AVNA, Advance Nanotech Reports Second Quarter 2009 Financial Results
MONTEBELLO, NY -- (Marketwire) -- 08/14/09 -- Advance Nanotech, Inc. (OTCBB: AVNA stock news) today
reported financial results for the three months ended June 30, 2009. The
Company reported a net loss of $1,047,000, or $0.02 per share, compared to
a loss of $2,363,000, or $0.06 per share, for the three months ended June
30, 2008, a decrease of 56 percent. During the six months ended June 30,
2009, the Company reported a net loss of $3,842,000, or $0.07 per share,
compared to a net loss of $3,449,000, or $0.09 per share, for the six
months ended June 30, 2008, an increase of 11 percent.
A summary of the highlights from the quarter include:
-- Operating costs were reduced by over 45 percent for the six month period in 2009, versus the comparable 2008 period -- Receipt of additional contract application development work with SELEX Galileo, Crowcon Detection Instruments, and Agilent -- Issuance of two additional granted patents bringing granted patented portfolio to four, with ten further patent applications pending -- Strategic focus on funded application development contracts that offer near-term revenue potential resulted in higher gross margins in the first half of 2009
Revenues generated were related to sales of its Lonestar and Vapor
Generator products, along with contracted, instructional and set-up
services provided to customers. Although revenue decreased by 37 percent
for the three months ended June 30, 2009, cost of sales decreased by over
65 percent during the same period. Similarly, while revenues decreased by
19 percent during the first six months compared to the same period in 2008,
cost of sales decreased by over 47 percent. The decrease in cost of sales
reflects higher margin contracted revenue recognized for the corresponding
periods.
"Our business development efforts in the second quarter were consistent
with our strategy of focusing on funded application development projects,"
commented Bret Bader, Advance Nanotech's CEO. "To that end, we secured
additional development contracts with SELEX Galileo, Crowcon, and Agilent
to further develop specific applications that we believe will provide the
Company potential near term revenue growth. With our focus primarily on
funded development programs, we have delayed algorithm development efforts
for our Lonestar product until we have sufficient capital resources to
continue. This delay has negatively impacted our second quarter revenues,
but has enabled us to significantly reduce costs. It is important to
understand that revenue opportunities for Lonestar are not lost, simply
delayed until the Company has secured much needed working capital to
continue its progress."
Mr. Bader continued, "We have been aggressively pursuing several options to
provide the necessary capital resources to execute on our full plan. These
options include strategic licensing transactions and the sale of
securities. While it has taken longer than expected to complete these
transactions, our confidence in the technology and our business remains
strong. To provide us with sufficient resources while these potential
transactions are progressing, we sold $1,000,000 of short term senior
secured notes."
The Company incurred a loss, including non-controlling interest (minority
interest), during the second quarter of 2009 of $1,120,000, or $0.02 per
basic share, compared to a loss of $2,305,000, or $0.06 per basic share for
the same period in 2008. The Company had a loss attributable to the
Company (net of minority interest) of $1,052,000, or $0.02 per basic share,
compared with a loss of $2,120,000, or $0.06 per basic share for the same
period in 2008. The Company reported a comprehensive loss (inclusive of
loss from discontinued operations and foreign currency translation
adjustments) of $977,000, or $0.02 per basic share, compared with a
comprehensive loss of $1,775,000, or $0.05 per share, for the same period
in 2008.
Selling, general and administrative expenses for the second quarter were
$474,000, a decrease of $185,000 or 28 percent compared to the first
quarter 2008 level of $659,000. Total operating expenses were $1,426,000,
down from $2,351,000 when compared to the second quarter of 2008. The loss
from operations during the current second quarter was $962,000 compared to
$1,691,000 for the same period in 2008, representing a decrease of $729,000
or 43 percent.
The Company incurred interest expense during the second quarter of 2009 of
$262,000, an increase of $72,000 from the previous year second quarter
level due to an increase in secured notes of $1,500,000. Other expenses
during the second quarter included a non-cash late registration accrual of
$108,000 relating to the registration obligations to the convertible note
holders. The Company also incurred a non-cash gain of $182,000 during the
second quarter 2009 for the re-valuation of the Company's warrant liability
as a result of the slight decrease in the market price of the Company's
common stock from March 31, 2009. During the same period of the prior
year, the Company recognized a non-cash loss of $850,000. The Company
recognized amortization of debt discount of $121,000 on the short term
notes issued during the second quarter of 2009.
As of December 31, 2008, the Company had net operating loss carry forwards
for income tax reporting purposes of approximately $31,922,000 that may be
offset against future taxable income through 2028.
