TORONTO: Theralase Technologies Inc. (“Theralase®” or the “Company”) (TLT:TSXV) (TLTFF:OTC), a leading biotech company focused on the commercialization of medical devices to eliminate pain and the development of Photo Dynamic Compounds (“PDCs”) to destroy cancer, announced today that for the nine-month period ended September 30, 2016, total revenue increased from $1,061,608 to $1,206,726 from the same period in 2015, a 14% increase.
In Canada, revenue decreased 18% to $728,277 from $885,562. In the US, revenue increased 193% to $399,445 from $136,382 and international revenue increased 99% to $79,004 from $39,665. The decrease in Canadian revenue in 3Q2016 and the corresponding increase in US and international revenue is attributable to the Company systematically building its sales and marketing teams in the Canadian and US market and the learning curves associated with training and developing a new sales force.
In December 2015, the next generation TLC-2000 laser technology received FDA 510(k) clearance and Health Canada approval, allowing Theralase the opportunity to commence recruiting a high performance sales and marketing team in Canada and the US, with the mandate of dramatically increasing sales of the TLC-2000 across Canada and the United States, in 4Q2016 and 2017. Once these strategic markets have been established and running independently, Theralase will focus on growing its international revenues through exclusive international distribution agreements.
Cost of sales for the nine-month period ended September 30, 2016 was $414,794 (34% of revenue) resulting in a gross margin of $791,392 (66% of revenue), compared to a cost of sales of $357,750 (34% of revenue) in 2015, resulting in a gross margin of $703,858 (66% of revenue). Cost of sales is represented by the following costs: raw materials, subcontracting, direct and indirect labour and the applicable share of manufacturing overhead. As revenues increase, volume purchasing should reduce the cost of goods sold.
Selling and marketing expenses for the nine-month period ended September 30, 2016 were $1,114,180 representing 92% of sales, compared with $750,098 or 71% of sales in 2015. The increase is primarily due to increased spending in marketing and sales personnel, which will augment sales of the TLC-2000 in future financial quarters. Selling expenses are expected to continue to increase in future quarters, as the Company expands in Canada, the US and international markets. On-going investment in sales personnel, marketing events and advertising are required to generate and increase revenues in subsequent financial quarters. As revenues increase, selling and marketing expenses should decrease as a percentage of revenue.
