AKR.L Regulatory News (AKR)

Embargoed: 1100hrs BST

12 August 2014

Akers Biosciences Announces its Financial Results for H1 and Q2 2014

Completed NASDAQ IPO - Sales of flagship PIFA Heparin/PF4 products increasing

Akers Biosciences, Inc. (NASDAQ: AKER) (AIM: AKR.L) (the "Company" or "ABI"), a leading designer and manufacturer of rapid diagnostic screening and testing products, reports its financial results for the six months and three months ended 30 June 2014.

H1 Financial Highlights:

· Revenue for the six months ended June 30, 2014 was $2,527,076 (H1 2013: $2,661,669)

· EBITDA was a loss of $937,655 (H1 2013: loss of $25,731)

· Net current assets at June 30, 2014 of $15,239,417 (at June 30, 2013 $3,682,838)

Operational Highlights

· Completed IPO on NASDAQ Capital Market on January 23, 2014, raising approximately $15 million in gross proceeds

· Sales of flagship PIFA Heparin/PF4 products increased by 5% to $642,790 (H1 2013: $611,031)

· Additional US distribution agreements signed for PIFA Heparin/PF4 products with Medline and Typenex

· PIFA Heparin/PF4 products are now being marketed by the three largest distributors of healthcare supplies in the United States

· Expansion of internal sales organization under the leadership of recently appointed Executive Vice President, Sales and Marketing, Edwin C. Hendrick

· Major advancements in international sales strategy with multi-product distribution agreements signed for territories including India, the Middle East, Australia and Singapore

· Commenced Clinical Trials for PIFA PLUSS Chlamydia Assay

"We are very encouraged by the continuing upward trajectory of sales of the flagship PIFA Heparin/PF4 products; and we are yet to see meaningful contributions from recent additional distribution channels established for this product during the first half of this year," commented Raymond F. Akers Jr., Ph.D, Executive Chairman.

"As well as accelerating the development process of the product pipeline, the NASDAQ listing has allowed us to add significant weight to our sales and marketing strategy, with Edwin Hendrick now leading our domestic sales and marketing effort; and the very recently appointed Nicolas Daurel spearheading international expansion through the identification of key overseas distribution partners," continued Dr. Akers. "We are looking forward to continuing growth of PIFA Heparin/PF4 product sales in the second half, while opening new channels for this - and other - commercialized tests."

Results of Operations for the six months ended June 30, 2014

ABI's total revenue for the six months ended June 30, 2014 was $2,527,076 (H1 2013: $2,661,669). The Company generated a net loss of $1,090,595 (H1 2013: $200,962). Three factors contributed to the increased loss: maintaining dual listings of our stock (NASDAQ Capital Market & London Stock Exchange) has significantly increased costs associated with compliance with regulatory requirements, the expansion of sales and marketing efforts and stock option based compensation for our directors, officers and key employees.

Domestic sales of the Company's PIFA Heparin/PF4 Rapid Assay products increased to $642,790 (2013: $611,031) for the period ended June 30, 2014. The Company's dedicated technical sales account executives have moved away from a direct selling model to one that works in tandem with over 300 sales representatives of ABI's US distribution partners, Cardinal Health ("Cardinal"), Medline Industries ("Medline") and Fisher HealthCare ("Fisher"). The relationship with Medline began this quarter and sales have yet to commence. In addition, the PIFA PLUSS assay was just added to Fisher's distribution agreement in January of 2014; this expansion and relationship-building initiative has already delivered a measureable increase in product trials and adoptions.

The Company also entered into a telesales agreement on June 8, 2014 with Typenex Medical ("Typenex"), a world leader in blood banking products for safety and streamlining processes and chain of custody. Their relationship within the hospital hematology department uniquely allows them access to the Company's target market. They are now selling PIFA products into the market via their seasoned telesales group, specifically focused on PIFA PLUSS. This allows the Company to better reach the total market in the most cost effective commercial approach.

Revenue from Rapid Enzymatic Assay ("REA") products in the six months ended June 30, 2014 totaled $864,000 (2013: $-). This revenue is attributable to the Company's new distributor in Australia, Singapore, Oman and the United Arab Emirates, Thirty Six Strategies General Trading LLC ("36S"), which placed its first order with the Company during the period.

MicroParticle Catalyzed Biosensor ("MPC") product revenues decreased to $840,458 (2013: $1,650,457) during the period. This is attributable to a decline in orders from our world-wide distributor of the alcohol breathalyzer product, ChubeWorkx Guernsey Limited. During the six months ended June 30, 2014, ChubeWorkx accounted for $766,379 (2013: $1,551,340) of our MPC product revenue, all of which was recorded during the first quarter. The decline is as a result of the French government's postponement indefinitely of the fine that was to be imposed for drivers failing to possess breathalyzers in their vehicles. Although drivers are still required to carry the self-tests, the lack of a monetary fine has naturally reduced demand. It is unknown how long this interruption will continue for, but the Company's distributor of alcohol breathalyzers has provided assurances that it is well positioned to resume large volume sales of the product should full enforcement resume.

Cost of sales for the six months ended June 30, 2014 decreased by 47% compared to the same period in 2013 to $745,732 from $1,409,384 in 2013. Direct cost of sales declined to 22% (2013: 45%) while indirect cost of sales declined to 9% (2013: 17%) of product revenue for the six months ended June 30, 2014. Overall, cost of sales, as a percentage of product revenue, was 32% and 61% for the six month periods ended June 30, 2014 and 2013.

Direct costs of sales decreased primarily as a result of one significant event: during prior periods, the Company had removed its REA products from inventory while it worked to develop a market and identify a distributor for the product line - an objective which has subsequently been accomplished through a distribution agreement with, and an initial sale to, 36S. As a result of this inventory write-down there was no significant cost of sales for this product reported for the six months ended June 30, 2014. Direct costs associated with the MPC products increased to 47% (H1 2013: 41%) and PIFA products remained steady at 12%.

The decrease in indirect cost of sales is attributed to decreases in shipping expenses, repairs and maintenance of equipment, and manufacturing supplies due to the reduced levels of production and improvements to the component inventory handling and reporting procedures that resulted in a reduction of materials lost to the production process during the six months ended June 30, 2014.

ABI's gross profit margin, as a percentage of total revenue, improved to 70% for the six months ended June 30, 2014 as compared to 47% in H1 2013. The improvement in gross profit margin was derived from events described above for the six months ended June 30, 2014. As the improvement in gross margin was in large part due to the REA product sales having no significant cost of sales attached, it should not be assumed that the gross profit margin will be maintained at this level in the future.

General and Administrative Expenses

General and administrative expenses for the six months ended June 30, 2014, totaled $1,670,728, which was a 147% increase as compared to $675,689 for the six months ended June 30, 2013. The increase is related to personnel ($266,996 (2013: $76,135)), professional services ($221,835 (2013: $74,734)), stock market and investor relations activities ($349,031 (2013: $101,198)), travel ($24,367 (2013 $553)) and to the issuance of stock options for Directors and Officers ($357,276 (2013: $-)).

The increases in professional services and stock market and investor relations activities are directly related to the maintenance of our stock listings in the United States (NASDAQ) and Great Britain (London Stock Exchange). The dual listing requires us to maintain public relations, stock registrars, nominated advisors and legal counsel for both markets and requires additional accounting services to insure compliance with regulators.

Sales and Marketing Expenses

Sales and marketing expenses for the six months ended June 30, 2014 totaled $607,707, which was a 48% increase as compared to $410,008 for the three months ended June 30, 2013. The increase was the result of general consulting services ($231,128 (2013: $11,875)) and the issuance of stock options for key employees ($48,081 (2013: $-)) and was offset by declines in royalties ($64,190 (2013: 115,023)) and outside sales commissions ($10,000 (2013: $43,240)). The general consulting fees are for the development of sales and marketing programs and the exploration of governmental opportunities and additional international markets for our products.

Research and Development

Research and development expenses for the six months ended June 30, 2014 totaled $502,489, which was a 4% decline as compared to $522,132 for the six months ended June 30, 2013. The decrease was the result of personnel reassignments which reduced personnel costs ($295,516 (2013: $446,999) but was partially offset by increases in professional services ($24,613 (2013: $3,513)) and consumable supplies ($22,715 (2013: $11,579)) and the issuance of stock options to key employees ($120,203 (2013: $-)). There has been a significant increase in activities related to obtaining regulatory approvals.

The Company entered into an agreement with an outside product and design firm on July 14, 2014 to work with internal personnel to review and further develop the VIVO product line. The Company believes that enhancing the capabilities of the VIVO product will allow further exposure into the large Health and Wellness market segment.

Other Income and Expense

Other income declined for the six months ended June 30, 2014 to $38,272 from $283,868 for the same period in 2013. During the six months ended June 30, 2014, the Company recognized gains from foreign currency transactions of $3,896 (2013: loss of $87), interest and dividends from investments amounted to $29,707 (2013: $1,054) and $4,669 (2013: $91,286)) in other income from the net proceeds gained from ABI's insurer demutualizing. During the six months ended June 30, 2013, the Company recognized $91,905 as the result of reversals of old trade payables and $99,710 from the sale of its 20% equity stake in BreathScan International to Chubeworkx Guernsey Limited.

Looking Ahead

We are highly focused on expanding distribution of our flagship PIFA Heparin/PF4 Rapid Assays, which are now being marketed by the three largest distributors of healthcare supplies in the United States. In addition to the ongoing upscaling of domestic sales and marketing capacity, the Company is committed to building international sales of its diagnostic assays in markets where existing tests do not effectively fulfill clinical requirements or where an emerging unfulfilled need for certain tests has been identified. In particular, we have identified opportunities in the near-term for international sales of our PIFA Heparin/PF4 Rapid Assays, PIFA Infectious Disease Rapid Assays and Tri-Cholesterol "Check"; and we continue to support Chubeworkx's international marketing of its CHUBE private-labeled breath alcohol detectors to additional markets.

Initial commercialization tasks for METRON and VIVO, as well as development activities for PIFA PLUSS Infectious Disease single-use assays, Breath Ketone "Check", and Breath PulmoHealth "Check" products, including advancement of the steps required for FDA clearance or CE marking in the EU where necessary, are ongoing. The funds raised in the initial public offering on the NASDAQ Capital Market earlier this year are enabling the Company to accelerate the development of these products which each have the capacity to address very substantial diagnostic markets.

Financial Statements

A summary of the key financial statements for the six months and the three months ended June 30, 2014 appears below. A Form 10-Q containing the detailed financial statements for the same periods is available for viewing on the Company's website at www.akersbiosciences.com or www.sec.gov.

Conference Call Information:

ABOUT AKERS BIOSCIENCES, INC.

Akers Biosciences develops, manufactures, and supplies rapid, point of care screening and testing products designed to bring healthcare information both rapidly and directly to the consumer or healthcare provider. 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 products 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 on our website 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:

Raymond F. Akers, Jr. PhD

Executive Chairman

Akers Biosciences, Inc.

Tel. +1 856 848 8698

Brendan Hopkins

RedChip Companies, Inc. (US Investor Relations)

Tel. +1 407 644 4256 x134

Emma Earl

Daniel Stewart (Nomad and Broker)

Tel. +44 (0)20 7776 6550

Ben Simons / Alexandra Roper

Vigo Communications (UK Investor Relations)

Tel. +44 (0)20 7016 9570

akers@vigocomms.com

Key Financial Statements