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MINRAD International, Inc. Announces Q1 2007 Financial Results
ORCHARD PARK, N.Y., May 15 /PRNewswire/ -- MINRAD International, Inc. (AMEX: BUF - News) today announced its financial results for the quarter ended March 31, 2007. The Company generated revenue of $2.926 million for the first quarter of 2007 as compared to $3.123 million for the first quarter of 2006.
(in thousands) Three-Month Periods Ended
March 31, March 31,
2007 2006
Revenue $2,926 $3,123
Cost of goods sold 2,236 1,564
Gross profit $690 $1,559
Gross margin 24% 50%
Revenue decreased by $197 thousand or 6%, to $2.926 million for the first three months of 2007 as compared to $3.123 million for the first three months of 2006. This decrease is primarily attributed to the processing of both isoflurane and sevoflurane on our isoflurane active pharmaceutical production line to meet customer demands while we our in the process of completing our additional sevoflurane active pharmaceutical production line. By changing between the production of isoflurane and sevoflurane on the same line, we incur a loss of production as changeover and clean outs occur, while also incurring a loss in margin due to the multiple start ups in the production cycle and reduced margin due to the inefficiency of producing sevoflurane on our isoflurane production line. Approximately two months of the production in the isoflurane active pharmaceutical production line in the first quarter were dedicated to the production of isoflurane, while the remaining time was spent on producing sevoflurane.
Assuming the Company would have produced at our standard margins during each of the periods, the gross margin during the first quarter of 2007 would have been 52% as compared to 60% for the first 3 months of 2006.
For the first quarter of 2007, the Company experienced a loss of $(3.386) million, $(0.07) per common share. This compares with a loss of $(0.748) million, $(0.03) per common share for the first quarter in 2006. The increased operating loss for the quarter is primarily due to decreases in gross margin combined with increases in overhead and headcount associated with our sales force, research and development efforts and administrative costs as we prepare to grow our business across our three product lines over the upcoming years.
Contact: Timothy Sheehan, VP - Corporate Development
tsheehan@minrad.com
(716) 855-1068
www.minrad.com
About the Company
MINRAD International, Inc. is an interventional pain management company with real-time image guidance, anesthesia and analgesia, conscious sedation product lines. The real-time image guidance products facilitate minimally invasive surgery especially for pain management and have broad applications in orthopedics, neurosurgery, and interventional radiology. These devices enable medical professionals to improve the accuracy of interventional procedures and reduce radiation exposure. MINRAD International also manufactures and markets generic inhalation anesthetics for use in connection with human and veterinary surgical procedures. The company is developing a drug/drug delivery system for conscious sedation, which, similar to nitrous oxide in dental surgery, provides a patient with pain relief without loss of consciousness. Additional information can be found at the company's website, www.minrad.com.
The information contained in this news release, other than historical information, consists of forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These statements may involve risks and uncertainties that could cause actual results to differ materially from those described in such statements. Factors that may cause actual results to differ materially from those expressed or implied by its forward-looking statements include, but are not limited to, Minrad International's limited operating history and business development associated with being a growth stage company; its dependence on key personnel; its need to attract and retain technical and managerial personnel; its ability to execute its business strategy; the intense competition it faces; its ability to protect its intellectual property and proprietary technologies; its exposure to product liability claims resulting from the use of its products; general economic and capital market conditions; financial conditions of its customers and their perception of its financial condition relative to that of its competitors; as well as those risks described under the heading "Risk Factors" of Minrad International's Form 10-KSB, filed with the Securities and Exchange Commission on March 29, 2006. Although Minrad International, Inc. believes that the expectations reflected in such forward-looking statements are reasonable, it can give no assurance that such expectations will prove to have been correct
MINRAD INTERNATIONAL, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS (UNAUDITED)
(in thousands)
March 31, December 31,
ASSETS 2007 2006
Current assets:
Cash and cash equivalents $2,053 $ 4,664
Investments 3,620 7,249
Interest receivable 62 86
Loan proceeds receivable 1,275 -
Accounts receivable, net 7,247 10,473
Inventories, net 5,625 4,360
Prepaid expenses and advance payments 2,755 1,477
Total current assets 22,637 28,309
Property and equipment:
Machinery and equipment 2,585 2,420
Computers 1,315 571
Furniture and fixtures 778 662
Leasehold improvements 385 385
Construction in progress 6,974 4,177
12,037 8,215
Less accumulated depreciation 1,454 1,234
Total property and equipment 10,583 6,981
Other assets 930 439
Total assets $34,150 $35,729
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $1,495 $965
Accrued expenses 1,025 1,262
Current portion of long term debt 151 -
Total current liabilities 2,671 2,227
Commitments and contingencies - -
Long term debt 1,124 -
Stockholders' equity
Common stock 471 470
Additional paid-in-capital 76,751 76,513
Accumulated deficit (46,867) (43,481)
Total stockholders' equity 30,355 33,502
Total liabilities and stockholders' equity $34,150 $35,729
MINRAD INTERNATIONAL, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
(in thousands, except per share amounts)
Three-Month Three-Month
Period Ended Period Ended
March 31, 2007 March 31, 2006
Revenue $2,926 $ 3,123
Cost of goods sold 2,236 1,564
Gross profit 690 1,559
Operating expenses:
Sales and marketing 1,910 761
Research and development 1,061 427
Finance and administrative 1,196 861
Total operating expenses 4,167 2,049
Operating loss (3,477) (490)
Interest income (expense):
Interest expense (3) (75)
Interest income 94 -
Total interest income (expense) 91 (75)
Net loss (3,386) (565)
Less preferred stock dividends - non cash - (183)
Net loss available for common stockholders $(3,386) $(748)
Net loss per share, basic and diluted $(0.07) $ (0.03)
Weighted average common shares outstanding,
basic and diluted 47,071 29,125
MINRAD INTERNATIONAL, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
(in thousands)
Three-Month Three-Month
Period Ended Period Ended
March 31, 2007 March 31, 2006
Cash flows from operating activities:
Net loss $(3,386) $ (565)
Adjustments to reconcile net loss to
net cash used by operating activities:
Increase in inventory reserve - 10
Depreciation and amortization 223 107
Stock based compensation 122 118
Amortization of bond discount (12) -
(Increase) decrease in assets:
Accounts receivable 3,226 (242)
Interest receivable 25 -
Inventories (1,265) 206
Prepaid expenses (1,281) (106)
Increase (decrease) in liabilities:
Accounts payable (365) (228)
Accrued expenses (237) 156
Net cash used by operating activities (2,950) (544)
Cash flows from investing activities:
Purchases of property and equipment (2,927) (128)
Proceeds from sale of Investments 3,641 -
Increase in other assets (492) (14)
Net cash provided (used) by
investing activities 222 (142)
Cash flows from financing activities:
Borrowings under demand notes payable - 400
Proceeds from options exercised 117 58
Deferred financing costs - (59)
Preferred cash dividends paid - (170)
Net cash provided by financing activities 117 229
Net decrease in cash and cash equivalents (2,611) (457)
Cash and cash equivalents - Beginning of period 4,664 670
Cash and cash equivalents - End of period $2,053 $213
MINRAD INTERNATIONAL, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY
THREE-MONTH PERIOD ENDED MARCH 31, 2007 (UNAUDITED)
(in thousands, except number of shares)
Series A
Convertible
Preferred Stock Common Stock
Shares Amount Shares Amount
Balance at December 31, 2006 - - 47,048,240 $470
Stock options exercised - - 45,291 1
Stock based compensation - - - -
Net loss - - - -
Balance at March 31, 2007 - - 47,093,531 $471
Additional Accumulated
Paid-In Capital Deficit Total
Balance at December 31, 2006 $76,513 $( 43,481) $33,502
Stock options exercised 116 - 117
Stock based compensation 122 - 122
Net loss - (3,386) (3,386)
Balance at March 31, 2007 $76,751 $(46,867) $30,355
Source: MINRAD International, Inc.