Innovotech Inc.
TSX VENTURE : IOT

Innovotech Inc.

May 25, 2005 16:03 ET

Innovotech Announces First Quarter, 2005 Unaudited Consolidated Financial Statements

EDMONTON, ALBERTA--(CCNMatthews - May 25, 2005) - Innovotech Inc (TSX VENTURE:IOT) today announced its unaudited consolidated financial and operational results for the three month period ended March 31, 2005.

"Following a successful financing in January, 2005, Innovotech's business revolved around its only subsidiary, MBEC Bioproducts Inc ("MBEC"). We are very pleased that good progress was achieved in all aspects of the business. Both contract research and device sales were up over the last quarter. Certain research grants that will accelerate the pace of our in-house research projects were approved. We are confident that such progress will be maintained during the rest of the year," said Dr. James Timourian, CFO of Innovotech.

Results of Operations

In the three month period ended March 31, 2005, the Company incurred a net loss of $61,020 compared to a net gain of $4,378 in the same period in 2004. The variance is mainly the result of increased costs due to hiring of personnel in the subsidiary MBEC, increased operational costs and increased accounting and administration support in Innovotech to meet the needs of a publicly reporting Company.

Revenues

In the three month period ended March 31, 2005, total revenues were $144,350 compared to $103,187 in the same period in 2004. This included contract research fees - $100,000 (2004 - $92,589), product sales - $32,089 (2004 - $10,598) and grant revenue $12,261 (2004 - nil). The increase in sales is due to expansion of the business into industrial markets, continued growth of the current client base and the launch of an "MBEC AssayTM" device in November 2003.

Innovotech earned $2,246 in interest revenue during the period ended March 31, 2005, compared to $3,643 for the same period last year. The decrease in interest received is attributable to the use of funds to support operations.

General and Administrative

In the period ended March 31, 2005, general and administrative expense was $121,561 compared to $43,851 in 2004. The increase for the period is directly related to increased costs for premise lease, personnel and administrative expense related to the requirements as a public company. Innovotech assumed the lease of office premises in April, 2004 but recovers some of these overhead costs from related companies sharing the same office.

Research & Development

For the period ended March 31, 2005, research and development expense was $27,900 compared to $81,032 in 2004. This decrease for the current period also relates to timing differences in allocation of costs to research and development in the previous year. The Company expenses research and development costs in the year that costs are incurred, unless development costs meet generally accepted accounting criteria for deferral and amortization. The Company has not deferred any research and development expense to date.

Amortization

For the period ended March 31, 2005, amortization was $15,300 compared to $1,173 for the previous fiscal year. The increase relates to amortization of costs incurred in pursuing patents and acquiring license agreements.

During the period ended March 31, 2005, the Corporation used $154,592 to support its operations and at March 31, 2005 had $561, 514 cash on hand.

On January 11, 2005, the TSX Venture Exchange approved the private placement of 1,111,111 of common shares in Innovotech Inc. at $ 0.18 per share for total proceeds of $200,000 by First Yellowhead Equities Inc.

Innovotech Inc. is a public company focused on acquiring novel technologies or promising technology based companies with an existing or imminent revenue stream. In addition to financial investment in these technologies, Innovotech provides management and technology commercialization expertise.

Certain information contained in this document is forward-looking and is subject to unknown risks or uncertainties. The actual results, performance or achievements of Innovotech Inc. and/or its subsidiary MBEC Bioproducts Inc. may differ materially from the results, performance or achievements expressed or implied by such forward-looking statements.



Innovotech Inc.
Consolidated Balance Sheets
As at March 31, 2005
------------------------------------------------------------------------

December
March 31, 31,
2005 2004
(Unaudited) (Audited)
$ $

Assets

Current assets
Cash and cash equivalents 561,514 406,923
Accounts receivable 71,326 55,819
Goods and services tax recoverable 4,626 6,347
Prepaid expenses 420 6,503
---------------------------

637,886 475,592

Inventory 1,246 -

Equipment 29,338 27,153

Patents and licenses 281,639 256,438
---------------------------

950,109 759,183
---------------------------
---------------------------

Liabilities

Current liabilities
Trade accounts payable and
accrued liabilities 199,783 108,954
Other accounts payable and
accrued liabilities 102,077 109,875
Deferred revenue 12,542 3,627
---------------------------

314,402 222,456

Long-term payables 116,000 156,000
---------------------------

430,402 378,456
---------------------------

Shareholders' Equity

Share capital 1,253,718 1,053,718

Contributed surplus 88,205 88,205

Deficit (822,216) (761,196)
---------------------------

519,707 380,727
---------------------------

950,109 759,183
---------------------------
---------------------------


Approved by the Board of Directors


(Signed) "Gerard Tertzakian" (Signed) "James Timourian"
Director Director


Innovotech Inc.
Consolidated Statements of Deficit
------------------------------------------------------------------------

Three-month Three-month
period ended period ended
March 31, March 31,
2005 2004
(Unaudited) (Unaudited)
$ $

Balance - Beginning of period (761,196) (128,042)

Net (loss) earnings for the period (61,020) 4,378

Adjustment for stock-based compensation - (88,205)
---------------------------

Balance - End of period (822,216) (211,869)
---------------------------
---------------------------


Innovotech Inc.
Consolidated Statements of Loss
------------------------------------------------------------------------

Three-month Three-month
period ended period ended
March 31, March 31,
2005 2004
(Unaudited) (Unaudited)
$ $

Revenue
Contract research fees 100,000 92,589
Product sales 32,089 10,598
Grant revenue 12,261 -
---------------------------

144,350 103,187

Direct costs 42,855 (23,604)
---------------------------

Gross margin 101,495 126,791
---------------------------

Expenses
General administrative 121,561 43,851
Research and development 27,900 81,032
Amortization 15,300 1,173
---------------------------

164,761 126,056
---------------------------

(Loss) earnings from operations (63,266) 735

Other income
Interest 2,246 3,643
---------------------------

Net (loss) earnings for the period (61,020) 4,378
---------------------------
---------------------------

$ $

Basic and diluted loss per common share (0.0049) 0.0007
---------------------------
---------------------------

# #

Weighted average number of
common shares outstanding for the period 12,453,147 6,500,000
---------------------------
---------------------------


Innovotech Inc.
Consolidated Statements of Cash Flows
------------------------------------------------------------------------

Three-month Three-month
period ended period ended
March 31, March 31,
2005 2004
(Unaudited) (Unaudited)
$ $

Cash provided by (used in)

Operating activities
Net (loss) earnings for the period (61,020) 4,378
Items not affecting cash
Amortization 15,300 1,173
Write-down note receivable - 12,500
---------------------------

(45,720) 18,051

Net change in non-cash working capital items 75,327 41,659
---------------------------

29,607 59,710
---------------------------

Financing activities
Issuance of share capital 200,000 -
Long-term payable (40,000) -
Deferred revenue 8,915 -
---------------------------

168,915 -
---------------------------

Investing activities
Inventory (1,246) -
Purchase of equipment (3,753) -
Expenses pursuing patents and licenses (38,932) (23,622)
Business acquisition costs - (38,293)
---------------------------

(43,931) (61,915)
---------------------------

Increase (decrease) in cash and cash
equivalents 154,591 (2,205)

Cash and cash equivalents - Beginning of
period 406,923 771,062
---------------------------

Cash and cash equivalents - End of period 561,514 768,857
---------------------------
---------------------------

Supplementary information
Interest paid 3,379 -
---------------------------
---------------------------

Interest received 2,246 3,643
---------------------------
---------------------------

Income taxes paid - -



The TSX Venture Exchange does not accept responsibility for the adequacy or accuracy of this release.

Contact Information

  • Innovotech Inc
    Dr Gerard Tertzakian
    CEO
    (780) 448-0585
    (780) 424-0941 (FAX)
    or
    MBEC BioProducts
    Ken Boutilier
    President
    (780) 425-7717
    (780) 424-0941 (FAX)
    Email: ken.boutilier@mbec.ca
    Website: http://www.mbec.ca