SPECTRAL ANNOUNCES FOURTH QUARTER AND FISCAL 2019 RESULTS

TORONTO, March 27, 2020 (GLOBE NEWSWIRE) -- Spectral Medical Inc., (TSX: EDT), a late stage theranostic company advancing therapeutic options for sepsis and septic shock, today announced its financial results for the fourth quarter and for the year ended December 31, 2019.

Financial Review

Revenue for the three months ended December 31, 2019 was $746,000 compared to $1,864,000 for the same three-month period last year. Revenue for the year ended December 31, 2019 was $2,868,000 compared to $3,840,000 for the prior year, representing a decrease of $972,000, or 25%.

For the quarter ended December 31, 2019, the Company reported operating costs of $2,160,000 compared to $1,420,000 for the corresponding period in 2018. Operating costs for the year ended December 31, 2019 amounted to $7,728,000 compared to $6,329,000 in 2018. Most of the Company’s expenses are incurred in its Phase III clinical trial and vary depending on the timing and level of patient enrolment. Apart from clinical trial activities, the Company continues to maintain a low cost operating structure for its base business operations.

Loss for the quarter ended December 31, 2019 was $1,414,000 ($0.006 per share) compared to income of $444,000 ($0.002 per share) for the same quarter last year. For the year ended December 31, 2019, the Company reported a loss of $4,860,000, ($0.02 per share), compared to a loss of $2,489,000 ($0.01 per share), for the year ended December 31, 2018.

The Company concluded the 2019 year with cash of $1,435,000 compared to $4,368,000 cash on hand as of December 31, 2018. This does not reflect the US$5,000,000 upfront rights payment from Baxter International Inc., which was received on February 21, 2020.

The total number of common shares outstanding for the Company was 225,876,683 as at December 31, 2019. 

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 and is guided by the Company’s Endotoxin Activity Assay (EAA), the only FDA cleared diagnostic for the risk of developing sepsis.

PMX has been approved for therapeutic use in Japan and Europe, and has been used safely and effectively on more than 200,000 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 330,000 patients are diagnosed with severe sepsis and septic shock in North America each year.

Spectral, through its wholly owned subsidiary, Dialco Medical Inc. (“Dialco”), is also commercializing a new proprietary platform, “SAMI”, targeting the renal replacement therapy (“RRT”) market.  Dialco is also seeking regulatory approval for “DIMI” which is based on the same RRT platform, but will be intended for home hemodialysis use.

Spectral is listed on the Toronto Stock Exchange under the symbol EDT. 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.

For further information, please contact:

Dr. Paul Walker President and CEO Spectral Medical Inc. 416-626-3233 ext. 2100 [e-mail]

Mr. Chris Seto CFO Spectral Medical Inc. 416-626-3233 ext. 2004 [e-mail]

Ali Mahdavi Capital Markets &Investor Relations 416-962-3300 [e-mail]

Spectral Medical Inc.
Consolidated Statements of Financial Position
(in thousands of Canadian dollars)

	December 31 2019			December 31 2018
	$			$
Assets
Current assets
Cash	1,435			4,368
Trade and other receivables	271			1,433
Inventories	276			197
Prepayments and other assets	155			192
Contract assets	519			126
	2,656			6,316
Non-current assets
Right-of-use-asset	719			-
Property and equipment	368			377
Intangible asset	263			284
Total assets	4,006			6,977
Liabilities
Current liabilities
Trade and other payables	1,002			500
Contract liabilities	-			107
Current portion of lease liability	77			-
	1,079			607
Non-current liability
Lease liability	667			-
Total liabilities	1,746			607
Equity
Share capital	66,837			66,646
Contributed surplus	7,981			7,98
Share-based compensation	6,183			5,564
Warrants	1,870			1,930
Deficit	(80,611)			(75,751)
Total equity	2,260			6,370
Total liabilities and equity	4,006			6,977

Spectral Medical Inc.
Consolidated Statements of Loss and Comprehensive Loss
For the years ended December 31, 2019 and 2018
(in thousands of Canadian dollars, except for share and per share data)

	2019			2018
	$			$
Revenue	2,868			3,840
Expenses
Changes in inventories of finished goods and work-in-process	291			102
Inventory write-down	-			229
Raw materials and consumables used	359			266
Salaries and benefits	3,826			3,095
Consulting and professional fees	1,499			1,308
Regulatory and investor relations	514			461
Travel and entertainment	326			129
Facilities and communication	300			370
Insurance	238			206
Depreciation and amortization	278			230
Interest expense on lease liability	36			-
Foreign exchange loss (gain)	114			(74	)
Interest income	(81	)		(13	)
Other expenses	28			20
	7,728			6,329
Loss and comprehensive loss for the year	(4,860	)		(2,489	)
Basic and diluted loss per common share	(0.02	)		(0.01	)
Weighted average number of common shares outstanding – basic and diluted
	225,731,215			220,172,675

Spectral Medical Inc.
Consolidated Statements of Changes in Equity
For the years ended December 31, 2019 and 2018
(in thousands of Canadian dollars)

	Notes	Issued capital		Contributed surplus	Share-based compensation		Warrants		Deficit			Total equity
		Number	$	$	$		$		$			$
Balance, January 1, 2018		207,459,022	63,225	7,849	4,914		132		(73,262	)	2,858
Private placement	22	17,694,661	3,267	-	-		1,930		-		5,197
Share options exercised	16	437,500	154	-	(63	)	-		-		91
Warrant expiry	16	-	-	132	-		(132	)	-		-
Loss and comprehensive loss  for the year		-	-	-	-		-		(2,489	)	(2,489		)
Share-based compensation	16	-	-	-	713		-		-		713
Balance, December 31, 2018		225,591,183	66,646	7,981	5,564		1,930		(75,751	)	6,370
Share options exercised	16	10,500	7	-	(3	)	-		-		4
Warrants exercised	16	275,000	184	-	-		(60	)	-		124
Loss and comprehensive loss for the year		-	-	-	-		-		(4,860	)	(4,860
Share-based compensation	16	-	-	-	622		-		-		622
Balance, December 31, 2019		225,876,683	66,837	7,981	6,183		1,870		(80,611	)	2,260

Spectral Medical Inc.
Consolidated Statements of Cash Flows
For the years ended December 31, 2019 and 2018
(in thousands of Canadian dollars)

	2019			2018
	$			$
Cash flow provided by (used in)
Operating activities
Loss and comprehensive loss for the year	(4,860	)		(2,489	)
Adjustments for:
Depreciation on right-of-use asset	94			-
Depreciation on property and equipment	163			205
Amortization of intangible asset	21			25
Interest expense on lease liability	36			-
Unrealized foreign exchange loss (gain)on cash	57			(59	)
Share-based compensation	622			713
Write down of property and equipment	-			35
Loss on disposal of property and equipment	7			-
Changes in items of working capital:
Trade and other  receivables	1,162			(552	)
Inventories	(79	)		(6	)
Prepayments and other assets	37			(119	)
Contract assets	(393	)		(126	)
Trade and other payables	502			(112	)
Contract liabilities	(107	)		104
Net cash used in operating activities	(2,738	)		(2,381	)
Investing activities
Property and equipment expenditures	(161	)		(47	)
Net cash used in investing activities	(161	)		(47	)
Financing activities
Proceeds from private placement	-			5,308
Transaction costs paid	-			(111	)
Lease liability payments	(105	)		-
Share options exercised	4			91
Warrants exercised	124			-
Net cash provided by financing activities	23			5,288
(Decrease) increase in cash	(2,876	)		2,860
Effects of exchange rate changes on cash	(57	)		59
Cash, beginning of year	4,368			1,449
Cash, end of year	1,435			4,368