AKR.L Regulatory News (AKR)

4 Apr 2006 07:00

Embargoed: 0700hrs, 4 April 2006 AKERS BIOSCIENCES, INC.("Akers Biosciences", "Akers" or the "Company"), Results for the year ended 31 December, 2005 Akers Biosciences, Inc. a leading designer and manufacturer of rapid diagnosticscreening and testing products, announces its annual results for the year ended31 December, 2005. Highlights * Revenue of $4.6 million represents a 250% increase over 2004 revenues ($1.3 million). * Pre-tax loss of $1.8 million before US GAAP adjustments is smallest in Company's history (2004: $4.4 million). * Cash balances at the end of 2005 were $3.2 million. * Regulatory approvals received included an FDA indication which allows OTC sales of Cholesterol test, and CE marks obtained for European distribution of HPF-4, Lithium, Drugs of Abuse, and Breathalyzers. * $7.75 million financings completed for expansion of production and sales force. * Trial started with Pfizer to introduce Akers Cholesterol test to US physicians and consumers. Prospects * Over 300 hospitals now using HPF-4 test; over 60 Lithium systems placed in psychiatrist's offices. * Partnerships with Alco Industries to distribute Breathalyzers and Cholesterol tests to US retail markets. * Cardinal Health and Corgenix Laboratories have begun marketing of the HPF-4 test in the US. * Italian government approval Breathalyzer for enforcement of drunk driving laws could result in significant sales. * The company has begun to expand its manufacturing capabilities from its current 5,000 sq. ft. facility to a 43,000 sq. ft. facility located in Puerto Rico. * The acquisition, completed in February 2006, of WNCK, the Company's primary distributor for its alcohol breathalyzers, is expected to result in significantly increased margin and greater access to customers. Ray Akers, Chief Executive Officer of Akers Biosciences, said:"We are very pleased to report record-breaking revenues for our Company in thefiscal year 2005, and expect revenues in 2006 to be even stronger. We haveundertaken an ambitious program that we believe will result in an increase inthe customer base of all products, expansion of our manufacturing capabilities,and the integration of a recent acquisition in the breathalyzer field. Revenuesfor 2006 will be shaped in large part by three core products: the homeTri-Cholesterol Check test, the PIFA Heparin/PF-4 Rapid Assay, and the AlcoholBreathalyzer. The Company's outlook for 2006 is very positive and we expectanother record-breaking year."Enquiries:Dr. Raymond Akers Chief Executive Officer, Akers 020 7917 9476 Biosciences, Inc. Paul Freedman Chief Financial Officer, Akers 001 856 848 8698 Biosciences, Inc. Bill Roberts CTC, Inc. 001 937 434 2700 Ben Simons Hansard Communications 020 7245 1100 PRELIMINARY RESULTS STATEMENTIntroductionWe are pleased to announce the preliminary results for AkersBiosciences Inc. for the year ended 31 December 2005. Results Results for theyear ended 31 December 2005 were $4.6 million compared with $1.3 million duringthe same period in 2004. The pre-tax loss before US GAAP adjustment was $1.8million (2004: $4.4 million). 2005 revenues primarily reflect initial sales ifits test for Heparin/Platelet Factor-4 antibodies into a small hospitalcustomer base that are now expected to contribute significantly to futuregrowth, the initial launch of its home Cholesterol test into retail channels,on top of continuing breathalyzer sales.Business ReviewAll of the Company'sproprietary technologies provide the platform for high margin niche products,intended for use in specialized market segments. In addition to its ongoingefforts with its strategic partners, the Company has also begun to build itsown brands. The company continues to focus on four market segments: biotech/pharmaceutical, OTC and doctor's surgeries, government/military and thedeveloping world, although effort is currently being concentrated on the firstthree sectors as these represent the most attractive immediate opportunities.Biotech/PharmaceuticalsThe Company remains confident that the biotech/pharmaceutical sector holdsgreat potential to build a core and sustainable business. * Heparin/platelet factor-4 antibodies test ("HPF4") The Company's rapid HPF4 test has been introduced into the US market under theCompany's brand "PIFA Heparin/PF-4 Rapid Assay". This is the first rapid testfor HPF4 antibodies, and the product is protected by two of the Company'spatents, with additional patents pending. After a lengthy validation period inmany US hospital laboratories, the test has been enthusiastically accepted, andproduct placement is steadily increasing. Over 300 hospitals in the US are nowusing the test today as a result of the Company's direct sales efforts. Whilethe sales cycle of the Heparin/PF-4 Rapid Assay is longer than had beenanticipated, repeat orders from existing customers have exceeded expectations.The extent of marketing penetration by the Company's distribution partners,Cardinal Health and Corgenix Medical Group will be additive to this number.As background, heparin is the most widely used intravenous anticoagulant, andis commonly used for the prophylaxis and treatment of thromboembolic disease,as well as numerous other applications including certain types of lung andheart disorders, and during or after a variety of surgeries including openheart, bypass, dialysis and orthopedic procedures. Patients with recentexposure to heparin are at a much greater risk for developing HITTS, than arethose not having previously been given the drug. The Company's test detects thepresence of Heparin/PF-4 antibody, which is associated with patients at riskfor HITTS, and is rapidly becoming a standard of care in hematology andcardiology.The Company and its partners have initially promoted the use of the test as areplacement for current laboratory tests used in the detection of HITTSresulting from heparin treatment. The Company's product has significantadvantages both in terms of cost and time to result. The Company's test takesminutes to perform, while the current laboratory tests take hours to perform oncomplex instrumentation. HITTS can rapidly progress in minutes or hours, andcan result in death or dismemberment. The Company's product is the only testavailable on the market that can provide real-time information that can usefulin formulating a clinical diagnosis. In 2004, approximately 3 million testswere performed using current laboratory tests to confirm a potential "heparinallergy" or HITTS, primarily in cardiology and emergency medicine patients. * Lithium Test The Company's first entry into this market was the lithium test. The Companyhas opened up a new market sector for this product by introducing its own"Lithium Check" brand to the hospital and clinical laboratory market. The testis currently being sold by the Company's sales force and distributed byCardinal Health. ReliaLab, Inc. has also begun selling the product direct topsychiatrists under its own brand, "InstaRead," now that the FDA CLIA waiverhas been obtained, and, in fact, has successfully placed nearly 70 systems. * White Blood Cells Tests The approval process for this product has made steady progress, but the aboveinitiatives have taken priority over the introduction of this product.Therefore, the Company does not expect to introduce this product until H2 atthe earliest.OTC and Doctors' SurgeriesThe Company has focused primarily on its home tests for Tri-Cholesterol Checkand Alcohol Breathalyzers.The Tri-Cholesterol Check is marketed in parallel through a collaboration withPfizer, Inc., and an alliance with Alco Industries. Pfizer markets the test ona trial basis to physicians and their patients in conjunction with itscholesterol-lowering drug Lipitor. Alco Industries has made a significantimpact on the US retail market sector through the introduction of the productin late 2004. The uptake of the Tri-Cholesterol Assay into the US retail marketcontinues to exceed expectations.Alco is also marketing the Alcohol Breathalyzers to the retail sector. Theaddition by Akers of retail distribution relationships acquired through therecent WNCK transaction will augment these efforts in 2006.Government and MilitaryThe Company is continuing to pursue both land and marine-based sales of itsAlcohol Breathalyzers through its own "Breath Alcohol Check" brand and therecently acquired BreathScan‚® brand. The Company's breathalyzer has beenapproved by the Italian government for use in a program to curb driving underthe influence of alcohol. Quest Diagnostics is the Company's primarydistributor of Akers' own brand of product, and has steadily increased itssales and customer base. The Company has also multiplied its access tocustomers through its acquisition of WNCK's distributor relationships.Additional products now being aggressively marketed to the military include theCompany's Battlefield Blood Transfusion Card, and the PIFA Heparin/PF-5 RapidAssay.Financial ReviewProfit and LossFor the year ended 31 December 2005, revenues increased by 254% to $4.6M (2004:$1.3M). The net loss before US GAAP adjustment was $1,817,852 ($0.04 loss pershare), compared to $4,419,970 ($0.10 loss per share) in 2004.Research and development expenses decreased to $789,750 from $1,107,628 in theprevious year.Sales and general and administrative expenses decreased to$3,087,316 from $3,245,980 in 2004.Capital expenditures were negligible in both 2005 and 2004.The Company had55,762,885 common shares in issue at 31 December 2005.Tundra LitigationIn the matter of Akers Biosciences Inc (the "Company"), Tundra Management LTD("Tundra) and Alliance Investment Management LLC ("Alliance"), the case hasbeen decided, with the following results. On February 18, 2005, the UnitedStates District Judge presiding over this matter signed a Default FinalJudgment against Tundra in the amount of $980,635. The judgment provided forset-off of the damage amount against the loan from Tundra, thereby satisfying,in full, the debt under the loan agreements. Accordingly the company hasrecognized as income $713,000, which represents the entire unpaid amount of theloan principal and interest. On September 1, 2005, following a six day trial inthe United States District Court for the Southern District of Florida, the juryruled that Alliance shall receive no damages from Akers, and a final judgmentreflecting that verdict was entered by the Court. Alliance has recentlyappealed the verdict and it will be several months before the Appellate Courtdecides on the matter. Management believes the appeal is without merit andplans to defend the appeal vigorously.FinancingOn 11 March 2005, the Company completed a placement of $2,500,000 of principleamount of promissory notes to an investment group. The notes, which wereconvertible into shares of the Company's common stock had an 18-month maturity,and bore simple interest at the annual rate of 6%. Between 8 April 2005 and 23June 2005, the entire principle amount of the promissory note, along with therelated interest, was converted to 3,264,689 shares of the Company's commonstock. Along with the placement of the notes, the Company has issued to theinvestors two different classes of warrants to purchase additional shares ofthe Company's common stock at specified prices.On 6 October 2005 the investors elected to exercise warrants to purchase2,604,167 shares at 60 pence per share, bringing in funds of $2,750,000 beforerelated expenses.On 15 September 2005 the Company agreed to sell up to $5,000,000 in convertibledebentures, bearing annual interest of 9%. On the same date the Companydelivered the first tranche of the debentures in the amount of $2,500,000.$2,230,000 of that debenture has been converted to 2,252,855 shares. Thecompany plans to repay the balance of $270,000 by the maturity date of 30 June2006. On 22 December 2005 the Company availed themselves of the second trancheof that facility, providing an additional $2,500,000 of funding, before relatedexpenses. This debenture matures on 30 June 2006 as well.Product DevelopmentThe Company now offers six different proprietary platformtechnologies, and has developed products based on these technologies.During 2005, the Company developed rapid tests for the environmental detectionof anthrax (Bacillus anthracis) and plague (Yersinnia pestis) based on itsParticle ImmunoFiltration Assay technology, and in a format similar to its PIFAHeparin/PF-4 test. These tests are currently under evaluation by the Company'spartner Battelle. In addition, the Company successfully published the resultsof a clinical trial of its Battlefield Blood Transfusion Card.Current Trading and OutlookImportant accomplishments in 2005 included FDA approvals for key products, theestablishment of alliances with major pharmaceutical and medical productscompanies, and successful product launches. The focus in 2006 will be onsignificantly increasing market penetration across all product lines, expandingproduction capabilities, and successfully integrating WNCK's business. We areconfident that this focus will augment revenues, move the Company towardsprofitability, and increase shareholder value, leading to another year ofsignificant growth and expansion.David Wilbraham Raymond Akers Chairman Chief Executive Officer APPENDIX Akers Biosciences' diagnostic and testing products are designed to bringhealthcare information both rapidly and directly to the doctor or the patientin the clinic or in the field without the need for expensive laboratoryequipment. Our strategy is to become a market leader in rapid testing using ourproprietary technologies to generate products with clear competitive advantagesin targeted markets. These products are intended for professional, consumer,and military markets in both the developed and developing world, and arebrought to market through strategic partnerships with established distributionorganizations.The Company now offers six different proprietary platform technologies, and hasdeveloped products based on these technologies. No longer offering only rapid,manual tests, the Company has developed a line of tests based on inexpensive,portable electronic readers. MinDNA technology allows for the analysis of DNAin one minute, and has been applied in the development of the rapid white bloodcell count and absolute neutrophil count assays that monitor a side effect ofthe Novartis drug clozaril (clozapine). Other applications of MinDNA technologycan result in tests necessary for the safety of the blood supply, specificidentification of parasitic infections, and biowarfare agent detection. MinDNA-based assays can be produced in both rapid manual or electronic readerversions.Synthetic Macrocycle Complex technology is associated with thedevelopment of novel macrocyclic organic compounds that determine quantitativelevels of therapeutic drugs, such as lithium blood levels, through the use ofelectronic readers. These hand-held readers and their associated proprietaryreagents unlock new potential in both professional and consumer markets,particularly in therapeutic drug monitoring.Our Rapid Enzymatic Metabolitetechnology platform focuses on the detection of blood and urine metabolitesthrough enzymatic chemistries in quantitative or semi-quantitative formats.These products are primarily intended for pharmaceutical or nutritionalmarkets, and include tests such as total and HDL cholesterol, glucose, cortisoland testosterone.Particle Immuno Filtration Assay (PIFA) technology has beendeveloped with an extensive range of rapid testing products, includingHeparin-platelet factor-4 antibodies, HIV, sexually-transmitted diseases,malaria, prostate cancer, blood typing, and other non-infectious agents. Theserobust products produce results in minutes comparable to laboratory-basedassays. MicroParticle Catalyzed Biosensor (MPC Biosensor)-based products,include the alcohol breathalyzer, which is the only portable breathalyzerapproved by the US Department of Transportation.The Biosniffer technology is designed to continuously monitor airbornebacterial, viral, and fungal agents. The initial application of this technologyis a system that provides real-time information on the probable cause of anatmospheric release of biowarfare agents. Each system is designed to providevisual, auditory and electronic warning signals to indicate that a bioagentrelease event has occurred. Tests are under development for other specificbiowarfare agents, as well as hospital-related airborne infections, such asmethicillin-resisitant streptococcus aureus (MRSA).Akers Biosciences, Inc.Financial Statements 1. Consolidated Balance Sheets as at 31 December 2005 and 2004 2005 2004 Assets Current Assets $ $ Cash 3,173,017 182,454 Trade receivables, net of allowance for doubtful accounts of $452,916 and $963,630 in 2005 and 2004, 3,203,777 105,982respectively Inventories 1,219,275 619,646 Prepaid and other current assets 147,333 217,109 Total current assets 7,743,402 1,125,191 Property and Equipment, net 246,580 221,371 Other Assets Patent costs, net of accumulated 97,119 117,930amortization Deferred financing costs, net of accumulated 135,456 4,825amortization Deposits and other assets 12,632 12,632 Total other assets 245,207 135,387 $ $ 8,235,189 1,481,949 Liabilities and Stockholders' Deficiency Current Liabilities $ $ Accounts payable and accrued expenses 1,611,122 1,601,114 Accrued interest payable 117,547 191,336 Notes payable 2,903,478 1,919,746 Current portion of long-term debt 38,731 105,715 Current portion of obligations under capital 12,829 5,974leases Total current liabilities 4,683,707 3,823,885 Long-Term Debt Long-term debt, net of current portion 414,663 442,394 Obligations under capital leases, net of 13,080 10,154current portion Total long-term debt 427,743 452,548 Stockholders' Equity(Deficiency) Preferred stock, no par value Authorized 15,000,000 shares, no shares issued and outstanding at December 31, 2005 and 2004 - - Common stock, no par value Authorized 80,000,000 shares issued and outstanding 55,762,885 and 46,955,614 shares at December 31, 2005 and 2004 58,790,850 48,366,016 Accumulated deficiency (55,667,111) (51,160,500) Total stockholders' equity (deficiency) 3,123,739 (2,794,484) $ $ Total Liabilities and Stockholders' Equity 8,235,189 1,481,949(Deficiency) 2. Consolidated Statements of Operations for years ended 31 December 2005 and 2004 2005 2004 $ $ Revenues 4,610,567 1,325,022 Cost of production 2,939,836 1,495,763 Gross profit(loss) 1,670,731 (170,741) Sales and general and administrative 3,087,316 3,245,980expenses Research and development expenses 789,750 1,107,628 Total expenses 3,877,066 4,353,608 Loss from operations (2,206,335) (4,524,349) Other income (expense) Interest income 10,529 1,333 Litigation recovery 713,046 - Forgiveness of trade payables 9,472 - Sale of New Jersey NOL's 304,533 323,896 Loss on disposal of property and (328) equipment Foreign currency transactions income 1,240 (377)(loss) Interest expense (650,009) (220,473) Total other income (expense) 388,483 104,379 Net loss before US GAAP adjustment (1,817,852) (4,419,970) US GAAP adjustment for equity (2,688,759) -compensation for options and warrants issued Net loss $ $ (4,506,611) (4,419,970) 3. Consolidated Statements of Stockholders' Equity (Deficit) Preferred Common Stock Accumulated Stock Shares Amount Shares Amount Deficiency Total $ $ $ $ Balance, December 31, - - 42,674,564 44,353,221 (46,740,530) (2,387,309)2003 Issuance of stock for - - 2,632,722 3,281,965 - 3,281,965cash Issuance of warrants - - - 40,000 - 40,000for products and services Issuance of common - - 1,455,000 501,419 - 501,419stock in exchange of debt Issuance of common stock in exchange of trade payables - - 193,328 189,411 - 189,411 Net loss for the year - - - - (4,419,970) (4,419,970)ended December 31, 2004 Balance, December 31, - - 46,955,614 $48,366,016 $ $2004 (51,160,500) (2,794,484) Issuance of stock for - - 2,627,306 2,291,750 - 2,291,750cash Issuance of warrants - - - 2,688,759 - 2,688,759for products and services Issuance of common - - 5,931,746 5,207,000 - 5,207,000stock in exchange of debt Issuance of common stock in exchange of trade payables - - 248,219 237,325 - 237,325 Net loss for the year - - - - (4,506,611) (4,506,611)ended December 31, 2005 Balance, December 31, - $- 55,762,885 $58,790,850 $(55,667,111) $3,123,7392005 4. Statements of Cash Flows for the years ended 31 December 2005 and 2004 2005 2004 Cash Flows From Operating Activities Net loss $(4,506,611) $(4,419,970) Adjustments to reconcile net loss to cash used in operating activities: Depreciation and amortization 101,139 100,732 Amortization of deferred finance costs 209,369 2,894 Stock, stock options and warrants issued to 2,688,759 40,000employees and non-employees Adjustments for litigation recovery (713,046) - Provisions for bad debts 182,267 808,883 Changes in operating assets and liabilities: (Increase) decrease in: Trade receivables (3,280,062) (433,016) Inventories (599,629) (169,495) Prepaids and other current assets 69,776 (145,718) Deferred financing costs (340,000) - Deposits and other assets - (1,865) Increase (decrease) in: Accounts payable and accrued expenses 234,416 104,370 Net cash used in operating activities (5,953,622) (4,113,185) Cash Flows From Investing Activities Purchase of property and equipment (87,968) (17,434) Net cash used in investing activities (87,968) (17,434) Cash Flows From Financing Activities Proceeds from issuance of stock, net 10,000 3,281,965 Proceeds from warrants exercised 2,543,750 - Proceeds from borrowings 10,039,043 1,120,000 Repayments of capital lease obligations (7,788) (4,317) Repayments on borrowings (3,552,852) (677,969) Net cash provided by financing activities 9,032,153 3,719,679 Increase (decrease) in cash 2,990,563 (410,940) Cash, beginning of year 182,454 593,394 Cash, end of year $3,173,017 $182,4544.Consolidated Statements of Cash Flows for the years ended 31 December 2005and 2004 (continued) 2005 2004 Supplemental Disclosures of Cash Flow Information: Non-cash investing and financing activities are as follows: Conversion of debt and accrued interest payable to common $5,108,989 $501,419stock Equipment purchased under capital lease $17,569 $19,500 Conversion of trade payable to common stock $73,336 $189,411 Cash Paid During the Period for Interest $66,933 $73,441Summary of Significant Accounting PoliciesThe Summary of Significant Accounting Policies below are integral parts of theaccompanying Consolidated Financial Statements.Description of Business: Akers Biosciences, Inc. and its subsidiaries (the"Company" or "Akers") is a New Jersey Corporation, which was incorporated onMarch 8, 1989. The Company commenced research and development operations inSeptember 1989, and until 2003 had devoted substantially all its efforts toestablish the new business.Patents and Trade Secrets: The Company has developed several diagnostic teststhat can detect the presence of various substances in a person's blood, urineand saliva. Proprietary protection for the Company's products, technology andprocess is important to its competitive position. To date, the Company hasreceived three patents from the United States Patent Office (5,565,366,5,231,035, and 5,827,749). Other patents have been granted through the WorldPatent Cooperation Treaty ("PCT") (WO 92/05440), European Patent Convention (EP0 556 202 B1), and in Japan (516757/91). Patents are in the national phase ofprosecution in many PCT-participating countries. Additional proprietarytechnology consists of eleven different inventions. The Company intends to fileadditional patent applications, where appropriate, relating to new products,technologies and their use in the US, European and Asian markets. Managementintends to protect all other intellectual property (e.g., copyrights,trademarks and trade secrets) using all legal remedies available to theCompany.Principles of Consolidation: The consolidated financial statements include theaccounts of the Company. All significant intercompany balances and transactionsare eliminated.Revenue Recognition: The Company recognizes sales at the time goods areshipped.Trade Receivables: Trade receivables are carried at original invoice amountless an estimate made for doubtful receivables based on a review of alloutstanding amounts on a monthly basis. Management determines the allowance fordoubtful accounts by regularly evaluating individual customer receivables andconsidering a customer's financial condition, credit history, and currenteconomic conditions. Trade receivables are written off when deemeduncollectable. Recoveries of trade receivables previously written off arerecorded when received. Trade receivables are considered to be past due if anyportion of the receivable balance is outstanding for more than 90 days.Management may elect to charge interest on past due trade receivables.Inventories: Inventories are stated at the lower of cost (first-in, first-out)or market.Property and Equipment: Property and equipment are stated at cost. Depreciationand amortization are computed over the estimated useful lives of the respectiveassets using straight-line and accelerated methods. Upon sale or retirement ofassets, the related costs and accumulated depreciation are eliminated from theaccounts and the resulting gain or loss is included in operations. Expendituresfor repairs and maintenance that do not increase the useful lives of the assetsare charged to operations as incurred.Patent Costs: Costs associated with applying for patents are capitalized aspatent costs. Once the patents are approved, the respective costs are amortizedover a period of twelve to seventeen years on a straight-line basis. Patentpending costs for patents that are not approved are charged to operations theyear the patent is rejected. Accumulated amortization related to patents was$134,366 and $113,555 as of December 31, 2005 and 2004, respectively.Amortization expense amounted to $20,811 and $14,311 for the years endedDecember 31, 2005 and 2004, respectively.Deferred Financing Costs: Costs incurred in connection with long-term financinghave been capitalized and are being amortized on the straight-line basis overthe term of the related debt. As of December 31, 2005 and 2004, accumulatedamortization was $27,018 and $24,123, respectively. Amortization expense foreach of the years ended December 31, 2005 and 2004 was $2,895.Research and Development Costs: Research and development costs are charged tooperations when incurred.Advertising and Promotion: Advertising and promotion costs are charged tocurrent operations when incurred. Advertising and promotion costs for the yearsended December 31, 2005 and 2004 were $11,422 and $7,685, respectively.Stock-Based Compensation: The Company adopted the disclosure-only provisions ofStatement of Financial Accounting Standards ("SFAS") No. 123 "Accounting forStock-Based Compensation," but elected to continue to utilize the "intrinsicvalue" method of accounting for recording stock-based compensation expense foremployees, as provided for in Accounting Principles Board No. 25 "Accountingfor Stock Issued to Employees" ("APB No. 25").Income Taxes: Deferred income taxes are provided on a liability method. Wherebydeferred tax assets are recognized for deductible temporary differences anddeferred tax liabilities are recognized for taxable temporary differences.Temporary differences are the differences between the reported amounts ofassets and liabilities and their tax bases. Deferred tax assets are reduced bya valuation allowance when, in the opinion of management, it is more likelythan not that some portion or all of the deferred tax assets will not berealized. Deferred tax assets and liabilities are adjusted for the effects ofchanges in tax laws and rates on the date of enactment.Stock Options and Warrants: The Company's intention is to issue stock optionsand warrants at no less than fair market value on the date of grant. Oninfrequent occasions, stock options have been issued at less than fair marketvalue for services and in connection with financings, and the effect of theseissuances has been recorded as an expense in the period of issuance of theoption. Under US GAAP rules, options or warrants issued to non-employees mustbe valued based on the Black-Sholes model, or another acceptable measurementprocedure, with the calculated fair value to be charged to the statement ofoperations on the date of issuance. Previously, the fair market value of commonstock had been determined based on the price that the Company has received forthe issuance of stock to investors during a comparable time period. Since May22, 2002, fair market value is deemed to be the price of the company's sharesas quoted on the Alternative Investment Market of the London Stock Exchange.Use of Estimates: The preparation of financial statements in conformity withaccounting principles generally accepted in the United States of Americarequires management to make estimates and assumptions that affect the reportedamounts of assets and liabilities and disclosure of contingent assets andliabilities at the date of the financial statements and the reported amounts ofrevenues and expenses during the reporting period. Actual results could differfrom those estimates.Loss per share: Basic loss per share of $0.04 (2004: $0.10) has been calculatedby dividing the net loss for the year before US GAAP adjustment of $1,817,852(2004; $4,419,970) by the weighted average number of shares in issue during theperiod of 50,079,576 (2004: 45,528,669).ENDAKERS BIOSCIENCES INC