VICTHOM DISCLOSES 2010 ANNUAL AND FOURTH QUARTER FINANCIAL RESULTS

QUEBEC, April 27 /CNW Telbec/ - Victhom Human Bionics Inc. (("Victhom") (TSXV: VHB)) today reported its 2010 annual and fourth quarter financial results.

Mr. Normand Rivard, President and CEO of Victhom, said: "During 2010, we have continued making progress towards our objective to bring products from both of our divisions, the Power Knee and the Neurostep®, to the market and generate revenues and value for our shareholders on a going-forward basis. Despite the delays in the development of the Neurostep® System commercial version, the contribution of our partner Otto Bock allowed our joint venture Neurostream to continue to make good progress in preparation for the European market launch and the start of the U.S. clinical trial". He added: "We are also very proud of the fact that our partner Ossur has recently announced the commercial launch of the second generation of the Power Knee and that we already received our first royalty payments from the sales of that product". Also, he said: "I believe the Company is well positioned for commercial and financial success in the future from these products".

2010 Annual and Fourth Quarter Results

For the year ended on December 31, 2010, the Company recorded revenues of $60,143 compared with $1,570,476 in 2009, representing a decrease of $1,510,333 or 96.2%. For the fourth quarter of 2010, the Company recorded revenues of $18,956 compared with $128,642 in 2009, a decrease of $109,686 or 85.3%. The decrease is attributable to the restructuring in 2009 of our Biotronix business and the transfer of the product support and development activities to Ossur.

R&D expenses, before tax credits and grants, amounted to $4,913,009 for the year ended on December 31, 2010, compared with $8,411,117 for the same period in 2009, representing a decrease of $3,498,108 or 41.6%. The decrease is mainly due to the reduction of activities in the Biotronix division and to the transfer of our Neurobionix division activities into the Neurostream joint venture, in which the Company has a 44.4% interest.

For the fourth quarter of 2010, R&D expenses, before tax credits and grants, amounted to $1,245,436 compared with $1,381,860 in 2009, a decrease of $136,424 or 9.9%. The decrease is mainly due to lower expenditures in material and professional fees that can be explained by the Neurostep® commercial version being in the validation and verification development phase in preparation of its registration with the European regulatory authorities. The decrease is partially offset by the change in accounting estimate which resulted in an increase of the amortization expenses of property, plant and equipment and intangible assets.

For the year ended on December 31, 2010, G&A expenses, net of non-cash stock-based compensation charges of $663, amounted to $1,714,178 compared with $2,138,258 for the same period in 2009, representing a decrease of $424,080 or 19.8%. The decrease in G&A expenses is mainly due to staff reduction in administrative functions and to lower depreciation of property, plant and equipment. The decrease is partially offset by non-recurring professional fees of $358,048 in May 2010 related to amended investment tax credits compared with non-recurring professional fees of $94,424 in June 2009 related to the completion of the transactions approved by the plan of arrangement.

For the fourth quarter of 2010, G&A expenses, net of non-cash stock-based compensation charges of $165, amounted to $413,143 compared with $299,487 for the same period in 2009, an increase of $113,656 or 38.0%. The increase is mainly due to the change in accounting estimate which resulted in an increase of the amortization expenses of property, plant and equipment and intangible assets. The increase is partially offset by the staff reduction in administrative functions.

For the year ended on December 31, 2010, financial expenses, net of exchange rate gain on preferred shares of $395,273, amounted to $1,554,741 compared with financial expenses, net of exchange rate gains on convertible debentures and preferred shares of $2,394,500, for the same period in 2009, which amounted to $2,061,295, representing a decrease of $506,554 or 24.6%. Financial expenses for the fourth quarter of 2010, net of exchange rate gain on preferred shares of $113,649, amounted to $395,868 compared with financial expenses, net of exchange rate gain on preferred shares of $154,116, for the same period in 2009, which amounted to $364,520, representing an increase of $31,348 or 8.6%. The increase is mainly explained by higher interests on the note payable and the liability component of the preferred shares.

For the year ended on December 31, 2010, the consolidated net loss amounted to $6,023,522 compared with a net income of $1,685,867 for the same period in 2009, representing an increase in loss of $7,709,389 or 457.3%. The increase is mainly explained by the special non-cash gains of $9,796,471 on the transactions approved by plan of arrangement in June 2009. The net loss, net of non-cash items of $1,560,346, amounted to $4,463,176 for the year ended on December 31, 2010, compared with a net loss, net of non-cash items of $9,213,275 for the same period in 2009, which amounted to $7,527,408, representing a decrease of $3,064,232 or 40.7%. The decrease is mainly explained by the staff reduction in administrative functions and the R&D expenses from the Neurobionix division which, since May 1, 2009, have been presented using the proportionate consolidation method with a 44.4% interest.

The net loss, net of non-cash items of $487,634, for the fourth quarter ended on December 31, 2010, amounted to $962,073 compared with a net loss, net of non-cash items of $276,481, for the same period in 2009, which amounted to $1,808,379, representing a decrease of $846,306 or 46.8%. The decrease in net loss, net of non-cash items, is mainly the result of the restructuring of the Biotronix division and the transfer of our Neurobionix division activities into the Neurostream joint venture, in which the Company has a 44.4% interest. The decrease is partially offset by lower revenues from the Biotronix division.

Shareholders' equity (deficiency) amounted to $(3,676,682) on December 31, 2010, compared with $1,080,520 on December 31, 2009. Total assets amounted to $8,130,753 on December 31, 2010, compared with $10,859,697 on December 31, 2009.

Financial Situation

As of December 31, 2010, the Company had $1,545,535 in cash and short-term investments. For the year ended on December 31, 2010, the net increase in cash was $388,000 compared with a decrease of $7,967 for the same period in 2009. During 2010, the cash was mainly provided by the receipt of investment tax credits receivable and a note payable from partner Otto Bock in the Neurostream joint venture, which was partially offset by cash used in operating activities.

The Company expects to incur additional expenditures to complete the development and marketing of its Neurobionix products. Management believes that, with its financial situation, the parent company Victhom will have sufficient liquidity to support its cash flow requirements for at least the next twelve months. However, management believes that its joint venture Neurostream will require additional financing to fund its continuing operations.

As of April 27, 2011, even though Neurostream had not achieved a milestone that was due on May 1, 2010, Otto Bock has continued funding Neurostream's operations on a voluntary basis. The outcome of this situation is dependent on a number of factors that are not entirely under the Company's control. As a result, there is uncertainty as to whether the Company's joint venture will have the ability to continue as a going concern.

Even so, the audited consolidated financial statements ended on December 31, 2010 do not reflect any adjustments that might be necessary if Neurostream is not successful in achieving the partnership milestones and in obtaining its required financing from its joint venture partner. Such adjustments could be material and could have a significant adverse effect on the Company's audited consolidated financial statements.

On April 22, 2011, the number of common shares outstanding totaled 18,529,313 while 248,050 options were outstanding under the stock option plan. The outstanding options are exercisable at a weighted average exercise price of $6.21 per share. On April 22, 2011, the number of preferred shares outstanding totaled 18,065,361 after conversion of 3,000,000 preferred shares into common shares during 2010 (1,877,139 in 2009).

About Victhom

Victhom discovers, develops and manufactures bionic devices involved in the treatment of a variety of physical and physiological dysfunctions. Victhom Biotronix business developed the Power Knee, the world's first and only motor-powered, artificially intelligent prosthesis for above-knee amputees. The Power Knee is commercialized by Ossur, a global leader in the orthotics and prosthetics ("O&P") market. Victhom also has a 44.4% interest in Neurostream Technologies, General Partnership, a joint venture with Otto Bock HealthCare, whose objective is to bring to market the Neurostep® System, and to develop neuromodulation products in other indications such as sleep apnea.

FORWARD-LOOKING STATEMENTS

Some of the statements made herein may constitute forward-looking statements. These statements relate to future events or our future financial performance and involve known and unknown risks, uncertainties and other factors that may cause Victhom's actual results, performance or achievements to be materially different from those expressed or implied by any of Victhom's statements. Actual events or results may differ materially. We disclaim any intention, and assume no obligation, to update these forward-looking statements.

SOURCE VICTHOM HUMAN BIONICS INC.

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Source:   Victhom Human Bionics Inc.
 
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Normand Rivard
President & CEO
Victhom Human Bionics Inc.
Tel.: 418-872-5665 ext 107
Fax: 418-864-7034
normand.rivard@victhom.com
www.victhom.com

 

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VICTHOM HUMAN BIONICS INC.

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