Annidis Corporation Reports 2011 Third Quarter Results

OTTAWA, Nov. 21, 2011 /CNW/ - Annidis Corporation (TSXV:RHA), creator of the Annidis RHA™ imaging technology that assists eye-care professionals screen, detect, diagnose and manage ocular diseases including glaucoma, age related macular degeneration and diabetic retinopathy, today announced its 2011 third quarter financial results for the three and nine month periods ended September 30, 2011.

Highlights

  • Revenue of $60,000 for Q3 2011 (based on an average installed base of 6 units), compared to $7,000 in Q3 2010 (based on an average installed base of 2 units)
  • Currently have 16 installed and committed contracts in Canada and 7 in the U.S. and an additional 9 contracts in Canada and 10 in the U.S. are awaiting final signature
  • Short term pipeline has 75 clinics in Canada and 200 clinics in the U.S. that the Company has presented to and is in discussions with
  • Received US FDA 510k clearance for the RHA™ ocular pathology management system
  • Appointed ophthalmic industry veterans Kevin McKnought, VP Sales U.S. and Mike Shuler, Director Business Development U.S. Engaged 11 of the top U.S. regional independent sales organizations to add Annidis RHA™ to their portfolio of products and provide national coverage, cumulatively covering over 30,000 optometrists and 10,000 ophthalmologists
  • Deployed the first RHATM device into ophthalmology clinic in the U.S.
  • Appointed Dr. Robert G. Devenyi, the Ophthalmologist-in-Chief and Director of Retinal Services at the Donald K. Johnson Eye Center at the University Health Network (UHN) to the Board of Directors
  • Have extended our current technology to allow it to image animals in clinical studies, providing a significant tool for pharmaceutical and research organizations in drug development and eye disease management

"Our growing sales demonstrate the clinical and financial benefit our RHATM device provides to practitioners," said Gerald Slemko, the Chief Executive Officer of Annidis. "With regulatory clearance to sell our device in the U.S., we are pursuing an aggressive growth strategy across North America. We currently have a strong sales pipeline with a significant number of contracts in negotiations, and we will continue to expand our footprint across Canada and the U.S. through direct sales and exploring potential partnership opportunities. We also continue leveraging our LED based multi-spectral imaging (MSI) platform towards development of new and improved imaging products in the eye care market. We recently demonstrated the capability to non-invasively image the retina and choroid of rats using the same high resolution MSI imaging platform with only minor modifications. This will allow us to enter the large pharmaceutical research market where investigations and trials using animal based models of human eye diseases contribute greatly to the fight against sight threatening illness. We plan to deploy this new camera into research markets during the first half of 2012."

Financial Highlights

The Company recorded contract revenues earned from the deployment of medical devices for the three and nine months ended September 30, 2011, of $60,000 and $141,000, compared to $7,000 and $24,000 for the same periods in 2010. The increase in recorded revenue is attributable to the increase in the number of revenue generating medical devices deployed in clinics in the latter half of 2010 and during 2011.

Total general, administrative and operation expenses for the three months and nine months ended September 30, 2011, were $621,000 and $1,204,000, compared to $296,000 and $775,000 for the corresponding periods in 2010. This increase is largely attributed to increased staff, increase in professional fees and consulting costs, and higher occupancy and office related expenses resulting from the increase in staffing levels.

Research and development expenses for the three months and nine months ended September 30, 2011, were $358,000 and $720,000, compared with $219,000 and $358,000 in 2010. The increase is primarily due to higher staff costs due to addition of new personnel, increased professional fees incurred on patent filings, increased spending on research materials, and a reduction in the amount of investment tax credit recorded due to changes in the Company's tax status resulting from the Qualifying Transaction.

Net loss was $1,276,000 or loss of $0.02 per share and loss of $5,005,000 or loss of $0.10 per share, for the three-month and nine-month periods ended September 30, 2011, compared with the loss of $756,000 or loss of $0.02 per share and loss of $1,731,000 or loss of $0.04 per share for the corresponding periods in 2010. The increase in reported loss is primarily attributed to higher operating costs and expenses resulting from the listing expenses associated with the Qualifying Transaction, financing transaction expenses incurred by the Company on the Qualifying Transaction, and an increase in the stock-based compensation expense.

During the three months and nine months ended September 30, 2011, the Company used cash of $882,000 and $2,644,000 for operating activities as compared to $805,000 and $2,050,000 for the corresponding periods of 2010.

As at September 30, 2011, the Company had cash on hand of $581,000 compared to $22,000 as at December 31, 2010. The increase was due to the proceeds of $3,337,000 from the issuance of share and warrant units on the private placement and proceeds from $1,009,000 on the exercise of warrants, offset operating losses, repayment of promissory notes, convertible debenture and share issuance costs.

Total current liabilities and long term liabilities were $3,591,000 at September 30, 2011, compared to $5,990,000 at December 31, 2010.

As at September 30, 2011, the Company's working capital deficiency was $1,074,000 compared to a working capital deficiency of $2,353,000 as at December 31, 2010. The increase in working capital is attributed to the proceeds from the issuance of share and share unit warrants, the reduction in promissory notes through conversion into equity or long-term convertible promissory notes and repayment.

About Annidis Corporation

Annidis (TSX-V:RHA) is dedicated to researching and developing instrumentation to assist in the early detection and monitoring of diseases of the eye. The Company's RHATM is an ocular pathology management system that integrates advanced multi-spectral imaging and analytic software for early detection and management of ocular pathologies such as glaucoma, age-related macular degeneration and diabetic retinopathy. The RHA system is the result of a multiyear research and development effort by the Annidis team in collaboration with leading eye care professionals and researchers in Canada including the Ottawa Eye Institute, Toronto Western Hospital, the School of Optometry in Montreal and numerous optometric clinics in Ontario.

This news release may contain "forward-looking information" within the meaning of applicable Canadian securities legislation.  Statements made in this news release, other than those concerning historical financial information, may be forward-looking and therefore subject to various risks and uncertainties.  The words "may", "will", "could", "should", "would", "suspect", "outlook", "believe", "plan", "anticipate", "estimate", "expect", "intend", "forecast", "objective", "hope", and "continue" (or the negative thereof), and words and expressions of similar import are intended to identify forward-looking statements.  Certain material factors or assumptions are implied in making forward-looking statements and actual results may differ materially from those expressed or implied in such statements.  Factors that could cause results to vary include those identified in the Company's Annual Information Form and other such filings with Canadian securities regulatory authorities, such as the applicability of patents and proprietary technology; possible patent ligation; regulatory approval of products in development; changes in government regulation or regulatory approval processes; government and third party reimbursement; dependence on strategic partnerships; intensifying competition; rapid technological change in the industry; anticipated future losses; the ability to access capital; and the ability to attract and retain key personnel.  All forward-looking information presented herein should be considered in conjunction with such filings.  Except as required by Canadian securities laws, the Corporation does not undertake to update any forward-looking statements; such statements speak only as of the date made.

ANNIDIS CORPORATION
Condensed Consolidated Statements of Financial Position
As at September 30, 2011, December 31, 2010 and January 1, 2010
[Unaudited]                  
          September 30     December 31   January 1
          2011     2010   2010
ASSETS                  
Current                  
  Cash       $ 581,370     $        22,248   $    192,630
  Restricted short-term investments          40,000     40,000       40,000
  Accounts receivable       104,080     60,799   22,113
  Government assistance receivable                    -         -   117,868
  Investment tax credits receivable       150,000     878,203   400,000
  Inventories       816,572     467,194              -
  Prepaid expenses         35,294             -     13,943
  Deferred financing charges                 -     15,399              -
                     
  Total current assets       1,727,316     1,483,843   786,554
  Property and equipment, net       578,302     331,888       45,819
  Intangible assets, net           5,716        27,389       48,596
                     
          $  2,311,334     $  1,843,120   $    880,969
LIABILITIES AND SHAREHOLDERS' EQUITY                  
Current                  
  Accounts payable and accrued liabilities       $     361,294     $     468,270     $    269,976
  Promissory notes payable                -     3,072,202   301,182
  Deferred government assistance                -           -      12,499
  Due to related parties       161,722     296,636       148,197
  Convertible debentures       2,278,620               -                 -
                     
  Total current liabilities       2,801,636     3,837,108      731,854
  Convertible debentures                -     2,152,788   2,007,343
  Convertible promissory notes       789,530            -               -
                     
          3,591,166     5,989,896   2,739,197
Shareholders' deficit                  
  Share capital       10,514,179     3,209,921   3,209,921
  Warrants       401,180     371,214   436,450
  Contributed surplus       918,693     380,538   243,007
  Deficit       (13,113,884)     (8,108,449)   (5,747,606)
                     
  Total shareholders' deficit       (1,279,832)     (4,146,776)   (1,858,228)
                     
          $  2,311,334     $  1,843,120   $     880,969
                     

ANNIDIS CORPORATION          
Condensed Consolidated Statements of Operations and Comprehensive Loss  
For the three and nine month periods ended September 30, 2011 and 2010      
[Unaudited]                        
          Three months ended   Nine months ended
          September 30   September 30
          2011     2010   2011     2010
                           
Revenues                        
  Contract revenues       $       60,325     $      7,170   $     141,027     $      24,170
  Interest and other income         2,167          -   3,809            94
          62,492     7,170   144,836     24,264
                           
Operating Costs and Expenses                        
  Research and development       357,711     219,214   720,200     358,200
  General, administrative and operations       620,810     295,726   1,203,918     775,435
  Sales and marketing       181,144     122,578   637,542     322,707
  Amortization of property and equipment       45,271     12,283   105,782     25,719
  Amortization of intangible assets       2,630     5,302   13,233     15,905
          1,207,566     655,103   2,680,675     1,497,966
                           
Loss from Operations       (1,145,074)     (647,933)   (2,535,839)     (1,473,702)
                           
  Interest and financing charges       30,902     80,358   193,749     160,995
  Interest on convertible debentures and notes       56,947     23,520   114,143     68,040
  Accretion on convertible notes       15,178          -   19,036             -
  Financing transaction costs       (50,835)          -   281,714             -
  Stock-based compensation       84,993     3,560   270,709     26,541
  Foreign exchange loss (gain)       (824)     341   (1,341)     2,061
  Loss on licensing agreement            -          -   8,440            -
  Listing expense       (5,607)          -   1,583,146             -
          130,754     107,779   2,469,596     257,637
                           
Net Loss and comprehensive loss for the period       $(1,275,828)     $(755,712)   $(5,005,435)     $ (1,731,339)
                           
Basic and diluted loss per share         $       (0.02)       $     (0.02)     $      (0.10)       $     (0.04)

ANNIDIS CORPORATION          
Condensed Consolidated Statements of Changes in Equity    
For the nine month periods ended September 30, 2011 and 2010    
[Unaudited]                
                Total
        Share   Contributed   Shareholders'
        Capital Warrants Surplus Deficit Deficit
        $ $ $ $ $
Balance as at January 1, 2010       3,209,921 436,450 243,007 (5,747,606) (1,858,228)
Value of warrants reclassified to contributed
surplus on expiry
                          -        (65,236)         65,236                     - -
Net loss and comprehensive loss for the period                           -                   -                   - (1,731,339) (1,731,339)
Share-based compensation expense                           -                   -         26,541 - 26,541
                 
Balance as at September 30, 2010       3,209,921 371,214 334,784 (7,478,945) (3,563,027)
                 
Balance as at January 1, 2011       3,209,921 371,214 380,538 (8,108,449) (4,146,776)
Exercise of share purchase warrants       1,216,883 (207,803)   - - 1,009,080
Common shares issued on conversion of
promissory notes and accrued interest
           1,728,468                   -                   - - 1,728,468
Common shares and warrants issued pursuant
to private placement
           3,206,523       130,477                   - - 3,337,000
Broker unit warrants issued in connection with
private placement
                          -         81,077                   - - 81,077
Share and warrant issuance costs              (512,599)        (19,089) - - (531,688)
Equity component of the conversion right on
the promissory note
                          -                   -       267,446 - 267,446
Net loss and comprehensive  loss for the period                           -                   -                   - (5,005,435) (5,005,435)
Share-based compensation expense                           -                   -       270,709 - 270,709
Fair value assigned to the shares on reverse
takeover transaction
           1,664,983                   -                   - - 1,664,983
Fair value assigned to the warrants on reverse
takeover transaction
                          -         45,304                   - - 45,304
                 
Balance as at September 30, 2011          10,514,179       401,180       918,693 (13,113,884)    (1,279,832)
                 

ANNIDIS CORPORATION          
Condensed Consolidated Statements of Changes of Cash Flows      
For the three and nine month periods ended September 30, 2011 and 2010      
[Unaudited]                        
          Three months ended   Nine months ended
          September 30   September 30
          2011     2010   2011     2010
                           
OPERATING ACTIVITIES                        
Net loss for the period       $(1,275,828)     $   (755,712)   $(5,005,435)     $(1,731,339)
Add items not involving cash                        
  Non-cash interest and financing expense       1,822     64,959   127,011     105,532
  Listing expense                 -               -   1,579,915     -
  Interest on convertible debentures and notes       56,947     23,520   114,143     68,040
  Loss on licensing agreement                 -              -   8,440     -
  Stock-based compensation       84,993       3,560   270,709     26,541
  Amortization of property and equipment       45,271     12,283   105,782     25,719
  Amortization of intangible assets       2,630       5,302   13,233     15,905
  Amortization of debenture issue costs         17,726     12,993   49,629     38,516
  Accretion of convertible debenture          15,178            -   19,036     -
          (1,051,261)     (633,095)   (2,717,536)     (1,451,086)
Changes in non-cash working capital items       169,291     (171,541)   73,760     (598,549)
                           
Cash used in operating activities       (881,970)     (804,636)   (2,643,776)     (2,049,635)
                           
INVESTING ACTIVITIES                        
Acquisition of property and equipment       (121,913)     (181,745)   (352,196)     (201,636)
                           
Cash used in investing activities       (121,913)     (181,745)   (352,196)     (201,636)
                           
FINANCING ACTIVITIES                        
Proceeds from warrants exercised             -          -   1,009,080     -
Proceeds from the issuance of promissory notes                 -     600,000   300,000     2,100,000
Cash received on Aumento Capital Corporation                 -         130,371     -
Repayment of promissory notes       (300,000)                -   (710,000)     -
Repayment of interest on promissory notes       (27,353)            -   (60,746)     -
Proceeds from the issuance of share and warrant units                 -             -   3,337,000     -
Convertible debenture and share issuance costs                 -             -   (450,611)     -
                           
Cash provided by (used in) financing activities       (327,353)     600,000   3,555,094     2,100,000
                           
Net increase (decrease)  in cash during the period       (1,331,236)     (386,381)   559,122     (151,271)
Cash, beginning of period       1,912,606     427,740   22,248     192,630
                           
Cash, end of period       $  581,370     $     41,359   $  581,370     $     41,359

SOURCE Annidis Corporation

For further information:

Gerald Slemko, CEO
Annidis Corporation
(519) 672-1524
Email: geralds@annidis.com

Babak Pedram
TMX Equicom
(416) 815-0700 ext. 264
Email: bpedram@equicomgroup.com


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