Hamilton Thorne Ltd. (TSX-V: HTL), a leading provider of advanced
laser systems for the regenerative medicine, fertility and stem
cell research markets, today reported operational and financial
results for the third quarter and nine months year-to-date ended
September 30, 2011.
"Revenue in the third quarter increased to $1.86 million,
exceeding the prior year by 8.5% due to substantial growth in our
laser portfolio, bolstered by strong LYKOS™ sales. Our new LYKOS™
laser system continues to pick up momentum in the existing customer
base and is well received by new customers, thus enabling the
Company to further cement our dominance in the US fertility market.
Sales of lasers for research markets also increased in sales during
Q3, although the research market tends to have a slower adoption
rate due to its complex and evolving technological landscape," said
David Wolf, President and Chief Executive Office of Hamilton Thorne
Ltd. "The nine months year-to-date revenue increased 14.1% to $5.1
million, and by a combination of growing sales and closely managing
our operating expenses, we continue to edge closer to achieving our
profitability goals."
Third Quarter Highlights
- Hamilton Thorne closed on a private placement and
recapitalization of debt that substantially improved the Company's
cash position and strengthened the balance sheet. Common stock
proceeds of $2.7 million were utilized to pay down long-term bank
debt by $1.5 million, resulting in $1.2 million of net new cash. In
addition, over $1.6 million of subordinated debentures and other
debt were converted to capital stock, substantially reducing debt
and future interest expense by approximately $50,000 per
quarter.
- Hamilton Thorne's products were referenced in over 7 new
peer-reviewed scientific articles, by customers at world-leading
research labs and academic institutions, including an article in
the prestigious journal Nature.
- At the American Society for Reproductive Medicine (ASRM) Annual
Meeting in October 2011, Hamilton Thorne showcased two fertility
products, the newly launched LYKOS™ laser
system, as well as previewed the Company's IMSI STRICT™ imaging analysis software. LYKOS™ is a significant
advance in integrated laser optics, providing additional
functionality, improved optics, increased resolution and
compatibility with all major microscope models. IMSI STRICT™ is an
imaging analysis product that provides fertility clinicians with
the ability to select optimum sperm and thus improve outcomes
during advanced fertility procedures.
- Hamilton Thorne President David Wolf was appointed as the
Company's Chief Executive Officer. Meg Spencer, the Company's
former CEO, remained Hamilton Thorne's Chairman of the Board and
will continue to play a lead role in defining product strategy. The
Company also announced that Mr. Wolf had been appointed to the
Company's Board of Directors.
Financial Results
All amounts are in US dollars, unless specified otherwise, and
results expressed in accordance with the International Financial
Reporting Standards ("IFRS"), which replaces Canadian Generally
Accepted Accounting Policies ("GAAP") effective January 1, 2010 for
all publicly accountable enterprises in Canada.
For the three months ended September 30, 2011, the Company
reported a sales increase of 8.5% to $1,858,333 for the quarter
ended September 30, 2011, an increase of $144,969 from $1,713,364
during the previous year. Nine months sales for 2011 of $5,136,989
were up 14.1%, from sales of $4,502,571 in 2010. This increase was
attributable to increased demand for our existing products,
additional sales derived from our new LYKOS laser introduced in the
second quarter of 2011 and improved budget availability for capital
equipment purchases, particularly in the human clinical market. The
Company's customers in the regenerative medicine field primarily
use the Company's products in research applications. Sales of
products for research applications are often funded by government
grants and may be subject to extended purchasing cycles.
Gross profit for the quarter increased 11% to $1,157,166 in the
quarter ended September 30, 2011, compared to $1,042,547 in the
previous year and increased to $3,210,539 versus $2,762,070 for the
comparable nine-month periods. Gross profit as a percentage of
sales were somewhat higher at 62.3% for the quarter and 62.5% for
the nine-months ended September 30, 2011, versus 60.8% and 61.3%
for the comparable periods in 2010, due primarily to product mix
and increased sales spread over a relatively constant overhead
base.
Operating expenses were $1,370,652 and $4,331,128 for the
quarter and nine-months ended September 30, 2011, up from
$1,271,788 and $3,815,081 for comparable periods during the
previous year. This increase in operating expenses represents
continued strategic investment in the growth of the Company.
Research and development expenses increased from $239,246 to
$267,842 for the quarter ended September 30, 2011 and from $718,500
to $887,570 for the nine-month period due to continued development
of new products. Sales and marketing expenses increased from
$569,480 to $676,734 for the quarter ended September 30, 2011 and
from $1,650,274 to $1,985,974 for the nine-month period due to the
expansion of our sales and marketing staff, commission expense on
higher sales volume, and increased variable costs of selling.
General and administrative (G&A) expenses decreased from
$463,062 to $426,076 for the quarter ended September 30, 2011
versus the prior quarter and increased from $1,446,307 to
$1,457,584 for the nine-month period due primarily to increases in
staffing and one-time severance expenses offset by positive foreign
currency valuation adjustments related to the convertible
debentures issued in August 2010 and March 2011 issued in Canadian
dollars.
Net interest expense increased from $92,997 to $159,518 for the
quarter ended September 30, 2011 and from $225,111 to $442,028 for
the nine-month period. The increase was due primarily to the
non-cash interest expense, both coupon and accreted, on the
Company's convertible debentures. Interest expense is expected to
decrease by approximately $50,000 per quarter as a result of a
conversion of approximately $1.6 million of debt to equity and the
reduction of the Company's bank loan by $1.5 million, both of which
were completed in the quarter ended September 30, 2011.
The net loss for the quarter ended September 30, 2011 increased
from $322,237 to $373,004 and from $1,278,122 to $1,562,617 for the
nine-month period. The increased loss was primarily due to the
additional investments by the Company in research, product
development, sales and marketing, additional general and
administrative expenses and interest expense, partially offset by
increased gross profit resulting from increased sales.
As of September 30, 2011, the Company had 46,616,365 common
shares issued and outstanding. As of September 30, 2011, there were
5,729,440 warrants outstanding to purchase common shares:
5,500,005, at a price of Cdn $0.60 which originally were set to
expire in April 2011 but were extended by eighteen months to
October 2012; 194,435 warrants to acquire one common share at an
exercise price of Cdn$0.50, expiring in August 2012 and March 2013,
issued to its financial advisors in connection with the August 2010
and March 2011 sales of the convertible debentures; and 35,000
warrants to acquire one common share at an exercise price of
Cdn$0.20, expiring in September 2013, issued to its financial
advisor in connection with the common stock private placement.
Stock options issued to employees and directors outstanding at
September 30, 2011 totaled 4,654,405 at exercise prices ranging
from Cdn $0.18 to Cdn $0.7712. Options for 2,569,140 shares are
exercisable as of September 30, 2011. Options expire at varying
times from July 2012 through September 2021.
The financial statements are available on www.sedar.com.
About Hamilton Thorne Ltd.
(www.hamiltonthorne.com) Hamilton Thorne provides novel solutions
for Life Science that reduce cost, increase productivity as much as
ten-fold, and enable research breakthroughs in regenerative
medicine, stem cell research and fertility markets. The Company's
new LYKOS™, Staccato™ and Stiletto™ laser systems offer significant
scientific advantages in the fields of developmental biology,
cancer research and other segments of cell biology. Hamilton
Thorne's laser products attach to standard inverted microscopes and
operate as robotic micro-surgeons, enabling a wide array of
scientific applications and procedures.
Hamilton Thorne's growing customer base includes pharmaceutical
companies, biotechnology companies, fertility clinics, university
research centers, and other commercial and academic research
establishments worldwide. Current customers include world-leading
research labs such as Harvard University, MIT, Yale, McGill
University, DuPont, Monsanto, Charles River Labs, Jackson Labs,
Merck, Novartis, Pfizer, Oxford University, and Cambridge.
Neither the Toronto Venture Exchange, nor its regulation
services provider (as that term is defined in the policies of the
exchange), accepts responsibility for the adequacy or accuracy of
this release.
Certain information in this press release may contain
forward-looking statements. This information is based on current
expectations that are subject to significant risks and
uncertainties that are difficult to predict. Actual results might
differ materially from results suggested in any forward-looking
statements. The Company assumes no obligation to update the
forward-looking statements, or to update the reasons why actual
results could differ from those reflected in the forward-looking
statements unless and until required by securities laws applicable
to the Company. Additional information identifying risks and
uncertainties is contained in filings by the Company with the
Canadian securities regulators, which filings are available at
www.sedar.com.
Financial results included below:
Hamilton Thorne Ltd.
Consolidated Statements of Financial Position
As at September 30, 2011 and December 31, 2010
(Expressed in U.S. Dollars - unaudited)
----------------------------------------------------------------------------
September 30, December 31,
2011 2010
------------------------------------------------ ------------- -------------
Assets
Current
Cash and cash equivalents 618,359 714,498
Accounts receivable 1,176,576 971,406
Inventories 756,24 544,170
Prepaid expenses and other current assets 85,303 58,241
------------------------------------------------ ------------- -------------
2,636,479 2,288,315
Property and equipment 186,816 134,662
Other assets 112,126 111,968
------------------------------------------------ ------------- -------------
Total assets 2,935,421 2,534,945
------------------------------------------------ ------------- -------------
Liabilities
Current
Accounts payable and accrued liabilities 1,390,981 1,412,831
Notes payable 46,590 104,460
Capital lease obligations, current 30,621 20,250
Deferred revenue 46,136 91,086
------------------------------------------------ ------------- -------------
Total current liabilities 1,514,328 1,628,627
Capital lease obligations, non-current 48,949 37,295
Deferred revenue, long-term 79,486 79,486
Long-term debt 3,771,506 6,121,015
------------------------------------------------ ------------- -------------
Total liabilities 5,414,269 7,866,423
------------------------------------------------ ------------- -------------
Shareholders' Equity (Deficiency)
Common shares 28,621,499 24,345,752
Warrants 354,127 349,019
Contributed surplus 741,927 607,535
Accumulated deficit (32,196,401) (30,633,784)
------------------------------------------------ ------------- -------------
Total Shareholders' equity (deficiency) (2,478,848) (5,331,478)
------------------------------------------------ ------------- -------------
Total Liabilities and shareholders' equity
(deficiency) 2,935,421 2,534,945
------------------------------------------------ ------------- -------------
Hamilton Thorne Ltd.
Consolidated Statements of Operations and Comprehensive Loss
For the three and nine months ended September 30, 2011 and 2010
(Expressed in U.S. Dollars - unaudited)
---------------------------- ----------- ----------- ----------- -----------
Three Months ended Nine Months ended
September 30 September 30
2011 2010 2011 2010
---------------------------- ----------- ----------- ----------- -----------
Sales 1,858,333 1,713,364 5,136,989 4,502,571
Cost of sales 701,167 670,816 1,926,450 1,740,501
---------------------------- ----------- ----------- ----------- -----------
1,157,166 1,042,548 3,210,539 2,762,070
---------------------------- ----------- ----------- ----------- -----------
Expenses
Research and development 267,842 239,246 887,570 718,500
Sales and marketing 676,734 569,480 1,985,974 1,650,274
General and administrative 426,076 463,062 1,457,584 1,446,307
---------------------------- ----------- ----------- ----------- -----------
Total expenses 1,370,652 1,271,788 4,331,128 3,815,081
---------------------------- ----------- ----------- ----------- -----------
Loss from operations (213,486) (229,240) (1,120,589) (1,053,011)
Other income (expense)
Interest expense, net,
Including accretion (159,518) (92,997) (442,028) (225,111)
---------------------------- ----------- ----------- ----------- -----------
Net loss and comprehensive
loss (373,004) (322,237) (1,562,617) (1,278,122)
---------------------------- ----------- ----------- ----------- -----------
Loss per share
Basic ($0.01) ($0.01) ($0.06) ($0.05)
Diluted ($0.01) ($0.01) ($0.06) ($0.05)
Weighted average number of
common shares outstanding
Basic 28,616,836 24,415,157 25,831,108 24,415,157
Diluted 28,616,836 24,415,157 25,831,108 24,415,157
Hamilton Thorne Ltd
Consolidated Statements of Cash Flows
For the three and nine months ended September 30, 2011 and 2010
(Expressed in U.S. Dollars - unaudited)
----------------------------------------------------------------------------
Three Months ended Nine Months ended
September 30 September 30
2011 2010 2011 2010
---------------------------- ----------- ----------- ----------- -----------
Cash flows from operating
activities
Net loss for the year (373,004) (322,237) (1,562,617) (1,278,122)
Adjustments to reconcile net
loss to net cash used in
operating activities:
Depreciation and
amortization 24,460 17,559 53,380 48,750
Non-cash interest
expense/accretion (65,393) 8,833 147,878 8,833
Share-based payments
expense 36,560 64,645 110,870 187,135
Changes in non-cash
operating assets and
liabilities: - -
Accounts receivable (189,943) 37,026 (205,170) (548,046)
Inventories (54,955) 7,823 (212,071) (49,759)
Prepaid expenses and
other current assets 14,345 10,467 (27,062) 53,942
Other assets 870 - (158) (57,000)
Accounts payable and
accrued liabilities (67,887) (226,910) 48,818 97,545
Deferred revenue (8,849) (8,008) (44,950) 122,880
---------------------------- ----------- ----------- ----------- -----------
Net cash flows used in
operating activities (683,796) (410,802) (1,691,082) (1,413,842)
---------------------------- ----------- ----------- ----------- -----------
Cash flows from investing
activities
Purchase of capital assets (15,670) (1,672) (58,924) (49,868)
---------------------------- ----------- ----------- ----------- -----------
Cash flows from financing
activities
Proceeds from debt 12,457 1,999,886 600,475 2,754,340
Payments on debt (1,573,360) (614,446) (1,595,630) (1,671,145)
Proceeds from issuance of
common stock, net of
expenses 2,649,022 2,649,022
Costs of private placement
refunded - 3,814
---------------------------- ----------- ----------- ----------- -----------
Net cash flows provided by
(used in) financing
activities 1,088,119 1,385,440 1,653,867 1,087,009
---------------------------- ----------- ----------- ----------- -----------
Net Increase (decrease) in
cash and cash equivalents 388,653 972,966 (96,139) (376,701)
Cash and cash equivalents,
beginning of period 229,706 6,703 714,498 1,356,371
---------------------------- ----------- ----------- ----------- -----------
Cash and cash equivalents,
end of period 618,359 979,669 618,359 979,670
---------------------------- ----------- ----------- ----------- -----------
Supplemental disclosure of
cash flow information:
Cash paid during the period
for:
Interest 69,860 55,559 202,137 163,025
Supplemental disclosure of
non-cash financing
activities:
Equipment acquired under
capital lease - 0 46,610 0
Conversion of debentures
to equity 1,573,212 1,573,212
Conversion of subordinated
note to equity 54,145 54,145
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For more information, please contact: David Wolf
President and CEO Hamilton Thorne Ltd. 978-921-2050 Email Contact
Lisa Rivero Director of Corporate Communications Hamilton Thorne
Ltd. 978-921-2050 Email Contact
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