TORONTO, ON--(Marketwired - December 09, 2015) - ViXS Systems Inc. ("ViXS" or the "Company") (TSX: VXS) a pioneer and leader in media processing solutions, reported its third quarter results for the quarter ended October 31, 2015 using International Financial Reporting Standards ("IFRS") and in U.S. dollars, unless otherwise specified. ViXS reported Q3FY16 revenue of $5.1 million, total comprehensive loss of $(3.2) million and non-IFRS net loss of $(2.8) million.Q3FY16 Highlights Revenue of $5.1 million, down from $6.0 million in the prior quarter, and down from $10.8 million in the comparable quarter last yearGross margin of 43.9%, an increase from the prior quarter's level of 34.3%, but down from 48.4% in the same quarter last year.IFRS Comprehensive loss of $(3.2) million, compared to a loss of $(3.0) million in the prior quarter, and a loss of $(2.9) million in the same quarter last year. Non-IFRS net loss of $(2.8) million, which was an improvement from a loss of $(3.6) million in the prior quarter, but a $0.6 million increase from a loss of $(2.2) million in the comparable quarter last year.$4.5 million of cash and equivalents, including $4.8 million of drawn bank debt.
Appointed semiconductor industry veteran Sohail Khan as President and Chief Executive Officer.During the quarter, the Company completed an independent third party valuation of its portfolio of 510 patents and applications. This independent valuation was completed by Black Stone IP, LLC ("BSIP"), where BSIP estimated a range of value between $43 Million and $109 Million USD for the VIXS portfolio.Strategic ActionsViXS has initiated a review to identify and examine strategic actions with the purpose of addressing near term liquidity concerns and enhancing shareholder value. The Company has continued support from its commercial bank lender, Comerica and is working with Comerica to increase credit access to assist ViXS' working capital needs through an amendment and other potential credit extensions to the Company's existing credit facility.
The Company believes that these initiatives, along with revenue growth and cost controls will provide sufficient liquidity, while providing time to enable additional steps that are expected to further enhance shareholder returns. The Company has not set a timetable for completion of these initiatives, but is actively pursuing them and will make further disclosures as appropriate or required by law. "As a company we have refocused our efforts to stabilize revenue and engage with both existing and new economy customers in the changing video delivery ecosystems. We are focused on creating video platforms which enable our customers to get to market in a short time period," stated Sohail Khan, President & CEO. "In addition, with the full support of the Board and Senior Management, we are in the midst of a strategic review, including focusing our resources on our core business and the potential sale of certain non-core assets, with the goal of enhancing shareholder value."Q3 FY2016 ResultsRevenues for the third quarter of fiscal 2016 totalled $5.1 million, sequentially lower than $6.0 million recognized in the second quarter of fiscal 2016.
This decrease was primarily due to lower volumes and decreased pricing of MoCA (Multimedia over Coax Alliance) based products, partially offset by higher sales of new XCode5 products and a seasonal uptick in legacy XCode3 and XCode4 products. Revenues decreased by $5.7 million from the same quarter last year, mainly due to lower XCode 6400 sales as first generation Ultra HD TV companion designs came to an end, plus lower MoCA based product sales. These declines were partially offset by increased sales of our XCode5 and XCodePro products, as well as higher NRE contributions.Gross margin for the third quarter of fiscal 2016 was 43.9%, a 9.6% point increase from the previous quarter's level of 34.3% and a 4.5% point decrease from the third quarter of fiscal 2015.
This sequential increase in margin was primarily due to higher volumes of XCodePro products sold in the cloud infrastructure market during the quarter. The decrease in margin from the third quarter of fiscal 2015 was primarily due to lower volumes of the higher margin XCode6400 products being sold plus weaker MoCA pricing. Excluding the effects of amortization, support contracts, Software Development Kits (SDKs), non-recurring inventory adjustments, the product margin in the third quarter of fiscal 2016 was 49.8%. Total operating expenses for the third quarter of fiscal 2016 were $5.2 million compared to $4.6 million in the prior quarter. Research & Development (R&D) spending increased to $3.2 million compared to $2.7 million in the previous quarter, due primarily to higher CAD software tool usage as well as additional R&D consulting costs in the third quarter. Selling, general and administrative expenses for the third quarter increased slightly to $2.0 million compared to $1.9 million in the prior quarter.IFRS comprehensive loss for the third quarter of fiscal 2016 was $(3.2) million, or a loss of $(0.06) per share basic and diluted. This is compared to a loss of $(3.0) million in the previous quarter, and a $0.3 million increase from the $(2.9) million loss in the third quarter of fiscal 2015. Non-IFRS net loss for the current quarter (as defined in the Non-IFRS Financial Measures section) totalled $(2.8) million, a $0.8 improvement compared to the $(3.6) million loss in the previous quarter but a $0.6 million increase from the $(2.2) million loss in the third quarter of fiscal 2015.
The Non-IFRS loss for the fiscal year to date 2016 was $(8.7) million compared to $(10.9) million in the same period last year. This year-over-year improvement in non-IFRS net loss from operations is a result of cost efficiencies and controls we continue to implement in our operations and fluctuations in foreign exchange rates.As at October 31, 2015, the Company's cash and cash equivalents was $4.5 million with $4.8 million of drawn bank debt. This decrease in cash was primarily due to lower than expected revenue levels in the quarter, certain working capital cash outlays in support of our continued operations and product development.For More InformationIn conjunction with this announcement, ViXS management will be holding a conference call on Wednesday December 9, 2015 at 5:00 P.M. Eastern Time to discuss the Company's results for Q3 fiscal 2016.FISCAL 3Q16 CONFERENCE CALL DETAILS:
DATE: Wednesday December 9, 2015
TIME: 5:00 P.M. EST
DIAL IN NUMBER: North American Toll: Free: 1-(866)-215-5508
International: (514) 841-2157
Passcode: 4120 9884#
REPLAY NUMBER: North American Toll: Free: 1-(888)-843-7419
International:(630) 652-3042
Passcode: 4120 9884#
WEBSITE: To view the press release or any additional financial
information, please visit the Investor Relations section
of the ViXS website at:
investor.vixs.com/investor-relations/
SELECTED CONSOLIDATED FINANCIAL INFORMATION
