THOROFARE, N.J, July 13, 2018 (GLOBE NEWSWIRE) -- Akers Biosciences, Inc. (NASDAQ: AKER) (AIM: AKR.L), (“Akers Bio” or the "Company"), a developer of rapid health information technologies, reports its financial results for the first quarter ended March 31, 2018. A Form 10-Q containing the full financial statements is available for viewing on the Company's website at www.akersbio.com or www.sec.gov.

Q1 Financial Summary:

  • Total revenue $302,475 (Q1 2017: $667,250)
    • Revenue from flagship PIFA Heparin PF/4 Rapid Assay products $259,983 (Q1 2017: $560,921) – the Company experienced lower yields in the process of extracting antigen used to produce these products, resulting in production under target levels, and backorders
  • Gross profit margin 2% (Q1 2017: 61%)
    • Costs associated with the low antigen yields and steps to remediate the issue significantly affected the direct costs of production and the fixed nature of key components of the indirect production costs impacted the margin during the period
  • Overall expenses increased by 7%:
    • General and Administrative expenses increased by 16% to $915,533 (Q1 2017: $790,529)
    • Sales and Marketing expenses decreased by 15% to $500,152 (Q1 2017: $588,934)
    • Research and Development expenses increased by 26% to $439,970 (Q1 2017: $348,442)
  • Net loss attributable to shareholders $1,859,991 (Q1 2017: $1,349,270)
  • Cash and marketable securities at March 31, 2018 of $9,326,277 (31 December 2017: $5,450,039)
    • During Q1 2018, warrant holders executed 30,492,070 warrants with an exercise price of $0.1875 per common share, raising net proceeds of $5,717,325

Q1 Operational Summary:

  • Entered into a three-year National Distribution Agreement with Diagnostica Stago, Inc. (“Stago”) for the sale of PIFA Heparin PF/4 Rapid Assay products across the US - Stago is a global leader in hemostasis, with an extensive US-based team dedicated to the sale and support of hemostasis products and equipment to hospitals across the country
  • During the quarter, the Company experienced lower yields in the process of extracting antigen from the supplier provided platelets used to produce PIFA Heparin PF/4 Rapid Assay products. At these yield levels, production of this product was under target levels, resulting in backorders. The Company’s engineers and supplier representatives have been working together to adjust processes in order to restore the yield to appropriate levels, the results of which are not yet determined
  • The Company is taking steps to improve its market presence for PIFA Heparin PF/4 Rapid Assay products including through the use of specialized Independent Sales Representatives (ISRs) and through a program to educate the marketplace through the preparation and publication of additional clinical studies and physician seminars on the risks associated with heparin induced thrombocytopenia – the ISR strategy is gaining momentum with coverage extending to 27 states across the US

Update Regarding Recent Key Events

The Company has updated its product pipeline to reflect products marketed and/or within its pipeline as follows:  

           
PIFA ® Heparin/PF4 & PIFA PLUSS ® PF4 PIFA Marketed Prescription Use Obtained Rapid tests for Heparin/PF4 antibodies to detect an allergy to the widely used blood thinner, Heparin
           
PIFA PLUSS ® Chlamydia PIFA Pipeline Prescription Use Required/withdrawn on May 29, 2018 *See explanation below. Rapid tests for the most prevalent sexually transmitted disease
           
seraSTAT ® seraSTAT Marketed Prescription Use Obtained Rapid Blood Cell Separator, marketed under the brand name seraSTAT ®, further accelerates the rate at which a test result is obtained as the often-required sample preparation step is abbreviated drastically.
           
Tri-Cholesterol “Check” ® REA Marketed OTC Obtained Rapid test for Total and high density lipoprotein cholesterol and estimates low density lipo protein
           
BreathScan OxiChek MPC Marketed Health and wellness n/a Breath test for oxidative stress using the Lync reader and digital app
           
BreathScan KetoChek MPC Pipeline Health and wellness n/a Breath test for ketosis using the Lync reader and digital app


Product Platform Marketed/Pipe line FDA Clearance Required Prescription Use/OTC FDA Clearance Status Obtained/Needed Description
BreathScan TM MPC Marketed OTC Obtained Disposable breath alcohol detector
           
BreathScan ® PRO MPC Marketed OTC Obtained Quantitative breath alcohol detection system
           
METRON ® MPC Marketed Health and wellness n/a Disposable breath ketone device to monitor ketosis
           
BreathScan Lync MPC Marketed Health and wellness n/a Non-invasive, quantitative measurement of biological markers for health and wellness

The Company follows a disciplined and rigorous process to determine market needs and the commercial viability of potential new products within its development pipeline. In doing so, the Company has targeted products that are aligned with our served markets and core capabilities, to further support our quest of enhancing business profitability and shareholder value.

All of the Company’s existing development projects and platforms are being subjected to this process which involves the re-evaluation of the scientific feasibility and potential marketability of the products and platforms. The new business development process ruled out the commercial viability of the following products: Breath Diabetic Ketoacidosis, Breath PulmoHealth “Check” products, and breath cardiac marker test (Troponin).    

In May 2018, after extensive review both internally and with the FDA, we withdrew our initial 510(k) application for the PIFA Chlamydia rapid assay. We are currently evaluating the feasibility and marketability of this product in order to determine when and if the 510(k) application will be resubmitted.    

Regulatory requirements vary across the globe. Our authorized distributors are tasked to meet local and regional regulatory requirements.   

Rapid Blood Cell Separation Technology

In addition to the Company’s testing platforms, Akers’ patented Rapid Blood Cell Separation (“Separator”) Technology, marketed under the brand name seraSTAT ®, further accelerates the rate at which a test result is obtained as the often-required sample preparation step is abbreviated drastically. Conventional methods of blood cell separation are labor-intensive and time-consuming, typically involving blood collection and laboratory personnel, as well as electrically-powered centrifuges and other specialized equipment. We wanted to clarify that the separator device requires a small-volume of venous whole blood sample.

Manufacturing and Suppliers

We are a vertically integrated manufacturer, producing substantially all of our devices in-house. The vast majority of our products start out as high quality, medical grade polymers and exit our facilities as fully manufactured and packaged medical devices. As a result, we have a short supply line between our raw materials and finished goods which gives us greater control over our product quality. The downside of our in-house manufacturing is the requirements for facilities, power, and equipment. This approach also requires mid-to-long-term planning and the ability to predict future needs. Many of our processes are unique to us, but the Company’s flexible manufacturing capabilities and unused current capacity generally translate into relatively short production timelines. As demand for our products increase, additional capacities may be required to advance our evolving needs.

We use a diverse and broad range of raw materials in the manufacturing of our products. We purchase all of our raw materials and select items such as packaging from external suppliers. In addition, we purchase some supplies from single sources for reasons of proprietary know-how, quality assurance, sole source availability, or due to regulatory qualification requirements. U.S. medical device manufacturers must establish and follow quality systems to help ensure that their products consistently meet applicable requirements and specifications. The quality systems for FDA-regulated products are known as current good manufacturing practices (“cGMP’s”). cGMP requirements for devices in part 820 (21 CFR part 820) were first authorized by section 520(f) of the Federal Food, Drug, and Cosmetic Act. We work closely with our suppliers to ensure continuity of supply while maintaining high quality and reliability. To date, we have not experienced any significant difficulty locating and obtaining the materials necessary to fulfill our production requirements.

During the three months ended March 31, 2018, we experienced lower yields in the process of extracting antigen from the supplier provided platelets used to produce our PIFA Heparin product.   At these yield levels, our production of this product was under target levels, resulting in backorders. Our engineers and representatives from our supplier have been working together to adjust our processes in order to restore the yield to appropriate levels, the results of which are not yet determined.            

Furthermore, we are evaluating and testing a resolution that may involve one or more alternative antigen suppliers and processes that may provide a path to restoring yield levels for this product. For each of these potential solutions, we will be conducting production validation and stability testing.

The following is an update of our distribution strategy

We distribute our products through direct and indirect channels of distribution. We have well-developed indirect distribution channels in the U.S. with, among others, Cardinal Health, Thermo Fisher Healthcare, a Division of Fisher Scientific Company L.L.C. and Diagnostica Stago, SA (“Stago”) for the Company’s PIFA Heparin/PF4 assays. These relationships provide us with access to most U.S. hospitals.

Our dedicated sales force works in tandem with independent and distributor sales representatives to uncover opportunities in the clinical laboratory marketplace. The Company facilitates direct sales for hospitals that prefer to purchase direct from the manufacturer.

Since 2012, the Company has had a distribution relationship with Novotek Pharmaceuticals, Inc., a division of Yifan Pharmaceuticals (“Novotek”), a Beijing-based pharmaceutical and in vitro diagnostic business development corporation. Through a multi-year distribution agreement. NovoTek has exclusive sales and marketing rights to distribute Akers’ PIFA products in Mainland China and Poland.       Prior to being able to distribute our products in these markets, NovoTek must first obtain product reimbursement approval from each of the Provincial (regional) jurisdictions. Through June 2018, NovoTek has not been able to obtain these approvals in any of these jurisdictions. We do not anticipate additional PIFA revenue from this region until these approvals are received.

With respect to the Company’s breath alcohol franchise, historically Akers focused its commercial attention within the on-the-job safety/human resources sector. Access was and currently is largely achieved through designated BreathScan® distributors and limited arrangements in which the Company serves in an OEM capacity.

In select European countries and Australia, we have distribution relationships with specialized sales and marketing organizations for some of our products. We do not have a strong presence in many emerging markets, but are seeking to enter into agreements to enable us to enter other international markets in the current fiscal year.

Other Emerging MPC Platform Products

The Company’s MPC Biosensor technology is being applied to the development of products that serve the nutraceutical, fitness, and weight loss marketplaces. As a category, these disposable screening tests are exempt from FDA 510(k) premarket clearances. Biomarkers related to various metabolic processes can be measured in breath condensate. As a result, Akers has used its proprietary, easy-to-use platform to design disposable breath devices that measure ketone (acid) production associated with fat-burning (METRON ® and KetoChek) and oxidative stress levels that relate to cellular damage and the development of many preventable diseases (OxiChek). The Company believes that personalized health and wellness – and eventually personalized medicine – will become an increasingly significant market. The Company is positioning its tests for fitness, weight loss and oxidative stress for this market by designing a more consumer-focused reagent device, and linking this device to an application for smartphones and tablets that can not only produce a result, but also track progress over time. Initial marketing activities have commenced for these products and the Company is preparing for commercialization. Since devices with claims related to weight loss or nutrition are exempt from FDA oversight, a clinical program to support a 510(k) submission is not required for any of these products. Given the non-medical intended use, the Company does not believe products will be required to hold a CE-mark prior to marketing in the EU.

Health and Wellness Market Development (OxiChek)

The Company is currently assessing distribution opportunities with companies specializing in weight loss and/or mass distribution through health-related multilevel marketing organizations. We had been engaged with a with a large network marketing firm to secure a multi-year contractual arrangement.    We failed to produce a custom product that satisfactorily met customer expectations, and as a result we were not able to finalize this arrangement. The Company is pursuing alternative customer options within the Multi-Level Market segment.

During October 2016 the Company was served with a notice that Pulse Health, LLC (“Pulse”) filed a lawsuit against the Company. This litigation has been assigned to mediation and our intention is to resolve this issue in the third quarter. There is risk associated with the BreathScan OxiChek product related to this litigation and an adverse decision may affect our ability to market the product. The Company is aggressively defending our product intellectual property and market position.

Update regarding the marketing of the BreathScan Breath Alcohol products acquired in settlement with ChubeWorkx

The Company has been actively marketing, on a global basis, the BreathScan Breath Alcohol products that were produced for and/or acquired as part of the ChubeWorkx settlement agreement in August 2016. Unfortunately, we have not been successful in securing buyers in sufficient volumes.   

An extensive analysis of the market opportunity has been performed and it was determined that the on-hand quantity of this group of products exceeded the expected near term demand for the product prior to its expiration. As such, the Company’s management elected to establish a reserve.

Chief Executive Officer’s Remarks:

“The decline in total revenues in Q1 was disappointing and was a result primarily of the lower antigen yields experienced in the process of extracting antigen from the supplier provided platelets used to produce PIFA Heparin PF/4 Rapid Assay products. This had an impact on production levels of this product, resulting in backorders. Our engineers and supplier representatives have been working together to adjust processes in order to restore the yield to appropriate levels, the results of which are not yet determined. We are additionally evaluating and testing a resolution that may involve one or more alternative antigen suppliers and processes that may provide a path to restoring yield levels for this product. For each of these potential solutions, we will be conducting production validation and stability testing.

The Company is taking steps to improve its market presence for PIFA Heparin PF/4 Rapid Assay products including through the use of specialized Independent Sales Representatives (ISRs) and through a program to educate the marketplace through the preparation and publication of additional clinical studies and physician seminars on the risks associated with heparin induced thrombocytopenia. I am pleased to say we have significantly enhanced our ISR network across the US, focused on surgeons and surgical teams. At the core of our strategy is to influence the clinical pathway for the diagnosis of heparin induced thrombocytopenia and therefore drive sales of PIFA Heparin/PF4 Rapid Assay products. Earlier this month, we announced that our ISR coverage extended to 27 states and we expect this to increase further in the near-term.

With our rapidly expanding ISR coverage, working in tandem with our existing distribution partners, as well as our own technical sales personnel targeting large Integrated Delivery Networks, we remain confident in the growth potential of PIFA Heparin PF/4 Rapid Assay products.

The Company continues to pursue opportunities to accelerate the commercialization of BreathScan OxiChek™, the first commercialized Akers Wellness™ breath test which rapidly determines levels of oxidative stress in the body by measuring the levels of certain abundant free radicals. The Company is currently assessing distribution opportunities with companies specializing in weight loss and/or mass distribution through health-related multilevel marketing organizations. The Company is pursuing opportunities within the multilevel marketing segment.

We remain highly focused on driving profitable growth of our core commercialized products, currently led by PIFA Heparin/PF4 Rapid Assay products. We are building strong sales and distribution partnerships with extensive national coverage in order to help achieve this. At the same time, we continue to advance the research and development of targeted products that are aligned with our served markets and core capabilities, to further support our quest of enhancing business profitability and shareholder value. I look forward to reporting developments in our commercial and product development strategies in the future.”

John J. Gormally
Chief Executive Officer

Summary of Statements of Operations for the Three Months Ended March 31, 2018 and 2017

Revenue

Akers’ revenue for the three months ended March 31, 2018 totaled $302,475, a 55% decrease from the same period in 2017. The table below summarizes revenue by product line for the three months ended March 31, 2018 and 2017 as well as the percentage of change year-over-year:
  

Product Lines 3 Months Ended
March 31, 2018
  3 Months Ended
March 31, 2017
  Percent Change 
Particle ImmunoFiltration Assay (“PIFA”) $259,983  $560,921   (54)%
MicroParticle Catalyzed Biosensor (“MPC”)  18,950   85,659   (78)%
Rapid Enzymatic Assay (“REA”)  9,900   -   -%
Other  13,642   20,670   (34)%
Product Revenue Total $302,475  $667,250   (55)%
License and Service Fees  -   -   -%
Total Revenue $302,475  $667,250   (55)%

Revenue from the Company’s PIFA Heparin/PF4 Rapid Assay products decreased 54% to $259,983 (2017: $560,921) during the three months ended March 31, 2018, over the same period of 2017. The Company is taking steps to improve its market presence including the use of specialized Independent Sales Representatives (“ISRs”) and through a program to educate the marketplace through the preparation and publication of additional clinical studies and physician seminars on the risks associated with heparin induced thrombocytopenia.

During the three months ended March 31, 2018, we experienced lower yields in the process of extracting antigen from the supplier provided platelets used to produce our PIFA Heparin product.   At these yield levels, our production of this product was under target levels, resulting in backorders.    Our engineers and representatives from our supplier have been working together to adjust our processes in order to restore the yield to appropriate levels, the results of which are not yet determined.

Furthermore, we are evaluating and testing a resolution that may involve one or more alternative antigen suppliers and processes that may provide a path to restoring yield levels for this product.   For each of these potential solutions, we will be conducting production validation and stability testing.

The Company’s dedicated technical sales account executives are supporting over 300 sales representatives of Akers’ U.S. distribution partners, Cardinal Health, Thermo Fisher Scientific and Diagnostica Stago. The Company’s relationship-building initiative with our partners has delivered a measurable increase in product trials and adoptions. Domestic sales for the three months ended March 31, 2018, of our distributors, Cardinal Health and Thermo Fisher Scientific, accounted for $209,471 of the total PIFA Heparin/PF4 Rapid Assay sales as compared to $454,656 for the same period of 2017.

The Company’s MPC product sales decreased by 78% to $18,950 (2017: $85,659) during the three months ended March 31, 2018. Sales of the Company’s Metron and BreathScan Alcohol products accounted for the revenue.

The Company’s REA products generated $9,900 (2017: $-) during the three months ended March 31, 2018. The Company’s re-introduced Tri-Cholesterol product is produced with this technology.

Other operating revenue decreased to $13,642 (2017: $20,670) during the three months ended March 31, 2018. The category is made up of the sales of miscellaneous raw material components, sub-assembled products and fees billed for shipping and handling charges.

The table below summarizes our revenue by geographic region for the three months ended March 31, 2018 and 2017 as well as the percentage of change year-over-year:

Geographic Region 3 months ended
March 31, 2018
  3 months ended
March 31, 2017
  Percent
Change
 
United States $294,733  $617,691   (52)%
People’s Republic of China  -   21,030   (100)%
Rest of World  7,742   28,529   (73)%
Total Revenue $302,475  $667,250   (55)%

Domestic sales represent the most significant portion of the Company’s revenue, contributing 97% (2016: 93%). The primary sales and marketing efforts are concentrated on expanding the Company’s domestic market share in the rapid clinical diagnostic and health and wellness segments. The introduction of the Tri-Cholesterol test has allowed the Company to re-enter the retail market.

Gross Margin

The Company’s gross margin declined to 2% (2017: 61%) for the three months ended March 31, 2018. Increases in direct personnel costs ($96,824 (2017: $65,353)) and the transfer of raw materials and sub-assemblies from/to inventory for production ($13,419 (2017: $133,111)) were offset by a decrease in services provided by sub-contractors for material preparation, assembly and packaging to $600 (2017: $113,761).

During the three months ended March 31, 2018, low yields during antigen extraction processes and the addition of a production laboratory technician to the direct manufacturing staff in anticipation of increased demand for the PIFA and REA platform products significantly affected direct costs of production.

Cost of production also includes significant components that are fixed expenses which effectively reduces the gross margin when revenue declines. These expenses include the cost of personnel, manufacturing and warehousing space, depreciation of equipment and other similar items.

Cost of sales for the three months ended March 31, 2018 totaled $297,500 (2017: $258,721). Direct cost of sales increased to 44% of product revenue while other cost of sales increased to 54% for the three months ended March 31, 2018 as compared to 16% and 23% respectively for the same period in 2017.

Direct cost of sales for the three-month period ended March 31, 2018 were $132,653 (2017: $106,129). Other cost of sales for the three months ended March 31, 2018 were $164,847 (2017: $152,593).

General and Administrative Expenses

General and administrative expenses for the three months ended March 31, 2018, totaled $915,532, which was a 16% increase as compared to $790,529 for the three months ended March 31, 2017.

The table below summarizes our general and administrative expenses for the three months ended March 31, 2018 and 2017 as well as the percentage of change year-over-year:

Description 3 Months Ended
March 31, 2018
  3 Months Ended
March 31, 2017
  Percent Change 
Personnel Costs $306,936  $334,527   (8)%
Professional Service Costs  303,937   191,753   59%
Stock Market & Investor Relations Costs  114,166   82,386   39%
Other General and Administrative Costs  190,493   181,863   5%
Total General and Administrative Expense $915,532  $790,529   16%

Personnel expenses decreased by 8% for the three months ended March 31, 2018 as compared to the same period of 2017. A reduction in bonuses included in salaries and wages to $243,941 (2017: $277,456) was offset by increases in auto allowance and employee benefit expenses of $19,938 (2017: $14,286).

Professional service costs increased 59% for the three months ended March 31, 2018 as compared to the same period of 2017. A significant increase in legal fees ($278,277 (2017: $138,688)) were offset partially by a decrease in engineering fees ($6,475 (2017: $30,090)) resulting in the change. The Company replaced its SEC attorneys in February 2018 and continues to incur legal expenses related to ongoing litigation (Part II, Item 1).
  
Investor relations totaled $52,573 (2017: $39,354) and transfer agent fees of $21,402 (2017: $7,369) were the major contributors to the 39% increase in stock market and investor relations costs for the three months ended March 31, 2018.

Other general and administrative expenses increased by 5%. This increase is the result of increases in building expenses of $74,909 (2017: $45,253) for the addition of the Ramsey, New Jersey satellite office and licenses, permits and fees of $16,374 (2017: $4,869).

Sales and Marketing Expenses

Sales and marketing expenses for the three months ended March 31, 2018 totaled $500,152 which was a 15% decrease compared to $588,934 for the three months ended March 31, 2017.

The table below summarizes our sales and marketing expenses for the three months ended March 31, 2018 and 2017 as well as the percentage of change year-over-year:

Description 3 Months Ended
March 31, 2018
  3 Months Ended
March 31, 2017
  Percent Change 
Personnel Costs $321,708  $335,832   (4)%
Professional Service Costs  71,559   65,046   10%
Royalties and Outside Commission Costs  27,855   45,133   (38)%
Other Sales and Marketing Costs  79,030   142,923   (45)%
Total Sales and Marketing Expenses $500,152  $588,934   (15)%

The US market has been divided into two regional zones, each with a business director that is responsible for recruiting and supporting ISRs and independent manufacturing representatives (“IMRs”) to target large integrated delivery networks and individual facilities. This strategy requires more experienced and technically knowledgeable sales personnel to interact with surgeons, executive management, laboratory and medical directors. The Company has increased its sales and marketing staff from 4 members on March 31, 2017 to 5 as of March 31, 2018.

Personnel costs decreased in the three months ended March 31, 2018 as compared to the same period of 2017. A reduction in compensation, bonuses and commissions to $257,352 (2017: $293,269) primarily due to changes in the bonus and compensation plan was offset by increases in auto allowance and employee benefit expenses of $31,648 (2017: $14,208).

The Company renegotiated or eliminated several consulting arrangements targeted at improving market penetration or identifying marketing or distribution partners during the first half of 2017. The result was a significant reduction of in professional services for the three months ended March 31, 2017. The Company continually monitors the effectiveness of the remaining agreements and a few have been expanded to provide additional services resulting in an increase in professional service costs during the three months ended March 31, 2018.

The legal settlement with ChubeWorkx Guernsey, Ltd (“ChubeWorkx”), signed on August 11, 2016, requires the Company to pay a 5% royalty on adjusted gross sales to ChubeWorkx on a quarterly basis. During the three months ended March 31, 2018, this royalty totaled $31,689 (2017: $32,279). The Company received a credit for an overpayment of commissions to an IMR for $14,208 which contributed to the decline in royalty and outside commission costs during the three months ended March 31, 2018.

The Company recognized significant reductions in advertising expenses ($12,167 (2017: $54,700)) and trade show expenses ($885 (2017: $29,523)) plus smaller reductions in several other operating categories that resulted in a 45% reduction in other sales and marketing costs.
  
Research and Development

Research and development expenses for the three months ended March 31, 2018 totaled $439,970, which was a 26% increase as compared to $348,442 for the three months ended March 31, 2018.

The table below summarizes our research and development expenses for the three months ended March 31, 2018 and 2017 as well as the percentage of change year-over-year:

Description 3 Months Ended
March 31, 2018
  3 Months Ended
March 31, 2017
  Percent Change 
Personnel Costs $299,212  $284,949   5%
Clinical Trial Costs  905   150   503%
Professional Service Costs  89,276   29,124   207%
Other Research and Development Costs  50,577   34,219   48%
Total Research and Development Expenses $439,970  $348,442   26%

Personnel costs increased 5% during the three months ended March 31, 2018 as compared to the same period of 2017. The Company expanded the research and development staff by one position to assist with the development of the health and wellness products.
  
Professional services consisted of fees paid to engineering consultants to address production mold designs, specialized tooling and manufacturing process development, regulatory consultants to assist with governmental filings and facility certifications and the medical director. Engineering service costs increased to $72,496 (2017: $17,705), fees for the consulting medical director totaled $9,000 (2017: $6,000) and other regulatory consulting fees totaled $5,280 (2017: $-) in the three months ended March 31, 2018.

Increases in laboratory supplies ($15,642 (2017: $8,059)) and the utilization of internal resources ($16,037 (2017: $1,887)) resulted in an increase of 48% for other research and development costs during the three months ended March 31, 2018.

The following table illustrates research and development costs by project for the three months ended March 31, 2018 and 2017, respectively:

Project 2018  2017 
Breath Alcohol $-  $4,669 
Chlamydia Trachomatis  32,690   51,709 
Heparin/PF4  46,593   11,499 
Ketone  -   1,707 
KetoChek™ / OxiChek™  342,605   89,724 
Metron  9,723   - 
Other Projects  -   59,688 
SeraSTAT  -   5,610 
Tri-Cholesterol  8,359   123,244 
VIVO  -   592 
Total R&D Expenses: $439,970  $348,442 

Other Income and Expense

Other income, net of expense for the three months ended March 31, 2018 totaled $33,466, which was a 160% increase as compared to $12,883 for the three months ended March 31, 2017.
  
The table below summarizes our other income and expenses for the three months ended March 31, 2018 and 2017 as well as the percentage of change year-over-year:

Description 3 Months Ended
March 31, 2018
  3 Months Ended
March 31, 2017
  Percent Change 
Currency Translation Gain/(Loss) $(2,875) $10,346   (128)%
Realized Gains on Investments  -   1,051   (100)%
Interest and Dividends  36,341   1,486   2,346%
Total Other Income, Net of Expenses $33,466  $12,883   160%

Losses associated with foreign currency transactions totaled $2,875 during the three months ended March 31, 2018 as compared to a gain of $10,346 the same period of 2017, primarily a result of the increased strength of the British Pound as compared to the US Dollar.

Realized gains, interest and dividend income increased to $36,341 (2017: $2,537). The Company’s available capital for investment activities increased significantly due to the capital raise in December 2017 and the subsequent exercises of warrants during the three months ended March 31, 2018 resulting in the increase in investment income.

Income Taxes

As of March 31, 2018, the Company does not believe any uncertain tax positions exist that would result in the Company having a liability to the taxing authorities. The Company’s policy is to classify interest and penalties related to unrecognized tax benefits, if and when required, as part of interest expense and general and administrative expense, respectively in the consolidated statement of operations.

Liquidity and Capital Resources

For the three months ended March 31, 2018 and 2017, the Company generated a net loss attributable to shareholders of $1,859,991 and $1,349,270, respectively. As of March 31, 2018 and December 31, 2017, the Company has an accumulated deficit of $106,705,838 and $104,845,847 and had cash and marketable securities totaling $9,326,277 and $5,450,039, respectively.

Our primary focus is to expand the global distribution of our PIFA Heparin PF/4 rapid assays. The Company continues commercialization of its BreathScan OxiChek, BreathScan Lync Readers, METRON, BreathScan Alcohol detection devices and the Tri-Cholesterol assay and development activities for PIFA PLUSS Chlamydia rapid assay and BreathScan KetoChek products.

We expect to continue to incur losses from operations for the near-term and these losses could be significant as we incur product development, clinical and regulatory activities, contract consulting and other product development and commercialization related expenses. We expect that our current working capital position will be sufficient to meet our estimated cash needs for at least the next twelve months. We are closely monitoring our cash balances, cash needs and expense levels. The accompanying financial statements do not include any adjustments to reflect the possible future effects on the recoverability and classification of assets or the amounts and classification of liabilities that might result in the possible inability of the Company to continue as a going concern.
  
We expect that our primary expenditures will be to continue development of BreathScan KetoChek via the enrollment of patients in clinical trials.to support performance claims and generate studies in peer-reviewed journals to support product marketing. We will also continue to support commercialization and marketing activities of in-line products PIFA Heparin/PF4 rapid assays, PIFA PLUSS® PF4, breath alcohol detectors, METRON BreathScan OxiChek and BreathScan Lync Readers globally. Based upon our experience, clinical trial and related regulatory expenses can be significant costs. Steps to achieve commercialization of emerging products will be an ongoing and evolving process with expected improvements and possible subsequent generations being evaluated for commercialized and emerging tests. Should we be unable to achieve FDA clearance for products that require such regulatory “approval”, develop performance characteristics for rapid tests that satisfy market needs, or generate sufficient revenue from commercialized products, we would need to rely on other business or product opportunities to generate revenue and costs that we have incurred for the patents may be deemed impaired.

Capital expenditures for the three months ended March 31, 2018 were $37,827 (2017: $16,774). Capital expenditures, primarily for production, laboratory and facility improvement costs for the year ending December 31, 2018 are expected to be approximately $250,000. As per the Company’s lease agreement, the owner of the facility will be handling most of the facility upgrades, and we anticipate financing any production and laboratory capital expenditures through working capital.

The Company may enter into generally short-term consulting and development agreements primarily for testing services and in connection with clinical trials conducted as part of the Company’s development process which may include activities related to the development of technical files for FDA 510(k) clearance submissions. Such commitments at any point in time may be significant but the agreements typically contain cancellation provisions.

We lease our manufacturing facility which also contains our administrative offices. Our current lease was executed January 1, 2013 and is effective through December 31, 2019. The Company has leased this property from the current owner since 1997. The Company executed a lease for a satellite office in Ramsey, New Jersey on June 23, 2017 which expires May 31, 2019. The satellite office supports members of executive management and the sales and marketing team with convenient access to resources in the greater New York City area.

Due to recent market events that have adversely affected all industries and the economy as a whole, management has placed increased emphasis on monitoring the risks associated with the environment, particularly the recoverability of current assets, the fair value of assets, and the Company’s liquidity. At this point in time, there has not been a material impact on the Company’s assets and liquidity. Management will continue to monitor the risks associated with the environment and their impact on the Company’s results.

The table below summarizes our cash flows for the three months ended March 31, 2018 and 2017 as well as the percentage of change year-over-year:

Description 3 Months Ended
March 31, 2018
  3 Months Ended
March 31, 2017
  Percent
Change
 
Cash at beginning of period $438,432   $72,700    503%
Loss from operations  (1,859,991 )  (1,349,270 )  38%
Adjustments            
Non-Cash Activities  90,858    79,157    15%
Cash Used in Operating Activities            
Cash Consumed by Operating Activities  (591,939 )  (439,121 )  35%
Cash Contributed by Operating Activities  560,700    147,571    280%
Net Cash Consumed by Operating Activities $(1,800,372)   $(1,561,663)   15%
Cash Flows from Investing Activities            
Cash Consumed by Investing Activities  (4,010,213 )  (1,218,984 )  229%
Cash Contributed by Investing Activities  302,095    1,095,218    (72)%
Cash Flows from Financing Activities            
Cash Consumed by Financing Activities  -    -    -%
Cash Contributed by Financing Activities  5,717,325    3,697,811    55%
Cash at end of period $647,267    $2,085,082    (69)% 

  
Our net cash consumed by operating activities totaled $1,800,372 during the three months ended March 31, 2018. Cash was consumed by the loss of $1,859,991 plus non-cash adjustments of $56,452 for depreciation and amortization of non-current assets, $3,469 for the amortization of deferred compensation, $24,460 for the reserve and write-off for obsolete inventory, $7,887 for share based compensation to employees and $12,545 for share based compensation to non-employees less $13,955 for accrued interest and dividends on marketable securities. For the three months ended March 31, 2018, decreases in trade receivables of $547,773 and prepaid expenses – related party of $12,927 provided cash, primarily related to routine changes in operating activities. A net increase in deposits and other receivables of $12,905, deposits and other receivables – related party of $33,243, inventory of $50,795, prepaid expenses of $89,497 and decreases in trade and other payables of $384,683 and trade and other payables – related party of $20,816 consumed cash from operating activities.

Our net cash consumed by operating activities totaled $1,561,663 during the three months ended March 31, 2017. Cash was consumed by the loss of $1,349,270 plus non-cash adjustments of $60,718 for depreciation and amortization of non-current assets, $5,203 for the fair value of restricted Common Stock issued for services and $5,036 for share based compensation to employees less $326 for accrued interest and dividends on marketable securities and $32,333 for a reduction in the reserve for obsolete inventory. For the three months ended March 31, 2017, decreases in trade receivables of $43,351, trade receivables – related parties of $7,458, deposits and other receivables of $10,692, prepaid expenses of $69,930, and prepaid expenses – related party of $16,140 provided cash, primarily related to routine changes in operating activities. A net increase in inventories of $100,878 and decreases in trade and other payables of $200,059 and trade and other payables – related party of $138,184 consumed cash from operating activities.

Investing and Financing Activities

The table below summarizes our cash flows from investing and financing activities for the three months ended March 31, 2018 and 2017 as well as the percentage of change year-over-year:

Description 3 months ended
March 31, 2018
  3 months ended
March 31, 2017
  Percent Change 
Cash Flows from Investing Activities            
Cash Consumed by Investing Activities  (4,010,213)  (1,218,984)  229%
Cash Contributed by Investing Activities  302,095   1,095,218   (72)%
Cash Flows from Financing Activities            
Cash Consumed by Financing Activities  -   -   -%
Cash Contributed by Financing Activities  5,717,325   3,697,811   55%

The Company’s net cash provided by investing and financing activities totaled $6,019,420 (2017: $4,793,028) during the three months ended March 31, 2018. Cash of $4,010,213 (2017: $1,218,984) was consumed by capital expenditures and the purchase of marketable securities. Proceeds from the sale of marketable securities contributed cash of $302,095 (2017: $1,095,218) and net proceeds from the public and private placements of common and Series B preferred stock and the exercise of warrants for Common Stock contributed $5,717,325 (2017: $3,697,811) for the three months ended March 31, 2018.

About Akers Biosciences, Inc.

Akers Bio develops, manufactures, and supplies rapid screening and testing products designed to deliver quicker and more cost-effective healthcare information to healthcare providers and consumers. The Company has advanced the science of diagnostics while responding to major shifts in healthcare through the development of several proprietary platform technologies. The Company's state-of-the-art rapid diagnostic assays can be performed virtually anywhere in minutes when time is of the essence. The Company has aligned with major healthcare companies and high volume medical product distributors to maximize product offerings, and to be a major worldwide competitor in diagnostics.

Additional information on the Company and its products can be found at www.akersbio.com. Follow us on Twitter @AkersBio.

Cautionary Note Regarding Forward Looking Statements

Statements contained herein that are not based upon current or historical fact are forward-looking in nature and constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Such forward-looking statements reflect the Company's expectations about its future operating results, performance and opportunities that involve substantial risks and uncertainties. Such statements may include, without limitation, statements with respect to the Company’s plans, compliance with the requirements of various regulatory agencies and certain NASDAQ Stock Market listing rules, objectives, projections, expectations and intentions and other statements identified by words such as “projects,” “may,” “will,” “could,” “would,” “should,” “believes,” “expects,” “anticipates,” “estimates,” “intends,” “plans,” “potential” or similar expressions, as they relate to the Company, its subsidiaries, or its management. These statements are based upon the current beliefs and expectations of the Company’s management and are subject to significant risks and uncertainties, including those detailed in the Company’s filings with the Securities and Exchange Commission. Actual results, performance, prospects, and opportunities to may differ materially from those set forth in, or implied by, the forward-looking statements. These forward-looking statements involve certain risks and uncertainties that are subject to change based on various factors (many of which are beyond the Company’s control). The Company undertakes no obligation to publicly update any forward-looking statements, whether as a result of new information, future events or otherwise, except as required by applicable law.


Enquiries:

Akers Biosciences, Inc.
John J. Gormally, Chief Executive Officer
Tel. +1 856 848 8698

Vigo Communications (Global Public Relations)
Ben Simons / Fiona Henson
Tel. +44 (0)20 7390 0234
Email: akers@vigocomms.com