Akers Biosciences Announces Q3 Earnings

THOROFARE, NJ--(Marketwired - Nov 14, 2016) - Akers Biosciences, Inc. (NASDAQ: AKER) (AIM: AKR), ("Akers Bio" or the "Company"), a developer of rapid health information technologies, reports its financial results for the third quarter ended September 30, 2016.

Q3 Financial Highlights:

• Total Revenue -- all from product sales -- up 262% to $613,198 (Q3 2015: $169,473)
  
  
• Sales of flagship PIFA Heparin/PF4 Rapid Assay products up 341% to $514,839 (Q3 2015: $116,783) -- entirely from US-based customers
  
  
• Significant improvement in gross margin to 61% (Q3 2015: (5)%) as a result of higher selling prices, improved volumes and different component mix on core products
  
  
• Gross profit of $376,498 (Q3 2015: $(8,479))
  
  
• Major reductions in costs in all key areas of the business: General and Administrative costs (27)%, Sales and Marketing costs (28)%, Research and Development costs (23)%
  
  
• Profit before tax in the quarter of $310,155 (Q3 2015: $(2,326,893)) following the reversal of an allowance for bad debts of $1,299,609
  
  
• Loss before income tax (excluding the reversal of bad debt allowance) more than halved to $(989,454) (Q3 2015: $(2,326,893))
  
  
• Cash and marketable securities at September 30, 2016 of $795,802 (December 31, 2015: $4,472,163)
  
  

Q4 Outlook

• The Company believes that Q4 will continue to show growth with continuing improvements in domestic product sales, the remaining $2,000,000 due under the Novotek order for PIFA Heparin/PF4 Rapid Assay products in China and growing interest in a number of Akers Wellness products
  
  

Q3 Operational Highlights

• Experienced strong growth from flagship PIFA Heparin/PF4 Rapid Assay product sales without any contribution from China in Q3 2016
  
  
• Revenues from breath test product sales improved by 256% derived from alcohol breathalyzer sales and initial stocking orders for BreathScan OxiCheck™
  
  
• Completed highly successful clinical study on BreathScan OxiCheck™ -- the first disposable breath test to rapidly determine levels of oxidative stress in the body. Demonstrated 99.5% correlation with standard blood testing method. Initial stocking orders placed during the period
  
  

Commentary from Raymond F. Akers, Jr. PhD, Co-founder and Chief Scientific Director and John J. Gormally, Chief Executive Officer:

Sales of the Company's flagship rapid test for heparin-induced thrombocytopenia (HIT) are continuing on an upward trajectory. The Company recorded an increase in sales of this product of 341% compared to the same period in 2015 -- this is as a result of both the implementation of a significant price increase for the product line and higher customer demand. Given previous evidence of lower stock depletion during the summer months -- as a result of fewer surgeries -- and therefore lighter demand for this product during the third quarter, we are particularly encouraged by this year's third quarter sales which lead us to believe the fourth quarter may be even stronger.

Importantly, these robust revenues for PIFA Heparin/PF4 Rapid Assay products in the third quarter were entirely derived from domestic sales and did not benefit from any contribution from China. The Company has product shipments scheduled for China in the fourth quarter which are expected to result in the receipt of the remaining $2,000,000 of payments under the $2,500,000 order placed by the Company's Chinese distributor, Novotek, earlier in the year. We believe that this, coupled with the continuing momentum in domestic sales for this product, is an encouraging sign for the potential of a strong fourth quarter.

Akers Bio is not merely making progress with its flagship rapid HIT test, but also with other commercialized products. Sales of our breath-based rapid assays improved in the third quarter by 256% as demand slowly returns for the Company's rapid alcohol breathalyzer and, more significantly, initial stocking orders were placed for BreathScan OxiCheck™ ("OxiChek™"), the first disposable breath test to rapidly determine levels of oxidative stress in the body -- an indicator of the overall health and wellbeing of a person. This follows our appointment, in June, of Aero-Med as the distributor for this product targeting the large specific markets in the United States of anti-aging, functional and integrative health and wellness treatment practitioners.

The Company's marketing efforts for OxiChek™ were given a boost in August following the completion of a clinical study which demonstrated a correlation between OxiChek™ and the standard reference laboratory blood testing method of 99.5%.

OxiChek™ is a general wellness product from Akers Wellness™, intended to measure indicators of oxidative stress in exhaled breath. Unlike current laboratory testing methods that test only a few free radicals using an invasive blood draw -- and have a turnaround time of 7 to 10 days -- Akers Bio's rapid OxiChek™ test detects a broad spectrum of free radicals contained in a person's exhaled breath in just a few minutes.

Not only did this clinical study demonstrate the effectiveness of our test for oxidative stress, but the comparison to the standard reference laboratory test -- blood vs breath -- was remarkable. We believe that we have a powerful tool for the expansive health and wellness and anti-aging industry and are delighted to be seeing initial stocking orders from paying customers.

At the same time as growing revenues, Akers Bio is also shrinking costs. The evidence of this in the third quarter is very clear. The Company recorded reductions in all key areas of cost. General and Administrative expenses were reduced by 27% in the quarter as a result of lower legal and other professional service costs; Sales and Marketing expenses were reduced by 28% in the quarter as a result of a reduction in the number of sales and marketing staff from 11 to 5 as of September 30, 2016 as our new sales model requires fewer - but more senior - sales personnel; and Research and Development expenses were reduced by 23% in the quarter principally as a result of lower professional service costs.

Outlook

Akers Bio moves into the final quarter of 2016 with excellent momentum in domestic sales of our flagship rapid test for HIT and with the remaining $2,000,000 due under the Novotek order for products in China which we expect to be fulfilled in the fourth quarter. There is also evidence of further demand for Akers Wellness™ products which are expected to produce additional sales in the remaining months of the year. The combination of these growing product sales and a leaner cost base is expected to enable Akers Bio to trade profitably both in the final quarter and, more significantly, in 2017.

Conference call information:

Monday, November 14, 2016 at 9:00 a.m. Eastern Time
US: 1-877-545-1402
International: 1-719-325-4907
Conference ID: 4526875
Webcast: http://public.viavid.com/index.php?id=121969

About Akers Biosciences, Inc.

Akers Bio develops, manufactures, and supplies rapid screening and testing products designed to deliver quicker and more cost-effective healthcare information to healthcare providers and consumers. The Company has advanced the science of diagnostics while responding to major shifts in healthcare through the development of several proprietary platform technologies. The Company's state-of-the-art rapid diagnostic assays can be performed virtually anywhere in minutes when time is of the essence. The Company has aligned with major healthcare companies and high volume medical product distributors to maximize product offerings, and to be a major worldwide competitor in diagnostics.

Additional information on the Company and its products can be found at www.akersbio.com. Follow us on Twitter @AkersBio.

Summary of Statements of Operations for the Three Months Ended September 30, 2016 and 2015

Revenue

Akers' revenue for the three months ended September 30, 2016 totaled $613,198, a 262% increase from the same period in 2015. The table below summarizes our revenue by product line for the three months ended September 30, 2016 and 2015 as well as the percentage of change year-over-year:

Product Lines		3 Months Ended September 30, 2016				3 Months Ended September 30, 2015				Percent Change
Particle ImmunoFiltration Assay ("PIFA")		$	514,839			$	116,783				341	%
MicroParticle Catalyzed Biosensor ("MPC")			85,338				23,953				256	%
Other			13,021				28,737				(55	)%
Product Revenue Total		$	613,198			$	169,473				262	%
License Fees			-				-				-	%
Total Revenue		$	613,198			$	169,473				262	%

Revenue from the Company's PIFA Heparin/PF4 Rapid Assay products increased 341% during the three months ended September 30, 2016 over the same period of 2015. The increase is due primarily to two events; first, the implementation of a significant price increase for the product line and second, during 2015, the Company experienced lower than usual distributor stock depletion for the PIFA Heparin/PF4 Rapid Assay products which did not re-occur during the three months ended September 30, 2016.

The Company received a $2.5 million order for PIFA Heparin/PF4 Rapid Assay products from Novotek on February 29, 2016. The Company received an initial payment of $250,000 on April 29, 2016 and a second payment of $250,000 on June 28, 2016 for scheduled product shipments, per the terms of sale. The Company recognized no revenue for PIFA Heparin/PF4 products from Novotek during the three months ended September 30, 2016; however, the remaining products will be scheduled to ship at various points throughout the remainder of the current fiscal year with the remaining $2,000,000 of revenue under the order being recognized when the criteria for the recognition of revenue is met.

The Company's MPC breathalyzer technology product sales increased 256% during the three months ended September 30, 2016 over the same period of 2015. A distributor's initial stocking order of $41,800 for the Company's BreathScan Lync and BreathScan OxiChek™ products and renewed interest in the Company's BreathScan Alcohol Breathalyzers, both domestically and internationally contributed to the increase during the three months ended September 30, 2016.

Other operating revenue decreased due to a decline in miscellaneous component sales during the three months ended September 30, 2016.

The Company's gross margin improved significantly, rising to 61% (2015: (5)%) for the three months ended September 30, 2016. The improvement is attributed to higher selling prices for the PIFA Heparin PF/4 Rapid Assay products, improved volumes and a significantly different component mix for the MPC products and the continued implementation of the new inventory and cost management procedures.

Cost of sales for the three months ended September 30, 2016 totaled $236,700 (2015: $177,952). Direct cost of sales decreased to 18% of product revenue while other cost of sales decreased to 21% for the three months ended September 30, 2016 as compared to 42% and 63% respectively for the same period in 2015.

Direct cost of sales for the three-month period ended September 30, 2016 were $109,835 (2015: $71,722). Other cost of sales for the three months ended September 30, 2016 were $126,865 (2015: $106,230).

General and Administrative Expenses

General and administrative expenses for the three months ended September 30, 2016, totaled $558,293, which was a 27% decrease as compared to $760,336 for the three months ended September 30, 2015.

Sales and Marketing Expenses

Sales and marketing expenses for the three months ended September 30, 2016 totaled $526,197, which was a 28% decrease as compared to $725,832 for the three months ended September 30, 2015.

Research and Development

Research and development expenses for the three months ended September 30, 2016 totaled $247,578, which was a 23% decrease as compared to $319,646 for the three months ended September 30, 2015.

Reversal of Reserve for Bad Debts

The Company reversed a reserve for bad debts for $1,299,609 during the three months ended September 30, 2016 as a result of the legal settlement with ChubeWorkx Guernsey Limited ("ChubeWorkx") on August 17, 2016. Details of the settlement are included in Part II, Section 1, Legal Proceedings.

Other Income and Expense

Other income, net of expense for the three months ended September 30, 2016 totaled $8,893, which was a 52% decrease as compared to $18,519 for the three months ended September 30, 2015.

Summary of Statements of Operations for the Nine Months Ended September 30, 2016 and 2015:

Revenue

Akers' revenue for the nine months ended September 30, 2016 totaled $2.307,708, a 40% increase from the nine months ended September 30, 2015. Product revenue increased by 74%, primarily a result of sales of our PIFA Heparin/PF4 Rapid Assay products. Total revenue was impacted by the elimination of license fee revenue following the cancellation of the License and Supply Agreement with ChubeWorkx Guernsey Limited ("ChubeWorkx") in May, 2015 in respect to BreathScan Alcohol Breathalyzer products.

The table below summarizes our revenue by product line for the nine months ended June 30, 2016 and 2015 as well as the percentage of change year-over-year:

Product Lines		9 Months Ended September 30, 2016				9 Months Ended September 30, 2015				Percent Change
Particle ImmunoFiltration Assay ("PIFA")		$	2,029,094			$	1,015,742				100	%
MicroParticle Catalyzed Biosensor ("MPC")			195,040				233,758				(17	)%
Other			83,574				76,387				9	%
Product Revenue Total		$	2,307,708			$	1,325,887				74	%
License Fees			-				320,556				(100	)%
Total Revenue		$	2,307,708			$	1,646,443				40	%

Revenue from the Company's PIFA Heparin/PF4 Rapid Assay products increased 100% during the nine months ended September 30, 2016 over the same period of 2015. The increase is due primarily to two events; first, the implementation of a significant price increase for the product line and second, the partial fulfillment of the $2.5 million order from Novotek, our exclusive distributor in the Peoples Republic of China.

The Company received a $2.5 million order for our PIFA Heparin/PF4 Rapid Assay products from Novotek on February 29, 2016. The Company received an initial payment of $250,000 on April 29, 2016 and a second payment of $250,000 on June 28, 2016 for scheduled product shipments, per the terms of sale resulting in the recognition of $493,850 for PIFA Heparin/PF4 products and $12,551 of other products from Novatek for the nine months ended September, 30, 2016. The remaining products will be scheduled to ship at various points throughout the remainder of the current fiscal year with the remaining $2,000,000 of revenue under the order being recognized when the criteria for the recognition of revenue is met.

The Company's MPC product sales declined 17% during the nine months ended September 30, 2016 over the same period of 2015. A distributor's initial stocking order of approximately $144,000 for the Company's BreathScan Alcohol Breathalyzer products in Great Britain was included for the nine months ended September 30, 2015 but not repeated in the nine months ended September 30, 2016. Net of this significant order, MPC product sales increased 117% for the nine months ended September 30, 2016.

While most of the MPC product sales in the nine months ended September 30, 2016 came from BreathScan Alcohol Breathalyzers, we have begun generating sales of other MPC products within our health and wellness line, primarily the Company's BreathScan OxiChek™ disposable breath test for oxidative stress which contributed $65,969.

Other operating revenue increased due to a rise in miscellaneous component sales and shipping and handling fees.

The Company's gross margin improved significantly, rising to 69% (2015: 54%) for the nine months ended September 30, 2016. The improvement is attributed to improved margins for the PIFA Heparin PF/4 products resulting from the increase in average selling price of these products.

Cost of sales for the nine months ended September 30, 2016 decreased by 4% to $713,576 (2015: $745,319). Direct cost of sales decreased to 14% of product revenue while other cost of sales decreased to 17% for the nine months ended September 30, 2016 as compared to 26% and 30% respectively for the same period in 2015.

Direct cost of sales for the nine-month period ended September 30, 2016 were $325,922 (2015: $353,659). The decrease is attributed to the offset of manufacturing costs to inventory.

Other cost of sales for the nine months ended September 30, 2016 were $387,654 (2015: $391,660). The decrease is attributed to reductions in expenses related to quality control testing and inventory shrinkage and is offset by increases in manufacturing consumable supplies and repairs and maintenance expenses.

General and Administrative Expenses

General and administrative expenses for the nine months ended September 30, 2016, totaled $2,298,099, which was a 2% decrease as compared to $2,341,500 for the nine months ended September 30, 2015.

Sales and Marketing Expenses

Sales and marketing expenses for the nine months ended September 30, 2016 totaled $1,764,952, which was a 5% decrease as compared to $1,854,623 for the nine months ended September 30, 2015.

Research and Development

Research and development expenses for the nine months ended September 30, 2016 totaled $932,858, which was a 9% decrease as compared to $1,003,444 for the nine months ended September 30, 2015.

Reversal of Reserve for Bad Debts

The Company reversed a reserve for bad debts for $1,299,609 during the nine months ended September 30, 2016 as a result of the legal settlement with ChubeWorkx Guernsey Limited ("ChubeWorkx") on August 17, 2016. Details of the settlement are included in Part II, Section 1, Legal Proceedings.

During the nine months ended September 30, 2015, the Company established a reserve for bad debts for $864,000 for 36 Strategies General Trading, a related party.

Impairment of Non-Current Assets

The Company performed a routine analysis of its intangible assets and determined that two patents and a trademark acquired in the fiscal year ended December 31, 2007 are no longer contributing to the Company's revenue flows and were therefore impaired for $466,476 (2014: $-) during the nine months ended September 30, 2015.

Other Income and Expense

Other income, net of expenses for the nine months ended September 30, 2016 totaled $22,792, which was a 74% decrease as compared to $87,729 for the nine months ended September 30, 2015.

Liquidity and Capital Resources

For the nine months ended September 30, 2016 and 2015, the Company generated a net loss attributable to shareholders of $2,207,707 and $5,734,921, respectively. As of September 30, 2016 and December 31, 2015, the Company has an accumulated deficit of $96,383,706 and $94,175,999 and had cash totaling $195,860 and $402,059, respectively.

Cautionary Statement Regarding Forward Looking Statements

Statements contained herein that are not based upon current or historical fact are forward-looking in nature and constitute forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. Such forward-looking statements reflect the Company's expectations about its future operating results, performance and opportunities that involve substantial risks and uncertainties. These statements include but are not limited to statements regarding the intended terms of the offering, closing of the offering and use of any proceeds from the offering. When used herein, the words "anticipate," "believe," "estimate," "upcoming," "plan," "target," "intend" and "expect" and similar expressions, as they relate to Akers Biosciences, Inc., its subsidiaries, or its management, are intended to identify such forward-looking statements. These forward-looking statements are based on information currently available to the Company and are subject to a number of risks, uncertainties, and other factors that could cause the Company's actual results, performance, prospects, and opportunities to differ materially from those expressed in, or implied by, these forward-looking statements.