Nanotech Announces Second Quarter Fiscal 2015 Results

Customers Demonstrate Continued Acceptance of the New Nanotech and its Security Features

VANCOUVER, British Columbia – June 1, 2015 – Nanotech Security Corp. (TSXV: NTS) (OTCQX: NTSFF), (“Nanotech” or “the Company”) today released its financial results for its three and six months ended March 31, 2015.

Strategic Highlights during the Second Quarter

  • Revenue increased by 167% to $1.5 million. The Fortress Optical acquisition contributed its second full quarter, delivering revenues of $873,000.
  • Gross margin improved to 47%. The same period last year saw 35% gross margin, reflecting a mix of higher margin Security Features orders related to the Fortress Optical acquisition.
  • Granted two patents in advanced security features. One provided increased protection on next generation nanotechnology authentication features, and the other was related to Optical Thin Film (“OTF”).
  • Signed banknote security feature development contract with a prominent issuing authority. The contract commenced in the first quarter and is focused on designing our technology into their banknote and is valued at approximately $1,000,000 per year with opportunity for renewal.

Recent Developments during the Third Quarter

  • Received follow-on OTF order of $560,000. Following a successful delivery of a similarly sized order in Q2 for banknotes, we received a further order with planned delivery in Q3.
  • Successful customer visits stemming from Vancouver Currency Conference. Had positive meetings with several issuing authorities and prominent banknote industry suppliers to showcase Nanotech’s latest security features at the Company’s new corporate office and lab in Burnaby, B.C.
  • Demonstrated KolourOptik™ security feature on a metal coin. Working with an issuing authority at its production facility to successfully apply a nanotechnology image and thin film to metal coins.

Granted an additional two patents in advanced security features.  One relates to the Company’s next generation nanotechnology authentication features, and the other provides increase protection for OTF.

Doug Blakeway, Nanotech’s Chairman and CEO commented, “The $1 million development contract we announced during the second quarter with a G8 issuing authority is a major milestone for the Company. We see this contract as verification that the exclusive banknote industry has accepted Nanotech and our technologies.”  Mr. Blakeway further commented, “Over the past few months we have met with numerous issuing authorities and banknote industry members; their enthusiasm surrounding our products has spread throughout this exclusive global community and has opened the door to many opportunities to be designed into future banknotes.”

Selected Financial Information

All results are reported in Canadian dollars and are prepared in accordance with International Financial Reporting Standards (“IFRS”) as issued by the International Accounting Standards Board (“IASB”).

  Three months ended   Six months ended
  March 31, $ %   March 31, $ %
  2015 2014 Change Change   2015 2014 Change Change
Revenue $ 1,533,242 $ 573,730 $ 959,512 167% $ 3,074,250 $ 1,131,049 $ 1,943,201 172%
Gross profit        723,818 201,755 522,063 259% 1,255,168 389,804 865,364 222%
Gross profit % 47% 35% 41% 34%
Net loss  (894,522)     (859,117) (35,405) 0% (1,825,793) (1,552,392) 273,401 (18%)
Net loss per share – basic and diluted (0.02) (0.02) 0% (0.04) (0.04) 0%
Net cash used in operating activities (1,149,447) (654,795) (494,652) (76%) (2,268,523) (1,238,836) (1,029,687) (83%)
Weighted average number of common shares 48,751,267 38,765,164 26% 48,539,720 38,760,600 25%

 

    $ %
  March 31, 2015 September 30, 2014 Change Change
Total assets $   27,969,948 $  29,749,852 $   (1,779,904) (6 %)
Total long term liabilities 4,940,000 6,100,000 (1,160,000) (19 %)
Total equity        21,246,767 22,027,680 (780,913) (4 %)

 

Revenue for the three months ended March 31, 2015 increased by $960,000, to $1.5 million, compared to $574,000 during the same period last year.  The increased revenue was largely a result of revenue generated by the new Security Features business unit that generated sales of $873,000, primarily from the delivery of OTF and development contracts.  OTF production during the quarter remained strong; however one significant order representing about one month’s production did not ship during the quarter and is expected to ship during the third or fourth quarter.  The Surveillance business unit again saw both sequential and year-over-year growth, benefiting from the delivery of three surveillance vans and steady product sales.

Revenue for the six months ended March 31, 2015 increased by $1.9 million to $3.1 million, compared to $1.1 million during the same period last year.  The increased revenue was again reflected in the revenue generated by the new Security Features business unit that generated sales of $1.9 million primarily from the delivery of