Positive momentum continues at Immunotec Inc., sales increase of 38.2 % in its second quarter



    VAUDREUIL-DORION, QC, June 23 /CNW Telbec/ - IMMUNOTEC INC. (TSX Venture
Exchange: IMM) (the "Company" or "Immunotec"), is engaged primarily in the
development, manufacturing and marketing of health and wellness products which
are classified as dietary supplements or natural health products focusing on
the immune segment of this growing market. These products are distributed and
sold in Canada, United States and South Korea through a network marketing
system and in other countries under exclusive distributorship agreements.

    NET SALES

    For the quarter ended April 30, 2009, net sales were $12,691,686 compared
to $9,180,346 for the same period in 2008, an increase of $3,511,340 or 38.2%.
The commencement of operations in South Korea under the seamless network
marketing model in March 2009 resulted in net sales of $1,070,081. Other
markets also reported increases in volume, in Canada $916,617 or 20.1%, in the
United States $1,384,068 or 37.5% and export sales $140,574 or 15.1%.
    For the six-month period ended April 30, 2009, net sales were $22,795,284
compared to $17,824,761 for the same period in 2008, an increase of $4,970,523
or 27.9%. The commencent of operations in South Korea under the seamless
network marketing model in March 2009 resulted in net sales of $1,070,081.
Other markets also reported increases in volume, in Canada $1,297,636 or
14.2%, in the United States $2,591,178 or 37.1% and export sales $11,628 or
0.7%.

    NET EARNINGS (LOSS)

    The company incurred a net loss for the second quarter ended April 30,
2009 of ($617,536) or ($0.009) per share, compared to net earnings in the
second quarter of 2008 of $434,049 or $0.006 per share.
    For the six-month period ended April 30, 2009 the company recorded a net
loss of ($818,741) or ($0.012) per share, compared to net earnings of $745,110
or $0.011 per share.
    Strategically the Company elected to invest in marketing and recruiting
programs to capitalize on the opportunity created by the economic downturn.
These results relate directly to the Company's efforts to increase market
share in Canada and the United States via expansion of its distributor network
in addition to opening the Korean market:
    
    - New entry packs sold at a greater discount designed to increase the
      number of new distributors in Canada and the United States which
      resulted in lower margins in the second quarter.
    - Introduction of a new compensation plan effective February 1, 2009
      resulting in higher incentives paid to distributors during the
      transition period.
    - Selling, administrative and promotional expenses incurred in the first
      and second quarters relating to the start-up costs of the Company's
      Korean subsidiary which started its sales operations late in the second
      quarter, on March 20, 2009.
    - The payment of higher incentives to distributors in Korea for the
      contribution of a large distribution network. More than 4,000 new
      distributors joined the Immunotec business in South Korea.
    - Higher sales support expenses incurred by the four Regional Sales
      Directors to fund meetings and travel to support the introduction of
      our new compensation plan to the Company's distributors and expansion
      in key U.S. and Canadian markets.

    SELECTED CONSOLIDATED ANNUAL INFORMATION

                                             For the                 For the
                            three-month period ended  six-month period ended
                                            April 30,               April 30,
                           -------------------------- -----------------------

                                    2009        2008        2009        2008
                                      ($)         ($)         ($)         ($)
                               unaudited   unaudited   unaudited   unaudited
                           -------------------------- -----------------------

    Net Sales                 12,691,686   9,180,346  22,795,284  17,824,761

    Cost of Sales              2,538,842   1,727,304   4,312,370   3,366,911

    Sales Incentives           5,968,448   3,731,886  10,458,376   7,274,096

    Selling, General and
     Administrative            4,926,043   3,028,620   9,004,815   5,926,128

    (Loss) Earnings before
     income taxes               (741,647)    692,536    (980,277)  1,257,626

    Net (Loss) Earnings         (617,536)    434,049    (818,741)    745,110

    Net (Loss) Earnings per share:

      Basic and diluted           (0.009)      0.006      (0.012)      0.011

    Weighted average number of
     common shares outstanding:
      Basic and diluted       69,994,300  69,994,300  69,994,300  69,994,300


                                               As at       As at       As at
                                            April 30, January 31, October 31,
                                                2009        2009        2008
                                                  ($)         ($)         ($)
                                           unaudited   unaudited     audited
                                         ------------ ----------- -----------
    ASSETS:
    -------
    Cash and equivalents                   2,463,783   5,693,766   6,138,454
    Restricted cash                          760,770           -           -
    Accounts receivable                    1,129,416     656,550     812,914
    Other current Assets                   7,137,186   5,998,319   4,683,255
                                         ------------ ----------- -----------
    Total current Assets                  11,491,155  12,348,635  11,634,623
                                         ------------ ----------- -----------

    Other Assets                          11,119,943  10,990,289  11,028,777
                                         ------------ ----------- -----------
        TOTAL ASSETS                      22,611,098  23,338,924  22,663,400
                                         ------------ ----------- -----------
                                         ------------ ----------- -----------
    LIABILITIES:
    ------------
    Current Liabilities                    5,119,813   5,306,600   4,552,187
                                         ------------ ----------- -----------
        TOTAL LIABILITIES                  5,119,813   5,306,600   4,552,187
                                         ------------ ----------- -----------
                                         ------------ ----------- -----------
    SHAREHOLDERS' EQUITY:
    ---------------------
      Share Capital                        3,465,548   3,465,548   3,465,548
      Other Equity-Stock Options           1,608,045   1,537,201   1,414,885
      Contributed surplus                 11,337,796  11,332,143  11,332,143
      Retained Earnings                    1,079,896   1,697,432   1,898,637
                                         ------------ ----------- -----------

        TOTAL SHAREHOLDERS' EQUITY        17,491,285  18,032,324  18,111,213
                                         ------------ ----------- -----------
                                         ------------ ----------- -----------


    SALES INCENTIVES

    Sales incentives are the largest operating expenses of the Company and
depend directly on the sales volume of each independent distributor. Sales
incentives include both commissions related to commissionable net sales and
various incentives which can be earned by independent distributors.
    Sales incentives were 45.9% of net sales for the six-month period ended
April 30, 2009 (47.0% for the quarter), compared to 40.8% (40.6% for the
quarter) of net sales for the corresponding periods of 2008. This increase in
sales incentives resulted from the introduction of the new compensation plan
in February 2009. Higher sales incentives were paid to the independent
distributors due to transitional expenses associated with the grandfathering
status offered for a limited period of time and bridging certain key
distributors to guarantee their income during the transition. In addition,
incentives related to achieving higher status in the new compensation plan
were higher than expected because both recruiting and leadership development
were much greater than anticipated.

    SELLING, GENERAL AND ADMINISTRATIVE

    The selling, general and administrative expenses were $9,004,815 for the
six-month period ended April 30, 2009 ($4,926,043 for the quarter), compared
to $5,926,128 ($3,028,620 for the quarter) for the corresponding periods of
2008. The increase is largely attributable to the increase in salaries and
related expenses of $1,017,200 resulting from the hiring of new executives as
well as sales and marketing personnel, the timing of the spring incentive
trip, $674,716, as well as higher sales support expenses in the US to fund
meetings and travel of the US Regional Sales Directors, $331,030, and the
special programs to support the introduction of the new compensation plan,
$453,151. Also, the increase in sales resulted in increase costs in credit
card fees and shipping and packaging costs $235,565. Other operating expenses
such as interest income, bank fees and foreign exchange contributed to the
unfavourable variation. The launch of South Korean operations in March 2009
resulted in operational expenses of $435,956 for the second quarter 2009,
which mainly included selling, marketing and executive expenses.

    FINANCIAL SITUATION AND LIQUIDITY

    As at April 30, 2009, the Company had a cash position of $2,463,783
compared to $5,863,208 as at April 30, 2008. The Company believes that cash
requirements in the ordinary course of business and for the expansion of its
business in international markets for next year can be met with its available
cash, cash generated from its operating activities and the reduction of income
tax payments caused by the realization of prior years income tax losses. If
required, the Company has access to operating credit facilities of $2,000,000
at its bank's prime rate plus 1/2 %. The credit facilities were not drawn upon
to date.
    As at April 30, 2009, the Company showed a working capital of $6,371,342
for a ratio of 2.24 compared to a working capital of $6,161,961 with a ratio
of 2.52 as at April 30, 2008.

    INTERNATIONAL

    The Company has for many years exported products internationally under
exclusive distribution agreements based on geographic territories. Going
forward, the Company has made a strategic decision to expand internationally
using the same seamless network marketing model successfully employed in North
America. The first venture in this strategic approach was the commencement of
operations in South Korea on March 20th through a wholly owned subsidiary,
Immunotec (Korea) Inc. The corporate head office of this subsidiary is located
in the city of Seoul and a satellite office is located in the city of Busan.
To date more than 4,000 distributors have joined the business and sales of
$1.1 million have been generated. In addition, Immunotec has formed a wholly
owned subsidiary, Immunotec International Healthcare Products Limited, located
in Dublin, Ireland this subsidiary began the process of building a network of
independent distributors in the Republic of Ireland and the United Kingdom in
May 2009.

    OUTLOOK

    Faced with some of the most difficult economic conditions to confront the
world in the last 50+ years, the Company made the conscious decision to
expand, and offer its business opportunity and products to as many people as
we could possibly touch. As a result we have gained significant positive
momentum in the first six months of the fiscal year. Our network is excited
about the business opportunity. We are extremely gratified with our
significant growth in sales, more than doubling recruiting of new distributors
and the dramatic growth in the number of new leaders who have developed in the
U.S., Canada and South Korea.
    The Company incurred significant expenses in both infrastructure and
promotional expenses to achieve this dramatic result during the last six
months. These expenses were designed to refocus our distributors on recruiting
and to provide increased marketing and sales support to build a foundation for
long term growth. Now that we have achieved strong positive momentum and
introduced our new compensation plan which intrinsically reinforces key
recruiting and leadership development initiatives, we will begin scaling back
the promotional expenses.
    Although gratified with the sales performance in the first half the
profits were below expectations. It is our expectation that the growth in the
Distributor network and new leaders will yield long term growth and benefits,
growing the revenue of the Company in the coming quarters and better
leveraging the investments we have made in human capital and infrastructure to
improve our bottom line results.

    FORWARD LOOKING STATEMENTS

    Some statements included in this management report contain forward-looking
information about the Company's future financial positions, operating results
and sales. They may be based on market expectations, management opinions and
assumptions. Such information involves significant risks and uncertainties
that are difficult to predict and rely on assumptions that may prove
inaccurate. Actual results and events may differ materially from these
forward-looking statements.

    ABOUT IMMUNOTEC

    Immunotec is located in a 37,000 square foot facility located in
Vaudreuil-Dorion, Quebec, Canada and also has a manufacturing facility located
in Blainville, Quebec, Canada, a distribution centre located in Swanton,
Vermont, USA as well as combined office and distribution facilities in Seoul
and Busan, South Korea. Immunotec is engaged primarily in the development and
marketing of natural health products, dietary supplements, food, vitamins and
personal care products, and natural health products, some of which are
manufactured on its behalf by third parties. Immunotec's products are
distributed and sold in Canada, the United States and South Korea through a
network marketing system and in other countries under exclusive
distributorship agreements.
    The Company files its consolidated financial statements, its management
and discussion analysis report, its press releases and such other required
documents on the SEDAR database at www.sedar.com and on the Company's website
at www.immunotec.com. The common shares of the Company are listed on the TSX
Venture Exchange under the ticker symbol IMM.

    The TSX Venture does not accept responsibility for the adequacy or
    accuracy of this release.
    




For further information:

For further information: Richard Patte, CA, Executive Vice-President and
Chief Financial Officer, (450) 510-4445

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IMMUNOTEC INC.

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