BlueScout Technologies Reports Second Quarter Financial Results for 2012

    




 CHANTILLY, VA, Aug. 28, 2012 /CNW/ - BlueScout Technologies TSXV: SCT, providers of the BlueScout OCS-210 for optimized wind energy generation, reported its financial results  for the three-and six-month periods ended June 30, 2012.  All figures  are in U.S. dollars, unless otherwise stated. 

 "During the second quarter we surpassed 250,000 hours of field operation  of our units on top of multiple top tier turbines," said Jo Major,  President and CEO of BlueScout Technologies, Inc. "With reliability and  up-time nearing 100% and approximately 35 installations completed or  scheduled, we are providing our current and potential customers with a  wealth of powerful data that is demonstrating the compelling  capabilities of our product.  We believe we are on the cusp of broad  market acceptance.  We were also successful in continuing to decrease  our operational cost structure by diligently improving manufacturing  and research and development efficiencies." 

 Selected Q2 2012 Financial and Operational Highlights 




        --  Agreement with Availon GmbH signed providing sales
            representation, installation and maintenance services in the
            German market.  This represents a significant opportunity to
            extend BlueScout's turbine control products into one of the top
            wind energy producing regions in Europe.
        --  Signed an agreement for a collaborative project with
            TechnoCentre éolien to install an OCS on one of its REpower
            MM92 2.05 MW wind turbines in Québec for evaluation in
            extremely cold climates and complex terrains.
        --  Continued to expand our patent portfolio with eight issued
            patents and 15 pending patent applications.
        --  Installation activities at four customers, covering five
            projects, including first-time installations at two customers.
        --  Upgraded product that had been installed at many customers
            prior to September 1, 2011 to improve customer experience.
        --  Jo Major appointed as full-time President and CEO, as part of a
            larger consulting agreement with InSite Partners, LLC, a firm
            specializing in corporate turnarounds and strategic
            transactions of technology companies.




 Highlights Subsequent to Quarter-end 




        --  Successfully rebranded under the name BlueScout Technologies,
            which included a new image, mission, vision, values, domain
            name and fresh logo. The new brand and its optical wind sensor,
            now known as the BlueScout OWS-150 and the OCS-210, are
            positioned to reconfirm the Company's commitment to making wind
            energy more competitive through innovation.
        --  On August 24, 2012, completed a special warrant offering for
            gross proceeds of CDN$3,064,000 and a convertible debt offering
            for CDN$1,200,000.




 Financial Performance BlueScout recognized revenue of $260K for the quarter ended June 30,  2012, compared to nil for the three-month period ended June 30, 2011.   Second quarter 2012 revenue was generated from two customers, one being  a new customer.  The Company has $758K of deferred revenue and customer  deposits recorded on its consolidated balance sheet at June 30, 2012  related to product shipments that have performance provisions that are  expected to be recognized in future quarters.  The Company had $553K of  deferred revenue and customer deposits, as at December 31, 2011. 

 On a six-month basis, BlueScout recognized revenue of $460K for 2012  compared to $390K for the same period in 2011.  The Company's revenue  for six-months ended June 30, 2012 was generated from three customers  compared to two for the same period last year. 

 Operating expenses for Q2 2012 were $2.8M, up 20.4% from $2.3M for the  corresponding period last year.   Excluding the non-cash gain on the  fair value of the warrant liability of $9.2K and $2.4M in Q2 2012 and  Q2 2011, respectively, operating expenses decreased $2.0M or 41% for  the quarter ended June 30, 2012 from the same quarter last year.  Further, when excluding litigation related expenses of $725K, operating  expenses for the quarter ending June 30, 2012 totaled $2.0M versus  $4.7M for the quarter ending June 30, 2011, a decrease of $2.7M or 56%. 

 For the six-month period ended June 30, 2012, operating expenses were  $4.8M, down 53% from $10.2M for FY2011.  Excluding the non-cash  gain/loss on the fair value of the warrant liability and litigation  expenses, operating expenses were $4.1M, down 48% from $7.8M for the  same period last year.   Selected operating expenses are detailed  below: 

 Cost of sales for the three-month period ended June 30, 2012 was $489K  compared to $274K for the same period last year.   On a six-month  basis, cost of sales was $640K compared to $1.1M for the same period in  2011.  Cost of sales include product unit cost and all costs associated  with the installation on, and integration with, wind turbines. 

 General and administrative expense for Q2 2012 was $171K down 76.6% from  $731K for Q2 2011.  The decrease is primarily due to reductions in  travel related expenses and repairs and maintenance costs. Travel  related expenses comprised $52K of general and administrative expense  for the quarter ended June 30, 2012 compared to $294K for the same  period in 2011.  Repairs and maintenance expense comprised $3K for the  quarter ended June 30, 2012 as compared to $253K for the same quarter  last year.  On a six-month basis, general and administrative expense  was $464K compared to $1.6M for the same period in 2011.  The 2011  expenses were predominantly related to travel and maintenance related  to the Falcon 50 aircraft. 

 Amortization of intangible assets for Q2 2012 was $879 compared to $339K  for Q2 2011.  The decrease is due to the fact that amortization last  year included amortization related to the project development costs of  an intangible asset, which was written off at September 30, 2011.  For  the first six months of 2012, amortization of intangible assets was $3K  compared to $677K for the same period last year. 

 Professional fees totaled $942K for the three month period ended June  30, 2012, up 58.0% from $396K for the same period last year.  The  increase in professional fees for the quarter is due to legal expenses  related to litigation matters.  Legal expense was $789K for the second  quarter of 2012 versus $119K for the same period last year.   On a  six-month basis professional fees were $1.4M for 2012 and $667K for  2011.  Excluding litigation expenses, legal expenses in 2012 compared  to 2011 declined by $55K and $111K for the corresponding three and six  month periods. 

 Second quarter 2012 research and development expense was $124K compared  to $1.8M for the same period last year.  The development of the second  generation Vindicator, inclusive of OADS labor, accounted for most of  the $1.8M R&D expense in 2Q11.  The second quarter of 2012, research  and development expense was spent on contract manufacturing  non-recurring expenses and control system design, evenly split.  On a  six-month basis, research and development expense was $181K compared to  $3.3M for the same period in 2011. 

 BlueScout recorded a net loss for Q2 2012 of $2.5M or $0.02 per share,  compared to a net loss of $2.2M or $0.03 per share for Q2 2011.  On a  six-month basis, BlueScout generated a net loss of $4.3M or $0.04 per  share compared to a net loss of $9.6M or $0.12 per share for the same  period of FY2011. 

 As of June 30, 2012, BlueScout had cash and cash equivalents of $1.5M  and working capital of $2.0M, compared to cash and cash equivalents of  $6.0M and working capital of $6.3M at December 31, 2011. 

 BlueScout has filed its financial statements for the three- and  six-month period ended June 30, 2012 and related Management's  Discussion and Analysis (MD&A) with securities regulatory authorities.   BlueScout's financial statements, MD&A and related documents are  available via SEDAR as well as through the Company's website, www.BlueScout.com. 

 Conference Call BlueScout will hold a conference call on August 29, 2012 at 10:00 am ET  to discuss its second quarter 2012 financial results. 

 To access the conference call by telephone, dial 647-427-7450 or  1-888-231-8191.  Please connect approximately 15 minutes prior to the  beginning of the call to ensure participation.  A question and answer  session for analysts and institutional investors will follow  management's presentation. 

 A live audio webcast of the conference call will be available at www.BlueScout.com. Please connect at least 15 minutes prior to the conference call to  ensure adequate time for any software download that may be required to  join the webcast. The webcast will be archived at the above web site  for 30 days. 

 A taped rebroadcast will be available to listeners until 12 a.m. ET on  Wednesday, September 5, 2012. To access the rebroadcast, please dial  416-849-0833 or 1-855-859-2056 and enter passcode 14916097, followed by  the number sign. 

 About BlueScout BlueScout Technologies  increases energy production and decreases operating costs by applying  groundbreaking microgeographical wind flow sensing to turbine control  systems that increases the effectiveness and availability of wind  turbines. BlueScout combines precise, optically based wind forecasting  with advanced predictive control architectures to ready the turbine for  the imminent wind inflow changes - optimizing energy production and  reducing the harmful effects of wind turbulence on the turbine. With  extensive operating data on multiple wind turbine models, BlueScout is  the leading, value-added innovator in wind turbine performance and  optimization. 

 The team consists of experienced high-tech, R&D and manufacturing  engineers, innovative entrepreneurs, and proven leaders. The BlueScout  team has unique expertise and shares a firm commitment, as part of the  wind power industry, to continuously improve the reliability of wind  power generation through innovation. For more information, visit www.BlueScout.com. 

 Forward-Looking Information This news release includes certain forward-looking statements within the  meaning of Canadian securities laws. Forward-looking statements involve  risks, uncertainties and other factors that could cause actual results,  performance, prospects and opportunities to differ materially from  those expressed in such forward-looking statements. Forward-looking  statements in this news release, include, but are not limited to,  economic performance and future plans and objectives of BlueScout  Technologies. Any number of important factors could cause actual  results to differ materially from these forward-looking statements as  well as future results. Although BlueScout believes that the  assumptions and factors used in making the forward-looking statements  are reasonable, undue reliance should not be placed on these  statements, which only apply as of the date of this news release, and  no assurance can be given that such events will occur in the disclosed  timeframes or at all. BlueScout Technologies disclaims any intention or  obligation to update or revise any forward-looking statement, whether  as a result of new information, future events or otherwise.  

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

 Catch the Wind Ltd. Condensed Consolidated Interim Balance Sheets (Unaudited) 

  





                                            June 30,         December 31,

                                               2012                2011

    (Expressed in United States    Note          $                   $
    dollars)

                                                                           

    Assets                                                                 

                                                                           

    Current assets:                                                        

      Cash and cash equivalents             1,449,547             6,018,559

      Accounts receivable                     209,693               167,705

      Inventory                      3      3,176,798             1,830,350

      Prepaid expenses and other              215,030               352,002
      assets

                                            5,051,068             8,368,616

    Non-current assets:                                                    

      Property and equipment                  286,084               418,896

      Intangible assets                             -                 3,166

      Other assets                             28,026                82,050

                                              314,110               504,112

                                                                           

    Total assets                            5,365,178             8,872,728

                                                                           

    Liabilities and Equity                                                 

                                                                           

    Current liabilities:                                                   

      Accounts payable and other            2,086,040             1,391,799
      liabilities

      Obligations under finance      5         21,216                62,707
      leases 

      Warranty provision             6        106,250                93,750

      Due to related party           9         45,139                18,516

      Deferred revenue and                    758,400               552,800
      customer deposits

                                            3,017,045             2,119,572

    Non-current liabilities:                                               

      Obligations under finance      5              -                 7,620
      leases

      Provision for                  6      2,000,000             2,000,000
      indemnification agreement

      Warrant liability              10           977               249,329

      Due to related party           9         34,306                     -

                                            2,035,283             2,256,949

                                                                           

    Total liabilities                       5,052,328             4,376,521

                                                                           

    Commitments and contingencies   7,8                                    

                                                                           

    Equity                                                                 

      Capital stock                  11        12,252                12,252

      Contributed surplus                  56,638,827            56,521,284

      Deficit                            (56,338,229)          (52,037,329)

    Total equity                              312,850             4,496,207

    Total liabilities and equity            5,365,178             8,872,728

                                          

    Approved on behalf of the
    Board:                         
    (signed) "Dr. Jo S. Major"           (signed) "Susan Nickey"
    Chairman of the Board                Director and Audit Committee Chair






   

 See accompanying notes to the unaudited condensed consolidated interim  financial statements. 

 Catch the Wind Ltd. Condensed Consolidated Interim Statements of Loss and Comprehensive Loss (Unaudited) 

  





                                 Three months ended           Six months ended

                              June 30,      June 30,      June 30,      June 30,

                                 2012          2011          2012          2011

    (Expressed in                 $             $             $             $ 
    United States     Note 
    dollars)

                                                                                 

    Revenue                     260,000             -       460,000       390,000

                                                                                 

    Expenses:                                                                    

      Cost of sales     3       489,363       273,797       639,954     1,056,704

      Salaries and      4       552,063       429,718     1,318,662     1,082,027
      benefits

      General and               171,110       731,288       463,741     1,584,502
      administrative

      Inventory         3             -      (19,052)           571         7,948
      writedown -                                                    
      beta units 

      Amortization                  879       338,540         3,166       677,080
      of intangible                                                  
      assets 

      Depreciation              111,360       159,019       201,362       318,116
      of property                                                    
      and equipment

      Sales and         2       129,523       147,663       154,809       296,012
      marketing

      Consulting        2       180,350       159,123       425,303       287,391
      fees

      Professional     2,4      942,001       396,096     1,386,647       667,499
      fees

      Professional               75,410       191,995       229,333       480,731
      engineering                                                    
      fees

      Research and              124,121     1,831,385       180,515     3,340,583
      development 

      Finance costs     5         1,380        86,795         5,535       176,419

      Interest                    (201)         (679)         (435)       (2,113)
      income

      Other income,                   -      (17,749)             -      (17,749)
      net 

      (Gain) Loss on    10      (9,209)   (2,408,442)     (248,352)       251,886
      fair value of                                                  
      warrant
      liability 

      Foreign                       914           205            89         7,075
      exchange                                                       
      (gain) loss 

                              2,769,064     2,299,702     4,760,900    10,214,111

                                                                                 

    Net loss and            (2,509,064)   (2,299,702)   (4,300,900)   (9,824,111)
    total                
    comprehensive
    loss 

                                                                                 

    Net loss and total                                                           
    comprehensive loss              
    attributable to:

      Owners of the         (2,509,064)   (2,185,797)   (4,300,900)   (9,594,776)
    Company

                                      -     (113,905)             -     (229,335)
    Non-controlling      
    interest

                            (2,509,064)   (2,299,702)   (4,300,900)   (9,824,111)

                                                                                 

                                                                                 

    Net loss per                 (0.02)        (0.03)        (0.04)        (0.12)
    share - basic        
    and diluted

                                                                                 

    Weighted average                                                             
    number of common     
    shares

      outstanding           122,513,614    80,491,919   122,513,614    80,491,919






   

 See accompanying notes to the unaudited condensed consolidated interim  financial statements. 

BlueScout Technologies


CONTACT:  BlueScout Technologies, Inc.John E. GreenCFO & Treasurer+1 703-956-6554               [e-mail] EquicomPhilip DaleInvestor Relations416-815-0700 ext. [e-mail] 


    

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