TUSTIN, Calif., Aug. 19 /PRNewswire-FirstCall/ -- AMDL Inc. (NYSE Alternext US: ADL), a US-based pharmaceutical company with major operations in China, today reported unaudited results and the filing of its Form 10-Q with the Securities and Exchange Commission ("SEC") for fiscal second quarter 2009.
For the three-month period ending June 30, 2009, AMDL reported revenues of approximately $3.2 million, a 35 percent decrease compared with revenues of $4.9 million in the second quarter of 2008. AMDL reported a comprehensive loss of approximately $8.0 million ($0.51 per share) in the second quarter of 2009, that included a one-time loss of approximately $4.2 million associated with the sale of YYB -- a wholly-owned foreign subsidiary of AMDL's China-based subsidiary Jade Pharmaceuticals Inc. (JPI), and a $1.9 million provision for doubtful accounts receivable from fourth quarter FY2008 sales of its newly launched Nalefen human placenta extract (HPE) based skin care product.
Sales for the second quarter were affected by commercial production delays for the Company's strongest selling Goodnak(TM) anti-aging injectable. Lack of commercial production was the result of a non-operational small-injectable production line, which was off-line while awaiting a mandatory 5-year GMP re-certification from the SFDA in China. As previously announced AMDL received initial re-certification in March 2009 and resumed full product production in July 2009. On a comparable basis before one-time charges, AMDL reported a loss of $0.51 per share during the second quarter of 2009, as compared to a $0.03 per share loss in the second quarter of 2008.
Gross profits for the second quarter FY2009 decreased to approximately $1.0 million compared to approximately $2.4 million for the same period in FY2008. Selling, general and administrative expenses for continuing operations of the Company were approximately $3.8 million for the quarter as compared to approximately $2.7 million for the same period in FY2008.
"The results we announced today are a clear indication we've encountered challenges with our China operations. With two consecutive down quarters, my top priority is to re-evaluate the business and take whatever necessary steps to position AMDL for the future," said AMDL Chairman and CEO Douglas MacLellan. "I am working closely with our US and China-based management teams and Board of Directors to scrutinize all aspects of AMDL's business - both in the US and China - with the goal of structuring operations in a manner that best suits the long-term growth and profitability of AMDL. We are well down the path in outlining a plan to focus AMDL's US operations solely on the In-Vitro Cancer Diagnostic and high-end skin care product markets with JPI organized and operated as a separate asset to AMDL. Based on the diversity of our China and US-based businesses, independent strengths of executive management and market potential of each of AMDL's operating divisions we are confident this path offers the greatest upside potential for AMDL and its shareholders."
AMDL Planned Spin-Off of JPI/JJB
AMDL believes the most prudent path to raising additional capital for our China-based operations is for JJB to complete one or more equity private placements during the third and fourth quarters of FY2009. Specifically, AMDL's China-based management team believes the strongest path for AMDL to monetize its investments in JPI/JJB is for JJB to then seek a public listing on the Growth Enterprise Market ("GEM") located in Shenzhen, China during the first half of 2010. AMDL's executive management team and Board of Directors are in agreement with JPI/JJB's management recommendations of a "spin-off" strategy and anticipate working with JPI/JJB to complete development plans with the goal of delivering potential returns for AMDL and its shareholders. It is anticipated during the third quarter of FY2009 AMDL and JPI/JJB will complete the agreements that will allow the Company to commence the spin-off process. Beginning in the third quarter of FY2009 AMDL expects to de-consolidate JPI/JJB in its financial statements and will account for this asset as an investment on its balance sheet. The de-consolidation accounting treatment is anticipated to create a significant one-time restructuring impairment charge.
With the planned monetization of JPI/JJB, AMDL continues to believe JPI/JJB has a promising future. The Company anticipates it may be able to sell off a portion or all of its ownership in JPI/JJB during the next 30 months; exit from its investment at or after any public listing; retain an equity stake in JPI/JJB if ownership is compelling; or position the subsidiary as a potential buyout target based on JPI/JJB's business and brand recognition. The goal of AMDL's executive management team and Board of Directors is to gain the best valuation possible for our JPI/JJB strategic asset.
As previously announced, AMDL began commercializing its regulatory approved Onko-Sure(TM) IVD cancer test this year and expects to initiate sales of its Elleuxe(TM) high-end skin care product line. The Company continues to make strong traction with its IVD division which has included the signing of a collaborative agreement with Mayo Clinic and securing its first customer and distributor partnerships with Precision Diagnostics Laboratories Inc. and GenWay Biotech Inc. AMDL anticipates generating approximately $1.5 million in revenue during 2009 from IVD and skin care product sales. Sales of Onko-Sure(TM) and Elleuxe(TM) are anticipated to expand in FY2010 based on the completion of additional international distribution agreements we are currently pursuing. Successful completion of new distribution agreements is dependent on securing additional financing for AMDL during the third quarter of FY2009.
Revised FY2009 Outlook
The spin-off process is anticipated to significantly affect AMDL's 2009 earnings and sales guidance, and as a result of restructuring efforts currently underway, AMDL has revised its FY2009 projections. AMDL now anticipates de-consolidating JPI and accounting for its operations as an investment in the 3rd quarter and JPI's management have indicated that they now anticipate that JPI will achieve gross revenues for FY2009 of between US$32 - $36 million and net income between US$4 - $6 million after taxes and before foreign currency translation gains or losses. This is on par with FY2008 financial results and represents revenues for the Company's China-based operations only.
New Brand Launch
On August 22, 2009, AMDL Inc. anticipates receiving shareholder approval in order to change its name to Radient Pharmaceuticals Corporation ("Radient Pharma"), with the goal of establishing a new corporate brand identity and its innovative and promising line of IVD & skin care products. The Company also anticipates launching a new corporate website which is expected to go live by the end of the third quarter of FY2009. The long-term success of Radient Pharma is based on significantly growing the sales of its IVD & skin care products and monetizing its investment in JJB. The Company intends to achieve this by securing adequate financing, broadening its distribution network and continuing to research, develop, and commercialize current and future products.
Mr. MacLellan continued, "We have made - and continue to make-- strong traction with our in vitro diagnostics division and the commercialization of AMDL's DR-70 cancer test. As previously mentioned, this includes the signing of a collaborative agreement with Mayo Clinic and securing various distributor partnerships in the US and Canada. We are also making marked progress with the development and commercialization of the Elleuxe(TM) brand of high-end skin care products scheduled for launch late in Q309 or early Q409. Most importantly, we remain diligent in our on-going cost containment efforts, especially in the wake of organizational changes underway."
AMDL continues to take proactive measures and is on track in reducing over $1.5 million of general & administrative expenses in FY2009 with the goal of increasing operational efficiencies and managing the business in an increasingly prudent manner. These cost containment activities include increased monitoring of discretionary spending and an anticipated 30% reduction in overall 3rd party service provider fees for accounting, legal, investor relations, and financial advisory and independent director services.
AMDL continues to work diligently to secure financing for corporate operations, JPI and AMDL Diagnostics, Inc. (ADI). On August 21, 2009, AMDL anticipates receiving approval from its shareholders for this issuance of up to 6.5 million shares of common stock, that can be used in a yet to be negotiated financing. Additionally JPI and ADI are in discussions with various investors interested in investing in these specific operations.
Going Concern Qualification
On April 15, 2009, AMDL filed with the SEC an Annual Report on Form 10-K in which included an audit opinion with a "going concern" explanatory paragraph which expresses doubt, based upon current financial resources, as to whether AMDL can meet its continuing obligations without access to additional working capital. The Company intends to raise additional capital and pursue expense reductions to ensure its ongoing financial viability. This disclosure is in compliance with the NYSE Alternext US Company Guide Rule 610(b) requiring a public announcement of the receipt of an audit opinion that contains a going concern qualification and does not reflect any change or amendment to the consolidated financial statements as filed. Further information regarding the going concern qualification is contained in AMDL's Annual Report on Form 10-K for the year ended December 31, 2008.
The Company will hold a conference call at 1:30 p.m. PDT/4:30 p.m. EDT on Friday, August 21, 2009, following our 10:30 a.m. Annual Meeting, to discuss second quarter 2009 results and results of the Annual Meeting. Listeners may access the call by dialing 1.877.360.1705 or 1.706.902.3245 for international callers, access code 26342319. A webcast will also be available through AMDL's website at www.amdl.com. A replay of the call will be available through September 1, 2009. For additional information on AMDL and its portfolio of products visit the Company's corporate website at www.amdl.com. For Investor Relations information contact Kristine Szarkowitz at email@example.com or 1.206.310.5323.
Headquartered in Tustin, CA with operations in China, AMDL Inc., along with its subsidiary, JPI, is a pharmaceutical company devoted to the research, development, manufacturing, and marketing of diagnostic, pharmaceutical, nutritional supplement, and cosmetic products. The Company employs over 510 people in the U.S. and China.
Forward Looking Statements
Safe Harbor Statement under the Private Securities Litigation Reform Act of 1995: The statements contained in this document include certain predictions and projections that may be considered forward-looking statements under securities law. These statements involve a number of important risks and uncertainties that could cause actual results to differ materially including, but not limited to, the performance of joint venture partners, as well as other economic, competitive and technological factors involving the Company's operations, markets, services, products, and prices. With respect to AMDL Inc., except for the historical information contained herein, the matters discussed in this document are forward-looking statements involving risks and uncertainties that could cause actual results to differ materially from those in such forward-looking statements.
AMDL Contact: Kristine Szarkowitz Director-Investor Relations firstname.lastname@example.org (Tel): 206.310.5323
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