Innovotech Inc.
TSX VENTURE : IOT

Innovotech Inc.

May 29, 2006 06:00 ET

Innovotech Announces Unaudited Consolidated Financial Statements for the Three Month Period Ended March 31, 2006

EDMONTON, ALBERTA--(CCNMatthews - May 29, 2006) - Innovotech Inc (TSX VENTURE:IOT) today announced its unaudited consolidated financial and operational results for the three month period ended March 31, 2006.

Highlights

- Sales comparable with Q1 2005

- Increased and focused R&D effort

"In the first quarter of 2006 Fiscal year, Innovotech's fully owned subsidiary MBEC generated Contract Research revenue comparable to Quarter 1, 2005. We managed to raise the awareness for the MBEC biofilm device through increased presence at tradeshows and conferences as well as our first international hands-on workshop which was held in Baltimore, Maryland this spring. Our R&D program is making good progress with two projects entering advanced stages of development." said Dr. James Timourian, CFO of Innovotech.



Highlights

------------------------------------------------------------------------
Three month period Three month period
March 31, March 31,
2006 2005
------------------------------------------------------------------------
Revenues $135,307 $132,089
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G&A $186,800 $ 96,913
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R&D (before grant subsidies) $ 87,095 $ 27,900
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Net (Loss) ($160,141) ($61,020)
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Consolidated Results of Operations

In the three month period ended March 31, 2006, the Company incurred a net loss of $160,141 compared to a net loss of $61,020 in the same period 2005. The increase resulted from increased personnel and increased marketing activities through workshops and conferences.

Revenues

In the three month period ended March 31, 2006 total revenues of the company's subsidiary MBEC Bioproducts Inc. were $135,307 compared to $132,089 in 2005. This included contract research fees $118,517 (2005 - $100,000), end product sales $16,790 (2005 - $32,089). The increase in contract research revenue is due to expansion of the contract research business into industrial markets and continued growth of the current client base. Product sales were lower than in the same period of 2005 and the company is seeking ways to raise market awareness of its analytical device.

Direct Costs and Gross Margin

Direct costs for the three month period ended March 31, 2006 were $70,286 (2005 - $67,503). The gross margin for this period was $65,021 compared to a gross margin in 2005 of $64,586.

General and Administrative

In the three month period ended March 31, 2006, general and administrative expense was $186,800 compared to $96,913 in 2005. The increase for the period is directly related to increased costs for marketing by attending conferences and workshops to increase awareness of MBEC, completion of a third party review of MBEC's intellectual property strategy and increased costs for personnel.

Amortization

For the three month period ended March 31, 2006 amortization was $17,901 compared to $15,300 for the same period in 2005. The increase in amortization is a result of some capital purchases and the costs incurred in pursuit of licenses and patents.

Research & Development

For the period ended March 31, 2006 gross research and development expense was $87,095 (2005 - $27,900). These costs were reduced by a subsidy from grants to a net cost of $21,084 (2005 - $15,639). The increase in research and development expense relates to mainly two projects which are in an advanced stage of development. 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.

Other Income

Innovotech earned $623 in interest revenue during the period ended March 31, 2006 compared to $2,246 for the same period last year. The decrease in interest received is attributable to the use of funds to support operations.

Deficit

Since acquisition of its subsidiary MBEC Bioproducts Inc., Innovotech has sustained operating losses with an accumulated deficit of $1,081,924 (2005 - $822,216). The increase is related to support of its subsidiary MBEC, offset by revenues from contract research, end product sales and grants to subsidize its research and development.

Liquidity and Capital Resources

On March 31, 2006 Innovotech had cash and cash equivalents of $170,830 compared to cash and cash equivalents of $213,985 at December 31, 2005. The decrease is directly related to the increased operating costs of its subsidiary MBEC, investment in capital assets, licenses and patents and the costs associated with public reporting. This was largely offset by revenues. The company believes that it will have sufficient funds to finance operations through revenues and grants but if necessary the Company may seek additional funding through private placement.

Financing Activities

There were no financing activities in this period.

In the period ended March 31, 2006 the Company invested $25,178 in capital assets and received a credit in the amount $2,295 for the pursuit of patents and licenses.

Innovotech stock trades on the TSX Venture Exchange as IOT. It closed on March 31, 2006 at $0.18 per share.

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.






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

Contact Information

  • Innovotech Inc.
    Dr. Wolfgang Muhs
    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: www.mbec.ca