IVAX Diagnostics, Inc. (NYSE Amex: IVD), a fully integrated in
vitro diagnostics company, reports its financial results for the
quarter ended March 31, 2011.
Kevin D. Clark, Chief Executive Officer, Chief Operating Officer
and President of IVAX Diagnostics, said, “We continued our
rebuilding efforts during the first quarter of 2011. Our operating
expenses were $246,000 lower in the first quarter of 2011 compared
to the first quarter of 2010, principally as a result of our
efforts to contain general and administrative expenses. However,
due to lower revenues, even with this decrease in operating
expenses, our cash and cash equivalents decreased by $899,000 since
December 31, 2010 to $927,000 as of March 31, 2011. We do not
believe that our existing cash and cash equivalents will be
sufficient to meet our anticipated cash requirements over the next
twelve months.”
Mr. Clark continued, “As previously announced, in January 2011,
we received clearance from the United States Food and Drug
Administration (FDA) on the 510(k) premarket submission that we had
filed for the Mago® 4S, our next-generation fully-automated
Enzyme-linked Immunosorbent Assay (ELISA) and Immunofluorescence
Assay (IFA) instrumentation system for autoimmune and infectious
disease testing that we have begun marketing in the United States.
During the first quarter of 2011, we began to make deliveries of
the Mago® 4S.”
Mr. Clark continued, “Looking ahead into the remainder of 2011,
we expect to continue our efforts to reduce manufacturing costs. We
also expect to implement a number of initiatives in an effort to
improve sales, while continuing to carefully manage our operating
expenses.”
As previously disclosed, in an effort to improve our cash
position, we entered into a stock purchase agreement with ERBA
Mannheim Diagnostics GmbH on April 8, 2011, pursuant to which we
agreed to sell and issue to ERBA 20,000,000 shares of our common
stock at a purchase price of $0.75 per share for an aggregate
purchase price of $15,000,000 and warrants to purchase an
additional 20,000,000 shares of our common stock (collectively, the
“Investment”). The per share purchase price for the common stock
constitutes a premium of 14% above the average closing price of a
share of our common stock on the NYSE Amex during the five trading
days immediately prior to the date on which we announced the
Investment. The warrants to be issued in the Investment will have a
five-year term and will have an exercise price per share of our
common stock equal to $0.75, which exercise price per share
constitutes a premium of 14% above the average closing price of a
share of our common stock on the NYSE Amex during the five trading
days immediately prior to the date on which we announced the
Investment.
The consummation of the Investment is subject to certain
conditions, including the approval of holders of at least 66-2/3%
of the issued and outstanding shares of our common stock (excluding
any shares beneficially owned, directly or indirectly, by ERBA),
which approval we are seeking at our 2011 Annual Meeting of
Stockholders to be held on May 20, 2011. We previously mailed to
our stockholders, as of April 15, 2011, proxy materials relating to
the Annual Meeting containing a detailed description of the
Investment and the other matters to be considered at the Annual
Meeting. Our Board of Directors has asked all of our stockholders
entitled to vote at the Annual Meeting to vote “FOR” all of the
proposals to be considered at the Annual Meeting, including the
Investment. The failure to vote by our stockholders entitled to
vote at the Annual Meeting will have the same effect as a vote cast
“AGAINST” the Investment. We urge you to please vote your shares
regardless of how many shares you own.
There can be no assurance that the Investment will be
consummated on the contemplated terms, in the time frame
anticipated, or at all. We are also evaluating various forms of
other financing arrangements. There can be no assurance that, if we
seek to raise additional funds through issuing debt or equity
securities or incurring indebtedness, any such additional funds
would be available on acceptable terms or at all. If we are unable
to obtain the requisite stockholder approval of the Investment, if
we are not successful in improving our operating results and cash
flows or if existing and possible future sources of liquidity
described above are insufficient, then we may be required to
curtail or reduce our operations, we may not be able to survive and
any investment in our company may be lost.
Financial Highlights for the Quarter Ended March 31,
2011
Net revenues for the first quarter of 2011 were $4,134,000
compared with $4,655,000 in the first quarter of 2010, a decline of
$521,000 or 11.2%. The decrease in revenue was primarily the result
of a decrease in reagent sales.
Gross profit for the first quarter of 2011 was $2,115,000, or
51.2% of net revenue, compared with $2,488,000, or 53.5% of net
revenue, for the first quarter of 2010. The decrease in gross
profit resulted from lower sales and the decrease in gross profit
margin was principally as a result of lower absorption of fixed
manufacturing costs due to lower reagent sales volume and an
increase in the sale of instruments, which have a lower average
margin than reagent sales.
Total operating expenses for the first quarter of 2011 decreased
to $3,123,000 from $3,368,000 for the first quarter of 2010.
Selling expenses decreased mainly due to decreased sales
commissions resulting from reduced sales. General and
administrative expenses decreased as a result of severance costs
that had been included in the expense recorded in the first quarter
of 2010, as well as the decrease in the number of executive
officers. Research and development expenses increased during the
first quarter of 2011 compared to the first quarter of 2010 due
principally to the increase in new product development activities
during 2011, including additional staff allocated to research and
development activities.
Loss from operations for the first quarter of 2011 was
$1,008,000 compared with loss from operations of $881,000 in the
first quarter of 2010. Net loss for the first quarter of 2011 was
$1,020,000, or $0.04 loss per share, compared with a net loss of
$957,000, or $0.03 loss per share, in the first quarter of
2010.
About IVAX Diagnostics, Inc.
IVAX Diagnostics, Inc. (www.ivaxdiagnostics.com), headquartered
in Miami, Florida, is a fully integrated in vitro diagnostics
company that develops, manufactures and distributes in the United
States and internationally, proprietary diagnostic reagents, test
kits and instrumentation, primarily for autoimmune and infectious
diseases, through its three subsidiaries: Diamedix Corporation
(U.S.), Delta Biologicals S.r.l. (Europe) and ImmunoVision, Inc.
(U.S.).
Safe Harbor Statement
Except for the historical matters contained herein, statements
in this press release are forward-looking and are made pursuant to
the safe harbor provisions of the Private Securities Litigation
Reform Act of 1995. Investors are cautioned that forward-looking
statements involve risks and uncertainties that may affect the
business and prospects of IVAX Diagnostics, Inc., including,
without limitation: IVAX Diagnostics’ ability to generate positive
cash flow or otherwise improve its liquidity, whether from existing
operations, strategic initiatives or possible future sources of
liquidity, including, without limitation, from the Investment,
issuing debt or equity securities, incurring indebtedness or
curtailing or reducing operations; the imposition on IVAX
Diagnostics of positive and negative covenants under any financing
arrangements, which could restrict various aspects of its business,
operations and finances; the dilutive impact to existing IVAX
Diagnostics stockholders of any issuance of equity securities, or
securities convertible into shares of common stock, including the
Investment; IVAX Diagnostics’ ability to raise additional funds
through issuing debt or equity securities or incurring indebtedness
on acceptable terms or at all; the Investment may not be
consummated on the contemplated terms, in the time frame
anticipated, or at all; the net proceeds of the Investment, whether
or not the warrants are exercised, may not provide adequate cash
resources to fund IVAX Diagnostics’ operations or liquidity needs
for the reasonably foreseeable future; the warrants may not be
exercised, in whole or in part; the decision to exercise the
warrants will be made by ERBA Diagnostics Mannheim GmbH based upon
considerations it deems appropriate, which may include, among other
things, the future market price of IVAX Diagnostics’ common stock,
which is subject to volatility and a number of other factors, many
of which may be beyond IVAX Diagnostics’ control; ERBA Diagnostics
Mannheim GmbH’s interests in deciding whether or not to exercise
the warrants may conflict with IVAX Diagnostics’ interests; IVAX
Diagnostics’ ability to successfully implement cost containment
efforts and achieve a reduction in its expenses; IVAX Diagnostics’
ability to successfully implement initiatives to improve its
manufacturing efficiencies and sales; economic, competitive,
political, governmental and other factors affecting IVAX
Diagnostics and its operations, markets and products; the success
of IVAX Diagnostics’ technological, strategic and business
initiatives; the ability of the Mago® 4S to perform as expected;
the ability of the Mago® 4S to be a source of revenue growth for
IVAX Diagnostics; IVAX Diagnostics’ ability to receive financial
benefits or achieve improved operating results from and after the
commercial release of the Mago® 4S; the ability of the Mago® 4S to
be a factor in IVAX Diagnostics’ growth; IVAX Diagnostics’ ability
to achieve cost advantages from its own manufacture of instrument
systems, reagents and test kits; voting control of IVAX
Diagnostics’ common stock by ERBA Diagnostics Mannheim GmbH;
conflicts of interest with ERBA Diagnostics Mannheim GmbH and with
our officers, employees and other directors, including, without
limitation, our directors that are also executive officers of ERBA
Diagnostics Mannheim GmbH; and other risks and uncertainties that
may cause results to differ materially from those set forth in the
forward-looking statements. In addition to the risks and
uncertainties set forth above, investors should consider the
economic, competitive, governmental, technological and other risks
and uncertainties discussed in IVAX Diagnostics’ filings with the
Securities and Exchange Commission, including, without limitation,
the risks and uncertainties discussed under the heading “Risk
Factors” in such filings.
IVAX DIAGNOSTICS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(unaudited) For the Three Months Ended
March 31, 2011 2010
Net revenues $ 4,134,357 $ 4,655,021 Cost of sales
2,019,142 2,167,274
Gross profit
2,115,215
2,487,747 Operating expenses: Selling
1,225,489 1,295,014 General and administrative 1,347,001 1,641,808
Research and development
550,235
431,622 Total operating expenses
3,122,725 3,368,444
Loss from operations
(1,007,510
) (880,697 )
Other income (expense): Interest income (expense) (3,391 ) 141
Other income (expense), net
19,192
(48,538 ) Total other income
(expense), net
15,801
(48,397 ) Loss before income taxes
(991,709 ) (929,094 ) Provision for income taxes
28,308 28,334
Net loss
$ (1,020,017 )
$ (957,428 )
Net loss per share Basic and diluted
$
(0.04 ) $ (0.03
) WEIGHTED AVERAGE NUMBER OF SHARES
OUTSTANDING: Basic
27,649,887
27,649,887 Diluted
27,649,887 27,649,887
IVAX DIAGNOSTICS, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS March 31,
December 31, 2011
2010
ASSETS
(unaudited) Current assets: Cash and cash equivalents $
927,058 $ 1,826,228 Accounts receivable, net of allowances for
doubtful accounts of $346,776 in 2010 and $356,162 in 2009
6,134,111 5,344,205 Inventories, net 4,289,305 4,077,896 Other
current assets
163,363
146,366 Total current assets 11,513,837
11,394,695 Property, plant and equipment, net 1,547,124
1,618,136 Equipment on lease 655,217 679,438 Product license
282,936 282,936 Goodwill 870,290 870,290 Restricted deposits
238,244 228,860 Other assets
47,747
26,847 Total assets
$
15,155,395 $
15,101,202
LIABILITIES AND
SHAREHOLDERS’ EQUITY
Current liabilities: Accounts payable $ 2,531,392 $
1,597,555 Accrued license payable 141,703 132,521 Accrued expenses
and other current liabilities 2,350,592 2,511,698 Capital lease
obligations
73,446
71,826 Total current liabilities
5,097,133 4,313,600
Other long-term liabilities: Capital lease obligations
81,632 100,612 Deferred tax liabilities 381,057 365,184 Other
long-term liabilities
1,024,538
955,056 Total other long-term liabilities
1,487,227 1,420,852
Commitments and contingencies Shareholders’
equity: Common stock, $0.01 par value, authorized 50,000,000
shares, issued and outstanding 27,649,887 in 2010 and 2009 276,498
276,498 Capital in excess of par value 41,389,404 41,204,712
Accumulated deficit (32,706,489 ) (31,686,472 ) Accumulated other
comprehensive loss
(388,378 )
(612,860 ) Total shareholders’ equity
8,571,035 9,366,570
Total liabilities and shareholders’ equity
$
15,155,395 $
15,101,022
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