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Friday, November 11, 2016

Third Quarter Results
Revenues for the third quarter of 2016 were $4.3 million, down 20% from the third quarter of 2015.
Product revenues totaled $3.5 million, 24% less than third quarter last year, primarily due to lower volumes from maturing military programs partially offset by a lower average price due to product mix. R&D contract revenues totaled approximately $769 thousand, consistent with the third quarter last year.
Overall gross margin for the third quarter was 30 percent on gross profit of $1.3 million compared to a gross margin of 20 percent on gross profit of $1.1 million in the same quarter last year. The increased gross margin for the quarter reflects a favorable impact of higher production volumes as inventory is built for the consumer products launch.
Operating expenses for the third quarter of 2016, including R&D expenses, increased to $3.7 million from $3.3 million in the third quarter of 2015. Third quarter operating expenses reflect higher spending on the development and marketing of our consumer products as well as the costs associated with the consolidation of the Company’s finance and procurement functions.
Operating loss for the third quarter increased to $2.4 million from a loss of $2.2 million in the third quarter last year. Net loss for third quarter of 2016 increased to $2.4 million, or $0.08 per basic and diluted share, from a loss of $2.2 million, or $0.09 per basic and diluted share, in the third quarter of 2015.
At September 30, 2016, the Company had approximately $6.9 million of cash and cash equivalents compared to $9.3 million of cash and cash equivalents at December 31, 2015. During the quarter we increased our R&D investment and began to build inventory for our consumer product launch.

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