Critical Outcome Technologies Reports Year-End Financial and Operating Results - Seite 2

Financial Results

Fourth Quarter

The Company reported a quarterly net loss of $1,226,521 or $0.01 per share, compared to a net loss of $443,579 or $0.01 per share, for the fourth quarter a year earlier. The increase of $782,942 in the loss related primarily to an increase of $502,261 in research and development ("R&D") expenditures and $312,122 in general and administrative ("G&A") expenditures partially offset by an increase of $42,495 in investment tax credits.

The increased R&D expenditures related primarily to in vivo and in vitro testing that increased by $414,497 reflecting the 28-day two-species toxicity tests being conducted for COTI-2 and the related supporting tests necessary to prepare an IND filing with the U.S. Food and Drug Administration. The major cause of the G&A increase was higher spending for strategic financial advisory services of $276,592 to assist in the Company's plans to raise capital in the U.S.

Fiscal Year

The Company reported a loss of $2,996,179 or $0.03 per share for FYE 2014 compared to a net loss of $2,625,804 or $0.03 per share for fiscal 2013. The increased loss of $370,375 resulted primarily from increases in R&D expense of $242,999 and G&A expense of $239,781 partially offset by a decrease in sales and marketing ("S&M") expense of $176,376.

R&D expenses increased year-over-year primarily due to increases in testing related to COTI-2, with the primary focus of the testing being the final two-species toxicity testing package and the associated tests supporting the preparation of a COTI-2 IND filing. The increase in G&A expenses related to higher consulting fees primarily associated with U.S. financial advisory services offset by a decrease in salaries and benefits, and share-based compensation. The decrease in S&M expenses year-over-year related to decreases in consulting fees, marketing and travel, and salaries and benefits related to a staffing reduction.

Financing

During the year, the Company realized gross proceeds of approximately $2.8 million through private placements with accredited investors and the issuance of a debenture to provide funding for operations. At FYE 2014, the Company had $830,275 in cash and cash equivalents to provide funding for operations in fiscal 2015 compared to $169,347 at FYE 2013. Subsequent to year-end, the Company announced a private placement financing for approximately $895,000 to further support operations.