AKR.L Regulatory News (AKR)

27 Sep 2005 06:00

Embargoed: 0700hrs 27 September 2005 AKERS BIOSCIENCES, INC. Interim results for the half year ended 30 June, 2005 Akers Biosciences, Inc. ("Akers Biosciences", "Akers" or the "Company"), aleading designer and manufacturer of rapid diagnostic screening and testingproducts, announces its interim results for the half year ended 30 June, 2005.Highlights * Revenues of $1,042,117 represent a 22% increase over revenues in the same period last year (2004: $855,417) * Pre tax loss: $1,154,326 (2004: $1,775,769) * Second half trading expected to significantly exceed that of period under review * Sales activities of the company's flagship product, the PIFA Heparin/PF4 rapid test, commenced by both the Company's direct sales force and Corgenix Medical Group * CLIA waiver for the company's lithium test system was received from the US FDA, allowing the product to be marketed to the physicians' office market * Alco Industries became the company's strategic partner in the US retail sector, and began market trials of the company's breathalyzer and cholesterol tests. * The Company introduced its products in the UK and certain EU countries through new alliances with Helena Biosciences Europe and Advanced Rapid Diagnostics Ltd. Ray Akers, Chief Executive Officer of Akers Biosciences, said:"The second quarter of the period saw a distinct uplift in sales due largely toour flagship PIFA Heparin/PH4 rapid test product. As of today, our test forheparin/PF-4 antibodies is being used in approximately 140 hospitals in theUnited States, and that number continues to grow by 5-10 hospitals each week.We gained further momentum through the receipt of other product approvals andthe establishment of important distribution and business relationships, andhave begun to translate this momentum into product sales. This is the firsttime in the Company's history that we have an established customer base and onethat is rapidly expanding. In addition, we have begun to establish a presencein UK and European markets and are in our most attractive position to date."Enquiries:Dr. Ray Akers Chief Executive Officer, Akers 020 7917 9476 Biosciences, Inc. Paul Freedman 001 856 848 8698 Chief Financial Officer, Akers Biosciences, Inc. Ben Simons Hansard Communications 020 7245 1100 CHAIRMAN AND CHIEF EXECUTIVE'S STATEMENTIntroductionWe are delighted to present interim results for Akers Biosciences for a periodin which sales increased by 22% over the same period in 2004 as more of theCompany's signature products were introduced into the marketplace.Financial ReviewRevenues for the half year ended 30 June 2005 were $1,042,117, compared with$855,417 during the same period in 2004. These revenues reflect initial salesinto the company's first established customer base, with significant growthpotential.The loss for the period was $1,154,326 ($0.02 per share) compared to $1,775,769($.04 per share) in the corresponding period of the preceding year.Research and development expenses decreased when compared to the level of thesame period of the prior year ($399,157 for 2005 vs. $451,212 for 2004). Themost significant objective of the Company's Research and Development departmentis coordination and follow-up with the FDA while several tests undergo theapproval process.Sales and general administrative expenses increased during the current periodto $1,606,797 from $1,260,397 in the similar period of the preceding year. Thisincrease reflects for the most part an increased level of sales and marketingactivity to support our product launch plans.FundingOn 11 March 2005, the company completed a placement of $2,500,000 of principleamount of promissory notes to an investment group. The entire amount of thesenotes has subsequently been converted into stock.After the new issuance and the transactions described above, the Company has50,712,063 Common Shares in issue.Business ReviewAll of the Company's proprietary technologies provide the platform for highmargin niche products, intended for use in specialized market segments. Inaddition to its ongoing efforts with its strategic partners, the Company hasalso begun to build its own brands. The company continues to focus on fourmarket segments: biotech/pharmaceutical, OTC and doctor's surgeries, government/military and the developing world, although effort is currently beingconcentrated on the first three sectors as these represent the most attractiveimmediate 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". The Company has begunintroducing the product into the European market place now that regulatoryclearance has been obtained. This is the first rapid test for HPF4 antibodies,and the product is protected by two of the Company's patents, with additionalpatents pending. After a lengthy validation period in many US hospitallaboratories, the test has been enthusiastically accepted, and productplacement is steadily increasing. 140 hospitals in the US are now using thetest as of today. Cardinal Health has just started distributing the product tohospitals and physicians throughout the US, and Corgenix Medical Group coversreference and clinical laboratories.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 a heparin"allergy" or other serious thrombolytic reaction ("HITTS") resulting fromheparin treatment. The Company's product has significant advantages both interms of cost and time to result. The Company's test takes minutes to perform,while the current laboratory tests take hours to perform on complexinstrumentation. HITTS can rapidly progress in minutes or hours, and can resultin death or dismemberment. The Company's product is the only test available onthe market that can provide real-time in formation that can useful informulating a clinical diagnosis. In 2004, approximately 3 million tests wereperformed using current laboratory tests to confirm a potential "heparinallergy" or HITTS, primarily in cardiology and emergency medicine patients.The Company and its partners have now begun promoting an expanded use of thistest as an initial decision point whenever heparin or other anti-thrombolytictreatment is proposed for use, in addition to cardiology and emergency medicineuses. Over 20 million patients in the US and Europe are given heparin each yearduring many different surgical and therapeutic procedures. Initial feedback hasindicated that additional clinical applications for this product haveprogressed much faster than the Company expected. If successful, this increasedrequirement should have a positive recurring impact on sales of this product.Lithium TestThe 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 50 systems as of theend of August 2005.White Blood Cells TestsThe FDA has recently granted expedited review status for this product. Thisstatus is usually granted for products perceived to be of a critical medicalneed. This product will be marketed to two distinct clinical areas initially:psychiatry, as tests for the side effects of the neuropsychiatry drugclozapine, and oncology, as tests for the side effects of chemotherapy andradiation therapy.OTC and Doctors' SurgeriesWe believe that our collaboration with Pfizer, Inc., and our alliance with AlcoIndustries enable the most effective approach into the OTC and doctor's surgerymarkets, especially with regard to the Company's "TriCholesterol Check" brandof rapid cholesterol tests. We have begun to ship cholesterol tests to Pfizer,which will test market to physicians in conjunction with itscholesterol-lowering drug Lipitor. If this trial program is successful, thevolume of demand could be significant. In addition, this program can stimulatethe success of the follow-on retail market, which will be managed by AlcoIndustries. Alco is a major US retailer already in the market with theCompany's alcohol breathalyzers, and is a key partner in the Company's strategyto penetrate the OTC markets. The Company expects to ship product to Alco inthe fourth quarter.. In the nutritional sector of this market, managementchanges at Vitarich Laboratories have resulted in the interruption of salesactivities.Government and MilitaryIn the government/military sector, our alliance with Battelle has led to twoinitial contracts for the supply of products to support biowarfare agentdetection systems, although the Company does not have a clearly definedexpectation of when shipping can begin. In addition, the Company is continuingto pursue both land and marine-based sales of its alcohol breathalyzers throughits own "Breath Alcohol Check" brand, and the brands of its customers. TheCompany's breathalyzer has been approved by the Italian government for use in aprogram to curb driving under the influence of alcohol. Quest Diagnostics isthe Company's primary distributor of Akers' own brand of product, and hassteadily increased is sales and customer base.All of these activities have resulted in breathalyzer sales of approximatelydouble the rate observed in 2004.Product DevelopmentThe Company now offers six different proprietary platformtechnologies, and has developed products based on these technologies.During thefirst half of 2005, the Company developed rapid tests for the environmentaldetection of anthrax (Bacillus anthracis) and plague (Yersinnia pestis) basedon its Particle ImmunoFiltration Assay technology, and in a format similar toits PIFA Heparin/PF-4 test. These tests are currently under evaluation by theCompany's partner Battelle.Current Trading and OutlookThe Company has successfully obtained FDA approvals for key products, allieditself with major pharmaceutical firms, and secured broad distribution channelswith blue chip medical products companies. A substantial portion of the salesachieved in the first half of the year occurred in the last two months of theperiod, and this positive trend for sales growth is expected to continue with asignificant amount of revenue anticipated to occur in the fourth quarter as aconsequence of additional sales and distribution partners as well as theexpanding hospital customer base. We expect this growth to continue into 2006and beyond.David Wilbraham, ChairmanRaymond Akers, Chief Executive26 September 2005Consolidated Balance Sheets as at 30 June 2005 and 2004 (unaudited) 2005 2004 $ $ Current Assets Cash in banks 1,001,140 1,070,921 Accounts receivable, net 695,468 927,822 Inventories, at lower of cost or market 931,075 415,560 Prepaids and other current assets 233,365 89,982 ________ ________ Total current assets 2,861,048 2,504,285 ________ ________ Property and equipment, at cost 1,311,428 1,243,163 Less : depreciation taken to date 1,086,424 998,055 ________ ________ Property and equipment, net 225,004 245,108 ________ ________ Other assets Patent costs 110,772 125,086 Intangible assets, net 55,877 6,271 Deposits and other assets 13,132 12,633 ________ ________ Total other assets 179,781 143,990 ________ ________ Total assets 3,265,833 2,893,383 ======= ======= Current liabilities Accounts payable and accrued expenses 1,812,128 1,758,769 Notes and loans payable 2,188,073 1,187,174 Current portion of long-term debt 51,690 409,986 ________ ________ Total current liabilities 4,051,891 3,355,929 ________ ________ Long -term debt, net of current maturities 435,780 517,478 ________ ________ Equity (deficit) Common stock 51,092,988 47,536,275 Accumulated deficit (52,314,826) (48,516,299) ________ ________ Total stockholders' equity (deficit) (1,221,838) (980,024) ________ ________ Total liabilities and stockholders' equity 3,265,833 2,893,383 ======= ======= Consolidated Statements of Operations for six months ended 30 June 2005 and2004 (unaudited) 2005 2004 $ $ Revenues 1,042,117 855,417 Cost of Production 749,180 785,499 ________ ________ Gross Profit 292,937 69,918 ________ ________ Sales and General and Administrative 1,606,797 1,260,397Expenses Research and Development Expenses 399,157 451,212 ________ ________ Total Operating Expenses 2,005,954 1,711,609 ________ ________ (Loss) From Operations (1,713,017) (1,641,691) ________ ________ Other Income (Expense) Interest Income 2,425 22 Currency Translation Income(Expense) (3,090) (2,385) Nonrecurring Income 713,046 - Interest Expense (153,690) (131,715) ________ ________ Total Other Income (Expense) 558,691 (134,078) ________ ________ Net (Loss) (1,154,326) (1,775,769) ======== ======== Net (Loss) per share (0.02) (0.04) ======== ======== Consolidated Statements of Stockholders' Deficit from 31 December 2003 to June2004 and 31 December 2004 to 30 June 2005 (unaudited) Preferred Stock Common Stock Shares Amount Shares Amount Accumulated Total Deficit $ $ $ $ Balance 31 December - - 42,674,564 44,353,221 (46,740,530) (2,387,309)2003 Issuance of stock - - 2,020,439 2,637,335 - 2,637,335for cash Warrant issued in - - - 75,000 - 75,000exchange for trade payables Issuance of stock in - - 1,455,000 463,419 - 463,419exchange of debt Issuance of stock - - 5,000 7,300 - 7,300for products and services Net loss for the - - - - (1,775,769) (1,755,769)period ended 30 June 2004 _____ ______ ________ ________ _________ _________ Balance, 30 June - - 46,155,003 47,536,275 (48,516,299) (980,024)2004 (unaudited) ===== ====== ======== ======== ========= ========= Preferred Stock Common Stock Shares Amount Shares Amount Accumulated Total Deficit $ $ $ $ Balance 31 December - - 46,955,614 48,366,016 (51,160,500) (2,794,484)2004 Issuance of stock - - 10,638 10,000 - 10,000for cash Warrant issued in - - - - - -exchange for trade payables Issuance of stock in - - 3,663,926 2,633,322 - 2,633,322exchange of debt Issuance of stock - - 81,885 83,650 - 83,650for products and services Net loss for the - - - - (1,154,326) (1,154,326)period ended 30 June 2005 _____ ______ ________ ________ _________ _________ Balance, 30 June - - 50,712,063 51,092,988 (52,314,826) (1,221,838)2005 (unaudited) ===== ====== ======== ======== ========= =========Consolidated Statement of Cash Flows for the six months ended 30 June(unaudited) 30 June 2005 30 June 2004 $ $ Operating Activities (1,154,326) (1,775,769) Net loss Adjustments to reconcile net loss to cash used in operating activities: Depreciation and amortization 52,158 52,156 Amortization of deferred finance costs 55,448 1,448 Stock, stock options and warrants issued to - 7,300employees and non-employees Nonrecurring income - Tundra judgment (713,046) - Provision for bad debts 286,330 200,000 (Increase) decrease in changes in operating assets and liabilities: Accounts receivable (875,816) (645,973) Inventories (311,429) 34,881 Prepaids and other current assets 27,394 (18,591) Deposits and other assets (500) (1,866) Increase (decrease) in Accounts payable and accrued expenses 163,899 (16,627) ________ ________ Net cash used in operating activities (2,469,888) (2,163,041) ________ ________ Investing activities Purchase of property and equipment (48,633) (19,251) ________ ________ Net cash used in investing activities (48,633) (19,251) ________ ________ Financing Activities Proceeds from issuance of stock, net 10,000 2,637,335 Proceeds from borrowings 4,399,488 170,000 Repayments on borrowings (1,072,268) (147,516) ________ ________ Net cash provided by financing activities 3,337,220 2,659,819 ________ ________ Increase in cash 818,699 477,527 Cash as at beginning of year 182,441 593,394 ________ ________ Cash as at 30 June 1,001,140 1,070,921 ======== ======== Supplemental disclosures of Cash Flow information: 2005 2004 $ $ Non-cash investing and financing activities are as follows: Conversion of debt and accrued interest 2,633,322 463,419payable to common stock ======== ========= Conversion of trade payables to common stock 40,000 - ======== ========= Common stock and warrants issued in - 75,000connection with debt ======== ========= Cash paid during the period for interest 30,748 41,515 ======== ========= 5. Notes to Interim Financial Statements5.1 Summary of significant accounting policiesBasis of presentationThe accompanying unaudited condensed consolidated financial statements havebeen prepared in accordance with generally accepted accounting principles forinterim financial information and do not include all the information andfootnotes required by generally accepted accounting principles for completefinancial statements. In the opinion of management, all adjustments (consistingof normal recurring accruals) considered necessary for a fair presentation havebeen included. Operating results for the interim six month period ended 30 June2005 are not necessarily indicative of results that may be expected for theyear ending 31 December 2005. For further information, refer to the Company'saudited financial reports for the year ended 31 December 2004. Balance sheetpresentation for 2004 has been restated for comparative purposes.Principles of consolidationThe interim financial statements include the accounts of the Company. Allsignificant intercompany balances and transactions are eliminated. The wholly-owned subsidiaries have been inactive since December 31, 1998 and have noassets or liabilities.Use of estimatesThe preparation of these financial statements requires the use of certainestimates by management in determining the Company's consolidated assets,liabilities, revenues and expenses. Actual results may vary from thoseestimates.Cash and cash equivalentsCash and cash equivalents include highly liquid investments that are readilyconvertible into cash and have a maturity of three months or less.Revenue recognitionThe company recognizes sales at the time goods are shipped.InventoriesInventories are stated at the lower of cost (first in, first out) or market.Property and equipmentProperty and equipment are stated at cost. Depreciation and amortization areallocated over the estimated useful lives of the respective assets usingstraight-line and accelerated methods. Upon sale or retirement of assets, therelated costs and accumulated depreciation are eliminated from the accounts andthe resulting gain or loss is included in operations. Expenditures for repairsand maintenance that do not increase the useful lives of the assets are chargedto operations as incurred.Research and development costsResearch and development costs are charged to operations when incurred.5.2 Nonrecurring income In February 2005, a Default Final Judgment was awarded by the United StatesDistrict Court, Southern District of Florida in favor of the Company againstTundra Management, Ltd. in the amount of $980,635. As a result, the Company isrecognizing, as income in the current year, the $713,046, which is the amountof the previously due loan plus all accrued interest and costs, now annulledunder the terms of the Court Order.5.3 Earnings per share Basic earnings per share have been calculated by dividing the loss for thecurrent six month period of $1,154,326 (2004: $1,775,769 loss) by the weightedaverage number of shares in issue during the current six month period of47,669,038 (2004: 44,538,687).ENDAKERS BIOSCIENCES INC