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Press Release
Stellar Pharmaceuticals Reports Third Quarter 2011 Financial Results
LONDON, ONTARIO -- (MARKET WIRE) -- Nov 14, 2011 -- Stellar Pharmaceuticals Inc. (OTCQB: SLXCF)(OTCBB: SLXCF)(PINK SHEETS: 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 period ended September 30, 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 September 30, 2011, total revenues from all sources were $689,162. This represented a decrease of 69.2% from $2,236,925 for the same period during 2010. The Company noted that the decrease in total revenues was driven primarily by the absence of licensing revenues in the third quarter of 2011, compared to $1,446,168 of license revenues being recorded in the same three-month period a year ago.
Total product sales for both domestic and international markets for the three month period ended September 30, 2011 decreased by 1.0% to $682,000 from $688,700 for the same period in 2010. Domestic product revenue growth of 3.5% was offset by a 9.4% decline in international product revenues. The decline in international product revenues was primarily the result of the 2010 third quarter being positively impacted by first-time orders from three new international distributors.
Total expenses for the three month period ended September 30, 2011 decreased 39.0% or $243,500, compared to the same period in 2010.
Stellar's net profit for the three month period ended September 30, 2011 was $112,261. This compared to a net profit of $1,380,841 in the same period a year ago. As previously noted, the Company received no license revenues in Q3 2011 versus $1,446,168 of license revenues in Q3 2010.
At September 30, 2011, Stellar had $3.5 million in cash and cash equivalents. This represents a decrease of $0.9 million from the $4.4 million balance at December 31, 2010, a significant portion of which is attributable to a $0.4 million retirement payout made to a former executive officer of the Company.
Arnold Tenney, Stellar's President and Chief Executive Officer, commented, "As our current business has continued to stabilize, with noted decreases in cost of product sales and carefully managed expenses in order to allow for future growth, Stellar has been able to maintain a strong financial position. This has left us well positioned to start taking advantage of some of the exciting opportunities that we have identified to increase our footprint and kick- start growth in both Canadian and international markets. We look forward to updating you on our progress in that regard as we move forward."
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 As at
September 30, December 31,
CURRENT 2011 2010
-------------------- -------------------
Cash and cash equivalents $ 3,511,390 $ 4,352,285
Accounts receivable, net of
allowance of $nil (2010 - $nil) 364,792 493,370
Inventories 900,908 611,676
Taxes recoverable 38,760 -
Loan receivable 15,814 15,814
Prepaids, deposits and sundry
receivables 121,047 99,433
-------------------- -------------------
Total current assets 4,952,711 5,572,578
PROPERTY, PLANT AND EQUIPMENT, net 1,498,114 1,568,729
OTHER ASSETS 159,212 139,287
-------------------- -------------------
Total assets $ 6,610,037 $ 7,280,594
-------------------- -------------------
-------------------- -------------------
LIABILITIES
CURRENT
Accounts payable $ 253,652 $ 236,420
Accrued liabilities 188,135 557,735
Deferred revenues 8,393 8,645
Product returns liability - 112,500
-------------------- -------------------
Total current
liabilities 450,180 915,300
LONG TERM WARRANT LIABILITY 15,064 216,823
-------------------- -------------------
Total liabilities 465,244 1,132,123
-------------------- -------------------
CONTINGENCIES AND COMMITMENTS
SHAREHOLDERS' EQUITY
CAPITAL STOCK
AUTHORIZED
Non-voting,
convertible
redeemable and
Unlimited retractable
preferred shares with
no par value
Common Shares with no
Unlimited par value
ISSUED Common Shares (2010 -
24,610,042 24,585,040) 9,046,206 9,055,982
Additional Paid-in
capital options -
outstanding 287,885 211,781
Additional Paid-in
capital options -
expired 795,740 733,517
-------------------- -------------------
10,129,831 10,001,280
DEFICIT (3,985,038) (3,852,809)
-------------------- -------------------
Total shareholders' equity 6,144,793 6,148,471
-------------------- -------------------
Total liabilities and
shareholders' equity $ 6,610,037 $ 7,280,594
-------------------- -------------------
-------------------- -------------------
STELLAR PHARMACEUTICALS INC.
CONDENSED INTERIM STATEMENTS OF OPERATIONS, COMPREHENSIVE
INCOME (LOSS) AND DEFICIT
(Expressed in Canadian Dollars)
(Unaudited)
For the Three Month Period For the Nine Month Period
Ended September 30 Ended September 30
2011 2010 2011 2010
------------- ------------- ---------------------------
PRODUCT SALES $ 683,864 $ 690,881 $ 2,381,684 $ 2,052,144
ROYALTY AND
LICENSING REVENUES 5,298 1,546,044 14,226 2,018,472
------------- ------------- ------------- -------------
TOTAL REVENUES
FROM ALL
SOURCES 689,162 2,236,925 2,395,910 4,070,616
COST OF PRODUCTS
SOLD 201,870 235,334 634,799 719,809
------------- ------------- ------------- -------------
GROSS PROFIT 487,292 2,001,591 1,761,111 3,350,807
------------- ------------- ------------- -------------
EXPENSES
Selling, general
and
administrative 621,641 566,371 2,024,640 1,726,890
Research and
development 12,196 45,606 45,966 81,560
Change in
warrant
liability (266,029) - (201,759) -
Amortization
(non-
manufacturing
property, plant
and equipment) 12,314 11,600 36,438 38,919
------------- ------------- ------------- -------------
380,122 623,577 1,905,285 1,847,369
------------- ------------- ------------- -------------
INCOME (LOSS) FROM
OPERATIONS 107,170 1,378,014 (144,174) 1,503,438
INTEREST AND OTHER
INCOME 5,091 2,827 11,945 5,949
LOSS ON DISPOSAL OF
EQUIPMENT - - - (15,308)
------------- ------------- ------------- -------------
INCOME (LOSS) AND
COMPREHENSIVE
INCOME FOR THE
PERIOD BEFORE
INCOME TAXES 112,261 1,380,841 (132,229) 1,494,079
Current income tax
expense - (421,300) - (435,100)
Future income tax
recovery - 421,300 - 435,100
------------- ------------- ------------- -------------
NET INCOME (LOSS)
AND COMPREHENSIVE
INCOME (LOSS) FOR
THE PERIOD 112,261 1,380,841 (132,229) 1,494,079
DEFICIT, beginning
of period (4,097,299) (4,265,279) (3,852,809) (4,378,517)
------------- ------------- ------------- -------------
DEFICIT, end of
period $ (3,985,038) $ (2,884,438) $ (3,985,038) $(2,884,438)
------------------------------------------- -------------
EARNINGS (LOSS) PER
SHARE - Basic $ 0.00 $ 0.06 $ (0.01) $ 0.06
------------- ------------- ------------- -------------
------------- ------------- ------------- -------------
WEIGHTED AVERAGE
NUMBER OF COMMON
SHARES OUTSTANDING
- Basic 24,610,042 23,585,040 24,599,144 23,517,256
-------------- ------------- ---------------------------
EARNINGS (LOSS) PER
SHARE - Diluted $ 0.00 $ 0.06 $ (0.01) $ 0.06
------------- ------------- ------------- -------------
------------- ------------- ------------- -------------
WEIGHTED AVERAGE
NUMBER OF COMMON
SHARES OUTSTANDING
- Diluted 24,610,042 23,594,579 24,599,144 23,518,390
-------------- ------------- ------------- -------------
STELLAR PHARMACEUTICALS INC.
CONDENSED INTERIM STATEMENTS OF CASH FLOWS
(Expressed in Canadian dollars)
(Unaudited)
For the Three Month Period For the Nine Month Period
Ended September 30 Ended September 30
2011 2010 2011 2010
----------- ----------- ----------- -----------
CASH FLOWS FROM
(USED IN)
OPERATING
ACTIVITIES -
Net income (loss)
for the period $ 112,261 $$ 1,380,841 $ (132,229) $ 1,494,079
Items not affecting
cash
Amortization 23,826 21,474 78,889 79,053
Current income tax
expense (421,300) - (435,100)
Future income tax
recovery 421,300 - 435,100
Loss on disposal
of equipment - - - 15,308
Change in warrant
liability (266,029) - (201,759) -
Issuance of equity
instruments for
services rendered 9,001 - 14,467 4,000
Stock-based
compensation 47,330 66,689 138,327 118,079
Change in non-cash
operating asset
and liabilities 137,403 39,974 (686,148) (535,908)
----------- ----------- ----------- -----------
CASH FLOWS (USED IN)
OPERATING
ACTIVITIES 63,792 1,508,978 (788,453) 1,174,611
----------- ----------- ----------- -----------
CASH FLOWS FROM (USED
IN) INVESTING
ACTIVITIES -
Additions to
property, plant
and equipment - (28,052) (5,008) (290,194)
Increase to other
assets (3,710) (6,000) (23,191) (16,847)
Proceeds from sale
of equipment - - - 12,630
----------- ----------- ----------- -----------
CASH FLOWS USED IN
INVESTING
ACTIVITIES (3,710) (34,052) (28,199) (294,411)
----------- ----------- ----------- -----------
CASH FLOWS USED IN
FINANCING
ACTIVITIES -
Stock options
exercised - - - 69,000
Share issuance
costs (2,559) - (24,243) -
----------- ----------- ----------- -----------
CASH FLOWS FROM (USED
IN) FINANCING
ACTIVITIES (2,559) - (24,243) 69,000
----------- ----------- ----------- -----------
CHANGE IN CASH AND
CASH EQUIVALENTS 57,523 1,474,926 (840,895) 949,200
CASH AND CASH
EQUIVALENTS,
Beginning of
period 3,453,867 1,799,486 4,352,285 2,325,212
----------- ----------- ----------- -----------
CASH AND CASH
EQUIVALENTS,
End of period $ 3,511,390 $ 3,274,412 $ 3,511,390 $ 3,274,412
------------- ----------- ----------- -------------
------------- ----------- ----------- -----------
Contacts: Company Contact Stellar Pharmaceuticals Inc. Arnold Tenney, President & CEO (519) 434-1540 arnoldt@stellarpharma.com www.stellarpharma.com