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Pioneering Technology Corp

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Pioneering Technology Reports Record 2015 Financial Results

    Pioneering Technology Corp. (TSXV: PTE) ("Pioneering"), a technology company and North America's leader in cooking fire prevention technologies and products, is pleased to report itsMississauga, Ontario--(Newsfile Corp. - February 1, 2016) - audited 2015 financial results and business highlights for the year ended September 30, 2015. Pioneering's audited financial statements and MD&A are available on SEDAR (www.sedar.com).

    Pioneering completed fiscal 2015 with revenue of approximately $4.4 million, net income of $141,976 and adjusted EBITDA of $652,641. For the three months ended September 30, 2015 Pioneering reports its seventh quarter of positive adjusted EBITDA over the past eight quarters and that it is experiencing substantial revenue growth (79% CAGR since 2013) on the strength of growing awareness of the significant societal problem that stovetop cooking fires represent and support for the proprietary solutions Pioneering offers to address this problem. Pioneering believes that the new products it introduced in 2015 combined with ongoing business development activities and imminent industry changes will support continued revenue and profitability growth in fiscal 2016.

    "We are pleased with our progress in fiscal 2015," said Kevin Callahan, Pioneering's President and Chief Executive Officer. "Our focus on building awareness of the significant dangers posed by stovetop cooking fires and working with business to business distribution partners to make our products available to a wider range of potential customers resulted in increased revenue and profit. We believe that the company has passed an inflection point and is poised for significant growth in fiscal 2016."

    The following chart summarizes Pioneering's audited financial results for the year ended September 30, 2015 as compared to audited results for the same period in 2014 and 2013:

      2015 2014 2013
           
    Revenue $4,393,534 $2,924,472 $1,382,798
    Gross Profit $2,936,677 $1,756,789 $797,444
    Expenses $2,420,416 $2,736,978 $1,607,835
    Net Income (Loss) $140,976 $(1,183,915) $(1,652,583)
    Adjusted EBITDA $652,641 $(464,249) $(756,377)
           

    Fiscal
    2015 Financial Highlights:

    • 2015 revenue was approximately $4.4M as compared to $2.9M in 2014 and $1.4M in 2013 (a 79% compound annual growth rate over the three year period).
        
    • Fourth quarter 2015 revenue was $1,182,800 versus $254,000 in 2014 and $190,000 in 2013.
        
    • Gross margins continue to be strong at 67% in 2015 versus 60% in 2014 and 58% in 2013.
        
    • Net income in fiscal 2015 was $140,976 versus losses in 2014 of ($1.2M) and ($1.7M) in 2013.
        
    • Adjusted EBITDA in fiscal 2015 was $652,641, an increase of $1,116,890 versus 2014.
        
    • Positive Adjusted EBITDA 7 of the last 8 quarters.
        
    • Expenses in 2015 were approximately $2.4M, down approximately $300K versus 2014.

    These results are generally consistent with the preliminary selected unaudited financial results that Pioneering published on November 25, 2015. The most significant differences between the preliminary selected unaudited results and the final audited results are that audited gross profit and expenses are each higher than the reported unaudited amounts by approximately $200K.

    Business Highlights:

    Pioneering had a very successful fiscal 2015. Its key accomplishments during the year included:

    • significantly increasing revenue and cash flow;
        
    • creating continued technology and brand awareness;
        
    • working closely with key influencers to require temperature limiting technology for electric coil stoves as part of new industry standards that are expected to be introduced in 2016; and;
         
    • reducing operating expenses while continuing to pursue opportunities to expand Pioneering’s product offerings.

    In fiscal 2015, revenue increased by over 50% on the strength of:

    • growing awareness for Pioneering’s products;
        
    • the launch of two new products early in the year;
        
    • new retail listings in both Canada and the US;
        
    • the launch of a new ecommerce site; and
        
    • securing new business to business distribution partnerships with some of North America’s largest facility and multi-residential supply companies.

    While all of these efforts are having an impact on Pioneering's growth it is the current focus on building B2B distribution relationships that is creating significant opportunities in penetrating new and existing channels. These new distribution relationships significantly increase the Company's sales reach and are expected to contribute to greater sales volumes moving forward.

    Product Developments

    • Pioneering successfully commercialized two new products:

      • SmartBurner, an easy to install consumer version of the Safe-T-element is having success in both the retail and business to business channel
                    
      • RangeMinder, which helps prevent unattended cooking on gas and ceramic stovetops, is designed specifically for the consumer market.

    • SmartBurner is now available to the general public through Home Hardware stores in Canada (approximately 1,400 stores).  While Pioneering is pursuing new retail listings for SmartBurner and its other products, it has prioritized new and existing B2B multi-residential housing, institution and facility channel opportunities for the SmartBurner and Safe-T-sensor products as it believes that these channels are presently the most promising areas for increasing revenue and profit.

    • In October 2015, Pioneering announced that Home Depot in the U.S. would begin making SmartBurner available to U.S. consumers through homedepot.com. This gives Pioneering access to the U.S. consumer market at a time when the U.S. Fire Service (Vision 20/20) is now emphasizing cooking fire safety in communities throughout the United States and needed a U.S. retail outlet to which it could direct consumers to purchase SmartBurner. This U.S. fire prevention initiative is expected to play a key role in fiscal 2016 and beyond in creating awareness in the consumer market for both the stovetop cooking fire problem and Pioneering’s solution. 

    • RangeMinder is currently only available online. Pioneering plans to begin actively promoting it to consumers once its resources permit.

    Customer, Distribution and Market Developments

    • Pioneering continued to work on large energy efficiency projects with industry heavyweights Johnson Controls and Siemens in the United States. These organizations continue to include the Safe-T-element as a key component of their overall energy efficiency contracts, both individually and in conjunction with the Department of Housing and Urban Development.  In affordable housing channels Safe-T-element is a proven and preferred solution for energy performance contractors.

    • Pioneering opened up new channels for its products including private rental property management companies, REITs, hotels/motels, office towers and hospitals/medical facilities. Previous barriers to entry in some of these markets which existed for Safe-T-element (such as professional installation/cost and maintenance) no longer exist with SmartBurner, which is driving channel expansion and revenue growth.
             
    • Pioneering signed vendor and distribution agreements with some of the largest B2B multi-residential, facility and institutional supply distributors in North America:

      • STAPLES Advantage, a division of Staples Inc. and one of the largest facility suppliers in North America, listed and began to distribute the SmartBurner and Safe-T-sensor products in the U.S. Over the past several months Pioneering has trained over 200 sales representatives and Pioneering is now beginning to see significant sales activity in new and existing channels.
              
      • HD Supply Canada began selling the SmartBurner product to their B2B customers throughout Canada. Success to date in Canada has resulted in HD Supply U.S. now selling the product to its customers in the United States.  HD Supply was previously Home Depot’s commercial supply division. It was acquired by a private equity company a number of years ago and continues to be one of the largest maintenance and facility supply companies in North America.

    • In addition, large existing wholesale appliance supply partners (ALMO, The Brick Commercial, Leon’s/Appliance Canada and others) who currently sell Safe-T-element to the multi-residential channel either as an aftermarket installation or preinstalled on new ranges will benefit from the addition of the SmartBurner to their overall offering. Pioneering believes this will help drive future growth.

    • As a result of these developments Pioneering began making a strategic shift in 2015 away from a primarily direct sales model to a more comprehensive distributor/sales model. With the addition of distribution/sales partners Staples and HD Supply Canada, Pioneering now has hundreds of sales people selling its products into new and existing business to business channels. Pioneering expects this new business model will allow it to (i) drive substantial growth, (ii) avoid adding additional sales force related expenses, and (iii) focus on developing new and improved product solutions for the cooking fire problem and other related business building opportunities.

    Industry Developments

    • A cooking fire prevention study commissioned by Vision 20/20 (funded by the Department of Homeland Security and the Federal Emergency Management Agency) was completed by Eastern Kentucky University’s Fire & Safety Laboratory. The results of the study identified Pioneering’s Safe-T-element and its temperature limiting control technology as the only technology tested that prevented stovetop cooking fires.  The results of this study helped in part contribute to the pending industry and UL standard changes described below.

    • The Association of Home Appliance Manufacturers , the Washington, D.C. based trade association representing the vast majority of kitchen range and cook top manufacturers, announced a plan to reduce unattended cooking fires, recognizing that recent technical advances related to electric coil ranges exist that will enable companies to mitigate the potential for unattended cooking fires.  Changes to the UL standard for the manufacturing of all electric coiled stoves are expected to be introduced in early 2016.  Pioneering’s Safe-T-element and SmartBurner products with their temperature limiting control sensor technology are the only products available today that prevent stovetop cooking fires and should benefit from this change to the industry standard.

    Financing Developments

    Pioneering funds its working capital requirements through a combination of cash flow generated by operations and debt financing. In fiscal 2015, Pioneering obtained a revolving accounts receivable financing facility to access up to $550K from a third party lender. Since June 15, 2015 the lender has financed approximately $2M in receivables. All borrowings under the facility are repaid within 45 days.

    The deadline for repayment of current indebtedness owing to McAllister Holdings Ltd. has been extended to March 30,, 2016. Pioneering is actively investigating alternatives for new debt and/or equity financing in order to raise funds to repay indebtedness, fund inventory purchases and for general working capital purposes.

    ##

    About Pioneering Technology Corp:

    Pioneering, based in Mississauga, Ontario is an "energy smart" technology company and North America's leader in cooking fire prevention technologies and products. Pioneering engineers and brings to market energy-smart solutions for everyday consumer appliances making them safer, smarter, and more efficient. Pioneering's patented cooking-fire prevention technologies/products are engineered to help prevent cooking fires, the number one cause of household fire (a multi-billion dollar problem) in North America. According to the National Fire Protection Association, stovetop cooking is the number one cause of household fire and fire injuries in North America (48% of all household fires - up from 20% in 1980). Pioneering has proprietary cooking fire prevention solutions for the majority of the more than 140 million stoves/ranges and over 140M microwave ovens throughout North America. Pioneering's cooking fire prevention trademarks include Safe-T-element, SmartBurner, RangeMinder & Safe-T-sensor. For more information go to www.pioneeringtech.com.

    For more information please contact:

    Kevin Callahan, President & CEO of Pioneering, 905-712-2061 ext.222 kcallahan@pioneeringtech.com

    Forward Looking Statements

    The statements made in this press release include forward-looking statements that involve a number of risks and uncertainties. These statements relate to future events or future performance and reflect management's current expectations and assumptions. A number of factors could cause actual events, performance or results to differ materially from the events, performance and results discussed in the forward-looking statements, such as the economy, generally, competition in Pioneering's target markets, the demand for Pioneering's products, the availability of funding and the efficacy of Pioneering's technology and governmental regulation. These forward-looking statements are made as of the date hereof an, except as required by applicable law, Pioneering does not assume any obligation to update or revise them to reflect new events or circumstances. Actual events or results could differ materially from Pioneering's expectations and projections.

    Non-GAAP Measures

    Adjusted EBITDA is a measure not recognized under Canadian generally accepted accounting principles ("GAAP"). However, management of Pioneering believes that most shareholders, creditors, other stakeholders and investment analysts prefer to have these measures included as reported measures of operating performance, a proxy for cash flow, and to facilitate valuation analysis. Adjusted EBITDA is defined as earnings before interest income, taxes, depreciation and amortization, stock based compensation, restructuring costs, impairment charges and other non-recurring gains or losses. Management believes Adjusted EBITDA is a useful measure that facilitates period-to-period operating comparisons.

    Adjusted EBITDA does not have any standard meanings prescribed by GAAP and therefore may not be comparable to similar measures presented by other issuers. Readers are cautioned that Adjusted EBITDA is not an alternative to measures determined in accordance with GAAP and should not, on its own, be construed as indicators of performance, cash flow or profitability. References to the Pioneering's Adjusted EBITDA should be read in conjunction with the financial statements and management's discussion and analysis of Pioneering posted on SEDAR (www.sedar.com).

    This news release contains certain forward-looking statements reflecting the Company's current views or expectations on its performance, business and future events. Such statements are subject to a number of risks, uncertainties and assumptions. Actual results and events may vary significantly.

    The TSX Venture Exchange Inc. has not reviewed and does not accept responsibility for the adequacy and accuracy of this release.

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