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BSD Medical Announces Second Quarter Fiscal 2014 Financial Results

Total Revenues More Than Double for the Second Consecutive Quarter

Company to Hold Investment Community Conference Call at 2:00 p.m. Eastern Today

Category: Results of Operations and Corporate Announcements

Wednesday, April 9, 2014 7:15 am MDT

Dateline:
SALT LAKE CITY

Public Company Information:

NASDAQ:BSDM
US0556621003

 
"We are pleased to report our second consecutive quarter of more than 100% year-over-year revenue growth, and a reduced loss"

SALT LAKE CITY--(BUSINESS WIRE)--BSD Medical Corporation (NASDAQ: BSDM) (Company or BSD) (www.BSDMedical.com), a leading provider of medical systems that treat cancer and benign diseases using heat therapy, today reported financial results for the three months and six months ended February 28, 2014.

Second Quarter of Fiscal 2014 Highlights (all comparisons with the second quarter of fiscal 2013)

  • Total revenues increased 106% to $1.7 million
  • Operating costs and expenses declined slightly to $2.2 million
  • Net loss of $1.5 million, an improvement of $.4 million from $1.9 million

First Half of Fiscal 2014 Highlights (all comparisons with the first half of fiscal 2013)

  • Total revenues doubled to $3.0 million compared to $1.5 million
  • Gross margin improved to 48%, from 40%
  • Operating costs and expenses were reduced to $4.4 million from $4.7 million
  • Net loss of $3.0 million dollars, a $1.1 million improvement from a net loss of $4.1 million
  • Total sales backlog of $1.6 million, a 96% increase

The Company reported cash and equivalents of $7.0 million and no debt at February 28, 2014.

Management Commentary

“We are pleased to report our second consecutive quarter of more than 100% year-over-year revenue growth, and a reduced loss,” said Harold Wolcott, President of BSD Medical. “Our higher revenues are primarily from increasing sales of our MicroThermX products. Our operating costs and expenses remained relatively unchanged from the prior year, even though we more than doubled total revenues. By increasing sales and reducing operating costs and expenses, we significantly reduced our net loss, compared with the same prior year periods.”

“BSD is very encouraged with the progress and the sales momentum for the MicroThermX system under our exclusive master distribution agreement with Terumo Europe NV. Terumo has already established sales in many of the Western European countries. Terumo will now expand its marketing into additional Western European countries, Eastern European countries, and several other markets defined in the distribution agreement,” Mr. Wolcott added. “We see tremendous potential for the MicroThermX Microwave Ablation System to meet the worldwide market trend toward effective, less invasive and more cost-effective therapies.”

“With the recent approval by the Taiwan Food and Drug Administration for the BSD-2000 Hyperthermia System, we were able to ship additional hyperthermia systems in the first half of fiscal 2014. Our distributor in Taiwan has also committed to purchase other BSD-2000 Hyperthermia Systems before the end of BSD’s current fiscal year,” Mr. Wolcott concluded.

Second Quarter and First Half of Fiscal 2014 Operating Summary

BSD reported total revenues for the second quarter of fiscal year 2014 of $1.7 million, more than doubling the $0.8 million from the second quarter of fiscal year 2013. This increase in revenues was driven primarily by increased sales of MicroThermX products and the sale of two hyperthermia systems. The Company has a current sales backlog of $1.6 million.

Gross margin was $0.8 million, or 45% of total revenues, for the second quarter of fiscal 2014, compared to $0.4 million, or 49% of total revenues, for the same period last year. Lower gross margin percent resulted from a change in product mix.

Operating costs and expenses declined slightly to $2.2 million during the second quarter of fiscal 2014 from $2.3 million in the comparable prior year period.

Increased sales and lower operating costs and expenses resulted in a reduction in our net loss. The Company reported a net loss of $1.5 million, or $0.04 per share, for the second quarter of fiscal 2014, compared with a net loss of $1.9 million, or $0.06 per share, for the second quarter of fiscal 2013.

Total revenues for the first half of fiscal 2014 increased 104% to $3.0 million, from $1.5 million in the prior year. Gross margin was $1.5 million, or 48% of total revenues, for the six months ended February 28, 2014, compared with $0.6 million, or 40% of total revenues, for the six months ended February 28, 2013. Operating costs and expenses for the first half of 2014 decreased to $4.4 million from $4.7 million in the prior year period. Net loss for the first half of fiscal 2014 declined to $3.0 million dollars, or $0.09 per share, from a net loss of $4.1 million, or $0.14 per share, for the first half of fiscal 2013.

Conference Call

Management will hold a conference call today at 2:00 p.m. Eastern time/12:00 p.m. Mountain time to discuss financial results and provide a business update. Individuals may participate on the call by dialing 877-941-1466 in the U.S. or 480-629-9870 outside the U.S. and entering passcode 4673204. A telephone replay will be available until April 16, 2014, by dialing 800-406-7325 in the U.S. or by dialing 303-590-3030 outside the U.S. and entering conference ID 4673204. The conference call will be available via webcast for 90 days by visiting the Investor Relations section of the Company's website at www.BSDMedical.com.

About BSD Medical Corporation

BSD Medical Corporation develops, manufactures, markets and services systems to treat cancer and benign diseases using heat therapy, which is delivered using focused radiofrequency (RF) and microwave energy. BSD’s product lines include both hyperthermia and ablation treatment systems. BSD’s MicroThermX microwave ablation system has been developed as a stand-alone therapy to employ precision-guided microwave energy to ablate (destroy) soft tissue. The Company has developed extensive intellectual property, multiple products in the market and established distribution in the United States, Europe and Asia. Certain of the Company’s products have received regulatory approvals and clearances in the United States, Europe and China. For further information visit BSD Medical's website at www.BSDMedical.com.

Forward-Looking Statements.

This press release contains forward-looking statements, which are subject to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995, including statements relating to its financial results and expectations, Terumo’s marketing plans, the potential for the MicroThermX Microwave Ablation System, the purchasing plans of our distributor in Taiwan and hyperthermia revenue opportunities. Readers are cautioned that these forward-looking statements are only predictions and may differ materially from actual future events or results due to a variety of factors, including, among other things, the demand for the Company’s products, the ability of the Company to produce the products to meet the demand, global economic conditions and uncertainties in the geopolitical environment and other risk factors set forth in the Company’s most recent reports on Form 10-K and Form 10-Q. Any forward-looking statements in this release are based on limited information currently available to the Company, which is subject to change, and the Company will not necessarily update the information.

 
BSD MEDICAL CORPORATION
Condensed Balance Sheets
(Unaudited)

ASSETS

   February 28,

2014

   August 31,

2013

Current assets:   
Cash and cash equivalents$7,023,187$9,450,528
Accounts receivable, net of allowance for doubtful
accounts of $20,000

669,988

899,969

Related party trade accounts receivable5,02624,201
Inventories, net2,430,3852,445,770
Other current assets 153,565     200,028 
 
Total current assets10,282,15113,020,496
 
Property and equipment, net 1,286,087     1,319,880 
 
$11,568,238    $14,340,376 
 
LIABILITIES AND STOCKHOLDERS’ EQUITY
 
Current liabilities:
Accounts payable$334,085$521,417
Accrued liabilities623,179573,880
Customer deposits324,630317,480
Deferred revenue – current portion 693,808     730,593 
 
Total current liabilities1,975,7022,143,370
 
Deferred revenue – net of current portion 13,038     53,115 
 
Total liabilities 1,988,740     2,196,485 
 
Commitments and contingencies
 
Stockholders’ equity:

Preferred stock, $.001 par value; 10,000,000 shares
authorized, no shares issued and outstanding

-

-

Common stock, $.001 par value, 80,000,000 shares
authorized, 34,006,202 shares issued

34,007

34,007

Additional paid-in capital58,157,62757,739,056
Treasury stock, 24,331 shares at cost(234)(234)
Accumulated deficit (48,611,902)    (45,628,938)
 
Total stockholders’ equity 9,579,498     12,143,891 
 
$11,568,238    $14,340,376 
 
 
      

BSD MEDICAL CORPORATION

Condensed Statements of Comprehensive Loss

(Unaudited)

 
Three Months EndedSix Months Ended
February 28,
2014
  February 28,
2013
   February 28,
2014
  February 28,
2013
Revenues:    
Sales$1,616,076$766,084$2,847,635$1,283,698
Sales to related parties1,7486,27518,43476,546
Equipment rental 72,900    46,900     155,300    118,800 
 
Total revenues 1,690,724    819,259     3,021,369    1,479,044 
 
Cost of Revenues:
Cost of sales918,426411,3651,547,137820,235
Cost of related party sales2595,0697,91366,446
Cost of equipment rental 2,947    2,947     5,894    5,894 
 
Total cost of revenues 921,632    419,381     1,560,944    892,575 
 
Gross margin 769,092    399,878     1,460,425    586,469 
 
Operating costs and expenses:
Research and development559,287558,6911,062,0441,085,958
Selling, general and administrative 1,682,319    1,705,682     3,387,032    3,594,931 
 
Total operating costs and expenses 2,241,606    2,264,373     4,449,076    4,680,889 
 
Loss from operations (1,472,514)   (1,864,495)    (2,988,651)   (4,094,420)
 
Other income (expense):
Interest income5,1046,72011,42716,666
Other expense (2,693)   (3,622)    (5,740)   (2,307)
 
Total other income 2,411    3,098     5,687    14,359 
 
Loss before income taxes(1,470,103)(1,861,397)(2,982,964)(4,080,061)
 
Income tax benefit -    -     -    - 
 
Net comprehensive loss$(1,470,103)  $(1,861,397)   $(2,982,964)  $(4,080,061)
 
Net loss per common share:
Basic$(0.04)  $(0.06)   $(0.09)  $(0.14)
Diluted$(0.04)  $(0.06)   $(0.09)  $(0.14)
 

Weighted average number of shares
outstanding:

 

Basic33,982,00029,778,00033,982,00029,778,000
Diluted33,982,00029,778,00033,982,00029,778,000
 
 
   

BSD MEDICAL CORPORATION

Condensed Statements of Cash Flows

(Unaudited)

 
Six Months Ended
February 28,
2014
   February 28,
2013
Cash flows from operating activities:   
Net loss$(2,982,964)$(4,080,061)
Adjustments to reconcile net loss to net cash used
in operating activities:
Depreciation and amortization61,37770,026
Stock-based compensation418,571576,332
Decrease (increase) in:
Receivables249,156(183,526)
Inventories15,38523,922
Other current assets46,463(53,308)
Increase (decrease) in:
Accounts payable(187,332)103,455
Accrued liabilities49,299212,304
Customer deposits7,15016,270
Deferred revenue (76,862)    (43,337)
 
Net cash used in operating activities (2,399,757)    (3,357,923)
 
Cash flows from investing activities:
Purchase of property and equipment (27,584)    (12,739)
 
Cash flows from financing activities -     - 
 
Net decrease in cash and cash equivalents(2,427,341)(3,370,662)
Cash and cash equivalents, beginning of the period 9,450,528     11,102,508 
 
Cash and cash equivalents, end of the period$7,023,187    $7,731,846 

Contact:

BSD Medical Corporation
William Barth, 801-972-5555
Fax: 801-972-5930
investor@bsdmc.com