Spectral Announces Second Quarter Results

TORONTO, ONTARIO--(Marketwired - Aug. 11, 2017) - Spectral Medical Inc., (TSX:EDT), a Phase III company developing the first treatment for patients with septic shock, today announced its unaudited financial results for the second quarter ended June 30, 2017.

Financial Review

Revenue for the three months ended June 30, 2017 was $1,090,000 compared to $870,000 for the same period in the preceding year. For the six months ended June 30, 2017 revenues were $2,031,000 compared to $1,932,000 in the first half of 2016. 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, 2017 amounted to $2,205,000 compared to $4,393,000 in 2016. Operating costs for the six months ended were $4,108,000, a decrease of $4,354,000 from $8,462,000 for the first six months of 2016. The decrease is almost entirely attributable to lower costs for the EUPHRATES trial. The fourth and final module of the PMA submission was provided to the U.S. FDA in the second quarter of 2017 and accepted for substantive review on July 20, 2017. The Company continues to maintain a low cost operating structure for its base business operations.

For the three months ended June 30, 2017, the Company reported a loss of $1,115,000 ($0.005 per share) compared to a loss of $3,498,000 ($0.02 per share) for the three months ended June 30, 2016. The loss for the six months ended June 30, 2017 was $2,077,000 ($0.01 per share) compared to $6,492,000 ($0.03 per share) for the same six month period in the prior year.

The Company concluded the second quarter of 2017 with cash on hand of $2,912,000 compared to $5,080,000 as of December 31, 2016.

The total number of shares outstanding for the Company was 207,440,587 as at June 30, 2017.

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.

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. Spectral is listed on the Toronto Stock Exchange under the symbol EDT. 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
	2017		2016
	$		$
Assets
Current assets
Cash	2,912		5,080
Trade and other receivables	953		642
Inventories	276		244
Prepayments and other assets	248		166
	4,389		6,132
Non-current assets
Property and equipment	625		634
Intangible asset	322		334
	947		968
Total assets	5,336		7,100
Liabilities
Current liabilities
Trade and other payables	1,043		1,112
Deferred revenue	96		166
Total liabilities	1,139		1,278
Equity
Share capital	63,214		63,084
Contributed surplus	7,849		7,849
Share-based compensation	4,425		4,103
Warrants	132		132
Deficit	(71,423	)	(69,346	)
Total equity	4,197		5,822
Total liabilities and equity	5,336		7,100

Spectral Medical Inc.
Condensed Interim Consolidated Statements of Loss and Comprehensive Loss
For the six months ended June 30, 2017 and 2016
(Unaudited)
(in thousands of Canadian dollars, except for share and per share data)
	Three months ended				Six months ended
			June 30				June 30
	2017		2016		2017		2016
			$				$
Revenue	1,090		870		2,031		1,932
Expenses
Changes in inventories of finished goods and work- in-process	111		58		126		83
Raw materials and consumables used	59		95		111		298
Employee benefits	804		956		1,884		2,109
Product development	-		67		50		67
Consulting and professional fees	884		2,558		1,204		4,629
Regulatory and investor relations	65		201		161		408
Travel and entertainment	59		261		145		470
Depreciation and amortization	58		49		112		91
Foreign exchange loss	31		15		34		30
Other expenses	134		133		281		277
	2,205		4,393		4,108		8,462
Operating loss	(1,115	)	(3,523	)	(2,077	)	(6,530	)
Finance income	-		25		-		38
Loss and comprehensive loss for the period	(1,115	)	(3,498	)	(2,077	)	(6,492	)
Basic and diluted loss per common share	(0.005	)	(0.02	)	(0.01	)	(0.03	)
Weighted average number of common shares outstanding	207,249,708		206,733,209		207,207,879		202,374,503

Spectral Medical Inc.
Condensed Interim Consolidated Statements of Changes in Equity
For the six months ended June 30, 2017 and 2016
(Unaudited)
(in thousands of Canadian dollars)
			Contributed	Share-based
	Issued capital		surplus	compensation		Warrants	Deficit	Total equity
	Number	$	$	$		$	$	$
Balance, January 1, 2016	190,771,405	53,058	7,849	3,723		-	(59,197)	5,433
Bought deal prospectus offering	15,106,804	9,163	-	-		236	-	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	62,679	7,849	3,990		236	(65,689)	9,065
Balance, January 1, 2017	207,165,587	63,084	7,849	4,103		132	(69,346)	5,822
Share options exercised	275,000	130	-	(53)		-	-	77
Loss and comprehensive loss for the period	-	-	-	-		-	(2,077)	(2,077)
Share-based compensation	-	-	-	375		-	-	375
Balance, June 30, 2017	207,440,587	63,214	7,849	4,425		132	(71,423)	4,197

Spectral Medical Inc.
Condensed Interim Consolidated Statements of Cash Flows
For the six months ended June 30, 2017 and 2016
(Unaudited)
(in thousands of Canadian dollars)
				Six months ended
		2017		2016
		$		$
Cash flow provided by (used in)
Operating activities
Loss and comprehensive loss for the period		(2,077	)	(6,492	)
Adjustments for:
	Depreciation on property and equipment	100		79
	Amortization of intangible asset	12		12
	Share-based compensation	375		459
	(Gain)loss on disposal of property and equipment	(15	)	4
Changes in items of working capital :
	Trade and other receivables	(311	)	(122	)
	Inventories	(32	)	(193	)
	Prepayments and other assets	(82	)	(123	)
	Trade and other payables	(69	)	537
	Deferred revenue	(70	)	(71	)
Net cash used in operating activities		(2,169	)	(5,910	)
Investing activities
Property and equipment expenditures		(91	)	(80	)
Proceeds on disposal of property and equipment		15		-
Net cash used in investing activities		(76	)	(80	)
Financing activities
Bought deal prospectus offering		-		9,399
Share options exercised		77		266
Net cash provided by financing activities		77		9,665
(Decrease)increase in cash		(2,168	)	3,675
Cash, beginning of period		5,080		6,369
Cash, end of period		2,912		10,044