DEERFIELD BEACH, Fla., June 21 /PRNewswire-FirstCall/ -- BioLok International Inc. , the manufacturer and worldwide distributor of leading-edge dental implant technology, today announced financial results for its fiscal 2006 second quarter and first half ended April 30, 2006. As previously announced, the Company achieved record second quarter revenue of $2.3 million.
“Revenues for the three months ended April 30, 2006 were a record for our second quarter as well as the highest ever for any quarter in the Company’s history,” said Bruce L. Hollander, President of BioLok International. “Sales from domestic territories that we began covering within the past six to nine months are ramping up, and we also are taking market share in other markets both here and abroad. We believe that our business model is strengthening as we expand our global reach. The demand for BioLok’s proven and scientifically enhanced product line is clearly evident in the distributors that seek to partner with us and from the experiences of our highly trained sales force. We anticipate that our revenue growth rate will continue to increase for the balance of the year to approximately three times that of the dental implant industry.
“A trend that began in the first quarter of the year, we continue to track our internal objectives. We believe that we are positioned for continued progression for the balance of the year. In fact, with nearly two months in the third quarter under our belt, we see a continued improvement in our business trends and a corresponding increase in our bottom line results.”
Fiscal 2006 Second Quarter and Six Months Financial Results
For the second quarter ended April 30, 2006, the Company’s sales were a record $2.3 million, an increase of 33% from $1.7 million in the same period of fiscal 2005 and approximately 15% sequentially from $2.0 million in the first quarter of fiscal 2006.
Benefiting from geographic diversification, international customers accounted for 72%, or $1.7 million, of sales, and domestic customers accounted for 28%, or $655,000, in the second quarter 2006. International and domestic revenues in the second quarter of fiscal year 2006 increased by 25% and 58%, respectively, as compared to the same period of fiscal 2005. The revenue growth in the domestic market reflects the expansion of the Company’s direct sales force to 11 sales representatives by late 2005. Both the direct sales force as well as international distributors showed continued market penetration.
Gross margins for the three months ended April 30, 2006 were 72.2% as a percentage of sales compared with 68.2% as a percentage of sales for the same period in fiscal 2005 as well as the first quarter of 2006. The 400 basis point or 4 percent increase in gross margin percentage demonstrates pricing power for the BioLok brand across a growing base of users, partially offset by promotional activities in an effort to capture new customers by the Company’s expanding sales force and international distributors. In addition, the Company is benefiting from improved manufacturing efficiencies. Cost of goods will continue to fluctuate in the future as growth and production requirements are met.
The Company experienced a 168% increase in selling and marketing (S&M) expenses in the second quarter of 2006 over the prior year period, which reflects the increase in spending for current and future top line growth. Sales and marketing expenses in the second quarter of 2006 were $1.1 million as compared to $.4 million in the prior year period. As a percentage of revenue, S&M expenses accounted for 48% in the second quarter 2006 as compared to 24% in the year earlier period. The increased expenses incurred are for staff increase (3 to 11) and marketing costs to generate sales growth.
G&A expenses were $633,730 in the second quarter as compared to $768,361 in the 2005 second quarter. As a percentage of revenue, G&A expenses accounted for 27% in the second quarter of 2006 as compared to 44% in the prior year period. G&A expenses were considerably lower for the second quarter over the same quarter in the prior year due to no stock being issued for services to officers and employees for services.
R&D expenses in the second quarter of fiscal 2006 were $70,729, or 3% of revenues, as compared to $85,500, or 4.9% of revenues, in the second quarter of fiscal 2005. The decrease in R&D expenses was temporary for the period.
BioLok recorded a net loss for the three months ended April 30, 2006 of $174,750, or $.01 per diluted share, compared with a net loss of $125,772, or $.01 per diluted share, for the same period in fiscal 2005. The decrease in profitability primarily reflects the increased sales and marketing costs which are part of management’s long term growth strategy.
Sales for the first half of fiscal 2006 were a record $4.3 million, an increase of 31% from $3.3 million in the comparable prior year period. BioLok had a net loss for the first six months of fiscal 2006 of $535,725 compared to a loss for the same period in fiscal 2005 of $34,190.
The Company continues to maintain an adequate and sufficient financial position. At the end of the second quarter, BioLok had a positive working capital position of $3.6 million, a current ratio of 2.4, and access to nearly $1 million from a line of credit. With plans to significantly boost revenues, BioLok has the capacity to continue to increase production with minimal capital investment.
Product Development and Marketing Highlights
In March, the Company announced it had received 510(k) clearance from the United States Food and Drug Administration (FDA) to market BoneGen(TM)-TR. The FDA clearance was granted 8 weeks after BioLok made its submission. BoneGen(TM)-TR from BioLok, a pioneer in merging technological innovation and cell biology, is a clinically safe, nano-composite, time release calcium sulfate product used for bone regeneration, augmentation, and as a soft tissue barrier in implantology, periodontology, endodontics and oral surgery. The broad bone augmentation market is estimated at over $1 billion annually by Datamonitor.
Clinical studies to enhance the product’s marketability are being conducted in the US, Argentina, Australia and Spain at multiple private practices and universities. BioLok is presently completing the requisite delivery and packaging system requirements needed for commercial distribution of BoneGen(TM)-TR. Full scale, revenue generating distribution is expected to commence in BioLok’s fourth quarter of fiscal 2006.
In May, BioLok announced its intent to enter into Japan, a dental implant market estimated at over $100 million annually, through an agreement with Shofu Inc. (“Shofu”). The international distribution agreement allows Shofu to market the BioLok Precision Dental Implant System and its related products in Japan, subject to the finalization and successful registration of the product line in Japan under their regulations of the Pharmaceutical Affairs Law and Medical Act.
Progress is being made toward the Company forming international marketing agreements for entry into Hungary and surrounding countries, Poland, the Philippines, and other countries. By the end of October 2006, BioLok plans to establish a subsidiary and have its product line registered in Canada as the starting point for entry into that country. A direct sales force will be introduced for initial coverage of Toronto and Montreal.
To accommodate BioLok’s domestic and international expansion, the Company has completed the majority of work associated with the addition of 6,500 square feet of new space at its corporate headquarters in Deerfield Beach, Florida.
Growth Outlook and Financial Results Guidance
“We are very excited by our outlook for the balance of the year,” Mr. Hollander stated. “BonGen(TM)-TR truly is a breakthrough product that carries with it very common characteristics for use. There is minimal if any learning curve for doctors and our sales people, and the patented product’s advantages are numerous, including safety and efficacy. We believe we are positioned for rapid acceptance and sales of the product.
“BoneGen(TM)-TR adds to the already substantial value proposition of the BioLok product line. Therefore, our sales and marketing channels have even greater potential to add new customers and produce incremental revenue from existing customers. To further capitalize on the opportunities available to BioLok, we will be increasing our domestic direct sales force by adding up to four sales representatives by the end of the calendar year.
“We remain on track to deliver revenue growth for the third consecutive year, with the balance of the year expected to come in at 40% or greater. Our second half performance is expected to offset the first half so that we expect to end the year at about breakeven. In addition to our organic growth initiatives, we are exploring acquisition opportunities which would be synergistic with our current mix of technologically differentiated products.”
BioLok International Inc. is merging cell biology and technology to develop and market products for the dental implant and tissue regeneration markets. The Company is the worldwide manufacturer and distributor of the BioLok Precision Dental Implant System. BioLok offers a superior line of dental implants that incorporate many patented features and are synonymous with quality, fit of components, leading edge technology and design, and ease of use. Additional information is available on the Company’s Web site at http://www.biolok.com.
With the exception of the historical information contained in the release, the matters described herein contain certain “forward-looking statements” that are made pursuant to the Safe Harbor provisions of the Private Securities Litigation Reform Act of 1995. The statements contained in this release, which are not historical facts may be deemed to contain forward-looking statements, including, but not limited to, deployment of new services, growth of the customer base, and growth of the service area, among other items. Actual results may differ materially from those anticipated in any forward-looking statement with regard to magnitude, timing or other factors. Deviation may result from risk and uncertainties, including, without limitation, the Company’s dependence on third parties, market conditions for the sale of services, technical factors affecting networks, availability of capital, timing and quantity of stock and other security issuances, and other risks and uncertainties. More detailed information about these risk factors are set forth and may be updated from time to time in filings by BioLok International, Inc. with the Securities and Exchange Commission, including the Company’s most recent quarterly report on Form 10-Q and other publicly available information regarding the Company. The Company disclaims any obligation to update information contained in any forward-looking statement.
BioLok International Contact: Investor Relations Contact: Bruce L. Hollander Jordan M. Darrow President/CEO Darrow Associates, Inc. 954-698-9998 631-367-1866 blh@biolok.comjdarrow@optonline.net
BioLok International Inc.
CONTACT: Bruce L. Hollander, President/CEO of BioLok International,+1-954-698-9998, blh@biolok.com, or Investor, Jordan M. Darrow of DarrowAssociates, Inc., +1-631-367-1866, jdarrow@optonline.net
Web site: http://www.biolok.com/
