TIDMLSI TIDMLSIC
RNS Number : 7862S
Lifeline Scientific, Inc
29 September 2014
29 September 2014
Lifeline Scientific, Inc. ("Lifeline" or the "Company")
Results for the Six Months Ended 30 June 2014
Solid trading across products and regions
Lifeline Scientific, the transplantation technology company,
announces results for the six months ended 30 June 2014. The
results build upon growth that was achieved in 2013 and show
planned improvement at the operating income line. The Company
anticipates continued solid demand for Lifeline's products and
services in the remainder of 2014.
Financial Highlights
-- Transplantation products and services revenues up by 12.3% to US$14.8m (H1 2013: US$13.2m)
-- North America revenues up 13.6% to US$12.0m (H1 2013:
US$10.5m)
-- Revenue outside of North America up 7.3% to US$2.8m (H1 2013:
US$2.7m) - representing 19.2% of total revenue (H1 2013: 20.1%)
-- LifePort proprietary consumables up 31.5% to US$8.5m (H1
2013: US$6.5m), contributing to an increase in gross margin to
62.0% (H1 2013: 55.4%)
-- Gross profit up 24.4% to US$9.4m (H1 2013: US$7.5m)
-- Break-even operating results US$0.0m (H1 2013: US$1.4m loss)
-- Net cash provided by operating activities US$0.3m (H1 2013: US$1.8 net cash used)
-- Basic earnings per share during period of US$0.00 (H1 2013: US$0.07 loss)
-- Cash of US$2.5m as of 30 June 2014 (as of 31 December 2013: US$3.0m)
Operational Highlights
-- 9 additional new transplant programme accounts were added: 2 in the US and 7 in Europe.
-- The installed base of LifePorts reached 185 leading
transplant programmes in 27 countries worldwide. (H1 2013: 155
programmes in 25 countries)
-- Sales of LifePort Kidney Transporters and related disposables
in France increased by 212.8% to US$1.2m (H1 2013: US$0.4m)
-- Uptake of LifePort Kidney Transporter 1.1 strong with 54 sold
during the period (H1 2013: 37)
David Kravitz, Chief Executive Officer of Lifeline, said:
"We continue to see the installed base of LifePorts expand and I
am pleased to be able to report an overall 11.2% increase in
revenues at an improved margin contributing to a solid set of
results for the first half of the year. Our pipeline remains strong
as is our full year outlook. Achievements during the first half of
2014 strengthened the Company's position in all of its key markets
and gives us a solid platform for increasing LifePort's adoption
throughout the world. We have continued to invest in capital and
management resources aimed at accelerating revenues, profitability
and shareholder value.
"We have been successful in advancing regulatory filings and
approvals which will allow us to expand our geographic reach and
support expansion in the key growth territories of the EU, Brazil,
and soon China. The new generation of LifePort with available
features such as GPS/GPRS capability has been very well received
and will continue to help drive both product adoption and sales of
single use consumables.
"Market growth will also be propelled by the expanding body of
clinical evidence supporting the new generation of LifePort. We
stay closely in touch with our customer communities of clinicians,
patients and payors, and will continue to develop product
innovations driven by their needs."
For further information please contact:
Lifeline Scientific, Inc. www.lifeline-scientific.com
David Kravitz, CEO +1 847 294 0300
Panmure Gordon (Nominated Adviser
and Broker) +44 (0)20 7886 2500
Freddy Crossley (Corporate Finance)
Maisie Atkinson (Corporate Broking)
Walbrook PR +44 (0)20 7933 8780 or lifeline@walbrookpr.com
Paul McManus +44 (0)7980 541 893
Mike Wort +44 (0)7900 608 002
About Lifeline Scientific Inc.
Lifeline Scientific, Inc. is a Chicago-based global medical
technology company with regional offices in Brussels and Sao Paulo.
The Company's focus is the development of innovative products that
improve transplant outcomes and lower the overall costs of
transplantation. Its lead product is the market-leading and
clinically validated LifePort Kidney Transporter. LifePorts and
novel solutions designed for preservation of other organs are in
development, with LifePort Liver Transporter next in line for
commercial launch. For more information please visit
www.lifeline-scientific.com
About LifePort Kidney Transporter
Created with the challenges of organ recovery and transport in
mind, LifePort Kidney Transporter is a proprietary medical device
designed to provide improved kidney preservation, evaluation and
transport prior to transplantation. Today, it is widely recognised
as the world's leading machine preservation device for kidneys.
Employed by surgeons in 187 major transplant centres in 27
countries worldwide, LifePorts have successfully preserved over
47,000 kidneys indicated for clinical transplant. For more
information please visit www.organ-recovery.com
Lifeline Scientific, Inc. Shares
As a US Company listed on the London Stock Exchange's AIM
exchange, Lifeline Scientific, Inc. trades under two lines of
stock, AIM: LSIC (unrestricted shares), LSI (restricted shares).
While affiliates of the Company are required to hold restricted
(RegS) shares, all others may hold restricted or unrestricted
shares. Unrestricted shares may be electronically traded through
the CREST system. Both lines of stock have identical rights,
preferences and privileges. Non-affiliates may transfer restricted
shares to the unrestricted line after purchase through the
Company's registrar. Total shares outstanding for the Company at
this time are 19,446,720, with 13,085,806 shares in issue under the
LSIC line and 6,360,914 shares in issue under the LSI line.
Chairman's Statement
Revenue from transplantation products was US$14.8m (H1 2013:
US$13.2m), representing overall growth of 12.3%. Apart from China,
which placed a large order toward year end 2013, we saw comparable
period growth in all of our key territories. While we are still
seeing importation related processing and permitting delays in
Brazil, our pipeline there remains strong as is our full year
outlook.
This period has been one of solid performance, as evidenced by a
doubling of LifePort sales over the previous period (H1 2014:
US$0.8m vs H1 2013: US$0.4m) and a 31.5% increase in sales of our
LifePort proprietary disposables to US$8.5m (H1 2013: US$6.5m). We
continue to establish the basis for solid growth in the second half
of the year and beyond and have achieved operational breakeven for
the period.
Single use consumables, which represent the bulk of worldwide
sales, reached US$13.5m (H1 2013: US$12.2m). Demand has been strong
worldwide for our upgraded LifePort Kidney Transporter featuring
GPS/GPRS, leading to strong LifePort sales for the period.
Our installed base grew to 185 sites in 27 countries. As the
installed base increases, we expect continued strong sales of the
higher margin single use consumable items during the second
half.
We are now making significant headway in supplying the French
national tender which we were awarded in November 2013. The
increased sales to France helped drive a 60.8% increase in LifePort
proprietary disposable sales in Europe to US$1.7m (H1 2013:
US$1.1m). We also saw sales to Brazil more than double to US$0.3m
(H1 2013: US$0.1m) with a strong portfolio of demand in the
pipeline for the second half of the year. In China, positive
results continue to be reported from the 100 patient Ministry of
Health sponsored clinical research study. Regulatory filings have
been completed and we are optimistic that Chinese FDA registration
approvals for our full product line of LifePort Kidney Transporter,
single-use disposables and solutions could potentially issue by
year end.
Gross margin increased to 62.0% (H1 2013: 55.4%), primarily as a
consequence of product mix as we sold a larger proportion of higher
margin single use disposables worldwide. Increased sales and
stronger margins for the period resulted in breakeven performance
at the operating results level of US$0.0m (H1 2013: loss of
US$1.4m).
Net cash of US$0.3m was generated from operating activities (H1
2013: US$1.8m net cash used), directly related to improved
operating income. Cash decreased in H1 2014 by US$0.5m compared to
US$2.7m decrease in H1 2013 primarily due to investments in
commercial tooling, regulatory and patent spending over the period,
offset by reduced research and development spending as the LifePort
Liver Transporter development program nears commercialization.
Breakeven earnings per share was achieved (H1 2013: US$0.07
loss).
The cash position of the Company remains strong at period end
US$2.5m (as at 31 December 2013: US$3.0m), US$1.5m net of a working
capital revolver. The Company is pleased to report a recently
negotiated bank facility with improved terms and a US$6.0m limit
(previously US$3.0m) to support future growth as necessary. The
first half of 2014 represents a very good start to the year and
gives us a firm basis for continuing good performance in the second
half.
John Garcia
Chairman
30 September 2013
Chief Executive Officer's review
We were encouraged to see growth in the key geographic markets
that we have devoted considerable resources and finance to as part
of our planned expansion strategy launched over 18 months ago.
Within these targeted markets, 9 new transplant programmes
purchased LifePort as their machine preservation technology for
clinical kidney transplantation. Regulatory and reimbursement
efforts in several of these key markets also progressed, reflecting
our strategic focus and investments over the last 18 months. In
parallel, we achieved important milestones in the planned
development of new products and market driven enhancements to
several of our existing products. Uptake of the Company's all new
LifePort Kidney Transporter 1.1 continued to be strong with 54 sold
during the period. LifePort 1.1 features available GPS/GPRS
technology, an upgraded digital user interface and faster data
download capabilities.
Expanding to New Markets
Strategic Europe
LifePort adoptions continued to grow in Europe fuelled by strong
early sales from the French national tender awarded to the Company
in November 2013. Sales in France increased 212.8% as 24 LifePorts
and 493 disposable sets were sold during the period in support of
national protocols recommending machine preservation for all
kidneys recovered from expanded criteria donors (ECD) and donors
after cardiac death (DCD). There has been strong demand as well for
LifePort's Rolling Transport Cover, a new innovation designed by
the Company to comply with specific requirements of the French
national tender. This new product has also found favour in other
geographic markets, including the US.
Brazil
Brazil continues to show promise as another potentially
significant geographic market for the Company. Health officials
there report over 4,500 kidneys recovered annually from deceased
donors, with significant demand for transplantation driven by
rapidly growing population of end stage renal disease patients.
Positive outcomes continue to be reported by Brazilian clinicians
who have studied LifePort preservation vs. ice-boxed kidneys;
clinical outcomes observed include significant reductions in
delayed graft function (DGF), and hospital patient length of stay
by transplant programmes now routinely using LifePort.
LifePort Kidney Transporters have been installed in eight
leading Brazilian transplant centres, including Sao Paulo's
prestigious Albert Einstein Hospital and Hospital Rim, the world's
largest volume renal transplant centre.
Since receiving regulatory approvals in Brazil for our full
suite of products, we have seen solid growth in demand. While we
are still seeing importation related processing and permitting
delays in Brazil, the pipeline of orders in process, anticipated
bookings by year end, and tenders for solutions where the Company
expects to be competitive is in excess of US$2.6m with an
additional US$2.5m-US$4.5m of new business opportunities in ongoing
discussions. Brazilian sales have more than doubled period over
period to US$0.3m (H1 2013: US$0.1m).
China
China is a key potential growth market for the Company. Its
organ donation and recovery practices are undergoing a major
step-change mandated by the Chinese Health Ministry, patterned
after successful national transplant systems and logistics
management developed in the West. This shift is driving significant
growth in donation of kidneys indicated for LifePort and by present
market observations appears to be a growing trend.
Based on Chinese government projections of renal transplant
demand (+1.5m end-stage renal disease patients on chronic
dialysis), and the fact that machine preservation is indicated for
the new "standard donor," China has potential to be the single
largest national market opportunity in the world for LifePort and
Lifeline's family of transplantation products. Chinese officials
have stated that based upon actual and anticipated demand, China's
renal transplant centers could grow from 165 locations today to
nearly 300 in the next 3-5 years.
Over the past few years we have invested considerable effort in
setting up key distributor and transplant centre relationships and
now count 13 of China's largest transplant hospitals among those
centres which are fully-trained and starting to employ LifePort
under clinical research protocols. Additional positive clinical
outcomes data has been reported from China's inaugural independent
investigator driven multi-centre LifePort feasibility study. The 9
centre, 100 patient study was funded by Chinese Health Ministry
grants and further study results are anticipated later this year.
To date, over 500 LifePort preserved kidneys are estimated to have
been successfully transplanted at Chinese transplant centres.
We have completed Chinese FDA (CFDA), required product testing
and regulatory filings for our full suite of products and are in
the end stage of CFDA file reviews. As full commercial market
launch of LifePort Kidney Transporter in China awaits regulatory
approvals, based on progress to date, the Company is optimistic
these could issue before year-end 2014.
New Clinical Evidence
In the 15 January edition of Transplantation, Gill J et al
reported results of 94,709 renal transplants in the US between 2000
and 2011 which were analysed with respect to DGF, after pulsatile
perfusion (PP), and also DGF after cold static storage at varying
cold ischemic times (CIT) with different donor groups. The authors
concluded that perfusion is associated with a reduced risk of DGF
irrespective of donor type and CIT. They also observed that while
PP modifies the impact of CIT on the risk of DGF, it does not
eliminate its association with DGF, suggesting the optimal strategy
to reduce DGF is to minimize CIT and utilize PP in all deceased
donor transplants. This retrospective study of close to 95,000
patients adds to the already significant body of evidence in the
medical literature that machine preservation leads to improved
patient outcomes by reducing delayed graft function across all
types of deceased donor kidneys.
An abstract was presented at the World Transplant Congress in
July by New York Presbyterian Hospital Columbia University Medical
Center from a cohort clinical study of 31 "orphan" livers that had
been transplanted after machine preservation on the LifePort
prototype with the Company's novel liver preservation solution.
Clinical outcomes observed included significant reductions in
length of patient hospital stay, early allograft dysfunction and
improved patient survival. In addition to the clinical benefits
reported it was notable that the 31 machine preserved liver grafts
had been turned down by other regional transplant centers and would
have likely been discarded. Near-term publication in a prominent
transplantation industry medical journal is expected.
In addition, a Columbia University Medical Center cost analysis
of clinically transplanted livers preserved on the LifePort Liver
Transporter prototype with the Company's novel machine preservation
solution, showed statistically significant (p=0.02) cost savings
vs. a matched cohort of livers that were preserved using static
cold storage (ice-boxed livers). While derived from a single center
experience, and confirmatory multi-center studies are planned, this
preliminary information was encouraging showing a US$47,000 saving
per patient with hypothermic machine perfusion versus cold storage
(current practice). This data was presented at the winter meeting
in January 2014 of the American Society of Transplant Surgeons
(ASTS) whose author was recognized with a Young Investigator's
Innovation Award.
New Product Innovations
With LifePort Liver Transporter's commercial design set, the
Company is in process of regulatory registration for the US and
Europe, while planning market access in China and Brazil. In
addition, the Company is in discussions regarding potential grant
funded product orders for humanitarian/clinical research use of
LifePort Liver Transporter in certain countries, with a commercial
launch planned in the US in H1 2015 subject to regulatory
clearances. We have commenced commercial production of the LifePort
Liver Transporter in preparation for orders and US FDA
clearance.
We continue to gather clinical data from investigator driven
controlled studies on early LifePort Liver Transporter prototypes
conducted at New York Presbyterian Hospital Columbia University
Medical Center. The data to-date suggests that LifePort Liver
Transporter could represent a significant advancement in liver
preservation. Potential benefits include improving patient outcomes
and lowering the overall cost of transplantation. Published
clinical data suggests our machine perfusion technology could also
help enable the successful recovery of certain livers otherwise
deemed not transplantable.
Sales of the Universal SealRing Cannula with novel ease-of-use
features has commenced. Clinicians employing the Universal SealRing
Cannula have commented on the new product's utility in facilitating
the cannulation of kidney's with challenging vasculature that would
otherwise render them unable to be connected to LifePort and
thereby likely unusable for life saving transplantation. This
invention also uniquely enables LifePort use with living donor
kidneys, a potential new future market.
Grant funded development has progressed in line with
expectations of novel point-of-care assays for monitoring of
life-long immunosuppressant drug levels in transplant patients and
ex-vivo biomarkers of an organ's health while undergoing LifePort
machine preservation.
Supporting Growth
While the Company generated cash from operations of US$0.3m,
cash for the period decreased US$0.5m, reflecting investments in
the building of commercial production tooling, inventory, product
development and financing national level regulatory, reimbursement
and other market access efforts.
Outlook
Achievements during the first half of 2014 have given us a
robust scientific and commercial base from which to expand the
Company's efforts for continued regional and product line growth,
and expansion to new geographic markets. Our installed base of
LifePorts and related products is growing well in the key markets
we identified for investment over 18 months ago, and I am
particularly pleased that our focus in these markets is starting to
deliver promising results.
Our strategy for continued growth is borne of closely listening
to and working with the communities of transplant clinicians,
patients and payors who we serve. As demand for life saving
transplantation is large and rapidly growing worldwide, and supply
of transplantable organs remains woefully inadequate, we are
honored to play an active role in helping advance the quality and
availability of these precious gifts of life.
Working to build shareholder value by improving outcomes in
clinical transplantation is our dedicated mission.
David Kravitz
Chief Executive Officer
30 September 2014
LIFELINE SCIENTIFIC, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
30 June 2014 and 2013
(In US Dollars unless otherwise noted)
UNAUDITED
2014 2013
Current Assets
Cash and cash equivalents $ 2,535,142 $ 3,038,639
Receivables
Customers (net of allowance for doubtful
accounts of $0 and $2,673 as of
30 June 2014 and 2013, respectively) 6,899,704 3,990,003
Grant 79,909 94,910
Deferred tax assets 97,472 16,285
Income taxes receivable - 85,569
Inventories 5,977,631 5,464,444
Prepaid expenses, deposits, and other 1,003,210 1,508,191
------------- -------------
Total Current Assets 16,593,068 14,198,041
Non-current Assets
Property and equipment (net of accumulated
depreciation
and amortisation) 3,556,914 2,580,743
Intangibles (net of accumulated amortisation) 4,018,111 3,081,548
Deferred tax assets 1,942,213 1,023,400
Goodwill 64,710 64,710
Other 91,152 498,575
------------- -------------
Total Non-current Assets 9,673,100 7,248,976
Total Assets $ 26,266,168 $ 21,447,017
=== ============= =============
Current Liabilities
Accounts payable $ 1,701,022 $ 2,382,660
Income taxes payable 10,428 -
Long-term debt due within one year 470,118 260,958
Capital lease obligations due within one
year 25,010 3,760
Accrued expenses
Interest due within one year 185,247 48,553
Salaries and other compensation 720,789 638,567
Other 1,100,228 812,698
Deferred rent 11,778 138,363
Deferred revenue 98,700 257,949
------------- -------------
Total Current Liabilities 4,323,320 4,543,508
Non-current Liabilities
Long-term debt (net of portion included
in current liabilities) 1,582,179 1,009,489
Deferred rent (net of portion included
in current liabilities) 372,398 248,917
Accrued interest (net of portion included
in current liabilities) 147,560 237,697
Capital leases (net of portion included
in current liabilities) 75,969 2,626
------------- -------------
Total Non-current Liabilities 2,178,106 1,498,729
Total Liabilities 6,501,426 6,042,237
------------- -------------
Stockholders' Equity
Common stock, $0.01 par value; authorized
- 30,000,000 shares; issued and
outstanding - 19,453,613 and 19,424,959
shares as of 30 June 2014 and 2013,
respectively 194,536 194,249
Additional paid-in capital 94,480,758 94,174,078
Other accumulated comprehensive loss (272,219) (290,721)
Accumulated deficit (73,472,398) (77,671,782)
------------- -------------
Total Lifeline Scientific, Inc. Stockholders'
Equity 20,930,677 16,405,824
============= =============
Non-controlling interest (1,165,935) (1,001,044)
Total Stockholders' Equity 19,764,742 15,404,780
------------- -------------
Total Liabilities and Stockholders' Equity $ 26,266,168 $ 21,447,017
=== ============= =============
LIFELINE SCIENTIFIC, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
Six months ended 30 June 2014 and 2013
(In US Dollars unless otherwise noted)
UNAUDITED
2014 2013
Net revenue
Product sales and service fee revenue $ 14,820,733 $ 13,194,065
Grant revenue 297,242 396,594
----------- ------------
Total net revenue 15,117,975 13,590,659
Cost of revenue 5,752,202 6,061,712
----------- ------------
Gross profit 9,365,773 7,528,947
----------- ------------
Gross profit percentage 62.0% 55.4%
Operating expenses
Research and development 1,350,193 1,786,108
Selling, general, and administrative 8,024,491 7,178,011
Gain from disposal of property and
equipment (697) -
Loss from abandonment of intangibles - 5,597
----------- ------------
Total operating expenses 9,373,987 8,969,716
----------- ------------
Loss from operations (8,214) (1,440,769)
----------- ------------
Other expense (income)
Interest expense 52,482 49,170
Interest income (1,294) (3,857)
----------- ------------
Total other expense 51,188 45,313
----------- ------------
Loss before income taxes (59,402) (1,486,082)
Income tax benefit (3,137) (72,236)
----------- ------------
Net loss (56,265) (1,413,846)
Less: net loss attributable to non-controlling
interest 86,499 101,237
----------- ------------
Net income (loss) attributable to Lifeline
Scientific, Inc. $ 30,234 $ (1,312,609)
=== =========== ============
Basic income (loss) per share $ 0.00 $ (0.07)
Diluted income (loss) per share 0.00 (0.07)*
Basic weighted average shares outstanding
(in shares) 19,445,881 19,424,959
Diluted weighted average shares outstanding
(in shares) 20,163,366 19,424,959
* Diluted loss per share is the same as basic loss per share
because the effects of potentially dilutive securities are
anti-dilutive.
LIFELINE SCIENTIFIC, INC.
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(LOSS)
Six months ended 30 June 2014 and 2013
(In US Dollars unless otherwise noted)
UNAUDITED
2014 2013
Net loss $ (56,265) $ (1,413,846)
Foreign currency translation (18,509) (40,438)
--------- ------------
Comprehensive loss (74,774) (1,454,284)
Comprehensive loss attributable to non-controlling
interest (86,499) (101,237)
--------- ------------
Comprehensive income (loss) attributable
to Lifeline Scientific, Inc. $ 11,725 $ (1,353,047)
=== ========= ============
LIFELINE SCIENTIFIC, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS'
EQUITY
Six months ended 30 June 2014 and 2013
(In US Dollars unless otherwise noted)
UNAUDITED
Lifeline Scientific, Inc. Stockholders
Other
Additional Accumulated
Paid-in Comprehensive Accumulated Non-controlling
Total Shares Par Value Capital Loss Deficit Interest
------------ ----------- ---------- ------------- -------------- --------------- ----------------
Balance, 1
January
2013 $ 16,730,465 19,424,959 $ 194,249 $ 94,045,479 $ (250,283) $ (76,359,173) $ (899,807)
Stock-based
compensation 128,599 - 128,599 - - -
Foreign currency
translation (40,438) - - - (40,438) - -
Net loss (1,413,846) - - - - (1,312,609) (101,237)
------------ ----------- ---------- ------------- -------------- --------------- ----------------
Balance, 30
June
2013 $ 15,404,780 19,424,959 $ 194,249 $ 94,174,078 $ (290,721) $ (77,671,782) $ (1,001,044)
=== ============ =========== ========== ============= ============== =============== ================
Balance, 1
January
2014 $ 19,685,198 19,446,720 $ 194,467 $ 94,326,509 $ (253,710) $ (73,502,632) $ (1,079,436)
Issuance of common
stock
in conjunction
with
cashless option
exercise - 6,893 69 (69) - - -
Stock-based
compensation 154,318 - - 154,318 - - -
Foreign currency
translation (18,509) - - - (18,509) - -
Net loss (56,265) - - - - 30,234 (86,499)
------------ ----------- ---------- ------------- -------------- --------------- ----------------
Balance, 30
June
2014 $ 19,764,742 19,453,613 $ 194,536 $ 94,480,758 $ (272,219) $ (73,472,398) $ (1,165,935)
=== ============ =========== ========== ============= ============== =============== ================
LIFELINE SCIENTIFIC, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
Six months ended 30 June 2014 and 2013
(In US Dollars unless otherwise noted)
UNAUDITED
2014 2013
Cash flows from operating activities
Net loss $ (56,265) $ (1,413,846)
Adjustments to reconcile net loss to net
cash provided by
(used in) operating activities:
Depreciation and amortisation of property
and equipment 407,777 364,622
Amortisation of intangibles 89,716 64,973
Settlement related to dispute with third
party - (836,957)
Stock-based compensation 154,318 128,599
Gain on disposal of property and equipment (697) -
Loss on abandonment of intangibles - 5,597
(Increase) decrease in:
Receivables 957,015 1,417,219
Inventories (642,536) (1,058,133)
Prepaid expenses and deposits 292,539 9,953
Other assets 269,317 (315,004)
Increase (decrease) in:
Accounts payable (399,550) 64,066
Accrued expenses (735,457) (94,309)
Accrued interest (9,671) (40,731)
Deferred revenue 20,806 (48,510)
Deferred rent (31,021) (19,079)
Other liabilities (238) -
--- ------------ ------------
Total adjustments 372,318 (357,694)
------------ ------------
Net cash provided by (used in) operating
activities 316,053 (1,771,540)
Cash flows from investing activities
Payments related to intangible assets
and legal fees
associated with patent filings (492,677) (339,298)
Capital expenditures (1,158,804) (446,543)
------------ ------------
Net cash used in investing activities (1,651,481) (785,841)
Cash flows from financing activities
Borrowings (repayments) under capital
lease obligations, net 34,298 (22,532)
Borrowings of long-term debt 1,000,000 -
Principal payments on long-term debt (174,178) (87,500)
Net cash provided by (used in) financing
activities 860,120 (110,032)
------------ ------------
Effect of foreign currency exchange rate
changes on cash (11,690) (40,354)
Net decrease in cash and cash equivalents (486,998) (2,707,767)
Cash and cash equivalents, beginning of
period 3,022,140 5,746,406
------------ ------------
Cash and cash equivalents, end of period $ 2,535,142 $ 3,038,639
=== ============ ============
LIFELINE SCIENTIFIC, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
30 June 2014 and 2013
(In US Dollars unless otherwise noted)
UNAUDITED
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
General: The accompanying condensed consolidated financial
statements of Lifeline Scientific, Inc. (the "Company") are
unaudited and do not include all of the footnotes required by
accounting principles generally accepted in the United States of
America ("US GAAP"). In the opinion of management of the Company,
these condensed consolidated financial statements contain all
adjustments necessary for a fair presentation of the results for
the interim periods presented. These statements should be read in
conjunction with the Company's annual report as of and for the year
ended 31 December 2013.
Principles of Consolidation: The Company was incorporated in the
state of Delaware as Organ Recovery Systems, Inc. on 1 October
1998. On 20 December 2007, the Company changed its name to Lifeline
Scientific, Inc. The Company is consolidated with the following
subsidiaries:
ORS Europe, NV (1)
Cell and Tissue Systems, Inc. (2)
Organ Recovery Systems, Inc. (1)
ORS Representacoes do Brasil LTDA (1)
(1) A wholly-owned subsidiary
(2) 49% owned
Intercompany balances and transactions have been eliminated in
consolidation.
The Consolidation Topic of US GAAP requires consolidation by the
primary beneficiary where the variable interest entity does not
have sufficient equity at risk to finance its activities without
additional subordinated financial support from other parties. The
application of this guidance resulted in the consolidation of Cell
and Tissue Systems, Inc. ("CTS"), which was created during the year
ended 31 December 2005 and was deemed to be a variable interest
entity. CTS was primarily formed to meet regulatory requirements in
order to enhance its ability and capacity to apply for funding from
available government sources. The Company contributed $490 for the
49% ownership needed to form the variable interest entity. CTS has
an accumulated deficit as of 30 June 2014 and 2013.
In accordance with the requirements of the accounting standard
under US GAAP that establishes accounting and reporting standards
for non-controlling interests in a subsidiary in consolidated
financial statements, the Company classifies the non-controlling
interest of CTS within the equity section of the consolidated
balance sheets and separately reports the amounts attributable to
controlling and non-controlling interests in the consolidated
statements of operations for all periods presented.
Cash and Cash Equivalents: The Company considers all money
market accounts and short-term investments with an original
maturity of three months or less and US Treasury money markets to
be cash equivalents. The majority of cash and cash equivalents as
of 30 June 2014 and 30 June 2013 were held through a single
financial institution, and the balances held at times may exceed
federally insured limits. The Company has not experienced any
losses in such accounts. The Company believes it is not exposed to
any significant credit risk on cash and cash equivalents.
Receivables: Receivables are carried at original invoice or
closing statement amount less estimates made for doubtful
receivables. Management determines the allowance for doubtful
accounts by reviewing and identifying troubled accounts on a
monthly basis and by using historical experience applied to an
aging of accounts. A receivable is considered to be past due if any
portion of the receivable balance is outstanding for more than 90
days. The Company does not charge interest on past due receivables.
Receivables are written off when deemed uncollectible. Recoveries
of receivables previously written off are recorded when
received.
Inventories: Inventories are valued at the lower of cost
(first-in, first-out) or market.
Depreciation and Amortisation: The Company's policy is to
depreciate or amortise the cost of property and equipment over the
estimated useful lives of the assets using the straight-line
method. The cost of leasehold improvements is amortised over the
estimated useful lives, or the applicable lease term, if
shorter.
Years
Computer equipment 3-5
Furniture and fixtures 5-7
Equipment under capital
lease 5-7
Laboratory equipment 3-7
Leasehold improvements 5-8
Tooling and moulds 1-15
Vehicles 5
Long-Lived Assets: Long-lived assets to be held are reviewed for
events or changes in circumstances that indicate that their
carrying value may not be recoverable. The Company periodically
reviews the carrying value of long-lived assets to determine
whether or not an impairment to such value has occurred. Management
believes that no impairment of long-lived assets exists as of 30
June 2014 and 2013.
Intangibles: The cost of intangible assets is being amortised
over the remaining lives of the assets acquired as follows:
Years
Certification marks 20
Patents 17
Licensing agreement 10
Professional and regulatory fees associated with obtaining the
licenses that enable the Company to sell its products (i.e.
certification marks) are capitalised and amortised over the shorter
of the useful life of the related licenses or 20 years. Legal fees
associated with filings for patents that are pending are
capitalised if management believes that it is probable that such
patent applications will be successful. Patent costs are not
amortised until the patent is obtained. During the year ended 31
December 2010, the Company signed an agreement that allows for the
licensing of technology to support the Company's product
development efforts. The agreement is being amortised over the
remaining estimated life of the licensed technology, or 10
years.
Goodwill: Goodwill results from business acquisitions and
represents the excess of the purchase price over the fair value of
acquired tangible assets and liabilities and identifiable
intangible assets. In accordance with accounting for goodwill under
US GAAP, goodwill is not amortised, but instead tested for
impairment on an annual basis. The Company has applied Financial
Accounting Standards Board ("FASB") Accounting Standards Update
("ASU") No. 2011-08, "Testing Goodwill for Impairment", in
connection with the performance of the annual goodwill impairment
test. Under FASB ASU 2011-08, entities are provided with the option
of first performing a qualitative assessment on none, some, or all
of its reporting units to determine whether further quantitative
impairment testing is necessary. An entity may also bypass the
qualitative assessment for any reporting unit in any period and
proceed directly to the quantitative impairment test.
Goodwill must be tested on an annual basis or if an event occurs
or circumstances change that would more likely than not reduce the
fair value of the reporting unit below its carrying amount. During
the year ended 31 December 2013, the Company was not required to
record any impairments to the carrying value of goodwill or
indefinite-lived intangible assets. During the six months ended 30
June 2014 and 2013, the Company identified no events or
circumstances that would trigger an interim assessement of
goodwill.
Deferred Rent: Minimum rent expense is recognised over the term
of the lease. The Company recognises minimum rent starting when
possession of the property is taken from the landlord. When a lease
contains a predetermined fixed escalation of the minimum rent, rent
expense is recognised on a straight-line basis. Any difference
between the recognised rent expense and the amounts payable under
the lease is reported as deferred rent in the consolidated balance
sheets. The Company records include a tenant allowance on its
facility lease in Itasca, Illinois, which is recorded as a
component of deferred rent and amortised as a reduction to rent
expense over the term of the lease. Future payments for common area
maintenance, insurance, real estate taxes, and other occupancy
costs to which the Company is obligated are excluded from minimum
lease payments.
Fair Value of Financial Instruments: US GAAP defines fair value
as the price that would be received to sell an asset or paid to
transfer a liability in an orderly transaction between market
participants as of the measurement date. US GAAP describes three
approaches to measuring the fair value of assets and liabilities:
the market approach, the income approach, and the cost approach.
Each approach includes multiple valuation techniques. US GAAP does
not prescribe which valuation technique should be used when
measuring fair value, but does establish a fair value hierarchy
that prioritises the inputs used in applying the various
techniques. Inputs broadly refer to the assumptions that market
participants use to make pricing decisions, including assumptions
about risk. Level 1 inputs are given the highest priority in the
hierarchy while Level 3 inputs are given the lowest priority.
Assets and liabilities carried at fair value are classified in one
of the following three categories based on the nature of the inputs
to the valuation technique used:
Level - Observable inputs that reflect unadjusted quoted
1 prices for identical assets or liabilities in active
markets as of the reporting date. Active markets
are those in which transactions for the asset or
liability occur in sufficient frequency and volume
to provide pricing information on an ongoing basis.
Level - Observable market-based inputs or unobservable inputs
2 that are corroborated by market data.
Level - Unobservable inputs that are not corroborated by
3 market data. These inputs reflect management's best
estimate of fair value using its own assumptions
about the assumptions a market participant would
use in pricing the asset or liability.
The carrying values of cash and cash equivalents, accounts
receivable, and accounts payable approximates their fair values
because of the short-term nature of these instruments. The carrying
value of long-term debt approximates their fair values as the
stated interest rates approximate current market interest rates of
long-term debt with similar terms.
Product Warranty: Estimated future costs applicable to products
sold under warranty are charged to expense in the year of sale and
the related liability is classified as current. The accrued
warranty liability as of 30 June 2014 and 2013 was $179,310 and
$140,577, respectively.
Revenue Recognition: Product sales revenue is recognised upon
shipment of product to the client. Service fee revenue is
recognised when services are performed. Deferred and unbilled
revenue is recognised in the consolidated balance sheets.
Grant revenue is recognised when earned. Grant revenues are
deemed earned to the extent of the total allowable expenditures
incurred, which are specified in the grant contract. In some cases,
a portion of the grant revenue is paid at the time the grant is
initiated. These advances are deferred and recognised using the
proportional performance model. Unbilled services are at times
recorded for revenue recognised to date and relate to amounts that
are currently unbillable to the client pursuant to contractual
terms.
The Company sells extended warranties on its LifePort product
for a specific period of months. This revenue is deferred and
recognised over the term of the warranties on a straight-line
basis.
Shipping and Handling Costs: Shipping and handling costs billed
to customers of $65,706 and $75,467 are netted with expense and
have been included in cost of sales on the consolidated statements
of operations during the six months ended 30 June 2014 and 2013,
respectively.
Income Taxes: Income taxes are provided for the tax effects of
transactions reported in the consolidated financial statements and
consist of taxes currently due plus deferred taxes related
primarily to differences between the basis of property and
equipment, bad debts, intangibles, and accrued expenses for
financial and income tax reporting. The deferred tax assets and
liabilities represent the future tax return consequences of those
differences, which will either be taxable or deductible when the
assets and liabilities are recovered or settled. The carrying value
of the Company's deferred tax assets is dependent upon its ability
to generate sufficient taxable income in the future. The Company
has established a valuation allowance against its net deferred tax
assets to reflect the uncertainty of realising the deferred tax
benefits, given historical losses and limited history of current
earnings. A valuation allowance is required when it is more likely
than not that all or a portion of a deferred tax asset will not be
realised. As of 31 December 2013, $1,000,000 of the valuation
allowance was reversed to reflect the likelihood of future taxable
income, which will most likely result in the utilisation of a
portion of the Company's net operating losses. During the six
months ended 30 June 2014 and 2013, the Company determined no
change to this estimate was required.
The Company is subject to US federal, state, and local taxes as
well as foreign taxes in Belgium and Brazil. The Company's tax
years extending back to the year ended 31 December 2009 remain open
to examination for both federal and state jurisdictions; for
foreign jurisdictions the Company's tax years extending back to
December 31, 2010 remain open for examination. The Company's policy
is to recognise interest and penalties related to uncertain tax
positions as a component of tax expense. During the six months
ended 30 June 2014 and 2013, the Company did not recognise expense
for interest and penalties. As of 30 June 2014 and 2013, the
Company had $118,000 and $94,000, respectively, accrued for the
payment of interest and penalties. The Company does not expect the
total amount of unrecognised tax benefits to significantly change
during the next 12 months.
The Company's consolidated financial statements provide for any
related US tax liabilities on earnings of foreign subsidiaries that
may be repatriated, aside from qualifying undistributed earnings of
certain foreign subsidiaries that are indented to be indefinitely
reinvested in operations outside of the US.
The Company accounts for unrecognised tax benefits in accordance
with US GAAP, which prescribes a more likely than not threshold for
consolidated financial statement presentation and measurement of a
tax position taken or expected to be taken in a tax return. A tax
position is recognised as a benefit only if it is "more likely than
not" that the tax position would be sustained in a tax examination,
with a tax examination being presumed to occur. The amount
recognised is the largest amount of tax benefit that is greater
than 50% likely of being realised on examination. For tax positions
not meeting the "more likely than not" test, no tax benefit is
recorded.
Stock Options: In accordance with US GAAP, the Company accounts
for the cost of employee services received in exchange for an award
of equity instruments utilising the grant date fair value of the
award. Stock-based awards that do not require future service (i.e.,
vested awards) are expensed immediately. The expense associated
with stock-based employee awards that require future service are
amortised over the relevant service period.
Management Estimates: The preparation of consolidated financial
statements in conformity with US GAAP requires management to make
estimates and assumptions that affect the reported amounts of
assets and liabilities and disclosure of contingent assets and
liabilities as of the date of the consolidated financial statements
and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates.
The estimates included by the Company in these consolidated
financial statements relate to warranty reserves, allowance for
doubtful accounts, the useful lives of patents and the license
agreement, the useful lives of depreciable property and equipment,
and the valuation allowance for deferred tax assets.
Research and Development: Expenditures relating to the
development of new products and procedures are expensed as
incurred.
Foreign Currency Translation: The financial position and results
of operations of the Company's foreign subsidiaries are measured
using the subsidiary's local currency as the functional currency.
Assets and liabilities of the foreign subsidiaries are translated
to US dollars using exchange rates in effect as of the consolidated
balance sheet dates. Income and expense items are translated at
monthly average rates of exchange. The resultant translation gains
or losses are included as part of the components of stockholders'
equity designated as other comprehensive loss.
Contingencies: During the six months ended 30 June 2013, the
Company settled a dispute with a third party. Under the settlement,
the Company is owed $1,000,000, payable through April 2015. The
Company recognized the full amount of the settlement amount as a
reduction to selling, general, and administrative expenses in the
consolidated statements of operations for the six months ended 30
June 2013. As of 30 June 2014 and 2013, the third party was current
with its payments to the Company, and the Company has received
payments of $619,559 and $163,043, respectively, related to this
settlement.
In addition to the aforementioned matter, the Company may
experience litigation arising in the ordinary course of business.
These claims are evaluated for possible exposure by management of
the Company and their legal counsel. The Company believes that the
ultimate resolution of any such matters will not have a material
adverse effect on its consolidated financial position.
NOTE 2 - INVENTORIES
30 June 30 June
2014 2013
---
Medical devices, parts, and solutions $ 4,677,868 $ 4,791,469
Raw materials 1,299,763 672,975
---------- ----------
$ 5,977,631 $ 5,464,444
=========================================== ========== ==========
NOTE 3 - PROPERTY AND EQUIPMENT
30 June 30 June
2014 2013
--- ------------ ------------
Property and equipment in progress $ 781,153 $ 420,785
Computer equipment 549,959 363,604
Furniture and fixtures 874,847 774,691
Equipment under capital lease 76,846 135,524
Laboratory equipment 2,846,378 1,934,675
Leasehold improvements 1,157,531 1,053,841
Tooling and moulds 893,678 843,176
Vehicles 223,566 153,142
------------ ------------
7,403,958 5,679,438
Accumulated depreciation and amortisation (3,847,044) (3,098,695)
------------ ------------
$ 3,556,914 $ 2,580,743
=============================================== ============ ============
During the six months ended 30 June 2014 and 30 June 2013, the
Company recognised property and equipment depreciation and
amortisation expense of $407,777 and $364,622, respectively.
NOTE 4 - INTANGIBLES
Intangible assets consist of the following:
30 June 30 June
2014 2013
--- ---------- ----------
Licensing agreement $ 141,931 $ 141,931
Certification mark fees 629,606 -
Patents issued 2,195,981 1,600,243
Patents pending 1,999,596 2,071,237
---------- ----------
4,967,114 3,813,411
Less: Accumulated amortisation (949,003) (731,863)
---------- ----------
$ 4,018,111 $ 3,081,548
==================================== ========== ==========
During the six months ended 30 June 2014 and 30 June 2013, the
Company recognised intangible amortisation expense of $89,716 and
$64,973, respectively. During the six months ended 30 June 2014 and
30 June 2013, the Company abandoned patents issued and patents
pending with an original cost of $0 and $5,597, respectively.
NOTE 5 - LINE OF CREDIT AGREEMENT
During August 2009, the Company entered into a two-year working
capital line of credit agreement with Silicon Valley Bank ("SVB")
to support potential future cash needs of the Company. This line of
credit agreement, and amendments in 2010, 2011, 2012, and 2013,
currently provide for a revolving line of credit not to exceed an
aggregate principal amount of $3,000,000, limited to qualifying
receivables as defined, and grants a security interest in and lien
upon all of the assets of Lifeline Scientific, Inc. and Organ
Recovery Systems, Inc. in favour of SVB. The maturity of the line
of credit agreement is 21 September 2014. The outstanding principal
under the revolving line of credit accrued interest at an annual
rate of 1.25% above the prime rate (3.25% as of 30 June 2014).
During the six months ended 30 June 2014, the company drew upon
this line of credit in the amount of $1,000,000. In addition, a
$750,000, 36 month term loan at a 5.50% unsecured or a 2.75%
secured rate was made available to the Company. During the year
ended 31 December 2012, the Company drew upon this term loan in the
amount of $525,000 (at a secured rate of 2.75%) to support the
Company's growth plans. The financing agreement was amended during
the period ended 30 June 2013 to adjust the financial covenant
requirement. The financing agreements contain financial covenants
which require the Company to maintain a minimum tangible net worth
(as defined). As of 30 June 2014 and 2013, the Company was in
compliance with all covenants.
On 19 September 2014, the Company entered into a new loan and
security agreement with The PrivateBank and Trust Company ("PB").
The loan and security agreement provides for a revolving line of
credit, not to exceed an aggregate principal amount of $6,000,000
but limited to qualifying receivables and inventories, as defined.
The outstanding principal under the loan and security agreement
will accrue interest at PB's prime rate, as defined. The loan and
security agreement contains financial covenants which require the
Company to maintain a minimum tangible net worth, as defined, and a
minimum fixed charge coverage ratio, as defined. The loan and
security agreement is secured by substantially all assets of the
Company, and expires 17 September 2015. The Company used proceeds
from the loan and security agreement to repay the outstanding
principal of the prior line of credit agreement with SVB.
Accordingly, that balance of $1,000,000 as of 30 June 2014 has been
classified as long-term debt in the condensed consolidated balance
sheet.
NOTE 6 - INCOME TAXES
At the end of its interim six month periods, the Company makes
its best estimate of the annual expected effective income tax rate
and applies that rate to its ordinary earnings or loss for each six
month interim period. The income tax provision or benefit related
to significant, unusual, or extraordinary items, if applicable,
that will be separately reported or reported net of their related
tax effects are individually computed and recognised in the six
month interim period in which those items occur. In addition, the
effect of changes in enacted tax laws or rates, tax status,
judgment on the realisability of a beginning of the year tax asset
in future years or income tax contingencies is recognised in the
six month interim period in which the change occurs.
The computation of the annual expected effective income tax rate
at each six month interim period requires certain estimates and
assumptions including, but not limited to, the expected pre-tax
loss for the year, projections of the proportion of loss taxed in
foreign jurisdications, permanent and temporary differences, and
the likelihood of the realisability of deferred tax assets
generated in the current year. The accounting estimates used to
compute the provision or benefit for income taxes may change as new
events occur, more experience is acquired, additional information
is obtained, or the Company's tax environment changes.
Income tax benefit consists of the following components:
30 June 30 June
2014 2014
--- --------- ----------
Current (benefit) expense
Federal $ (40,254) $ (107,595)
Foreign 17,117 15,359
State 20,000 20,000
--------- ----------
Total income tax benefit $ (3,137) $ (72,236)
=== ========= ==========
The net deferred tax assets (liabilities) in the accompanying
consolidated balance sheets include the following components:
30 June 30 June
2014 2013
--- ------------- -------------
Deferred tax liabilities $ (1,387,003) $ (1,033,140)
Deferred tax assets 22,688,789 22,438,573
------------- -------------
Net deferred tax assets 21,301,786 21,405,433
Valuation allowance (19,262,101) (20,365,748)
------------- -------------
Net deferred tax assets $ 2,039,685 $ 1,039,685
=== ============= =============
The income tax benefit differs from the federal statutory tax
rate generally as a result of changes in each jurisdiction's
valuation allowance and permanent differences, such as meals and
entertainment expenses. A valuation allowance has been provided to
reduce the deferred tax assets to the amount that is more likely
than not to be realised.
As of 30 June 2014, the Company has federal and state net
operating loss carryforwards totalling $57,712,000, which may be
used to offset future taxable income. If not used, the
carryforwards will expire as follows:
Year US $
-------------------------- --- -----------
2022 $ 2,366,000
2023 7,720,000
2024 6,412,000
2025 11,136,000
2026 12,197,000
2027 14,131,000
2028 3,750,000
-----------
Total loss carryforwards $ 57,712,000
=== ===========
As a result of changes in ownership at the IPO date, the Company
estimates there will be future limitations on the utilisation of
operating loss carryforwards pursuant to Internal Revenue Code
Section 382. Any unused annual loss limitation carries forward to a
future year. The annual limitation on loss carryforwards that could
be utilised is approximately $2,600,000 after the six months ending
30 June 2014 and 30 June 2013. The cumulative unused loss
limitation, which carried into the year ended 31 December 2013, was
approximately $16,402,000.
NOTE 7 - STOCK OPTIONS
A summary of option activity under the Second Amended and
Restated Stock Option and Restricted Stock Plan (the "2007 Plan")
as of 30 June 2014 and 2013, and the changes during the six months
ended 30 June 2014 and 2013 is as follows:
Weighted- Weighted-
Average Average Aggregate
Exercise Remaining Intrinsic
Number Price Contractual Value
of Shares GBP Term GBP
------------ ---------- ------------- ------------
Outstanding as of 1 January
2013 1,958,340 1.18 6.95 1,071,045
Granted 219,000 1.90
Exercised - -
Forfeitures (1,125) 2.13
------------
Outstanding as of 30 June 2013 2,176,215 1.25 6.79 1,429,358
============ ========== ============= ============
Outstanding as of 1 January
2014 2,141,640 1.27
Granted - -
Exercised (8,800) 0.39
Forfeitures (1,375) 1.94
Expirations (4,000) 0.82
------------
Outstanding as of 30 June 2014 2,127,465 1.27 5.81 1,478,679
============ ========== ============= ============
Vested or expected to vest
as of 30 June 2014 2,114,763 1.27 5.80
============ ========== =============
Options exercisable as of 30
June 2014 1,753,113 1.13 5.37 1,461,284
============ ========== ============= ============
The Company recognised compensation expense of $154,318 and
$128,599 for the six months ended 30 June 2014 and 2013,
respectively. As of 30 June 2014, there was approximately $394,829
of total unrecognised compensation cost related to nonvested
share-based compensation arrangements granted under the 2007 Plan.
That cost is expected to be recognised over a weighted-average
period of 0.9 years.
NOTE 8 - EARNINGS PER SHARE
Basic earnings per share is computed by dividing net income by
the weighted average number of shares of common stock outstanding
during the period. Diluted earnings per share include the dilutive
effect of stock options and warrants, using the treasury stock
method. The following table sets forth the computation of basic and
diluted earnings per share for the six months ended 30 June 2014
and 2013:
30 June 30 June
2014 2013
--- ----------- ------------
Net income (loss) attributed to common
stock shareholders $ 30,234 $ (1,312,609)
Weighted average shares outstanding
for basic earnings per share 19,445,881 19,424,959
Dilutive effect of stock options 717,486 -
--- ----------- ------------
Weighted average shares outstanding
for diluted earnings per share $ 20,163,366 $ 19,424,959
=== =========== ============
Basic income (loss) per share $ 0.00 $ (0.07)
Diluted income (loss) per share $ 0.00 $ (0.07)
For the six months ended 30 June 2013, diluted loss per share is
the same as basic loss per share because the effects of potentially
dilutive securities are anti-dilutive.
NOTE 9 - RELATED PARTY TRANSACTIONS
During the year ended 31 December 2010, the Company entered into
a consulting agreement with a company in which Steven Mayer, a
member of the Company's Board of Directors, is a director. Mr.
Mayer performed the consulting services. Fees for services rendered
under the consulting agreement were $48,000 and $36,000 for the six
months ended 30 June 2014 and 2013, respectively.
Additionally, during the six months ended June 2014 and 2013,
the Company did business with a company in which David Kravitz and
Steven Mayer are directors and have an ownership interest. Fees for
research and development related products and services rendered
were $351,000 and $214,500 for the six months ended 30 June 2014
and 2013, respectively. These payments represented expensed
products and services of $171,000 and $22,500 for the six months
ended 30 June 2014 and 2013, respectively, and asset purchases of
$180,000 and $192,000, respectively.
This information is provided by RNS
The company news service from the London Stock Exchange
END
IR KMGZLKVVGDZM
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