protection market. The Company expanded its sales and marketing team with the addition of experienced sales leaders to pursue near-term revenue opportunities in both of its key markets.
Banknote security feature market. The Company has two areas of focus in the banknote market:
Brand protection market. The Company launched its first brand protection products, LiveLogo™ and LivePortrait™ in April and completed its first sale in the brand protection market this year. The sales team participated in targeted industry tradeshows and events to promote Nanotech's brand protection product line. Nanotech's products have garnered strong interest from the industry, with several opportunities added to the sales pipeline and the announcement of a multi-year brand protection contract subsequent to year end.
2020 Outlook
In 2020, the Company will pursue revenue growth by focusing on product sales opportunities with short sales cycles in both key markets. Management has set the following targets for 2020:
The Company will continue to expand its product line and make further investments in its sales and marketing team and initiatives in order to expand Nanotech's market reach. In the near-term, management expects that Adjusted EBITDA losses will persist as cost increases will outpace revenue growth in fiscal 2020. However, these additional expenditures are expected to support revenue growth beyond 2020.
With a strong balance sheet, including $10.3 million in cash and short-term investments and no debt, the Company says it is well positioned to continue to develop and pursue its product-based sales and marketing strategies in 2020.
Equity Grants
The Board of Directors have approved for grant 1,479,000 stock options. These options will be granted subsequent to the end of the Company's trading blackout at market price, in accordance with TSXV Policy 1.1. The options will be for five years and will bring the total options outstanding to 7.2% of outstanding shares. The Company also granted 291,479 restricted share units, of which 147,984 are to officers.
Select 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.
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Three months ended September 30 |
Years ended September 30 |
||||
|
|
|
% |
|
% |
|
|
2019 |
2018 |
Change |
2019 |
2018 |
Change |
Revenue (1) |
$ 1,449,687 |
$ 3,000,839 |
(52%) |
$ 6,402,702 |
$ 8,247,414 |
(22%) |
Gross margin |
1,112,053 |
2,333,004 |
(52%) |
4,890,837 |
6,737,313 |
(27%) |
Gross margin % |
77% |
78% |
|
76% |
82% |
|
Adjusted EBITDA (2) |
(298,542) |
1,305,841 |
(123%) |
(118,519) |
1,998,785 |
(106%) |
|
|
|
|
|
|
|
Net income (loss) |
(704,848) |
770,086 |
(192%) |
(2,835,254) |
(46,266) |
6,028% |
Earnings (loss) per share Basic and diluted |
(0.01) |
0.01 |
|
(0.04) |
0.00 |
|
Weighted average number |
|
|
|
|
|
|
Basic and Diluted |
69,035,007 |
68,514,245 |
|
68,916,001 |
68,425,673 |
|
(1) Revenue has been adjusted to reflect the reclassification of tenant and steam income from revenue to other income under the full retrospective application of IFRS 15 - Revenue from Contracts with Customers ("IFRS 15"), which was adopted October 1, 2018. Quarterly revenue adjusted for these reclassifications can be found in the "Quarterly Results" section of management's discussion and analysis for the year ended September 30, 2019. For further information, see note 4(b) of the consolidated financial statements for the year ended September 30, 2019.
(2) Adjusted EBITDA is a non-IFRS measure as described in the "Non-IFRS Financial Measures" section of this News Release.
Financial Position as at: |
September 30, |
September 30, |
% |
|
2019 |
2018 |
Change |
Cash, cash equivalents and short-term investments |
$ 10,289,264 |
$ 9,613,621 |
7% |
|
|
|
|
Total assets |
$ 28,523,244 |
$ 30,229,055 |
(6%) |
Total liabilities |
1,791,610 |
1,325,139 |
35% |
Total equity |
26,731,634 |
28,903,916 |
(8%) |
Financial Statements and Management's Discussion and Analysis
This news release should be read in conjunction with the Company's consolidated financial statements and related notes, and management's discussion and analysis for the year ended September 30, 2019, copies of which can be found at www.sedar.com.
Non-IFRS Financial Measures
In addition to results reported in accordance with IFRS, the Company discloses Adjusted EBITDA as a supplemental indicator of its financial performance.
The Company defines Adjusted EBITDA as net income (loss) excluding the impact of interest and financing costs (net of interest income), foreign exchange gain (loss), income taxes, depreciation and amortization, share-based compensation, restructuring costs, and net income (loss) from discontinued operations. The Company believes Adjusted EBITDA is a useful measure as it provides information to management about the operating and financial performance of the Company and its ability to generate operating cash flow to fund future working capital needs, as well as future growth. Adjusted EBITDA may also be used by investors and analysts for the purpose of valuing the Company.
Readers are cautioned that these non-IFRS definitions are not recognized measures under IFRS, do not have standardized meanings prescribed by IFRS, and should not be construed to be alternatives to net earnings determined in accordance with IFRS or as indicators of performance or liquidity or cash flows. The Company's method of calculating these measures may differ from methods used by other entities or in other jurisdictions. The Company uses these measures because it believes they provide useful information to both management and investors with respect to the operating and financial performance of the Company.
|
Three months ended |
Years ended |
||
|
2019 |
2018 |
2019 |
2018 |
|
|
|
|
|
Net income (loss) |
$ (704,848) |
$ 770,086 |
$ (2,835,254) |
$ (46,266) |
Finance income |
(42,444) |
(41,484) |
(192,752) |
(121,878) |
Foreign exchange (gain) loss |
(17,442) |
5,270 |
(14,982) |
(250,023) |
Depreciation and amortization |
398,257 |
425,472 |
1,566,122 |
1,611,891 |
Share-based compensation |
96,060 |
146,497 |
570,772 |
681,739 |
Restructuring costs |
(28,125) |
- |
787,575 |
- |
Net loss from discontinued |
- |
- |
- |
123,322 |
Adjusted EBITDA |
$ (298,542) |
$ 1,305,841 |
$ (118,519) |
$ 1,998,785 |
Company Snapshot |
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Nanotech Security (A Meta Materials Inc. Company)
Burnaby (Other Tech Sectors)
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