|By Marketwired .||
|January 23, 2014 04:00 PM EST||
MONTREAL, QUEBEC -- (Marketwired) -- 01/23/14 -- SENSIO Technologies Inc. ("SENSIO" or "the Company") (TSX VENTURE: SIO) presented today its second quarter financial results for 2013-2014. In the second quarter, Company's revenues had climbed to $440K from $203K in the same period last year. Second quarter revenues were reported at $130K, up $38K or 41% compared to the same quarter last year.
Second quarter losses this year equaled $1.2M, which is $153K more than second quarter losses last year. This is primarily due to the impairment of advances on royalties that had previously been paid to studios as part of 3DGO! operations. This non-monetary expense was recognized to reflect the unrecoverable portion of advance royalty payments based on the Company's assessment. That depreciation excluded, losses for the quarter amounted to $818K and operating expenses totaled $937K, a drop of $167K, or 16.5%, compared to the same quarter in the previous year. This is the direct result of the cost-cutting program implemented by SENSIO.
"In the second quarter, we had to recognize a depreciation in the advances on royalties paid to certain studios. This contributed to the rise of our costs and our quarterly loss, but it hasn't impacted our liquidities," said Nicholas Routhier, President and Chief Executive Officer. "The significant investment in content was needed to launch 3DGO! and to attract new customers, both manufacturers and consumers. In fact, that investment is what led to the announcement with Panasonic last quarter. We're currently renegotiating content distribution rights with the studios so that advances reflect existing and projected volumes for 3DGO!. We're also very much encouraged by the increase in movie rentals and by the interest that 3D electronics manufacturers have shown in 3DGO!. With the planned addition in the fourth quarter of Panasonic 3DTVs, WiLAN's current negotiations with certain manufacturers and the potential addition of a new patent program, we believe we're on the right track to see interesting revenue growth in the upcoming quarters."
Highlights of the second quarter ended November 30, 2013
-- Agreement signed with Universal Studios to offer new 3D titles on 3DGO!; -- Two key European patents obtained for S2D Switch technology and Hi-Fi 3D; -- Closing of private placement announced June 4, 2013, for net proceeds of $2,670,000; -- Revenues of $129,522 in the second quarter and $440,001 in the first six months; the previous year saw $92,433 in the second quarter and $203,297 in the first six months; -- Decrease in operating expenses, excluding the cost of sales, of 16.4% compared to the same quarter last year and of 10.5% over the first six months of the fiscal year.
Home consumer market
In the second quarter of fiscal 2014, the Company recorded licence revenues of $111,294, up from $92,433 in the quarter ended November 30, 2012. The increase of $18,861 is due in large part to royalties from 3DTV sales over the quarter.
"We've been seeing slightly higher activity over the past few months, which is in line with our expectations," Routhier commented. "For a while now, we've noticed more articles claiming that 3DTV is dead because of things like ultra-high-definition television (UHDTV), also known as 4K. A recent study by Future Source challenges that claim, stating that the increase in 3DTV sales will continue into 2017, when they will reach over 155 million units. At the last CES, we demonstrated that 4K TVs, rather than threatening 3D, actually offer a superior 3D experience, and we firmly believe that SENSIO will benefit from that new trend. The anticipated growth of the 3DTV market opens the market up to technology licences and patents, and we're going to redouble our efforts in terms of patent licensing programs in the next quarters. We remain positive about the potential of the 3DTV market."
Content rental: growing number of users and rentals
In the second quarter, revenues from movie rentals jumped to $18,228 from $8,469 in the previous quarter, up $9,759 or 115%. In the same period, the number of 3DGO! users climbed from 3,089 to 8,019, an increase of 160%. At second quarter end, there were 2,693 active users, which was up from 894 at the end of last quarter. In the second quarter, active users rented 2,877 paid titles, compared to 1,354 in the first quarter.
"Our direct marketing efforts with Vizio are starting to pay off, especially among new buyers of 3DTVs," said Routhier. "Although we're having a harder time than expected in reaching existing 3DTV owners, we're seeing strong growth in the user rate among new buyers, which is a good sign for what's to come, because it means we're building a loyal user base for the future. After a few months of operation, we're encouraged by the gain in the number of people using the service and by the estimated rental repeat rate of active users since it leads us to believe that there's real demand for high-quality 3D VOD service. We've learned a lot in the last months, and we're going to use that experience to maximize the impact of having Panasonic 3DTV owners join us in the fourth quarter of this year. We remain very enthusiastic about the potential of 3DGO! across different platforms."
Summary of Financial Results
In the second quarter of fiscal 2014, the Company posted revenues of $129,522 compared to $92,433 in the quarter ended November 30, 2012, an increase of $37,089 or 40.1%. The higher licence revenues can be explained by an increase of $18,602 in royalty revenues resulting from agreements signed with CE manufacturers for SENSIO technologies. The launch of 3DGO! video-on-demand platform contributed as well by generating $18,228 during the quarter ($0 in the comparative quarter).
For the three months period ending November 30, 2013, the cost of sales amounted to $362,845 compared to $3,707 for the compared quarter one year ago. This increase of $359,138 is mainly attributable to the impairment of advance royalty payments of $345,397 incurred and paid previously to studios for operations related to 3DGO!. This non-monetary expense is recognized to reflect the advance on royalties that won't be recoverable according to the Company's estimation. These disbursements done in the past quarters gave credibility to the 3DGO! platform and allow ultimately the Company to sign an agreement with Panasonic. The management is confident that other manufacturers will follow in the coming quarters. The content rental royalties of $10,420 that diminished the advance royalty payments explained the increase as well.
If we exclude the cost of sales from the operating expenses for the quarter, the operating expenses were reduced of $180,735 or 16.4% when compared to corresponding quarter of the previous year. The selling expenses totalled $412,618 compared to $594,734 in the corresponding quarter the previous year, a decrease of $182,116 or 30.6%. Lower payroll, fees paid to consultants and traveling fees offset by higher costs for the launch of 3DGO! in the three-month period explains the variance.
The Company's research and development expenses amounted to $181,963 compared to $154,168 in the second quarter of the previous year, an increase of $27,795 or 18%. The increase is explainable by severances paid to two employees. The decision taken by the management was part of the cost-cutting program in order to reduce the Company's expenses.
Administrative expenses for the quarter ended November 30, 2013 amounted to $324,573 compared to $350,987 for the second quarter of the previous year, a decrease of $26,414 or 7.5%. This decrease is mainly explainable by a decrease of the depreciation assets expense.
SENSIO's net loss for the quarter ended November 30, 2013 amounted to $1,163,646 ($0.02 per share) compared to $1,010,819 ($0.02 per share) as at November 30, 2012.
Selected Financial information
--------------------------------------------------- Fiscal year 2014 ------------------------ T2 T1 --------------------------------------------------- Revenues 129 522 $ 310 479 $ Net loss (1 163 646)$ (729 917)$ Basic and diluted loss per share (0,02)$ (0,01)$ Basic and diluted weighted average number of shares 76 971 787 63 019 342 --------------------------------------------------- ---------------------------------------------------------------------------- Fiscal year 2013 ------------------------------------------------- T4 T3 T2 T1 ---------------------------------------------------------------------------- Revenues 76 267 $ 112 792 $ 92 433 $ 110 864 $ Net loss (976 170)$ (980 761)$ (1 010 819)$ (895 248)$ Basic and diluted loss per share (0,02)$ (0,02)$ (0,02)$ (0,02)$ Basic and diluted weighted average number of shares 63 019 342 63 019 342 60 696 110 52 512 544 ---------------------------------------------------------------------------- --------------------------------------------------- Fiscal year 2012 ------------------------ T4 T3 --------------------------------------------------- Revenues 90 651 $ 679 913 $ Net loss (1 322 159)$ (870 844)$ Basic and diluted loss per share (0,03)$ (0,02)$ Basic and diluted weighted average number of shares 52 487 797 52 487 797 ---------------------------------------------------
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 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 November 30, 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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Chief Financial Officer
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