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SENSIO Releases its Results for the 2012-2013 Fiscal YearLoss reduced despite lower sales as the Company repositions its activities (September 27, 2013)
MONTREAL, QUEBEC -- (Marketwired) -- 09/27/13 -- SENSIO Technologies Inc. ("SENSIO" / the "Company") (TSX VENTURE:SIO) today released its results for the fiscal year ended May 31, 2013. The Company saw a decrease in its sales in this period, which went from $1.13M to $392,000, while deferred revenues continued to rise, from $556K as at May 31, 2012 to $926K as at May 31, 2013, an increase of $370K. This increase is due to an advance received upon the signing of the exclusive licence agreement with WiLAN for the commercialization of the SENSIO S2D Switch patent. Meanwhile, the Company reduced its losses, from $4.3M last year to $3.9M in the year just ended. This reduction of the loss aligns with cost-cutting efforts instituted by the Company during the year.
"The last year was a difficult one for SENSIO in terms of generating revenues, which are much below the potential of the Company, its technologies, and its intellectual property, and we know that this announcement may be disappointing," commented Nicholas Routhier, President and CEO. "Nevertheless, these figures only tell part of the story which, in our opinion, is much more positive than at first glance. During the year, we made some key strategic decisions given the slowdown in our Live 3D activities and the delay in the launch of 3DGO! These measures are designed to get SENSIO back on the path to growth, while reducing the Company's losses in the meantime. The three most important measures instituted were to subcontract the commercialization of the S2D Switch, to abandon the promotion of Live 3D content, and to concentrate our content efforts on 3DGO!, a promising project for the consumer electronics market. This entailed significant internal cuts and rationalization, and we are proud of what the team has accomplished in this difficult context."
The results speak for themselves. "Because of the agreement with WiLAN, we were able to recognize deferred revenue during the year and also reduce the costs inherent in maintaining our patents. That agreement also led to the first licensing of the S2D Switch - to Panasonic - and the impact of this development will be felt as of the first quarter of fiscal 2014. Although we knew that the decision to sign with WiLAN would have an adverse impact on our 2013 revenues, pending WiLAN's signing of agreements with the manufacturers, we were still convinced that this was the best decision, both in the short term (cost reduction) and in the medium and long term (greater revenue potential). We also continued our efforts with 3DGO! and ultimately signed content agreements with Disney and Paramount, two of the biggest Hollywood studios, culminating in the launch of 3DGO! on the consumer market. The launch with VIZIO and the subsequent announcement with Panasonic reflect the demand for the product in the market and we are confident of the future of 3DGO!.
Now that these three major strategic measures are in place and operational, we are confident that we will get back on the track to growth as early as the next quarter, while we continue to reduce our losses in the coming year, a year we are tackling with enthusiasm."
Highlights of the fiscal year ended May 31, 2013
-- $370,003 increase in deferred revenues in the year; -- Operating expenses reduced by more than $1M and net loss reduced by $472K; -- U.S. launch of 3DGO! - a video-on-demand service offering titles from Disney, Pixar, Paramount, Dreamworks Animation, and more; -- Signing of a licence agreement with WiLAN for certain patents related to the SENSIO S2DSwitch; -- Panasonic signs the first patent licence agreement with WiLAN for the SENSIO S2DSwitch; -- Japan issues a patent for the SENSIO S2DSwitch - the third patent granted for that technology in the world; -- Signing of the first integration agreement for SENSIO Autodetect with a major semiconductor manufacturer; and -- Closing of a $3.45M private placement concluded exclusively with institutional investors.
Consumer electronics market - 3DGO! in the forefront
On the consumer market side, the Company posted revenues of $303,038 compared to $901,512 the previous year, a decrease of $598,474. This decrease in revenues can primarily be explained by a decrease in the revenues earned this fiscal year by the SENSIO S2D Switch further to the decision to subcontract its exploitation to WiLAN, so as to reduce operating expenses and increase revenue potential in the medium and long term. The previous year, the Company had posted significant revenues in the third quarter due to the signing of a patent licence agreement with Samsung for the SENSIO S2D Switch technology.
In the fiscal year just ended, the deferred revenues on the balance sheet increased from $555,765 to $925,768. The Company also continued to invest in its future by launching its VOD platform, 3DGO!, in the U.S. market, by obtaining its SENSIO S2D Switch patent in Japan, and by adding an American patent for a quincunx spatial image interpolation method, bringing the total number of the Company's issued patents to 12. Finally, the Company saw its partnership with WiLAN begin to bear fruit when an agreement was concluded between WiLAN and Panasonic, granting Japanese manufacturers rights to SENSIO's patents for its SENSIO S2D Switch technology.
"In 2013, we significantly repositioned our activities with the signing of the agreement with WiLAN and the launch of 3DGO! in the American market," said Routhier. "We still believe that the difficulty in accessing quality 3D content in the consumer market is a determining factor in consumers' slow adoption of this tremendous experience. With its user-friendliness, its impressive library of quality 3D content, and its easy access thanks to its connected TV model, we believe that 3DGO! will be successful in this market. The initial results, after just a few months of operation, are encouraging in terms of the growth in the number of subscribers and rental frequency. Since the launch with VIZIO and the recent announcement with Panasonic, we have been in discussion with numerous other manufacturers that want to offer 3DGO! on their 3DTVs. With the arrival of 4KTVs, the vast majority of which support 3D, our SENSIO Hi-Fi 3D technology will be put to even better use, which is a good sign for SENSIO. So I can reiterate that, with the combination of revenues from the rental of movies on 3DGO!, the expected growth in the number of products that integrate SENSIO Hi-Fi 3D technology, the commercialization of SENSIO Autodetect with SoC manufacturers, and WiLAN'S exploitation of the SENSIO S2D Switch, we will see significant progress in terms of revenue from the CE market in the coming year."
The "Live 3D" market - A shift in activities
Activities in the Live 3D market generated revenues of $52,510 in 2012-2013 compared to $142,514 in 2011-2012, a decrease of $90,004. The decrease can be explained by the fact that the Company presented no Live 3D events this past year, while it had broadcast some of the NBA finals games in Europe the previous year.
"In the last year, only a very limited number of Live 3D events were shown in movie theatres, which had a major impact on our revenues in this market," noted Richard LaBerge, Executive Vice-President and Chief Business Development Officer. "Faced with this reality, we decided to shift our efforts in this market to the rollout of the technology and technical support for events. We will continue to support our long-time partners in their efforts to distribute Live 3D events. However, we will no longer be undertaking promotional or direct distribution activities, preferring to concentrate our resources on the consumer market, which is rapidly developing for us."
Private placement update
On 18 September 2013, the Company announced changes to the conditions of the private placement originally announced June 3, 2013 which would take the form of convertible debentures. The Company decided that it was preferable to do a private placement in units of $ 2,500,000 with an over-allotment option of 15%. Every unit, worth $ 0.10, will consist of one common share and a warrant to purchase one common share at a price of $ 0.18 which can be exercised during the two years following the closing.
On September, 27, 2013, subject to the terms and conditions of the Subscription Agreement, investors have committed to subscribe for 15,400,000 units for a total of $ 1,540,000. The Company anticipates that the closing of the first tranche will be on or around October 3, 2013, subject to regulatory approvals. "We are grateful for the confidence in our business plan shown by the investors despite the current difficult financial market environment for small cap companies," explains Nicholas Routhier. "In the coming months we will work towards increasing our revenues and reducing our operating expenses in order to breakeven as quickly as possible. The Company, its Board of Directors and all of its employees are making the commitment to work towards that goal."
Summary of financial results
For the fiscal year ended May 31, 2013, SENSIO posted revenues of $392,356, compared to $1,130,541 in 2012, a decrease of $738,185 or 65.3%. The decrease in revenues can primarily be explained by a decrease in revenues from the S2D Switch compared to the previous year, when the Company signed an agreement with Samsung for that patent, and the lack of Live 3D events broadcast during this fiscal year. The Live 3D market generated revenues of $52,510 in 2013 versus $142,514 in 2012, a decrease of $90,004. In the comparative period, the Company had broadcast some of the NBA finals games live in Europe, while there were no such events broadcast this year.
For the year ended May 31, 2013, SENSIO earned a gross profit of $334,905, or 85.4% of its revenues, compared to $1,016,547 or 89.9% of its revenues the previous year. During the year, the Company's management continued its efforts to control expenses, so as to optimize the use of the Company's financial resources while ensuring that it achieved its commercial objectives. Management succeeded in reducing the Company's operating expenses by $1,044,260 (or 19.9%) and reducing the loss by $471,876 (or 10.9%) in the year.
More specifically, the Company's selling expenses amounted to $2,223,937 compared to $2,833,000 the previous year, a decrease of $609,063 or 21.5%. This decrease can primarily be explained by a reduction in the payroll and trade show expenses, and lower Live 3D fees. The Company's research and development expenses amounted to $566,885 (net of the R&D tax credit and a subsidy from the National Research Council of Canada totalling $362,114) compared to $803,863 (net of the $201,986 R&D tax credit) the previous year. This decrease of $236,978, or 29.5%, is largely due to a subsidy obtained from the NRC under the Industrial Research Assistance Program. Finally, administrative expenses amounted to $1,421,843 for the year ended May 31, 2013, compared to $1,620,062 the previous year, a decrease of $198,219 or 12.2%.
SENSIO's net loss for the year ended May 31, 2013 stood at $3,862,998 or $0.06 per share, compared to $4,334,874 or $0.08 per share as at May 31, 2012.
Selected Financial information
As at and for the year ended May 31, May 31, May 31, 2013 2012 2011 ---------------------------------------------------------------------------- ---------------------------------------------------------------------------- Statements of Comprehensive Loss $ $ $ Revenues 392,356 1,130,541 1,253,267 Gross profit 334,905 1,016,547 1,225,538 Net loss and comprehensive loss (3,862,998) (4,334,874) (4,590,830) Basic and diluted loss per share (0.06) (0.08) (0.09) ---------------------------------------------------------------------------- Statements of Financial Position Total assets 4,497,765 4,610,672 8,582,177 Non-current financial liabilities(1) - - - Dividends declared - - - ---------------------------------------------------------------------------- (1) Non-current financial liabilities exclude deferred revenue and lease inducement of $823,192 in 2013 ($505,965 in 2012)
For more details, please see the Management Discussion and Analysis and the Financial Statements for the reference period on the SENSIO Website: www.sensio.tv.
About SENSIO Technologies Inc. (SENSIO):
Founded in 1999, SENSIO Technologies Inc. (www.sensio.tv) is a pioneer in the 3D industry. 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 broadcasting and consumer electronics sectors, as well as for live 3D events in cinemas, 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 licensed products, based on quality, content, usability and compatibility. These include its flagship, award-winning technology, SENSIO Hi-Fi 3D, the premium-quality frame-compatible format.
SENSIO's technologies are the object of patents and intellectual property protection proceedings worldwide. SENSIO is listed on the Toronto TSX Venture Exchange (SIO).
Caution Concerning Forward-Looking Statements
Certain statements made in this press release, including statements regarding the expected timing and completion of the private placement,, that are not historical facts are forward-looking statements and are subject to important risks, uncertainties and assumptions. A number of factors beyond the control of SENSIO could cause the aforementioned private placement to be delayed or cancelled, including general market conditions, failure to meet the conditions of the subscription agreement or failure to obtain the necessary regulatory approvals. The results or events predicted in these forward-looking statements may differ materially from actual results or events. As a result, 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 fiscal year 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.
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.
SENSIO is a registered trademark of SENSIO Technologies Inc.
Chief Financial Officer
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