BoIA: Website Accessibility Lawsuits Expected to Rise From Trump Administration

PROVIDENCE, RI—(Marketwired – August 03, 2017) – Under the guidance of President Trump, the United States Department of Justice (DOJ) has deprioritized the monitoring and regulation of web accessibility standards. This is a striking about–face, given that the DOJ had promised earlier that it would promote increased web accessibility regulations as part of the legislation of the Americans with Disabilities Act (ADA).

By abandoning the pursuit of these improved standards, Trump's DOJ is keeping the regulations for website accessibility murky and thereby allowing for more complaints to be lodged and more suits to be filed against organizations and businesses that are not in compliance.

By not following through on the promised steps toward a more transparent standard for website accessibility, President Trump and the DOJ are unwittingly contributing to the ongoing flurry of website accessibility lawsuits.

For more on these issues and how to protect your business against potential accessibility lawsuits.

For more information: https://www.boia.org/blog/website–accessibility–lawsuits–expected–to–rise–from–trump–administration

About the Bureau of Internet Accessibility:

The Bureau of Internet Accessibility (BoIA) has been helping eliminate the accessibility digital divide since 2001. The organization's reports, tools, and services have assisted businesses in improving, maintaining, and proving the accessibility of their websites. With services that include self–help tools, audits, training, remediation and implementation support, BoIA has the experience and expertise to ensure that accessibility efforts are worthwhile and successful. For more information, visit www.BoIA.org.

Gran Colombia Gold Provides Details for Its Second Quarter 2017 Results Webcast

TORONTO, ON—(Marketwired – August 03, 2017) – Gran Colombia Gold Corp. (TSX: GCM) announced today that it will release its financial results for the second quarter of 2017 after market close on Monday, August 14, 2017 and will host a conference call and webcast on Tuesday, August 15, 2017 at 9:30 a.m. Eastern Time to discuss the results.

Webcast and call–in details are as follows:

Live Event link: http://edge.media–server.com/m/p/urfvuni7
International: 1 (514) 841–2157
North America Toll Free: 1 (866) 215–5508
Colombia Toll Free: 01 800 9 156 924
Conference ID: 45399427

A replay of the webcast will be available at www.grancolombiagold.com from Tuesday, August 15, 2017 until Thursday, September 14, 2017.

About Gran Colombia Gold Corp.

Gran Colombia is a Canadian–based gold and silver exploration, development and production company with its primary focus in Colombia. Gran Colombia is currently the largest underground gold and silver producer in Colombia with several underground mines in operation at its Segovia and Marmato Operations. Gran Colombia is continuing an expansion and modernization project at its Segovia Operations.

Additional information on Gran Colombia can be found on its website at www.grancolombiagold.com and by reviewing its profile on SEDAR at www.sedar.com.

Hudbay Announces Second Quarter 2017 Results

TORONTO, ON—(Marketwired – August 03, 2017) – Hudbay Minerals Inc. (“Hudbay” or the “company”) (TSX: HBM) (NYSE: HBM) today released its second quarter 2017 financial results. All amounts are in U.S. dollars, unless otherwise noted.

Summary:

  • Operating cash flow1 of $124 million, a 54% increase from the first quarter 2017
  • Consolidated copper production of 40,842 tonnes, an 18% increase from the first quarter 2017
  • Consolidated zinc production of 34,896 tonnes, a 14% increase from the first quarter 2017
  • Consolidated cash cost2, net of by–product credits, of $0.85 per pound of copper, a 3% decrease from the first quarter 2017
  • Consolidated all–in sustaining cash cost2, net of by–product credits, of $1.49 per pound of copper, a 2% increase from the first quarter 2017
  • Continued progress on reducing debt balances with $67 million repaid during the quarter and amended revolving credit facilities to extend the maturities and reduce the interest rates
  • Net debt 2 of $950 million and total liquidity of $497 million, including $153 million in cash, an improvement from March 31, 2017 levels of net debt of $1,035 million and total liquidity of $433 million
  • Rosemont project received the Final Record of Decision from the U.S. Forest Service
  • Allocated additional funds to exploration budget to focus on high–priority drilling targets
  • On track to meet production, operating cost and capital cost guidance for 2017

Net profit and earnings per share in the second quarter of 2017 were $25.6 million and $0.11, respectively, compared to a net loss and loss per share of $5.7 million and $0.02, respectively, in the second quarter of 2016.

In the second quarter of 2017, operating cash flow before change in non–cash working capital increased to $124.1 million from $80.6 million in the first quarter of 2017 and $69.5 million in the second quarter of 2016. The increase in operating cash flow is the result of growth in sales volumes of most metals and higher realized copper and zinc prices.

“We continued to generate positive free cash flow, which enabled us to expand our exploration budget to focus on building our long–term growth pipeline,” said Alan Hair, president and chief executive officer. “For the balance of the year, we remain committed to deliver on our operating targets, further reduce debt and advance the in–house brownfield opportunities at Lalor and Pampacancha, and we are on–track to achieve these objectives.”

1 Operating cash flow before change in non–cash working capital.
2 Cash cost and all–in sustaining cash cost per pound, net of by–product credits, and net debt are not recognized under IFRS. For a detailed description of each of these non–IFRS financial performance measures used in this news release, please see the discussion under “Non–IFRS Financial Performance Measures” beginning on page 6 of this news release.

Net profit and earnings per share in the second quarter of 2017 were affected by, among other things, the following items:

  Pre–tax gain   After–tax gain   Per share
  (loss)   (loss)   gain (loss)
  ($ millions)   ($ millions)   ($/share)
Foreign exchange loss (5.7)   (5.3)   (0.02)
Mark–to–market adjustments of various items 6.8   6.1   0.03
Non–cash deferred tax adjustments   1.7   0.01

Compared to the same quarter of 2016, production of zinc in concentrate increased as a result of higher zinc grades in Manitoba, while copper production declined due to lower copper grades in Peru.

In the second quarter of 2017, consolidated cash cost per pound of copper produced, net of by–product credits, was $0.85, a marginal increase compared to $0.83 in the same period of last year. Incorporating sustaining capital, capitalized exploration, royalties and corporate selling and administrative expenses, consolidated all–in sustaining cash cost per pound of copper produced, net of by–product credits, in the second quarter of 2017 was $1.49, up from $1.42 in the second quarter of 2016. The increase in all–in sustaining cash cost was driven by higher planned sustaining capital expenditures in Peru and lower copper production compared to the second quarter of 2016.

Cash and cash equivalents increased by $20.1 million in the second quarter to $152.7 million compared to March 31, 2017. This increase was partly a result of cash generated from operating activities of $131.9 million, and a net release of restricted cash of $16.9 million. These inflows were partly offset by $53.5 million of capital investments primarily at Hudbay's Peru and Manitoba operations and debt repayments of $67.1 million.

Net debt declined by $85.7 million from March 31, 2017 to $949.8 million at June 30, 2017, as approximately $63 million in drawings under Hudbay's revolving credit facilities were repaid. At June 30, 2017, total liquidity, including cash and available credit facilities, was $496.8 million, up from $432.9 million at March 31, 2017.

       
Financial Condition ($000s) Jun. 30, 2017 Mar. 31, 2017 Dec. 31, 2016
Cash and cash equivalents 152,672 132,583 146,864
Total long–term debt 1,102,426 1,168,052 1,232,164
Net debt1 949,754 1,035,469 1,085,300
Working capital 86,112 86,959 121,539
Total assets 4,359,827 4,357,812 4,456,556
Equity 1,794,305 1,762,817 1,763,212

1 Net debt is a non–IFRS financial performance measure with no standardized definition under IFRS. For further information, please see page 6 of this news release.

 
Financial Performance Three months ended Six months ended
($000s except per share and cash cost amounts) Jun. 30 Jun. 30
  2017 2016 2017 2016
Revenue 324,898 246,975 578,055 500,600
Cost of sales 246,919 198,684 450,926 424,386
Profit (loss) before tax 41,813 6,557 54,507 (10,331)
Profit (loss) 25,586 (5,703) 23,281 (21,491)
Basic and diluted earnings (loss) per share 0.11 (0.02) 0.10 (0.09)
Operating cash flow before change in non–cash working capital 124,118 69,489 204,718 141,375
     
Production and Cost Performance Three months ended Three months ended
      Jun. 30, 2017 Jun. 30, 2016
      Peru Manitoba Total Peru Manitoba Total
Contained metal in concentrate produced1          
  Copper   tonnes 29,798 11,044 40,842 34,699 11,193 45,892
  Gold   oz 3,802 22,862 26,664 8,625 21,080 29,705
  Silver   oz 546,295 264,051 810,346 778,448 218,063 996,511
  Zinc   tonnes 34,896 34,896 26,456 26,456
Payable metal in concentrate sold            
  Copper   tonnes 28,482 10,767 39,249 26,562 10,272 36,834
  Gold   oz 3,445 22,006 25,451 4,157 22,598 26,755
  Silver   oz 558,617 232,090 790,707 482,332 233,541 715,873
  Zinc2   tonnes 29,424 29,424 23,728 23,728
                 
Cash cost3   $/lb 1.24 (0.18) 0.85 0.97 0.37 0.83
Sustaining cash cost3   $/lb 1.82 0.38   1.39 1.10  
All–in sustaining cash cost3   $/lb     1.49     1.42
      Six months ended Six months ended
      Jun. 30, 2017 Jun. 30, 2016
      Peru Manitoba Total Peru Manitoba Total
Contained metal in concentrate produced1          
  Copper   tonnes 57,009 18,564 75,573 63,842 20,929 84,771
  Gold   oz 7,737 39,650 47,387 14,376 42,573 56,949
  Silver   oz 1,085,830 462,411 1,548,241 1,287,442 431,985 1,719,427
  Zinc   tonnes 65,466 65,466 49,832 49,832
Payable metal in concentrate sold            
  Copper   tonnes 47,047 18,617 65,664 57,835 20,918 78,753
  Gold   oz 4,919 46,001 50,920 11,537 32,935 44,472
  Silver   oz 941,880 525,392 1,467,272 1,148,415 341,767 1,490,182
  Zinc2   tonnes 56,256 56,256 49,148 49,148
                 
Cash cost3   $/lb 1.27 (0.37) 0.86 1.05 0.73 0.97
Sustaining cash cost3   $/lb 1.72 0.34   1.44 1.67  
All–in sustaining cash cost3   $/lb     1.48     1.59

1 Metal reported in concentrate is prior to deductions associated with smelter contract terms.
2 Includes refined zinc metal sold and payable zinc in concentrate sold.
3 Cash cost, sustaining cash cost and all–in sustaining cash cost per pound of copper produced, net of by–product credits, are non–IFRS financial performance measures with no standardized definition under IFRS. For further information, please see page 6 of this news release.

Peru Operations Review

During the second quarter of 2017, the Peru operations produced 29,798 tonnes of copper, which was 10% higher than production in the first quarter 2017 as a result of improved mill throughput, but lower than production in the same quarter of 2016 due to expected grade decline as per the mine plan.

Ore mined at Constancia during the second quarter of 2017 increased by 12% compared to the same period in 2016 as the company continues to increase stockpiles to improve its ability to blend ore at the processing plant. As expected, milled copper grades in the second quarter were approximately 15% lower than the same period in 2016 as Constancia entered lower grade phases of the mine plan. Despite harder material, mill throughput improved 3% due to plant optimization initiatives during the second quarter of 2017.

Recoveries of copper, gold and silver were lower in the second quarter of 2017, compared to the same period in 2016, due to normal ore variability. Improvements in process recoveries continue to be implemented and evaluated along with consistent positive grade reconciliations.

Combined mine, mill and G&A unit operating costs in the second quarter of 2017 were 14% higher than the same period in 2016 as a result of increased unplanned plant maintenance, costs of operating the molybdenum plant at higher than planned rates, higher community spending, road maintenance costs and other administrative costs. Combined unit operating costs are expected to decline in the second half of 2017 with full year results expected to fall within the guidance range.

Cash cost per pound of copper produced, net of by–product credits, for the three months ended June 30, 2017 was $1.24, an increase of 28% from the same period in 2016 mainly as a result of decreased copper grades, together with increased plant maintenance and other costs as described above.

Sustaining cash cost per pound of copper produced, net of by–product credits, for the three months ended June 30, 2017 was $1.82, an increase of 31% from the same period in 2016 as a result of the factors noted above, as well as expected higher sustaining capital in heavy civil works during the dry season and mobile equipment overhauls.

Hudbay expects to meet production and cost guidance in Peru for the year.

Manitoba Operations Review

During the second quarter of 2017, the Manitoba operations produced 34,896 tonnes of zinc, 11,044 tonnes of copper and 26,634 ounces of gold–equivalent precious metals. Production of zinc and precious metals was higher than the same quarter in 2016 by 32% and 10%, respectively, as a result of higher grades at 777 and Lalor as well as higher production at Lalor. Production of copper during the quarter was consistent with the same period in 2016. Due to increased Lalor mine throughput and higher zinc grades at 777, zinc concentrate production is exceeding the processing capacity of the Flin Flon zinc plant. As a result, sales of excess zinc concentrate inventory began in the second quarter of 2017 and will continue as long as concentrate production exceeds zinc plant processing capacity.

Ore mined at Hudbay's Manitoba operations during the second quarter of 2017 increased by 2% compared to the same period in 2016, primarily as a result of increased production at the company's Lalor and Reed mines, partially offset by decreased production at the 777 mine. Overall zinc, gold and silver grades were 38%, 10%, and 20% higher, respectively, while copper grades were 5% lower in the second quarter of 2017 compared to the same period of 2016. Grade variances were due to planned stope sequencing, including the resequencing of the 777 mine plan to prioritize higher grade zinc stopes in 2017.

Ore processed in Flin Flon in the second quarter of 2017 was consistent with ore processed during the same period in 2016. Copper, gold and silver recoveries in the second quarter of 2017 were consistent with the same period in 2016, while zinc recovery was 10% higher due to higher zinc head grades. Unit operating costs at the Flin Flon concentrator were 6% higher in the second quarter of 2017 compared to the same period in 2016 as a result of higher maintenance expenditures. Ore processed and recoveries at the Stall concentrator in the second quarter of 2017 were consistent with the same period in 2016. Unit operating costs at the Stall concentrator were 26% higher in the second quarter of 2017 compared to the same period in 2016 as a result of higher maintenance expenditures and additional costs related to the use of higher–cost temporary crushing facilities in April. The mill resumed use of its permanent crushing circuit by the end of April 2017.

The strong ramp up of ore production from the Lalor mine in the first half of 2017 has resulted in the accumulation of an ore stockpile as Lalor's production has exceeded the Stall concentrator's current milling capacity. Hudbay has started to truck some of the stockpiled ore to the Flin Flon mill for processing in the second half of 2017.

Manitoba combined mine, mill and G&A unit operating costs in the second quarter were 25% higher than in the same period in 2016. This was partly due to higher mining unit costs at Lalor, consistent with the revised mine plan, reflecting increased cement rock filling costs as well as substantial operating and capital development work that was undertaken to support the company's plan to grow Lalor's production rates to 4,500 tonnes per day. Milling unit costs were higher for the reasons outlined above. In addition, the stockpiling of Lalor ore described above increased combined mine/mill unit costs as that metric is expressed as total costs during the period (irrespective of inventory changes), divided by the tonnes of ore milled. This factor should reverse as stockpiles reduce, although costs in the second half will be affected by higher Reed mine unit costs as the capitalization of development costs will cease, and additional costs will be incurred to truck Lalor ore to the Flin Flon mill. Processing the additional Lalor production in Flin Flon is expected to drive economies of scale and additional revenues through a faster ramp up. Combined unit costs are expected to be within the guidance range for 2017.

Cash cost, net of by–product credits, in the second quarter of 2017 was negative $0.18 per pound of copper produced compared to $0.37 in the second quarter of 2016. The decrease is primarily a result of significantly increased zinc by–product credits, partially offset by higher expected costs at the 777 and Reed mines during this part of their mine life.

Sustaining cash cost, net of by–product credits, in the second quarter of 2017 decreased to $0.38 per pound of copper produced compared to $1.10 in the second quarter of 2016 as a result of the same factors described above and lower capitalized underground mine development.

Hudbay expects to meet production and cost guidance in Manitoba for the year.

Final Record of Decision for Rosemont

On June 7, 2017, the U.S. Forest Service (“USFS”) issued the Final Record of Decision (“FROD”) related to the Rosemont Project. Receiving the FROD concludes a thorough process involving 17 co–operating agencies at various levels of government, 16 hearings, over 1,000 studies, and 245 days of public comment resulting in more than 36,000 comments. Since receiving the FROD, the company has commenced the administrative process working with the USFS to complete the Mine Plan of Operations (“MPO”), and the draft MPO was submitted to the USFS in late June. The other key federal permit outstanding is the Section 404 Water Permit from the U.S. Army Corps of Engineers.

Credit Facility Extension & Amendments

On July 14, 2017, Hudbay entered into amendments to its senior credit facilities to secure both facilities with substantially all of the company's assets other than assets related to the Rosemont project, amend the financial covenants, extend the maturity dates to July 14, 2021 from March 31, 2019 and reduce the interest rate to LIBOR plus 3.00% from LIBOR plus 4.50%, based on financial results for the twelve months ended June 30, 2017. The revised covenants include maintaining gross total debt to EBITDA of less than 4.00 times in 2017, senior secured debt to EBITDA of less than 2.00 times, and interest coverage of more than 3.00 times. The two facilities have substantially similar terms and conditions and continue to provide revolving credit to a maximum amount of up to $550 million.

Exploration Update

Given the strong free cash flow generation of the business year–to–date, additional funds have been allocated to exploration in 2017 with a focus on high–priority drilling targets. The company has been active in identifying and acquiring grassroots exploration properties in Peru, Chile and British Columbia during the recent downturn in metals prices. The increase in exploration expenditures is expected to fund drilling on the grassroots exploration properties, as well as testing targets in Manitoba and drilling down plunge at Lalor.

The revised exploration guidance for 2017 is shown below:

2017 Exploration Guidance    
(in $ millions) Revised Original
Manitoba 6 4
Peru 5 2
Generative and Other 12 4
Total Exploration Expenditures 23 10
Capitalized Spending1 (2) (2)
Total1 21 8

1 Assumes $2 million of Manitoba expenditures will be capitalized.

Dividend Declared

A semi–annual dividend of C$0.01 per share was declared on August 3, 2017. The dividend will be paid on September 29, 2017 to shareholders of record as of September 8, 2017.

Non–IFRS Financial Performance Measures

Net debt is shown in this news release because it is a performance measure used by the company to assess its financial position. Cash cost, sustaining and all–in sustaining cash cost per pound of copper produced are shown because the company believes they help investors and management assess the performance of its operations, including the margin generated by the operations and the company. These measures do not have a meaning prescribed by IFRS and are therefore unlikely to be comparable to similar measures presented by other issuers. These measures should not be considered in isolation or as a substitute for measures prepared in accordance with IFRS and are not necessarily indicative of operating profit or cash flow from operations as determined under IFRS. Other companies may calculate these measures differently. For further details on these measures, including reconciliations to the most comparable IFRS measures, please refer to page 31 of Hudbay's management's discussion and analysis for the three and six months ended June 30, 2017 available on SEDAR at www.sedar.com and EDGAR at www.sec.gov.

Website Links

Hudbay:

www.hudbay.com

Management's Discussion and Analysis:

http://www.hudbayminerals.com/files/doc_financials/2017/Q2/2MDA17.pdf

Financial Statements:

http://www.hudbayminerals.com/files/doc_financials/2017/Q2/2FS17.pdf

Conference Call and Webcast

Date: Friday, August 4, 2017
 
Time: 10 a.m. ET
 
Webcast: www.hudbay.com
 
Dial in: 416–849–1847 or 1–866–530–1554

Qualified Person

The technical and scientific information in this news release related to the Constancia mine and Rosemont project has been approved by Cashel Meagher, P. Geo, Hudbay's Senior Vice President and Chief Operating Officer. The technical and scientific information related to the Manitoba sites and projects contained in this news release has been approved by Robert Carter, P. Eng, Hudbay's Lalor Mine Manager. Messrs. Meagher and Carter are qualified persons pursuant to NI 43–101. For a description of the key assumptions, parameters and methods used to estimate mineral reserves and resources, as well as data verification procedures and a general discussion of the extent to which the estimates of scientific and technical information may be affected by any known environmental, permitting, legal title, taxation, sociopolitical, marketing or other relevant factors, please see the Technical Reports for the company's material properties as filed by Hudbay on SEDAR at www.sedar.com.

Forward–Looking Information

This news release contains forward–looking information within the meaning of applicable Canadian and United States securities legislation. All information contained in this news release, other than statements of current and historical fact, is forward–looking information. Often, but not always, forward–looking information can be identified by the use of words such as “plans”, “expects”, “budget”, “guidance”, “scheduled”, “estimates”, “forecasts”, “strategy”, “target”, “intends”, “objective”, “goal”, “understands”, “anticipates” and “believes” (and variations of these or similar words) and statements that certain actions, events or results “may”, “could”, “would”, “should”, “might” “occur” or “be achieved” or “will be taken” (and variations of these or similar expressions). All of the forward–looking information in this news release is qualified by this cautionary note.

Forward–looking information includes, but is not limited to, production, cost and capital and exploration expenditure guidance, anticipated production at Hudbay's mines and processing facilities, the anticipated timing, cost and benefits of developing the Rosemont project, Pampacancha deposit and Lalor growth projects, anticipated exploration plans, anticipated mine plans, anticipated metals prices and the anticipated sensitivity of the company's financial performance to metals prices, events that may affect its operations and development projects, the permitting, development and financing of the Rosemont project, the potential to increase throughput at the Stall mill and to refurbish the New Britannia mill and utilize it to process ore from the Lalor mine, anticipated cash flows from operations and related liquidity requirements, the anticipated effect of external factors on revenue, such as commodity prices, estimation of mineral reserves and resources, mine life projections, reclamation costs, economic outlook, government regulation of mining operations, and business and acquisition strategies. Forward–looking information is not, and cannot be, a guarantee of future results or events. Forward–looking information is based on, among other things, opinions, assumptions, estimates and analyses that, while considered reasonable by the company at the date the forward–looking information is provided, inherently are subject to significant risks, uncertainties, contingencies and other factors that may cause actual results and events to be materially different from those expressed or implied by the forward–looking information.

The material factors or assumptions that Hudbay identified and were applied by the company in drawing conclusions or making forecasts or projections set out in the forward–looking information include, but are not limited to:

  • the success of mining, processing, exploration and development activities;
  • the scheduled maintenance and availability of the processing facilities;
  • the sustainability and success of Hudbay's cost reduction initiatives;
  • the accuracy of geological, mining and metallurgical estimates;
  • anticipated metals prices and the costs of production;
  • the supply and demand for metals the company produces;
  • the supply and availability of all forms of energy and fuels at reasonable prices;
  • no significant unanticipated operational or technical difficulties;
  • the execution of Hudbay's business and growth strategies, including the success of its strategic investments and initiatives;
  • the availability of additional financing, if needed;
  • the ability to complete project targets on time and on budget and other events that may affect the company's ability to develop its projects;
  • the timing and receipt of various regulatory, governmental and joint venture partner approvals;
  • the availability of personnel for the exploration, development and operational projects and ongoing employee relations;
  • the ability to secure required land rights to develop the Pampacancha deposit;
  • maintaining good relations with the communities in which the company operates, including the communities surrounding the Constancia mine and Rosemont project and First Nations communities surrounding the Lalor and Reed mines;
  • no significant unanticipated challenges with stakeholders at the company's various projects;
  • no significant unanticipated events or changes relating to regulatory, environmental, health and safety matters;
  • no contests over title to the company's properties, including as a result of rights or claimed rights of aboriginal peoples;
  • the timing and possible outcome of pending litigation and no significant unanticipated litigation;
  • certain tax matters, including, but not limited to current tax laws and regulations and the refund of certain value added taxes from the Canadian and Peruvian governments; and
  • no significant and continuing adverse changes in general economic conditions or conditions in the financial markets (including commodity prices and foreign exchange rates).

The risks, uncertainties, contingencies and other factors that may cause actual results to differ materially from those expressed or implied by the forward–looking information may include, but are not limited to, risks generally associated with the mining industry, such as economic factors (including future commodity prices, currency fluctuations, energy prices and general cost escalation), uncertainties related to the development and operation of the company's projects (including risks associated with the permitting, development and economics of the Rosemont project and related legal challenges), risks related to the maturing nature of the 777 and Reed mines and their impact on the related Flin Flon metallurgical complex, dependence on key personnel and employee and union relations, risks related to the schedule for mining the Pampacancha deposit (including the timing and cost of acquiring the required surface rights), risks related to the cost, schedule and economics of the capital projects intended to increase processing capacity for Lalor ore, risks related to political or social unrest or change, risks in respect of aboriginal and community relations, rights and title claims, operational risks and hazards, including unanticipated environmental, industrial and geological events and developments and the inability to insure against all risks, failure of plant, equipment, processes, transportation and other infrastructure to operate as anticipated, compliance with government and environmental regulations, including permitting requirements and anti–bribery legislation, depletion of the company's reserves, volatile financial markets that may affect the company's ability to obtain additional financing on acceptable terms, the failure to obtain required approvals or clearances from government authorities on a timely basis, uncertainties related to the geology, continuity, grade and estimates of mineral reserves and resources, and the potential for variations in grade and recovery rates, uncertain costs of reclamation activities, the company's ability to comply with its pension and other post–retirement obligations, the company's ability to abide by the covenants in its debt instruments and other material contracts, tax refunds, hedging transactions, as well as the risks discussed under the heading “Risk Factors” in Hudbay's most recent Annual Information Form.

Should one or more risk, uncertainty, contingency or other factor materialize or should any factor or assumption prove incorrect, actual results could vary materially from those expressed or implied in the forward–looking information. Accordingly, you should not place undue reliance on forward–looking information. Hudbay does not assume any obligation to update or revise any forward–looking information after the date of this news release or to explain any material difference between subsequent actual events and any forward–looking information, except as required by applicable law.

Note to United States Investors

This news release has been prepared in accordance with the requirements of the securities laws in effect in Canada, which may differ materially from the requirements of United States securities laws applicable to U.S. issuers.

About Hudbay

Hudbay (TSX: HBM) (NYSE: HBM) is an integrated mining company primarily producing copper concentrate (containing copper, gold and silver) and zinc metal. With assets in North and South America, the company is focused on the discovery, production and marketing of base and precious metals. Directly and through its subsidiaries, Hudbay owns four polymetallic mines, four ore concentrators and a zinc production facility in northern Manitoba and Saskatchewan (Canada) and Cusco (Peru), and a copper project in Arizona (United States). The company's growth strategy is focused on the exploration and development of properties it already controls, as well as other mineral assets it may acquire that fit its strategic criteria. Hudbay's vision is to become a top–tier operator of long–life, low–cost mines in the Americas. Hudbay's mission is to create sustainable value through the acquisition, development and operation of high–quality and growing long–life deposits in mining–friendly jurisdictions. The company is governed by the Canada Business Corporations Act and its shares are listed under the symbol “HBM” on the Toronto Stock Exchange, New York Stock Exchange and Bolsa de Valores de Lima. Hudbay also has warrants listed under the symbol “HBM.WT” on the Toronto Stock Exchange and “HBM/WS” on the New York Stock Exchange.

A.M. Best Company Reaffirms Ohio National's “A+ (Superior)” Rating

CINCINNATI, OH—(Marketwired – August 03, 2017) – Ohio National Financial Services is pleased to announce that A.M. Best Company has reaffirmed the financial strength rating of “A+ (Superior)” for both The Ohio National Life Insurance Company and Ohio National Life Assurance Corporation.

This is the 54th consecutive year for Ohio National to receive A.M. Best's “A+ (Superior)” rating, which is the second–highest on a 16–part scale.

“For more than five decades, Ohio National has continued its tradition of unwavering commitment to our policyholders with this A+ Superior rating,” said Gary T. “Doc” Huffman, CLU, ChFC, Ohio National chairman, president and chief executive officer. “It underscores our mission to help them achieve financial security and independence now and for generations to come.”

In its analysis, A.M. Best Company noted the rating affirmations reflected favorably upon Ohio National's overall middle market position within the individual life and variable annuity markets and continued positive trend in individual life sales.

The ratings also recognize Ohio National's stable adjusted Generally Accepted Accounting Principles (GAAP) operating results, strong risk–adjusted capitalization ratios, recent expansion into the retirement services market and strong front–end risk management practices.

Tracing its corporate origins to 1909, Ohio National markets a variety of insurance and financial products through more than 50,000 representatives in 49 states (all except New York), the District of Columbia, Puerto Rico and through affiliated operations in South America. Additional subsidiaries operate in New York and Connecticut. As of December 31, 2016, its affiliated companies have $41.8 billion total assets under management. Products are issued by The Ohio National Life Insurance Company and Ohio National Life Assurance Corporation. Ohio National is proud to be named a “Top Workplace” in Cincinnati for eight consecutive years by Enquirer Media (June 2010–2017) and employs more than 1,300 associates. Please visit ohionational.com for more information and for the latest company updates, connect with Ohio National on LinkedIn, Facebook, Twitter and Instagram.

All ratings information is according to reports published on: www.ambest.com/ratings, www.standardandpoors.com, and www.moodys.com/insurance. Ratings are accurate as of 8/2/17. For the most current ratings, see www.ohionational.com. Ohio National has received high marks for financial strength and claims paying ability from major rating agencies; however, such ratings do not refer to the performance of our variable accounts nor imply approval of our variable contracts or their portfolios.

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Axis Wake Research Launches New A24 for 2018

LOUDON, TN—(Marketwired – August 03, 2017) – Today, Axis Wake Research launched the all–new 2018 A24, debuting a sleek new profile and making the Power Wedge II hydrofoil available for the first time on the Axis product. Designed, engineered and handcrafted by Malibu Boats (NASDAQ: MBUU) in the U.S.A., Axis delivers cutting–edge technology and superior quality with an extraordinary performance–value equation.

With an alluring new design that recalls the original A24 design in a striking way, the 2018 Axis A24 leaps ahead of the competition. Onboard, a new multi–position Sliding Skybox Seat maximizes versatility in this 17–seater, which features an exceptionally spacious front lounge area and plenty of storage for a full day's activities on the water. The largest boat from Axis, the A24 handles with the brand's renowned outstanding agility.

“There's no question that the Axis A24 is the best value in its class,” said Eric Bondy, Malibu Boats Vice President of Sales and Marketing. “The A24 makes an amazing family boat offering something for everyone. You can take a big crew out on the water, and the A24 can customize wakes and waves for any rider. With the addition of Power Wedge II, the infinite wake and wave adjustability previously only available on Malibu takes Axis to a new level.”

Power Wedge II

The Axis Performance Surf Package™ (P.S.P.), a comprehensive system of wake and wave technologies, gains a significant advance for 2018 with the debut of the Power Wedge II hydrofoil as an option for all Axis models. The Power Wedge II hydrofoil can instantly add up to 1,500 pounds of additional wake–carving capability. With the widest range of adjustment on the market, the Power Wedge II makes it easier than ever to customize the size, length and shape of the wakeboard wake or surf wave, from Beginner to Advanced.

Combined with the standard Wake Plus hull and up to 3,370 pounds of ballast, the Power Wedge II enables the A24 to generate enormous wakes that have made this Axis model a favorite among pro wakeboarders. The high–speed, hydraulic Surf Gate™ customizes the wake into a big, barreling surf wave on either side of the boat, and, combined with Power Wedge II provides unlimited adjustability of the wave.

A panel of soft–key switches puts major controls at the driver's fingertips. With the Surf Band wrist remote, the rider can adjust the Power Wedge II, Surf Gate, boat speed and tower speaker volume right from the water.

The A24's stereo, which includes helm and transom remotes and multi–zone volume control, routes Surf Gate signaling to the rider through the audio speakers. That way, the rider and the crew know when a side–to–side transition is about to happen. The A24's striking dash design features glowing white 3–in–1 gauges, giving the cockpit a classic sporty look.

As with all Axis models, the standard 6–liter Monsoon engine provides an enormous 450 lb–ft of torque, with an electric shift for easy control. The A24, the Axis brand's largest boat, handles with stellar agility, a brand hallmark.

The new 2018 Axis A24 is available now at Axis retailers, and it's ready to make waves.

ABOUT AXIS WAKE RESEARCH:

Built in the U.S.A. by Malibu with unstinting dedication to the same legendary craftsmanship, Axis Wake Research is all about pure performance and astonishing affordability. Axis has seen explosive growth in the watersports industry in the seven years since its founding, quickly reaching fourth in market share — and showing no signs of slowing down. Together, Malibu and Axis easily lead. It's all because Axis Wake Research is centered on you — and built to make waves.

VIVUS Reports Second Quarter 2017 Financial Results

CAMPBELL, CA—(Marketwired – August 03, 2017) – VIVUS, Inc. (NASDAQ: VVUS) (the “Company”), a biopharmaceutical company committed to the development and commercialization of innovative therapies focusing on treatments for patients with serious unmet medical needs, today reported financial results for the quarter ended June 30, 2017 and provided a business update.

“During the second quarter, we made important progress in ramping up development of tacrolimus, our lead clinical candidate, which we believe has significant potential in treating pulmonary arterial hypertension, and we remain on track to hold a pre–IND meeting with FDA in the second half of this year,” said Seth H. Z. Fischer, VIVUS' Chief Executive Officer. “VIVUS is dedicated to addressing the urgent therapeutic needs of patients with serious medical conditions and life–limiting diseases. We continue to evaluate opportunities to obtain additional product candidates that have the potential to radically improve patient care and outcomes.”

Recent Business Highlights and Upcoming Events

  • In May 2017, VIVUS announced the appointment of Thomas B. King to its board of directors.
  • In July 2017, VIVUS announced a settlement agreement with Actavis Laboratories FL (Actavis) resolving patent litigation related to Qsymia®. The litigation resulted from the submission by Actavis of an Abbreviated New Drug Application (ANDA) to the U.S. Food and Drug Administration seeking approval to market generic versions of Qsymia. The settlement agreement permits Actavis to begin selling a generic version of Qsymia on December 1, 2024, or earlier under certain circumstances. In the event of a launch earlier than December 1, 2024, VIVUS will receive a royalty on Actavis' sales of the generic version of Qsymia.
  • Seth H. Z. Fischer, VIVUS' Chief Executive Officer, will present at the 2017 Wells Fargo Healthcare Conference, taking place September 6th and 7th in Boston, MA. Mr. Fischer's presentation will be accessible via webcast and accessible in the events and presentations section of the Company's investor relations website, or by clicking here.

Financial Results

Total revenue, net for the second quarters of 2017 and 2016, was $11.2 million and $13.8 million, respectively. Revenue consisted of the following:

     
    Three Months Ended
    June 30,
    2017   2016
Qsymia, net product revenue   $ 8,518   $ 12,749
STENDRA/SPEDRA supply revenue     2,119    
STENDRA/SPEDRA royalty revenue     590     1,027
  Total revenue   $ 11,227   $ 13,776
             

Beginning in the first quarter of 2017, with 48 months of returns experience, VIVUS believes that it has sufficient data and experience from selling Qsymia to reliably estimate expected returns. As a result, VIVUS changed its revenue recognition methodology for Qsymia sales from a “sell–through” methodology to a “sell–in” methodology.

Approximately 105,000 and 116,000 Qsymia prescriptions were dispensed in the second quarters of 2017 and 2016, respectively. In the second quarter of 2017, VIVUS shipped approximately 83,000 units of Qsymia to the wholesalers as wholesalers reduced their Qsymia inventory levels. VIVUS recognized approximately $2.3 million less Qsymia revenue under the “sell–in” methodology than would have been recognized under the “sell–through” methodology. The “sell–in” methodology could continue to result in higher volatility of Qsymia sales, as wholesalers adjust inventory levels compared to those historically reported.

Total cost of goods sold was $3.6 million and $2.6 million in the second quarters of 2017 and 2016, respectively. The increase was primarily a result of higher STENDRA/SPEDRA supply revenue during the quarter.

Research and development expense was $1.0 million and $1.1 million in the second quarters of 2017 and 2016, respectively. Research and development expenses were impacted by a decrease in efforts surrounding our Qsymia regulatory requirements partially offset by development efforts of tacrolimus for the treatment of pulmonary arterial hypertension.

General and administrative expense was $6.2 million and $7.7 million for the second quarters of 2017 and 2016, respectively, while selling and marketing expense for the commercialization of Qsymia totaled $5.4 million and $6.0 million in the second quarters of 2017 and 2016, respectively. The decreases were due to the continued cost control initiative and the result of the realignment of our sales force, and refinement of our marketing and promotional programs.

Net loss for the second quarter of 2017 was $13.4 million, as compared to $11.4 million in the second quarter of 2016. Cash, cash equivalents and available–for–sale securities were $251.5 million at June 30, 2017.

Additional Information

The Company will not host a conference call for the quarter ended June 30, 2017 and will resume quarterly conference calls surrounding financial results for the quarter ended September 30, 2017. The Company's financial statements and related footnotes will be available in its Quarterly Report on Form 10–Q for the three and six months ended June 30, 2017, which was filed with the U.S. Securities and Exchange Commission earlier today.

About Qsymia

Qsymia is approved in the U.S. and is indicated as an adjunct to a reduced–calorie diet and increased physical activity for chronic weight management in adults with an initial body mass index (BMI) of 30 kg/m2 or greater (obese) or 27 kg/m2 or greater (overweight) in the presence of at least one weight–related medical condition such as high blood pressure, type 2 diabetes, or high cholesterol.

The effect of Qsymia on cardiovascular morbidity and mortality has not been established. The safety and effectiveness of Qsymia in combination with other products intended for weight loss, including prescription and over–the–counter drugs, and herbal preparations, have not been established.

Important Safety Information

Qsymia® (phentermine and topiramate extended–release) capsules CIV is contraindicated in pregnancy; in patients with glaucoma; in hyperthyroidism; in patients receiving treatment or within 14 days following treatment with monoamine oxidase inhibitors; or in patients with hypersensitivity to sympathomimetic amines, topiramate, or any of the inactive ingredients in Qsymia.

Qsymia can cause fetal harm. Females of reproductive potential should have a negative pregnancy test before treatment and monthly thereafter and use effective contraception consistently during Qsymia therapy. If a patient becomes pregnant while taking Qsymia, treatment should be discontinued immediately, and the patient should be informed of the potential hazard to the fetus.

The most commonly observed side effects in controlled clinical studies, 5% or greater and at least 1.5 times placebo, include paraesthesia, dizziness, dysgeusia, insomnia, constipation, and dry mouth.

About Avanafil

STENDRA® (avanafil) is approved in the U.S. by the FDA for the treatment of erectile dysfunction. Metuchen Pharmaceuticals LLC has exclusive marketing rights to STENDRA in the U.S., Canada, South America and India.

STENDRA is available through retail and mail order pharmacies.

SPEDRA™, the trade name for avanafil in the EU, is approved by the EMA for the treatment of erectile dysfunction in the EU. VIVUS has granted an exclusive license to the Menarini Group through its subsidiary Berlin–Chemie AG to commercialize and promote SPEDRA for the treatment of erectile dysfunction in over 40 European countries plus Australia and New Zealand.

Avanafil is licensed from Mitsubishi Tanabe Pharma Corporation (MTPC). VIVUS owns worldwide development and commercial rights to avanafil for the treatment of sexual dysfunction, with the exception of certain Asian–Pacific Rim countries. VIVUS is in discussions with other parties for the commercialization rights to its remaining territories.

For more information about STENDRA, please visit www.STENDRA.com.

Important Safety Information

STENDRA® (avanafil) is prescribed to treat erectile dysfunction (ED).

Do not take STENDRA if you take nitrates, often prescribed for chest pain, as this may cause a sudden, unsafe drop in blood pressure.

Discuss your general health status with your healthcare provider to ensure that you are healthy enough to engage in sexual activity. If you experience chest pain, nausea, or any other discomforts during sex, seek immediate medical help.

STENDRA may affect the way other medicines work. Tell your healthcare provider if you take any of the following; medicines called HIV protease inhibitors, such as ritonavir (Norvir®), indinavir (Crixivan®), saquinavir (Fortavase® or Invirase®) or atazanavir (Reyataz®); some types of oral antifungal medicines, such as ketoconazole (Nizoral®), and itraconazole (Sporanox®); or some types of antibiotics, such as clarithromycin (Biaxin®), telithromycin (Ketek®), or erythromycin.

In the rare event of an erection lasting more than 4 hours, seek immediate medical help to avoid long–term injury.

In rare instances, men taking PDE5 inhibitors (oral erectile dysfunction medicines, including STENDRA) reported a sudden decrease or loss of vision. It is not possible to determine whether these events are related directly to these medicines or to other factors. If you experience sudden decrease or loss of vision, stop taking PDE5 inhibitors, including STENDRA, and call a doctor right away.

Sudden decrease or loss of hearing has been rarely reported in people taking PDE5 inhibitors, including STENDRA. It is not possible to determine whether these events are related directly to the PDE5 inhibitors or to other factors. If you experience sudden decrease or loss of hearing, stop taking STENDRA and contact a doctor right away. If you have prostate problems or high blood pressure for which you take medicines called alpha blockers or other anti–hypertensives, your doctor may start you on a lower dose of STENDRA.

Drinking too much alcohol when taking STENDRA may lead to headache, dizziness, and lower blood pressure.

STENDRA in combination with other treatments for ED is not recommended.

STENDRA does not protect against sexually transmitted diseases, including HIV.

The most common side effects of STENDRA are headache, flushing, runny nose and congestion.

Please see full patient prescribing information for STENDRA (50 mg, 100 mg, 200 mg) tablets.

About VIVUS

VIVUS is a biopharmaceutical company committed to the development and commercialization of innovative therapies that focus on advancing treatments for patients with serious unmet medical needs. For more information about the Company, please visit www.vivus.com.

Certain statements in this press release are forward–looking within the meaning of the Private Securities Litigation Reform Act of 1995 and are subject to risks, uncertainties and other factors, including risks and uncertainties related to potential change in our business strategy to enhance long–term stockholder value, including the evaluation of development opportunities; risks and uncertainties related to our ability to successfully commercialize Qsymia; risks and uncertainties related to our ability to successfully develop or acquire a proprietary formulation of tacrolimus as a precursor to the clinical development process; risks and uncertainties related to our ability to identify, acquire and develop new product pipeline candidates; risks and uncertainties related to our ability to develop a proprietary formulation and to demonstrate through clinical testing the quality, safety, and efficacy of our current or future investigational drug candidates; risks and uncertainties related to the timing, strategy, tactics and success of the commercialization of STENDRA (avanafil) by our sublicensees; risks and uncertainties related to our ability to successfully complete on acceptable terms, and on a timely basis, avanafil partnering discussions for territories under our license with MTPC in which we do not have a commercial collaboration; risks and uncertainties related to the failure to obtain FDA or foreign authority clearances or approvals and noncompliance with FDA or foreign authority regulations; and risks and uncertainties related to our ability to protect our intellectual property and litigation in which we are involved or may become involved. These risks and uncertainties could cause actual results to differ materially from those referred to in these forward–looking statements. The reader is cautioned not to rely on these forward–looking statements. Investors should read the risk factors set forth in VIVUS' Form 10–K for the year ended December 31, 2016 as filed on March 8, 2017, and as amended by the Form 10–K/A filed on April 26, 2017, and periodic reports filed with the Securities and Exchange Commission. VIVUS does not undertake an obligation to update or revise any forward–looking statements.

   
VIVUS, INC.  
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS  
(In thousands, except per share data)  
(Unaudited)  
   
    Three Months Ended     Six Months Ended  
    June 30,     June 30,  
    2017     2016     2017     2016  
Revenue:                                
  Net product revenue   $ 8,518     $ 12,749     $ 26,138     $ 25,161  
  License and milestone revenue                 5,000        
  Supply revenue     2,119             5,931       1,526  
  Royalty revenue     590       1,027       1,170       2,413  
    Total revenue     11,227       13,776       38,239       29,100  
                                 
Operating expenses:                                
  Cost of goods sold     3,570       2,647       9,737       6,351  
  Research and development     1,014       1,096       3,194       2,125  
  Selling, general and administrative     11,630       13,692       23,061       28,814  
    Total operating expenses     16,214       17,435       35,992       37,290  
                                 
Income (loss) from operations     (4,987 )     (3,659 )     2,247       (8,190 )
                                 
    Interest expense and other expense, net     8,398       7,735       16,700       15,896  
Loss before income taxes     (13,385 )     (11,394 )     (14,453 )     (24,086 )
Provision for income taxes     1       7       (11 )     23  
  Net loss   $ (13,386 )   $ (11,401 )   $ (14,442 )   $ (24,109 )
                                 
Basic and diluted net loss per share   $ (0.13 )   $ (0.11 )   $ (0.14 )   $ (0.23 )
Shares used in per share computation:                                
  Basic and diluted     105,712       104,126       105,596       104,099  
                                 
                 
VIVUS, INC.  
CONDENSED CONSOLIDATED BALANCE SHEETS  
(In thousands)  
                 
    June 30,     December 31,  
    2017     2016*  
ASSETS     (Unaudited)          
Current assets:                
  Cash and cash equivalents   $ 76,406     $ 84,783  
  Available–for–sale securities     175,115       184,736  
  Accounts receivable, net     8,441       9,478  
  Inventories     15,628       16,186  
  Prepaid expenses and other assets     5,333       8,251  
    Total current assets     280,923       303,434  
Property and equipment, net     670       788  
Non–current assets     1,198       1,554  
    Total assets   $ 282,791     $ 305,776  
LIABILITIES AND STOCKHOLDERS' EQUITY                
Current liabilities:                
  Accounts payable   $ 4,384     $ 4,707  
  Accrued and other liabilities     20,357       15,686  
  Deferred revenue     1,694       19,174  
  Current portion of long–term debt     24,601       8,708  
    Total current liabilities     51,036       48,275  
  Long–term debt, net of current portion     220,183       232,610  
  Deferred revenue, net of current portion     5,732       6,449  
  Non–current accrued and other liabilities     369       257  
    Total liabilities     277,320       287,591  
Commitments and contingencies                
Stockholders' equity:                
  Common stock and additional paid–in capital     833,349       831,855  
  Accumulated other comprehensive loss     (382 )     (616 )
  Accumulated deficit     (827,496 )     (813,054 )
    Total stockholders' equity     5,471       18,185  
    Total liabilities and stockholders' equity   $ 282,791     $ 305,776  
                 
* The Condensed Consolidated Balance Sheets have been derived from the Company's audited financial statements at that date, as adjusted.  
                 

Nanotech Announces Strong Third Quarter Fiscal 2017 Results

VANCOUVER, BC—(Marketwired – August 03, 2017) – Nanotech Security Corp. (TSX VENTURE: NTS) (OTCQX: NTSFF), (“Nanotech” or the “Company”) today released its financial results for the three and nine months ended June 30, 2017. Unless otherwise stated, all dollar amounts are expressed in Canadian dollars.

Highlights during the Third Quarter

  • Revenue increased 151% to $2,906,649 compared to the same period last year. Optics' revenue increased by 417% to $2,569,016 reflecting increased revenue from paid development contracts and optical thin film (“OTF”) deliveries from our Thurso facility. Tactical's revenue decreased 49% to $337,633 due to lower van and equipment sales.
  • Gross margins improved to 78%, up from 47% in the same period last year. Gross margins continue to reflect strong margins in the Optics division.
  • Cash from operating activities improved to $696,117. Strong revenues and gross margins resulted in Nanotech achieving its first ever quarter delivering positive cash from operations, a notable milestone and improvement from the $1,137,647 use of cash in same period last year.
  • Cash balance of $13,235,906 at end of the quarter. The Company completed a bought deal private placement with a syndicate of underwriters pursuant to which the Company issued 11,586,870 common shares at a price of $1.15, for gross proceeds to the Company of $13,324,901.
  • Paid development contracts are progressing well. The Company currently derives a significant portion of its revenue from paid authentication development projects with major issuing authorities. During the year, the Company announced a development contract for up to $30.0 million over a period of up to five years. These development activities incorporate both nano–optic and OTF technologies and are focused on developing authentication features for future banknotes. All projects are progressing well, and the Company continues to see development revenue as a significant growth area for the business.
  • OTF opportunities. The Company continues to work with its European production partner Hueck Folien to become qualified to deliver volume OTF to a specific Asian customer. Overall, management remains optimistic that there is strong customer demand for OTF and that our production partner will fulfill these requirements. The Company also continues to deliver OTF from its Thurso facility and sees significant new opportunities for both facilities as other countries have indicated their plans to incorporate colour–shifting OTF into their future banknotes.
  • Tax Stamps. The Company's nano–optic images have now become qualified with a customer in India that is currently supplying several billion holographic tax stamps to the Indian government. Management is working with this customer to transition the government from traditional holographic images to licensing Nanotech nano–optic images.

Recent Developments

Doug Blakeway, Nanotech's Chairman and CEO, commented, “Our strong revenue and gross margins have led to our first cash flow positive quarter. This positive cash flow enhances our recent $13.3 million bought deal financing and, even after using $1.4 million to repay the convertible debentures, we finished the quarter with a $13.2 million cash balance. With the recent strengthening of our balance sheet and advancing customer relationships, we are very well positioned to continue our growth.”

Select Financial Information

All results are reported in Canadian dollars and are prepared in accordance with International Financial Reporting Standards (“IFRS”) as issued by the International Accounting Standards Board (“IASB”).

    Three months ended June 30,   Nine months ended June 30,
        $   %       $   %
    2017   2016   Change   Change   2017   2016   Change   Change
Revenue   $ 2,906,649   $ 1,157,905   $1,748,744   151%   $ 5,577,262   $ 3,615,365   $1,961,897   54%
Gross profit   2,256,542   543,711   1,712,831   315%   3,938,630   1,785,133   2,153,497   121%
Gross profit %   78%   47%           71%   49%        
Net loss   (905,268)   (1,957,434)   1,052,166   (54%)   (4,453,438)   (6,153,779)   1,700,341   (28%)
Net loss per share Basic and diluted   (0.02)   (0.04)           (0.08)   (0.12)        
Weighted average number of common shares Basic and diluted   60,027,320   53,612,215           56,006,062   53,470,153        
Net cash provided by (used in) operating activities   696,117   (1,137,647)   1,833,764   161%   (1,344,960)   (3,023,063)   1,678,103   56%
                 
            $   %
    June 30, 2017   September 30, 2016   Change   Change
Total assets   $ 33,162,188   $ 24,511,586   $ 8,650,602   35%
Total liabilities   4,900,381   8,089,503   (3,189,122)   (39%)
Total equity   28,261,807   16,422,083   11,839,724   72%
                 

Revenue

Consolidated revenues for the three months ended June 30, 2017 increased by $1,748,744 or 151% to $2,906,649 compared to $1,157,905 in the same period last year. Optics revenue increased by $2,071,902 or 417% to $2,569,016 compared to $497,114 last year representing increased revenue from paid development contracts and OTF deliveries from our Thurso facility. Tactical's revenue decreased by $323,158 or 49% to $337,633 compared to $660,791 in the previous year due to lower van and equipment sales.

Customer paid development revenues continue to grow and the projects are progressing well as we continue to advance our optic based technologies into the development of new security features for future banknotes. In addition, management is beginning to see new OTF opportunities and is working with several partners to expand our customer base to provide further growth. Management continues to work with our production partner Hueck Folien to demonstrate their ability to produce large volume OTF for several customer opportunities.

Consolidated revenues for the nine months ended June 30, 2017 increased by $1,961,897 or 54% to $5,577,262 compared to $3,615,365 in the same period last year. Optics revenue increased by $2,970,601 or 174% to $4,682,131 compared to $1,711,530 last year primarily due to increased revenue from paid development contracts. Tactical's revenue was lower by $1,008,704 or 53% to $895,131 compared to $1,903,835 in the same period last year due to lower van and equipment sales.

Overall revenue growth reflected a strong increase in Optics revenue that was significantly offset by Tactical's poor performance. Management is reviewing the strategic options available to Tactical including generating new revenue opportunities, selling the business or significantly altering the operation. Management expects to make strategic decisions on Tactical within the next four months.

Gross Margin

Gross margin for the three months ended June 30, 2017 increased by $1,712,831 or 315% to $2,256,542 compared to $543,711 in the same period last year. Overall, the gross margin percentage improved to 78% for the three months ended June 30, 2017, an increase from 47% in the same period last year. The increased gross margins reflect continued strong margins in the Optics division.

Gross margin for the nine months ended June 30, 2017 increased by $2,153,497 or 121% to $3,938,630 compared to $1,785,133 in the same period last year. Overall, the gross margin percentage improved to 71% for the nine months ended June 30, 2017, an increase from 49% in the same period last year. The increased gross margins continue to reflect strong margins in the Optics division.

Operating Costs

Research and development expenditures for the three months ended June 30, 2017 decreased by $68,677 or 12% to $483,511 compared to $552,188 in the same period last year due to a larger portion of salaries and other expenses being allocated to cost of sales as a result of increased development projects.

Research and development expenditures for the nine months ended June 30, 2017 decreased by $388,402 or 22% to $1,389,172 compared to $1,777,574 in the same period last year, again due to a larger portion of salaries and other expenses being allocated to cost of sales as a result of increased development projects.

General and administration expenditures for the three months ended June 30, 2017 were $790,761, an increase of $138,910 or 21% compared to $651,851 in the same period last year which reflects higher utilities costs at our Thurso production facility and an increase in stock based compensation.

General and administration expenditures for the nine months ended June 30, 2017 were $2,207,257, an increase of $229,324 or 12% compared to $1,977,933 in the same period last year which again reflects higher utilities costs at our Thurso production facility and an increase in stock based compensation.

Sales and marketing expenditures for the three months ended June 30, 2017 were $573,330, a decrease of $24,501 or 4% compared to $597,831 in the same period last year. The decrease mainly relates to a reduction in travel and marketing expenses in the Optics division along with lower sales commissions in the Tactical division.

Sales and marketing expenditures for the nine months ended June 30, 2017 were $1,624,139, a decrease of $175,573 or 10% compared to $1,799,712 in the same period last year. The decrease again mainly relates to a reduction in travel and marketing expenses in the Optics division along with lower sales commissions in the Tactical division.

Depreciation and amortization expenditures for the three months ended June 30, 2017 were $666,766, compared to $766,096 in the same period last year, reflecting the Company's declining balance depreciation policy and fewer fixed asset additions in the current period.

Depreciation and amortization expenditures for the nine months ended June 30, 2017 were $2,087,159, compared to $2,307,334 in the same period last year, again reflecting the Company's declining balance depreciation policy and fewer fixed asset additions in the current period.

Other expenses for the three months ended June 30, 2017 were $647,442, an increase of $551,466 compared to $95,976 in the same period last year. The increase includes $540,828 of interest expense representing $105,557 of interest paid, $435,271 of accretion that was a result of the Company's decision to repay the convertible debentures and an increased foreign exchange loss in the current period.

Other expenses for the nine months ended June 30, 2017 were $1,084,341, an increase of $845,185 compared to $239,156 in the same period last year. The increase includes $945,827 of interest expense representing $355,969 of interest paid, $589,858 of accretion that was a result of the Company's decision to repay the convertible debentures and a decreased foreign exchange loss in the current period.

Net Loss

The net loss for the three months ended June 30, 2017 was $905,268 compared to $1,957,434 during the same period last year. The decrease in net loss reflects an increase in revenues, reduced expenses and higher margins.

The net loss for the nine months ended June 30, 2017 was $4,453,438 compared to $6,153,779 during the same period last year. The decrease in net loss also reflects an increase in revenues, reduced expenses and higher margins.

Capital Resources

The Company ended the quarter with $13,235,906 in cash and cash equivalents, up from $3,312,691 at September 30, 2016. On May 18, 2017, the Company completed a bought deal private placement with a syndicate of underwriters whereby a total of 11,586,870 common shares of the Company were issued at a price of $1.15 per share, for total gross proceeds of $13,324,901.

The Company had convertible debentures outstanding with a face value amounting to $4,185,000 with a maturity date of May 31, 2018. The convertible debentures accrued interest at a rate of 12% per annum payable quarterly in arrears and were convertible into common shares of the Company at a price of $1.25 per share. On May 18, 2017, the Company provided notice to the debenture holders of the Company's intention to repay the convertible debentures on June 21, 2017. Most debenture holders elected to convert their debentures into common shares at $1.25 per share. As a result, the Company issued 2,252,000 common shares valued at $2,815,000. The remaining $1,370,000 was repaid.

The Company has a note payable outstanding of $3,000,000 as at June 30, 2017. The note payable was used to finance some of the real estate assets acquired on the acquisition of Fortress Optical Features Ltd., and is secured by the assets of the Company. It bears interest at 4% per annum and the principal is due in September 2017. Monthly interest payments are required prior to the maturity date. The Company plans to repay or refinance the note.

Management has reviewed its projected funding requirements and expects that, through the generation and collection of revenues and/or raising additional financing, the Company will maintain sufficient liquidity.

ADDITIONAL INFORMATION

Outlook

Nanotech is a leader in next–generation anti–counterfeiting products. These products have brand protection and enhancement applications across a wide range of markets including banknotes, secure government documents, commercial branding, and the pharmaceutical industry. Nanotech is initially focusing its efforts on the banknote market due to its high margins and established customer base. Management continues to believe that the Company is well positioned to supply OTF, however the additional time required for product acceptance and integration into their production processes has taken longer than anticipated. With the recent signing of the $30 million paid development contract, the Company is focusing on further developing business with its established customer base and, as a result, is well positioned to expand its authentication development contract revenue and other nano–optic and OTF opportunities in the years ahead.

In 2017, management established a goal to double its revenue and make significant progress towards becoming cash flow positive. During the most recent quarter, the Company delivered its first ever quarter generating positive cash flow from operations and is on track to more than double Optics' revenue for the year. The Company's legacy business segment, Tactical, has had a negative impact with both a significant reduction in revenue and the generation of a loss of $473,002. Looking ahead to the fourth quarter, management expects to make strategic decisions on Tactical and deliver strong financial results consistent with this past quarter. Looking ahead to 2018, the Company is well positioned to continue to expand its development revenue, begin supplying high volume OTF and begin receiving licensing revenue from tax stamps.

Achieving these results is not certain and involves known and unknown risks that may cause actual results to differ materially from this goal. These risks and uncertainties include, among other things, risks related to uncertainty of amount and timing of purchase orders, the ability of Hueck Folien to successfully deliver volume production, our ability to expand our Optics development revenue and our ability to maintain sufficient liquidity through June 30, 2018 to facilitate any business ramp–up. These and other risk factors are further discussed under the “Business Risks and Uncertainties” segment of the September 30, 2016 management's discussion and analysis.

   
Nanotech Security Corp.  
Condensed Consolidated Statements of Operations and Comprehensive Loss  
(Unaudited)  
   
Three and nine months ended June 30, 2017 and 2016  
(In Canadian dollars)  
    Three months ended   Nine months ended  
    June 30,   June 30,  
    2017   2016   2017   2016  
                           
Revenue   $ 2,906,649   $ 1,157,905   $ 5,577,262   $ 3,615,365  
Cost of sales     650,107     614,194     1,638,632     1,830,232  
Gross profit     2,256,542     543,711     3,938,630     1,785,133  
                           
Expenses                          
Research and development     483,511     552,188     1,389,172     1,777,574  
General and administration     790,761     651,851     2,207,257     1,977,933  
Sales and marketing     573,330     597,831     1,624,139     1,799,712  
Depreciation and amortization     666,766     766,096     2,087,159     2,307,334  
      2,514,368     2,567,966     7,307,727     7,862,553  
                           
Loss before other expenses     (257,826 )   (2,024,255 )   (3,369,097 )   (6,077,420 )
                           
Other expenses                          
Foreign exchange loss     84,022     27,067     56,841     103,283  
Finance expense     563,420     68,909     1,027,500     135,873  
      647,442     95,976     1,084,341     239,156  
                           
Loss before income taxes     (905,268 )   (2,120,231 )   (4,453,438 )   (6,316,576 )
                           
Deferred income tax recovery         162,797         162,797  
Net loss     (905,268 )   (1,957,434 )   (4,453,438 )   (6,153,779 )
                           
Other comprehensive loss:                          
Items that may be subsequently reclassified to earnings:                          
Unrealized foreign exchange gain                          
on translation of foreign operation     37,817     5,665     23,715     38,912  
Total comprehensive loss for the period   $ (867,451 ) $ (1,951,769 ) $ (4,429,723 ) $ (6,114,867 )
                           
Loss per share                          
Basic and diluted   $ (0.02 ) $ (0.04 ) $ (0.08 ) $ (0.12 )
                           
Weighted average number of common shares                          
Basic and diluted     60,027,320     53,612,215     56,006,062     53,470,153  
                           
 
Nanotech Security Corp.
Condensed Consolidated Statements of Financial Position
(Unaudited)
 
(In Canadian dollars)
    June 30,   September 30,
    2017   2016
         
Assets        
Current assets:        
Cash and cash equivalents   $ 13,235,906   $ 3,312,691
Accounts receivable   1,416,279   597,414
Inventory   373,934   385,753
Prepaid expenses and other assets   147,961   127,719
    15,174,080   4,423,577
         
Property, plant and equipment   16,259,341   17,338,312
Intangible assets   340,309   1,361,239
Goodwill   1,388,458   1,388,458
    $ 33,162,188   $ 24,511,586
         
Liabilities and Shareholders' Equity        
Current liabilities:        
Accounts payable and accrued liabilities   $ 1,822,266   $ 1,395,568
Note payable   3,000,000   3,000,000
    4,822,266   4,395,568
         
Non–current liabilities:        
Convertible debentures     3,595,142
Tenant inducement   78,115   98,793
    4,900,381   8,089,503
         
Shareholders' equity        
Share capital   60,858,578   45,210,507
Contributed Surplus   3,106,507   2,485,131
Deficit   (35,572,483)   (31,119,045)
Accumulated other comprehensive loss   (130,795)   (154,510)
    28,261,807   16,422,083
    $ 33,162,188   $ 24,511,586
         
 
Nanotech Security Corp.
Condensed Consolidated Statements of Cash Flows
(Unaudited)
 
Three and nine months ended June 30, 2017 and 2016
(in Canadian Dollars)
    Three months ended   Nine months ended
    June 30,   June 30,
    2017   2016   2017   2016
                 
Cash flows provided by (used in):                
Operating activities:                
Net loss   $(905,268)   $(1,957,434)   $(4,453,438)   $(6,153,779)
Items not involving cash:                
Depreciation and amortization   733,245   772,364   2,196,839   2,320,433
Deferred income taxes     (162,797)     (162,797)
Share–based compensation   230,416   187,263   744,663   508,233
Accretion of convertible debentures   435,271   8,856   589,858   8,856
Other   (6,893)   (6,893)   (22,292)   (20,678)
Non–cash working capital changes   209,346   20,994   (400,590)   476,669
Cash provided by (used in) operating activities   696,117   (1,137,647)   (1,344,960)   (3,023,063)
                 
Investing activities:                
Purchase of property and equipment, net of disposal   (6,837)   42,664   (95,402)   (166,205)
Cash provided by (used in) investing activities   (6,837)   42,664   (95,402)   (166,205)
                 
Financing activities:                
Issuance of shares for options exercised       223,000   180,000
Proceeds on financing, net of costs   12,486,784     12,486,784  
Proceeds on issuance of convertible debenture, net of costs     4,120,289     4,120,289
Repayment of convertible debentures   (1,370,000)     (1,370,000)  
Cash provided by financing activities   11,116,784   4,120,289   11,339,784   4,300,289
                 
Effect of foreign exchange on cash and cash equivalents   38,328   5,862   23,793   39,959
                 
Decrease in cash and cash equivalents   11,844,392   3,031,168   9,923,215   1,150,980
                 
Cash and cash equivalents, beginning of period   1,391,514   1,141,740   3,312,691   3,021,928
Cash and cash equivalents, end of period   $ 13,235,906   $ 4,172,908   $ 13,235,906   $ 4,172,908
                 

Conference Call Details:

DATE:   Thursday, August 3, 2017   Time: 5:00 PM Eastern Daylight Savings Time
DIAL IN NUMBER:   Toll free (Canada and US): 1–888–430–8678 Conference ID: 2291594   Alternate number: 1–719–457–2619
TAPED REPLAY:   Toll free (Canada and US): 1–844–512–2921 Replay available until September 3, 2017 Replay Pin number: 2291594   Alternate number: 1–412–317–6671 Replay Pin number: 2291594
WEBCAST:   http://public.viavid.com/index.php?id=125655    

FORWARD–LOOKING STATEMENTS

The discussion and analysis in this news release contains forward–looking statements concerning anticipated developments in the Company's operations in future periods, the adequacy of Nanotech's financial resources, and the events or conditions that may occur in the future. Forward–looking statements are frequently, but not always, identified by words such as “expects”, “anticipates”, “believes”, “intends”, “estimates”, “predicts”, “potential”, “targeted” “plans”, “possible” and similar expressions, or statements that events, conditions, or results “will”, “may”, “could” or “should” occur or be achieved.

These forward–looking statements include, without limitation, statements about the Company's market opportunities, strategies, competition, and the Company's views that its optics based technologies will continue to show promise for large scale production. Other forward–looking statements imply that the Company will remain capable of being financed and/or will be able to partner development until profitability is eventually realized. The principal risks related to these forward–looking statements are that the Company's products receive market acceptance, that its intellectual property claims will be sufficiently broad or enforceable to provide the necessary protection or attract the necessary capital.

These forward–looking statements are based on the beliefs, expectations and opinions of management on the date the statements are made. Consequently, all forward–looking statements made in the discussion and analysis of the financial conditions and results of operations or the documents incorporated by reference, are qualified by this cautionary statement and there can be no certainty that actual results or developments the Company anticipates will be realized. For additional information with respect to certain of these risks or factors reference should be made to the “Business Risks and Uncertainties” section of the management's discussion and analysis and notes to the consolidated financial statements for the year ended September 30, 2016, as well as with the Company's continuous disclosure materials filed from time to time with Canadian securities regulatory authorities, which are available online at www.sedar.com. Nanotech disclaims any intention or obligation to update or revise any forward–looking statements, whether as a result of new information, future events or otherwise, other than as required by law. Caution needs to be used when taking forward–looking statements into account when evaluating the Company.

About Nanotech Security

Nanotech designs, manufactures and markets nano–optic OVDs and OTF products. These products have brand protection and enhancement applications across a wide range of markets including banknotes, secure government documents, commercial branding, and the pharmaceutical industry. The Company is initially focusing its efforts on the banknote market due to its high margins and its established customer base.

The Company's nano–optic technology employs arrays of billions of nano–indentations that are impressed or embossed onto a substrate material such as polymer, paper, metal, or fabric. By using sophisticated algorithms to direct an electron beam, the Company creates visual images with colour–shifting effects such as 3D, high–definition, and motion–impression, and can also display distinct colours including skin tones, white, and black, which are not possible using current holographic technology.

Additional information about Nanotech can be found at the Company's website www.nanosecurity.ca, the Canadian disclosure filings website www.sedar.com or the OTCMarkets disclosure filings website www.otcmarkets.com.

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