Sales of Flagship PIFA Heparin PF/4 Rapid
Assay Products Up 16% over Q3 2017; Company Continuing to Evaluate
Strategic Alternatives to Maximize Shareholder Value
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 and nine
months ended September 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.
Q3 Financial Summary:
|
● |
Q3 total revenue $557,089 (Q3
2017: $675,831) |
|
|
|
|
|
o |
Revenue from flagship PIFA
Heparin PF/4 Rapid Assay products increased by 16% to $567,262 (Q3
2017: $490,058), with the increase principally on account of
filling open backorders |
|
|
|
o |
Revenue from breathalyzer
product sales utilizing MPC Biosensor technology decreased by 118%
to $(18,798) (Q3 2017: $104,094), on account of our settlement with
Pulse, and a decline in the sales of Breath Alcohol products |
|
|
|
|
|
|
● |
Q3 gross profit
margin declined to 14% (Q3 2017: 52%), principally on account of
the Pulse litigation settlement which resulted in a write off of
BreathScan OxiChek™ products in the aggregate amount of
$218,799 |
|
|
|
|
|
● |
Q3 operating expenses increased
by 109% |
|
|
|
|
|
o |
Administrative expenses increased by 108%
to $1,706,651 (Q3 2017: $819,565) |
|
|
o |
Sales and Marketing expenses decreased by
3% to $364,641 (Q3 2017: $377,091) |
|
|
o |
Research and Development expenses decreased
by 45% to $160,867 (Q3 2017: $290,447) |
|
|
o |
Litigation Settlement Expenses incurred of
$930,000 |
|
|
|
|
|
● |
Q3 net loss attributable to
shareholders $3,083,949 (Q3 2017: $1,177,644) |
|
|
|
|
● |
Cash and marketable securities
at September 30, 2018 of $6,167,451 (31 December 2017:
$5,450,039) |
|
|
|
|
Q3 Operational
Summary: |
|
|
|
|
● |
Agreements signed
with multiple additional Independent Sales Representative (ISR)
organizations to further expand US sales and marketing capabilities
for the Company’s rapid test for heparin-induced thrombocytopenia
(HIT) - since the start of 2018, Akers Bio has developed sales and
marketing coverage through ISRs in 39 of the 50 United States,
covering more than 75 per cent of the country’s total
population |
|
|
|
|
|
● |
During Q3, antigen
yields in the process of extracting antigen from the platelets used
to produce our PIFA Heparin PF/4 Rapid Assay products improved, and
the Company was able to fill all of its backorders. The Company’s
engineers and representatives from its supplier continue to work
together to adjust processes in order to restore the yield to
appropriate levels, the results of which are not yet determined.
Furthermore, the Company is 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, the Company
will be conducting production validation and stability testing |
|
|
|
|
|
● |
The Company reached
an amicable resolution by way of a settlement agreement and release
with Pulse Health, LLC. Pursuant to the settlement, the Company
paid $930,000 to Pulse and agreed to a permanent injunction and
will not make, use, sell or offer to sell the BreathScan OxiChek™
product |
|
Howard R. Yeaton, Chief Executive
Officer and interim Chief Financial Officer,
commented:
“I am pleased to report growth in revenues of
our core PIFA Heparin PF/4 Rapid Assay products over the
corresponding quarter of 2017, with the increase principally on
account of filling open backorders. The considerable efforts to
improve the antigen yields in the process of manufacturing these
products has resulted in improved yields, enabling us to fill all
backorders. Our dedicated technical sales account executives
continue to work with our distribution partners and Independent
Sales Representatives to drive awareness and sales of these
products.
“Following new leadership’s review of the
Company’s commercial and product development strategies, the
Company moved into the fourth quarter of the year as a more focused
organization, working primarily on the commercialization of our
Particle Immuno-Filtration Assay (PIFA®) Technology platform.
“The Board of Directors and officers of the
Company are committed to identifying the best pathway to maximizing
value for our shareholders. An offering of common stock and
warrants for gross proceeds of $2 million last month has boosted
the Company’s balance sheet, and I believe this helps to place the
Company in a strong position to evaluate strategic alternatives to
maximize shareholder value. This process is considering a range of
potential strategic alternatives including possible business
combinations, while simultaneously supporting the management and
employees in the execution of the Company’s current business
activities. I look forward to reporting further on this process
when appropriate.”
Summary of Statements of Operations for
the Three Months Ended September 30, 2018 and 2017
Revenue
Akers’ revenue for the three months ended
September 30, 2018 totaled $557,089, an 18% decrease from the same
period in 2017. The table below summarizes our revenue by product
line for the three months ended September 30, 2018 and 2017 as well
as the percentage of change year-over-year:
|
|
For the Three Months Ended September 30, |
|
|
|
|
Product
Lines |
|
2018 |
|
|
2017 |
|
|
Percent Change |
|
Particle
ImmunoFiltration Assay (“PIFA”) |
|
$ |
567,262 |
|
|
$ |
490,058 |
|
|
|
16 |
% |
MicroParticle Catalyzed
Biosensor (“MPC”) |
|
|
(18,798 |
) |
|
|
104,094 |
|
|
|
(118 |
)% |
Rapid Enzymatic Assay
(“REA”) |
|
|
- |
|
|
|
27,500 |
|
|
|
(100 |
)% |
Other |
|
|
8,625 |
|
|
|
16,679 |
|
|
|
(48 |
)% |
Product Revenue
Total |
|
|
557,089 |
|
|
|
638,331 |
|
|
|
(13 |
)% |
License Fees |
|
|
- |
|
|
|
37,500 |
|
|
|
(100 |
)% |
Total Revenue |
|
$ |
557,089 |
|
|
$ |
675,831 |
|
|
|
(18 |
)% |
Revenue from the Company’s PIFA Heparin/PF4 Rapid Assay products
increased 16% to $567,262 (2017: $490,058) during the three months
ended September 30, 2018, over the same period of 2017, with the
increase principally on account of filling open backorders.
During the six 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. During the three months ended
September 30, 2018, our antigen yields improved, and we were able
to fill all of our backorders. Our engineers and representatives
from our supplier continue to work 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 September 30, 2018, of our
distributors, Cardinal Health, Thermo Fisher Scientific and
Diagnostica Stago, accounted for $529,860 of the total PIFA
Heparin/PF4 Rapid Assay related product sales as compared to
$441,676 for the same period of 2017.
The Company’s MPC product sales decreased by
118% to $(18,798) (2017: $104,094) during the three months ended
September 30, 2018. On account of our settlement with Pulse (as
discussed in Note 10 of the footnotes within this Quarterly
Report), we repurchased from our U.S. distributor their remaining
inventory in the amount of $33,600 for the OxiChek products. In
addition, we saw a decline in sales of the Breath Alcohol
products.
The Company’s REA products generated $0 (2017:
$27,500) during the three months ended September 30, 2018.
Other revenue decreased to $8,625 (2017:
$16,679) during the three months ended September 30, 2018 primarily
due to a decline in shipping/handling revenue. The category is made
up of the sales of miscellaneous raw material components,
sub-assembled products and fees billed for shipping and handling
charges.
Gross Margin
The Company’s gross margin declined to 14%
(2017: 52%) for the three months ended September 30, 2018,
principally on account of the Pulse litigation settlement which
resulted in a write off of OxiChek products in the aggregate amount
of $218,799. 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 decreased during the period to
$76,254 (2017: $88,903). This decrease was a result of fewer
personnel being utilized in production related activities.
Cost of sales for the three months ended
September 30, 2018 increased to $476,453 (2017: $323,526). The
increase was principally attributable to the write off of $218,799
of OxiChek product. Direct cost of sales decreased to 22% of
product revenue while other cost of sales increased to 64% for the
three months ended September 30, 2018 as compared to 31% and 20%
respectively for the same period in 2017 as described above.
Direct cost of sales for the three months ended
September 30, 2018 were $122,545 (2017: $196,866). Other cost of
sales for the three months ended September 30, 2018 were $353,908
(2017: $126,660).
General and Administrative
Expenses
General and administrative expenses for the
three months ended September 30, 2018, totaled $2,636,651, which
was a 222% increase as compared to $819,565 for the three months
ended September 30, 2017.
The table below summarizes our general and
administrative expenses for the three months ended September 30,
2018 and 2017 as well as the percentage of change
year-over-year:
|
|
For the Three Months Ended September 30, |
|
|
|
|
Description |
|
2018 |
|
|
2017 |
|
|
Percent Change |
|
Personnel Costs |
|
$ |
287,054 |
|
|
$ |
223,361 |
|
|
|
29 |
% |
Professional Service
Costs |
|
|
727,069 |
|
|
|
320,081 |
|
|
|
127 |
% |
Stock Market &
Investor Relations Costs |
|
|
122,214 |
|
|
|
120,807 |
|
|
|
1 |
% |
Other General and
Administrative Costs |
|
|
1,500,314 |
|
|
|
155,316 |
|
|
|
866 |
% |
Total General and
Administrative Expense |
|
$ |
2,636,651 |
|
|
$ |
819,565 |
|
|
|
222 |
% |
Personnel expenses increased by 29% for the
three months ended September 30, 2018 as compared to the same
period of 2017. An increase in salaries, wages and bonuses to
$249,445 (2017: $172,587) was offset by a decline in employee
benefit expenses of $14,723 (2017: $22,857).
Professional service costs increased 127% for
the three months ended September 30, 2018 as compared to the same
period of 2017. A significant increase in legal fees ($394,067
(2017: $258,026)) and accounting and audit expenses ($206,374
(2017: $36,130)) 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 as in connection with
litigation matters. Configuration and implementation expenses for
the planned NetSuite Financial System also contributed to the
increased accounting service costs.
Stock market and investor fees increased 1% for
the three months ended September 30, 2018. The fees included costs
associated with the Company’s nominated advisor, stock transfer
agents, investor relations team and stock exchange fees.
Other general and administrative expenses
increased by 866%. During the three months ended September 30,
2018, the Company made a lump sum compensation payment of $100,000
to each of the independent directors. In addition, the Board
approved the settlement of the Pulse Litigation which resulted in a
one-time charge of $930,000. Increases in other general and
administrative expenses were also attributable to business
insurance costs, totaled $137,256 (2017: $39,902) and computer
expenses $58,502 (2017: $7,688) related to the licensing and
implementation of the NetSuite Financial System impacted the higher
costs.
Sales and Marketing
Expenses
Sales and marketing expenses for the three
months ended September 30, 2018 totaled $364,641 which was a 3%
decrease compared to $377,091 for the three months ended September
30, 2017.
The table below summarizes our sales and
marketing expenses for the three months ended September 30, 2018
and 2017 as well as the percentage of change year-over-year:
|
|
For the Three Months Ended September 30, |
|
|
|
|
Description |
|
2018 |
|
|
2017 |
|
|
Percent Change |
|
Personnel Costs |
|
$ |
209,029 |
|
|
$ |
184,835 |
|
|
|
13 |
% |
Professional Service
Costs |
|
|
41,147 |
|
|
|
67,111 |
|
|
|
(39 |
)% |
Royalties and Outside
Commission Costs |
|
|
68,017 |
|
|
|
43,635 |
|
|
|
56 |
% |
Other Sales and
Marketing Costs |
|
|
46,448 |
|
|
|
81,510 |
|
|
|
(43 |
)% |
Total Sales and
Marketing Expenses |
|
$ |
364,641 |
|
|
$ |
377,091 |
|
|
|
(3 |
)% |
The U.S. market has been divided into two
regional zones, each with a business director that is responsible
for recruiting and supporting Independent Sales Representatives
(“ISRs”) 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 September 30, 2017 to 5 as of September 30, 2018.
Personnel costs increased in the three months
ended September 30, 2018 as compared to the same period of 2017,
the results of an increase in compensation, commissions and benefit
costs to $175,296 (2017: $155,488).
The Company has terminated relationships with
several of its professional service providers.
Commissions paid to ISRs totaled $85,370 in the
three months ended September 30, 2018 (2017: $9,307) which were
offset by an adjustment to the royalties due to ChubeWorkx
Guernsey, Ltd (“ChubeWorkx”).
The Company recognized reductions in computer
and travel expenses in the three months ended September 30, 2018
($5,230 (2017: $12,854) and ($26,651 (2017: $37,405), respectively)
plus smaller reductions in several other operating categories that
resulted in a 43% decrease in other sales and marketing costs.
Research and Development
Research and development expenses for the three
months ended September 30, 2018 totaled $160,867, which was a 45%
decrease as compared to $290,447 for the three months ended
September 30, 2017.
The table below summarizes our research and
development expenses for the three months ended September 30, 2018
and 2017 as well as the percentage of change year-over-year:
|
|
For the Three Months Ended September 30, |
|
|
|
|
Description |
|
2018 |
|
|
2017 |
|
|
Percent Change |
|
Personnel Costs |
|
$ |
95,896 |
|
|
$ |
214,369 |
|
|
|
(55 |
)% |
Clinical Trial
Costs |
|
|
- |
|
|
|
2,153 |
|
|
|
(100 |
)% |
Professional Service
Costs |
|
|
15,554 |
|
|
|
41,829 |
|
|
|
(63 |
)% |
Other Research and
Development Costs |
|
|
49,417 |
|
|
|
32,096 |
|
|
|
54 |
% |
Total Research and
Development Expenses |
|
$ |
160,867 |
|
|
$ |
290,447 |
|
|
|
(45 |
)% |
Personnel costs decreased 55% during the three
months ended September 30, 2018 as compared to the same period of
2017. The Company’s termination of Dr. Akers in April combined with
additional reductions in the number of staff in the department
resulted 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 decreased to $8,545 (2017: $32,830) and other general
and regulatory consulting fees totaled $7,009 (2017: $9,000) in the
three months ended September 30, 2018.
Increases in laboratory supplies ($14,948 (2017:
$9,325)) and seminar and conference fees ($15,213 (2017: $0))
resulted in an increase of 54% for other research and development
costs during the three months ended September 30, 2018.
Other Income and Expense
Other income, net of expense, for the three
months ended September 30, 2018 totaled $40,351 as compared to an
expense of $68 for the three months ended September 30, 2017.
The table below summarizes our other income and
expenses for the three months ended September 30, 2018 and 2017 as
well as the percentage of change year-over-year:
|
|
For the Three Months Ended September 30, |
|
|
|
|
Description |
|
2018 |
|
|
2017 |
|
|
Percent Change |
|
Currency Translation
(Gain)/Loss |
|
$ |
(634 |
) |
|
$ |
3,195 |
|
|
|
(120 |
)% |
Interest and Dividend
Income |
|
|
(35,545 |
) |
|
|
(3,127 |
) |
|
|
1,036 |
% |
Other Income |
|
|
(4,172 |
) |
|
|
- |
|
|
|
N/A |
|
Total Other Income, Net
of Expenses |
|
$ |
(40,351 |
) |
|
$ |
68 |
|
|
|
(59,440 |
)% |
Realized gains, interest and dividend income
increased to $35,545 (2017: $3,127). 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 nine months ended September 30, 2018 resulting
in the increase in investment income.
Summary of Statements of Operations for
the Nine Months Ended September 30, 2018 and 2017
Revenue
Akers’ revenue for the nine months ended
September 30, 2018 totaled $1,386,165, a 43% decrease from the same
period in 2017. The table below summarizes our revenue by product
line for the nine months ended September 30, 2018 and 2017 as well
as the percentage of change year-over-year:
|
|
For the Nine Months Ended September 30, |
|
|
|
|
Product
Lines |
|
2018 |
|
|
2017 |
|
|
Percent Change |
|
|
|
|
|
|
|
|
|
|
|
Particle
ImmunoFiltration Assay (“PIFA”) |
|
$ |
1,183,327 |
|
|
$ |
1,477,726 |
|
|
|
(20 |
)% |
MicroParticle Catalyzed
Biosensor (“MPC”) |
|
|
106,832 |
|
|
|
259,601 |
|
|
|
(59 |
)% |
Rapid Enzymatic Assay
(“REA”) |
|
|
55,000 |
|
|
|
27,500 |
|
|
|
100 |
% |
Other |
|
|
41,006 |
|
|
|
613,614 |
|
|
|
(93 |
)% |
Product Revenue
Total |
|
|
1,386,165 |
|
|
|
2,378,441 |
|
|
|
(42 |
)% |
License Fees |
|
|
- |
|
|
|
37,500 |
|
|
|
(100 |
)% |
Total Revenue |
|
$ |
1,386,165 |
|
|
$ |
2,415,941 |
|
|
|
(43 |
)% |
Revenue from the Company’s PIFA Heparin/PF4
Rapid Assay products decreased 20% to $1,183,327 (2017: $1,477,726)
during the nine months ended September 30, 2018, over the same
period of 2017. The decline in revenues was principally on account
of the aforementioned yield matters and the resulting and customer
backorders, but our antigen yields improved, and we were able to
fill all our backorders from June 30, 2018.
Domestic sales for the nine months ended
September 30, 2018, of our distributors, Cardinal Health, Thermo
Fisher Scientific and Diagnostica Stago accounted for $1,067,018 of
the total PIFA Heparin/PF4 Rapid Assay related product sales as
compared to $1,207,372 for the same period of 2017.
The Company’s MPC product sales decreased by 59%
to $106,832 (2017: $259,601) during the nine months ended September
30, 2018.
The Company’s REA products generated $55,000
(2017: $27,500) during the nine months ended September 30,
2018.
Other revenue decreased to $41,006 (2017:
$613,614) during the nine months ended September 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 nine months ended September 30, 2017,
the Company received an order for manufacturing components totaling
$500,000.
Gross Margin
The Company’s gross margin declined to 22%
(2017: 64%) for the nine months ended September 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 $283,707 (2017: $213,867).
Cost of sales for the nine months ended
September 30, 2018 increased to $1,076,779 (2017: $872,847). Direct
cost of sales increased to 30% of product revenue while other cost
of sales increased to 47% for the nine months ended September 30,
2018 as compared to 19% and 18% respectively for the same period in
2017 as described above. The increase was principally attributable
to the write off of $218,799 of the OxiChek products.
Direct cost of sales for the nine month period
ended September 30, 2018 were $419,910 (2017: $446,549). Other cost
of sales for the nine months ended September 30, 2018 were $656,869
(2017: $426,299).
General and Administrative
Expenses
General and administrative expenses for the nine
months ended September 30, 2018, totaled $5,117,786, which was a
110% increase as compared to $2,440,023 for the nine months ended
September 30, 2017.
The table below summarizes our general and
administrative expenses for the nine months ended September 30,
2018 and 2017 as well as the percentage of change
year-over-year:
|
|
For the Nine Months Ended September 30, |
|
|
|
|
Description |
|
2018 |
|
|
2017 |
|
|
Percent Change |
|
Personnel Costs |
|
$ |
786,781 |
|
|
$ |
781,833 |
|
|
|
1 |
% |
Professional Service
Costs |
|
|
1,958,819 |
|
|
|
866,403 |
|
|
|
126 |
% |
Stock Market &
Investor Relations Costs |
|
|
382,151 |
|
|
|
320,446 |
|
|
|
19 |
% |
Other General and
Administrative Costs |
|
|
1,990,035 |
|
|
|
471,341 |
|
|
|
322 |
% |
Total General and
Administrative Expense |
|
$ |
5,117,786 |
|
|
$ |
2,440,023 |
|
|
|
110 |
% |
Personnel expenses increased by 1% for the nine
months ended September 30, 2018 as compared to the same period of
2017.
Professional service costs increased by 126% for
the nine months ended September 30, 2018 as compared to the same
period of 2017. A significant increase in legal fees ($1,277,518
(2017: $568,225)), accounting and audit services ($442,416 (2017:
$140,130)) and general consulting services of $134,567 (2017:
$52,975) were offset partially by a decrease in engineering fees
$28,883 (2017: $82,718). 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.
Configuration and implementation expenses for the planned NetSuite
Financial System also contributed to the increased accounting and
general consulting service costs.
Stock market and investor fees increased 19% for
the nine months ended September 30, 2018. The fees included costs
associated with the Company’s nominated advisor, stock transfer
agents, investor relations team and stock exchange fees. Investor
relations fees of $181,548 (2017: $167,245) and stock exchange fees
of $71,669 (2017: $37,631) contributed to the increase.
Other general and administrative expenses
increased by 322%. During September of 2018, the Company made a
lump sum compensation payment of $100,000 to each of the
independent directors. The Board approved the settlement of the
Pulse Litigation which resulted in a one-time charge of $930,000.
Other categories that increased during the nine months ended
September 30, 2018 included bad debt expenses $125,000 (2017:
$47,471), business insurance costs totaled $233,008 (2017:
$116,482) and computer expenses $87,278 (2017: $32,406) related to
the licensing and implementation of the NetSuite Financial System
impacted the higher costs.
Sales and Marketing
Expenses
Sales and marketing expenses for the nine months
ended September 30, 2018 totaled $1,334,262 which was a 3% decrease
compared to $1,382,416 for the nine months ended September 30,
2017.
The table below summarizes our sales and
marketing expenses for the nine months ended September 30, 2018 and
2017 as well as the percentage of change year-over-year:
|
|
For the Nine Months Ended September 30, |
|
|
|
|
Description |
|
2018 |
|
|
2017 |
|
|
Percent Change |
|
Personnel Costs |
|
$ |
797,627 |
|
|
$ |
702,319 |
|
|
|
14 |
% |
Professional Service
Costs |
|
|
181,770 |
|
|
|
204,237 |
|
|
|
(11 |
)% |
Royalties and Outside
Commission Costs |
|
|
165,855 |
|
|
|
192,470 |
|
|
|
(14 |
)% |
Other Sales and
Marketing Costs |
|
|
189,010 |
|
|
|
283,390 |
|
|
|
(33 |
)% |
Total Sales and
Marketing Expenses |
|
$ |
1,334,262 |
|
|
$ |
1,382,416 |
|
|
|
(3 |
)% |
Personnel costs increased in the nine months
ended September 30, 2018 as compared to the same period of 2017.
This was due to an increase in compensation, bonuses, commissions
and severance payments to $651,402 (2017: $602,029) and employee
benefit expenses of $37,891 (2017: $23,454).
During the nine months ended September 30, 2018,
the ChubeWorkx royalty totaled $41,418 (2017: $128,109) and was
partially off-set by an increase in commissions to ISRs, which were
$124,437 (2017: $64,362), which contributed to the decline in
royalty and outside commission costs during the nine months ended
September 30, 2018.
The Company recognized significant reductions in
advertising expenses ($12,167 (2017: $60,568)) due to a television
commercial that was produced in 2017 and a reduction in trade show
expenses ($950 (2017: $33,199)) plus smaller reductions in several
other operating categories that resulted in a 33% reduction in
other sales and marketing costs.
Research and Development
Research and development expenses for the nine
months ended September 30, 2018 totaled $859,961, which was a 10%
decrease as compared to $952,724 for the nine months ended
September 30, 2017.
The table below summarizes our research and
development expenses for the nine months ended September 30, 2018
and 2017 as well as the percentage of change year-over-year:
|
|
For the Nine Months Ended September 30, |
|
|
|
|
Description |
|
2018 |
|
|
2017 |
|
|
Percent Change |
|
Personnel Costs |
|
$ |
571,311 |
|
|
$ |
727,206 |
|
|
|
(21 |
)% |
Clinical Trial
Costs |
|
|
1,480 |
|
|
|
2,453 |
|
|
|
(40 |
)% |
Professional Service
Costs |
|
|
153,450 |
|
|
|
89,541 |
|
|
|
71 |
% |
Other Research and
Development Costs |
|
|
133,720 |
|
|
|
133,524 |
|
|
|
0 |
% |
Total Research and
Development Expenses |
|
$ |
859,961 |
|
|
$ |
952,724 |
|
|
|
(10 |
)% |
Personnel costs decreased 21% during the nine
months ended September 30, 2018 as compared to the same period of
2017. The Company’s termination of Dr. Akers in April combined with
additional reductions in the number of staff in the department
resulted 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 $106,345 (2017: $56,164), fees for the
other general and regulatory consulting fees totaled $47,105 (2017:
$33,377) in the nine months ended September 30, 2018.
Other Income and Expense
Other income, net of expense for the nine months
ended September 30, 2018 totaled $119,560, which was a 673%
increase as compared to $15,468 for the nine months ended September
30, 2017.
The table below summarizes our other income and
expenses for the nine months ended September 30, 2018 and 2017 as
well as the percentage of change year-over-year:
|
|
For the Nine Months Ended September 30, |
|
|
|
|
Description |
|
2018 |
|
|
2017 |
|
|
Percent Change |
|
Currency Translation
(Gain)/Loss |
|
$ |
5,271 |
|
|
$ |
(6,172 |
) |
|
|
(185 |
)% |
Interest and Dividend
Income |
|
|
(120,659 |
) |
|
|
(9,296 |
) |
|
|
1,198 |
% |
Other Income |
|
|
(4,172 |
) |
|
|
- |
|
|
|
N/A |
|
Total Other Income, Net
of Expenses |
|
$ |
(119,560 |
) |
|
$ |
(15,468 |
) |
|
|
673 |
% |
Realized gains, interest and dividend income
increased to $120,659 (2017: $9,296). 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 nine months ended September 30, 2018 resulting
in the increase in investment income.
Income Taxes
As of September 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 nine months ended September 30, 2018 and
2017, the Company generated a net loss attributable to shareholders
of $7,011,394 and $3,344,932, respectively. As of September 30,
2018 and December 31, 2017, the Company has an accumulated deficit
of $111,857,241 and $104,845,847 and had cash (excluding restricted
cash) and marketable securities totaling $6,167,451 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 Alcohol detection
devices and the Tri-Cholesterol assay.
We expect to continue to incur losses from
operations for the near-term and these losses could be significant
as we incur regulatory 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 will also continue to support marketing
activities of in-line products PIFA Heparin/PF4 rapid assays, PIFA
PLUSS® PF4, breath alcohol detectors, METRON breath ketone tests
and Tri-Cholesterol products, globally.
Capital expenditures for the nine months ended
September 30, 2018 were $68,214 (2017: $37,191). 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.
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.
Our net cash consumed by operating activities
totaled $5,874,664 during the nine months ended September 30, 2018.
Cash was consumed by the loss of $7,011,394 plus non-cash
adjustments of $173,047 for depreciation and amortization of
non-current assets, $3,469 for the amortization of deferred
compensation, $218,799 for the charge for obsolescence, $97,000 for
the allowance of doubtful accounts, $12,106 for share based
compensation to employees and $12,545 for share based compensation
to non-employees less $10,633 for accrued interest and dividends on
marketable securities. For the nine months ended September 30,
2018, decreases in trade receivables of $584,443, prepaid expenses
– related party of $20,706 and increases in trade and other
payables – related party of $7,366 and trade and other payables of
$508,983 provided cash, primarily related to routine changes in
operating activities. A net increase in deposits and other
receivables of $13,836, deposits and other receivables – related
party of $30,243, inventory of $79,162, and prepaid expenses of
$367,860 consumed cash from operating activities.
Our net cash consumed by operating activities
totaled $3,654,858 during the nine months ended September 30, 2017.
Cash was consumed by the loss of $3,344,932 plus non-cash
adjustments of $182,866 for depreciation and amortization of
non-current assets, $46,239 for the reserve and write-off of
doubtful accounts, $15,784 for the fair value of restricted common
stock issued for services and $14,502 for share-based compensation
less $148 for accrued interest and dividends on marketable
securities. For the nine months ended September 30, 2017, decreases
in deposits and other receivables of $2,034, trade receivables –
related parties of $31,892, prepaid expenses of $68,797, prepaid
expenses – related party of $38,438, and an increase in trade and
other payables of $174,185 provided cash, primarily related to
routine changes in operating activities. A net increase in trade
receivables of $570,065, inventories of $111,486 and other assets
of $9,280 and a decrease in trade and other payables – related
party of $213,822 consumed cash from operating activities.
Investing and Financing
Activities
The Company’s net cash provided by investing and
financing activities totaled $7,237,650 (2017: $3,717,291) during
the nine months ended September 30, 2018. Cash of $5,378,212 (2017:
$2,746,339) was consumed by capital expenditures and the purchase
of marketable securities. Proceeds from the sale of marketable
securities contributed cash of $5,460,662 (2017: $2,749,119) 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 nine months
ended September 30, 2018.
On November 2, 2018, the Company, entered into a
securities purchase agreement with certain investors (the “Purchase
Agreement”) pursuant to which the Company agreed to sell an
aggregate of 694,445 shares of common stock and warrants to
purchase approximately 694,445 shares of common stock (the
“Warrants”). The combined purchase price for one share of common
stock and each Warrant will be priced at $2.88 (the “Offering”).
The Purchase Agreement contains customary representations,
warranties, and covenants by the Company.
Each Warrant has an initial exercise price of
$3.76 per share, will be exercisable immediately after the date of
issuance and will expire five years from the date it becomes
exercisable. Subject to limited exceptions, a holder of the
Warrants will not have the right to exercise any portion of such
securities if the holder, together with its affiliates, would
beneficially own in excess of 4.99% of the number of shares of the
Company’s common stock outstanding immediately after the exercise.
The exercise price of the Warrants, and in some cases the number of
shares of common stock issuable upon exercise of the Warrants, will
be subject to adjustment in the event of stock splits, stock
dividends, combinations, rights offerings and similar events
affecting the common stock.
In addition, the Warrants provide that, in the
event of a fundamental transaction (as such term is described in
the Warrant), the holder of such Warrant, at the holder’s option,
may receive, for each warrant share (as such term is described in
the Warrant) that would have been issuable upon such exercise
immediately prior to the occurrence of such fundamental
transaction, the number of shares of common stock of the successor
or acquiring corporation or of the Company, if it is the surviving
corporation, and any additional consideration receivable as a
result of such fundamental transaction by a holder of the number of
shares of common stock for which the Warrant is exercisable
immediately prior to such fundamental transaction. If holders of
common stock are given any choice as to the securities, cash or
property to be received in a fundamental transaction, then the
holder shall be given the same choice as to the alternate
consideration it receives upon any exercise of the Warrant
following such fundamental transaction. The Company shall cause any
successor entity (as such term is described in the Warrant), at the
option of the holder, to deliver to the holder in exchange for the
Warrant a security of the successor entity evidenced by a written
instrument substantially similar in form and substance to the
Warrant which is exercisable for a corresponding number of shares
of capital stock of such successor entity (or its parent entity)
equivalent to the shares of common stock acquirable and receivable
upon exercise of the Warrant (without regard to any limitations on
the exercise of this Warrant) prior to such fundamental
transaction, and with an exercise price which applies the exercise
price hereunder to such shares of capital stock.
The Offering was made pursuant to a shelf
registration statement on Form S-3 (File No. 333-214214),
previously filed with the Securities and Exchange Commission on
October 24, 2016 and declared effective on November 16, 2016. Such
securities are being offered only by means of a prospectus.
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
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.
Inquiries:
Akers Biosciences, Inc.Howard R. Yeaton, Chief
Executive Officer and interim Chief Financial OfficerTel. +1 856
848 8698
Vigo Communications (Global Public Relations)Ben
Simons / Fiona HensonTel. +44 (0)20 7390 0234Email:
akers@vigocomms.com
Akers Biosciences (NASDAQ:AKER)
Historical Stock Chart
From Mar 2024 to Apr 2024
Akers Biosciences (NASDAQ:AKER)
Historical Stock Chart
From Apr 2023 to Apr 2024