Research and development expenses for the three months ended
March 31, 2015 totaled $305,574, which was a 21% increase as
compared to $253,538 for the three months ended March 31, 2014. The
increase is the result of expenses for professional services
($91,186 (2014: $6,503)) and supplies ($16,514 (2014: $4,115))
offset by a decline in personnel expenses ($166,115 (2014:
$218,315)). The significant increase in professional services
relates primarily to product engineering and design services
involved in the launch of new products.
Other Income and Expense
Other income increased for the three months ended March 31, 2015
to $38,398 from $17,765 for the same period in 2014. The increase
is the result of interest and dividend earnings on the marketable
securities and the note receivable totaling $31,600 (2014:
$10,657).
Income Taxes
As of March 31, 2015, 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 three months ended March 31, 2015 and 2014, the Company
generated a net loss attributable to shareholders of $1,321,799 and
$595,600, respectively. As of March 31, 2015 and December 31, 2014,
the Company has an accumulated deficit of $86,185,885 and
$84,864,086 and had cash totaling $336,243 and $455,841,
respectively.
Currently, our primary focus is to expand the domestic and
international distribution of our PIFA Heparin/PF4 rapid assays.
The Company continues commercialization tasks for METRON, VIVO, and
BreathScan Lync(TM), as well as development activities for its PIFA
PLUSS(R) Infectious Disease single-use assays, BreathScan(R) DKA,
and Breath PulmoHealth products, including advancement of the steps
required for FDA clearance or CE marking in the EU where
necessary.
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 believe that our current working capital
position will be sufficient to meet our estimated cash needs for at
least 36 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 PIFA PLUSS(R) Infectious Disease single-use assays,
BreathScan(R) DKA and Breath PulmoHealth products, enroll patients
in clinical trials to support performance claims, generate studies
in peer-reviewed journals to support product marketing, and provide
data for the FDA 510(k) clearance/CE certifications processes when
required. We will also continue to support commercialization and
marketing activities of commercialized products (PIFA Heparin/PF4
rapid assays, PIFA PLUSS(R) PF4, breath alcohol detectors, METRON,
VIVO and BreathScan Lync(TM) ) in the US and internationally. 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 production for the three months ended
March 31, 2015 were $44,510 (2014: $-). Capital expenditures,
primarily for production, laboratory and facility improvement costs
for the year ending December 31, 2015 are expected to be
approximately $250,000. As per the Company's lease agreement, the
owner of the facility will be handling the majority of facility
upgrades, and we anticipate financing any production and laboratory
capital expenditures through working capital.
The Company invested $64,675 for a 19.9% ownership position in a
joint venture with Hainan Savy Investment Management, Ltd and Mr.
Thomas Knox, the Company's Non-executive Co-chairman, to research,
develop, produce and sell Akers' rapid diagnostic screening and
testing products in China. The new entity, incorporated in the
People's Republic of China, operates as Hainan Savy Akers
Biosciences, Ltd.
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.
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
current 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 current environment and their impact
on the Company's results.
The Company's net cash provided by investing and financing
activities totaled $1,122,378 during the three months ended March
31, 2015. Cash was consumed by capital expenditures, the investment
in Hainan Savy Akers Biosciences, Ltd. and the purchase of
marketable securities of $136,413. Proceeds from the sale of
marketable securities and a policy renewal incentive from an
insurer contributed cash of $1,258,791 for the period ended March
31, 2015.
The Company's net cash provided by investing and financing
activities totaled $1,034,545 during the three months ended March
31, 2014. Cash was consumed by the payment of a short-term note
payable - related party and the purchase of marketable securities
of $12,816,484. Proceeds from the issuance of common shares and the
demutualization of an insurer contributed cash of $13,851,029 for
the period ended March 31, 2014.
Operating Activities
Our net cash consumed by operating activities totaled $1,241,975
during the three months ended March 31, 2015. Cash was consumed by
the loss of $1,321,799 less non-operating gains of $5,355 plus a
non-cash adjustment of $80,349 for depreciation and amortization of
non-current assets and $7,156 for accrued interest and dividends on
marketable securities. For the three months ended March 31, 2015,
decreases in trade receivables, notes receivable - related party,
other receivables of $78,517 and an increase in trade and other
payables of $87,745 provided cash, primarily related to routine
changes in operating activities. A net increase in inventory and
other assets of $85,256 and a decrease in deferred revenue -
related party of $83,333 consumed cash from operating
activities.
Akers' net cash consumed by operating activities totaled
$832,370 during the three months ended March 31, 2014. Cash was
consumed by the loss of $595,600 less non-operating gains of $4,669
plus a non-cash adjustment of $86,825 for depreciation and
amortization of non-current assets. For the three months ended
March 31, 2014, decreases in inventory and other assets of $478,694
provided cash, primarily related to routine changes in operating
activities. A net increase in trade receivables, trade receivables
- related parties and other receivables of $317,273 and a decrease
in trade and other payables, trade and other payables - related
parties and deferred revenue - related party of $480,347 consumed
cash from operating activities.
ABOUT AKERS BIOSCIENCES, INC.
Akers Biosciences 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.akersbiosciences.com. Follow us on Twitter
@AkersBio.
Cautionary Statement Regarding Forward Looking Statements
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