AdvanSource Biomaterials 2010 fiscal first quarter revenue increases 11.8%

Aug 19 2010

AdvanSource Biomaterials Corporation (NYSE Amex: ASB), a leading developer of advanced polymer materials for a broad range of medical devices, today announced financial results for its fiscal 2011 first quarter ended June 30, 2010.

Total revenues for the three months ended June 30, 2010 were $503,000 as compared with $450,000 for the comparable prior year period, an increase of $53,000, or 11.8%. Product sales of our biomaterials for the three months ended June 30, 2010 were $402,000 as compared with $239,000 for the comparable prior year period, an increase of $163,000, or 68.2%. License, royalty and development fees for the three months ended June 30, 2010 were $101,000 as compared with $211,000 for the comparable prior year period, a decrease of $110,000 or 52.1%.

Michael F. Adams, President and CEO of AdvanSource, stated, "The continued sequential quarterly growth in product sales is an important indicator of the success of the marketing and sales efforts that have been a key in the execution of our ongoing business plan. We understood from the outset that in executing our new business strategy we would have to aggressively gain traction in our product sales business since the revitalization of our license, royalty and development business would be a slow, painstaking process. However, we believe our product sales should continue to ramp over the next several quarters. We recently announced a new development agreement and it is our expectation to continue to aggressively pursue similar opportunities. In addition, we are confident that an existing development agreement could soon make the transition from a development relationship to a commercial supply and license relationship. We believe these types of relationships with medical device designers and manufacturers, where the transition from development to commercial relationships, albeit slowly, should provide us important opportunities to reap significant rewards."

Gross profit on total revenues for the three months ended June 30, 2010 was $138,000, or 27.4% of total revenues, compared with $111,000, or 24.7% of total revenues, for the comparable prior year period. Gross profit on product sales for the three months ended June 30, 2010 was $37,000, or 9.2% of product sales, compared with a loss of ($100,000), or (41.8%) of product sales, for the comparable prior year period. The improvement in gross profit dollars on total and product sales and gross profit as a percentage of total and product revenues is attributable, in part, to: i) continued overhead cost containment and control measures, ii) improved efficiencies in the production process, and iii) increased product sales.

Mr. Adams further commented, "It is important to note that growth in our product sales and continued efficiencies in our production process have had a positive effect on improving our margins and have contributed in offsetting the negative impact on margins from decreasing license, royalty and development fees. Due to the significant fixed-cost structure of our manufacturing operations, we believe gross profits could continue to improve in response to increasing product sales. This would be an important factor in our ultimate objective of achieving profitability."

Research and development expenses for the three months ended June 30, 2010 were $177,000 as compared with $182,000 for the comparable prior year period, a decrease of $5,000 or 2.8%. Our research and development efforts continue to be focused on developing new applications for our biomaterials. We continue to maintain a relatively stable research and development budget, which management believes meets the needs of our customers and internal development needs.

Selling, general and administrative expenses for the three months ended June 30, 2010 were $603,000 as compared with $786,000 for the comparable prior year period, a decrease of $183,000 or 23.3%. The decrease is primarily attributable to our cost containment measures which included continued reductions in outside consultants, legal and accounting costs. These decreases were offset by increased costs in sales and marketing to continue to promote our products and acquire new customers.

Mr. Adams concluded, "We believe the execution of our plan over the past several quarters, has resulted in the recognition of AdvanSource Biomaterials, by medical device designers and manufacturers throughout the world, as an innovator of polymer technologies and products that could benefit their development of future medical devices and become an integral component of commercially available medical devices. We also believe our marketing, sales and production teams have matured and are making measurable contributions towards our quarter-to-quarter financial performance improvements. We continue to be optimistic that the quarter-by-quarter steps we take in advancing our business strategy should move us closer towards our ultimate goal of achieving profitability."

As of June 30, 2010, we had cash and cash equivalents of $2,432,000 as compared with $3,055,000 as of March 31, 2010.

Source : AdvanSource Biomaterials