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SENSIO Releases its Results for the 2013-2014 Fiscal Year

MONTREAL, CANADA — (Marketwired) — 09/26/14 — SENSIO Technologies Inc. (“SENSIO” / the “Company”) (TSX VENTURE: SIO) today released its results for the fiscal year ended May 31, 2014. In the last fiscal year, the Company–s revenues amounted to $705K, an increase of $313K, representing a progression of 79.7% over the previous year. The increase coming from patent licencing revenues and the posting of the first revenues from 3DGO! explain this improvement, while the combined revenues from Live 3D and the professional market were down $53K which was consistent with the Company–s strategic reorientation of its business activities. During the same period, operating expenses decreased by $833K compared to 2012-2013, representing a reduction of 19.8%. Finally, the Company–s net loss amounted to $5.2M after incurring a $2.3M expense related to advances on royalties for the entire fiscal year. These advances on royalties are paid or payable to studios and are related to 3D movies distribution rights for the 3DGO! store.

Highlights of the Fiscal Year Ended May 31, 2014

“The shift SENSIO has made since 2013 has begun to bear fruit and this is reflected not only in revenues but also in the lowering of operating expenses during the last fiscal year,” commented Nicholas Routhier, President and CEO. “While for now, our technology and patent licencing activities in the consumer electronics market represent our main source of revenues, we believe that 3DGO! will represent the biggest opportunity for revenue growth in the future, which explains our major investments in infrastructure and content acquisition in the last two years. The sizeable expense related to advances on royalties which we–ve posted, is the outcome of a year-end exercise in reassessing this asset and obligations related to the current agreements with studios, based on the current level of activity. It stems from the initial agreements SENSIO has signed since 2011 with the right owners, when the market for 3D movies was highly speculative and demand for 3D films was very strong. We believe that this initial investment was necessary in order to get into the market at the right time and was the price to pay for launching such a venture and sign the first agreements with the big industry players. Existing agreements which have been renewed and new agreements signed by SENSIO since then are much more in line financially with the current level of activity in the market with no adverse impact on our library of titles. We expect to dramatically reduce the expenses related to advance on royalties in the coming fiscal year.

Thanks to these investments, we were able to launch 3DGO! with Vizio early in the year and then sign agreements with Panasonic and LG. These agreements are important milestones which significantly increase our potential market by adding prospective new users. In the coming quarters, our efforts will be focused on the deployment of 3DGO! on LG–s 3DTVs, on increasing the level of activity and the number of 3DGO! users, as well as the international rollout of our service, particularly in Europe. By keeping a tight grip on our costs, reducing our minimum guarantees on content to better reflect our current level of activity and by increasing our revenues from 3DGO!, we should see a significant improvement in our financial results in the next fiscal year.”

Consumer electronics market – Growth in licence revenues

Activities in the consumer electronics market generated $611K in revenues in the last fiscal year, up $219K over the previous year. This improvement is mainly due to the increase in revenues from the S2D Switch program pursuant to the signing of a licence agreement between WiLAN and Panasonic which included that program. Meanwhile, fourth quarter revenues were up slightly, by $3K, compared to the same quarter of the previous year, but down $39K from the previous quarter, which is primarily explained by seasonal factors.

During the last fiscal year, the Company continued to invest in its intellectual property portfolio while proceeding with a cleanup of its patents in order to focus on those identified as having the best commercial potential. With the granting of three new patents during the year and accounting for patents granted since year end, the Company–s portfolio now includes 15 patents issued and 14 pending in 11 distinct families. The Company has also announced its intention to set up a second patent licensing program which would be in addition to the one for the S2D Switch.

“The recent fiscal year was a turning point for SENSIO, with the beginning of the recognition of revenues from our agreement with WiLAN,” said Routhier. “After more than 18 months since the signing of the original agreement with WiLAN, we now expect to see more agreements being signed with CE manufacturers and the announcement of the deal with Sony is in line with our expectations. Also, the comeback of virtual reality, driven by giants like Facebook (Oculus Rift), Sony and, more recently, Samsung, is a sign of new and interesting opportunities for stereoscopic image processing technologies. In the coming year, we will focus considerably on patent licensing activities and on 3DGO! to continue our growth, and with the recent announcement of the deal with Sony, we are starting off the new fiscal year on the right track.”

3DGO! – An encouraging first year

In the fourth quarter, revenues from movie rentals amounted to $30K, bringing total revenues for the first year of operation to $94K. During the quarter, the number of 3DGO! registered users went up from 16,191 to 18,231, an increase of 12.6%. It is worth noting that the increase in the number of users and movie rentals is seasonal and also varies based on 3DTV sales in the marketplace. In the fourth quarter, SENSIO also renewed its agreement with The Walt Disney Studios for the distribution of their movies on 3DGO!. The agreement provides for an extension of the term and the addition of new titles.

“We have now completed the first year of 3DOG! operation and the steady rise in the number of users is an encouraging sign for the future,” said Routhier. “The rate of subscription to the service by new 3DTV purchasers is continually growing and we are satisfied with the progress we have made in this area in the last year. The upcoming deployment of our service on LG–s 3DTVs in the U.S. will considerably expand the pool of new potential users and we are very excited with this collaboration which will enable us to expand internationally in the near future. Finally, we are very happy with the cooperation from the studios, who are continuing to support our initiative. We are therefore very optimistic about the prospects for the growth of 3DGO! in the coming year.”

Summary of Financial Results

In the fiscal year ended May 31, 2014, the Company posted revenues of $704,908 compared to $392,356 in 2013, an increase of $312,552 or 79.7%. In 2014, the Company increased his royalty revenue of $101,045, his patent revenue of $195,319 and earned his first revenue from his 3DGO! platform ($94,274). These increases compensated the decrease of sales from the embedment of technologies in electronic chips (-$23,919), in equipment provided to digital theaters (-$40,587) and for professional equipment (-$12,969).

In the fiscal year ended May 31, 2014, the cost of sales of the Company amounted to $2,430,875 compared to $57,451 in the previous year. The increase of $2,373,424 is mainly attributable to the impairment of advance royalty payments of $2,335,783 incurred and paid previously to studios for operations related to 3DGO!. This non-monetary expense is recognized to reflect the advance on royalties that won–t be recoverable according to the Corporation estimation. These disbursements done in the past quarters gave credibility to the 3DGO! platform and ultimately allowed the Corporation to sign agreements with Vizio, Panasonic and LG following the end of the 2014 fiscal year. The cost of sales related to 3DGO! (+$77,241) off-set by a stock impairment in 2013 (-$47,513) explained the increase as well.

For fiscal year ended May 31, 2014, the operational expenses of the Company decreased of $832,550 or 19.8%. Selling and marketing expenses decreased of $677,910 or 30.5% amounting to $1,546,027 compared to $2,223,937 the previous year. This variance can primarily be explained by a reduction in the payroll, fees paid to consultants, traveling fees and expenses for trade shows offset by higher costs for the launch of 3DGO!. R&D expenses amounted to $571,164 (net of the R&D tax credit and a subsidy from the National Research Council of Canada (“NRC”) totalling $229,865) compared to $566,885 (net of the R&D tax credit and a subsidy from the National Research Council of Canada (“NRC”) totalling $362,114) the previous year. This $4,279 or 0.8% increase is mainly attributable to the decrease of subsidy obtained from the NRC under the Industrial Research Assistance Program (“IRAP”). The difference was off-set by a decrease of salaries expenses for the period. Finally, the Company–s administrative expenses amounted to $1,262,924 compared to $1,421,843 the previous year, a decrease of $158,919 or 11.2%. This difference is attributable to the decrease in salaries, professional and director–s fees.

The Company–s net loss for the fiscal year ended May 31, 2014 amounted to $5,192,782 an increase of $1,329,784 or 34.4% compared to $3,862,998 for the fiscal year ended May 31, 2013.

For more details, please see the Management Discussion and Analysis and the Financial Statements for the reference period on the SENSIO Website:

About SENSIO Technologies Inc. (SENSIO):

Founded in 1999, SENSIO Technologies Inc. () is a pioneer in the 3D industry. Its vision, expertise and state-of-the-art solutions, based on diversified stereoscopic image-processing technologies, have been trusted by some of the biggest names in the broadcasting and consumer electronics sectors, as well as for live 3D events in cinemas, to power numerous industry firsts, initiate new business models and generate immediate revenue with a distinctive 3D offering.

SENSIO enables its clients to deliver the best possible 3D experience for the end-user through a broad portfolio of licensed products, based on quality, content, usability and compatibility. These include its flagship, award-winning technology, SENSIO® Hi-Fi 3D, the premium-quality frame-compatible format.

SENSIO–s technologies are the object of patents and intellectual property protection proceedings worldwide. SENSIO is listed on the Toronto TSX Venture Exchange (SIO).

Caution Concerning Forward-Looking Statements

Certain statements made in this press release that are not historical facts are forward-looking statements and are subject to important risks, uncertainties and assumptions, both general and specific, which give rise to the possibility that actual results or events could differ materially from our expectations expressed in or implied by such forward-looking statements. As a result, we cannot guarantee that any forward-looking statement will materialize and readers are cautioned not to place undue reliance on these forward looking statements. For more exhaustive information on these risks and uncertainties, the reader should refer to the risk factors described in the management–s discussion and analysis of SENSIO for the quarter ended May 31, 2014. The forward-looking statements contained in this press release represent our expectations as of the date hereof. We disclaim any intention and assume no obligation to update or revise any forward-looking statements. Forward-looking statements are presented for the purpose of providing information about management–s current expectations and plans and allowing investors and others to obtain a better understanding of our anticipated operating environment. Readers are cautioned that such information may not be appropriate for other purposes.

Neither TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in the policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release.

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Contacts:
SENSIO Technologies
Eric Choquette
Chief Financial Officer
+1 514 846-2022 x17

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