Market Newsdesk

November 12, 2020 4:09 pm

Armata Pharmaceuticals Announces Third Quarter 2020 Results and Provides General Corporate Update

PR Newswire

MARINA DEL REY, Calif., Nov. 12, 2020 /PRNewswire/ — Armata Pharmaceuticals, Inc. (NYSE American: ARMP) (“Armata” or the “Company”), a clinical-stage biotechnology company focused on precisely targeted bacteriophage therapeutics for antibiotic-resistant and difficult-to-treat bacterial infections, today announced results for the third quarter of 2020 and provided a corporate and clinical update.

Subsequent to the end of the third quarter, Armata announced FDA clearance of its Investigational New Drug (IND) application to initiate a clinical trial of its lead clinical candidate, AP-PA02, in Pseudomonas aeruginosa infections.

“With FDA clearance of our IND, we are moving quickly to initiate a Phase 1b/2a clinical trial of AP-PA02 in cystic fibrosis patients suffering from Pseudomonas aeruginosa infections, known as the SWARM-P.a. study, and we remain on track to do so by the end of this year,” stated Todd R. Patrick, Chief Executive Officer of Armata. “We are also rapidly advancing our second clinical candidate, AP-SA02, for difficult-to-treat Staphylococcus aureus infections. With our growing clinical-stage pipeline, we recently strengthened our team with the addition of Dr. Mina Pastagia as Vice President of Clinical Development.”

“Multi-drug resistant bacterial infections are a serious and growing public health threat, and with two strong therapeutic candidates and a robust team that will drive clinical development, we believe we are well positioned to be a leader in the innovative field of phage therapy which is poised to transform antimicrobial intervention. Further, we are pleased with our current financial position. We ended the quarter with approximately $16 million in cash and, to date, we have only drawn on $1.3 million of the $20 million in non-dilutive contract awards we received earlier this year,” Mr. Patrick concluded.

Anticipated 2020 and 2021 Milestones:

Barring worsening of COVID-19 conditions, the Company expects to initiate the single ascending dose (SAD) cohort of the SWARM-P.a. Phase 1b/2a clinical trial evaluating AP-PA02 as a potential treatment for Pseudomonas aeruginosa infections by the end of 2020. Armata is receiving financial ($5 million in total funding) and clinical assistance for this trial from the Cystic Fibrosis Foundation (CFF) and the Cystic Fibrosis Therapeutics Development Network (TDN).
Initiate multiple ascending dose (MAD) cohort of Swarm-P.a. trial in 2021.
Initiate a Phase 1b/2 clinical trial evaluating AP-SA02 as a potential treatment for Staphylococcus aureus bacteremia in 2021, with funding assistance ($15 million in total funding) from U.S. Department of Defense through the Medical Technology Enterprise Consortium (MTEC).
Continue to screen pathogens against the Company’s proprietary phage library to identify additional high-quality bacteriophage product candidates that target other major pathogens of infectious disease.

Third Quarter Financial Results

Grant Revenue. The company recognized grant revenues of $0.3 million for the three months ended September 30, 2020, which represents MTEC’s share of the costs incurred for the Company’s AP-SA02 program for the treatment of Staphylococcus aureus bacteremia.

Research and Development. Research and development expenses for the three months ended September 30, 2020 were approximately $4.1 million as compared to $3.0 million for the comparable period in 2019 and increased primarily related to the increase in clinical trial and personnel related expenses.

General and Administrative. General and administrative expenses for the three months ended September 30, 2020 were $1.8 million as compared to $3.8 million for the comparable period in 2019. The decrease related primarily to the absence of a non-cash stock-based compensation charge in the 2020 period and for a reduction in professional fees.

Loss from Operations. Loss from operations for the three months ended September 30, 2020 was $5.6 million as compared to $6.8 million for the comparable period in 2019.

Cash and Equivalents. As of September 30, 2020, Armata held $15.9 million of unrestricted cash and cash equivalents, as compared to $6.0 million as of December 31, 2019. Management believes the Company’s existing resources will be sufficient to fund planned operations through at least the first half of 2021.

As of November 12, 2020, there were approximately 18.7 million shares of common stock outstanding.

About Armata Pharmaceuticals, Inc.

Armata is a clinical-stage biotechnology company focused on the development of precisely targeted bacteriophage therapeutics for the treatment of antibiotic-resistant and difficult-to-treat bacterial infections using its proprietary bacteriophage-based technology. Armata is developing and advancing a broad pipeline of natural and synthetic phage candidates, including clinical candidates for Pseudomonas aeruginosa, Staphylococcus aureus, and other pathogens. In addition, in collaboration with Merck, known as MSD outside of the United States and Canada, Armata is developing proprietary synthetic phage candidates to target an undisclosed infectious disease agent. Armata is committed to advancing phage with drug development expertise that spans bench to clinic including in-house phage specific GMP manufacturing.

Forward Looking Statements

This communication contains “forward-looking” statements, including, without limitation, statements related to Armata’s ability to meet expected milestones, expand its pipeline, and pursue additional potential partnerships, the expected use of proceeds from the $15 million grant, the expected impact of the COVID-19 pandemic on the Company’s operations, Armata’s ability to be a leader in the development of phage-based therapeutics, and statements related to the timing and results of clinical trials, including the anticipated initiation of clinical trials of AP-PA02 and AP-SA02, Armata’s ability to develop new products based on bacteriophages and synthetic phages, Armata’s expectations for performance of Armata’s therapeutic candidates based on Armata’s recent nonclinical work, and Armata’s ability to continue to screen pathogens against Armata’s proprietary phage library to identify additional high-quality bacteriophage product candidates and expand the pipeline. Any statements contained in this communication that are not statements of historical fact may be deemed to be forward-looking statements. These forward-looking statements are based upon Armata’s current expectations. Forward-looking statements involve risks and uncertainties. Armata’s actual results and the timing of events could differ materially from those anticipated in such forward-looking statements as a result of these risks and uncertainties, which include, without limitation, risks related to the ability of Armata’s lead clinical candidates, AP-PA02 and AP-SA02, to be more effective than previous candidates; Armata’s ability to expedite development of AP-PA02; Armata’s ability to advance its preclinical and clinical programs and the uncertain and time-consuming regulatory approval process; Armata’s ability to develop products based on bacteriophages and synthetic phages to kill bacterial pathogens; the Company’s expected market opportunity for its products; Armata’s ability to sufficiently fund its operations as expected, including obtaining additional funding as needed; and any delays or adverse events within, or outside of, Armata’s control, caused by the recent outbreak of COVID-19. Additional risks and uncertainties relating to Armata and its business can be found under the caption “Risk Factors” and elsewhere in Armata’s filings and reports with the SEC, including in Armata’s Annual Report on Form 10-K, filed with the SEC on March 19, 2020, and in its subsequent filings with the SEC. Armata expressly disclaims any obligation or undertaking to release publicly any updates or revisions to any forward-looking statements contained herein to reflect any change in Armata’s expectations with regard thereto or any change in events, conditions or circumstances on which any such statements are based.

Media Contacts:

At Armata:

Steve Martin

Armata Pharmaceuticals, Inc.
[email protected]
858-800-2492

Investor Relations:

Joyce Allaire

LifeSci Advisors, LLC
[email protected]
212-915-2569

Armata Pharmaceuticals, Inc.
Condensed Consolidated Balance Sheets

	September 30, 2020		December 31, 2019

Assets
Cash and cash equivalents	$	15,885,000	$	6,033,000
Awards receivable		335,000		94,000
Prepaids and other current assets		804,000		528,000
Total current assets		17,024,000		6,655,000
Property and equipment, net		12,819,000		4,214,000
Other long term assets		2,086,000		836,000
Intangible assets, net		13,746,000		13,746,000
Total assets	$	45,675,000	$	25,451,000

Liabilities and stockholders’ equity
Total current liabilities	$	7,070,000	$	4,879,000
Long term liabilities		10,909,000		2,902,000
Deferred tax liability		3,077,000		3,077,000
Total liabilities		21,056,000		10,858,000
Stockholders’ equity		24,619,000		14,593,000
Total liabilities and stockholders’ equity	$	45,675,000	$	25,451,000

Armata Pharmaceuticals, Inc.
Condensed Consolidated Statements of Operations

	Three Months Ended Sept 30,				Nine Months Ended Sept 30,
	2020		2019		2020		2019
	(Unaudited)		(Unaudited)		(Unaudited)		(Unaudited)

Grant Revenue	$	288,000	$	–	$	319,000	$	–
Operating expenses:
Research and development		4,066,000		3,019,000		9,464,000		8,156,000
General and administrative		1,845,000		3,758,000		5,989,000		7,220,000
Total operating expenses		5,911,000		6,777,000		15,453,000		15,376,000
Loss from operations		(5,623,000)		(6,777,000)		(15,134,000)		(15,376,000)
Other income (expense):
Change in fair value of derivative liabilities		–		–		–		1,117,000
Other income (expense), net		(146,000)		(178,000)		(423,000)		(634,000)
Total other income (expense), net		(146,000)		(178,000)		(423,000)		483,000
Loss before income taxes and Net Loss	$	(5,769,000)	$	(6,955,000)	$	(15,557,000)	$	(14,893,000)
Net loss per share, basic	$	(0.31)	$	(0.73)	$	(0.99)	$	(2.05)
Weighted average shares outstanding, basic		18,394,614		9,552,688		15,740,858		7,254,803

Net loss per share, diluted	$	(0.31)	$	(0.73)	$	(0.99)	$	(2.11)
Weighted average shares outstanding, diluted		18,394,614		9,522,688		15,740,858		7,497,194

Armata Pharmaceuticals, Inc.
Condensed Consolidated Statements of Cash Flows

	Nine Months Ended Sept 30,
	2020		2019

Operating activities:
Net loss	$	(15,557,000)	$	(14,893,000)
Adjustments required to reconcile net loss to net cash used in operating activities:
Change in fair value of derivative liabilities		–		(1,117,000)
Stock-based compensation		2,613,000		3,224,000
Depreciation		840,000		1,049,000
Non-cash interest expense		457,000		717,000
Changes in operating assets and liabilities, net		(321,000)		(1,833,000)
Net cash used in operating activities		(11,968,000)		(12,853,000)
Investing activities:
Purchases of property and equipment, net		(458,000)		(203,000)
Cash acquired in reverse merger transaction		–		3,008,000
Net cash used in investing activities		(458,000)		2,805,000
Financing activities:
Payment of deferred consideration for asset acquisition		(1,000,000)		(1,000,000)
Proceeds from sale of common stock, net of offering costs		22,893,000		9,975,000
Proceeds from exercise of warrants and stock options		168,000		–
Proceeds from PPP Loan		717,000		–
Net cash provided by (used in) financing activities		22,778,000		8,975,000
Net increase (decrease) in cash and cash equivalents		10,352,000		(1,073,000)
Cash, cash equivalents and restricted cash, beginning of period		6,733,000		10,463,000
Cash, cash equivalents and restricted cash, end of period	$	17,085,000	$	9,390,000



Reconciliation of Cash and cash equivalents:		Nine Months Ended Sept 30,
		2020		2019
Cash and cash equivalents	$	15,885,000	$	8,690,000
Restricted cash		1,200,000		700,000
Cash, cash equivalents and restricted cash	$	17,085,000	$	9,390,000

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SOURCE Armata Pharmaceuticals, Inc.

November 12, 2020 4:09 pm

AudioEye Reports Third Quarter 2020 Results

Record Total Customer Count, MRR and Total Revenue

PR Newswire

TUCSON, Ariz., Nov. 12, 2020 /PRNewswire/ — AudioEye, Inc. (NASDAQ: AEYE), an industry-leading digital accessibility platform delivering website accessibility compliance to businesses of all sizes, reported financial results for the third quarter ended September 30, 2020.

Third Quarter 2020 Financial Results

Total revenue increased 92% to a little over $5.3M from $2.8M in the same prior year period. The year-over-year increase in revenue was primarily due to continued growth in the Company’s vertical partner channel, coupled with new business and renewals in the enterprise channel.
As of September 30, 2020, monthly recurring revenue (MRR) was about $1.7M, an increase of 67% on a year-over-year basis.
Gross profit increased 132% to $3.8M (~71% of total revenue) from $1.6M (~59% of total revenue) in the same prior year period. The increases in gross profit and gross margin were primarily due to increased revenue and improvement in efficiencies being realized as the Company continues to improve and expand the level of automation in its remediations, offset in part by higher costs for investments to support the revenue growth.
Operating expenses increased 43% to $5.4M from $3.8M in the same prior year period. The increase in total operating expenses was primarily due to increased investments in talent across various functions, product development, sales, marketing, and severance.
Net loss available to common stockholders was $1.1M, or $(0.12) per share, compared to $2.2M, or $(0.27) per share, in the same prior year period. The improvement in net loss reflects the increase in our gross profit as we scale, and also benefit from warrant liability accounting, and partially offset by higher equity compensation costs and severance related charges.
On a Non-GAAP basis, net loss available to common stockholders was about $200K, or $(0.02) per share. The Non-GAAP earnings and EPS reflect adjustments as described further below under “Use of Non-GAAP Financial Measures.”
At quarter-end, the Company had $10.3M in cash, compared to $2.1M at June 30, 2020. This cash balance reflects net proceeds from a public offering of common stock and cash received from exercise of warrants in the third quarter.
As of September 30, 2020, total customer count had grown to about 22,000 customers, which was a 500% increase compared to September 30, 2019.
The Company is reiterating its expectation to grow MRR and become cash flow positive in 2021, subject to ongoing economic conditions.

Third Quarter and Recent Operational Highlights

Added key executives to help build on and execute upon on the strategic initiatives laid out last November which are designed to accelerate growth in customers, MRR and gross margin:

Bryan Rodrigues
joined the company as Chief Marketing Officer. Bryan brings 20 years of technology marketing leadership with strong depth in product marketing, branding and growth marketing, having held leadership positions and key roles at Tile, Livescribe, Houghton Mifflin Harcourt, Nike and The McKenna Group.
Russell Griffin
joined the Company as Chief Revenue Officer. Russell brings over 15 years of executive sales leadership and is responsible for executing on the Company’s go to market strategy. He has held executive leadership positions at ShipStation and BigCommerce. Russell also spent time at Dell, Rackspace, Pier 1 Hosting, and Hostway, building and developing strategic partnerships and leading enterprise sales organizations.

The Company and digital marketing agency Neil Patel Digital announced their strategic partnership to integrate AudioEye’s digital accessibility platform with Neil Patel’s Ubersuggest SEO platform to show digital marketers how accessibility impacts the performance of SEO.
Selected by HubSpot as the digital accessibility provider for its annual INBOUND event, which was held virtually for the first time. AudioEye’s Toolbar was visible to more than 42,000 attendees, activated more than 14,000 times.
Continued to position AudioEye as a digital accessibility thought leader, with media coverage in targeted publications (see https://www.audioeye.com/posts). Publications referencing or featuring AudioEye included: Forbes, Fast Company,Rewire, EdScoop, Diverse EducationandThrive Global.
Customer retention during the third quarter remained high at an historic 90% rate.
As many Enterprise organizations continue to balance the still-uncertain impact of COVID-19, AudioEye continued to grow its Enterprise (direct) sales channel client roster in the third quarter with prominent new customers from the automotive, fashion and retail industries, among others.
Continued to solidify existing Vertical (indirect) channel partner relationships through deeper penetration within active channel partners who offer AudioEye as a preferred digital accessibility solution to their clients.

Financial Outlook
The Company remains focused on growing monthly recurring revenue (MRR) as its leading financial indicator. The Company is reiterating its expectation to grow MRR and become cash flow positive in 2021. This expectation remains subject to the overall economic conditions.

Management Commentary

AudioEye’s Director and Interim CEO David Moradi said, “We continue to bring on top tier talent, invest in our scalable technology and expand our market leading position as we pursue our mission to eradicate barriers to digital access. AudioEye remains the market’s most trusted choice when it comes to digital accessibility compliance, as we deliver to our customers unique, truly comprehensive and sustainable digital accessibility solutions through our platform.”

Executive Chairman Dr. Carr Bettis added, “Our positive momentum continued in the third quarter of 2020 with an increase in our total customer count to about 22,000 customers representing enterprise, vertical partner and marketplace/platform channels. We also saw an increase in total revenue, representing our 19^th straight quarter of revenue growth, and an increase in MRR, with MRR at the end of Q3 at approximately $1.7M, an increase of 67% on a year-over-year basis.”

Conference Call
AudioEye management will hold a conference call today, November 12, 2020 at 4:30 p.m. Eastern time (1:30 p.m. Pacific time) to discuss these results.

AudioEye management will host the conference call, followed by a question and answer period.

U.S. dial-in number: (877) 407-9208
International number: (201) 493-6784

Please call the conference telephone number 5-10 minutes prior to the start time. An operator will register your name and organization. If you have any difficulty connecting with the conference call, please contact Gateway Investor Relations at (949) 574-3860.

The conference call will also be webcast live and available for replay, which will be accessible via the investor relations section of the company’s website. The audio recording will remain available via the investor relations section of the company’s website for 90 days.

A telephonic replay of the conference call will also be available after 7:30 p.m. Eastern time on the same day through November 19, 2020.

Toll-free replay number: (844) 512-2921
International replay number: (412) 317-6671
Replay ID: 13712272

About AudioEye

AudioEye is an industry-leading digital accessibility platform delivering trusted ADA and WCAG accessibility compliance at scale. Through patented technology, subject matter expertise and proprietary processes, AudioEye is eradicating all barriers to digital access, helping creators get accessible and supporting them with ongoing advisory and automated upkeep. Trusted by the FCC, ADP, SSA, Samsung, and more, AudioEye helps everyone identify and resolve issues of accessibility and enhance user experiences, automating digital accessibility for the widest audiences. AudioEye stands out among its competitors because it delivers Machine Learning/AI-driven accessibility without fundamental changes to site architecture. Join our movement at www.audioeye.com.

Forward-Looking Statements

Any statements in this press release about AudioEye’s expectations, beliefs, plans, objectives, prospects, financial condition, assumptions or future events or performance are not historical facts and are “forward-looking statements” as that term is defined under the federal securities laws. Forward-looking statements are often, but not always, made through the use of words or phrases such as “believe”, “anticipate”, “should”, “intend”, “plan”, “will”, “expects”, “estimates”, “projects”, “positioned”, “strategy”, “outlook” , “forecast” and similar words. You should read the statements that contain these types of words carefully. Such forward-looking statements contained herein include, but are not limited to, statements regarding anticipated contributions from less mature lines of business, long-term growth prospects, opportunities in the digital accessibility industry, our expectation that we will grow MRR and be cash flow positive in 2021 and the COVID-19 related macroeconomic impact to our customers and to AudioEye. These statements are subject to a number of risks, uncertainties and other factors that could cause actual results to differ materially from what is expressed or implied in such forward-looking statements, including the variability of AudioEye’s revenue and financial performance; risks associated with product development and technological changes; the acceptance of AudioEye’s products in the marketplace by existing and potential future customers; competition; general economic conditions; and uncertainties regarding the impact on our business and the overall economy from the coronavirus (COVID-19) outbreak. These and other risks are described more fully in AudioEye’s filings with the Securities and Exchange Commission (the “SEC”), including AudioEye’s Annual Report on Form 10-K for the year ended December 31, 2019 filed with the SEC on March 30, 2020, Form 10-Q for the quarter ended March 31, 2020 filed with the SEC on May 15, 2020, Form 10-Q for the quarter ended June 30, 2020 filed with the SEC on August 13, 2020 and its subsequent filings with the SEC. There may be events in the future that AudioEye is not able to predict accurately or over which AudioEye has no control. Forward-looking statements reflect management’s view as of the date of this press release, and AudioEye urges you not to place undue reliance on these forward-looking statements. AudioEye does not undertake any obligation to update such forward-looking statements to reflect new information, future events or uncertainties or otherwise after the date hereof.

About Key Operating Metrics

We consider monthly recurring revenue (“MRR”) as a key operating metric and a key indicator of our overall business. We also use MRR as (i) one of the primary methods for planning and forecasting overall expectations and for evaluating, on at least a quarterly and annual basis, actual results against such expectations; and (ii) as a performance metric for certain executive share-based compensation awards.

We define MRR as the sum of (i) for our enterprise and agency sales channels, the total of the average monthly fee amount under each active paid contract at the date of determination, plus (ii) for our vertical partners, marketplace and platform sales channels, the recognized monthly fee amount for all paying customers at the date of determination, in each case, assuming no changes to the subscription and without taking into account any usage above the subscription or recurring revenue base, if any, that may be applicable to such subscription. This determination includes both annual and monthly contracts for recurring products. Some of our contracts are cancelable, which may impact future MRR. MRR excludes revenue from our PDF remediation services business.

Vertical Partner is a CMS provider or a company which provides a web-hosting platform for private and public entities and resells the AudioEye Managed service as an accessibility service offering to its customers. CMS providers who are focused on a specific industry vertical are referred to as Vertical Partners by AudioEye. CMS providers who are vertical agnostic are referred to as Platform partners by AudioEye.

Use of Non-GAAP Financial Measures

From time to time, we review adjusted financial measures that assist us in comparing our operating performance consistently over time, as such measures remove the impact of certain items, as applicable, such as our capital structure (primarily interest charges), items outside the control of the management team (taxes), and expenses that do not relate to our core operations, including transaction-related expenses (such as professional and advisory services) and other costs that are expected to be non-recurring. In order to provide investors with greater insight, and allow for a more comprehensive understanding of the information used in our financial and operational decision-making, the Company has supplemented the information presented on a GAAP basis in this press release with the following non-GAAP financial measures: Non-GAAP earnings (loss) and Non-GAAP earnings (loss) per diluted share.

These non-GAAP financial measures have limitations as analytical tools and should not be considered in isolation or as a substitute for analysis of Company results as reported under GAAP. The Company compensates for such limitations by relying primarily on our GAAP results and using non-GAAP financial measures only as supplemental data. We also provide a reconciliation of non-GAAP to GAAP measures used. Investors are encouraged to carefully review this reconciliation. In addition, because these non-GAAP measures are not measures of financial performance under GAAP and are susceptible to varying calculations, these measures, as defined by us, may differ from and may not be comparable to similarly titled measures used by other companies.

We define: (i) Non-GAAP earnings (loss) as net income (loss), less non-cash valuation adjustments to liabilities, plus interest expense, plus share-based compensation expense and plus certain severance expense; and (ii) Non-GAAP earnings (loss) per diluted share as net income (loss) per diluted common share, less non-cash valuation adjustments to liabilities, plus interest expense, plus share-based compensation expense and plus certain severance expense, each on a per share basis. Non-GAAP earnings per diluted share would include incremental shares in the share count that are considered anti-dilutive in a GAAP net loss position. However, no incremental shares apply when there is a Non-GAAP loss per diluted share, as is the case for the periods presented in this press release.

Non-GAAP earnings (loss) and Non-GAAP earnings (loss) per diluted share are used to facilitate a comparison of our operating performance on a consistent basis from period to period and provide for a more complete understanding of factors and trends affecting our business than GAAP measures alone. All of the items adjusted in the Non-GAAP earnings (loss) to net loss and the related per share calculations are either recurring non-cash items, or items that management does not consider in assessing our on-going operating performance. In the case of the non-cash items, such as share-based compensation expense and valuation adjustments to assets and liabilities, management believes that investors may find it useful to assess our comparative operating performance because the measures without such items are less susceptible to variances in actual performance resulting from expenses that do not relate to our core operations and are more reflective of other factors that affect operating performance. In the case of items that do not relate to our core operations, management believes that investors may find it useful to assess our operating performance if the measures are presented without these items because their financial impact does not reflect ongoing operating performance.

Non-GAAP earnings (loss) is not a measure of liquidity under GAAP, or otherwise, and is not an alternative to cash flow from continuing operating activities, despite the advantages regarding the use and analysis of these measures as mentioned above. Non-GAAP earnings (loss) and Non-GAAP earnings (loss) per diluted share, as disclosed in this press release, have limitations as analytical tools, and you should not consider these measures in isolation or as a substitute for analysis of our results as reported under GAAP; nor are these measures intended to be measures of liquidity or free cash flow for our discretionary use.

To properly and prudently evaluate our business, we encourage readers to review the GAAP financial statements included elsewhere in this press release, and not rely on any single financial measure to evaluate our business. Reconciliations of Non-GAAP earnings (loss) to net loss, the most directly comparable GAAP-based measure, as well as Non-GAAP earnings (loss) per diluted share to net loss per diluted share, the most directly comparable GAAP-based measure, are included in this press release. We strongly urge readers to review these reconciliations, along with the consolidated financial statements included elsewhere in this press release.

Corporate Contact:
AudioEye, Inc.
Dr. Carr Bettis, Executive Chairman
[email protected]

Investor Contact:

Matt Glover or Tom Colton
[email protected]
(949) 574-3860

-Financial Tables to Follow-

AUDIOEYE, INC. CONSOLIDATED STATEMENTS OF OPERATIONS (unaudited)

	Three months ended				Nine months ended
	September 30,				September 30,
(in thousands, except per share data)	2020		2019		2020		2019
Revenue	$	5,341	$	2,776	$	14,885	$	7,198

Cost of revenue		1,551		1,147		4,478		3,193

Gross profit		3,790		1,629		10,407		4,005

Operating expenses:
Selling and marketing		2,028		1,598		5,551		4,257
Research and development		203		149		801		442
General and administrative		3,197		2,040		8,185		5,624
Total operating expenses		5,428		3,787		14,537		10,323

Operating loss		(1,638)		(2,158)		(4,130)		(6,318)

Other income (expense):
Change in fair value of warrant liability		593		–		120		–
Interest expense		(35)		(37)		(141)		(39)
Total other income (expense)		558		(37)		(21)		(39)

Net loss		(1,080)		(2,195)		(4,151)		(6,357)

Dividends on Series A Convertible Preferred Stock		(13)		(13)		(39)		(39)

Net loss available to common stockholders	$	(1,093)	$	(2,208)	$	(4,190)	$	(6,396)

Net loss per common share-basic and diluted	$	(0.12)	$	(0.27)	$	(0.46)	$	(0.81)

Weighted average common shares outstanding-basic and diluted		9,385		8,279		9,067		7,848

AUDIOEYE, INC. CONSOLIDATED BALANCE SHEETS (unaudited)

	September 30,		December 31,
(in thousands, except per share data)	2020		2019
ASSETS
Current assets:
Cash	$	10,295	$	1,972
Accounts receivable, net of allowance for doubtful accounts of $79 and $63, respectively		3,457		2,958
Unbilled receivables		34		160
Deferred costs, short term		179		183
Debt issuance costs, net		–		137
Prepaid expenses and other current assets		219		198
Total current assets		14,184		5,608

Property and equipment, net of accumulated depreciation of $179 and $124, respectively		121		156
Right of use assets		671		827
Deferred costs, long term		102		145
Intangible assets, net of accumulated amortization of $4,294 and $3,710, respectively		1,931		1,715
Goodwill		701		701
Total assets	$	17,710	$	9,152

LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable and accrued expenses	$	1,588	$	973
Finance lease liabilities		57		52
Operating lease liabilities		223		209
Warrant liability		–		120
Deferred revenue		5,587		5,372
Total current liabilities		7,455		6,726

Long term liabilities:
Finance lease liabilities		23		52
Operating lease liabilities		486		655
Deferred revenue		110		153
Term loan		1,302		–
Total liabilities		9,376		7,586

Stockholders’ equity:
Preferred stock, $0.00001 par value, 10,000 shares authorized
Series A Convertible Preferred Stock, $0.00001 par value, 200 shares designated, 100 and 105 shares issued and outstanding as of September 30, 2020 and December 31, 2019, respectively		1		1
Common stock, $0.00001 par value, 50,000 shares authorized, 9,921 and 8,877 shares issued and outstanding as of September 30, 2020 and December 31, 2019, respectively		1		1
Additional paid-in capital		62,409		51,490
Accumulated deficit		(54,077)		(49,926)
Total stockholders’ equity		8,334		1,566

Total liabilities and stockholders’ equity	$	17,710	$	9,152

AUDIOEYE, INC. RECONCILIATIONS OF GAAP to NON-GAAP FINANCIAL MEASURES (unaudited)

	Three months ended				Nine months ended
	September 30,				September 30,
(in thousands, except per share data)	2020		2019		2020		2019
Non-GAAP Earnings (Loss) Reconciliation
Net loss (GAAP)	$	(1,080)	$	(2,195)	$	(4,151)	$	(6,357)
Non-cash valuation adjustments to liabilities		(593)		–		(120)		–
Interest expense		35		37		141		39
Share-based compensation expense		1,089		273		2,004		997
Severance (1)		360		–		360		–
Non-GAAP earnings (loss)	$	(189)	$	(1,885)	$	(1,766)	$	(5,321)

Non-GAAP Earnings (Loss) per Diluted Share Reconciliation
Net loss per common share (GAAP) — diluted	$	(0.12)	$	(0.27)	$	(0.46)	$	(0.81)
Non-cash valuation adjustments to liabilities		(0.06)		–		(0.01)		–
Interest expense		–		–		0.02		–
Share-based compensation expense		0.12		0.04		0.22		0.13
Severance (1)		0.04		–		0.04		–
Non-GAAP earnings (loss) per diluted share (2)	$	(0.02)	$	(0.23)	$	(0.19)	$	(0.68)
Diluted weighted average shares (3)		9,385		8,279		9,067		7,848


(1)	Represents severance expense associated with the move of our technology center to Portland, Oregon, and is exclusive of accrued vacation paid upon termination of employment.

(2)	Non-GAAP earnings per adjusted diluted share for our common stock is computed using the more dilutive of the two-class method or the if-converted method.

(3)	The number of diluted weighted average shares used for this calculation is the same as the weighted average common shares outstanding share count when the Company reports a GAAP and non-GAAP net loss.

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SOURCE AudioEye, Inc.

November 12, 2020 4:09 pm

Textainer Group Holdings Limited Reports Third-Quarter 2020 Results

PR Newswire

HAMILTON, Bermuda, Nov. 12, 2020 /PRNewswire/ — Textainer Group Holdings Limited (NYSE: TGH; JSE: TXT) (“Textainer”, “the Company”, “we” and “our”), one of the world’s largest lessors of intermodal containers, today reported financial results for the third-quarter ended September 30, 2020.

Key Financial Information (in thousands except for per share and TEU amounts) and Business Highlights:

	QTD
	Q3 2020			Q2 2020			Q3 2019
Lease rental income	$	149,130		$	144,774		$	155,848
Gain on sale of owned fleet containers, net	$	7,976		$	5,640		$	6,092
Income from operations	$	54,109		$	49,265		$	53,487
Net income attributable to Textainer Group Holdings Limited common shareholders	$	16,952		$	15,989		$	10,578
Net income attributable to Textainer Group Holdings Limited common shareholders per diluted common share	$	0.32		$	0.30		$	0.18
Adjusted net income ⁽¹⁾	$	21,634		$	14,794		$	12,950
Adjusted net income per diluted common share ⁽¹⁾	$	0.41		$	0.28		$	0.22
Adjusted EBITDA ⁽¹⁾	$	118,960		$	109,977		$	118,254
Average fleet utilization ⁽²⁾		96.0	%		95.4	%		97.3	%
Total fleet size at end of period (TEU) ⁽³⁾		3,599,889			3,458,080			3,557,466
Owned percentage of total fleet at end of period		87.1	%		86.1	%		80.7	%


(1)	Refer to the “Use of Non-GAAP Financial Information” set forth below.

(2)	Utilization is computed by dividing total units on lease in CEUs (cost equivalent unit) by the total units in our fleet in CEUs, excluding CEUs that have been designated as held for sale units and manufactured for us but have not yet been delivered to a lessee. CEU is a unit of measurement based on the approximate cost of a container relative to the cost of a standard 20-foot dry container. These factors may differ slightly from CEU ratios used by others in the industry.

(3)	TEU refers to a twenty-foot equivalent unit, which is a unit of measurement used in the container shipping industry to compare shipping containers of various lengths to a standard 20-foot container, thus a 20-foot container is one TEU and a 40-foot container is two TEU.

Net income of $17.0 million for the third quarter or $0.32 per diluted common share, as compared to $16.0 million or $0.30 per diluted common share in the second quarter of 2020;
Adjusted net income of $21.6 million for the third quarter, or $0.41 per diluted common share, as compared to $14.8 million, or $0.28 per diluted common share in the second quarter of 2020;
Adjusted EBITDA of $119.0 million for the third quarter, as compared to $110.0 million in the second quarter of 2020;
Utilization averaged 96.0% for the third quarter and is currently at 97.7%;
Container deliveries of approximately $420 million during the third quarter, for a total $610 million delivered through the first nine months of the year, virtually all of which are currently on lease;
Issued $450 million and $829 million of fixed-rate asset backed notes on August 20, 2020 and September 21, 2020, respectively, for a combined total of nearly $1.3 billion. Proceeds were used to pay down certain fixed-rate asset backed notes and variable-rate facilities, lowering our effective interest rate to 3.10% and creating additional borrowing capacity for future container investments; and
Repurchased 2,376,222 shares of common stock at an average price of $11.61 per share during the third quarter under the share repurchase program. As announced on September 14, 2020, Textainer’s Board of Directors authorized an increase to the share repurchase program for an additional $50 million of the Company’s outstanding shares. As of the end of the third quarter, the remaining authority under the share repurchase program totaled $34.9 million.

“We are very pleased with our much-improved performance and outlook which demonstrates the effectiveness and disciplined execution of our long-term strategic turnaround plan. For the quarter, we delivered lease rental income of $149.1 million, adjusted EBITDA of $119.0 million and adjusted net income of $21.6 million,” stated Olivier Ghesquiere, President and Chief Executive Officer of Textainer Group Holdings Limited.

Ghesquiere continued, “Industry fundamentals have improved dramatically since June, allowing us to seize upon substantial business opportunities that will continue to generate long-term additional revenue and continue to improve our profitability over the coming quarters. During the quarter, we leased out over 390,000 TEU of factory and depot containers, helping improve our utilization which currently stands at 97.7%. Container prices and lease terms steadily improved in the third quarter and remain at attractive levels today.

“In addition, we have taken a number of actions this year to strengthen our business, financial resources and long-term outlook. In particular, since the beginning of the year, we lowered our borrowing costs with the successful issuance of nearly $1.3 billion in asset backed financings, we invested over $56 million in share buybacks, and we invested over $610 million in containers delivered through the third quarter.

“We expect steady earnings momentum to continue in the fourth quarter, driven by growth and operating efficiencies. While we are optimistic about our outlook in 2021, significant uncertainties remain due to the unpredictable impact of a resurgence of COVID-19. We continue to be committed to delivering long term value to our shareholders while maintaining a strong financial position to support the future growth of our business,” concluded Ghesquiere.

Third-Quarter Results

Lease rental income increased $4.4 million from the second quarter of 2020, due primarily to an increase in utilization and fleet size.

Gains on sale of owned fleet containers, net increased $2.3 million from the second quarter of 2020, due primarily to an increase in the number of containers sold.

Direct container expense – owned fleet increased $1.1 million from the second quarter of 2020, which includes higher handling and maintenance to prepare depot units for lease-out, partially offset by lower storage costs resulting from an increase in utilization.

Depreciation expense increased $1.5 million from the second quarter of 2020, primarily due to an increase in fleet size.

General and administrative expense increased $1.0 million from the second quarter of 2020, due primarily to an increase in consulting fees associated with our IT enhancement project and management incentive compensation resulting from improved company performance.

Bad debt recovery was $2.1 million in the third quarter of 2020, resulting from a reduction in reserves due to improved collections, compared to a recovery of $0.3 million in the second quarter of 2020.

Write off of unamortized deferred debt issuance costs and bond discounts amounted to $8.6 million in the third quarter of 2020, resulting from the early redemption of certain fixed-rate asset backed notes in the quarter.

Conference Call and Webcast

A conference call to discuss the financial results for the third quarter 2020 will be held at 5:00 pm Eastern Time on Thursday, November 12, 2020. The dial-in number for the conference call is 1-877-407-9039 (U.S. & Canada) and 1-201-689-8470 (International). The call and archived replay may also be accessed via webcast on Textainer’s Investor Relations website at http://investor.textainer.com.

About Textainer Group Holdings Limited

Textainer has operated since 1979 and is one of the world’s largest lessors of intermodal containers with approximately 3.6 million TEU in our owned and managed fleet. We lease containers to approximately 250 customers, including all of the world’s leading international shipping lines, and other lessees. Our fleet consists of standard dry freight, refrigerated intermodal containers, and dry freight specials. We also lease tank containers through our relationship with Trifleet Leasing and are a supplier of containers to the U.S. Military. Textainer is one of the largest and most reliable suppliers of new and used containers. In addition to selling older containers from our fleet, we buy older containers from our shipping line customers for trading and resale. We sold an average of approximately 140,000 containers per year for the last five years to more than 1,500 customers making us one of the largest sellers of used containers. Textainer operates via a network of 14 offices and approximately 500 independent depots worldwide. Textainer has a primary listing on the New York Stock Exchange (NYSE: TGH) and a secondary listing on the Johannesburg Stock Exchange (JSE: TXT). Visit www.textainer.com for additional information about Textainer.

Important Cautionary Information Regarding Forward-Looking Statements

This press release contains forward-looking statements within the meaning of U.S. securities laws. Forward-looking statements include statements that are not statements of historical facts and may relate to, but are not limited to, expectations or estimates of future operating results or financial performance, capital expenditures, introduction of new products, regulatory compliance, plans for growth and future operations, as well as assumptions relating to the foregoing. In some cases, you can identify forward-looking statements by terminology such as “may,” “will,” “should,” “could,” “expect,” “plan,” “anticipate,” “believe,” “estimate,” “predict,” “intend,” “potential,” “continue” or the negative of these terms or other similar terminology. Readers are cautioned that these forward-looking statements involve risks and uncertainties, are only predictions and may differ materially from actual future events or results. These risks and uncertainties include, without limitation, the following items that could materially and negatively impact our business, results of operations, cash flows, financial condition and future prospects: (i) we expect earnings momentum to continue in the fourth quarter; (ii) will continue to generate long-term additional revenue and improve our profitability over the coming quarters; (iii) our actions this year will strengthen our business, financial resources and long-term outlook; and (iv) optimistic outlook in 2021; Textainer is well positioned to navigate through the current crisis and participate in an eventual recovery; and other risks and uncertainties, including those set forth in Textainer’s filings with the Securities and Exchange Commission. For a discussion of some of these risks and uncertainties, see Item 3 “Key Information— Risk Factors” in Textainer’s Annual Report on Form 20-F filed with the Securities and Exchange Commission on March 30, 2020.

Textainer’s views, estimates, plans and outlook as described within this document may change subsequent to the release of this press release. Textainer is under no obligation to modify or update any or all of the statements it has made herein despite any subsequent changes Textainer may make in its views, estimates, plans or outlook for the future.

Textainer Group Holdings Limited
Investor Relations
Phone: +1 (415) 658-8333
[email protected]

TEXTAINER GROUP HOLDINGS LIMITED AND SUBSIDIARIES
Condensed Consolidated Statements of Comprehensive Income
(Unaudited)
(All currency expressed in United States dollars in thousands, except per share amounts)

	Three Months Ended September 30,								Nine Months Ended September 30,
	2020				2019				2020				2019
Revenues:
Lease rental income – owned fleet			$	133,587			$	130,555			$	392,307			$	390,555
Lease rental income – managed fleet				15,543				25,293				47,075				77,650
Lease rental income				149,130				155,848				439,382				468,205

Management fees – non-leasing				1,696				1,582				3,724				5,823

Trading container sales proceeds				7,655				10,669				24,667				37,775
Cost of trading containers sold				(6,721)				(9,469)				(22,513)				(32,371)
Trading container margin				934				1,200				2,154				5,404

Gain on sale of owned fleet containers, net				7,976				6,092				19,410				18,263

Operating expenses:
Direct container expense – owned fleet				16,395				11,810				44,907				34,071
Distribution expense to managed fleet container investors				14,364				23,318				43,219				71,535
Depreciation expense				65,374				67,644				196,056				194,243
Amortization expense				645				481				1,766				1,576
General and administrative expense				10,868				9,364				30,872				28,638
Bad debt (recovery) expense, net				(2,095)				(1,198)				(326)				2,650
Container lessee default expense (recovery), net				76				(184)				(1,607)				7,718
Gain on insurance recovery and legal settlement				—				—				—				(841)
Total operating expenses				105,627				111,235				314,887				339,590
Income from operations				54,109				53,487				149,783				158,105
Other (expense) income:
Interest expense				(29,123)				(39,970)				(95,257)				(115,699)
Write-off of unamortized deferred debt issuance costs and bond discounts				(8,628)				—				(8,750)				—
Interest income				23				680				479				2,047
Realized (loss) gain on derivative instruments, net				(4,107)				170				(8,900)				2,709
Unrealized gain (loss) on derivative instruments, net				4,161				(2,478)				(9,434)				(18,315)
Other, net				859				(10)				803				(10)
Net other expense				(36,815)				(41,608)				(121,059)				(129,268)
Income before income tax and noncontrolling interest				17,294				11,879				28,724				28,837
Income tax benefit (expense)				152				(1,318)				(89)				(1,470)
Net income				17,446				10,561				28,635				27,367
Less: Net (income) loss attributable to the noncontrolling interest		(494)				17				(73)				575
Net income attributable to Textainer Group Holdings Limited common shareholders	$	16,952			$	10,578			$	28,562			$	27,942
Net income attributable to Textainer Group Holdings Limited common shareholders per share:
Basic	$	0.32			$	0.18			$	0.53			$	0.49
Diluted	$	0.32			$	0.18			$	0.53			$	0.49
Weighted average shares outstanding (in thousands):
Basic		52,514				57,503				54,221				57,493
Diluted		52,713				57,598				54,317				57,586
Other comprehensive income, before tax:
Change in derivative instruments designated as cash flow hedges				158				—				(13,093)				—
Reclassification of realized loss on derivative instruments designated as cash flow hedges				1,130				—				1,658				—
Foreign currency translation adjustments				105				(119)				3				(52)
Comprehensive income, before tax				18,839				10,442				17,203				27,315
Income tax (expense) benefit related to items of other comprehensive income				(17)				—				115				—
Comprehensive income, after tax				18,822				10,442				17,318				27,315
Comprehensive (income) loss attributable to the noncontrolling interest				(494)				17				(73)				575
Comprehensive income attributable to Textainer Group Holdings Limited common shareholders			$	18,328			$	10,459			$	17,245			$	27,890

TEXTAINER GROUP HOLDINGS LIMITED AND SUBSIDIARIES
Condensed Consolidated Balance Sheets
(Unaudited)
(All currency expressed in United States dollars in thousands)

	September 30, 2020		December 31, 2019
Assets
Current assets:
Cash and cash equivalents	$	155,166	$	180,552
Accounts receivable, net of allowance of $4,692 and $6,299, respectively		101,771		109,384
Net investment in finance leases, net of allowance of $199 and $0, respectively		59,485		40,940
Container leaseback financing receivable, net of allowance of $105 and $0, respectively		22,412		20,547
Trading containers		14,290		11,330
Containers held for sale		32,457		41,884
Prepaid expenses and other current assets		11,646		14,816
Due from affiliates, net		2,098		1,880
Total current assets		399,325		421,333
Restricted cash		78,712		97,353
Containers, net of accumulated depreciation of $1,566,794 and $1,443,167, respectively		4,102,791		4,156,151
Net investment in finance leases, net of allowance of $1,137 and $0, respectively		555,427		254,363
Container leaseback financing receivable, net of allowance of $367 and $0, respectively		256,994		251,111
Fixed assets, net of accumulated depreciation of $12,695 and $12,266, respectively		834		1,128
Intangible assets, net of accumulated amortization of $47,125 and $45,359, respectively		3,525		5,291
Derivative instruments		–		135
Deferred taxes		1,388		1,388
Other assets		14,355		14,364
Total assets	$	5,413,351	$	5,202,617
Liabilities and Equity
Current liabilities:
Accounts payable and accrued expenses	$	27,717	$	23,404
Container contracts payable		325,897		9,394
Other liabilities		2,248		2,636
Due to container investors, net		18,501		21,978
Debt, net of unamortized costs of $6,542 and $8,120, respectively		240,144		242,433
Total current liabilities		614,507		299,845
Debt, net of unamortized costs of $22,430 and $21,446, respectively		3,481,145		3,555,296
Derivative instruments		34,512		13,778
Income tax payable		10,035		9,909
Deferred taxes		7,335		7,789
Other liabilities		17,083		30,355
Total liabilities		4,164,617		3,916,972
Equity:
Textainer Group Holdings Limited shareholders’ equity:
Common shares, $0.01 par value. Authorized 140,000,000 shares; 58,413,983 shares issued and 50,947,887 shares outstanding at 2020; 58,326,555 shares issued and 56,817,918 shares outstanding at 2019		584		583
Treasury shares, at cost, 7,466,096 and 1,508,637 shares, respectively		(74,525)		(17,746)
Additional paid-in capital		414,036		410,595
Accumulated other comprehensive loss		(11,828)		(511)
Retained earnings		894,135		866,458
Total Textainer Group Holdings Limited shareholders’ equity		1,222,402		1,259,379
Noncontrolling interest		26,332		26,266
Total equity		1,248,734		1,285,645
Total liabilities and equity	$	5,413,351	$	5,202,617

TEXTAINER GROUP HOLDINGS LIMITED AND SUBSIDIARIES
Condensed Consolidated Statements of Cash Flows
(Unaudited)
(All currency expressed in United States dollars in thousands)

	Nine Months Ended September 30,
	2020		2019
Cash flows from operating activities:
Net income	$	28,635	$	27,367
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation expense		196,056		194,243
Bad debt (recovery) expense, net		(326)		2,650
Container (recovery) write-off from lessee default, net		(140)		7,154
Unrealized loss on derivative instruments, net		9,434		18,315
Amortization and write-off of unamortized deferred debt issuance costs and accretion of bond discounts		14,761		5,922
Amortization of intangible assets		1,766		1,576
Gain on sale of owned fleet containers, net		(19,410)		(18,263)
Gain on insurance recovery and legal settlement		—		(841)
Share-based compensation expense		3,218		3,213
Changes in operating assets and liabilities		54,319		80,875
Total adjustments		259,678		294,844
Net cash provided by operating activities		288,313		322,211
Cash flows from investing activities:
Purchase of containers and fixed assets		(273,171)		(449,105)
Payment on leaseback financing receivable		(24,089)		(271,976)
Receipt of principal payments on container leaseback financing receivable		15,788		2,083
Proceeds from sale of containers and fixed assets		109,144		111,523
Net cash used in investing activities		(172,328)		(607,475)
Cash flows from financing activities:
Proceeds from debt		1,626,759		995,134
Principal payments on debt		(1,704,132)		(654,723)
Principal repayments on container leaseback financing liability, net		(12,754)		—
Purchase of treasury shares		(56,779)		(2,558)
Debt issuance costs		(13,333)		(7,368)
Dividends paid to noncontrolling interest		—		(2,744)
Issuance of common shares upon exercise of share options		224		121
Net cash (used in) provided by financing activities		(160,015)		327,862
Effect of exchange rate changes		3		(52)
Net (decrease) increase in cash, cash equivalents and restricted cash		(44,027)		42,546
Cash, cash equivalents and restricted cash, beginning of the year		277,905		224,928
Cash, cash equivalents and restricted cash, end of the period	$	233,878	$	267,474

Use of Non-GAAP Financial Information

To supplement Textainer’s condensed consolidated financial statements presented in accordance with U.S. generally accepted accounting principles (“GAAP”), the company uses non-GAAP measures of certain components of financial performance. These non-GAAP measures include adjusted net income, adjusted net income per diluted common share, adjusted EBITDA, headline earnings and headline earnings per basic and diluted common share.

Management believes that adjusted net income and adjusted net income per diluted common share are useful in evaluating Textainer’s operating performance, as we intend to hold derivative instruments until maturity and any unrealized gain or loss on derivative instruments is a non-cash, non-operating item. Management considers adjusted EBITDA a widely used industry measure and useful in evaluating Textainer’s ability to fund growth and service long-term debt and other fixed obligations. Headline earnings is reported as a requirement of Textainer’s listing on the JSE. Headline earnings and headline earnings per basic and diluted common shares are calculated from net income which has been determined based on GAAP.

Reconciliations of these non-GAAP measures to the most directly comparable GAAP measures are included in the tables below for the three and nine months ended September 30, 2020 and 2019 and for the three months ended June 30, 2020.

Non-GAAP measures are not financial measures calculated in accordance with GAAP and are presented solely as supplemental disclosures. Non-GAAP measures have limitations as analytical tools, and should not be relied upon in isolation, or as a substitute to net income, income from operations, cash flows from operating activities, or any other performance measures derived in accordance with GAAP. Some of these limitations are:

They do not reflect cash expenditures, or future requirements, for capital expenditures or contractual commitments;
They do not reflect changes in, or cash requirements for, working capital needs;
Adjusted EBITDA does not reflect interest expense or cash requirements necessary to service interest or principal payments on debt;
Although depreciation expense and container impairment are a non-cash charge, the assets being depreciated may be replaced in the future, and neither adjusted EBITDA, adjusted net income or adjusted net income per diluted common share reflects any cash requirements for such replacements;
They are not adjusted for all non-cash income or expense items that are reflected in our statements of cash flows; and
Other companies in our industry may calculate these measures differently than we do, limiting their usefulness as comparative measures.

	Three Months Ended,						Nine Months Ended
	September 30, 2020		June 30, 2020		September 30, 2019		September 30, 2020		September 30, 2019
	(Dollars in thousands)						(Dollars in thousands)
	(Unaudited)						(Unaudited)
Reconciliation of adjusted net income:
Net income attributable to Textainer Group Holdings Limited common shareholders	$	16,952	$	15,989	$	10,578	$	28,562	$	27,942
Adjustments:
Write-off of unamortized deferred debt issuance costs and bond discounts		8,628		—		—		8,750		—
Unrealized (gain) loss on derivative instruments, net		(4,161)		(1,342)		2,478		9,434		18,315
Gain on insurance recovery and legal settlement		—		—		—		—		(841)
Impact of reconciling items on income tax (benefit) expense		(42)		13		(27)		(179)		(173)
Impact of reconciling items attributable to the noncontrolling interest		257		134		(79)		(437)		(845)
Adjusted net income	$	21,634	$	14,794	$	12,950	$	46,130	$	44,398

Adjusted net income per diluted common share	$	0.41	$	0.28	$	0.22	$	0.85	$	0.77



	Three Months Ended,						Nine Months Ended
	September 30, 2020		June 30, 2020		September 30, 2019		September 30, 2020		September 30, 2019
	(Dollars in thousands)						(Dollars in thousands)
	(Unaudited)						(Unaudited)
Reconciliation of adjusted EBITDA:
Net income attributable to Textainer Group Holdings Limited common shareholders	$	16,952	$	15,989	$	10,578	$	28,562	$	27,942
Adjustments:
Interest income		(23)		(56)		(680)		(479)		(2,047)
Interest expense		29,123		30,022		39,970		95,257		115,699
Write-off of unamortized deferred debt issuance costs and bond discounts		8,628		—		—		8,750		—
Realized loss (gain) on derivative instruments, net		4,107		3,267		(170)		8,900		(2,709)
Unrealized (gain) loss on derivative instruments, net		(4,161)		(1,342)		2,478		9,434		18,315
Gain on insurance recovery and legal settlement		—		—		—		—		(841)
Income tax (benefit) expense		(152)		1,074		1,318		89		1,470
Net income (loss) attributable to the noncontrolling interest		494		308		(17)		73		(575)
Depreciation expense		65,374		63,848		67,644		196,056		194,243
Container write-off (recovery) from lessee default, net		33		(1,557)		(576)		(1,525)		7,154
Amortization expense		645		557		481		1,766		1,576
Impact of reconciling items attributable to the noncontrolling interest		(2,060)		(2,133)		(2,772)		(7,507)		(9,099)
Adjusted EBITDA	$	118,960	$	109,977	$	118,254	$	339,376	$	351,128


	Three Months Ended						Nine Months Ended
	September 30, 2020		June 30, 2020		September 30, 2019		September 30, 2020		September 30, 2019
	(Dollars in thousands)						(Dollars in thousands)
	(Unaudited)						(Unaudited)
Reconciliation of headline earnings:
Net income attributable to Textainer Group Holdings Limited common shareholders	$	16,952	$	15,989	$	10,578	$	28,562	$	27,942
Adjustments:
Container impairment		3,074		1,197		5,351		8,857		17,069
Gain on insurance recovery and legal settlement		—		—		—		—		(841)
Impact of reconciling items on income tax benefit		(28)		(12)		(53)		(86)		(158)
Impact of reconciling items attributable to the noncontrolling interest		(85)		(43)		(137)		(243)		(463)
Headline earnings	$	19,913	$	17,131	$	15,739	$	37,090	$	43,549

Headline earnings per basic common share	$	0.38	$	0.32	$	0.27	$	0.68	$	0.76
Headline earnings per diluted common share	$	0.38	$	0.32	$	0.27	$	0.68	$	0.76

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SOURCE Textainer Group Holdings Limited

November 12, 2020 4:09 pm

KLA Announces Upcoming Investor Webcasts

PR Newswire

MILPITAS, Calif., Nov. 12, 2020 /PRNewswire/ — KLA Corporation (NASDAQ: KLAC) today announced webcasts for upcoming virtual investor conferences:

Tuesday, Nov. 17, 2020 – Bernstein Operational Decisions Conference at 1:30 p.m. PT
Tuesday, Dec. 1, 2020 – Credit Suisse 24th Annual Technology Conference at 10 a.m. PT
Wednesday, Dec. 2, 2020 – Wells Fargo 2020 TMT Summit at 12:20 p.m. PT

The live webcast will be available on the Investor Relations page of KLA’s website at http://ir.kla.com/ and a replay of the webcast will be posted after the event.

Logo: https://mma.prnewswire.com/media/806571/KLA_Corporation_Logo.jpg

About KLA:
KLA develops industry-leading equipment and services that enable innovation throughout the electronics industry. We provide advanced process control and process-enabling solutions for manufacturing wafers and reticles, integrated circuits, packaging, printed circuit boards and flat panel displays. In close collaboration with leading customers across the globe, our expert teams of physicists, engineers, data scientists and problem-solvers design solutions that move the world forward. Additional information may be found at www.kla.com (KLAC-F).

View original content:http://www.prnewswire.com/news-releases/kla-announces-upcoming-investor-webcasts-301172276.html

SOURCE KLA Corporation

November 12, 2020 4:09 pm

Western Midstream to Participate in RBC Midstream and Energy Infrastructure Conference

Announces Third-Quarter Post-Earnings Interview with CEO, Michael Ure

PR Newswire

HOUSTON, Nov. 12, 2020 /PRNewswire/ — Today Western Midstream Partners, LP (NYSE: WES) announced that Michael Ure, President, Chief Executive Officer, and Chief Financial Officer, will participate in a question and answer session at the RBC Capital Markets Midstream and Energy Infrastructure Virtual Conference, on Wednesday, November 18, 2020 at 10:40 a.m. EST. To provide additional insight related to third-quarter results, an interview with Michael Ure will be posted on Western Midstream’s website at www.westernmidstream.com after-market close Tuesday, November 17, 2020.

ABOUT WESTERN MIDSTREAM
Western Midstream Partners, LP (“WES”) is a Delaware master limited partnership formed to acquire, own, develop, and operate midstream assets. With midstream assets located in the Rocky Mountains, North-central Pennsylvania, Texas, and New Mexico, WES is engaged in the business of gathering, compressing, treating, processing, and transporting natural gas; gathering, stabilizing, and transporting condensate, natural-gas liquids, and crude oil; and gathering and disposing of produced water for its customers. In its capacity as a natural-gas processor, WES also buys and sells natural gas, natural-gas liquids, and condensate on behalf of itself and as an agent for its customers under certain contracts.

For more information about Western Midstream Partners, LP, please visit www.westernmidstream.com.

WESTERN MIDSTREAM CONTACTS

Kristen S. Shults

Vice President, Investor Relations and Communications
[email protected]
832.636.6000

Abby Dempsey

Investor Relations Supervisor
[email protected]
832.636.6000

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SOURCE Western Midstream Partners, LP

November 12, 2020 4:08 pm

Achieve Reports Financial Results for Third Quarter 2020 and Provides Corporate and Cytisinicline Development Update

PR Newswire

SEATTLE and VANCOUVER, BC, Nov. 12, 2020 /PRNewswire/ — Achieve Life Sciences, Inc. (Nasdaq: ACHV), a clinical-stage pharmaceutical company committed to the global development and commercialization of cytisinicline for smoking cessation and nicotine addiction, today announced third quarter 2020 financial results and provided an update on the cytisinicline clinical development program.

Recent Events & Highlights

Initiated the Phase 3 ORCA-2 clinical trial evaluating the efficacy and safety of 3 mg cytisinicline dosed 3 times daily compared to placebo in 750 adult smokers at 15 clinical sites in the United States
Promoted John Bencich to Chief Executive Officer and Dr. Cindy Jacobs to President
Presented successful results from the RAUORA, head-to-head non-inferiority clinical trial comparing cytisinicline and Chantix® (varenicline), at the Society for Research on Nicotine and Tobacco European (SRNT-E) Annual Meeting
Presented mechanism of action data comparing 5-HT₃ receptor activity of cytisinicline vs. Chantix at SRNT-E, providing rationale for differentiated side effect profile of smoking cessation treatments
Announced smoking cessation Key Opinion Leader Virtual Roundtable to be held on November 17, 2020

“With the initiation of the Phase 3 ORCA-2 trial and the breakthrough evidence, both mechanistically and clinically, in support of cytisinicline in comparison to Chantix, the third quarter of 2020 has undeniably been the most pivotal in the history of our company,” commented John Bencich, Chief Executive Officer of Achieve. “Our primary focus in the coming months will be enrollment and execution of ORCA-2, while continuing to explore opportunities for commercialization and expansion into new therapeutic indications, digital health technologies, and audiences who may benefit from cytisinicline, specifically, users of vapes or e-cigarettes.”

Phase 3 ORCA-2 Trial Initiation

Achieve’s first Phase 3 ORCA-2 trial was initiated in October 2020 and will randomize 750 U.S. smokers to one of three study arms to determine the efficacy and safety of cytisinicline administered for either 6 or 12 weeks, compared to placebo. The primary endpoint is biochemically verified continuous abstinence during the last 4 weeks of treatment in the 6 and 12-week cytisinicline treatment arms compared to placebo. Each treatment arm will be compared independently to the placebo arm and the trial will be determined to be successful if either or both of the cytisinicline treatment arms show a statistical benefit compared to placebo.

Management Team Update

In September, the Company announced the promotion of John Bencich to Chief Executive Officer and Dr. Cindy Jacobs to President. Mr. Bencich has been serving as Achieve’s Chief Financial and Operating Officer since 2017 and will join the Board of Directors in his role. Dr. Jacobs has been serving as the Chief Medical Officer of Achieve since 2017 and will continue in her role leading the regulatory and clinical development efforts for cytisinicline. Rick Stewart will remain with Achieve as the Executive Chairman of the Board of Directors and Dr. Anthony Clark will remain in his role as Chief Scientific Officer.

RAUORA: Significantly Fewer Adverse Events and Higher Quits Rates for Cytisinicline vs Chanti

x

Final results from the New Zealand RAUORA Phase 3 non-inferiority clinical trial comparing cytisinicline to varenicline (Chantix) in Māori (indigenous New Zealanders) and whānau (family) of Māori were presented at the SRNT-E Annual Meeting in September 2020. Results showed that cytisinicline met the pre-specified non-inferiority endpoint and was trending towards superiority demonstrating a 4.29% improvement in quit rates in favor of cytisinicline. Subjects in the cytisinicline arm were approximately one and a half times more likely to have quit smoking at 6 months compared to subjects who received varenicline. Importantly, significantly fewer overall adverse events (AEs) were reported in cytisinicline-treated subjects. Of the subjects who experienced AEs (111 in the cytisinicline arm compared to 138 in the varenicline arm), there was significantly less nausea and vivid dreams.

MOA Data Explaining Reduced Nausea and Vomiting with Cytisinicline Presented at SRNT-E

Data presented at the SRNT-E Annual Meeting in September 2020 provides a rationale based on detailed receptor pharmacology to explain why the incidence of nausea and vomiting associated with cytisinicline appears to be consistently lower than that seen with Chantix. The preclinical study, conducted at the University of Cambridge Department of Biochemistry, was designed to examine the in vitro binding characteristics of cytisinicline compared to varenicline at the human 5-HT₃ receptor. The study reported an IC50 of 0.50 mM for cytisinicline and 0.25 µM for varenicline, representing a 2000-greater fold agonist binding affinity to the 5-HT₃ receptor for varenicline compared to cytisinicline.

Virtual Smoking Cessation KOL Roundtable to be Held November 17, 2020

Achieve announced plans to host a virtual roundtable on cytisinicline and smoking cessation on Tuesday, November 17, 2020, at 12:00PM EST. Five esteemed experts in the field of smoking cessation will discuss the ongoing ORCA-2 trial, review recent cytisinicline data, and discuss the importance of smoking cessation in the midst of the COVID-19 pandemic. Visit http://ir.achievelifesciences.com/events-and-webcasts for additional information and click here to register for the event.

Financial Results

As of September 30, 2020, the company’s cash, cash equivalents, and restricted cash was $22.4 million. Total operating expenses for the three and nine months ended September 30, 2020 were $3.8 million and $10.0 million, respectively. Total net loss for the three and nine months ended September 30, 2020 was $3.8 million and $10.0 million, respectively.

As of November 12, 2020, Achieve had 3,617,664 shares outstanding.

Conference Call Details
Achieve will host a conference call at 4:30pm Eastern time today, Thursday, November 12, 2020. To access the webcast, log on to the investor relations page of the Achieve website at http://ir.achievelifesciences.com/events-and-webcasts. Alternatively, access to the live conference call is available by dialing (877) 472-9809 (U.S. & Canada) or (629) 228-0791 (International) and referencing conference ID 8047128. A webcast replay will be available approximately two hours after the call and will be archived on the website for 90 days.

About Achieve and Cytisinicline
Tobacco use is currently the leading cause of preventable death that is responsible for more than eight million deaths worldwide and nearly half a million deaths in the U.S. annually.^1,2 More than 87% of lung cancer deaths, 61% of all pulmonary disease deaths, and 32% of all deaths from coronary heart disease are attributable to smoking and exposure to secondhand smoke.² Achieve’s focus is to address the global smoking health and nicotine addiction epidemic through the development and commercialization of cytisinicline.

Cytisinicline is a plant-based alkaloid with a high binding affinity to the nicotinic acetylcholine receptor. It is believed to aid in smoking cessation by interacting with nicotine receptors in the brain by reducing the severity of nicotine withdrawal symptoms and by reducing the reward and satisfaction associated with smoking.

Forward Looking Statements
This press release contains forward-looking statements within the meaning of the “safe harbor” provisions of the Private Securities Litigation Reform Act of 1995, including, but not limited to, statements regarding the timing and nature of cytisinicline clinical development and commercialization activities, the potential market size for cytisinicline, the potential benefits of cytisinicline, the ability to discover and develop new uses for cytisinicline, including but not limited to as an e-cigarette cessation product, and the development and effectiveness of new treatments. All statements other than statements of historical fact are statements that could be deemed forward-looking statements. Achieve may not actually achieve its plans or product development goals in a timely manner, if at all, or otherwise carry out its intentions or meet its expectations or projections disclosed in these forward-looking statements. These statements are based on management’s current expectations and beliefs and are subject to a number of risks, uncertainties and assumptions that could cause actual results to differ materially from those described in the forward-looking statements, including, among others, the risk that cytisinicline may not demonstrate the hypothesized or expected benefits; the risk that Achieve may not be able to obtain additional financing to fund the development of cytisinicline; the risk that cytisinicline will not receive regulatory approval or be successfully commercialized; the risk that new developments in the smoking cessation landscape require changes in business strategy or clinical development plans; the risk that Achieve’s intellectual property may not be adequately protected; general business and economic conditions; risks related to the impact on our business of the COVID-19 pandemic or similar public health crises and the other factors described in the risk factors set forth in Achieve’s filings with the Securities and Exchange Commission from time to time, including Achieve’s Annual Reports on Form 10-K and Quarterly Reports on Form 10-Q. Achieve undertakes no obligation to update the forward-looking statements contained herein or to reflect events or circumstances occurring after the date hereof, other than as may be required by applicable.

Media Contact
Glenn Silver
[email protected]
(646) 871-8485

Investor Relations Contact
Jason Wong
[email protected]
(415) 375-3340 ext. 4

References
¹World Health Organization. WHO Report on the Global Tobacco Epidemic, 2019. Geneva: World Health Organization, 2017.
² U.S. Department of Health and Human Services. The Health Consequences of Smoking – 50 Years of Progress. A Report of the Surgeon General, 2014.

Chantix® is a registered trademark of Pfizer Inc.


Consolidated Statements of Loss
(In thousands, except per share and share data)



	Three Months Ended September 30,		Nine Months Ended September 30,
	2020	2019	2020	2019


Operating expenses:
Research and development	1,891	1,824	4,535	7,911
General and administrative	1,863	1,893	5,494	5,408
Total operating expenses	3,754	3,717	10,029	13,319
Loss from operations	(3,754)	(3,717)	(10,029)	(13,319)
Other income (expense)	(10)	44	23	118
Net loss	$ (3,764)	$ (3,673)	$ (10,006)	$ (13,201)

Basic and diluted net loss per share	$ (1.14)	$ (9.07)	$ (4.55)	$ (35.96)

Weighted average number of basic and diluted common shares	3,289,252	405,012	2,197,368	367,103


Consolidated Balance Sheets
(In thousands)

	September 30,	December 31,
	2020	2019

Assets:
Cash, cash equivalents, short term investments and restricted cash	$ 22,443	$ 16,714
Prepaid expenses and other current assets	1,669	670
Property, equipment and other assets	358	244
Right-of-use assets	193	329
License agreement	1,920	2,087
Goodwill	1,034	1,034
Total assets	$ 27,617	$ 21,078

Liabilities and stockholders’ equity:
Accounts payable and accrued liabilities	$ 1,719	$ 2,666
Current portion of long-term obligations	129	203
Long-term obligations	94	159
Stockholders’ equity	25,675	18,050
Total liabilities and stockholders’ equity	$ 27,617	$ 21,078

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SOURCE Achieve Life Sciences, Inc.

November 12, 2020 4:08 pm

Helius Medical Technologies, Inc. Reports Third Quarter of Fiscal Year 2020 Financial Results

NEWTOWN, Pa., Nov. 12, 2020 (GLOBE NEWSWIRE) — Helius Medical Technologies, Inc. (Nasdaq:HSDT) (TSX:HSM) (“Helius” or the “Company”), a neurotech company focused on neurological wellness, today reported financial results for the quarter ended September 30, 2020.

Third

Quarter and Recent Business Updates

The Company made a leadership change by appointing Dane C. Andreeff to the position of Interim President and Chief Executive Officer (“CEO”), and Blane Walter as Chairman of the Board of Directors. These moves followed the departure of Philippe Deschamps from his role as President, CEO and Chairman of the Board of Directors.
Following the receipt of Breakthrough Designation earlier this year, the Company submitted a request to the U.S. Food and Drug Administration (“FDA”) for de novo classification and clearance of the Portable Neuromodulation Stimulator (PoNS™) device as a potential treatment for gait deficit due to symptoms of Multiple Sclerosis (“MS”). The Company received a request for additional information from the FDA which includes requests for additional analysis of clinical data and proposes certain labeling modifications.
Subsequent to quarter-end the Company closed a private placement for total gross proceeds of approximately $3.4 million led by a syndicate consisting of current members of the management team and other current investors which the Company expects will be sufficient to fund our operations throughout most of the first quarter of 2021.
The Company expanded its authorized clinic network to a total of 27 Authorized PoNS Treatment™ Clinic locations spanning across Canada, up from 7 clinics at the beginning of the year.
The Company announced the publication of an important study, titled Translingual Neural Stimulation with the Portable Neuromodulation Stimulator (PoNS™) Induces Structural Changes Leading to Functional Recovery in Patients with Mild-to-Moderate Traumatic Brain Injury, in the peer-reviewed journal, EMJ Radiology.
The putative shareholder class action lawsuit against the Company in the Southern District of New York was dismissed without prejudice in July 2020.

Third

Quarter 20

20

Financial Summary

Revenue of $131 thousand, compared to revenue of $150 thousand in third quarter of 2019.
Operating loss of $3.7 million, compared to operating loss of $5.7 million in third quarter of 2019.
Net loss of $3.5 million, compared to net loss of $5.6 million in third quarter of 2019.
As of September 30, 2020, the Company had cash of $2.7 million, compared to $5.5 million at December 31, 2019. The Company had no debt outstanding at September 30, 2020.

“I’m very pleased by our team’s performance during the third quarter, especially given the challenging environment created by the COVID pandemic,” said Dane Andreeff, Interim President and Chief Executive Officer of Helius. “We continued to make strong progress in our strategy to obtain regulatory clearance in the U.S. and submitted our request for de novo classification and clearance to the FDA on August 4th. We look forward to working with the FDA within the context of our Breakthrough Device Designation to facilitate the review of our PoNS device, with the goal of making it available to the estimated 1 million U.S. MS patients as quickly as possible. While our sales performance in Canada continued to be impacted by the disruption due to COVID, our commercial team has done an impressive job of engaging and training Canadian clinics to provide PoNS Treatment, expanding our network to a total of 27 PoNS authorized clinics as of last week.”

“Looking ahead, Helius remains committed to driving continued progress with respect to the two primary aspects of our near-term strategy: pursuing regulatory clearance in the U.S. and advancing our commercialization in the Canadian market. By focusing on these priorities, and continuing to operate as efficiently as possible, we believe we are pursuing the best course to benefit our customers, patients and shareholders. We look forward to building on our recent successes and facilitating awareness, accessibility and adoption of our revolutionary PoNS Treatment to bring 2020 to a strong close.”

Third

Quarter

2020

Financial Results

Total revenue for the third quarter of 2020 was $131 thousand, compared to $150 thousand in the third quarter of 2019. Product sales represented approximately 95% of total revenue in the third quarter of 2020 compared to 100% of total revenue in the third quarter of 2019. Product sales in both periods were generated through sales of the PoNS device pursuant to supply agreements with PoNS Authorized clinic locations in Canada. License and fee revenue represented 5% of sales in the third quarter of 2020, compared to 0% of sales in the third quarter of 2019.

Gross profit for the third quarter of 2020 was $109 thousand, compared to gross profit of $61 thousand in the third quarter of 2019. Operating expenses for the third quarter of 2020 decreased $2.0 million, or 35% year-over-year, to $3.8 million, compared to $5.8 million in the third quarter of 2019.

Operating loss for the third quarter of 2020 decreased $2.1 million, or 36% year-over-year, to $3.7 million, compared to $5.7 million in the third quarter of 2019.

Total other income for the third quarter of 2020 was $183 thousand, compared to $148 thousand in the third quarter of 2019.

Net loss for the third quarter of 2020 was $3.5 million, or $(0.08) per basic and diluted common share, compared to a net loss of $5.6 million, or $(0.22) per basic and diluted common share, in the third quarter of 2019. Weighted average shares used to compute basic and diluted net loss per common share were 45.1 million and 25.9 million for the third quarters of 2020 and 2019, respectively.

Nine Months Ended

September 30, 2020

Financial Results

Total revenue for the nine months ended September 30, 2020 was $0.5 million, compared to $1.3 million in the prior year period. Product sales represented 94% of total revenue for the nine months ended September 30, 2020, compared to 96% of total revenue in the prior year period. Product sales in both periods were generated through sales of the PoNS device pursuant to supply agreements with PoNS Authorized clinic locations in Canada. License and fee revenue represented 6% of total revenue for the nine months ended September 30, 2020, compared to 4% of total revenue in the prior year period.

Gross profit for the nine months ended September 30, 2020 was $0.3 million, compared to gross profit of $0.8 million in the prior year period. Operating expenses for the nine months ended September 30, 2020 decreased $7.5 million, or 39% year-over-year, to $11.7 million, compared to $19.2 million in the prior year period.

Operating loss the nine months ended September 30, 2020 decreased $7.0 million, or 38% year-over-year, to $11.4 million, compared to operating loss of $18.4 million in the prior year period.

Total other expense for the nine months ended September 30, 2020 was $211 thousand, compared to $13.9 million of other income in the prior year period. The year-over-year change is driven primarily by the change in fair value of derivative instruments which is primarily attributable to the change in our stock price, volatility and the number of derivative financial instruments being measured during the period.

Net loss for the nine months ended September 30, 2020 was $11.6 million, or $(0.30) per basic and diluted common share, compared to net loss of $4.5 million, or $(0.17) per basic and diluted common share, in the prior year period. Weighted average shares used to compute basic and diluted net loss per share were 39.2 million and 25.9 million for the nine months ended September 30, 2020 and 2019, respectively.

Net cash provided by financing activities during the nine months ended September 30, 2020 was $6.7 million.

As of September 30, 2020, the Company had cash of $2.7 million, compared to $5.5 million at December 31, 2019. The Company had no debt outstanding at September 30, 2020. Subsequent to quarter end, the Company raised $3.4 million of gross proceeds in a private placement, which the Company expects will extend its cash runway throughout most of the first quarter of 2021.

Full Year 20

20

Outlook

On May 7, 2020, the Company withdrew its previously announced full year 2020 outlook. The Company is currently unable to estimate the duration and impact of the COVID-19 pandemic on its financial and operating results for the full year 2020.

Conference Call

Management will host a conference call at 5:45 p.m. Eastern Time on November 12, 2020 to discuss the results of the quarter and business outlook. Those who would like to participate may dial 877-407-2988 (201-389-0923 for international callers) and provide access code 13711025. A live webcast of the call will also be provided on the Events section of the Company’s investor relations website at: https://heliusmedical.com/index.php/investor-relations/events/upcoming-events.

For those unable to participate, a replay of the call will be available for two weeks at 877-660-6853 (201-612-7415 for international callers); access code 13711025. The webcast will be archived on the Events section of the Company’s investor relations website.

About Helius Medical Technologies, Inc.

Helius Medical Technologies is a neurotech company focused on neurological wellness. The Company’s purpose is to develop, license and acquire unique and non-invasive platform technologies that amplify the brain’s ability to heal itself. The Company’s first commercial product is the Portable Neuromodulation Stimulator (PoNS™). For more information, visit www.heliusmedical.com.

About the PoNS Device and PoNS Treatment

The Portable Neuromodulation Stimulator (PoNS™) is an authorized class II, non-implantable, medical device in Canada intended for use as a short term treatment (14 weeks) of gait deficit due to mild and moderate symptoms from multiple sclerosis (MS), and chronic balance deficit due to mild-to-moderate traumatic brain injury (mmTBI) and is to be used in conjunction with physical therapy. The PoNS™ is an investigational medical device in the United States, the European Union (“EU”), and Australia (“AUS”). The device is currently under review for de novo classification and clearance by the FDA. It is also under premarket review by the AUS Therapeutic Goods Administration. PoNS™ is currently not commercially available in the United States, the European Union or Australia.

Cautionary Disclaimer Statement:

Certain statements in this news release are not based on historical facts and constitute forward-looking statements or forward-looking information within the meaning of the U.S. Private Securities Litigation Reform Act of 1995 and Canadian securities laws. All statements other than statements of historical fact included in this news release are forward-looking statements that involve risks and uncertainties. Forward-looking statements are often identified by terms such as “believe,” “continue,” “expect,” “look forward,” “will” and similar expressions. Such forward-looking statements include, among others, statements regarding the COVID-19 pandemic, including its impact on the Company, the Company’s future growth and operational progress, including clinical and regulatory development plans for the PoNS device, the Company’s expectations regarding the sufficiency of funds for anticipated future operations, potential receipt of regulatory clearance of the PoNS device in the United States, the success of the Company’s planned study, business and commercialization initiatives and objectives, and expectations for full year 2020.

There can be no assurance that such statements will prove to be accurate and actual results and future events could differ materially from those expressed or implied by such statements. Important factors that could cause actual results to differ materially from the Company’s expectations include the impact of the COVID-19 pandemic, uncertainties associated with clinical trial enrollments and the results of the planned study, uncertainties associated with the clinical development process and FDA regulatory submission and approval process, including the Company’s capital requirements to achieve its business objectives and other risks detailed from time to time in the filings made by the Company with securities regulators, and including the risks and uncertainties about the Company’s business described in the “Risk Factors” sections of the Company’s Annual Report on Form 10-K for the year ended December 31, 2019, its Quarterly Report on Form 10-Q for the quarter ended September 30, 2020 and its other filings with the United States Securities and Exchange Commission and the Canadian securities regulators, which can be obtained from either at www.sec.gov or www.sedar.com.

The reader is cautioned not to place undue reliance on any forward-looking statement. The forward-looking statements contained in this news release are made as of the date of this news release and the Company assumes no obligation to update any forward-looking statement or to update the reasons why actual results could differ from such statements except to the extent required by law.

The Toronto Stock Exchange has not reviewed and does not accept responsibility for the adequacy or accuracy of the content of this news release.

Helius Medical Technologies, Inc.

Unaudited
Consolida
ted Balance Sheets

(Except for share data, amounts in thousands)

	September 30, 2020			December 31, 2019
ASSETS
Current assets
Cash	$	2,680		$	5,459
Accounts receivable, net		80			210
Other receivables		138			364
Inventory, net of reserve		572			598
Prepaid expenses		666			610
Total current assets		4,136			7,241
Property and equipment, net		463			712
Other assets
Goodwill		725			1,242
Intangible assets, net		579			582
Operating lease right-of-use asset, net		105			552
Other assets		18			18
Total other assets		1,427			2,394
TOTAL ASSETS	$	6,026		$	10,347
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities
Accounts payable	$	720		$	1,676
Accrued liabilities		1,399			1,519
Operating lease liability		107			172
Derivative financial instruments		—			5
Deferred revenue		339			430
Total current liabilities		2,565			3,802
Non-current liabilities
Operating lease liability		47			465
Deferred revenue		217			245
TOTAL LIABILITIES		2,829			4,512
STOCKHOLDERS’ EQUITY
Preferred stock, $0.001 par value; 10,000,000 shares authorized; no shares issued and outstanding as of September 30, 2020 and December 31, 2019		—			—
Class A common stock, $0.001 par value; 150,000,000 shares authorized; 45,354,612 and 30,718,554 shares issued and outstanding as of September 30, 2020 and December 31, 2019, respectively		45			31
Additional paid-in capital		120,213			111,479
Accumulated other comprehensive loss		(693	)		(902	)
Accumulated deficit		(116,368	)		(104,773	)
TOTAL STOCKHOLDERS’ EQUITY		3,197			5,835
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY	$	6,026		$	10,347

Helius Medical Technologies, Inc.

Unaudited
Consolidated Statements of Operations and Comprehensive
Loss

(Amounts in thousands except
share
and per share data)

	Three Months Ended						Nine Months Ended
	September 30,						September 30,
	2020			2019			2020			2019
Revenue:
Product sales, net	$	124		$	150		$	441		$	1,295
Fee revenue		—			—			9			49
License revenue		7			—			20			—
Total operating revenue		131			150			470			1,344
Cost of sales:
Cost of product sales		22			89			187			538
Gross profit		109			61			283			806
Operating expenses:
Research and development		1,327			1,506			3,755			6,462
Selling, general and administrative		2,370			4,291			7,625			12,715
Amortization expense		72			—			287			—
Total operating expenses		3,769			5,797			11,667			19,177
Operating loss		(3,660	)		(5,736	)		(11,384	)		(18,371	)
Other income (expense):
Other income		—			11			63			35
Change in fair value of derivative financial instruments		1			196			4			14,033
Foreign exchange gain (loss)		182			(59	)		(278	)		(147	)
Total other income (expense)		183			148			(211	)		13,921
Net loss		(3,477	)		(5,588	)		(11,595	)		(4,450	)
Other comprehensive loss:
Foreign currency translation adjustments		(172	)		68			209			(168	)
Comprehensive loss	$	(3,649	)	$	(5,520	)	$	(11,386	)	$	(4,618	)
Net loss per share
Basic	$	(0.08	)	$	(0.22	)	$	(0.30	)	$	(0.17	)
Diluted	$	(0.08	)	$	(0.22	)	$	(0.30	)	$	(0.17	)
Weighted average shares outstanding
Basic		45,137,995			25,903,544			39,187,370			25,869,039
Diluted		45,137,995			25,903,544			39,187,370			25,869,039

Helius Medical Technologies, Inc.

Unaudited
Condensed Consolidated Statements of Cash Flows

(Amounts in thousands)

	Nine Months Ended
	September 30,
	2020			2019
Cash flows from operating activities:
Net loss	$	(11,595	)	$	(4,450	)
Adjustments to reconcile net loss to net cash used in operating activities:
Change in fair value of derivative financial instruments		(4	)		(14,033	)
Stock-based compensation expense		2,021			3,336
Unrealized foreign exchange loss		245			211
Depreciation expense		92			89
Amortization expense		287			—
Provision for doubtful accounts		160			—
Intangible asset impairment		182			—
Loss from disposal of property and equipment		110			—
Gain from lease modification		(56	)		—
Changes in operating assets and liabilities:
Accounts receivable		(30	)		(380	)
Other receivables		226			(123	)
Inventory		26			(897	)
Prepaid expenses		(56	)		285
Other current assets		—			264
Operating lease liability		20			(9	)
Accounts payable		(956	)		(678	)
Accrued liabilities		(120	)		(75	)
Deferred revenue		(119	)		—
Net cash used in operating activities		(9,567	)		(16,460	)
Cash flows from investing activities:
Purchase of property and equipment		(14	)		(260	)
Proceeds from sale of property and equipment		61			—
Internally developed software		(7	)		—
Net cash provided by (used in) investing activities		40			(260	)
Cash flows from financing activities:
Proceeds from the issuance of common stock and accompanying warrants		7,233			—
Share issuance costs		(506	)		(52	)
Proceeds from the exercise of stock options and warrants		—			215
Proceeds from Paycheck Protection Program Loan		323			—
Repayment of Paycheck Protection Program Loan		(323	)		—
Net cash provided by financing activities		6,727			163
Effect of foreign exchange rate changes on cash		21			(7	)
Net decrease in cash		(2,779	)		(16,564	)
Cash at beginning of period		5,459			25,583
Cash at end of period	$	2,680		$	9,019

Investor Relations Contact:

Westwicke Partners on behalf of Helius Medical Technologies, Inc.
Mike Piccinino, CFA
[email protected]

November 12, 2020 4:08 pm

Lantronix Reports First Quarter Fiscal 2021 Results

First
Quarter Net Revenue
W
as
$
17.
1
Million, Up
35
%
F
rom
the
Prior Year
,
Down
1
% Sequentially
GAAP Gross Margin Improved
1,040
Basis Points to
48.1
% Sequentially
GAAP EPS
Improved to
($0.
0
1
)
p
er
S
hare
Non-GAAP EPS
W
as
$0.
0
5
per share
, Driven by
Gross Margin Strength
,
Integration
,
and
Expense Controls
Company
Reiterates
Fiscal 2021
Revenue Growth
Target
of 20%
-25%
and
Non-GAAP EPS Growth
of
120
–
160
%

IRVINE, Calif., Nov. 12, 2020 (GLOBE NEWSWIRE) — Lantronix, Inc. (NASDAQ: LTRX), a global provider of software as a service (“SaaS”), engineering services, and intelligent hardware for the Internet of Things (IoT) and Remote Environment Management (REM), today reported results for the first quarter of fiscal 2021 that ended September 30, 2020.

Net revenue totaled $17.1 million, up 35 percent year over year and down 1 percent sequentially.

GAAP EPS improved to ($0.01), compared to ($0.06) in the prior fiscal quarter.

Non-GAAP EPS was $0.05, compared to $0.04 in the prior fiscal quarter.

“Profitability improved nicely in the first quarter, driven by gross margin strength, ongoing integrations and rigorous expense controls,” stated Paul Pickle, president and CEO of Lantronix. “While supply chain disruptions related to COVID-19 continue to impact our ability to meet customer demand, opportunities are on the rise and we remain confident in our 2021 revenue and earnings forecasts.”

Business Outlook

Due to the ongoing uncertainties caused by the COVID-19 pandemic that continue to impact supply chains, Lantronix has transitioned from specific quarterly guidance in favor of annual growth targets. For the full year fiscal 2021, the company continues to expect year over year revenue growth of 20-25 percent, with non-GAAP EPS growth on the order of 120-160 percent.

Conference Call and Webcast

Lantronix will host an investor conference call and audio webcast today at 2:00 p.m. Pacific Time (5:00 p.m. Eastern Time) to discuss its results for the first quarter of fiscal 2021 that ended Sept. 30, 2020. To access the live conference call, investors should dial 1-844-802-2442 (US) or 1-412-317-5135 (international) and indicate that they are participating in the Lantronix Q1 FY 2021 call. The webcast will be available simultaneously via the investor relations section of the Company’s website at www.lantronix.com.

Investors can access a replay of the conference call starting at approximately 5:00 p.m. Pacific Time today at www.lantronix.com. A telephonic replay will also be available through Nov. 19, 2020, by dialing 1-877-344-7529 (US) or 1-412-317-0088 (international) and entering passcode 10149339.

About Lantronix

Lantronix, Inc. is a global provider of software as a service (“SaaS”), engineering services, and hardware for Edge Computing, the Internet of Things (IoT), and Remote Environment Management (REM). Lantronix enables its customers to provide reliable and secure solutions while accelerating their time to market. Lantronix’s products and services dramatically simplify operations through the creation, development, deployment, and management of customer projects at scale while providing quality, reliability and security.

Lantronix’s portfolio of services and products address each layer of the IoT Stack including Collect, Connect, Compute, Control and Comprehend, enabling its customers to deploy successful IoT and REM solutions. Lantronix’s services and products deliver a holistic approach, addressing its customers’ needs by integrating a SaaS management platform with custom application development layered on top of external and embedded hardware enabling intelligent edge computing, secure communications (wired, Wi-Fi, and cellular), location and positional tracking, and environmental sensing and reporting.

With three decades of proven experience in creating robust industry and customer specific solutions, Lantronix is an innovator in enabling its customers to build new business models, leverage greater efficiencies and realize the possibilities of the Internet of Things and Remote Environment Management. Lantronix’s solutions are deployed inside millions of machines at data centers, offices, and remote sites serving a wide range of industries, including energy, agriculture, medical, security, manufacturing, distribution, transportation, retail, financial, environmental, infrastructure and government.

For more information, visit www.lantronix.com.

Learn more at the Lantronix blog, www.lantronix.com/blog, featuring industry discussion and updates. To follow Lantronix on Twitter, please visit www.twitter.com/Lantronix. View our video library on YouTube at www.youtube.com/user/LantronixInc or connect with us on LinkedIn at www.linkedin.com/company/lantronix

References in this Report to “fiscal 2021” refer to the fiscal year ended June 30, 2021 and references to “fiscal 2020” refer to the fiscal year ended June 30, 2020.

Discussion of Non-GAAP Financial Measures

Lantronix believes that the presentation of non-GAAP financial information, when presented in conjunction with the corresponding GAAP measures, provides important supplemental information to management and investors regarding financial and business trends relating to the company’s financial condition and results of operations. Management uses the aforementioned non-GAAP measures to monitor and evaluate ongoing operating results and trends to gain an understanding of our comparative operating performance. The non-GAAP financial measures disclosed by the company should not be considered a substitute for, or superior to, financial measures calculated in accordance with GAAP, and the financial results calculated in accordance with GAAP and reconciliations of the non-GAAP financial measures to the financial measures calculated in accordance with GAAP should be carefully evaluated. The non-GAAP financial measures used by the company may be calculated differently from, and therefore may not be comparable to, similarly titled measures used by other companies. The company has provided reconciliations of the non-GAAP financial measures to the most directly comparable GAAP financial measures.

Non-GAAP net income (loss) consists of net income (loss) excluding (i) share-based compensation and the employer portion of withholding taxes on stock grants, (ii) depreciation and amortization, (iii) interest income (expense), (iv) other income (expense), (v) income tax provision (benefit), (vi) severance and restructuring charges, (vii) acquisition related costs, (viii) impairment of long-lived assets, (ix) amortization of purchased intangibles, and (x) amortization of manufacturing profit in acquired inventory.

Non-GAAP net income (loss) per share is calculated by dividing non-GAAP net income (loss) by non-GAAP weighted-average shares outstanding (diluted). For purposes of calculating non-GAAP net income (loss) per share, the calculation of GAAP weighted-average shares outstanding (diluted) is adjusted to exclude share-based compensation, which for GAAP purposes is treated as proceeds assumed to be used to repurchase shares under the GAAP treasury stock method.

Guidance on earnings per share growth is provided only on a non-GAAP basis due to the inherent difficulty of forecasting the timing or amount of certain items that have been excluded from the forward-looking non-GAAP measures, and a reconciliation to the comparable GAAP guidance has not been provided because certain factors that are materially significant to Lantronix’s ability to estimate the excluded items are not accessible or estimable on a forward-looking basis without unreasonable effort.

Forward-Looking Statements

This news release contains forward-looking statements, including statements concerning our projected operating and financial performance
for
fiscal 2021, the short- and long-term impact of COVID-19 on our business,
our ability to innovate
and
to enable new business models, leverage greater efficiencies and realize the possibilities of the Internet of Things and Remote Environment Management as well as the benefits that might be derived from the efforts of our team to transform our business. These forward-looking statements are intended to qualify for the safe harbor from liability established by the Private Securities Litigation Reform Act of 1995. We have based our forward-looking statements on our current expectations and projections about trends affecting our business and industry and other future events. Although we do not make forward-looking statements unless we believe we have a reasonable basis for doing so, we cannot guarantee their accuracy. Forward-looking statements are subject to substantial risks and uncertainties that could cause our results or experiences, or future business, financial condition, results of operations or performance, to differ materially from our historical results or those expressed or implied in any forward-looking statement contained in this news release. Factors which could have a material adverse effect on our operations and future prospects or which could cause actual results to differ materially from our expectations include, but are not limited to: the impact of COVID-19 and the measures to reduce its spread on our employees, supply and distribution chains, the global economy and our financial condition and liquidity; the effects of negative or worsening regional and worldwide economic conditions or market instability on our business, including effects on purchasing decisions by our customers; our ability to continue to generate revenue from products sold into mature markets; our ability to develop, market, and sell new products; our ability to succeed with our new software offerings; fluctuations in our revenue due to the project-based timing of orders from certain customers; unpredictable timing of our revenues due to the lengthy sales cycle for our products and services and potential delays in customer completion of projects; our ability to accurately forecast future demand for our products; delays in qualifying revisions of existing products; constraints or delays in the supply of, or quality control issues with, certain materials or components; difficulties associated with the delivery, quality or cost of our products from our contract manufacturers or suppliers; risks related to the outsourcing of manufacturing and international operations; difficulties associated with our distributors or resellers; intense competition in our industry and resultant downward price pressure; rises in inventory levels and inventory obsolescence; undetected software or hardware errors or defects in our products; cybersecurity risks; our ability to obtain appropriate industry certifications or approvals from governmental regulatory bodies; changes in applicable U.S. and foreign government laws, regulations, and tariffs; our ability to successfully implement our acquisitions strategy or integrate acquired companies; uncertainty as to the future profitability of acquired businesses, and delays in the realization of, or the failure to realize, any accretion from acquisition transactions; acquiring, managing and integrating new operations, businesses or assets, and the associated diversion of management attention or other related costs or difficulties; our ability to protect patents and other proprietary rights and avoid infringement of others’ proprietary technology rights; the level of our indebtedness, our ability to service our indebtedness and the restrictions in our debt agreements; our ability to attract and retain qualified management; and any additional factors included in our Annual Report on Form 10-K for the fiscal year ended June 30, 2020, filed with the Securities and Exchange Commission (the “SEC”) on September 11, 2020, including in the section entitled “Risk Factors” in Item 1A of Part I of such report, and in our other public filings with the SEC. In addition, actual results may differ as a result of additional risks and uncertainties of which we are currently unaware or which we do not currently view as material to our business. For these reasons, investors are cautioned not to place undue reliance on any forward-looking statements. The forward-looking statements we make speak only as of the date on which they are made. We expressly disclaim any intent or obligation to update any forward-looking statements after the date hereof to conform such statements to actual results or to changes in our opinions or expectations, except as required by applicable law or the rules of the Nasdaq Stock Market LLC. If we do update or correct any forward-looking statements, investors should not conclude that we will make additional updates or corrections

Lantronix Investor Relations Contact:
Jeremy Whitaker
Chief Financial Officer
[email protected]

LANTRONIX, INC.
UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands)

	September 30			June 30,
	2020			2020
Assets
Current assets:
Cash and cash equivalents	$	7,709		$	7,691
Accounts receivable, net		12,345			11,411
Inventories, net		13,888			13,781
Contract manufacturers’ receivable		551			337
Prepaid expenses and other current assets		1,690			1,290
Total current assets		36,183			34,510
Property and equipment, net		1,555			1,587
Goodwill		15,810			15,810
Purchased intangible assets, net		11,567			12,449
Lease right-of-use assets		2,974			3,345
Other assets		241			232
Total assets	$	68,330		$	67,933

Liabilities and stockholders’ equity
Current liabilities:
Accounts payable	$	6,676		$	5,331
Accrued payroll and related expenses		2,390			2,658
Short-term debt, net		1,472			1,472
Other current liabilities		6,339			6,308
Total current liabilities		16,877			15,769
Long-term debt, net		3,314			3,682
Other non-current liabilities		1,640			1,962
Total liabilities		21,831			21,413

Commitments and contingencies

Stockholders’ equity:
Common stock		3			3
Additional paid-in capital		246,546			246,265
Accumulated deficit		(200,421	)		(200,119	)
Accumulated other comprehensive income		371			371
Total stockholders’ equity		46,499			46,520
Total liabilities and stockholders’ equity	$	68,330		$	67,933

LANTRONIX, INC.
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share data)


	Three Months Ended
	September 30,			June 30,			September 30,
	2020			2020			2019
Net revenue	$	17,146		$	17,397		$	12,741
Cost of revenue		8,907			10,846			6,546
Gross profit		8,239			6,551			6,195
Operating expenses:
Selling, general and administrative		4,899			4,680			4,473
Research and development		2,572			2,010			2,621
Restructuring, severance and related charges		92			478			749
Acquisition-related costs		–			38			643
Amortization of purchased intangible assets		882			941			144
Total operating expenses		8,445			8,147			8,630
Loss from operations		(206	)		(1,596	)		(2,435	)
Interest income (expense), net		(85	)		(90	)		56
Other income (expense), net		39			1			(43	)
Loss before income taxes		(252	)		(1,685	)		(2,422	)
Provision for income taxes		50			16			48
Net loss	$	(302	)	$	(1,701	)	$	(2,470	)
Net loss per share – basic and diluted	$	(0.01	)	$	(0.06	)	$	(0.11	)
Weighted-average common shares – basic and diluted		28,371			28,046			22,913

LANTRONIX, INC.
UNAUDITED RECONCILIATION OF NON-GAAP ADJUSTMENTS
(In thousands, except per share data)

	Three Months Ended
	September 30,			June 30,			September 30,
	2020			2020			2019
GAAP net loss	$	(302	)	$	(1,701	)	$	(2,470	)
Non-GAAP adjustments:
Cost of revenue:
Share-based compensation		58			85			24
Employer portion of withholding taxes on stock grants		–			–			1
Depreciation and amortization		177			179			67
Total adjustments to cost of revenue		235			264			92
Selling, general and administrative:
Share-based compensation		445			783			459
Employer portion of withholding taxes on stock grants		5			12			5
Depreciation and amortization		55			69			54
Total adjustments to selling, general and administrative		505			864			518
Research and development:
Share-based compensation		100			122			95
Employer portion of withholding taxes on stock grants		6			2			4
Depreciation and amortization		33			27			26
Total adjustments to research and development		139			151			125
Restructuring, severance and related charges		92			478			749
Acquisition related costs		–			38			643
Amortization of purchased intangible assets		882			941			144
Amortization of manufacturing profit in acquired inventory		7			51			171
Total non-GAAP adjustments to operating expenses		1,625			2,523			2,350
Interest (income) expense, net		85			90			(56	)
Other (income) expense, net		(39	)		(1	)		43
Provision for income taxes		50			16			48
Total non-GAAP adjustments		1,956			2,892			2,477
Non-GAAP net income	$	1,654		$	1,191		$	7


Non-GAAP net income per share – diluted	$	0.05		$	0.04		$	0.00

Denominator for GAAP net income per share – basic		28,371			28,046			22,913
Non-GAAP adjustment		1,833			1,959			1,834
Denominator for non-GAAP net income per share – diluted		30,204			30,005			24,747

GAAP operating expenses	$	8,445		$	8,147		$	8,630
Non-GAAP adjustments to operating expenses		(1,625	)		(2,523	)		(2,350	)
Non-GAAP operating expenses	$	6,820		$	5,624		$	6,280

LANTRONIX, INC.
UNAUDITED NET REVENUES BY PRODUCT LINE AND REGION
(In thousands)

	Three Months Ended
	September 30, 2020		June 30, 2020		September 30, 2019
IoT	$	14,620	$	14,588	$	10,221
REM		2,402		2,671		2,301
Other		124		138		219
	$	17,146	$	17,397	$	12,741


	Three Months Ended
	September 30, 2020		June 30, 2020		September 30, 2019
Americas	$	10,929	$	11,549	$	5,764
EMEA		2,639		3,093		4,521
Asia Pacific Japan		3,578		2,755		2,456
	$	17,146	$	17,397	$	12,741

November 12, 2020 4:08 pm

INTRUSION Reports Third Quarter 2020 Results

Positive Response to Beta Testing of New Cybersecurity Solution
and

Strengthened Balance Sheet with Successful Follow-On Offering

PLANO, Texas, Nov. 12, 2020 (GLOBE NEWSWIRE) — INTRUSION, Inc. (NASDAQ: INTZ) announced today financial results for the three- and nine-month periods ended September 30, 2020.

Third Quarter and Recent Business Highlights

With positive beta-testing results, accepts pre-order s for INTRUSION Shield™
$18.1 million in net proceeds raised from a public offering of common shares
Successfully uplisted to the Nasdaq Capital Market
Expansion of executive team with key appointments to support growth strategy

“While extended government shutdowns associated with the pandemic continued to impact our legacy subscription and reporting businesses during the third quarter, the growing trend of sophisticated cybersecurity attacks underscores the crucial need for more advanced, innovative solutions,” stated Jack B. Blount, President and CEO of INTRUSION. “We are capitalizing on this need through the recent introduction and aggressive ramp of our new Shield family of disruptive cybersecurity solutions.

“Recent feedback from enterprise customers that are beta testing Shield has been extraordinarily positive, which is why we made the decision to take pre-orders ahead of general availability. Leveraging our unique proprietary database of threat indicators and advanced AI, Shield detects and neutralizes threats that are actively inside customers’ networks, effectively tackling the problem of vulnerability from the inside out. Shield will disrupt the cybersecurity industry beginning with the enterprise market, which represents more than a $7 billion opportunity in the U.S. alone. Moreover, the launch of subsequent solutions within the Shield family will also increase our addressable market, further fueling our growth.”

Third Quarter Financial Results

Revenue for the third quarter 2020 was $1.6 million, compared to $3.9 million in the third quarter 2019 and $1.7 million for the second quarter 2020.

Gross profit margin was 59 percent of revenue in the third quarter of 2020, compared to 62 percent in the third quarter 2019 and 61 percent in the second quarter 2020.

INTRUSION’s third quarter 2020 operating expenses were $2.3 million, compared to $0.9 million in the third quarter 2019 and $1.7 million in the second quarter 2020.

INTRUSION’s net loss was $1.4 million in the third quarter 2020, compared to net income of $1.5 million in the third quarter 2019 and a net loss of $0.7 million in the second quarter 2020.

As of September 30, 2020, INTRUSION reported cash, cash equivalents and accounts receivables of $2.5 million. Subsequent to quarter end, INTRUSION raised $18.1 million in net proceeds from a follow-on offering of 3.6 million shares of its common stock. The net proceeds reflect 2.5 million shares offered by the Company, including the underwriter’s exercised option to purchase an additional 465,000 shares.

Conference Call

Intrusion’s management will host a conference call today at 4:00 P.M. CST. Interested investors can access the call at 1-833-366-0416 or +1-236-712-2506 for international callers and provide the following Conference ID: 5795593. For those unable to participate in the live conference call, a replay will be accessible beginning tonight at 7:00 P.M. CST until November 19, 2020 by calling 1-800-585-8367 or +1-416-621-4642 for international callers. At the replay prompt, enter conference identification number 5795593. Additionally, a live and archived audio webcast of the conference call will be available at www.intrusion.com.

About INTRUSION Inc.

I
NTRUSION Inc. is a global provider of entity identification, high speed data mining, cybercrime and advanced persistent threat detection products. INTRUSION’s solution families include Shield™, a combination of plug-n-play hardware, software, global data, and real-time Artificial Intelligence (AI) services that provide organizations with the most robust cybersecurity defense possible, TraceCop™ for identity discovery and disclosure, and Savant™ for network data mining and advanced persistent threat detection. INTRUSION’s solutions help protect critical information assets by quickly detecting, protecting, analyzing and reporting attacks or misuse of classified, private and regulated information for government and enterprise networks. For more information, please visit www.intrusion.com.

This release may contain certain forward-looking statements, which reflect management’s expectations regarding future events and operating performance and speak only as of the date hereof. These forward-looking statements involve a number of risks and uncertainties.
Such statements include, without limitations, statements regarding future revenue growth and profitability, the difficulties in forecasting future sales caused by current economic and market conditions, the effects of sales and implementation cycles for our products on our quarterly results and difficulties in accurately estimating market growth, uncertainties regarding future government and corporate spending on information security products, spending patterns of, and appropriations to, U.S. government departments, statements about our new INTRUSION Shield solution and its success and future market acceptance, as well as other statements. These statements are made under the “safe harbor” provisions of the Private Securities Litigation Reform Act of 1995 and involve risks and uncertainties which could cause actual results to differ materially from those in the forward-looking statements. The factors that could cause actual results to differ materially from expectations are detailed in the Company’s most recent reports on Form 10-K and Form 10-Q, particularly under the heading “Risk Factors.”

Company Contact

Julia Kramer, VP Marketing
[email protected]
P: 972-301-3635

Investor Relations Contact

Joel Achramowicz
[email protected]
P: (415) 845-9964

INTRUSION INC.

UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS

(In thousands except par value amounts)

	September 30,		December 31,
	2020		2019
ASSETS
Current Assets
Cash and cash equivalents	$	1,505	$	3,334
Accounts receivable	1,030			1,556
Prepaid expenses	647			152
Total current assets	3,182			5052
Noncurrent Assets
Property and equipment, net	356			335
Finance leases right-of-use asset, net	30			62
Operating leases right-of-use asset, net	1,160			1,348
Other assets	57			38
Total noncurrent assets	1,603			1,783
TOTAL ASSETS	$	4,785	$	6,835

LIABILITIES AND EQUITY (DEFICIT)

Current Liabilities
Accounts payable and accrued expenses	$	1,420		$	1,080
Dividends payable	—			20
Finance leases liability, current portion	31			43
Operating leases liability, current portion	295			284
PPP loan payable, current portion	392			—
Deferred revenue	58			516
Total current liabilities	2,196			1,943
Finance leases liability, noncurrent portion	1			21
PPP loan payable, noncurrent portion	239			—
Operating lease liability, noncurrent portion	1,095			1,315
Total noncurrent liabilities	1,335			1,336
Stockholders’ Equity:
Preferred stock, $.01 par value:
Authorized shares – 5,000
Series 1 shares issued and outstanding – 200 in 2019
Liquidation preference of $1,013 in 2019	—			707
Series 2 shares issued and outstanding – 460 in 2019 Liquidation preference of $1,155 in 2019	—			724
Series 3 shares issued and outstanding – 289 in 2019 Liquidation preference of $634 in 2019	—			412
Common stock, $.01 par value:
Authorized shares – 80,000
Issued shares – 14,939 in 2020 and 13,552 in 2019 Outstanding shares – 14,929 in 2020 and 13,542 in 2019	149			136
Common stock held in treasury, at cost – 10 shares	(362		)	(362		)
Additional paid-in capital	58,877			56,759
Accumulated deficit	(57,367		)	(54,777		)
Accumulated other comprehensive loss	(43		)	(43		)
Total stockholders’ equity	1,254			3,556
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY	$	4,785		$	6,835

INTRUSION INC.

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(In thousands except per share amounts)

	Three Months Ended September 30,								N i ne Months Ended September 30,
	20 20				201 9				20 20				201 9
Revenue	$		1,588		$	3,860			$		5,039		$	11,071
Cost of revenue	652				1,465				2,050				4,339

Gross profit	936				2,395				2,989				6,732

Operating expenses:
Sales and marketing	885				356				1,880				813
Research and development	1,081				297				2,741				775
General and administrative	377				277				962				930

Operating income (loss)	(1,407			)	1,465				(2,594			)	4,214
Interest expense	(2			)	(1			)	(4			)	(45		)
Interest income	—				—				8				—

Net income (loss)	$	(1,409		)	$		1,464		$	(2,590		)	$	4,169

Preferred stock dividends accrued	(13			)	(35			)	(79			)	(104		)
Net income (loss) attributable to common stockholders	$	(1,422		)	$		1,429		$	(2,669		)	$	4,065

Net income (loss) per share attributable to common stockholders:
Basic	$		(0.10	)	$		0.11		$	(0.19		)	$	0.30
Diluted	$		(0.10	)	$		0.09		$	(0.19		)	$	0.27

Weighted average common shares outstanding:
Basic	14,450				13,523				13,981				13,466
Diluted	14,450				15,371				13,981				15,314

November 12, 2020 4:08 pm

Dynagas LNG Partners LP Reports Results for the Three and Nine Months Ended September 30, 2020

ATHENS, Greece, Nov. 12, 2020 (GLOBE NEWSWIRE) — Dynagas LNG Partners LP (NYSE: “DLNG”) (“Dynagas Partners” or the “Partnership”), an owner and operator of liquefied natural gas (“LNG”) carriers, today announced its results for the three and nine months ended September 30, 2020.

Third Quarter Highlights:

Net income and earnings per common unit of $10.0 million and $0.20, respectively;
Adjusted Net Income⁽¹⁾ of $10.2 million and Adjusted Earnings per common unit of $0.21;
Adjusted EBITDA⁽¹⁾of $24.2 million;
100% fleet utilization;
Declared and paid cash distribution of $0.5625 per unit on its Series A Preferred Units (NYSE: “DLNG PR A”) for the period from May 12, 2020 to August 11, 2020 and $0.546875 per unit on the Series B Preferred Units (NYSE: “DLNG PR B”) for the period from May 22, 2020 to August 21, 2020; and
Entered into an amended and restated ATM Sales Agreement (the “A&R Sales Agreement”), for the offer and sale of common units representing limited partnership interests, having an aggregate offering price of up to $30.0 million (the “Current ATM Program”). Upon entry into the A&R Sales Agreement, the Partnership terminated its prior at-the-market program established in July of 2020 (the “Prior ATM Program”). At the time of such termination, $0.4 million of the Partnership’s common units out of an aggregate of $30.0 million of its common units were sold pursuant to the Prior ATM Program.

Subsequent Events:

Declared a quarterly cash distribution of $0.5625 on the Partnership’s Series A Preferred Units for the period from August 12, 2020 to November 11, 2020, which was paid on November 12, 2020; and
Declared a quarterly cash distribution of $0.546875 on the Partnership’s Series B Preferred Units for the period from August 22, 2020 to November 21, 2020, which is payable on November 23, 2020.

⁽¹⁾ Adjusted Net Income, Adjusted Earnings per common unit, and Adjusted EBITDA are not recognized measures under U.S. GAAP. Please refer to Appendix B of this press release for the definitions and reconciliation of these measures to the most directly comparable financial measures calculated and presented in accordance with U.S. GAAP and other related information.

CEO Commentary:

We are pleased to report the results for the three months and nine months ended September 30, 2020. All six LNG carriers in our fleet are operating under their respective long-term charters with international gas producers with an average remaining contract term of 7.9 years. Our estimated contracted revenue backlog is approximately $1.15 billion. Absent any unforeseen events or unscheduled dry dockings, our fleet is contracted to be employed 100% for 2020, 92% for 2021 and 83% for 2022 through and including 2025. The earliest contracted re-delivery date for our six LNG carriers is in the third quarter of 2021(the Arctic Aurora), with the next carrier (the Clean Energy) becoming available for re-chartering in the first quarter of 2026 at the earliest.

For the third quarter of 2020, we reported Net Income of $10.0 million and Adjusted EBITDA of $24.2 million. This improved performance is attributable to an increase in voyage revenues and a decrease in interest and finance costs compared to the corresponding period in 2019, coupled with stable vessel operating expenses during this period.

Despite the ongoing operational challenges the industry is facing as a result of the COVID-19 outbreak, we are pleased to report 100% utilization for our fleet for the third quarter of 2020. The ongoing impact of the COVID-19 outbreak has been operationally manageable due to our manager’s COVID-19 response plan which has been implemented with the support of our seafarers, charterers and employees, for which we are grateful.

Going forward, we intend to continue our strategy of using our cash flow generation to deleverage our balance sheet and reinforce our liquidity so as to build equity value over time. This, we believe, will enhance our ability to pursue future growth initiatives.

Financial Results Overview:

	Three Months Ended					Nine Months Ended
*(U.S. dollars in thousands, except per unit data)*		September 30, 2020 (unaudited)		September 30, 2019 (unaudited)			September 30, 2020 (unaudited)		September 30, 2019 (unaudited)
Voyage revenues	$	34,346	$	34,364		$	102,730	$	96,584
Net Income / (Loss)	$	10,015	$	(4,740	)	$	23,409	$	(1,916	)
Adjusted Net Income ⁽¹⁾	$	10,203	$	2,775		$	27,161	$	5,277
Operating income	$	16,149	$	16,061		$	48,018	$	43,963
Adjusted EBITDA⁽¹⁾	$	24,221	$	23,775		$	72,091	$	66,366
Earnings/ (Loss) per common unit	$	0.20	$	(0.21	)	$	0.41	$	(0.30	)
Adjusted Earnings/ (Loss) per common unit ⁽¹⁾	$	0.21	$	—		$	0.52	$	(0.10	)

⁽¹⁾ Adjusted Net Income, Adjusted EBITDA, and Adjusted Earnings/(Loss) per common unit are not recognized measures under U.S. GAAP. Please refer to Appendix B of this press release for the definitions and reconciliation of these measures to the most directly comparable financial measures calculated and presented in accordance with U.S. GAAP.

Three Months Ended September 30, 2020 and 2019 Financial Results

Net Income for the three months ended September 30, 2020 was $10.0 million as compared to a Net Loss of $4.7 million in the corresponding period of 2019, which represents an increase of $14.7 million, or 312.8%. This increase was mainly attributable to a decrease in interest and finance costs in the three months ended September 30, 2020, as further analyzed below.

Adjusted Net Income for the three months ended September 30, 2020 was $10.2 million compared to $2.8 million in the corresponding period of 2019, representing a net increase of $7.4 million or 264.3%.

Voyage revenues for the three-month periods ended September 30, 2020 and 2019 were $34.3 million and $34.4 million, respectively.

The Partnership reported average daily hire gross of commissions⁽¹⁾of approximately $62,500 per day per vessel in the three-month period ended September 30, 2020, compared to approximately $62,200 per day per vessel in the corresponding period of 2019. During the three-month periods ended September 30, 2020 and September 30, 2019, the Partnership’s vessels operated at 100% and 99% utilization, respectively.

Vessel operating expenses were $7.2 million, which corresponds to a daily rate per vessel of $13,074 in the three-month period ended September 30, 2020, as compared to $7.5 million, or a daily rate per vessel of $13,531 in the corresponding period of 2019.

Adjusted EBITDA for the three months ended September 30, 2020 was $24.2 million, as compared to $23.8 million for the corresponding period of 2019, which corresponds to an increase of $0.4 million, or 1.7%.

Interest and finance costs, net, were $6.0 million in the three months ended September 30, 2020 as compared to $20.9 million in the corresponding period of 2019, which represents a decrease of $14.9 million, or 71.3%. The decrease in interest and finance costs is due to (i) the lower weighted average interest rate, (ii) the reduction in the average interest bearing debt and (iii) the decrease in deferred loan fees as a result of a $7.5 million one-time write-off of deferred loan fees included in the corresponding period of 2019 in connection with the early prepayment of the $480 million Senior Secured Term Loan facility in September 2019.

For the three months ended September 30, 2020, the Partnership reported Earnings per common unit and Adjusted Earnings per common unit, basic and diluted, of $0.20 and $0.21 respectively, after taking into account the distributions relating to the Series A Preferred Units and the Series B Preferred Units on the Partnership’s Net income/Adjusted Net Income. Earnings per common unit and Adjusted Earnings per common unit, basic and diluted, are calculated on the basis of a weighted average number of 35,593,477 common units outstanding during the period and in the case of Adjusted Earnings per common unit after reflecting the impact of the non-cash items presented in Appendix B of this press release.

Adjusted Net Income, Adjusted EBITDA and Adjusted Earnings/(Loss) per common unit are not recognized measures under U.S. GAAP. Please refer to Appendix B of this press release for the definitions and reconciliation of these measures to the most directly comparable financial measures calculated and presented in accordance with U.S. GAAP.

Amounts relating to variations in period–on–period comparisons shown in this section are derived from the condensed financials presented below.

⁽¹⁾Average daily hire gross of commissions represents voyage revenue excluding the non-cash time charter deferred revenue amortization, divided by the Available Days in the Partnership’s fleet as described in Appendix B.

Liquidity/ Financing/ Cash Flow Coverage

During the three months ended September 30, 2020, the Partnership generated net cash from operating activities of $27.6 million as compared to $13.6 million in the corresponding period of 2019, which represents an increase of $14.0 million, or 102.9%.

As of September 30, 2020, the Partnership reported total cash of $76.0 million (including $50.0 million of restricted cash). The Partnership’s outstanding indebtedness as of September 30, 2020 under the $675.0 Million Credit Facility amounted to $627.0 million, gross of unamortized deferred loan fees and including $48.0 million, which is repayable within one year.

In July 2020, the Partnership, under the Prior ATM program, issued and sold 122,580 common units at a weighted average price of $3.665 per unit, resulting in gross proceeds of $0.4 million and net proceeds of $0.3 million. No issuances of common units under the Current ATM program were made during the three months ended September 30, 2020.

As of September 30, 2020, the Partnership had unused availability of $30.0 million under its interest free $30.0 million revolving credit facility with its Sponsor, or the $30.0 Million Revolving Credit Facility, which was extended on November 14, 2018, and is available to the Partnership at any time until November 2023.

Vessel Employment

As of November 12, 2020, the Partnership had estimated contracted time charter coverage⁽¹⁾ for 100% of its fleet estimated Available Days (as defined in Appendix B) for 2020, 92% of its fleet estimated Available Days for 2021 and 83% of its fleet estimated Available Days for 2022.

As of the same date, the Partnership’s contracted revenue backlog estimate^{(2) (3)} was $1.15 billion, with an average remaining contract term of 7.9 years.

⁽¹⁾ Time charter coverage for the Partnership’s fleet is calculated by dividing the fleet contracted days on the basis of the earliest estimated delivery and redelivery dates prescribed in the Partnership’s current time charter contracts, net of scheduled class survey repairs by the number of expected Available Days during that period.

⁽²⁾The Partnership calculates its estimated contracted revenue backlog by multiplying the contractual daily hire rate by the expected number of days committed under the contracts (assuming earliest delivery and redelivery and excluding options to extend), assuming full utilization. The actual amount of revenues earned and the actual periods during which revenues are earned may differ from the amounts and periods disclosed due to, for example, dry-docking and/or special survey downtime, maintenance projects, off-hire downtime and other factors that result in lower revenues than the Partnership’s average contract backlog per day.

⁽³⁾$0.16 billion of the revenue backlog estimate relates to the estimated portion of the hire contained in certain time charter contracts with Yamal which represents the operating expenses of the respective vessels and is subject to yearly adjustments on the basis of the actual operating costs incurred within each year. The actual amount of revenues earned in respect of such variable hire rate may therefore differ from the amounts included in the revenue backlog estimate due to the yearly variations in the respective vessels’ operating costs.

Conference Call and Webcast:

As announced, the Partnership’s management team will host a conference call on Friday, November 13, 2020 at 10:00 a.m. Eastern Time to discuss the Partnership’s financial results.

Conference Call details:

Participants should dial into the call 10 minutes before the scheduled time using the following numbers: +1 (877) 553-9962 (US Toll Free Dial In), 0 (808) 238-0669 (UK Toll Free Dial In) or +44 (0) 2071 928592(Standard International Dial In). Please quote “Dynagas.”

A telephonic replay of the conference call will be available until November 19, 2020, by dialing +1(866) 331-1332 (US Toll Free Dial In), 0(808) 238-0667 (UK Toll Free Dial In) or +44 (0) 3333 009785 (Standard International Dial In) and the access code required for the replay is: 59711562#.

Audio Webcast – Slides Presentation:

There will be a live and then archived audio webcast of the conference call, via the internet through the Dynagas LNG Partners website www.dynagaspartners.com. Participants to the live webcast should register on the website approximately 10 minutes prior to the start of the webcast.

The slide presentation on the third quarter ended September 30, 2020 financial results will be available in PDF format 10 minutes prior to the conference call and webcast, accessible on the company’s website www.dynagaspartners.com on the webcast page. Participants to the webcast can download the PDF presentation. None of the information contained in or that forms a part of the Partnership’s conference calls, website or audio webcasts is part of this release.

About Dynagas LNG Partners LP

Dynagas LNG Partners LP. (NYSE: DLNG) is a master limited partnership which owns and operates liquefied natural gas (LNG) carriers employed on multi-year charters. The Partnership’s current fleet consists of six LNG carriers, with aggregate carrying capacity of approximately 914,000 cubic meters.

Visit the Partnership’s website at www.dynagaspartners.com.

Contact Information:

Dynagas LNG Partners LP
Attention: Michael Gregos
Tel. +30 210 8917960
Email: [email protected]

Investor Relations / Financial Media:

Nicolas Bornozis
Markella Kara
Capital Link, Inc.
230 Park Avenue, Suite 1536
New York, NY 10169
Tel. (212) 661-7566
E-mail: [email protected]

Forward-Looking Statements

Matters discussed in this press release may constitute forward-looking statements. The Private Securities Litigation Reform Act of 1995 provides safe harbor protections for forward-looking statements in order to encourage companies to provide prospective information about their business. Forward-looking statements include statements concerning plans, objectives, goals, strategies, future events or performance, and underlying assumptions and other statements, which are other than statements of historical facts.

The Partnership desires to take advantage of the safe harbor provisions of the Private Securities Litigation Reform Act of 1995 and is including this cautionary statement in connection with this safe harbor legislation. The words “believe,” “anticipate,” “intends,” “estimate,” “forecast,” “project,” “plan,” “potential,” “project”, “will”, “may,” “should,” “expect,” “expected,” “pending” and similar expressions identify forward-looking statements. These forward-looking are not intended to give any assurance as to future results and should not be relied upon.

The forward-looking statements in this press release are based upon various assumptions and estimates, many of which are based, in turn, upon further assumptions, including without limitation, examination by the Partnership’s management of historical operating trends, data contained in its records and other data available from third parties. Although the Partnership believes that these assumptions were reasonable when made, because these assumptions are inherently subject to significant uncertainties and contingencies which are difficult or impossible to predict and are beyond the Partnership’s control, the Partnership cannot assure you that it will achieve or accomplish these expectations, beliefs or projections.

In addition to these important factors, other important factors that, in the Partnership’s view, could cause actual results to differ materially from those discussed, expressed or implied, in the forward-looking statements include, but are not limited to, the strength of world economies and currency fluctuations, general market conditions, including fluctuations in charter rates, ownership days, and vessel values, changes in supply and demand for Liquefied Natural Gas (LNG) shipping capacity, changes in the Partnership’s operating expenses, including bunker prices, drydocking and insurance costs, the market for the Partnership’s vessels, availability of financing and refinancing, changes in governmental laws, rules and regulations or actions taken by regulatory authorities, economic, regulatory, political and governmental conditions that affect the shipping and the LNG industry, potential liability from pending or future litigation, general domestic and international political conditions, potential disruption of shipping routes due to accidents or political events, vessel breakdowns, instances of off-hires, the length and severity of the COVID-19 outbreak, the impact of public health threats and outbreaks of other highly communicable diseases, the impact of the expected discontinuance of LIBOR after 2021 on interest rates of our debt that reference LIBOR, the amount of cash available for distribution, and other factors. Please see the Partnership’s filings with the Securities and Exchange Commission for a more complete discussion of these and other risks and uncertainties. The information set forth herein speaks only as of the date hereof, and the Partnership disclaims any intention or obligation to update any forward-looking statements as a result of developments occurring after the date of this communication.

APPENDIX A

DYNAGAS LNG PARTNERS LP

Condensed Consolidated Statements of Income

(In thousands of U.S. dollars except units and per unit data)		Three Months Ended September 30,						Nine Months Ended September 30,
		2020 (unaudited)			2019 (unaudited)			2020 (unaudited)			2019 (unaudited)
REVENUES
Voyage revenues	$	34,346		$	34,364		$	102,730		$	96,584
EXPENSES
Voyage expenses (including related party)		(695	)		(803	)		(2,305	)		(1,934	)
Vessel operating expenses		(7,217	)		(7,469	)		(21,687	)		(21,286	)
General and administrative expenses (including related party)		(596	)		(737	)		(1,861	)		(1,823	)
Management fees -related party		(1,697	)		(1,648	)		(5,055	)		(4,890	)
Depreciation		(7,992	)		(7,646	)		(23,804	)		(22,688	)
Operating income		16,149			16,061			48,018			43,963
Interest and finance costs, net		(6,026	)		(20,851	)		(21,126	)		(45,898	)
Loss on derivative instruments		(5	)		—			(3,357	)		—
Other, net		(103	)		50			(126	)		19

Net income / (Loss)	$	10,015		$	(4,740	)	$	23,409		$	(1,916	)
Earnings/ (loss) per common unit (basic and diluted)	$	0.20		$	(0.21	)	$	0.41		$	(0.30	)
Weighted average number of units outstanding, basic and diluted:
Common units		35,593,477			35,490,000			35,524,744			35,490,000

DYNAGAS LNG PARTNERS LP

Consolidated Condensed Balance Sheets

(Expressed in thousands of U.S. Dollars—except for unit data)

		September 30, 2020 (unaudited)			December 31, 2019 (audited)
ASSETS:
Cash and cash equivalents and restricted cash (current and non-current)	$	76,046		$	66,206
Due from related party (current and non-current)		1,350			1,350
Other current assets		2,521			1,966
Vessels, net		892,893			916,697
Other non-current assets		2,666			2,968
Total assets	$	975,476		$	989,187

LIABILITIES
Total long-term debt, net of deferred financing costs	$	619,068		$	653,154
Total other current liabilities		19,567			16,951
Derivative financial instrument (current and non-current)		3,181			—
Due to related party (current and non-current)		1,747			2,202
Total other non-current liabilities		3,193			3,173
Total liabilities	$	646,756		$	675,480

PARTNERS’ EQUITY
General partner (35,526 units issued and outstanding as at September 30, 2020 and December 31, 2019)		(13	)		(28	)
Common unitholders (35,612,580 units issued and outstanding as at September 30, 2020 and 35,490,000 units issued and outstanding as at December 31, 2019)		202,019			187,021
Series A Preferred unitholders: (3,000,000 units issued and outstanding as at September 30, 2020 and December 31, 2019)		73,216			73,216
Series B Preferred unitholders: (2,200,000 units issued and outstanding as at September 30, 2020 and December 31, 2019)		53,498			53,498
Total partners’ equity	$	328,720		$	313,707

Total liabilities and partners’ equity	$	975,476		$	989,187

DYNAGAS LNG PARTNERS LP

Consolidated Statements of Cash Flows

(Expressed in thousands of U.S. Dollars)



		Three Months Ended September 30,						Nine Months Ended September 30,
		2020			2019			2020			2019
Cash flows from Operating Activities:
Net income / (Loss):	$	10,015		$	(4,740	)	$	23,409		$	(1,916	)
Adjustments to reconcile net income / (loss) to net cash provided by operating activities:
Depreciation		7,992			7,646			23,804			22,688
Amortization and write-off of deferred financing fees		626			8,316			1,913			9,927
Deferred revenue amortization		129			(36	)		233			(430	)
Amortization of deferred charges		54			54			162			126
Loss on derivative financial instrument		5			—			3,357			—
Changes in operating assets and liabilities:
Trade accounts receivable		355			—			(222	)		48
Prepayments and other assets		196			165			(285	)		(498	)
Inventories		19			1,222			(48	)		421
Due from/ to related parties		3,275			(749	)		(455	)		(274	)
Deferred charges		108			38			(73	)		(999	)
Trade accounts payable		(54	)		(834	)		(988	)		(449	)
Accrued liabilities		189			128			(122	)		173
Unearned revenue		4,678			2,350			3,738			888

Net cash provided by Operating Activities		27,587			13,560			54,423			29,705

Cash flows from Investing Activities
Vessel acquisitions and other additions to vessels’ cost		—			—			—			—
Net cash used in Investing Activities		—			—			—			—

Cash flows from Financing Activities:
Issuance of common units, net of issuance costs		276			—			276			—
Payment of securities registration and other filing costs		(17	)		—			(17	)		(139	)
Distributions declared and paid		(2,891	)		(2,890	)		(8,672	)		(13,501	)
Proceeds from long-term debt		—			675,000			—			675,000
Repayment of long-term debt		(12,000	)		(470,400	)		(36,000	)		(472,800	)
Payment of derivative instruments		(170	)		—			(170	)		—
Payment of deferred finance fees		—			(10,558	)		—			(10,558	)
Net cash used in Financing Activities		(14,802	)		191,152			(44,583	)		178,002

Net increase in cash and cash equivalents and restricted cash		12,785			204,712			9,840			207,707
Cash and cash equivalents and restricted cash at beginning of the period		63,261			112,912			66,206			109,917
Cash and cash equivalents and restricted cash at end of the period	$	76,046		$	317,624		$	76,046		$	317,624

APPENDIX B

Fleet statistics

		Three Months Ended September 30,						Nine Months Ended September 30,
(expressed in United states dollars except for operational data)		2020			2019			2020			2019
Number of vessels at the end of period		6			6			6			6
Average number of vessels in the period ⁽¹⁾		6			6			6			6
Calendar Days ⁽²⁾		552.0			552.0			1,644.0			1,638.0
Available Days ⁽³⁾		552.0			552.0			1,644.0			1,638.0
Revenue earning days ⁽⁴⁾		552.0			548.7			1,638.7			1,604.3
Time Charter Equivalent ⁽⁵⁾	$	60,962		$	60,799		$	61,086		$	57,784
Fleet Utilization ⁽⁴⁾		100	%		99	%		99.7	%		98	%
Vessel daily operating expenses ⁽⁶⁾	$	13,074		$	13,531		$	13,192		$	12,995

(1)	Represents the number of vessels that constituted the Partnership’s fleet for the relevant period, as measured by the sum of the number of days that each vessel was a part of the Partnership’s fleet during the period divided by the number of Calendar Days (defined below) in the period.
(2)	“Calendar Days” are the total days that the Partnership possessed the vessels in its fleet for the relevant period.
(3)	“Available Days” are the total number of Calendar Days that the Partnership’s vessels were in its possession during a period, less the total number of scheduled off-hire days during the period associated with major repairs, or dry-dockings.
(4)	The Partnership calculates fleet utilization by dividing the number of its Revenue earning days, which are the total number of Available Days of the Partnership’s vessels net of unscheduled off-hire days (which do not include positioning/ repositioning days for which compensation has been received) during a period by the number of Available Days. The shipping industry uses fleet utilization to measure a company’s efficiency in finding employment for its vessels and minimizing the amount of days that its vessels are off-hire for reasons such as unscheduled repairs but excluding scheduled off-hires for vessel upgrades, dry-dockings or special or intermediate surveys.
(5)	Time charter equivalent rate (“TCE rate”), is a measure of the average daily revenue performance of a vessel. For time charters, this is calculated by dividing total voyage revenues, less any voyage expenses, by the number of Available Days during that period. Under a time charter, the charterer pays substantially all vessel voyage related expenses. However, the Partnership may incur voyage related expenses when positioning or repositioning vessels before or after the period of a time charter, during periods of commercial waiting time or while off-hire during dry-docking or due to other unforeseen circumstances. The TCE rate is not a measure of financial performance under U.S. GAAP (non-GAAP measure), and should not be considered as an alternative to voyage revenues, the most directly comparable GAAP measure, or any other measure of financial performance presented in accordance with U.S. GAAP. However, the TCE rate is a standard shipping industry performance measure used primarily to compare period-to-period changes in a company’s performance and to assist the Partnership’s management in making decisions regarding the deployment and use of the Partnership’s vessels and in evaluating their financial performance. The Partnership’s calculation of TCE rates may not be comparable to that reported by other companies. The following table reflects the calculation of the Partnership’s TCE rates for the three and nine months ended September 30, 2020 and 2019 (amounts in thousands of U.S. dollars, except for TCE rates, which are expressed in U.S. dollars, and Available Days):

		Three Months Ended September 30,						Nine Months Ended September 30,
		2020			2019			2020			2019
(In thousands of U.S. dollars, except for Available Days and TCE rate)
Voyage revenues	$	34,346		$	34,364		$	102,730		$	96,584
Voyage Expenses ^*		(695	)		(803	)		(2,305	)		(1,934	)
Time Charter equivalent revenues	$	33,651		$	33,561		$	100,425		$	94,650
Available Days		552.0			552.0			1,644.0			1,638.0
Time charter equivalent (TCE) rate	$	60,962		$	60,799		$	61,086		$	57,784

*Voyage expenses include commissions of 1.25% paid to Dynagas Ltd., the Partnership’s Manager, and third party ship brokers, when defined in the charter parties, bunkers, port expenses and other minor voyage expenses.

(6)	Daily vessel operating expenses, which include crew costs, provisions, deck and engine stores, lubricating oil, insurance, spares and repairs and flag taxes, are calculated by dividing vessel operating expenses by fleet Calendar Days for the relevant time period.

Reconciliation of U.S. GAAP Financial Information to Non-GAAP Financial Information

Reconciliation of Net Income to Adjusted EBITDA

		Three Months Ended September 30,				Nine Months Ended September 30,
(In thousands of U.S. dollars)		2020		2019			2020		2019
Net income / (Loss)	$	10,015	$	(4,740	)	$	23,409	$	(1,916	)
Net interest and finance costs ⁽¹⁾		6,026		20,851			21,126		45,898
Depreciation		7,992		7,646			23,804		22,688
Loss on derivative financial instrument		5		—			3,357		—
Amortization of deferred revenue		129		(36	)		233		(430	)
Amortization of deferred charges		54		54			162		126
Adjusted EBITDA	$	24,221	$	23,775		$	72,091	$	66,366

⁽¹⁾

Includes interest and finance costs and interest income, if any.

The Partnership defines Adjusted EBITDA as earnings before interest and finance costs, net of interest income (if any), gains/losses on derivative financial instruments, taxes (when incurred), depreciation and amortization (when incurred), class survey costs and significant non-recurring items (if any). Adjusted EBITDA is used as a supplemental financial measure by management and external users of financial statements, such as investors, to assess the Partnership’s operating performance.

The Partnership believes that Adjusted EBITDA assists its management and investors by providing useful information that increases the ability to compare the Partnership’s operating performance from period to period and against that of other companies in its industry that provide Adjusted EBITDA information. This increased comparability is achieved by excluding the potentially disparate effects between periods or against companies of interest, other financial items, depreciation and amortization and taxes, which items are affected by various and possible changes in financing methods, capital structure and historical cost basis and which items may significantly affect net income between periods. The Partnership believes that including Adjusted EBITDA as a measure of operating performance benefits investors in (a) selecting between investing in the Partnership and other investment alternatives and (b) monitoring the Partnership’s ongoing financial and operational strength.

Adjusted EBITDA is not intended to and does not purport to represent cash flows for the period, nor is it presented as an alternative to operating income. Further, Adjusted EBITDA is not a measure of financial performance under U.S. GAAP and does not represent and should not be considered as an alternative to net income, operating income, cash flow from operating activities or any other measure of financial performance presented in accordance with U.S. GAAP. Adjusted EBITDA excludes some, but not all, items that affect net income and these measures may vary among other companies. Therefore, Adjusted EBITDA, as presented above, may not be comparable to similarly titled measures of other businesses because they may be defined differently by those other businesses. It should not be considered in isolation or as a substitute for a measure of performance prepared in accordance with GAAP. Any Non-GAAP measures should be viewed as supplemental to, and should not be considered as alternatives to, GAAP measures including, but not limited to net earnings (loss), operating profit (loss), cash flow from operating, investing and financing activities, or any other measure of financial performance or liquidity presented in accordance with GAAP.

Reconciliation of Net Income to Adjusted Net Income available to common unitholders and Adjusted Earnings per common unit

	Three Months Ended September 30,						Nine Months Ended September 30,
(In thousands of U.S. dollars except for units and per unit data)		2020			2019			2020			2019
Net Income / (Loss)	$	10,015		$	(4,740	)	$	23,409		$	(1,916	)
Non-cash expense from accelerated amortization of deferred loan fees		—			7,497			—			7,497
Amortization of deferred revenue		129			(36	)		233			(430	)
Amortization of deferred charges		54			54			162			126
Loss on derivative financial instrument		5			—			3,357			—
Adjusted Net Income	$	10,203		$	2,775		$	27,161		$	5,277
Less: Adjusted Net Income attributable to preferred unitholders and general partner		(2,898	)		(2,891	)		(8,690	)		(8,668	)
Common unitholders’ interest in Adjusted Net Income/(Loss)	$	7,305		$	(116	)	$	18,471		$	(3,391	)
Weighted average number of common units outstanding, basic and diluted:		35,593,477			35,490,000			35,524,744			35,490,000
Adjusted Earnings/(Loss) per common unit, basic and diluted	$	0.21		$	—		$	0.52		$	(0.10	)

Adjusted Net Income represents net income before non-recurring expenses (if any), charter hire amortization related to time charters with escalating time charter rates, amortization of fair value of acquired time charters and changes in the fair value of derivative financial instruments. Adjusted Net Income available to common unitholders represents the common unitholders interest in Adjusted Net Income for each period presented. Adjusted Earnings per common unit represents Adjusted Net Income attributable to common unitholders divided by the weighted average common units outstanding during each period presented.

Adjusted Net Income, Adjusted Net Income per common unit and Adjusted Earnings per common unit, basic and diluted, are not recognized measures under U.S. GAAP and should not be regarded as substitutes for net income and earnings per unit, basic and diluted. The Partnership’s definitions of Adjusted Net Income, Adjusted Net Income per common unit and Adjusted Earnings per common unit, basic and diluted, may not be the same at those reported by other companies in the shipping industry or other industries. The Partnership believes that the presentation of Adjusted Net Income and Adjusted Earnings per unit available to common unitholders are useful to investors because these measures facilitate the comparability and the evaluation of companies in the Partnership’s industry. In addition, the Partnership believes that Adjusted Net Income is useful in evaluating its operating performance compared to that of other companies in the Partnership’s industry because the calculation of Adjusted Net Income generally eliminates the accounting effects of items which may vary for different companies for reasons unrelated to overall operating performance. The Partnership’s presentation of Adjusted Net Income available to common unitholders and Adjusted Earnings per common unit does not imply, and should not be construed as an inference, that its future results will be unaffected by unusual or non-recurring items and should not be considered in isolation or as a substitute for a measure of performance prepared in accordance with GAAP.