TORONTO, May 30, 2023
/CNW/ - SQI Diagnostics Inc. ("SQI" or the "Company") (TSXV:
SQD) (OTCQB: SQIDF), a leader in the science of lung health that
develops and manufactures respiratory health and precision medicine
tests today reported its financial and operational results for the
second quarter ended March 31,
2022.
Q2 2023 Financial Highlights
- Sales of $0.3M in Q2 2023,
compared to $5.6M in Q2 2022. The
significant decrease in sales is attributable to lower sales from
the Company's COVID-19 PCR human testing business as a result of
widespread acceptance of antigen tests and relaxed testing
requirements.
- Gross profit was $0.1M in Q2
2023, compared to $2.9M in Q2 2022.
The decrease is also a result of significantly lower sales from the
Company's COVID-19 PCR human testing business.
- Corporate & General expenses were $1.0M in Q2 2023, compared to $2.4M in Q2 2022. The decrease is mainly related
to lower expenses in transition costs and legal and financing fees
which were higher in Q2 2022 in connection with the Company's
acquisition of Precision Biomonitoring Inc's COVID-19 PCR
business.
- The R&D expense category, which includes Manufacturing,
Quality and Engineering, was $0.4M in
Q2 2023, compared to $2.8M in Q2
2022. The decrease was due to a reduction in consulting and
clinical costs, lower stock-based compensation costs and lower
salaries & wages due to an adjustment in variable
compensation.
- Net loss of $3.5M, or
$0.01 per share, in Q2 2023, compared
to a net loss of $2.6M, or
$0.01 per share, in Q2 2022. The
increase in net loss is due to the significant reduction in gross
margin.
- Cash and cash equivalents of $0.6M as of March 31,
2023.
- Net working capital deficit of $9.7M as of March 31,
2023, compared to a net working capital deficit of
$5.4M as of March 31, 2022. The increase in the working
capital deficit was due to increases in both short-term borrowing
and accounts payable.
Q2 2023 Corporate Highlights
- On November 10, 2022, The Company
entered into a funding agreement (the "Contribution Agreement")
with the Federal Economic Development Agency for Southern Ontario ("FedDev Ontario") to support
the Company's manufacturing scale-up and commercialization of its
pipeline of products in development. Under the terms of the
Contribution Agreement, the Company will be able to draw down up to
$2 million of funding in the form of
interest-free contributions. During the quarter, the Company drew
down $1.7 million under the
Contribution Agreement.
- During the quarter, the Company increased the amount borrowed
under its credit facility with Pivot Financial by $500,000 and also extended the maturity date of
the loan to April 30, 2023 and,
subsequent to the quarter, further extended the maturity date of
the loan to July 30, 2023.
- During the quarter, the Company decided to concentrate its
efforts on point-of-care ("POC") products and to move away from
laboratory-based products due to shifting market conditions.
Consequently, we have reduced our workforce by approximately
sixty-five percent, scaled back on expenses to reduce our
go-forward cash burn by over fifty percent and gained the support
of our strategic partners regarding the new direction of the
Company. The Company also made the decision to exit the COVID-19
testing business due to a significant reduction in consumer demand
for its products. We believe that these changes position us to
leverage our core competencies and expedite our path to
profitability.
Andrew Morris, Chief Executive
Officer, SQI Diagnostics Inc. commented that "following a
challenging Q2 2023, we restructured our business following a
thorough review of our product portfolio by significantly reducing
our workforce, cutting expenses and shedding non-core assets. We
believe this restructuring was in the best interests of
shareholders and are steadfast in our belief that a leaner
organization will accelerate our path to profitability subject to
our ability to successfully recapitalize the business and to
continue the business as a going concern."
Liquidity and Going Concern
Risk
While management considers that the preparation of its financial
statements under the going concern basis is appropriate, there is
significant doubt about the Company's ability to continue as a
going concern as the Company has a working capital deficit of
$9,9M as at March 31, 2023 and for the three month period
ended March 31, 2022 the Company
incurred a net loss of $3.5M, which
include impairment charges and asset write-downs totalling
approximately $1.8M to reflect
corporate restructuring including discontinued operations. The
Company's ability to continue as a going concern is dependent upon
the Company's ability to raise additional capital through equity
and/or debt financings and achieve profitable operations. While the
Company continues to pursue commercial sales, strategic partnering
activities and funding opportunities, there are no assurances that
it will be successful in generating revenues or raising additional
investment capital to generate sufficient cash flows to continue as
a going concern and there is significant doubt about the Company's
ability to continue as a going concern without achieving such
revenue or financing in the near term. Should the Company be unable
to continue as a going concern, it may be unable to realize the
carrying value of its assets and to meet its liabilities as they
become due.
As of the writing of the date hereof, the Company has not
received any viable term sheets from potential sources of financing
and management does not currently believe that the Company will
have sufficient cash to continue operations as currently conducted
beyond June 15, 2023 without
successfully raising additional equity and/or debt
capital. The Company will announce additional details relating
to any new financing or financings, if any, in due course in the
event that it is successful in negotiating and entering into
definitive documentation relating to same. Please see the Company's
Condensed Interim Consolidated Financial Statements for the six
months ended March 31, 2023 and
March 31, 2022 and related Management
Discussion & Analysis filed on SEDAR on May 30, 2023 for additional details
regarding the Company's current cash position and risks relating
thereto.
About SQI Diagnostics
SQI Diagnostics is a leader in the science of lung health. The
Company develops and manufactures respiratory health and precision
medicine tests that run on SQI's fully automated systems. The
Company's tests simplify and improve Rapid Acute Lung Injury
testing, donor organ transplant informatics, and immunological
protein and antibody testing. SQI Diagnostics is driven to create
and market life-saving testing technologies that help more people
in more places live longer, healthier lives. For more information,
please visit www.sqidiagnostics.com.
Contact:
Chief Financial Officer
Morlan Reddock
437-235-6563
mreddock@sqidiagnostics.com
FORWARD-LOOKING INFORMATION
This press release contains certain words and statements,
which may constitute "forward-looking statements" within the
meaning of applicable securities laws relating to future events or
future performance and reflect the current expectations and
assumptions of the Company regarding its growth, results of
operations, performance, business prospects and opportunities.
These statements generally can be identified by use of
forward-looking words such as "may", "would", "could", "will",
"should", "expect", "plan", "estimate", "anticipate", "intends",
"believe", "potential", or "continue" or the negative thereof or
similar variations. The Company's actual results and performance
discussed herein could differ materially from those expressed or
implied by such statements. Such statements are qualified in their
entirety by the inherent risks and uncertainties surrounding future
expectations. Important factors that could cause actual results to
differ materially from expectations include, among other things,
general economic and market factors, competition, the effect of the
global pandemic and consequent economic disruption, and the factors
detailed in the Company's ongoing filings with the securities
regulatory authorities, available at www.sedar.com. Although the
forward-looking statements contained herein are based on what we
consider to be reasonable assumptions based on information
currently available to us, there can be no assurance that actual
events, performance or results will be consistent with these
forward looking statements, and our assumptions may prove to be
incorrect. Readers are cautioned not to place undue reliance on
these forward-looking statements. The Company undertakes no
obligation to publicly update or revise any forward-looking
statements either as a result of new information, future events or
otherwise, except as required by applicable law.
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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SOURCE SQI Diagnostics Inc.
