Skyline Medical Inc. (NASDAQ:SKLN) (“Skyline” or
“the Company”), developer of the innovative STREAMWAY® waste fluid
disposal system for medical applications, reports financial results
for the three and 12 months ended December 31, 2016 and provides a
business update.
Highlights of the fourth quarter of 2016 and
recent weeks include:
- Awarded a contract to sell the STREAMWAY System to
customers of Vizient, Inc., the largest member-driven health care
performance improvement company in the country
- Received Vizient’s Innovative Technology designation that the
STREAMWAY System offers unique and incremental benefits over other
products available on the market today
- Added four regional sales managers
- Refined the STREAMWAY sales and marketing focus on the
radiology marketplace, particularly on paracentesis and
thoracentesis procedures
- Further migrated STREAMWAY marketing to a highly efficient
electronic and digital strategy
- Sold four STREAMWAY Systems during the fourth quarter, bringing
the total number of units installed to 100
- Received Health Canada medical device license to market and
sell the STREAMWAY System in that country
- Recorded the first sale of a STREAMWAY System in Canada
- Raised more than $6.0 million during the fourth quarter and
recent weeks
- Appointed Dr. Carl Schwartz as chief executive officer
- Secured shareholder approval for an increase in the number of
authorized shares to 24 million
- Received notice from The Nasdaq Stock Market that the Company
is in full compliance with all requirements for its stock’s
continued listing on The Nasdaq Capital
Market
Management Commentary
“Skyline management and staff worked tirelessly
during 2016 to set a viable business strategy and build a strong
foundation for growth in 2017 and beyond. I am delighted to
report we are starting to see the positive results of our efforts,
including the purchase by a top-ranked U.S. hospital of its fourth
and fifth STREAMWAY Systems for its headquarters location during
the fourth quarter,” said Dr. Schwartz. “We are grateful to our
shareholders for voting affirmatively for some very difficult
initiatives – a reverse stock split and two increases in authorized
shares – that permitted us to raise growth capital while
maintaining our Nasdaq listing. These were vital actions to
ensure Skyline’s viability and allow us to continue bringing the
innovative and exceptional STREAMWAY System to patients and
clinicians.
“We expect to resume revenue growth in 2017 as
we increase the size of our direct sales organization. Our
customer-acquisition activities are focused on radiology suites and
include a heightened presence at radiology conferences. As a
result of these efforts, we are seeing a dramatic increase in the
number of institutions seeking to trial the STREAMWAY System, which
bodes very well for future sales. Earlier this month we
exhibited at the AHRA Association for Medical Imaging Management
Spring Conference and garnered many excellent sales leads,” added
Dr. Schwartz. “Securing both the contract with Vizient and
its Innovative Technology award are watershed events for
Skyline. The contract provides new avenues to reach member
organizations as potential customers for STREAMWAY, and we are
working with Vizient to finalize marketing materials. As a matter
of perspective, we have been informed there are only 63 active
Innovative Technology Contracts, and only one in four requests for
contracts reaches agreement status, so we feel especially
honored.”
The Company provides an update on various sales
and regulatory initiatives and agreements, as follows:
- Domestic sales. We currently have an in-house dedicated
U.S. sales group of five individuals, and affirm plans to add 25 to
30 commission-only independent reps by the end of the year.
- Marketing and sales in Canada. Following Health Canada
approval of STREAMWAY in November 2016, and upon further review of
our strategy there, we have determined that direct sales via
company and independent sales representatives will maximize the
uptake of STREAMWAY. We expect this approach will result in
better control over the process, more trialing, faster sales
decisions and improved economics to Skyline versus a distributor
model. Canada represents a large market with approximately 10,000
operating rooms in approximately 1,500 hospitals across 13
provinces.
- CE Mark. In late 2016 we contracted with TUV (a
nationally recognized testing laboratory, or NRTL) to certify our
STREAMWAY System to the new 60601-1 3rd Edition to conform to the
European Union’s Medical Devices Directive. This
certification will be part of a technical file that will be
submitted to our Notified Body (BSI) for recommendation for our CE
Mark, which will allow us to sell STREAMWAY in European Union
member states and certain other countries. We expect this
process to be completed in the next several weeks.
- GLG Pharma. Our distribution arrangements with GLG Pharma
for the UK, Poland and Central Europe are in place and rollout of
the STREAMWAY System in those geographies is awaiting receipt of
the CE Mark. The diagnostic product we envisioned developing
with GLG Pharma for use in conjunction with STREAMWAY is in the
research and feasibility phase.
- Electronic On-Ramp (EOR) - negotiations are ongoing.
- Munro Enterprises agreement. Munro Enterprises, an
Economically-Disadvantaged, Woman-Owned Small Business (EDWOSB), is
working to distribute the STREAMWAY System to the U.S. federal
government including U.S. Department of Veterans Affairs, U.S.
Department of Defense and U.S. Health and Human Services
facilities. In its capacity as an EDWOSB, Munro is afforded
special consideration to sell to these agencies.
Financial Results
Revenue for the fourth quarter of 2016 was
$139,563 compared with $183,276 for the fourth quarter of 2015.
Revenue was derived from the sale of four STREAMWAY Systems
and disposable products during each of these periods.
Gross profit for the fourth quarter of 2016 was
$107,074 or 76.7% of revenue, compared with $78,601 or 69.3% of
revenue for the same period in 2015.
Net loss available to common shareholders for
the fourth quarter of 2016 was $732,772 or $0.16 per share,
compared with a net loss available to common shareholders for the
fourth quarter of 2015 of $2,263,006 or $10.87 per share. Weighted
average shares used in calculation of loss per common share was
4,529,978 shares in the 2016 quarter and 208,257 shares in the 2015
quarter.
For 2016 revenue was $456,000, compared with
$654,000 in 2015. Revenue in 2016 included the sale of four
STREAMWAY systems and disposable supplies, and in 2015 included the
sale of 20 STREAMWAY Systems and disposable supplies. Revenue
declined in 2016 due to an insufficient sales force and limited
brand awareness. The Company spent the first half of 2016
repositioning itself with its customer base and ensuring that its
units were all the latest iteration.
Gross profit for 2016 was $274,875 or 60.2% of
revenue, compared with $350,372 or 53.5% of revenue for 2015.
In 2015 the Company absorbed the cost of upgrading or
replacing earlier generation systems, which increased its cost of
goods sold relevant to actual margin on new units sold. In
2016 the Company completed those upgrades, which still reduced its
margins but not as significantly. Skyline expects 2017 to
normalize to a higher gross profit margin.
Net loss available to common shareholders for
2016 was $6,526,014 or $2.31 per share, compared with a net loss
available to common shareholders for 2015 of $4,790,530 or $30.86
per share. Weighted average shares used in the calculation of
loss per share was 2,823,345 shares for 2016 and 155,233 shares for
2015.
The Company had cash, cash equivalents and
marketable securities of $2,148,419 as of December 31, 2016,
compared with $4,856,232 as of December 31, 2015. Subsequent
to the close of the year, the Company raised gross proceeds of
$4,295,812 in an underwritten public offering of stock and
warrants.
Conference Call
Skyline Medical management will host a
conference call beginning at 4:30 p.m. Eastern time today to
discuss fourth quarter financial results, expectations for 2017 and
to answer questions.
To access the conference call, please dial
844-666-7589 from within the U.S. or 443-961-0433 from outside the
U.S. All listeners should provide passcode 86034782.
Following the conclusion of the conference call,
a telephone replay will be available through March 21, 2017 and can
be accessed by dialing 855-859-2056 from within the U.S. or
404-537-3406 from outside the U.S. All listeners should
provide passcode 86034782.
About the STREAMWAY System
Skyline's revolutionary, FDA-cleared STREAMWAY
system is the first true direct-to-drain fluid disposal system
designed specifically for medical applications, such as radiology,
endoscopy, urology and cystoscopy procedures. It connects directly
to a facility's plumbing system to automate the collection,
measurement and disposal of waste fluids. As of December 31,
2016, Skyline Medical customers have installed 100 STREAMWAY
systems in 50 facilities across 19 states.
The STREAMWAY minimizes human intervention for
better safety and improves compliance with Occupational Safety and
Health Administration (OSHA) and other regulatory agency safety
guidelines. It also provides unlimited capacity for increased
efficiency in the operating room, which leads to greater
profitability. Furthermore, the STREAMWAY eliminates canisters to
reduce overhead costs and provides greater environmental
stewardship by helping to eliminate the approximately 50 million
potentially disease-infected canisters that go into landfills
annually in the U.S. For a demonstration please visit
www.skylinemedical.com or call 855-785-8855.
About Skyline MedicalSkyline
Medical produces a fully automated, patented, FDA-cleared waste
fluid disposal system that virtually eliminates staff exposure to
blood, irrigation fluid and other potentially infectious fluids
found in the healthcare environment. Antiquated manual fluid
handling methods that require hand carrying and emptying filled
fluid canisters present an exposure risk and potential liability.
Skyline Medical's STREAMWAY System fully automates the collection,
measurement and disposal of waste fluids and is designed to: 1)
reduce overhead costs to hospitals and surgical centers; 2) improve
compliance with OSHA and other regulatory agency safety guidelines;
3) improve efficiency in the operating room, and radiology and
endoscopy departments, thereby leading to greater profitability;
and 4) provide greater environmental stewardship by helping to
eliminate the approximately 50 million potentially disease-infected
canisters that go into landfills each year in the U.S. For
additional information, please visit www.skylinemedical.com.
Forward-looking
StatementsCertain of the matters discussed in this
announcement contain forward-looking statements that involve
material risks to and uncertainties in the Company's business that
may cause actual results to differ materially from those
anticipated by the statements made herein. Such risks and
uncertainties include, among other things, current negative
operating cash flows and a need for additional funding to finance
our operating plan; the terms of any further financing, which may
be highly dilutive and may include onerous terms; unexpected costs
and operating deficits, and lower than expected sales and revenues;
uncertain willingness and ability of customers to adopt new
technologies and other factors that may affect further market
acceptance, if our product is not accepted by our potential
customers, it is unlikely that we will ever become profitable,
adverse economic conditions; adverse results of any legal
proceedings; the volatility of our operating results and financial
condition; inability to attract or retain qualified senior
management personnel, including sales and marketing personnel; our
ability to establish and maintain the proprietary nature of our
technology through the patent process, as well as our ability to
possibly license from others patents and patent applications
necessary to develop products; the Company's ability to implement
its long range business plan for various applications of its
technology; the Company's ability to enter into agreements with any
necessary marketing and/or distribution partners; the impact of
competition, the obtaining and maintenance of any necessary
regulatory clearances applicable to applications of the Company's
technology; and management of growth and other risks and
uncertainties that may be detailed from time to time in the
Company's reports filed with the Securities and Exchange
Commission, which are available for review at www.sec.gov.
This is not a solicitation to buy or sell securities and does not
purport to be an analysis of the Company's financial position. See
the Company's most recent Annual Report on Form 10-K, and
subsequent reports and other filings at www.sec.gov.
SKYLINE MEDICAL INC.BALANCE
SHEETS |
|
|
|
|
|
December 31, 2016 |
|
|
December 31, 2015 |
|
ASSETS |
|
|
|
|
|
|
|
|
Current Assets: |
|
|
|
|
|
|
|
|
Cash & cash
equivalents |
|
$ |
1,764,090 |
|
|
$ |
4,856,232 |
|
Certificates of
deposit |
|
|
100,000 |
|
|
|
- |
|
Marketable
securities |
|
|
284,329 |
|
|
|
- |
|
Accounts
Receivable |
|
|
38,919 |
|
|
|
38,283 |
|
Inventories |
|
|
272,208 |
|
|
|
231,740 |
|
Prepaid Expense and
other assets |
|
|
148,637 |
|
|
|
271,579 |
|
Total Current
Assets |
|
|
2,608,183 |
|
|
|
5,397,834 |
|
|
|
|
|
|
|
|
|
|
Fixed Assets, net |
|
|
101,496 |
|
|
|
139,598 |
|
Intangibles, net |
|
|
97,867 |
|
|
|
94,987 |
|
|
|
|
|
|
|
|
|
|
Total Assets |
|
$ |
2,807,546 |
|
|
$ |
5,632,419 |
|
|
|
|
|
|
|
|
|
|
LIABILITIES AND STOCKHOLDERS' EQUITY |
|
|
|
|
|
|
|
|
Current
Liabilities: |
|
|
|
|
|
|
|
|
Accounts Payable |
|
$ |
220,112 |
|
|
$ |
650,413 |
|
Accrued Expenses |
|
|
1,346,105 |
|
|
|
864,295 |
|
Deferred Revenue |
|
|
7,998 |
|
|
|
5,000 |
|
Total Current
Liabilities |
|
|
1,574,215 |
|
|
|
1,519,708 |
|
|
|
|
|
|
|
|
|
|
Accrued Expenses |
|
|
309,649 |
|
|
|
- |
|
Total Liabilities |
|
|
1,883,864 |
|
|
|
1,519,708 |
|
Commitments and
Contingencies |
|
|
- |
|
|
|
- |
|
Stockholders’
Equity: |
|
|
|
|
|
|
|
|
Series B Convertible
Preferred Stock, $.01 par value, 20,000,000 authorized, 79,246 and
1,895,010 outstanding |
|
|
792 |
|
|
|
18,950 |
|
Common Stock, $.01 par
value, 24,000,000 authorized, 4,564,428 and 208,258
outstanding |
|
|
45,644 |
|
|
|
2,080 |
|
Additional paid-in
capital |
|
|
47,894,196 |
|
|
|
44,584,118 |
|
Accumulated
deficit |
|
|
(47,018,451 |
) |
|
|
(40,492,437 |
) |
Accumulated Other
Comprehensive Income |
|
|
1,501 |
|
|
|
- |
|
Total Stockholders'
Equity |
|
|
923,682 |
|
|
|
4,112,711 |
|
|
|
|
|
|
|
|
|
|
Total Liabilities and
Stockholders' Equity |
|
$ |
2,807,546 |
|
|
$ |
5,632,419 |
|
SKYLINE MEDICAL
INC.STATEMENTS OF COMPREHENSIVE INCOME
(LOSS) |
|
Year Ended December 31, |
|
|
2016 |
|
|
2015 |
|
Revenue |
|
$ |
456,495 |
|
|
$ |
654,354 |
|
|
|
|
|
|
|
|
|
|
Cost of goods sold |
|
|
181,620 |
|
|
|
303,982 |
|
|
|
|
|
|
|
|
|
|
Gross margin |
|
|
274,875 |
|
|
|
350,372 |
|
|
|
|
|
|
|
|
|
|
General and
administrative expense |
|
|
5,174,799 |
|
|
|
3,399,339 |
|
|
|
|
|
|
|
|
|
|
Operations expense |
|
|
1,158,117 |
|
|
|
846,687 |
|
|
|
|
|
|
|
|
|
|
Sales and marketing
expense |
|
|
467,970 |
|
|
|
503,989 |
|
|
|
|
|
|
|
|
|
|
Interest expense |
|
|
3 |
|
|
|
390,887 |
|
|
|
|
|
|
|
|
|
|
Total Expense |
|
|
6,800,889 |
|
|
|
5,140,902 |
|
|
|
|
|
|
|
|
|
|
Net loss available to
common shareholders |
|
|
(6,526,014 |
) |
|
|
(4,790,530 |
) |
|
|
|
|
|
|
|
|
|
Other
comprehensive income |
|
|
|
|
|
|
|
|
Unrealized gain (loss)
from marketable securities |
|
|
1,501 |
|
|
|
- |
|
|
|
|
|
|
|
|
|
|
Comprehensive loss |
|
$ |
(6,524,513 |
) |
|
$ |
(4,790,530 |
) |
|
|
|
|
|
|
|
|
|
Loss per common share -
basic and diluted |
|
$ |
(2.31 |
) |
|
$ |
(30.86 |
) |
|
|
|
|
|
|
|
|
|
Weighted average shares
used in computation - basic and diluted |
|
|
2,823,345 |
|
|
|
155,233 |
|
Contacts:
LHA
Kim Sutton Golodetz
kgolodetz@lhai.com
212-838-3777
or
Bruce Voss
bvoss@lhai.com
310-691-7100
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