Covalon Announces First Quarter Fiscal 2024 Results
I am extremely proud of the progress that the
The entire
Q1 Financial Overview
US product revenue for the quarter increased 36%, offset by International product revenue declining by 77%, largely due to the timing of shipments for a large International tender. Revenue for the three months ended
Development and consulting services revenue for the three-month period ended
Licensing and royalty fees for the three months ended
Gross margin for the three-month period ended
Operating expenses for the three months ended
Net loss for the three months ended
Adjusted Gross Margin(1) for the three-month period ended
Adjusted EBITDA(1) loss for the three months ended
Statement of Operations
The following audited table presents Covalon’s consolidated statements of operations for the three-month periods ended
(unaudited) |
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|
Three months ended
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2023 |
|
|
2022 |
|
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Revenue |
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Product |
|
|
|
$ |
4,575,767 |
|
$ |
5,245,264 |
|
|
Development and consulting services |
|
|
|
|
56,640 |
|
|
818,346 |
|
|
Licensing and royalty fees |
|
|
|
|
30,650 |
|
|
121,795 |
|
|
Total revenue |
|
|
|
|
4,663,057
|
|
|
6,185,405 |
|
|
Cost of sales |
|
|
|
|
1,814,520 |
|
|
2,490,573 |
|
|
|
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Gross profit before operating expenses |
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|
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2,848,537 |
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3,694,832 |
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|
|
|
|
|
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Operating expenses |
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Operations |
|
|
|
|
630,713 |
|
|
207,879 |
|
|
Research and development activities |
|
|
|
|
311,411 |
|
|
285,975 |
|
|
Sales, marketing, and agency fees |
|
|
|
|
1,646,303 |
|
|
2,029,936 |
|
|
General and administrative |
|
|
|
|
1,731,625 |
|
|
1,526,895 |
|
|
|
|
|
|
|
4,320,052 |
|
|
4,050,685 |
|
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|
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Gain of finance lease receivable |
|
|
|
|
610,088 |
|
|
- |
|
|
Finance (income) expenses |
|
|
|
|
(9,964 |
) |
|
24,968 |
|
|
|
|
|
|
|
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|||||
Net loss |
|
|
|
$ |
(851,543 |
) |
$ |
(380,821 |
) |
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Other comprehensive income (loss) Amount that may be reclassified to profit or loss |
|
|
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|
||||||
Foreign currency translation adjustment |
|
|
(387,273 |
) |
|
(16,785 |
) |
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Total comprehensive loss |
|
|
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$ |
(1,238,816 |
) |
|
(397,606 |
) |
|
Loss per common share |
|
|
|
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Basic loss per share (Note 17) |
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|
|
$ |
(0.03 |
) |
$ |
(0.02 |
) |
|
Diluted loss per share (Note 17) |
|
|
|
$ |
(0.03 |
) |
$ |
(0.02 |
) |
Non-GAAP Financial Measures
This press release makes reference to certain non-GAAP measures. These measures are not recognized or defined measures under IFRS Accounting Standards, do not have standardized meaning prescribed by IFRS Accounting Standards and are therefore unlikely to be comparable to similar measures presented by other companies. Rather, these measures are provided as additional financial information to complement those IFRS Accounting Standards measures by providing further understanding of our results of operations from management’s perspective. Accordingly, these measures should not be considered in isolation or as a substitute for analysis of our financial information reported under IFRS Accounting Standards. The non-GAAP financial measures, adjustments, and reasons for adjustments should be carefully evaluated as these measures have limitations as analytical tools and should not be used in substitution for an analysis of the Company’s results under IFRS Accounting Standards. We use non-GAAP measures including “Adjusted Gross Margin” and “Adjusted EBITDA” to provide investors with supplemental measures of our operating performance and thus highlight trends in our core business that may not otherwise be apparent when relying solely on IFRS Accounting Standards measures. We believe that securities analysts, investors and other interested parties frequently use non-GAAP measures in the evaluation of issuers. Our management also uses non-GAAP measures in order to facilitate operating performance comparisons from period to period, to prepare annual operating budgets and forecasts and to determine components of management compensation. The following non-GAAP financial measures are presented in this news release, and a description of the calculation for each measure is included below:
- Adjusted Gross Margin is defined as gross profit before operating expenses, plus depreciation and amortization included in cost of sales, plus inventory provision amounts.
- Adjusted EBITDA is defined as net loss, plus interest expense, plus depreciation and amortization, plus stock-based compensation, less government subsidies, plus inventory provisions, plus accounts receivable write-off expenses.
You should also be aware that the Company may recognize income or incur expenses in the future that are the same as, or similar to some of the adjustments in these non-GAAP financial measures. Because these non-GAAP financial measures may be defined differently by other companies in our industry, our definitions of these non-GAAP financial measures may not be comparable to similarly titled measures of other companies, thereby diminishing their utility.
The table below provides a reconciliation of gross profit before operating expenses under IFRS Accounting Standards in the consolidated financial statements to Adjusted Gross Margin for the three months, and year ended
(unaudited) |
Three months ended
|
|||
|
2023 |
2022 |
||
Gross profit before operating expenses |
2,848,537 |
3,694,832 |
||
Add: Depreciation and amortization |
52,548 |
56,033 |
||
Add: Inventory provisions |
(192,771) |
- |
||
Adjusted Gross Margin |
2,708,314 |
3,750,865 |
||
Adjusted Gross Margin (%) |
58% |
61% |
The table below provides a reconciliation of net loss under IFRS Accounting Standards in the consolidated financial statements to Adjusted EBITDA for the three months, and year ended
|
Three months ended
|
|||
|
2023 |
2022 |
||
Net loss |
(851,543) |
(380,821) |
||
Add: Net finance (income) expenses |
(9,964) |
24,968 |
||
Add: Depreciation and amortization |
240,194 |
250,085 |
||
Add: Share based compensation |
115,929 |
156,307 |
||
Add: Inventory provisions |
(192,771) |
- |
||
Add: Gain on finance lease receivable |
(582,140) |
- |
||
Adjusted EBITDA |
(1,280,295) |
50,539 |
About
Neither the
This news release may contain forward-looking statements which reflect the Company's current expectations regarding future events. The forward-looking statements are often, but not always, identified by the use of words such as "seek", "anticipate", "plan, "estimate", "expect", "intend", or variations of such words and phrases or state that certain actions, events, or results “may”, “could”, “would”, “might”, “will” or “will be taken”, “occur”, or “be achieved”. In addition, any statements that refer to expectations, projections or other characterizations of future events or circumstances contain forward-looking information. Statements containing forward-looking information are not historical facts, but instead represent management’s expectations, estimates, and projections regarding future events. Forward-looking statements involve risks and uncertainties, including, but not limited to, the factors described in greater detail in the “Risks and Uncertainties” section of our management’s discussion and analysis of financial condition and results of operations for the year ended
(1) See “Non-GAAP Measures” below, including for a reconciliation of the non-GAAP measures used in this release to the most comparable IFRS Accounting Standards measures.
View source version on businesswire.com: https://www.businesswire.com/news/home/20240228780937/en/
To learn more about
Investor Relations,
Email: investors@covalon.com
Website: https://covalon.com/
Twitter: @covalon
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