SENSIO Technologies Inc.

TSX VENTURE : SIO


SENSIO Technologies Inc.

December 10, 2013 08:30 ET

SENSIO Corporate Update

MONTREAL, QUEBEC--(Marketwired - Dec. 10, 2013) - SENSIO Technologies Inc. ("SENSIO" or "the Company") (TSX VENTURE:SIO) (OTC:SNIOF), is providing today a general corporate update on its business activities. "As we were in the process of finalizing the second tranche of our private placement, it was decided that, exceptionally, no investor phone conference would be held following the publication of our FYE 2014 first quarter results," said Nicholas Routhier, President and CEO of SENSIO. "With the closing behind us, we think that the timing is ideal to summarize for our shareholders up to date information on the state of our business."

FINANCING AND COST REDUCTION PROGRAM

On November 13, SENSIO closed a second and final tranche in the amount of $630,000 for its most recent private placement which totaled $2,670,000. The use of proceeds for this placement is for general working capital purposes and for business development, namely for the expansion of 3DGO! to more devices, porting to new platforms and further content acquisition. In parallel to this new financing, the Company accelerated its cost reduction program which it had already begun in the previous fiscal year. The Company expects these cuts will begin to have a noticeable impact starting in the third quarter of the current fiscal year.

"In fiscal 2013, SENSIO had to make considerable investments in order to develop 3DGO!, acquire content distribution rights from Hollywood studios and launch the service in the U.S.," said Mr. Routhier. "We believe these investments were necessary in order to position SENSIO as a leader in 3D image processing technologies, add value to our existing products and sign with more CE manufacturers. Now that 3DGO! was launched, we are in an optimization mode in order to reduce our expenses with a view to achieve a cash flow positive situation. Although the last round of equity financing was more dilutive than originally anticipated, we are pleased with the response from investors who have seen 3DGO! in action and decided to participate in this placement. We are committed to the long term success of the Company and we will continue to manage our cash resources in a responsible way in order to achieve our commercial goals for the benefit of our shareholders."

PATENT LICENCING UPDATE

Since the end of the first quarter, SENSIO has been granted a new patent in Europe pertaining to the S2D Switch licensing program. This new patent is in addition to those already granted in the U.S., India and, recently, Japan. A final S2D Switch related patent is currently pending in China. The recent grants of the Japanese and European patents further increase the revenue potential of the S2D Switch program as there are significant sales of 3DTVs in these territories which have not been fully addressed by the existing deals with CE manufacturers. The exact potential remains to be determined and will be dependent on the demonstration of the actual use of the patented method in products manufactured or sold in these territories.

"Early results of the collaboration with WiLan are above our expectations," explained Nicholas Routhier. "Patent licensing deals typically take between eighteen to twenty-four months to negotiate with CE manufacturers yet WiLan generated its first revenues only nine months after signing our licensing agreement. For the twenty-four month period ending August 31st, 2013, our patent licensing activities have generated more than $1,9M in cash inflow for the Company which is not negligible. It is not unreasonable to expect that revenues from the patent licensing activities will eventually cover our existing operating costs based on our reduced expenses, commercial terms from the Panasonic deal and volumes of 3DTVs sold in regions where SENSIO has S2D Switch patents. We are optimistic about the prospects for this business line."

3DGO! UPDATE

Since the beginning of the year, SENSIO has experienced a steady growth in the number of users and average volume of daily rentals on a month to month basis. As at December 1st 2013, there were 8,019 registered users and 2,693 active users, a growth of 160% and 201% respectively since the end of the first quarter. These users all came from Vizio 3DTV owners as 3DGO! is currently only available on Vizio devices. With the upcoming Holidays and new titles to be released, the Company expects that the current growth trend will continue for the third quarter of the fiscal year. As for Panasonic, porting work of the 3DGO! store has recently begun with target availability before the end of the current fiscal year. The porting work, which has been deliberately postponed a few months to coincide with the recent closing of the private placement, is progressing according to expectations.

"SENSIO is fundamentally a 3D technology company and 3DGO! is by far our best promotional tool to increase our visibility as well as the market penetration of our technologies", said Mr. Routhier. "The growth we are experiencing with 3DGO! in terms of membership, rentals and repeat business shows that a well packaged 3D home experience can be successful and appealing to consumers. In our view, our recent agreement with Panasonic demonstrates that CE manufacturers are beginning to recognize the added value 3DGO! brings to 3DTVs. While the growth of 3DGO! will be limited during this fiscal year by its restricted availability to a limited number of devices, we have planned numerous direct marketing activities to get the maximum out of the current install base. Our goal for the rest of the year is to add new CE manufacturers and to port the 3DGO! store as quickly as possible to their devices in order to increase our potential user base for the future. We are very excited with the growth potential of 3DGO! and by the early results after only six months of operations."

TECHNOLOGY LICENSING UPDATE

Revenues from the technology licensing activities have increased since the beginning of the year, namely due to the first revenues generated from the deal with Hisense for 3DTVs sold in China. The revenues in the Chinese market are however expected to remain minimal until SENSIO Hi-Fi 3D content becomes available in the territory. SENSIO is currently evaluating and working on various alternatives to make such content available through Chinese partners. There are no set expectations for when the content will be accessible in China. Globally, technology licensing revenues are expected to grow in the coming quarters with the growth of 3DTV sales in the consumer market and the targeted addition of new CE manufacturers.

Since the 3DGO! service is only available in SENSIO Hi-Fi 3D, technology licensing revenues can be expected from all 3DGO! deals with CE manufacturers unless otherwise specifically indicated. For legacy devices (i.e. 3DTVs already sold to consumers), most technology licensing deals will be based on a recoupment from the revenue share portion which would normally be paid to CE manufacturers for the use of their connected 3DTV platform. In other words, SENSIO will be deducting a technology licensing fee from the revenue share normally payable to CE manufacturers on each rental by end users. The Panasonic agreement is based on such licensing terms. The standard licensing model based on a per unit royalty remains active and is our preferred model, namely for future 3DTV sales in the market.

"Technology licensing remains our main focus and, with the help of 3DGO!, we have developed new creative ways of offering and monetizing our technologies," said Nicholas Routhier. "We have developed several pricing strategies and packages which offer equivalent mid-term revenue potential based on our analysis and available market data. With these options, we are able to offer our CE customers various options with the flexibility to fit their particular needs. This is why today, the SENSIO Hi-Fi 3D format remains the only proprietary frame compatible format in use in the market and why we are expecting that it will continue to gain market shares and increase its penetration within the 3DTV segment and soon with glasses-free 3D tablets."

MORE TO COME

At the upcoming CES and annual shareholder's meeting, SENSIO will be providing additional details on its strategy to grow its revenues and take advantage of new trends such as 4K/Ultra HD TV sets and glasses-free 3D tablets. "While some people have been pessimistic on 3D, we have many reasons to be enthusiastic about the potential of 3D in the home which in our view is evidenced by the adoption and growth of our 3DGO! store", said Nicholas Routhier. "We are still in the very early days of 3D in the home and we are confident that a well-packaged 3D offering which is simple, accessible, affordable and which delivers a high-quality experience is appealing to consumers. The advent of 4K and glasses-free technologies represent a new step forward for 3D in the consumer space and we expect it to regain a lot of visibility in the coming year. We are looking forward to sharing our vision with our shareholders in the New Year".

For further information on SENSIO and its technologies, please visit www.sensio.tv

About SENSIO Technologies Inc. (SENSIO):

SENSIO Technologies Inc. (www.sensio.tv) has been leading the floor in bringing 3D video to the consumer since 1999. Its vision, expertise and state-of-the-art solutions, based on diversified stereoscopic image-processing technologies, have been trusted by some of the biggest names in the media and entertainment industries to power numerous industry firsts, initiate new business models and generate immediate revenue with a distinctive 3D offering.

SENSIO enables its clients to deliver the best possible 3D experience for the end-user through a broad portfolio of products, including its flagship, award-winning technology, SENSIO® Hi-Fi 3D. Through SENSIO solutions, consumers can access - with effortless interaction and complete peace of mind - 3D content of superior quality to common frame-compatible formats distributed over existing infrastructure (cable, satellite or over IP) and displayed using any existing digital equipment (cinema, home cinema, TV, game consoles or PC). SENSIO is listed on the Toronto TSX Venture Exchange.

SENSIO® is a registered trademark of SENSIO Technologies Inc.

Caution Concerning Forward-Looking Statements

Certain statements made in this press release that are not historical facts are forward-looking statements and are subject to important risks, uncertainties and assumptions, both general and specific, which give rise to the possibility that actual results or events could differ materially from our expectations expressed in or implied by such forward-looking statements... As a result, we cannot guarantee that any forward-looking statement will materialize and readers are cautioned not to place undue reliance on these forward looking statements. For more exhaustive information on these risks and uncertainties, the reader should refer to the risk factors described in the management's discussion and analysis of SENSIO for the quarter ended May 31, 2013. The forward-looking statements contained in this press release represent our expectations as of the date hereof. We disclaim any intention and assume no obligation to update or revise any forward-looking statements. Forward-looking statements are presented for the purpose of providing information about management's current expectations and plans and allowing investors and others to obtain a better understanding of our anticipated operating environment. Readers are cautioned that such information may not be appropriate for other purposes.

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.

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