Akers Biosciences, Inc. (NASDAQ: AKER) (AIM: AKR.L), (“Akers Bio”
or the "Company"), a developer of rapid health information
technologies, reports its financial results for the three months
and six months ended June 30, 2018. A Form 10-Q containing the full
financial statements is available for viewing on the Company's
website at www.akersbio.com or www.sec.gov.
Q2 & H1 Financial
Summary:
- Q2 total revenue $526,601 (Q2 2017:
$1,072,861)
- Revenue from flagship PIFA Heparin
PF/4 Rapid Assay products decreased by 17% to $356,082 (Q2 2017:
$426,747), but increased by 37% against the first quarter of 2018 –
the Company continued to experience lower yields in the process of
extracting the antigen used to produce these products during Q2,
resulting in production under target levels, and backorders
- Revenue from breathalyzer product
sales utilizing MPC Biosensor technology increased by 53% to
$106,680 (Q2 2017: 69,848), driven by sales of Metron, a disposable
ketones breath test, and BreathScan Alcohol tests
- H1 total revenue $829,076 (H1 2017:
$1,740,111)
- Revenue from flagship PIFA Heparin
PF/4 Rapid Assay products decreased by 38% to $616,066 (H1 2017:
$987,668)
- Revenue from breathalyzer product
sales utilizing MPC Biosensor technology decreased by 19% to
$125,630 (H1 2017: $155,507)
- Q2 gross profit margin reduced to
42% (Q2 2017: 73%), principally on account of the decline in
revenue against a base of certain fixed costs within product cost
of sales, but was a significant improvement on the first quarter of
2018
- H1 gross profit margin was 28% (H1
2017: 68%)
- Q2 overall expenses increased by
47%
- Administrative expenses increased
by 89% to $1,565,602 (Q2 2017: $829,929)
- Sales and Marketing expenses
increased by 13% to $469,469 (Q2 2017: $416,391)
- Research and Development expenses
decreased by 17% to $259,124 (Q2 2017: $313,835)
- H1 overall expenses increased by
26%
- Administrative expenses increased
by 53% to $2,481,134 (H1 2017: $1,620,457)
- Sales and Marketing expenses
decreased by 4% to $969,620 (H1 2017: $1,005,326)
- Research and Development expenses
increased by 6% to $699,094 (H1 2017: $662,277)
- Q2 net loss attributable to
shareholders $2,067,453 (Q2 2017: $818,008)
- H1 net loss attributable to
shareholders $3,927,444 (H1 2017: $2,167,279)
- Cash and marketable securities at
June 30, 2018 of $8,753,538 (31 December 2017: $5,450,039)
Q2 & H1 Operational
Summary:
- Significant expansion of outsourced
US sales and marketing capabilities for PIFA Heparin/PF4 Rapid
Assay products through independent sales representatives (ISRs).
Since the start of 2018, Akers Bio has developed coverage through
ISRs in 39 of the 50 United States, covering more than 75 per cent
of the country’s total population
- In May 2018, after extensive review
internally and with the FDA, the Company withdrew its initial
510(k) application for the PIFA Chlamydia rapid assay – Company
currently evaluating the feasibility and marketability of this
product in order to determine when and if the 510(k) application
will be resubmitted
- Entered into a three-year National
Distribution Agreement with Diagnostica Stago, Inc. (“Stago”) for
the sale of PIFA Heparin PF/4 Rapid Assay products across the US -
Stago is a global leader in hemostasis, with an extensive US-based
team dedicated to the sale and support of hemostasis products and
equipment to hospitals across the country
- During the periods, the Company
experienced lower yields in the process of extracting antigen from
the supplier provided platelets used to produce PIFA Heparin PF/4
Rapid Assay products. At these yield levels, production of this
product was under target levels, resulting in backorders. The
Company’s engineers and supplier representatives have been working
together to adjust processes in order to restore the yield to
appropriate levels, the results of which are not yet
determined
John J. Gormally, Chief Executive
Officer, commented:
“Despite the manufacturing challenges associated
with lower antigen yields experienced in the production of our core
PIFA Heparin/PF4 Rapid Assay products during the quarter, demand
and interest in these tests remains robust. The Company’s
relationship-building initiatives with our partners is beginning to
deliver a measurable increase in product trials and adoptions. The
antigen yield levels are improving in the current quarter and
backorders are being filled.
“Significant efforts have been made in recent
months to expand our outsourced marketing capabilities for PIFA
Heparin/PF4 Rapid Assay products through independent sales
representatives (ISRs) with relevant relationships, particularly
among prospective clinical end-users of these tests, including
surgeons. In fact, since the start of 2018, Akers Bio has developed
coverage through ISRs in 39 of the 50 United States, covering more
than 75 per cent of the country’s total population.
“Following the recent review of the scientific
feasibility and marketability of products within our development
pipeline, we continue R&D activities for our more focused new
product development pipeline. This includes PIFA PLUSS Chlamydia
Rapid Assay, for which we are continuing to evaluate feasibility
and marketability in order to determine when and if the 510(k)
application will be resubmitted; as well as BreathScan KetoChek, an
Akers Wellness product for nutritional ketosis.
“Our primary commercial focus is to continue to
expand the global distribution of our PIFA Heparin PF/4 Rapid Assay
products – the backbone of the Company - as well as
commercialization efforts associated with other tests including our
Tri-Cholesterol assay being sold under the “First Check” brand. The
leadership team remains focused on building long-term shareholder
value from our products and technologies.”
Summary of Statements of Operations for
the Three Months Ended June 30, 2018 and 2017
Revenue
Akers’ revenue for the three months ended June
30, 2018 totaled $526,601, a 51% decrease from the same period in
2017. The table below summarizes our revenue by product line for
the three months ended June 30, 2018 and 2017 as well as the
percentage of change year-over-year:
|
|
For the Three Months Ended June 30, |
|
Percent |
|
Product
Lines |
|
2018 |
|
|
2017 |
|
|
Change |
|
|
|
|
|
|
|
|
|
|
|
Particle
ImmunoFiltration Assay (“PIFA”) |
|
$ |
356,082 |
|
|
$ |
426,747 |
|
|
|
(17 |
)% |
MicroParticle Catalyzed
Biosensor (“MPC”) |
|
|
106,680 |
|
|
|
69,848 |
|
|
|
53 |
% |
Rapid Enzymatic Assay
(“REA”) |
|
|
45,100 |
|
|
|
- |
|
|
|
0 |
% |
Other |
|
|
18,739 |
|
|
|
576,266 |
|
|
|
(97 |
)% |
Total Revenue |
|
$ |
526,601 |
|
|
$ |
1,072,861 |
|
|
|
(51 |
)% |
Revenue from the Company’s PIFA Heparin/PF4
Rapid Assay products decreased 17% to $356,082 (2017: $426,747)
during the three months ended June 30, 2018, over the same period
of 2017. The Company is taking steps to improve its market presence
including the use of specialized Independent Sales Representatives
(“ISRs”) and through a program to educate the marketplace through
the preparation and publication of additional clinical studies and
physician seminars on the risks associated with heparin induced
thrombocytopenia.
During the three months ended June 30, 2018, we
experienced lower yields in the process of extracting antigen from
the platelets used to produce our PIFA Heparin product. At these
yield levels, our production of this product was under target
levels, resulting in backorders. Our engineers and representatives
from our supplier have been working together to adjust our
processes in order to restore the yield to appropriate levels, the
results of which are not yet determined.
Furthermore, we are evaluating and testing a
resolution that may involve one or more alternative antigen
suppliers and processes that may provide a path to restoring yield
levels for this product. For each of these potential solutions, we
will be conducting production validation and stability testing.
The Company’s dedicated technical sales account
executives are supporting over 300 sales representatives of Akers’
U.S. distribution partners, Cardinal Health, Thermo Fisher
Scientific and Diagnostica Stago, and the Company’s ISRs. Domestic
sales for the three months ended June 30, 2018, of our
distributors, Cardinal Health, Thermo Fisher Scientific and
Diagnostica Stago, accounted for $327,556 of the total PIFA
Heparin/PF4 Rapid Assay sales as compared to $328,076 for the same
period of 2017.
The Company’s MPC product sales increased by 53%
to $106,680 (2017: $68,848) during the three months ended June 30,
2018. Sales of the Company’s Metron and BreathScan Alcohol products
accounted for the revenue.
The Company’s REA products generated $45,100
(2017: $-) during the three months ended June 30, 2018.
Other revenue decreased to $18,739 (2017:
$576,266) during the three months ended June 30, 2018. The category
is made up of the sales of miscellaneous raw material components,
sub-assembled products and fees billed for shipping and handling
charges. During the three months ended June 30, 2017, the Company
received an initial order for manufacturing components from NovoTek
totaling $500,000. NovoTek plans to utilize these components along
with additional materials to be purchased in a future period to
assemble PIFA Heparin/PF4 products in either the Peoples Republic
of China or Poland.
Gross Margin
The Company’s gross margin declined to 42%
(2017: 73%) for the three months ended June 30, 2018, principally
on account of the decline in revenue against a base of certain
fixed costs within product cost of sales. These fixed costs within
product cost of sales consisted principally of direct personnel
costs, manufacturing and warehousing space and depreciation of
equipment. Within these fixed costs, direct personnel costs
increased during the period to $110,629 (2017: $59,612).
Furthermore, during the three months ended June
30, 2018, we incurred additional product cost of sales of
approximately $8,000 in our evaluation, testing and production
efforts for the extraction of antigen from platelets used to
produce our PIFA Heparin product.
As a result, cost of sales for the three months
ended June 30, 2018 increased to $302,826 (2017: $290,591). Direct
cost of sales increased to 31% of product revenue while other cost
of sales increased to 26% for the three months ended June 30, 2018
as compared to 13% and 14% respectively for the same period in 2017
as described above.
Direct cost of sales for the three-month period
ended June 30, 2018 were $164,712 (2017: $143,545). Other cost of
sales for the three months ended June 30, 2018 were $138,114 (2017:
$147,046).
General and Administrative
Expenses
General and administrative expenses for the
three months ended June 30, 2018, totaled $1,565,602, which was an
89% increase as compared to $829,929 for the three months ended
June 30, 2017.
The table below summarizes our general and
administrative expenses for the three months ended June 30, 2018
and 2017 as well as the percentage of change year-over-year:
|
|
For the Three Months Ended June 30, |
|
|
Percent Change |
|
Description |
|
2018 |
|
|
2017 |
|
|
|
|
Personnel Costs |
|
$ |
192,792 |
|
|
$ |
223,944 |
|
|
|
(14 |
)% |
Professional Service
Costs |
|
|
927,812 |
|
|
|
354,570 |
|
|
|
162 |
% |
Stock Market &
Investor Relations Costs |
|
|
145,771 |
|
|
|
117,253 |
|
|
|
24 |
% |
Other General and
Administrative Costs |
|
|
299,227 |
|
|
|
134,162 |
|
|
|
123 |
% |
Total General and
Administrative Expense |
|
$ |
1,565,602 |
|
|
$ |
829,929 |
|
|
|
89 |
% |
Personnel expenses decreased by 14% for the
three months ended June 30, 2018 as compared to the same period of
2017. A reduction in salaries, wages and bonuses to $162,756 (2017:
$177,657) and employee benefit expenses of $4,994 (2017: $17,326)
accounted for the savings.
Professional service costs increased 162% for
the three months ended June 30, 2018 as compared to the same period
of 2017. A significant increase in legal fees ($605,175 (2017:
$171,511)) and accounting and audit expenses ($236,042 (2017:
$104,000)) resulted in the change. The increase in the legal and
accounting fees were principally in connection with our Board’s
recent investigation and the resulting restatement of our
previously issued financials, as well in connection with litigation
matters.
Stock exchange fees totaling $45,819 (2017:
$12,247) were the major contributors to the 24% increase in stock
market and investor relations costs for the three months ended June
30, 2018.
Other general and administrative expenses
increased by 123%. This increase is the result of increases in bad
debts expense $125,500 (2017: $5,380) and rent and operating
expenses of $79,361 (2017: $42,525) for the rental of the Ramsey,
New Jersey satellite office.
Sales and Marketing
Expenses
Sales and marketing expenses for the three
months ended June 30, 2018 totaled $469,469 which was a 13%
increase compared to $416,391 for the three months ended June 30,
2017.
The table below summarizes our sales and
marketing expenses for the three months ended June 30, 2018 and
2017 as well as the percentage of change year-over-year:
|
|
For the Three Months Ended June 30, |
|
|
|
|
Description |
|
2018 |
|
|
2017 |
|
|
Percent Change |
|
Personnel Costs |
|
$ |
266,889 |
|
|
$ |
181,653 |
|
|
|
47 |
% |
Professional Service
Costs |
|
|
69,065 |
|
|
|
72,079 |
|
|
|
(4 |
)% |
Royalties and Outside
Commission Costs |
|
|
69,983 |
|
|
|
103,702 |
|
|
|
(33 |
)% |
Other Sales and
Marketing Costs |
|
|
63,532 |
|
|
|
58,957 |
|
|
|
8 |
% |
Total Sales and
Marketing Expenses |
|
$ |
469,469 |
|
|
$ |
416,391 |
|
|
|
13 |
% |
The US market has been divided into two regional
zones, each with a business director that is responsible for
recruiting and supporting ISRs and independent manufacturing
representatives (“IMRs”) to target large integrated delivery
networks and individual facilities. This strategy requires more
experienced and technically knowledgeable sales personnel to
interact with surgeons, executive management, laboratory and
medical directors. The Company has increased its sales and
marketing staff from 4 members on June 30, 2017 to 5 as of June 30,
2018.
Personnel costs increased in the three months
ended June 30, 2018 as compared to the same period of 2017. A
increase in compensation, bonuses, commissions and severance
payments to $219,754 (2017: $153,273) primarily due to changes in
the bonus and compensation plan and adjustments to staffing.
The legal settlement with ChubeWorkx Guernsey,
Ltd (“ChubeWorkx”), signed on August 11, 2016, requires the Company
to pay a 5% royalty on adjusted gross sales to ChubeWorkx on a
quarterly basis. During the three months ended June 30, 2018, this
royalty totaled $27,082 (2017: $61,502).
The Company recognized reductions in computer
expenses ($11,709 (2017: $21,099)) plus smaller reductions in
several other operating categories which were offset by an increase
in travel expenses ($33,210 (2017: $21,065)) that resulted in an 8%
increase in other sales and marketing costs.
Research and Development
Research and development expenses for the three
months ended June 30, 2018 totaled $259,123, which was a 17%
decrease as compared to $313,835 for the three months ended June
30, 2017.
The table below summarizes our research and
development expenses for the three months ended June 30, 2018 and
2017 as well as the percentage of change year-over-year:
|
|
For the Three Months Ended June 30, |
|
|
|
|
Description |
|
2018 |
|
|
2017 |
|
|
Percent Change |
|
Personnel Costs |
|
$ |
176,202 |
|
|
$ |
227,887 |
|
|
|
(23 |
)% |
Clinical Trial
Costs |
|
|
575 |
|
|
|
150 |
|
|
|
283 |
% |
Professional Service
Costs |
|
|
48,620 |
|
|
|
18,588 |
|
|
|
162 |
% |
Other Research and
Development Costs |
|
|
33,727 |
|
|
|
67,210 |
|
|
|
(50 |
)% |
Total Research and
Development Expenses |
|
$ |
259,124 |
|
|
$ |
313,835 |
|
|
|
(17 |
)% |
Personnel costs decreased 23% during the three
months ended June 30, 2018 as compared to the same period of 2017.
On April 25, 2018, the Board of Directors of the Company terminated
Dr. Raymond F. Akers from his position as Executive Chairman of the
Board and from each of his officer positions as Chief Scientific
Director and Secretary of the Company resulting in the decline in
personnel costs.
Professional services consisted of fees paid to
engineering consultants to address production mold designs,
specialized tooling and manufacturing process development,
regulatory consultants to assist with governmental filings and
facility certifications and the medical director. Engineering
service costs increased to $25,304 (2017: $5,630) and other general
and regulatory consulting fees totaled $23,316 (2017: $12,848) in
the three months ended June 30, 2018.
Decreases in laboratory supplies ($10,665 (2017:
$34,124)) and the consumption of raw materials ($1,888 (2017:
$11,851)) resulted in a decrease of 50% for other research and
development costs during the three months ended June 30, 2018.
Other Income and Expense
Other income, net of expense for the three
months ended June 30, 2018 totaled $45,744, which was a 1,624%
increase as compared to $2,654 for the three months ended June 30,
2017.
The table below summarizes our other income and
expenses for the three months ended June 30, 2018 and 2017 as well
as the percentage of change year-over-year:
|
|
For the Three Months Ended June 30, |
|
|
|
|
Description |
|
2018 |
|
|
2017 |
|
|
Percent Change |
|
Currency Translation
Loss |
|
$ |
(3,029 |
) |
|
$ |
(978 |
) |
|
|
210 |
% |
Realized Gains on
Investments |
|
|
(4,400 |
) |
|
|
605 |
|
|
|
(827 |
)% |
Interest and
Dividends |
|
|
53,173 |
|
|
|
3,027 |
|
|
|
1,657 |
% |
Total Other Income, Net
of Expenses |
|
$ |
45,744 |
|
|
$ |
2,654 |
|
|
|
1,624 |
% |
Losses associated with foreign currency
transactions totaled $3,029 during the three months ended June 30,
2018 as compared to a loss of $978 the same period of 2017,
primarily a result of the increased strength of the British Pound
as compared to the US Dollar.
Realized gains, interest and dividend income
increased to $48,773 (2017: $3,632). The Company’s available
capital for investment activities increased significantly due to
the capital raise in December 2017 and the subsequent exercises of
warrants during the three months ended June 30, 2018 resulting in
the increase in investment income.
Summary of Statements of Operations for
the Six Months Ended June 30, 2018 and 2017
Revenue
Akers’ revenue for the six months ended June 30,
2018 totaled $829,076, a 52% decrease from the same period in 2017.
The table below summarizes our revenue by product line for the six
months ended June 30, 2018 and 2017 as well as the percentage of
change year-over-year:
|
|
For the Six Months Ended June 30, |
|
|
|
|
Product
Lines |
|
2018 |
|
|
2017 |
|
|
Percent Change |
|
|
|
|
|
|
|
|
|
|
|
Particle
ImmunoFiltration Assay (“PIFA”) |
|
$ |
616,066 |
|
|
$ |
987,668 |
|
|
|
(38 |
)% |
MicroParticle Catalyzed
Biosensor (“MPC”) |
|
|
125,630 |
|
|
|
155,507 |
|
|
|
(19 |
)% |
Rapid Enzymatic Assay
(“REA”) |
|
|
55,000 |
|
|
|
- |
|
|
|
- |
|
Other |
|
|
32,380 |
|
|
|
596,936 |
|
|
|
(95 |
)% |
Total Revenue |
|
$ |
829,076 |
|
|
$ |
1,740,111 |
|
|
|
(52 |
)% |
Revenue from the Company’s PIFA Heparin/PF4
Rapid Assay products decreased 38% to $616,066 (2017: $987,668)
during the six months ended June 30, 2018, over the same period of
2017. The Company is taking steps to improve its market presence
including the use of specialized Independent Sales Representatives
(“ISRs”) and through a program to educate the marketplace through
the preparation and publication of additional clinical studies and
physician seminars on the risks associated with heparin induced
thrombocytopenia.
During the six months ended June 30, 2018, we
experienced lower yields in the process of extracting antigen from
the supplier provided platelets used to produce our PIFA Heparin
product. At these yield levels, our production of this product was
under target levels, resulting in backorders. Our engineers and
representatives from our supplier have been working together to
adjust our processes in order to restore the yield to appropriate
levels, the results of which are not yet determined.
Furthermore, we are evaluating and testing a
resolution that may involve one or more alternative antigen
suppliers and processes that may provide a path to restoring yield
levels for this product. For each of these potential solutions, we
will be conducting production validation and stability testing.
The Company’s dedicated technical sales account
executives are supporting over 300 sales representatives of Akers’
U.S. distribution partners, Cardinal Health, Thermo Fisher
Scientific, Diagnostica Stago and the Company’s ISRs. Domestic
sales for the six months ended June 30, 2018, of our distributors,
Cardinal Health, Thermo Fisher Scientific and Diagnostica Stago
accounted for $537,027 of the total PIFA Heparin/PF4 Rapid Assay
sales as compared to $765,653 for the same period of 2017.
The Company’s MPC product sales decreased by 19%
to $125,630 (2017: $155,508) during the six months ended June 30,
2018. Sales of the Company’s Metron and BreathScan Alcohol products
accounted for the revenue.
The Company’s REA products generated $55,000
(2017: $-) during the six months ended June 30, 2018. The Company’s
re-introduced Tri-Cholesterol product is produced with this
technology.
Other revenue decreased to $32,380 (2017:
$596,935) during the six months ended June 30, 2018. The category
is made up of the sales of miscellaneous raw material components,
sub-assembled products and fees billed for shipping and handling
charges. During the six months ended June 30, 2017, the Company
received an initial order for manufacturing components from NovoTek
totaling $500,000. NovoTek plans to utilize these components along
with additional materials to be purchased in a future period to
assemble PIFA Heparin/PF4 products in either the Peoples Republic
of China or Poland.
Gross Margin
The Company’s gross margin declined to 28%
(2017: 68%) for the six months ended June 30, 2018 principally on
account of the decline in revenue against a base of certain fixed
costs within product cost of sales. These fixed costs within
product cost of sales consisted principally of direct personnel
costs, manufacturing and warehousing space, depreciation of
equipment. Within these fixed costs, direct personnel costs
increased during the period to $207,453 (2017: $124,965).
Furthermore, during the six months ended June
30, 2018, we incurred additional product cost of sales of
approximately $19,200 in our evaluation, testing and production
efforts for the extraction of antigen from platelets used to
produce our PIFA Heparin product.
As a result, cost of sales for the six months
ended June 30, 2018 increased to $600,326 (2017: $549,312). Direct
cost of sales increased to 36% of product revenue while other cost
of sales increased to 36% for the six months ended June 30, 2018 as
compared to 15% and 17% respectively for the same period in 2017 as
described above.
Direct cost of sales for the six -month period
ended June 30, 2018 were $297,365 (2017: $249,673). Other cost of
sales for the six months ended June 30, 2018 were $302,961 (2017:
$299,639).
General and Administrative
Expenses
General and administrative expenses for the six
months ended June 30, 2018, totaled $2,481,135, which was a 53%
increase as compared to $1,620,457 for the six months ended June
30, 2017.
The table below summarizes our general and
administrative expenses for the six months ended June 30, 2018 and
2017 as well as the percentage of change year-over-year:
|
|
For the Six MonthsEnded June 30, |
|
|
|
|
Description |
|
2018 |
|
|
2017 |
|
|
Percent Change |
|
Personnel Costs |
|
$ |
499,727 |
|
|
$ |
558,471 |
|
|
|
(11 |
)% |
Professional Service
Costs |
|
|
1,231,750 |
|
|
|
546,322 |
|
|
|
125 |
% |
Stock Market &
Investor Relations Costs |
|
|
259,937 |
|
|
|
199,639 |
|
|
|
30 |
% |
Other General and
Administrative Costs |
|
|
489,721 |
|
|
|
316,025 |
|
|
|
55 |
% |
Total General and
Administrative Expense |
|
$ |
2,481,135 |
|
|
$ |
1,620,457 |
|
|
|
53 |
% |
Personnel expenses decreased by 11% for the six
months ended June 30, 2018 as compared to the same period of 2017.
A reduction in salaries, wages and bonuses to $406,697 (2017:
$455,113) and employee benefit expenses of $20,739 (2017: $31,612)
accounted for the savings.
Professional service costs increased by 125% for
the six months ended June 30, 2018 as compared to the same period
of 2017. A significant increase in legal fees ($883,451 (2017:
$310,198)) and accounting and audit services ($236,042 (2017:
$104,000)) were offset partially by a decrease in engineering fees
$14,658 (2017: $56,794). The increase in the legal and accounting
fees were principally in connection with our Board’s recent
investigation and the resulting restatement of our previously
issued financials, as well in connection with litigation
matters.
Stock exchange fees totaled $116,001 (2017:
$106,687) and transfer agent fees of $34,308 (2017: $21,124) were
the major contributors to the 30% increase in stock market and
investor relations costs for the six months ended June 30,
2018.
Other general and administrative expenses
increased by 55%. This increase is the result of increases in bad
debts expenses of $125,500 (2017: $47,741), rent and operating
expenses of $154,270 (2017: $87,778) for the addition of the
Ramsey, New Jersey satellite office and insurance expenses of
$95,752 (2017: $76,580).
Sales and Marketing
Expenses
Sales and marketing expenses for the six months
ended June 30, 2018 totaled $969,620 which was a 4% decrease
compared to $1,005,326 for the six months ended June 30, 2017.
The table below summarizes our sales and
marketing expenses for the six months ended June 30, 2018 and 2017
as well as the percentage of change year-over-year:
|
|
For the Six MonthsEnded June 30, |
|
|
|
|
Description |
|
2018 |
|
|
2017 |
|
|
Percent Change |
|
Personnel Costs |
|
$ |
588,598 |
|
|
$ |
517,485 |
|
|
|
14 |
% |
Professional Service
Costs |
|
|
140,623 |
|
|
|
137,126 |
|
|
|
3 |
% |
Royalties and Outside
Commission Costs |
|
|
97,838 |
|
|
|
148,836 |
|
|
|
(34 |
)% |
Other Sales and
Marketing Costs |
|
|
142,561 |
|
|
|
201,879 |
|
|
|
(29 |
)% |
Total Sales and
Marketing Expenses |
|
$ |
969,620 |
|
|
$ |
1,005,326 |
|
|
|
(4 |
)% |
Personnel costs increased in the six months
ended June 30, 2018 as compared to the same period of 2017. This
was due to an increase in compensation, bonuses and commissions and
severance payments to $476,106 (2017: $446,542) and employee
benefit expenses of $27,327 (2017: $13,075) primarily due to
changes in the bonus and compensation plan and adjustments to
staffing.
During the six months ended June 30, 2018, the
ChubeWorkx royalty totaled $58,771 (2017: $93,781) and commissions
to IMRs were $39,067 (2017: $55,055) which contributed to the
decline in royalty and outside commission costs during the six
months ended June 30, 2018.
The Company recognized significant reductions in
advertising expenses ($12,167 (2017: $54,700)) and trade show
expenses ($885 (2017: $30,742)) plus smaller reductions in several
other operating categories was offset by an increase in travel
expenses ($60,921 (2017: $50,923)) that resulted in a 29% reduction
in other sales and marketing costs.
Research and Development
Research and development expenses for the six
months ended June 30, 2018 totaled $699,094, which was a 6%
increase as compared to $662,277 for the six months ended June 30,
2017.
The table below summarizes our research and
development expenses for the six months ended June 30, 2018 and
2017 as well as the percentage of change year-over-year:
|
|
For the Six Months Ended June 30, |
|
|
|
|
Description |
|
2018 |
|
|
2017 |
|
|
Percent Change |
|
Personnel Costs |
|
$ |
475,415 |
|
|
$ |
512,837 |
|
|
|
(7 |
)% |
Clinical Trial
Costs |
|
|
1,480 |
|
|
|
300 |
|
|
|
393 |
% |
Professional Service
Costs |
|
|
137,896 |
|
|
|
47,711 |
|
|
|
189 |
% |
Other Research and
Development Costs |
|
|
84,303 |
|
|
|
101,429 |
|
|
|
(17 |
)% |
Total Research and
Development Expenses |
|
$ |
699,094 |
|
|
$ |
662,277 |
|
|
|
6 |
% |
Personnel costs decreased 7% during the six
months ended June 30, 2018 as compared to the same period of 2017.
On April 25, 2018, the Board of Directors of the Company terminated
Dr. Raymond F. Akers from his position as Executive Chairman of the
Board and from each of his officer positions as Chief Scientific
Director and Secretary of the Company resulting in the decline in
personnel costs.
Professional services consisted of fees paid to
engineering consultants to address production mold designs,
specialized tooling and manufacturing process development,
regulatory consultants to assist with governmental filings and
facility certifications and the medical director. Engineering
service costs increased to $97,800 (2017: $23,335), fees for the
other general and regulatory consulting fees totaled $40,096 (2017:
$21,503) in the six months ended June 30, 2018.
Decreases in laboratory supplies ($26,306 (2017:
$42,183)) and travel expenses ($5,067 (2017: $19,593)) resulted in
a decrease of 17% for other research and development costs during
the six months ended June 30, 2018.
Other Income and Expense
Other income, net of expense for the six months
ended June 30, 2018 totaled $79,209, which was a 410% increase as
compared to $15,536 for the six months ended June 30, 2017.
The table below summarizes our other income and
expenses for the six months ended June 30, 2018 and 2017 as well as
the percentage of change year-over-year:
|
|
For the Six Months Ended June 30, |
|
|
|
|
Description |
|
2018 |
|
|
2017 |
|
|
Percent Change |
|
Currency Translation
Gain/(Loss) |
|
$ |
(5,904 |
) |
|
$ |
9,367 |
|
|
|
(163 |
)% |
Realized Gains on
Investments |
|
|
(4,401 |
) |
|
|
1,656 |
|
|
|
(366 |
)% |
Interest and
Dividends |
|
|
89,514 |
|
|
|
4,513 |
|
|
|
1,883 |
% |
Total Other Income, Net
of Expenses |
|
$ |
79,209 |
|
|
$ |
15,536 |
|
|
|
410 |
% |
Losses associated with foreign currency
transactions totaled $5,904 during the six months ended June 30,
2018 as compared to a gain of $9,367 the same period of 2017,
primarily a result of the increased strength of the British Pound
as compared to the US Dollar.
Realized gains, interest and dividend income
increased to $85,113 (2017: $6,169). The Company’s available
capital for investment activities increased significantly due to
the capital raise in December 2017 and the subsequent exercises of
warrants during the three months ended June 30, 2018 resulting in
the increase in investment income.
Income Taxes
As of June 30, 2018, 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 six months ended June 30, 2018 and 2017,
the Company generated a net loss attributable to shareholders of
$3,927,444 and $2,167,279, respectively. As of June 30, 2018 and
December 31, 2017, the Company has an accumulated deficit of
$108,773,291 and $104,845,847 and had cash (excluding restricted
cash) and marketable securities totaling $8,253,538 and $5,450,039,
respectively.
Our primary focus is to expand the global
distribution of our PIFA Heparin PF/4 rapid assays. The Company
continues commercialization of its BreathScan OxiChek, BreathScan
Lync Readers, METRON, BreathScan Alcohol detection devices and the
Tri-Cholesterol assay and development activities for PIFA PLUSS
Chlamydia rapid assay and BreathScan KetoChek products.
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 expect that our current
working capital position will be sufficient to meet our estimated
cash needs for at least the next twelve 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 BreathScan KetoChek via the enrollment
of patients in clinical trials.to support performance claims and
generate studies in peer-reviewed journals to support product
marketing. We will also continue to support commercialization and
marketing activities of in-line products PIFA Heparin/PF4 rapid
assays, PIFA PLUSS® PF4, breath alcohol detectors, METRON
BreathScan OxiChek and BreathScan Lync Readers globally. 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 the six months ended
June 30, 2018 were $37,698 (2017: $37,191). Capital expenditures,
primarily for production, laboratory and facility improvement costs
for the year ending December 31, 2018 are expected to be
approximately $60,000. As per the Company’s lease agreement, the
owner of the facility will be handling most of the facility
upgrades, and we anticipate financing any production and laboratory
capital expenditures through working capital.
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.
The Company executed a lease for a satellite office in Ramsey, New
Jersey on June 23, 2017 which expires May 31, 2019. The satellite
office supports members of executive management and the sales and
marketing team with convenient access to resources in the greater
New York City area.
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 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 environment and their impact on the
Company’s results.
Our net cash consumed by operating activities
totaled $3,817,892 during the six months ended June 30, 2018. Cash
was consumed by the loss of $3,927,444 plus non-cash adjustments of
$112,903 for depreciation and amortization of non-current assets,
$3,469 for the amortization of deferred compensation, $32,283 for
the reserve and write-off for obsolete inventory, $97,000 for the
reserve and write-off of doubtful accounts, $10,629 for share based
compensation to employees and $12,545 for share based compensation
to non-employees less $16,332 for accrued interest and dividends on
marketable securities. For the six months ended June 30, 2018,
decreases in trade receivables of $455,048, prepaid expenses –
related party of $26,468 and an increase in trade and other
payables of $89,964 provided cash, primarily related to routine
changes in operating activities. A net increase in deposits and
other receivables of $13,698, deposits and other receivables –
related party of $30,243, inventory of $99,220, prepaid expenses of
$548,144, and a decrease in trade and other payables – related
party of $23,120 consumed cash from operating activities.
Our net cash consumed by operating activities
totaled $2,593,231 during the six months ended June 30, 2017. Cash
was consumed by the loss of $2,167,279 plus non-cash adjustments of
$121,381 for depreciation and amortization of non-current assets,
$21,542 for the write-off and reserve for obsolete inventory,
$46,239 for the reserve and write-off of doubtful accounts, $15,864
for the fair value of restricted common stock issued for services
and $12,367 for share-based compensation less $1,001 for accrued
interest and dividends on marketable securities. For the six months
ended June 30, 2017, decreases in deposits and other receivables of
$10,692, trade receivables – related parties of $31,892, prepaid
expenses of $20,752, prepaid expenses – related party of $46,890,
and an increase in trade and other payables of $38,278 provided
cash, primarily related to routine changes in operating activities.
A net increase in trade receivables of $372,502, inventories of
$213,860 and other assets of $4,330 and decreases trade and other
payables – related party of $200,156 consumed cash from operating
activities.
Investing and Financing
Activities
The Company’s net cash provided by investing and
financing activities totaled $4,155,423 (2017: $2,717,706) during
the six months ended June 30, 2018. Cash of $5,306,452 (2017:
$2,742,359) was consumed by capital expenditures and the purchase
of marketable securities. Proceeds from the sale of marketable
securities contributed cash of $2,306,675 (2017: $1,745,554) and
net proceeds from the public and private placements of common and
Series B preferred stock and the exercise of warrants for Common
Stock contributed $7,155,200 (2017: $3,714,511) for the six months
ended June 30, 2018.
Enquiries:
Akers Biosciences, Inc.John J. Gormally, Chief Executive
OfficerTel. +1 856 848 8698
Vigo Communications (Global Public Relations)Ben Simons / Fiona
HensonTel. +44 (0)20 7390 0234Email: akers@vigocomms.com
About Akers Biosciences,
Inc.
Akers Bio 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.akersbio.com. Follow us on Twitter
@AkersBio.
Cautionary Note 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 the
Private Securities Litigation Reform Act of 1995. Such
forward-looking statements reflect the Company's expectations about
its future operating results, performance and opportunities that
involve substantial risks and uncertainties. Such statements may
include, without limitation, statements with respect to the
Company’s plans, compliance with the requirements of various
regulatory agencies and certain NASDAQ Stock Market listing rules,
objectives, projections, expectations and intentions and other
statements identified by words such as “projects,” “may,” “will,”
“could,” “would,” “should,” “believes,” “expects,” “anticipates,”
“estimates,” “intends,” “plans,” “potential” or similar
expressions, as they relate to the Company, its subsidiaries, or
its management. These statements are based upon the current beliefs
and expectations of the Company’s management and are subject to
significant risks and uncertainties, including those detailed in
the Company’s filings with the Securities and Exchange Commission.
Actual results, performance, prospects, and opportunities to may
differ materially from those set forth in, or implied by, the
forward-looking statements. These forward-looking statements
involve certain risks and uncertainties that are subject to change
based on various factors (many of which are beyond the Company’s
control). The Company undertakes no obligation to publicly update
any forward-looking statements, whether as a result of new
information, future events or otherwise, except as required by
applicable law.
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