AKR.L Regulatory News (AKR)

Embargoed: 0700hrs 14 May 2015

Akers Biosciences, Inc.

Financial Results for First Quarter 2015

U.S. Sales of Flagship PIFA Heparin/PF4 Rapid Test Sales Continue to Grow

Akers Biosciences, Inc. (NASDAQ: AKER) (AIM: AKR.L), ("Akers Bio" or the "Company"), a medical device company focused on reducing the cost of healthcare through faster, easier diagnostics, reports its financial results for the first quarter ended March 31, 2015. The Form 10-Q containing the financial statements will be available for viewing later today on the Company's website at www.akersbiosciences.com or at www.sec.gov.

Q1 Highlights

· Revenue for Q1 2015 was $510,047 (Q1 2014: $1,173,919, of which $766,379 related to alcohol breathalyzer business from ChubeWorkx Guernsey Limited which contributed nil in Q1 2015)

· Domestic sales of PIFA Heparin/PF4 Rapid Assay products for the period increased to $338,361 (Q1 2014: $288,581)

· Gross profit margin of 56% (Q1 2014: 49%)

· Loss before income tax was $1,321,799 (Q1 2014: loss of $595,600)

· Cash and marketable securities at March 31, 2015 was $8,394,553 ($9,720,802 at March 31, 2014)

· Sales and Marketing leadership team strengthened with appointments of John C. Cheneval (Senior VP, Sales and Marketing) and Chris Ellis (VP, Global Marketing)

· Added multiple sales executives across the U.S. to support distributors - benefits of which we expect to see beginning in Q2

· Achieved ISO 13485 (2003) Certification which accelerates the process of gaining regulatory clearance for medical devices in certain countries, allowing the Company to get products to market faster

· Awarded patent by European Patent Office for novel blood separator technology and method of separating a fluid fraction from whole blood

Raymond F. Akers, Jr. PhD, Co-founder and Executive Chairman, commented:

"Domestic sales of our flagship rapid test to detect an allergic condition associated with the blood thinner heparin continue to rise, with sales of these products up 17% compared with Q1 2014. What is particularly encouraging is that this strong growth does not yet include the anticipated benefits of either the price increase (which took effect on May 1, 2015 for new customers and will be gradually implemented from July 2016 for existing customers), or from the expanded U.S. sales team."

"We estimate this test has the capacity to save the average U.S. hospital over $1 million a year. That's not just because our tests cost less than the existing testing procedures. By providing a near-instant diagnostic result that rules out a heparin allergy, we can often help physicians avoid the unnecessary use of very expensive medicines and the associated medical monitoring costs when a heparin allergy is otherwise suspected. This, we believe, will be the basis for driving domestic sales growth of these tests in the months and years ahead."

"The Q1 financial performance is in line with management's expectations for the period. Like other medical device companies in the early phases of commercialization, our revenues are staggered as we receive initial stocking orders from new distributors in new territories. The effect is that some quarters' sales, such as Q1 2015, are lighter than others due to the timing of product shipments to new markets. We expect this trend to continue and remain confident of the revenue prospects for the full fiscal year."

"The reduction in revenues for Q1 2015 when compared to Q1 2014 is due to our alcohol breathalyzer distributor, ChubeWorkx Guernsey Limited, placing no orders in the period for those products. That distributor was positioning the product last year for sales predominantly in France where the opportunity has since been impeded by the French Government's postponement of the fine that was to be imposed for drivers failing to possess breathalyzers in their vehicles. The decline in revenues from this distributor was therefore anticipated and, while we are exploring some opportunities in the U.S. for this product, international sales of alcohol breathalyzers are not core to Akers Bio's strategy at present as we continue to focus on higher margin tests."

"I was delighted to welcome, in Q1, more highly accomplished sales and marketing professionals both to the senior leadership team and out in the field across the U.S. The ability to attract people of their caliber to drive product commercialization is precisely why the cash infusion from 2014's NASDAQ IPO was such an important catalyst for Akers Bio."

"Our operational goals throughout 2015 are four-fold: firstly, to work with our newly expanded sales and marketing team to unlock the true growth potential of the heparin allergy test in the U.S.; secondly, to assist our distribution partners to establish international sales for these - and other - tests - particularly in China where sales have already begun; thirdly, to establish sales channels for our Akers Wellness products aimed at the substantial health and wellness sector including weight-loss and anti-aging; and, finally, to bring to market new, highly disruptive rapid testing solutions for conditions including chlamydia and diabetic ketoacidosis."

Conference Call Information:

Summary of Statements of Operations for the Three Months Ended March 31, 2015 and 2014

Revenue

Akers' revenue for the three months ended March 31, 2015 totaled $510,047, a 57% decrease from the same period in 2014. The majority of the revenue reduction was due to the anticipated decline in orders from ChubeWorkx Guernsey Limited, our distributor of the alcohol breathalyzer product from the MPC product line. During the three months ended March 31, 2015, ChubeWorkx accounted for $- whereas they accounted for $766,379 of our MPC product revenue in the same period of 2014, prior to the French government's postponement, indefinitely, of the fine that was to be imposed for drivers failing to possess breathalyzers in their vehicles. Sales of MPC products therefore decreased by 95%.

Domestic sales of the Company's PIFA Heparin/PF4 Rapid Assay products for the period ended March 31, 2015 totaled $338,361, a 17% increase from the same period in 2014. The Company's added multiple technical sales account executives during the period whose role is to support more than 300 sales representatives of Akers' US distribution partners, Cardinal Health ("Cardinal"), Fisher HealthCare ("Fisher") and Typenex Medical ("Typenex"). The revenue benefit from additional sales executives is not expected to be seen until the second quarter.

Other operating revenue increased 28% for the period ended March 31, 2015. The improvement was due to increases in licensing fees and shipping and handling fees.

Cost of sales for the three months ended March 31, 2015 decreased by 63% compared to the same period in 2014 to $226,341 from $604,323 in 2014. Direct cost of sales decreased to 24% of product revenue while indirect cost of sales increased to 33% for the three months ended March 31, 2015 as compared to 45% and 11% respectively for the same period in 2014. Overall, cost of sales, as a percentage of product revenue, was 56% and 55% for the three month periods ended March 31, 2015 and 2014.

The increase in indirect cost of sales is attributed to significant increases in shipping expenses and repairs and maintenance of equipment and was mitigated by a reduction in indirect personnel expenses in the three months ended March 31, 2015. In addition, the percentage increase is affected by the fixed cost nature of many of the components in this category.

Akers' gross profit margin, as a percentage of revenue, continued to improve, increasing to 56% for the three months ended March 31, 2015 as compared to 49% in 2014. The improvement in gross profit margin was derived from an increase in the average selling price of products in the three months ended March 31, 2015.

General and Administrative Expenses

General and administrative expenses for the three months ended March 31, 2015, totaled $698,433, which was a 7% increase as compared to $653,682 for the three months ended March 31, 2014. The most significant expenses are personnel, professional services and stock market and investor relations fees which totaled $517,399 (2014: $553,539). Increased travel ($55,598 (2014: $98)) in support of investor relations activities, the joint venture with Hainan Savy Investment Management, Ltd in the People's Republic of China and the creation of the Facilities Management department ($57,242 (2014: $-)) that was completed in April, 2014 accounted for the majority of the increase in expenses for the period ended March 31, 2015. Prior to April, 2014, facility management expenses were distributed across several functional areas and cost categories.

Sales and Marketing Expenses

Sales and marketing expenses for the three months ended March 31, 2015 totaled $575,252, which was a 173% increase as compared to $211,098 for the three months ended March 31, 2014. The increase is the result of a significant increase in personnel costs ($323,209 (2014: $110,702)) for additional sales and marketing staff and for market development studies and other professional services ($204,576 (2014: $28,550)). The increases were offset by lower royalty and external sales commission expenses ($6,639 (2014: $60,774)).

Research and Development

Research and development expenses for the three months ended March 31, 2015 totaled $305,574, which was a 21% increase as compared to $253,538 for the three months ended March 31, 2014. The increase is the result of expenses for professional services ($91,186 (2014: $6,503)) and supplies ($16,514 (2014: $4,115)) offset by a decline in personnel expenses ($166,115 (2014: $218,315)). The significant increase in professional services relates primarily to product engineering and design services involved in the launch of new products.

Other Income and Expense

Other income increased for the three months ended March 31, 2015 to $38,398 from $17,765 for the same period in 2014. The increase is the result of interest and dividend earnings on the marketable securities and the note receivable totaling $31,600 (2014: $10,657).

Income Taxes

As of March 31, 2015, the Company does not believe any uncertain tax positions exist that would result in the Company having a liability to the taxing authorities. The Company's policy is to classify interest and penalties related to unrecognized tax benefits, if and when required, as part of interest expense and general and administrative expense, respectively in the consolidated statement of operations.

Liquidity and Capital Resources

For the three months ended March 31, 2015 and 2014, the Company generated a net loss attributable to shareholders of $1,321,799 and $595,600, respectively. As of March 31, 2015 and December 31, 2014, the Company has an accumulated deficit of $86,185,885 and $84,864,086 and had cash totaling $336,243 and $455,841, respectively.

Currently, our primary focus is to expand the domestic and international distribution of our PIFA Heparin/PF4 rapid assays. The Company continues commercialization tasks for METRON, VIVO, and BreathScan Lync™, as well as development activities for its PIFA PLUSS® Infectious Disease single-use assays, BreathScan® DKA, and Breath PulmoHealth products, including advancement of the steps required for FDA clearance or CE marking in the EU where necessary.

We expect to continue to incur losses from operations for the near-term and these losses could be significant as we incur product development, clinical and regulatory activities, contract consulting and other product development and commercialization related expenses. We believe that our current working capital position will be sufficient to meet our estimated cash needs for at least 36 months. We are closely monitoring our cash balances, cash needs and expense levels. The accompanying financial statements do not include any adjustments to reflect the possible future effects on the recoverability and classification of assets or the amounts and classification of liabilities that might result in the possible inability of the Company to continue as a going concern.

We expect that our primary expenditures will be to continue development of PIFA PLUSS® Infectious Disease single-use assays, BreathScan® DKA and Breath PulmoHealth products, enroll patients in clinical trials to support performance claims, generate studies in peer-reviewed journals to support product marketing, and provide data for the FDA 510(k) clearance/CE certifications processes when required. We will also continue to support commercialization and marketing activities of commercialized products (PIFA Heparin/PF4 rapid assays, PIFA PLUSS® PF4, breath alcohol detectors, METRON, VIVO and BreathScan LyncTM) in the US and internationally. Based upon our experience, clinical trial and related regulatory expenses can be significant costs. Steps to achieve commercialization of emerging products will be an ongoing and evolving process with expected improvements and possible subsequent generations being evaluated for commercialized and emerging tests. Should we be unable to achieve FDA clearance for products that require such regulatory "approval", develop performance characteristics for rapid tests that satisfy market needs, or generate sufficient revenue from commercialized products, we would need to rely on other business or product opportunities to generate revenue and costs that we have incurred for the patents may be deemed impaired.

Capital expenditures for production for the three months ended March 31, 2015 were $44,510 (2014: $-). Capital expenditures, primarily for production, laboratory and facility improvement costs for the year ending December 31, 2015 are expected to be approximately $250,000. As per the Company's lease agreement, the owner of the facility will be handling the majority of facility upgrades, and we anticipate financing any production and laboratory capital expenditures through working capital.

The Company invested $64,675 for a 19.9% ownership position in a joint venture with Hainan Savy Investment Management, Ltd and Mr. Thomas Knox, the Company's Non-executive Co-chairman, to research, develop, produce and sell Akers' rapid diagnostic screening and testing products in China. The new entity, incorporated in the People's Republic of China, operates as Hainan Savy Akers Biosciences, Ltd.

The Company may enter into generally short-term consulting and development agreements primarily for testing services and in connection with clinical trials conducted as part of the Company's development process which may include activities related to the development of technical files for FDA 510(k) clearance submissions. Such commitments at any point in time may be significant but the agreements typically contain cancellation provisions.

We lease our manufacturing facility which also contains our administrative offices. Our current lease was executed January 1, 2013 and is effective through December 31, 2019. The Company has leased this property from the current owner since 1997.

Due to recent market events that have adversely affected all industries and the economy as a whole, management has placed increased emphasis on monitoring the risks associated with the current environment, particularly the recoverability of current assets, the fair value of assets, and the Company's liquidity. At this point in time, there has not been a material impact on the Company's assets and liquidity. Management will continue to monitor the risks associated with the current environment and their impact on the Company's results.

The Company's net cash provided by investing and financing activities totaled $1,122,378 during the three months ended March 31, 2015. Cash was consumed by capital expenditures, the investment in Hainan Savy Akers Biosciences, Ltd. and the purchase of marketable securities of $136,413. Proceeds from the sale of marketable securities and a policy renewal incentive from an insurer contributed cash of $1,258,791 for the period ended March 31, 2015.

The Company's net cash provided by investing and financing activities totaled $1,034,545 during the three months ended March 31, 2014. Cash was consumed by the payment of a short-term note payable - related party and the purchase of marketable securities of $12,816,484. Proceeds from the issuance of common shares and the demutualization of an insurer contributed cash of $13,851,029 for the period ended March 31, 2014.

Operating Activities

Our net cash consumed by operating activities totaled $1,241,975 during the three months ended March 31, 2015. Cash was consumed by the loss of $1,321,799 less non-operating gains of $5,355 plus a non-cash adjustment of $80,349 for depreciation and amortization of non-current assets and $7,156 for accrued interest and dividends on marketable securities. For the three months ended March 31, 2015, decreases in trade receivables, notes receivable - related party, other receivables of $78,517 and an increase in trade and other payables of $87,745 provided cash, primarily related to routine changes in operating activities. A net increase in inventory and other assets of $85,256 and a decrease in deferred revenue - related party of $83,333 consumed cash from operating activities.

Akers' net cash consumed by operating activities totaled $832,370 during the three months ended March 31, 2014. Cash was consumed by the loss of $595,600 less non-operating gains of $4,669 plus a non-cash adjustment of $86,825 for depreciation and amortization of non-current assets. For the three months ended March 31, 2014, decreases in inventory and other assets of $478,694 provided cash, primarily related to routine changes in operating activities. A net increase in trade receivables, trade receivables - related parties and other receivables of $317,273 and a decrease in trade and other payables, trade and other payables - related parties and deferred revenue - related party of $480,347 consumed cash from operating activities.

ABOUT AKERS BIOSCIENCES, INC.

Akers Biosciences develops, manufactures, and supplies rapid screening and testing products designed to deliver quicker and more cost-effective healthcare information to healthcare providers and consumers. The Company has advanced the science of diagnostics while responding to major shifts in healthcare through the development of several proprietary platform technologies. The Company's state-of-the-art rapid diagnostic assays can be performed virtually anywhere in minutes when time is of the essence. The Company has aligned with major healthcare companies and high volume medical product distributors to maximize product offerings, and to be a major worldwide competitor in diagnostics.

Additional information on the Company and its products can be found at www.akersbiosciences.com. Follow us on Twitter @AkersBio.

Cautionary Statement Regarding Forward Looking Statements

Statements contained herein that are not based upon current or historical fact are forward-looking in nature and constitute forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. Such forward-looking statements reflect the Company's expectations about its future operating results, performance and opportunities that involve substantial risks and uncertainties. These statements include but are not limited to statements regarding the intended terms of the offering, closing of the offering and use of any proceeds from the offering. When used herein, the words "anticipate," "believe," "estimate," "upcoming," "plan," "target", "intend" and "expect" and similar expressions, as they relate to Akers Biosciences, Inc., its subsidiaries, or its management, are intended to identify such forward-looking statements. These forward-looking statements are based on information currently available to the Company and are subject to a number of risks, uncertainties, and other factors that could cause the Company's actual results, performance, prospects, and opportunities to differ materially from those expressed in, or implied by, these forward-looking statements.

For more information:

Akers Biosciences, Inc.

Raymond F. Akers, Jr. PhD

Executive Chairman of the Board

Tel. +1 856 848 8698

finnCap (UK Nominated Adviser and Broker)

Geoff Nash / Scott Mathieson (Corporate Finance)

Steve Norcross (Broking)

Tel. +44 (0)20 7220 0500

Taglich Brothers, Inc. (US Investor Relations)

Chris Schreiber

Tel. +1 917 445 6207

Email: cs@taglichbrothers.com

Vigo Communications (UK Investor Relations)

Ben Simons / Fiona Henson

Tel. +44 (0)20 7016 9570

Email: akers@vigocomms.com