Spectral Announces Second Quarter Results

TORONTO, ONTARIO--(Marketwired - Aug. 12, 2016) - Spectral Medical Inc., (TSX:EDT) (OTCQX:EDTXF), a Phase III company developing the first treatment for patients with septic shock guided by a companion diagnostic, today announced its unaudited financial results for the second quarter ended June 30, 2016.

Financial Review

Revenue for the three months ended June 30, 2016 was $870,000 compared to $818,000 for the same period in the preceding year. For the six months ended June 30, 2016 revenues were $1,932,000 compared to $1,695,000 in the first half of 2015. Revenues for both the quarter and the year were consistent with prior year levels and this trend is expected to continue for the remainder of the year.

Operating costs for the quarter ended June 30, 2016 amounted to $4,393,000 compared to $3,242,000 in 2015. Operating costs for the six months ended were $8,462,000, an increase of $2,088,000 from $6,374,000 for the first six months of 2015. The increase is almost entirely attributable to higher costs for the EUPHRATES trial, resulting from completion of patient enrolment, collection of data, and preparation of its final submission to the U. S. Food and Drug Administration (FDA). Trial related expenses are expected to decline significantly starting in the third quarter. Apart from clinical trial activities, the Company continues to maintain a low cost operating structure for its base business operations.

For the three months ended June 30, 2016, the Company reported a loss of $3,498,000 ($0.02 per share) compared to a loss of $2,400,000 ($0.01 per share) for the three months ended June 30, 2015. The loss for the six months ended June 30, 2016 was $6,492,000 ($0.03 per share) compared to $4,722,000 ($0.03 per share) for the same six month period in the prior year.

The Company concluded the second quarter of 2016 with cash on hand of $10,044,000 compared to $6,369,000 as of December 31, 2015.

The total number of shares outstanding for the Company was 206,733,209 as at June 30, 2016.

About Spectral

Spectral is a Phase III company seeking U.S. FDA approval for its unique product for the treatment of patients with septic shock, Toraymyxin™ ('PMX"). PMX is a therapeutic hemoperfusion device that removes endotoxin, which can cause sepsis, from the bloodstream. Directed by the Company's Endotoxin Activity Assay (EAA™), the only FDA cleared diagnostic for the risk of developing sepsis, Spectral's EUPHRATES trial is the world's only active and most innovative Phase III study in the area of septic shock.

PMX has been approved for therapeutic use in Japan and Europe, and has been used safely and effectively on more than 150,000 patients to date. In March 2009, Spectral obtained the exclusive development and commercial rights in the U.S. for PMX, and in November 2010, signed an exclusive distribution agreement for this product in Canada. Approximately 350,000 patients are diagnosed with severe sepsis and septic shock in North America each year, representing a greater than $3 billion market opportunity for Spectral. Spectral is listed on the Toronto Stock Exchange under the symbol EDT, and on the OTCQX under the symbol EDTXF. For more information please visit www.spectraldx.com

Forward-looking statement

Information in this news release that is not current or historical factual information may constitute forward - looking information within the meaning of securities laws. Implicit in this information, particularly in respect of the future outlook of Spectral and anticipated events or results, are assumptions based on beliefs of Spectral's senior management as well as information currently available to it. While these assumptions were considered reasonable by Spectral at the time of preparation, they may prove to be incorrect. Readers are cautioned that actual results are subject to a number of risks and uncertainties, including the availability of funds and resources to pursue R&D projects, the successful and timely completion of clinical studies, the ability of Spectral to take advantage of business opportunities in the biomedical industry, the granting of necessary approvals by regulatory authorities as well as general economic, market and business conditions, and could differ materially from what is currently expected.

The TSX has not reviewed and does not accept responsibility for the adequacy or accuracy of this statement.

Spectral Medical Inc.
Condensed Interim Consolidated Statements of Financial Position
(Unaudited)
(in thousands of Canadian dollars)
	June 30		December 31
	2016		2015
	$		$
Assets
Current assets
Cash	10,044		6,369
Trade and other receivables	752		630
Inventories	436		243
Prepayments and other assets	264		141
	11,496		7,383
Non-current assets
Property and equipment	714		717
Intangible asset	347		359
	1,061		1,076
Total assets	12,557		8,459
Liabilities
Current liabilities
Trade and other payables	3,387		2,850
Deferred revenue	105		176
Total liabilities	3,492		3,026
Equity
Share capital	62,915		53,058
Contributed surplus	7,849		7,849
Other equity reserves	3,990		3,723
Deficit	(65,689	)	(59,197	)
Total equity	9,065		5,433
Total liabilities and equity	12,557		8,459

Spectral Medical Inc.
Condensed Interim Consolidated Statements of Loss and Comprehensive Loss
For the six months ended June 30, 2016 and 2015
(Unaudited)
(in thousands of Canadian dollars, except for share and per share data)
	Three months ended				Six months ended
			June 30				June 30
	2016		2015		2016		2015
			$				$
Revenue	870		818		1,932		1,695
Expenses
Changes in inventories of finished goods and work- in-process	58		56		83		80
Raw materials and consumables used	95		107		298		207
Employee benefits	969		906		2,210		1,910
Product development	67		-		67		-
Consulting and professional fees	2,555		1,670		4,610		3,242
Regulatory and investor relations	191		138		326		308
Travel and entertainment	261		189		470		392
Depreciation and amortization	49		44		91		87
Foreign exchange loss (gain)	15		4		30		(13	)
Other expenses	133		128		277		252
	4,393		3,242		8,462		6,465
Operating loss	(3,523	)	(2,424	)	(6,529	)	(4,770	)
Finance income	25		24		38		48
Loss and comprehensive loss for the period	(3,498	)	(2,400	)	(6,492	)	(4,722	)
Basic and diluted loss per common share	(0.02	)	(0.01	)	(0.03	)	(0.03	)
Weighted average number of commonshares outstanding	206,733,209		190,803,548		202,334,393		185,307,431

Spectral Medical Inc.
Condensed Interim Consolidated Statements of Changes in Equity
For the six months ended June 30, 2016 and 2015
(Unaudited)
(in thousands of Canadian dollars)
		Issued capital				Contributed surplus	Share-based compensation		Warrants	Deficit		Total equity
		Number		$		$	$		$	$		$
Balance, January 1, 2015		179,737,241		46,879		7,849	3,542		-	(49,450	)	8,820
Private placement		11,049,464		6,021		-	-		-			6,021
Shares repurchased under NCIB		(90,000	)	(23	)					(32	)	(55	)
Share options exercised		355,950		231		-	(99	)	-			132
Loss and comprehensive loss for the period		-		-		-	-		-	(4,722	)	(4,722	)
Share-based compensation		-		-		-	228		-	-		228
Balance, June 30, 2015		191,052,655		53,108		7,849	3,671		-	(54,204	)	10,424
Balance, January 1, 2016		190,771,405		53,058		7,849	3,723		-	(59,197	)	5,433
Bought deal prospectus offering		15,106,804		9,399		-	-		-	-		9,399
Share options exercised		855,000		458		-	(192	)	-	-		266
Loss and comprehensive loss for the period		-		-		-	-		-	(6,492	)	(6,492	)
Share-based compensation		-		-		-	459		-	-		459
Balance, June 30, 2016		206,733,209		62,915		7,849	3,990		-	(65,689	)	9,065

Spectral Medical Inc.
Condensed Interim Consolidated Statements of Cash Flows
For the six months ended June 30, 2016 and 2015
(Unaudited)
(in thousands of Canadian dollars)
				Six months ended
		2016		2015
		$		$
Cash flow provided by (used in)
Operating activities
Loss and comprehensive loss for the period		(6,492	)	(4,722	)
Adjustments for:
	Depreciation on property and equipment	79		75
	Amortization of intangible asset	12		12
	Share-based compensation	459		228
	Loss on disposal of property and equipment	4
Changes in items of working capital :
	Trade and other receivables	(122	)	(197	)
	Inventories	(193	)	(101	)
	Prepayments and other assets	(123	)	(135	)
	Trade and other payables	537		(110	)
	Deferred revenue	(71	)	(75	)
Net cash used in operating activities		(5,910	)	(5,025	)
Investing activities
Property and equipment expenditures		(80	)	(191	)
Net cash used in investing activities		(80	)	(191	)
Financing activities
Bought deal prospectus offering		9,399		-
Private placement		-		6,021
Share options exercised		266		132
Shares repurchased under NCIB		-		(55	)
Net cash provided by financing activities		9,665		6,098
Increase in cash		3,675		882
Cash, beginning of period		6,369		10,054
Cash, end of period		10,044		10,936