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Press Release
Stellar Pharmaceuticals Reports First Quarter 2011 Financial Results
LONDON, ONTARIO -- (MARKET WIRE) -- May 16, 2011 -- Stellar Pharmaceuticals Inc. (OTCQB: SLXCF) ("Stellar" or "the Company"), a Canadian pharmaceutical developer and marketer of high quality, cost-effective products for select health care markets, today announced financial results for the quarter ended March 31, 2011. In this press release, all dollar amounts are expressed in Canadian currency and results are reported in accordance with United States generally accepted accounting principles (U.S. GAAP).
For the three month period ended March 31, 2011, Stellar's total revenues were $634,000 as compared to $577,900 for the same period in 2010. The Company noted that the increase in total revenues was driven by a 52.2% growth in product sales to international markets, while the Canadian market sales experienced a 1.7% decrease in product sales. Gross margin as a percentage of sales increased to 73.0% for the quarter end March 31, 2011, from 64.7% for the same period ended March 31, 2010.
Operating expenses for the first quarter of 2011, increased $161,100, to $769,000 compared with $607,900 for the first quarter of 2010. In addition to increased business development expenses, factors also contributing to the increase in operating expenses were several non-cash transactions. These non-cash transactions included the following:
-- share option expense in the first quarter of 2011 of $63,800, (includes
$21,700 related to options which fully vested upon the retirement of an
officer of the Company) compared to $33,900 during the same period in
2010;
-- amortization expense in the first quarter of 2011 of $12,100 compared to
$26,800 during the same period in 2010;
-- warranty liability expense in the first quarter of 2011 of $39,300
related to the re-valuation of warrants, compared to $nil during the
same period in 2010; and
-- foreign currency exchange expense in the first quarter of 2011 of
$45,600, compared to $20,200 during the same period in 2010.
Net loss from continuing operations for the three month period ended March 31, 2011 was $302,900 or $0.01 per share, compared to $247,500 or $0.01 per share in the first quarter of 2010.
At March 31, 2011 the Company had $3.7 million in cash and cash equivalents, a decrease of $0.6 million over the December 31, 2010 balance of $4.4 million. The primary reason for the decrease was a $0.4 million retirement payout to an executive office of the Company.
Arnold Tenney, Stellar's President and Chief Executive Officer, commented, "Stellar ended the first quarter of 2011, in a strong financial position, with an increase of 9.7% in total revenues, no short or long tem debt and working capital of $4.5 million. We continue to evaluate all opportunities at supporting growth and improving our position both in Canada and international markets."
About Stellar Pharmaceuticals Inc.
Stellar has developed and is marketing direct in Canada, and in countries around the world through out-license agreements, three products based on its core polysaccharide technology: NeoVisc® and NeoVisc® Single Dose, for the symptomatic treatment of osteoarthritis; and Uracyst®, its patented technology for the treatment of interstitial cystitis (IC), an inflammatory disease of the urinary bladder wall. Both NeoVisc and Uracyst have their CE Mark certification for the European Community. Stellar also has an in-licensing agreement for NMP22® BladderChek®, a proteomics-based diagnostic test for the diagnosis and monitoring of bladder cancer. For more information, please visit the company's website at www.stellarpharma.com.
Forward-Looking Statements
This press release contains forward-looking statements as defined in the Private Securities Litigation Reform Act of 1995. Readers are cautioned not to place undue reliance on these forward-looking statements. Actual results may differ materially from those indicated by these forward-looking statements as a result of risks and uncertainties impacting the Company's business including increased competition; the ability of the Company to expand its operations, to attract and retain qualified professionals, technological obsolescence; general economic conditions; and other risks detailed from time to time in the Company's filings.
STELLAR PHARMACEUTICALS INC.
CONDENSED INTERIM BALANCE SHEETS
(Expressed in Canadian dollars)
(Unaudited)
As at March As at
31, December 31,
CURRENT 2011 2010
--------------- ---------------
Cash and cash equivalents $ 3,738,181 $ 4,352,285
Accounts receivable, net of allowance of
$nil (2010 - $nil) 355,769 493,370
Inventories 795,775 611,676
Taxes recoverable 28,233 -
Loan receivable 15,814 15,814
Prepaids, deposits and sundry receivables 120,151 99,433
--------------- ---------------
Total current assets 5,053,923 5,572,578
PROPERTY, PLANT AND EQUIPMENT, net 1,543,097 1,568,729
OTHER ASSETS 142,142 139,287
--------------- ---------------
Total assets $ 6,739,162 $ 7,280,594
--------------------------------
--------------------------------
LIABILITIES
CURRENT
Accounts payable $ 106,854 $ 236,420
Accrued liabilities 348,129 557,735
Deferred revenues 833 8,645
Product returns liability 112,500 112,500
--------------- ---------------
Total current liabilities 568,316 915,300
LONG TERM WARRANT LIABILITY 256,069 216,823
--------------- ---------------
Total liabilities 824,385 1,132,123
--------------- ---------------
CONTINGENCIES AND COMMITMENTS
SHAREHOLDERS' EQUITY
CAPITAL STOCK
AUTHORIZED
Unlimited Non-voting, convertible
redeemable and retractable
preferred shares with no par
value
Unlimited Common Shares with no par value
ISSUED
24,585,040 Common Shares (2010 - 24,585,040) 9,055,982 9,055,982
Shares to be issued 5,466 -
Additional Paid-in capital
options - outstanding 213,293 211,781
Additional Paid-in capital
options - expired 795,740 733,517
--------------- ---------------
10,070,481 10,001,280
DEFICIT (4,155,704) (3,852,809)
--------------- ---------------
Total shareholders' equity 5,914,777 6,148,471
--------------- ---------------
Total liabilities and
shareholders' equity $ 6,739,162 $ 7,280,594
--------------- ---------------
--------------- ---------------
STELLAR PHARMACEUTICALS INC.
CONDENSED INTERIM STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS AND
DEFICITS
(Expressed in Canadian dollars)
(Unaudited)
For the Three Month Period
Ended March 31,
2011 2010
PRODUCT SALES $ 631,276 $ 549,510
ROYALTIES & LICENSING REVENUE 2,766 28,369
--------------- ---------------
TOTAL REVENUE FROM ALL SOURCES 634,042 577,879
COST OF PRODUCTS SOLD 171,396 203,757
--------------- ---------------
GROSS PROFIT 462,646 374,122
EXPENSES
Selling, general and administrative 704,055 567,932
Change in warranty liability 39,246 -
Research and development 13,678 26,270
Amortization of assets (non-manufacturing
property, plant and equipment) 12,062 13,663
--------------- ---------------
769,041 607,865
--------------- ---------------
LOSS FROM OPERATIONS (306,395) (233,743)
INTEREST AND OTHER INCOME 3,500 1,513
LOSS ON DISPOSAL OF EQUIPMENT - (15,308)
--------------- ---------------
NET LOSS AND COMPREHENSIVE
LOSS FOR THE PERIOD (302,895) (247,538)
DEFICIT, beginning of period (3,852,809) (4,378,517)
--------------- ---------------
DEFICIT, end of period $ (4,155,704) (4,626,055)
--------------- ---------------
--------------- ---------------
LOSS PER SHARE - Basic and diluted $ (0.01) $ (0.01)
--------------- ---------------
--------------- ---------------
WEIGHTED AVERAGE NUMBER OF COMMON
SHARES OUTSTANDING - Basic and diluted 24,585,040 23,480,040
--------------- ---------------
--------------- ---------------
STELLAR PHARMACEUTICALS INC.
CONDENSED INTERIM STATEMENTS OF CASH FLOWS
(Expressed in Canadian dollars)
(Unaudited)
For the Three Month Period
Ended March 31,
-------------------------------
2011 2010
CASH FLOWS USED IN OPERATING ACTIVITIES
Net loss $ (302,895) $ (247,538)
Items not affecting cash
Amortization 26,722 26, 785
Loss on disposal of equipment - 15,308
Stock-based compensation 63,735 33,947
Change in warrant liability 39,246 -
Issuance of equity instruments for
services rendered 5,466 -
Change in non-cash operating assets and
liabilities (442,435) (140,920)
--------------- ---------------
CASH FLOWS USED IN OPERATING ACTIVITIES (610,161) (312,419)
CASH FLOWS PROVIDED BY (USED IN) INVESTING
ACTIVITIES
Additions to property, plant and equipment - (221,853)
Increase in other assets (3,943) (8,014)
Proceeds from sale of equipment - 12,630
--------------- ---------------
CASH FLOWS USED IN INVESTING ACTIVITIES (3,943) (217,237)
--------------- ---------------
CHANGE IN CASH AND CASH EQUIVALENTS (614,104) (529,655)
CASH AND CASH EQUIVALENTS, beginning of
period 4,352,285 2,325,212
--------------- ---------------
CASH AND CASH EQUIVALENTS, end of period $ 3,738,181 $ 1,795,557
--------------- ---------------
--------------- ---------------
Contacts: Stellar Pharmaceuticals Inc. Arnold Tenney President & CEO (519) 434-1540 arnoldt@stellarpharma.com