Welcome!

News Feed Item

Spectra7 Announces Financial Results for Three Month Period Ended March 31, 2014

Gross Margins Increase to 76%

TORONTO, ONTARIO -- (Marketwired) -- 05/29/14 -- Spectra7 Microsystems Inc. ("Spectra7" or the "Company") (TSX VENTURE:SEV), a high performance analog semiconductor company delivering unprecedented speed, resolution and signal fidelity to consumer and wireless infrastructure products, today announced its unaudited financial results for the three month period ended March 31, 2014 ("Q1"). A copy of the unaudited condensed interim consolidated financial statements for the three month period ended March 31, 2014 prepared in accordance with International Financial Reporting Standards and the corresponding Management's Discussion and Analysis will be available under the Company's profile on www.sedar.com. All amounts are in US dollars unless otherwise noted.

Q1 Highlights


--  Revenue for the quarter ended March 31, 2014 was $0.9 million, an
    increase of more than three times the revenue in the same quarter of
    2013. 
--  Revenue from the Company's interconnect products increased 30% for the
    quarter ended March 31, 2014 to $0.8 million compared to $0.6 million
    for the quarter ended December 31, 2013. 
--  Overall gross margins as a percent of revenue increased to 76% for the
    quarter ended March 31, 2014, compared to 63% for the quarter ended
    December 31, 2013 and 42% for the three month ended March 31, 2013. 
--  Gross margins for the Company's interconnect products increased to 75%
    for the quarter ended March 31, 2014, compared to 74% for the quarter
    ended December 31, 2013 and from 70% for the quarter ended March 31,
    2013. The introduction of new products and retail channel strategies
    continues to contribute to the Company's strong gross margin trend. 
--  Significant progress made in expanding the Company's retail channel for
    CouchConnect(TM) with the addition of Walmart.com and Newegg.com
    authorized retailers shipping CouchConnect(TM) across the United States.
--  Completed equity public offering of over CDN$7 million to accelerate
    product development. 

"The Company has achieved significant milestones this quarter. We believe that the unique value premise of our technology and products resonates well with our customers, investors and partners as we expand our footprint into segments requiring high bandwidth, ultra-thin and low latency connections from "wearable" visual displays to next-generation wall-mounted 4K UltraHD panels," said Tony Stelliga, CEO of Spectra7. "Our recent equity fundraising will help accelerate new product development to meet the broadening demand for this unique capability."

Financial Summary

For the three month period ended March 31, 2014, the revenue remained strong at $0.9 million, over three times the revenue in the same quarter in the previous year.

Gross margins for the three month period ended March 31, 2014 were $0.7 million which was 5% higher than the previous quarter. Gross margin percent improved from 63% in the previous quarter to 76% in the current quarter.

On March 28, 2014, the Company announced it had closed a public offering of 23,333,333 units for gross proceeds of CDN$7.0 million. On April 28, 2014, the Company issued an additional 3,500,000 units pursuant to the exercise in full of the agent's over-allotment option at a price of CDN$0.30 for a gross proceeds of CDN$1,050,000. The Company intends to use the proceeds from the offering as disclosed in the final prospectus dated March 24, 2014.

The following table is a summary of the financial information presented in the financial statements.


                                                 Three months               
                                  Three months          ended               
                                         ended   December 31,               
                                March 31, 2014           2013               
                                   (unaudited)    (unaudited) Percent Change
$000                                         $              $     Q1 over Q4
                               ---------------------------------------------
Revenue                                                                     
Wireless                                   102            404           -75%
Interconnect                               759            585            30%
                               ---------------------------------------------
Revenue                                    861            989           -13%
                                                                            
Product Gross Margin %                                                      
Wireless                                   79%            88%            -9%
Interconnect                               75%            74%             1%
                               ---------------------------------------------
Product Gross Profit                       76%            80%            -4%
                                                                            
Provision for Write Down                     -            167             0%
Percent of Revenue                          0%            17%           -17%
                                                                            
Total Gross Margin                         652            623             5%
Total Gross Margin %                       76%            63%            13%
                                                                            
Operating Expenses                       2,376          2,492            -5%
Other Expenses                           1,055          2,977           -65%
                               ---------------------------------------------
Net loss                               (2,779)         (4846)           -43%

Revenue

Revenue for the three months ended March 31, 2014 was $0.9 million compared to $1.0 million for the previous quarter. The Company continues to experience strong demand for its active cable signal processing technology which is used by market leading customers to design, develop and launch next-generation interconnects for HD displays, wearable computing and second screen viewing.

The Company's wireless SimplyRF(TM) analog intellectual property ("IP") technology continued to generate strong revenue in the quarter. SimplyRF(TM) licensing revenue in the previous quarter was $0.3 million due to a milestone payment under a contract with a large TV manufacturer. Monthly royalty payments under that contract started in January 2014 and are expected to continue for the remainder of 2014.

Gross Margins

Percentage of total gross margin improved from 63% in the previous quarter to 76% for the three months ended March 31, 2014.

Percentage of product gross margins(1) for interconnect products improved in the three months ended March 31, 2014 over the previous quarter by 1% while decreasing for wireless by 9% due to a lower mix of IP licensing revenue.

Product gross margins(1) represent revenue less the direct costs of manufacturing including yield loss and freight costs. Total gross margin in the prior quarter represents product gross margin less a provision to write-down surplus, obsolete, or on-hand inventory to its recoverable amount which was done for the older product line including demodulators, tuner and cable components. The Company does not expect further significant provisions in the foreseeable future as the Company continues its transition to new, higher average selling prices and higher gross margins.

Expenses

Operating expenses decreased from the previous quarter by 5% as the Company continues to carefully control both resources and related expenses. The Company has recently hired a small number of engineers that will be used to accelerate new product development. This will increase expenses nominally in the next quarter.

Other expenses decreased 65% from the previous quarter due mainly to a year-end adjustment made in December 2013 that will not occur in 2014.

For a complete discussion of expenses please refer to the financial statements and management's discussion and analysis for the three months ended March 31, 2014.

Product and Customer Development

During the three month period ended March 31, 2014, the Company continued to advance its product offering and expanded into new retail sales channels.

Product Announcements

In January 2014, the Company announced the launch of CouchConnect(TM), a portable five meter/16 foot plug'n'play solution capable of delivering true, real time 1080p HD or 4K UltraHD content from a mobile device to a main screen.

Also in January 2014, the Company unveiled its Detectiv4K(TM) integrated audio/video performance monitoring technology and announced that Detectiv4K(TM) was embedded in Monster® Cable's ("Monster") Black Platinum® cable, adding to the existing use of the Company's home theatre technology in Monster's Core Power® and MSeries® cable lines.

In May 2014, the Company announced that the Company's DisplayDirect(TM) Virtual Reality VR7100 product had commenced production based on purchase orders to use the Company's product in leading wearable computing and virtual reality platforms.

Customer Announcements

During the first quarter 2014, the Company made significant progress in expanding its retail channel for CouchConnect(TM) to both "bricks and mortar" storefront retailers and leading online e-tailers. The Company expanded its online presence with the addition of Newegg.com, Walmart.com, Amazon.ca, Kmart.com and Sears.com as authorized retailers shipping CouchConnect(TM) across the United States.

In March 2014, the Company announced that Newegg was shipping the entire CouchConnect(TM) product line. Newegg is an award-winning electronics-focused e-retailer. The product also became available on Kmart.com and Sears.com in April 2014.

ABOUT SPECTRA7 MICROSYSTEMS INC.

Spectra7 Microsystems Inc. is a high performance analog semiconductor company delivering unprecedented speed, resolution and signal fidelity to consumer and wireless infrastructure products. Spectra7's new system-level components address throughput bottlenecks and satisfy the exponential demand for more bandwidth and lower costs in mobile and internet infrastructure equipment, including handsets, tablets, base stations and microwave backhaul systems. Spectra7 is headquartered in Markham, Ontario with development centers in Silicon Valley, Irvine, California and Cork, Ireland. For more information, please visit www.spectra7.com.

CAUTIONARY NOTES

Certain statements contained in this press release constitute "forward-looking statements". All statements other than statements of historical fact contained in this press release, including, without limitation, those regarding the Company's future financial position and results of operations, strategy, proposed acquisitions, plans, objectives, goals and targets, and any statements preceded by, followed by or that include the words "believe", "expect", "aim", "intend", "plan", "continue", "will", "may", "would", "anticipate", "estimate", "forecast", "predict", "project", "seek", "should" or similar expressions or the negative thereof, are forward-looking statements. These statements are not historical facts but instead represent only the Company's expectations, estimates and projections regarding future events. These statements are not guarantees of future performance and involve assumptions, risks and uncertainties that are difficult to predict. Therefore, actual results may differ materially from what is expressed, implied or forecasted in such forward-looking statements. Additional factors that could cause actual results, performance or achievements to differ materially include, but are not limited to the risk factors discussed in the Company's annual MD&A for the year ended December 31, 2013. Management provides forward-looking statements because it believes they provide useful information to investors when considering their investment objectives and cautions investors not to place undue reliance on forward-looking information. Consequently, all of the forward-looking statements made in this press release are qualified by these cautionary statements and other cautionary statements or factors contained herein, and there can be no assurance that the actual results or developments will be realized or, even if substantially realized, that they will have the expected consequences to, or effects on, the Company. These forward-looking statements are made as of the date of this press release and the Company assumes no obligation to update or revise them to reflect subsequent information, events or circumstances or otherwise, except as required by law.

Neither the 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.

(1) Gross margin and product gross margin are additional GAAP measures. Gross margin is presented in this press release as additional information regarding the Company's financial performance. The Company's method of calculating gross margin may differ from other methods used. Gross margin has been calculated by deducting manufacturing cost of sales from revenue excluding any provision for inventory write-downs. Gross margin helps the Company to plan and forecast for future periods as well as being a close proximity to cash. Management of the Company believes that providing this information, in addition to IFRS measures, allows investors to see the Company's results through the eyes of management, and to better understand its historical and future financial performance.

More Stories By Marketwired .

Copyright © 2009 Marketwired. All rights reserved. All the news releases provided by Marketwired are copyrighted. Any forms of copying other than an individual user's personal reference without express written permission is prohibited. Further distribution of these materials is strictly forbidden, including but not limited to, posting, emailing, faxing, archiving in a public database, redistributing via a computer network or in a printed form.

Latest Stories
Web Real-Time Communication APIs have quickly revolutionized what browsers are capable of. In addition to video and audio streams, we can now bi-directionally send arbitrary data over WebRTC's PeerConnection Data Channels. With the advent of Progressive Web Apps and new hardware APIs such as WebBluetooh and WebUSB, we can finally enable users to stitch together the Internet of Things directly from their browsers while communicating privately and securely in a decentralized way.
"My role is working with customers, helping them go through this digital transformation. I spend a lot of time talking to banks, big industries, manufacturers working through how they are integrating and transforming their IT platforms and moving them forward," explained William Morrish, General Manager Product Sales at Interoute, in this SYS-CON.tv interview at 18th Cloud Expo, held June 7-9, 2016, at the Javits Center in New York City, NY.
More and more companies are looking to microservices as an architectural pattern for breaking apart applications into more manageable pieces so that agile teams can deliver new features quicker and more effectively. What this pattern has done more than anything to date is spark organizational transformations, setting the foundation for future application development. In practice, however, there are a number of considerations to make that go beyond simply “build, ship, and run,” which changes ho...
The Internet of Things can drive efficiency for airlines and airports. In their session at @ThingsExpo, Shyam Varan Nath, Principal Architect with GE, and Sudip Majumder, senior director of development at Oracle, will discuss the technical details of the connected airline baggage and related social media solutions. These IoT applications will enhance travelers' journey experience and drive efficiency for the airlines and the airports. The session will include a working demo and a technical d...
Kubernetes is a new and revolutionary open-sourced system for managing containers across multiple hosts in a cluster. Ansible is a simple IT automation tool for just about any requirement for reproducible environments. In his session at @DevOpsSummit at 18th Cloud Expo, Patrick Galbraith, a principal engineer at HPE, discussed how to build a fully functional Kubernetes cluster on a number of virtual machines or bare-metal hosts. Also included will be a brief demonstration of running a Galera M...
Why do your mobile transformations need to happen today? Mobile is the strategy that enterprise transformation centers on to drive customer engagement. In his general session at @ThingsExpo, Roger Woods, Director, Mobile Product & Strategy – Adobe Marketing Cloud, covered key IoT and mobile trends that are forcing mobile transformation, key components of a solid mobile strategy and explored how brands are effectively driving mobile change throughout the enterprise.
Developing software for the Internet of Things (IoT) comes with its own set of challenges. Security, privacy, and unified standards are a few key issues. In addition, each IoT product is comprised of (at least) three separate application components: the software embedded in the device, the back-end service, and the mobile application for the end user’s controls. Each component is developed by a different team, using different technologies and practices, and deployed to a different stack/target –...
Identity is in everything and customers are looking to their providers to ensure the security of their identities, transactions and data. With the increased reliance on cloud-based services, service providers must build security and trust into their offerings, adding value to customers and improving the user experience. Making identity, security and privacy easy for customers provides a unique advantage over the competition.
All clouds are not equal. To succeed in a DevOps context, organizations should plan to develop/deploy apps across a choice of on-premise and public clouds simultaneously depending on the business needs. This is where the concept of the Lean Cloud comes in - resting on the idea that you often need to relocate your app modules over their life cycles for both innovation and operational efficiency in the cloud. In his session at @DevOpsSummit at19th Cloud Expo, Valentin (Val) Bercovici, CTO of So...
SYS-CON Events announced today that Commvault, a global leader in enterprise data protection and information management, has been named “Bronze Sponsor” of SYS-CON's 19th International Cloud Expo, which will take place on November 1–3, 2016, at the Santa Clara Convention Center in Santa Clara, CA. Commvault is a leading provider of data protection and information management solutions, helping companies worldwide activate their data to drive more value and business insight and to transform moder...
SYS-CON Events announced today that eCube Systems, a leading provider of middleware modernization, integration, and management solutions, will exhibit at @DevOpsSummit at 19th International Cloud Expo, which will take place on November 1–3, 2016, at the Santa Clara Convention Center in Santa Clara, CA. eCube Systems offers a family of middleware evolution products and services that maximize return on technology investment by leveraging existing technical equity to meet evolving business needs. ...
SYS-CON Events has announced today that Roger Strukhoff has been named conference chair of Cloud Expo and @ThingsExpo 2016 Silicon Valley. The 19th Cloud Expo and 6th @ThingsExpo will take place on November 1-3, 2016, at the Santa Clara Convention Center in Santa Clara, CA. "The Internet of Things brings trillions of dollars of opportunity to developers and enterprise IT, no matter how you measure it," stated Roger Strukhoff. "More importantly, it leverages the power of devices and the Interne...
Personalization has long been the holy grail of marketing. Simply stated, communicate the most relevant offer to the right person and you will increase sales. To achieve this, you must understand the individual. Consequently, digital marketers developed many ways to gather and leverage customer information to deliver targeted experiences. In his session at @ThingsExpo, Lou Casal, Founder and Principal Consultant at Practicala, discussed how the Internet of Things (IoT) has accelerated our abil...
Digital innovation is the next big wave of business transformation based on digital technologies of which IoT and Big Data are key components, For example: Business boundary innovation is a challenge to excavate third-party business value using IoT and BigData, like Nest Business structure innovation may propose re-building business structure from scratch, as Uber does in the taxicab industry The social model innovation is also a big challenge to the new social architecture with the design fr...
Whether they’re located in a public, private, or hybrid cloud environment, cloud technologies are constantly evolving. While the innovation is exciting, the end mission of delivering business value and rapidly producing incremental product features is paramount. In his session at @DevOpsSummit at 19th Cloud Expo, Kiran Chitturi, CTO Architect at Sungard AS, will discuss DevOps culture, its evolution of frameworks and technologies, and how it is achieving maturity. He will also cover various st...