Nanalysis Scientific Inc. Reports Third Quarter 2020 Results and Provides Business Update

CALGARY, AB, Nov. 27, 2020 /CNW/ - Nanalysis Scientific Corp. ("the Company"), (TSXV: NSCI) (OTCQX: NSCIF) (FRA: 1N1) released today its third quarter 2020 results and provided an update on business operations.

	Three months ended September 30			Nine months ended September 30
($000's)	2020	2019	($) Change	2020	2019	($) Change
Revenue	1,700	1,641	59	5,219	6,241	(1,022)
Cost of products sold	644	385	259	1,855	1,897	(42)
Gross profit	1,056	1,256	(200)	3,364	4,344	(980)
Expenses
Sales and marketing	822	409	413	2,200	1,588	612
General and administration	668	782	(114)	2,187	1,929	258
Earnings (loss) before other items	(434)	65	(499)	(1,023)	827	(1,850)
Other Items^(1)	749	363	386	1,706	2,542	(836)
Loss before tax	(1,183)	(298)	(885)	(2,729)	(1,715)	(1,014)
Deferred tax recovery	84	-	84	259	36	223
Net loss	(1,099)	(298)	(801)	(2,470)	(1,679)	(791)
Other comprehensive income	40	-	40	182	-	182
Total comprehensive loss	(1,059)	(298)	(761)	(2,288)	(1,679)	(609)

(1) other items includes acquisition transaction costs, RTO  transaction costs, depreciation and amortization expense, finance expense (income) one time inventory adjustments, stock-based compensation and foreign exchange (gain) loss

OVERALL PERFORMANCE
For the three months ended September 30, 2020, the Company reported consolidated revenue of $1,700K, an increase of $59K or 4% from the comparative period in 2019. Unearned revenue was $2,800K as at September 30, 2020, an increase of $2,184K from $616K as at December 31, 2019. The Covid-19 pandemic impacted both Nanalysis and RS2D in the quarter.  Specifically, Nanalysis saw reduced sales as customers were wary on capital spending during the uncertainty of the pandemic, while RS2D employees were unable to complete certain contracts due to COVID-19 travel restrictions. Despite these challenges, the acquisition of RS2D earlier in 2020 and the inclusion of its revenue in Q3 2020 (versus none in 2019) enabled sales to show a 4% increase overall.

Gross profit for three months ended September 30, 2020, was $1,056K (a margin of 62%) compared to gross profit of $1,256K (a margin of 77%) for the third quarter of 2019. The three months ended September 2019 had a significant cost recovery for inventory, resulting in increased margins for 2019.

The Company's comprehensive loss for the three months ended September 30, 2020, was $1,059K as compared to comprehensive loss of $298K for the comparable period of 2019. The increase in comprehensive loss for the three months ended September 30, 2020, was due to increased depreciation and amortization, increased stock-based compensation expense, increased foreign exchange loss, increased sales and marketing expenses partially offset by decreased general and administration expense, decreased finance expense, a deferred tax recovery, increased other comprehensive income and increased revenue.

For the nine months ended September 30, 2020, the company reported consolidated revenue of $5,219K, a decrease of 16% from the $6,241K recognized from the comparable period ended September 30, 2019. The Company's comprehensive loss for the nine months ended September 30, 2020, was $2,228K as compared to comprehensive loss of $1,679K in the comparable period of 2019.  The decrease in revenue and the higher comprehensive loss was primarily due to the aforementioned impact of COVID-19, partially offset by the acquisition of RS2D.

FINANCIAL POSITION

At September 30, 2020, the Company had $4,187K (December 31, 2019 - $8,534K) of working capital, including $4,468K (December 31, 2019 - $6,619K) in cash. The Company has an undrawn line of credit of $2,000K and $785K of available borrowing on the Western Economic Diversification Canada interest free loan. Nanalysis's business has been affected by COVID-19 and as such is eligible for a subsidy of up to 75% of employees' eligible wages. During the nine months ended September 30, 2020, the Company claimed $1,213K and to date has received $1,085K from the Canadian emergency wage subsidy ("CEWS"). The Company will continue to monitor revenues and seek government support for both Canadian and French operations where assistance is offered.    

BUSINESS UPDATE

The Company continues to address challenges due to COVID-19 by adapting numerous work policies which have allowed it to operate with minimal disruptions to development and manufacturing. Travel restrictions and border closures have impacted the timeline and completion of significant contracts, specifically at its RS2D subsidiary. However, through the utilization of government COVID-19 relief programs, the Company remains in a strong financial position.

"Eight months of the pandemic has created numerous business challenges that we continue to push through," said Sean Krakiwsky, CEO, Nanalysis Scientific Corp. "Despite the impact of the pandemic, we remain confident in our business, with a significant number of contracts in our pipeline, backlog of customer sales orders, strong working capital balance, untouched debt facilities, and continued government grant applications, we are optimistic about the future."

The following objectives remain important for the Company in Q4 2020 and Q1 2021:

• New product: The Company expects to begin shipping its new 100 MHz benchtop NMR instrument, for which it has over $3 million in purchase orders and larger sales funnel reflecting strong market demand. The Company is striving to fulfill the sales backlog and will press release when the first 100 MHz product is shipped to a customer. We are pleased to convey that we have satisfied the regulatory safety requirements to ship our 100 MHz product commercially.
• Strategic contracts with partners that can fuel growth in the short, medium, and long terms.
• Evolving our scalable magnetic resonance technology platform, with a particular emphasis on leveraging commonalities between Nuclear Magnetic Resonance (NMR) spectroscopy and NMR imaging (aka MRI) to maximize performance for current and future customers, as well as enabling future products.
• Government grants and COVID relief funds to ensure continued innovation during these challenging times.
• Momentum in RS2D-related revenue growth, manifesting the value of the acquisition.

The pandemic has slowed the progress of strategic partnerships with companies such as Bosch and Sartec, both previously disclosed, but these relationships remain strong. The pandemic has also impacted the Company's ability to deliver on customer solutions in Europe as well negatively affected the Company's ability to commence shipping of its new 100 MHz product.

About Nanalysis Scientific Corp. (TSXV: NSCI, OTCQX: NSCIF, FRA: 1N1)

The Company trades on the TSX Venture Exchange (TSXV) in Canada with ticker symbol 'NSCI' and over the counter in the United States under the ticker symbol 'NSCIF'.

Nanalysis business is what we term "MRI for industry": It develops and manufactures portable Nuclear Magnetic Resonance (NMR) spectrometers or analyzers for laboratory and industrial markets. The NMReady60™ was the first fully featured portable NMR spectrometer in a single compact enclosure requiring no liquid helium or any other cryogens, and the Company continues to develop new products and has a strong innovation pipeline. Nanalysis began taking orders for the 100MHz device in early 2020. The Company's new device will be the most powerful non-cryogen, permanent magnet compact NMR device ever brought to market. Nanalysis devices are used by chemical professionals in many industries (oil and gas, chemical, mining, pharma, biotech, flavor and fragrances, agrochemicals, and more) as well as numerous government and university research labs around the world. The Company continues to exploit new global market opportunities both independently and with partners.

In March 2020, the Company acquired all outstanding shares of RS2D, a complementary technology company based in Strasbourg France that specializes in the development of cutting-edge MR electronics.  Based on a single electronic board, RS2D has developed MR product lines in high-field ("HF") NMR and magnetic resonance imaging ("MRI") that can further advance Nanalysis' existing product line, while the new products to round out the Company's magnetic resonance technology portfolio.

Notice regarding Forward Looking Statements and Legal Disclaimer

This news release contains certain "forward-looking statements" within the meaning of such statements under applicable securities law. Forward-looking statements are frequently characterized by words such as "anticipates", "plan", "continue", "expect", "project", "intend", "believe", "anticipate", "estimate", "may", "will", "potential", "proposed", "positioned" and other similar words, or statements that certain events or conditions "may" or "will" occur. These statements are only predictions. Various assumptions were used in drawing the conclusions or making the projections contained in the forward-looking statements throughout this news release. Forward-looking statements are based on the opinions and estimates of management at the date the statements are made and are subject to a variety of risks and uncertainties and other factors that could cause actual events or results to differ materially from those projected in the forward-looking statements. The Company is under no obligation, and expressly disclaims any intention or obligation, to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except as expressly required by applicable law.

Neither TSX Venture Exchange nor its Regulation Services Provider accepts responsibility for the adequacy or accuracy of this release.

SOURCE Nanalysis Scientific Corp.

Nanalysis Investor Relations, Telephone: [phone]

Related Links

http://www.nanalysis.com/company