Edmonton, Alberta, August 17, 2011 – Innovotech Inc. (TSX-V: IOT), a pioneer in the field of biofilm product development, today announced its unaudited financial and operational results for the three and six-month periods ended June 30, 2011.
Highlights:
- Softness in contract research business affects bottom line in second quarter
- Innovotech receives first purchase order for new InnovoSCEPT veterinary biofilm tests
- Private placement exceeds minimum gross proceeds
- Innovotech’s MBEC Assay™ receives approval as international biofilm standard
- Innovotech’s Sani-Lux™ receives approval as a natural hard surface sanitizer
“Innovotech achieved a number of significant milestones in the second quarter of this year, including receipt of a purchase order for the first sale of a new product line, InnovoScept veterinary biofilm tests. The company has solidified its position as a leader in the field of biofilms with the approval of its core technology, the MBEC Assay™, as an international biofilm standard,” said Ken Boutilier, President and Chief Executive Officer of Innovotech. “These positive developments should lead to increased revenue from products, thereby reducing Innovotech’s reliance on revenue from its contract research business, which can fluctuate based on product development cycles of clients.”
Innovotech announced a private placement on June 15, 2011 with minimum gross proceeds of $500,000 and a maximum of $1,500,000. At the second quarter filing date, Innovotech had exceeded the minimum.
Subsequent to the end of the second quarter, Innovotech granted exclusive worldwide rights to Spectrum Labs Inc., specialists in veterinary testing in the United States and over 40 countries worldwide, to market Innovotech’s InnovoSCEPT veterinary biofilm tests as part of its testing service.
Revenues
In the three-month period ended June 30, 2011, total revenues were $138,612 (2010 - $408,288). This included contract research revenue of $115,287 (2010 - $383,023) and product sales of $23,325 (2010 - $25,265). The decline in the contract research revenue is reflective of the cyclical nature of the business. The Company had strong sales last year from several clients with products proceeding through key regulatory and development stages. These companies have since moved on to marketing activities thereby not requiring Innovotech’s services. Product sales, on the other hand, have experienced a continuous annual growth over the past three years. In the six-month period ended June 30, 2011, total revenues were $431,457 (2010 - $862,658).
General and Administrative Expense
In the three-month period ended June 30, 2011, general and administrative expense, including stock based compensation expense and allocated amortization expense, was $272,787 (2010 - $303,629). The decrease was mainly due to a decrease in professional costs and improved management of foreign exchange transactions. In the six-month period ended June 30, 2011, general and administrative expenses were $554,323 (2010 - $659,897).
Research and Development
In the three-month period ended June 30, 2011, research and development expense, including allocated amortization, was $255,337 (2010 - $217,939). The cost was partially offset by various grants of $137,564 (2010 - $19,764). The increase in research and development expense is directly related to increased development costs of a new family of products in human and veterinary susceptibility testing. In the six-month period ended June 30, 2011, research and development expense was $502,577 (2010 - $391,263).
Liquidity and Capital Resources
At June 30, 2011, the Company had $671,905 in cash compared to $766,758 at December 31, 2010. Continued investment in development and marketing of the Company’s two lead products have contributed to a decrease in cash reserves since December 31, 2010. These expenditures were partially offset by the proceeds from the private placement initiated during the second quarter, as well as by the cash inflows from product sales, contract research revenue and various grants.
The Company is actively engaged in a private placement financing, the proceeds of which will be used for general working capital purposes, to support marketing of its veterinary and human test kits and to support efforts to gain regulatory approval of its agricultural industry products. Final approval by the TSX Venture Exchange and closing of the private placement is expected no later than August 22, 2011.
Innovotech’s second quarter 2011 Financial Statements and Management’s Discussion and Analysis will be filed on The System for Electronic Document Analysis and Retrieval (SEDAR) at www.sedar.com
About Innovotech Inc.
Innovotech Inc. is a pioneer in the field of biofilm product development, focused on providing innovative and practical solutions to medical, agricultural and industrial problems caused by microbial biofilms. Biofilms are organized communities of microorganisms that exist in virtually every natural environment and are responsible for a host of diseases in human health, animal health and agriculture. There are few products or regulatory standards, aside from those of Innovotech, designed specifically for biofilm-forming organisms.
Innovotech has a broad range of products that address the issue of biofilms within a number of different industries, including commercially available products in three market segments; the MBEC Assay™, bioFILM PA™ and InnovoSCEPT veterinary kits. The MBEC Assay™ is a high throughput biofilm growth device that was recently approved as an ASTM International standard. bioFILM PA™ is the first diagnostic kit to assist physicians in the selection of the most effective combination antibiotic treatment of patients with biofilm-based chronic lung infections, while the InnovoSCEPT veterinary kits are designed to determine the most effective antibiotic treatment for infections in both large and small animals.
Innovotech also has two products in advanced stages of development; Agress® is a unique, environmentally friendly seed treatment and plant spray designed to protect crops against both bacterial and fungal infections and Sani-Lux™ is a light-activated, natural hard surface sanitizer.
For more information contact:
Ken Boutilier, President and CEO
Innovotech Inc.
Phone: (780) 448-0585 ext. 221
Fax: (780) 424-0941
Email: ken.boutilier@innovotech.ca
Amanda Stadel, Communications Officer
Innovotech Inc.
Phone: (780) 448-0585 ext. 224
Fax: (780) 424-0941
Email: amanda.stadel@innovotech.ca
Connect with us:
Website: www.innovotech.ca
Blog: www.cf-test.ca
Twitter: www.twitter.com/innovotech
Facebook: www.facebook.com/innovotech
