Edmonton, Alberta, Canada
November 23, 2011
Innovotech Inc. (TSX VENTURE:IOT), a pioneer in the field of biofilm product development, today announced its unaudited financial and operational results for the three and nine-month periods ended September 30, 2011.
Highlights:
- Initial revenue from veterinary product sales
- Exclusive worldwide rights granted to Spectrum Labs Inc. to market
- Innovotech's veterinary biofilm tests
- Private placement receives final approval from TSX Venture Exchange
- Significant advances in Agress(R) chemistry which will be used to support its registration
"This quarter saw the start of a number of initiatives that have the potential to provide increasing revenue on an ongoing basis," said Ken Boutilier, President and Chief Executive Officer of Innovotech. "While Innovotech will continue to seek opportunities to advance products that are currently in its pipeline, our focus will be foremost on the progression of products that have the greatest and most immediate revenue potential."
During the third quarter, Innovotech granted exclusive worldwide rights to Spectrum Labs Inc., specialists in veterinary testing in the United States and over 40 countries worldwide, to market Innovotech's InnovoSCEPT veterinary biofilm tests as part of its testing service. With the launch of this service and Innovotech's continued promotion of its human testing service to doctors and potential patients, product sales increased during the quarter.
Innovotech also received final acceptance from the TSX Venture Exchange for a non brokered private placement for gross proceeds in excess of $800,000. Innovotech intends to use the proceeds from the offering to support marketing of its veterinary and human test kits and to support efforts to gain regulatory approval of its agricultural industry products.
Significant progress was made by the Company in the third quarter of 2011 in the area of Agress(R) chemistry, which will be used to support its registration. Work is underway to finalize protocols for a product chemistry package to be submitted to the EPA.
Financial Summary
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Three-month Three-month Nine-month Nine-month
period ended period ended period ended period ended
September 30, September 30, September 30, September 30,
($) 2011 2010 2011 2010
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Revenues 393,970 425,051 825,428 1,287,709
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G&A 335,876 332,185 890,199 992,083
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R&D 250,549 235,317 753,126 626,580
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Net loss (189,199) (240,998) (843,048) (732,908)
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Share Price $ 0.70 $ 0.55 $ 0.70 $ 0.55
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Cash position 544,062 935,513 544,062 935,513
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Revenues
In the three-month period ended September 30, 2011, total revenues were $393,970 (2010 - $425,051; 2009 - $399,728). This included contract research revenue of $327,614 (2010 - $395,332; 2009 - $381,292) and product sales of $66,356 (2010 - $29,719; 2009 - $18,436). While revenue from contract research increased in the third quarter in comparison to revenue from the first and second quarters, overall contract research revenue for the nine-month period is still less than that for the same period in fiscal 2010. Product sales, however, were higher for the nine-month period than for the same period in the past three years. In the nine-month period ended September 30, 2011, total revenues were $825,428 (2010 - $1,287,709; 2009 - $989,425).
General and Administrative Expense
In the three-month period ended September 30, 2011, general and administrative expense, including stock based compensation expense and allocated amortization expense, was $335,876 (2010 - $332,185). The increase was mainly due to the loss on disposal of an abandoned asset for which no proceeds were received. In the nine-month period ended September 30, 2011, general and administrative expenses were $890,199 (2010 - $992,083). The decrease over the nine-month period was mainly attributable to reduced expenses for legal and other professional services and improved management of foreign exchange transactions.
Research and Development
In the three-month period ended September 30, 2011, research and development expense, including allocated amortization, was $250,549 (2010 - $235,317). The cost was partially offset by various grants of $118,374 (2010 - $87,523). The increase in research and development expense is directly related to increased development costs of a new family of products in human and veterinary susceptibility testing and extensive chemistry work on Agress(R). In the nine-month period ended September 30, 2011, research and development expense was $753,126 (2010 - $626,580) offset by various grants of $364,961 (2010 - $129,099).
Liquidity and Capital Resources
At September 30, 2011, the Company had $544,062 in cash compared to $766,758 at December 31, 2010. Continued investment in development and marketing of two of the Company's lead products have contributed to a decrease in cash reserves since December 31, 2010. These expenditures were partially offset by the proceeds from the private placement initiated during the second quarter, as well as by cash inflows from product sales, contract research revenue and various grants.
Innovotech's third quarter 2011 Financial Statements and Management's Discussion and Analysis will be filed on The System for Electronic Document Analysis and Retrieval (SEDAR) at www.sedar.com
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