Akers Biosciences, Inc. Announces Q2 2015 Earnings

Published: Aug 18, 2015

US Sales of Rapid HIT Test Continue to Rise: +67% Over Q2 2014

Conference Call Scheduled for 9:00 a.m. EDT Today

THOROFARE, N.J., Aug. 18, 2015 (GLOBE NEWSWIRE) -- Akers Biosciences, Inc. (NASDAQ:AKER) (AIM:AKR.L), (the "Company," "Akers" or "Akers Bio"), a medical device company focused on reducing the cost of healthcare through faster, easier diagnostics, reports its earnings for the second quarter and six months ended June 30, 2015.

Financial Highlights:

Revenue for Q2 was $966,922 and for H1 was $1,476,970
US sales of flagship test for heparin-induced thrombocytopenia ("HIT") for Q2 were $560,598 and for H1 were $898,960 – showing growth of 67% over Q2 2014 and 44% over H1 2014
Company is beginning to see increased demand for its alcohol breathalyzer (mainly from the EU) with $209,805 shipped in H1 and a larger pipeline of orders through the remainder of the year
Gross profit margin in Q2 was 65% and in H1 was 62% - consistent with management's expectations of where margins are expected to settle on a continuing basis
Gross profit in Q2 was $625,897 in H1 was $909,603
Loss before income tax in Q2 was $2,086,229 and in H1 was $3,408,028 – which includes a one-time reserve of $864,000 for a past due receivable
Cash and marketable securities at June 30, 2015 was $6,677,360

Operational Highlights

Sales and Marketing leadership team strengthened with appointments of additional senior sales and marketing executives
Added multiple sales executives across US to support distributors of rapid HIT test
Launched Akers Wellness product line with two new rapid breath tests for ketosis and oxidative stress targeting the health and wellness industry
Signed agreement to sell METRON® breath ketone test direct to consumers through Amazon Marketplace – online store to launch in Q3
Signed exclusive Master Distributor Agreement with ADS Inc. for marketing and supply of rapid tests to US Government agencies and departments
Expanded the international distribution network through the addition of new distributors for rapid HIT test in Europe, the Middle East and Africa (EMEA) – product now exposed to 30 non-US markets
Achieved ISO 13485 (2003) Certification which accelerates the process of gaining regulatory clearance for medical devices in certain countries, allowing the Company to get products to market faster

"Our core business of rapid tests for heparin-induced thrombocytopenia keeps growing," said Raymond F. Akers, Jr. PhD, Co-founder and Executive Chairman. "The benefits of the newly expanded sales team are beginning to be felt with domestic sales of this flagship product up 67 per cent compared with the second quarter of 2014 – and up 44% compared with the first half of 2014; and we are confident of a significantly stronger second half of the year for this product," continued Dr. Akers.

"Outside of the HIT test business, we are very pleased to see a return in demand from new customers for the alcohol breathalyzer product in the EU following the loss of the French revenue stream when the French government postponed the fine for drivers failing to possess breathalyzers in their vehicles. We have visibility over a healthy pipeline of orders from the EU for this product through the remainder of the year," continued Dr. Akers.

"One of the most significant events to occur in terms of the Company's future has been the creation of the new Akers Wellness product line and the introduction of its transformative breath tests - known as BreathScan OxiChek™ and BreathScan KetoChek™ - which connect to a bluetooth-enabled reader and synch via an app on any mobile device. These tests will enable doctors, chiropractors, suppliers of nutritional supplements, health coaches and consumers to monitor trends in critical metabolic processes with a level of convenience which has never before been available to them. This is a huge market globally – particularly in the US – and our proprietary technology for identifying biomarkers in exhaled breath positions us very well to capitalize on it," continued Dr. Akers.

"Looking ahead through the remainder of the year, the most important indicator is that domestic sales of the flagship HIT test continue to rise – and we expect this trend to accelerate. We also have a strong pipeline of orders for alcohol breathalyzers coming from new distributors in the EU. Longer term we're very excited about the prospects for our international business – particularly China where we see the most significant opportunity. While we have good revenue visibility through the remainder of the year in our core business, the Company's ability to meet full revenue expectations for the year remains partially dependent on the timing of large stocking orders from international distributors like those in China, which are influenced by external factors such as regulatory approvals. We are confident that such orders will materialize but there can be no certainty over their timing. We also expect to see initial revenue contributions this year from our Akers Wellness line as these transformative products establish their place in the market," said Dr. Akers.

Summary of Statements of Operations for the Three Months Ended June 30, 2015 and 2014

Akers' revenue for the three months ended June 30, 2015 totaled $966,922, a 90% increase over the three months ended March 31, 2015 and a 29% decrease from the three months ended June 30, 2014. Although revenue declined overall, importantly, sales of the flagship PIFA Heparin/PF4 Rapid Assay products increased by 67% over the three months ended June 30, 2014. The reduction in overall revenue resulted from there having been an initial stocking order for Tri-Cholesterol "Check" tests in the three month period ended June 30, 2014 which was not repeated in the three months ended June 30, 2015.

The Company's MPC product sales, specifically the BreathScan breathalyzer product, rose during the period due to an initial stocking order from a new distributor in the European Union ("EU"). An initial order for 2,000,000 devices was received and units began to ship in June. Additional shipments will be released as directed by the distributor over the next twelve months.

Domestic sales of the Company's PIFA Heparin/PF4 Rapid Assay products, part of the PIFA line, continue to grow. The Company has expanded its sales and marketing staff to cover most of the United States, adding technical sales account executives whose role is to significantly support the sales representatives of Akers' US distribution partners, Cardinal Health ("Cardinal"), Fisher HealthCare ("Fisher") and Typenex Medical ("Typenex"). We have begun to recognize the revenue benefits from the expansion of the sales and marketing staff and expect this to continue as the additional sales executives become more involved with the distributor representatives in their sales regions.

There were no sales in the three months ended June 30, 2015 for the Tri-Cholesterol "Check" tests, part of the REA line of products, which generated sales of $864,000 during the same period of 2014. The revenue generated in the 2014 sale of the Tri-Cholesterol "Check" tests was due to an initial stocking order from 36 Strategies General Trading, LLC to distribute the tests in Australia, Singapore, the United Arab Emirates and Oman.

Other operating revenue increased due to a rise in shipping and handling fees, a result of increased volume and the mix of domestic and international shipments.

The Company's exclusive License and Supply Agreement with ChubeWorkx Guernsey Limited ("ChubeWorkx") for the Company's proprietary breathalyzer product was cancelled by both parties on May 7, 2015. As a result of this event, and per the terms of the original agreement, the Company recognized the remaining $166,667 of deferred revenue in the statement of operations for the period ended June 30, 2015. The Company is now able to solicit business outside the United States for its alcohol breathalyzer products and has begun to receive and ship orders.

Cost of sales for the three months ended June 30, 2015 increased by 141% compared to the same period in 2014 to $341,025 from $141,408 in 2014. Direct cost of sales increased to 25% of product revenue while indirect cost of sales increased to 21% for the three months ended June 30, 2015 as compared to 3% and 8% respectively for the same period in 2014. Overall, cost of sales, as a percentage of product revenue, was 46% and 11% for the three month periods ended June 30, 2015 and 2014.

Direct cost of sales for the three month period ended June 30, 2015 are in line with the previous quarter; direct costs for the period ended March 31, 2015 were 24% and indirect costs were 33%. The significant increase for the three months ended June 30, 2015 was due to one significant event that occurred in the three months ended June 30, 2014; during prior periods, the Company had written-off its REA product inventory while it worked to develop a market and identify a distributor for the product line. As a result of this action, no significant cost of sales was associated with the REA product revenue.

The increase in indirect cost of sales for the three months ended June 30, 2015 is attributed to an ongoing project to improve the management, reporting and turn-over rate of our production inventory. The increase was mitigated by a reduction in indirect personnel expenses in the three months ended June 30, 2015. In addition, the percentage increase is affected by the fixed cost nature of many of the components in this category.

Akers' gross profit margin, as a percentage of revenue, decreased to 65% for the three months ended June 30, 2015 as compared to 89% in 2014 for the reasons described above and is consistent with management's expectations of where margins are expected to settle on a continuing basis.

General and administrative expenses for the three months ended June 30, 2015, totaled $1,746,531, which was a 72% increase as compared to $1,017,047 for the three months ended June 30, 2014.

During the three months ended June 30, 2014, the Company issued stock options to the officers and key employees which accounts for the most significant fluctuation in personnel, where, during the same period of 2015, no costs were incurred.

The increase in professional service costs for the three months ended June 30, 2015 is related to costs associated with various corporate and legal affairs. Also included in this increase is the use of employment agencies to seek out qualified applicants for our sales and marketing department.

The Company established an allowance for bad debts of $864,000 for a receivable that was due June 30, 2015. During the three months ended June 30, 2014, the Company issued stock options to the directors which offsets a portion of the increase in other general and administrative expenses, where, during the same period of 2015, no costs were incurred.

Sales and marketing expenses for the three months ended June 30, 2015 totaled $553,539, which was a 40% increase as compared to $396,609 for the three months ended June 30, 2014.

Research and development expenses for the three months ended June 30, 2015 totaled $378,225, which was a 52% increase as compared to $248,951 for the three months ended June 30, 2014.

Clinical trial costs, professional service costs and other research and development costs have increased in the three months ended June 30, 2015 due to the significant costs associated with preparing several key products for market. Major expenses include engineering fees, product insert and packaging design, testing and clinical trials.

Summary of Statements of Operations for the Six Months Ended June 30, 2015 and 2014

Akers' revenue for the six months ended June 30, 2015 totaled $1,476,970, a 42% decrease from the same period in 2014. Importantly, sales of the flagship PIFA Heparin/PF4 Rapid Assay products increased by 44% over the six month period ended June 30, 2014. The reduction in overall revenue resulted from there having been an initial stocking order for Tri-Cholesterol "Check" tests in the first half of last year which was not repeated in the six months ended June 30, 2015 and from the impact on sales of BreathScan breathalyzer products following the French government's postponement, indefinitely, of the fine that was to be imposed for drivers failing to possess breathalyzers in their vehicles.

The Company's MPC product sales declined during the six months ended June 30, 2015. During the same period of 2014, the Company received the final order from ChubeWorkx for the Company's breathalyzer product. The decline was partially offset by an initial stocking order from a new distributor in the European Union ("EU"). An initial order for 2,000,000 devices was received and units began to ship in June. Additional shipments will be released as directed by the distributor over the next twelve months.

Domestic sales of the Company's PIFA Heparin/PF4 Rapid Assay products continue to grow. The Company has expanded its sales and marketing staff to cover most of the United States, adding technical sales account executives whose role is to significantly support the sales representatives of Akers' US distribution partners, Cardinal Health ("Cardinal"), Fisher HealthCare ("Fisher") and Typenex Medical ("Typenex"). We have begun to recognize the revenue benefits from the expansion of the sales and marketing staff and expect this to continue as the additional sales executives become more involved with the distributor representatives in their sales regions.

There were no sales in the six months ended June 30, 2015 for the Tri-Cholesterol "Check" tests, part of the REA line of products, which generated sales of $864,000 during the same period of 2014. The revenue generated in the 2014 sale of the Tri-Cholesterol "Check" tests was due to an initial stocking order from 36 Strategies General Trading, LLC to distribute the tests in Australia, Singapore, the United Arab Emirates and Oman.

Other operating revenue increased due to a rise in shipping and handling fees, a result of increased volume and the mix of domestic and international shipments.

Cost of sales for the six months ended June 30, 2015 decreased by 24% compared to the same period in 2014 to $567,367 from $745,732 in 2014. Direct cost of sales increased to 24% of product revenue while indirect cost of sales increased to 25% for the six months ended June 30, 2015 as compared to 22% and 9% respectively for the same period in 2014. Overall, cost of sales, as a percentage of product revenue, was 49% and 31% for the six month periods ended June 30, 2015 and 2014.

Direct cost of sales for the six months ended June 30, 2015 showed a small increase of 2% of product revenue over 2014. The increase for the six months ended June 30, 2015 was due to one significant event that occurred in the six months ended June 30, 2014; during prior periods, the Company had written-off its REA product inventory while it worked to develop a market and identify a distributor for the product line. As a result of this action, no significant cost of sales was associated with the REA product revenue.

The increase in indirect cost of sales is attributed to an ongoing project to improve the management, reporting and turn-over rate of our production inventory. The increase was mitigated by a reduction in indirect personnel expenses in the six months ended June 30, 2015. In addition, the percentage increase is affected by the fixed cost nature of many of the components in this category.

Akers' gross profit margin, as a percentage of revenue, decreased to 62% for the six months ended June 30, 2015 as compared to 70% in 2014 for the reasons described above and is consistent with management's expectations of where margins are expected to settle on a continuing basis.

General and administrative expenses for the six months ended June 30, 2015, totaled $2,444,964, which was a 46% increase as compared to $1,670,728 for the six months ended June 30, 2014.

During the six months ended June 30, 2014, the Company issued stock options to the officers and key employees which accounts for the most significant fluctuation in personnel costs, where, during the same period of 2015, no costs were incurred.

The increase in professional service costs for the six months ended June 30, 2015 is related to costs associated with various corporate and legal affairs. Also included in this increase is the use of employment agencies to seek out qualified applicants for our sales and marketing department.

Offsetting a portion of the professional service expenses was the elimination of management fees paid to Nicolette Consulting Group for services that were incurred in the six months ended June 30, 2014.

The Company established an allowance for bad debts of $864,000 for a receivable that was due June 30, 2015. During the six months ended June 30, 2014, the Company issued stock options to the directors which offsets a portion of the increase in other general and administrative expenses, where, during the same period of 2015, no costs were incurred.

Sales and marketing expenses for the six months ended June 30, 2015 totaled $1,128,792, which was an 86% increase as compared to $607,707 for the six months ended June 30, 2014

Research and development expenses for the six months ended June 30, 2015 totaled $683,799, which was a 36% increase as compared to $502,489 for the six months ended June 30, 2014.

Clinical trial costs, professional service costs and other research and development costs have increased in the six months ended June 30, 2015 due to the significant costs associated with preparing several key products for market. Major expenses include engineering fees, product insert and packaging design, testing and clinical trials.

For the six months ended June 30, 2015 and 2014, the Company generated a net loss attributable to shareholders of $3,408,028 and $1,106,388, respectively. As of June 30, 2015 and December 31, 2014, the Company has an accumulated deficit of $88,272,114 and $84,864,086 and had cash totaling $261,234 and $455,841, respectively.

Conference Call Information:

Tuesday, August 18, 2015 at 9.00 a.m. Eastern time
US:	1-888-572-7034
International:	1-719-325-2464
Conference ID:	3581038
Webcast:	http://ir.akersbiosciences.com/events.cfm

Replays - Available through September 1, 2015
US:	1-877-870-5176
International:	1-858-384-5517
Conference ID:	3581038

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

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 Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. Such forward-looking statements reflect the Company's expectations about its future operating results, performance and opportunities that involve substantial risks and uncertainties. These statements include but are not limited to statements regarding the intended terms of the offering, closing of the offering and use of any proceeds from the offering. When used herein, the words "anticipate," "believe," "estimate," "upcoming," "plan," "target", "intend" and "expect" and similar expressions, as they relate to Akers Biosciences, Inc., its subsidiaries, or its management, are intended to identify such forward-looking statements. These forward-looking statements are based on information currently available to the Company and are subject to a number of risks, uncertainties, and other factors that could cause the Company's actual results, performance, prospects, and opportunities to differ materially from those expressed in, or implied by, these forward-looking statements.

CONTACT: For more information: Akers Biosciences, Inc. Raymond F. Akers, Jr. PhD Executive Chairman of the Board Tel. +1 856 848 8698 Taglich Brothers, Inc. (Investor Relations) Chris Schreiber Tel. +1 917 445 6207 Email: cs@taglichbrothers.com finnCap (UK Nominated Adviser and Broker) Geoff Nash / Scott Mathieson (Corporate Finance) Steve Norcross (Broking) Tel. +44 (0)20 7220 0500 Vigo Communications (Public Relations) Ben Simons / Fiona Henson Tel. +44 (0)20 7016 9570 Email: akers@vigocomms.com

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Akers Biosciences, Inc. Announces Q2 2015 Earnings