VANCOUVER, BRITISH COLUMBIA--(Marketwire - November 09, 2009) - Forbes Medi-Tech Inc. (NASDAQ: FMTI) ("Forbes" or "Company") today announced its results for the third quarter ended September 30, 2009. The comparative period for these statements is the three and nine-month periods ended September 30, 2008. All amounts are in Canadian Dollars unless otherwise noted.
THIRD QUARTER OVERVIEW:
Reducol™: In October 2009 the Company announced that the European Union had approved a health claim for plant sterols -- Reducol™ -- in free or esterified form.
Exchange Listings: In January 2009, Forbes announced that it had received notice from the Toronto Stock Exchange ("TSX"), indicating that the TSX was reviewing the eligibility of its common shares for continued listing on the TSX, relating to Forbes' market capitalization, which had fallen below the designated minimum TSX threshold for continued listing.
On August 12, 2009, Forbes announced that it had received notice from the TSX that its common shares will be delisted at the close of market on September 11, 2009. The delisting decision announced by the TSX related to the Company's market capitalization, which had remained below the TSX designated minimum, $3,000,000 market capitalization threshold for continued listing. On September 11, 2009, as the Company had not regained compliance with the TSX listing requirements, the Company's shares were delisted from trading on the TSX.
Since the beginning of the year, NASDAQ has three times extended its suspension of its bid price and market value of publicly held shares requirements, with the result that the Company's compliance deadline is now January 4, 2010.
FINANCIAL RESULTS:
The following table offers a summary of the financial results for the third quarter of 2009.
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Summary:
(thousands of $
except per share 3 month 3 month 9 month 9 month
values and number period ended period ended period ended period ended
of shares) Sept. 30, Sept. 30, Sept. 30, Sept. 30,
(unaudited) 2009 2008 2009 2008
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Phytosterol
revenues $ 1,279 $ 1,927 $ 3,022 $ 6,648
Cost of sales (1,174) (1,513) (2,432) (5,375)
Inventory and
purchase commitment
allowances (389) (182) 509 (64)
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(284) 232 1,099 1,209
Expenses (1,101) (1,687) (3,597) (6,191)
Other income 29 39 4,248 133
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(Loss) / income
from continuing
operations (1,356) (1,416) 1,750 (4,849)
Income tax expense (23) (14) (26) (25)
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Net (loss) / income
from continuing
operations (1,379) (1,430) 1,724 (4,874)
Income / (loss)
from discontinued
operations - 785 - (457)
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Net (loss) / income
for the period $ (1,379) $ (645) $ 1,724 $ (5,331)
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Weighted average
number of shares 4,969,813 4,885,662 4,969,813 4,829,749
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(Loss) / income
per share from
continuing
operations
Basic and diluted $ (0.28) $ (0.29) $ 0.35 $ (1.01)
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Income (loss) per
share from
discontinued
operations
Basic and diluted - 0.16 - (0.09)
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(Loss) / income
per share
Basic and diluted $ (0.28) $ (0.13) $ 0.35 $ (1.10)
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Net income for the year to date: For the nine months ended September 30, 2009, the net income of $1,724,000 includes the one-time positive impact of the reversal of the $1,424,000 provision for loss on certain purchase commitments. This provision was previously recognized as a charge against income in prior accounting periods and reversed in the second quarter ending June 30, 2009. Net income also includes a one time gain related to the completion of the Deans Knight public offering and conversion of the convertible debenture. These events resulted in the recognition of a gain of approximately $4,148,000 in the first quarter ended March 31, 2009.
Revenues: Phytosterol revenues - includes direct sales of branded Reducol™ ingredients, non-branded sterol esters and sterols, sales through the Forbes-Fayrefield joint venture of finished products containing Reducol™, and license fees received. Phytosterol revenues for the nine months ended September 30, 2009 totaled $3,022,000 compared with $6,648,000 for the nine months ended September 30, 2008. The decrease is primarily due to re-alignment of inventories by one of the Company's major customers in the first six months of 2009. This customer is returning to its prior purchasing patterns in the second half of 2009. Also, the Company's sales to its European customers have shown a decrease, primarily due to the effect of the economic downturn. In addition, sales by Forbes-Fayrefield of finished products to key European markets have also decreased, in part as a result of a switch from revenue to commission based sales. As a result of these events, together with current general market uncertainties, the Company anticipates that this year's revenue will be significantly below its prior year's level.
Cost of Sales/ Margins: Excluding the impact of the inventory and purchase commitment allowances, for the nine months ended September 30, 2009, the Company realized a gross margin percentage of 20% on phytosterol revenues of $3,022,000 compared with a gross margin percentage of 19% on phytosterol revenues of $6,648,000 for the nine months ended September 30, 2008.
Excluding the impact of the inventory and purchase commitment allowances, for the three months ended September 30, 2009, the Company realized a gross margin percentage of 8% on phytosterol revenues of $1,279,000 compared with a gross margin percentage of 22% on phytosterol revenues of $1,927,000 for the three months ended September 30, 2008. The margins decreased primarily due to a customer mix with lower margins and less favorable foreign exchange rates.
Operating expenses: The Company continues to reduce operating expenses wherever possible. The reduction in expenses in the current nine months in comparison to the comparable nine months in the previous year is attributable to a reduced head count and other cost saving measures. In addition, in the prior year, for the nine months ended September 30, 2008, the Company incurred one-time costs associated with the Special General Meeting, the NASDAQ hearing, the non dilutive financing and severance costs associated with the corporate restructuring.
Liquidity & Capital Resources: The Company's cash position as of September 30, 2009 totaled $1,197,000 compared with $1,377,000 as at December 31, 2008. Forbes had working capital of $4,834,000 at September 30, 2009 compared with $3,531,000 as at December 31, 2008.
The Company has projected that its capital resources will be sufficient to finance operations through the first quarter of 2010. This view is based on a number of factors and assumptions, which includes the assumption that the Company's expenditures will not exceed those currently planned, and its revenues will meet or exceed current expectations.
The Company's future operations are completely dependent upon its ability to complete a strategic transaction such as a merger, acquisition, sale of business or other suitable transaction, and/or secure additional funds. The market for any of these activities for companies such as Forbes has always been challenging, and the Company believes that current economic conditions and uncertainties have provided, and will continue to provide, additional challenges. While management is continuing to seek available alternatives, there is no assurance that any of these activities will be successfully completed in a timely manner, or at all. If the Company cannot complete one or more of these activities in advance of the end of the first quarter of 2010, it will have to consider winding up, dissolution or liquidation.
Third Quarter Report
This news release includes by reference the Company's unaudited financial statements for the third quarter ended September 30, 2009 and the corresponding Management's Discussion & Analysis (MD&A). More detailed information can be found in the MD&A and financial statements, which are being filed with applicable Canadian and U.S. regulatory authorities and will be available on the Company's website at www.forbesmedi.com.
FORBES MEDI-TECH INC.
CONSOLIDATED BALANCE SHEETS
(Expressed in Canadian dollars)
(unaudited)
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September 30 December 31
2009 2008
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ASSETS
Current Assets
Cash and cash equivalents $ 1,197,109 $ 1,376,575
Accounts receivable 885,093 1,446,561
Inventories 3,110,379 5,992,748
Prepaid expenses and deposits 171,010 241,784
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5,363,591 9,057,668
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Long-term Assets
Capital assets 110,690 139,843
Other assets 24,308 18,376
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$ 5,498,589 $ 9,215,887
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LIABILITIES and SHAREHOLDERS' EQUITY
Current liabilities
Accounts payable and accrued liabilities $ 462,865 $ 2,598,488
Income tax liability 1,803 6,838
Convertible debenture - 2,856,272
Current portion of tenure allowance payable 65,000 65,000
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529,668 5,526,598
Long-term liabilities
Tenure allowance 943,381 1,005,029
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1,473,049 6,531,627
Equity component of subsidiary's
convertible debenture - 398,615
Shareholders' equity
Share capital $ 2,720,992 $ 2,720,992
Contributed surplus 10,042,877 10,026,964
Deficit (8,738,329) (10,462,311)
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4,025,540 2,285,645
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$ 5,498,589 $ 9,215,887
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FORBES MEDI-TECH INC.
CONSOLIDATED STATEMENTS OF OPERATIONS, COMPREHENSIVE INCOME / (LOSS) AND
DEFICIT
(Expressed in Canadian dollars)
(unaudited)
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Three months ended Nine months ended
Sept. 30 Sept. 30 Sept. 30 Sept. 30
2009 2008 2009 2008
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REVENUES
Sales $ 1,278,726 $ 1,923,111 $ 3,019,622 $ 6,643,581
Licensing - 4,097 2,168 4,097
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Phytosterol
revenues 1,278,726 1,927,208 3,021,790 6,647,678
Cost of sales (1,173,589) (1,513,077) (2,431,579) (5,374,741)
Inventory and
purchase commitment
allowances (389,000) (182,000) 509,000 (64,000)
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(283,863) 232,131 1,099,211 1,208,937
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EXPENSES
General and
administrative 762,460 1,132,181 2,434,007 4,081,701
Nutraceutical
research,
development and
support 133,385 237,114 563,763 1,054,529
Marketing, sales
and product
development 123,024 275,824 482,595 1,217,315
Foreign exchange
loss / (gain) 73,359 27,519 88,235 (226,066)
Depreciation and
amortization 8,677 13,955 29,153 63,356
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1,100,905 1,686,593 3,597,753 6,190,835
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Loss from
continuing
operations $ (1,384,768) $ (1,454,462) $ (2,498,542) $ (4,981,898)
OTHER INCOME
Gain on dilution
of interest in
subsidiary - - 4,147,975 -
Interest and other 29,119 38,456 100,331 132,950
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29,119 38,456 4,248,306 132,950
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Net (loss) / income
from continuing
operations before
taxes $ (1,355,649) $ (1,416,006) $ 1,749,764 $ (4,848,948)
Income tax expense (22,878) (13,907) (25,782) (24,611)
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Net (loss) / income
from continuing
operations (1,378,527) (1,429,913) 1,723,982 (4,873,559)
Income / (loss)
from discontinued
operations - 784,681 - (457,726)
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Net (loss) / income
and comprehensive
(loss) / income (1,378,527) (645,232) 1,723,982 (5,331,285)
Deficit, beginning
of period (7,359,802) (7,495,865) (10,462,311) (101,269,812)
Reduction of
deficit and stated
share capital - - - 98,460,000
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Deficit, end of
period $ (8,738,329) $(8,141,097) $ (8,738,329) $ (8,141,097)
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Weighted average
number of common
shares outstanding 4,969,813 4,885,662 4,969,813 4,829,749
Basic and diluted
(loss) / income
per share from
continuing
operations $ (0.28) $ (0.29) $ 0.35 $ (1.01)
Basic and diluted
income / (loss)
per share from
discontinued
operations - $ 0.16 - $ (0.09)
Basic and diluted
(loss) / income
per share $ (0.28) $ (0.13) $ 0.35 $ (1.10)
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FORBES MEDI-TECH INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Expressed in Canadian dollars)
(unaudited)
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Three months ended Nine months ended
Sept. 30 Sept. 30 Sept. 30 Sept. 30
2009 2008 2009 2008
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OPERATIONS
Net (loss) / income
for the period $ (1,378,527) $ (645,232) $ 1,723,982 $(5,331,285)
Adjustments for:
Depreciation and
amortization 8,677 13,955 29,153 74,389
Stock-based
compensation
expense - 103,419 15,913 138,083
Loss on write down
of capital assets - - 65,115
Loss on disposal
of capital assets - 1,145 - 3,272
Accretion of
interest - 96,865 103,728 150,492
Gain on dilution
of interest in
subsidiary - - (4,147,975) -
Gain on disposal
of discontinued
operations - (767,603) - (767,603)
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(1,369,850) (1,197,451) (2,275,199) (5,667,537)
Net change in
non-cash operating
items 1,374,936 (1,303) 1,306,373 (875,121)
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Net cash generated
by / (used in)
operations 5,086 (1,198,754) (968,826) (6,542,658)
INVESTMENTS
Proceeds on disposal
of short-term
investments - - 789,360 -
Acquisition of
capital assets - (1,927) - (9,240)
Proceeds on disposal
of capital assets - - - 3,125
Net proceeds on
disposal of
discontinued
operations - 1,016,966 - 1,016,966
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- 1,015,039 789,360 1,010,851
FINANCING
Debenture - - - 2,960,000
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- - - 2,960,000
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Increase /
(decrease) in
cash and cash
equivalents 5,086 (183,715) (179,466) (2,571,807)
Cash and cash
equivalents,
beginning of
period 1,192,023 2,845,951 1,376,575 5,234,043
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Cash and cash
equivalents,
end of period $ 1,197,109 $ 2,662,236 $ 1,197,109 $ 2,662,236
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About Forbes Medi-Tech Inc.
Forbes Medi-Tech Inc. is a life sciences company focused on evidence-based nutritional solutions. A leader in nutraceutical technology, Forbes is a provider of value-added products and cholesterol-lowering ingredients for use in functional foods and dietary supplements. Forbes successfully developed and commercialized its Reducol™ plant sterol blend, which has undergone clinical trials in various matrices and has been shown to lower "LDL" cholesterol levels safely and naturally. Building upon established partnerships with leading retailers and manufacturers across the globe, Forbes helps its customers to develop private label and branded products. For more information, please visit www.forbesmedi.com.
Reducol™ is a trademark of Forbes Medi-Tech Inc.
FORWARD LOOKING STATEMENTS
This News Release contains forward-looking statements and forward-looking information concerning anticipated developments in the Company's business including projected sales and revenues, sufficiency of its capital resources, future financing, strategic and/or and M&A transactions, its continued NASDAQ listing, and other information in future periods. Forward-looking statements and information can be identified by forward-looking terminology such as "projected", "deadline", "future", "planed", "expectations", "continuing", "will be", "will meet", "seek", "may", "obtain", "anticipated", "2010", "will", and similar expressions or variations thereon.
Forward-looking statements and information are about the future and are inherently uncertain, and actual results may differ materially from those reflected in the forward-looking statements and information due to a variety of risks, uncertainties and other factors, including, without limitation, the Company's need for additional future capital or a merger, acquisition or other suitable transaction, which may not be available in a timely manner or at all and which, if not obtained, would have a material adverse effect on the Company and its ability to continue as a going concern; the risk of unanticipated expenses and inability to control certain costs; the risk that sales revenue may not meet the Company's expectations; the Company's dependence on its key personnel; the Company's need for additional customers and the Company's existing reliance on a few major customers for performance; the effect of competition; manufacturing risks and the Company's dependence on third party suppliers; product liability, intellectual property and insurance risks; exchange rate fluctuations; uncertainty whether the Company's shares will remain listed on NASDAQ and the need to regain compliance with NASDAQ's minimum bid price rule by January 4, 2010, which is not assured; the risk that delisting of the Company's shares from the NASDAQ could, have a negative effect on the Company's share liquidity and trading price, on the Company's ability to obtain further financing or to complete a merger, acquisition or other suitable transaction and continue as a going concern, and on the ability of certain investors to trade in the Company's shares; the need for future regulatory approvals, which are not assured; and other risks and uncertainties affecting the Company and its business, as contained in its latest Annual Information Form on Form 20-F and other documents filed with Canadian and U.S. securities regulatory authorities at www.sedar.com and www.sec.gov, any of which could cause actual results to vary materially from current results or the Company's anticipated future results. Forward-looking statements and information are based on the beliefs, assumptions, and expectations of the Company's management at the time they are made, and the Company does not assume any obligation, except as required by law, to update its forward-looking statements or information if those beliefs, assumptions, or expectations or other circumstances should change.
Contacts:
Forbes Medi-Tech Inc.
David Goold
Chief Financial Officer
(604) 689-5899 ext. 239
ir@forbesmedi.com
www.forbesmedi.com
