D. Medical Industries Ltd. (Nasdaq:DMED) (TASE:DMED) ("D. Medical"
or the "Company"), a medical device company engaged through its
subsidiaries in the research, development, manufacture and sale of
innovative products for diabetes treatment and drug delivery, today
announced financial results for the three and nine months ended
September 30, 2011. Results were characterized by the Company's
initial execution of its low risk and low cost strategy of
introducing and promoting the "Spring" brand name to and across
various target markets - including the United States, Canada and
Europe initially via the commercial roll out of its Spring
Universal Infusion Sets.
Third Quarter Highlights:
- In July 2011, the Company's subsidiary, Spring Health Solutions
Ltd., signed a non-binding letter of intent with Dex Medical,
Canada's largest distributor of diabetes care products, to become
exclusive distributor of the Spring™ Universal Infusion Set in
Canada.
- In August 2011, D. Medical showcased the Company's Spring™
Universal Infusion Set, Spring Zone Insulin Pump and Spring Hybrid
Patch Pump products at the American Association of Diabetes
Educators 2011 Annual Meeting & Exhibition in Las Vegas,
NV.
- In August 2011, the Company's subsidiary, Spring Health
Solutions Inc., signed a non-exclusive distribution agreement with
RGH Enterprises, Inc., the parent company of Edgepark Medical
Supplies and Independence Medical, for the distribution of its
Spring™ Universal Infusion Sets in the United States.
- In August 2011, D. Medical held its Annual General Meeting of
shareholders where all proposals, with the exception of Proposal 6
(amendment to outstanding warrants of the Company), were
approved.
- In August 2011, D. Medical closed the sale of its holdings in
its publicly held subsidiary, NextGen Biomed Ltd.
- In September 2011, the Company announced that it had initiated
a performance improvement program, including the reduction of
staff, mainly engaged with manufacturing activities at its
operations in Israel, designed to improve the Company's financial
performance in the short- and medium-term periods. The Company does
not expect to incur any significant costs relating to the
implementation of this program.
- In September 2011, the Company announced that its shelf
prospectus in Israel had gone effective. The Shelf Prospectus is
valid for a period of two years and may be used by the Company to
raise capital or debt in the future through the issuance of shares
(including pursuant to the SEDA entered into with Yorkville),
bonds, convertible bonds and/or warrants to purchase shares or
bonds, at the discretion of the Company, subject to a supplemental
shelf offering report in which the Company would describe the
specific details of the offering, including the terms of the
securities offered.
Financial Results:
The unaudited selected consolidated financial statements
presented below were prepared in accordance with International
Financial Reporting Standards (IFRS) as issued by the International
Accounting Standards Board (IASB). A convenience U.S. dollar
translation of NIS amounts is provided using the rate of NIS 3.712
to US$1.00, the representative rate of exchange as of September 30,
2011 as published by the Bank of Israel.
Sales for the nine months ended September 30, 2011 and 2010
amounted to NIS 1,145 thousand (US$ 308 thousand) and NIS 1,264
thousand (US$ 341 thousand), respectively. The decrease of sales
was mainly attributable to the lengthening of the logistic
procedures in the US and to the early termination of manufacturing
in Israel as part of the performance improvement plan. Sales for
the three months ended September 30, 2011 and 2010 amounted to NIS
305 thousand (US$ 82 thousand) and nil, respectively. Sales in the
third quarter of 2010 did not meet the company's sales recognition
criteria.
Cost of sales for the nine months ended September 30, 2011 and
2010 amounted to NIS 8,402 thousand (US$ 2,263 thousand) and NIS
4,873 thousand (US$ 1,313 thousand), respectively. Cost of sales
for the three months ended September 30, 2011 and 2010 amounted to
NIS 2,377 thousand (US$ 640 thousand) and NIS 2,144 thousand (US$
578 thousand), respectively. The increase was mainly attributable
to the preparation of the aforementioned UPG production line in
China and the training of new staff.
R&D expenses for the nine months ended September 30, 2011
and 2010 amounted to NIS 12,904 thousand (US$ 3,476 thousand) and
NIS 7,724 thousand (US$ 2,081 thousand), respectively. R&D
expenses for the three months ended September 30, 2011 and 2010
amounted to NIS 4,958 thousand (US$ 1,336 thousand) and NIS 3,671
thousand (US$ 989 thousand), respectively. The increase was mainly
attributable to the development of the second generation of the Adi
pump, the Spring Zone Pump and the Spring Hybrid Patch Pump.
General and Administration expenses for the nine months ended
September 30, 2011 and 2010 amounted to NIS 9,154 thousand (US$
2,466 thousand) and NIS 6,776 thousand (US$ 1,825 thousand),
respectively. General and Administration expenses for the three
months ended September 30, 2011 and 2010 amounted to NIS 3,017
thousand (US$ 813 thousand) and NIS 2,287 thousand (US$ 616
thousand), respectively. The increase was mainly due to the
additional costs related to the company being traded on the NASDAQ
in addition to the TASE.
D. Medical's comprehensive loss for the nine months ended
September 30, 2011 and 2010 amounted to NIS 32,388 thousand (US$
8,725 thousand) or NIS 3.70 (US$ 1.00) per share and NIS 31,148
thousand (US$ 8,391 thousand) or NIS 4.66 (US$ 1.26) per share,
respectively. Comprehensive loss for the three months ended
September 30, 2011 and 2010 amounted to NIS 7,923 thousand (US$
2,134 thousand) or NIS 0.97 (US$ 0.26) per share and NIS 9,945
thousand (US$ 2,679 thousand) or NIS 1.28 (US$ 0.34) per share,
respectively. Comprehensive loss includes loss from discontinued
operations for the nine months ended September 30, 2011 and 2010 of
NIS 64 thousand (US$ 17 thousand) and NIS 7,553 thousand (US$ 2,034
thousand), respectively. The discontinued operation is related to
the sale of the publicly held subsidiary, NextGen Biomed Ltd.
"While our financial statements continue to reflect the very
initial stages of commercialization of our Spring™ Universal
Infusion Sets in the United States and Canada, the early interest
shown by patients, doctors and Diabetes educators in this
breakthrough product continues to be high," said Efri Argaman, D.
Medical's Chief Executive Officer. "Accordingly, we remain hopeful
that the business will start to generate meaningful and growing
revenues toward the end of 2011."
As of September 30, 2011, D. Medical had cash and cash
equivalents of NIS 9,690 thousand (US$ 2,610 thousand).
Main Events Subsequent to Quarter-End:
In October 2011, the Company received a judgment that pursuant
to which Mr. Shekalim's shares in Spring Set were converted into
73,148 ordinary shares of the Company (representing approximately
0.9% of the Company's ordinary shares following the issuance), in
accordance with the terms of an agreement entered into between the
Company, Spring Set and Mr. Shekalim in 2008. Following the
Conversion, Mr. Shekalim is no longer a member of the board of
directors of Spring Set which became a wholly owned subsidiary of
the Company.
On November 18, 2011, the Company's shelf registration statement
was declared effective by the U.S. Securities and Exchange
Commission.
About D. Medical
D. Medical is a medical device company engaged through its
subsidiaries in the research, development, manufacture and sale of
innovative products for diabetes treatment and drug delivery. D.
Medical has developed durable and semi-disposable insulin pumps,
which continuously infuse insulin into a patient's body, using its
proprietary spring-based delivery technology. D. Medical believes
that its spring-based delivery mechanism is cost-effective compared
to the motor and gear train mechanisms that drive competitive
insulin pumps and also allows it to incorporate certain
advantageous functions and design features in its insulin pumps. D.
Medical has also developed an infusion set for insulin pumps and is
focusing its research and development efforts on the development of
next generation insulin pumps and a device that will combine a
continuous glucose monitoring system and an insulin pump on the
same patch. For more information, visit
http://www.dmedicalindustries.com (corporate) and
http://www.springnow.com (healthcare professionals, patients and
care givers).
Forward-Looking Statements
This press release contains forward-looking statements (as
defined by the Israeli Securities Law, 1968, Section 27A of the
Securities Act of 1933, as amended, and Section 21E of the
Securities Exchange Act of 1934, as amended) that involve risks and
uncertainties. These statements include, forecasts, goals,
uncertainties and assumptions and relate, inter alia, to D.
Medical's future expectations in connection with its level of sales
and cost of sales, manufacturing volumes, the cost-effectiveness of
its spring-based design, target markets and timing of markets
penetration. The forward-looking statements are based on D.
Medical's current expectations and beliefs which are based on,
among other things, its analysis of publicly available information
and market research reports. All forward-looking statements are
subject to certain risks, uncertainties and assumptions that could
cause actual results to differ materially from those described in
the forward-looking statements. Such risks and uncertainties
include, but are not limited to, the impact of general economic
conditions, competitive products, product demand, product
performance, the performance of D. Medical's contract manufacturer
and distributors, regulatory trends and approvals and healthcare
reform legislation. If one or more of these risks and/or
uncertainties materialize, or if the underlying assumptions prove
to be incorrect, D. Medical's actual results, performance or
achievements could differ materially from those expressed in, or
implied by, any such forward-looking statements or results which
are based upon such assumptions. No assurances can be given
that any of the events anticipated by the forward-looking
statements will transpire or occur, or if any of them transpire or
occur, what impact it will have on D. Medical's results
of operations or financial condition. D. Medical does not
undertake to update any forward-looking statements.
D. MEDICAL INDUSTRIES
LTD. |
CONDENSED CONSOLIDATED
STATEMENTS OF FINANCIAL POSITION |
NIS in thousands |
|
|
|
|
|
|
|
Convenience translation into
US$ |
|
|
|
(in thousands) |
|
September 30,
2011 |
December 31,
2010 |
September 30,
2011 |
|
(Unaudited) |
(Audited) |
(Unaudited) |
|
|
|
|
|
|
|
|
A s s e t s |
|
|
|
CURRENT ASSETS: |
|
|
|
Cash and cash equivalents |
9,690 |
35,085 |
2,610 |
Short term deposits |
301 |
3,769 |
81 |
Trade and
other receivables: |
|
|
|
Trade accounts receivable |
452 |
322 |
122 |
Other |
2,095 |
1,904 |
564 |
Inventory |
2,441 |
2,494 |
658 |
T o t a l current assets |
14,979 |
43,574 |
4,035 |
|
|
|
|
NON-CURRENT
ASSETS : |
|
|
|
Property and equipment, net |
3,810 |
3,815 |
1,026 |
Intangible assets, net |
10,098 |
13,505 |
2,720 |
Long-term receivables |
567 |
693 |
153 |
T o t a l non-current assets |
14,475 |
18,013 |
3,899 |
T o t a l assets |
29,454 |
61,587 |
7,934 |
|
|
|
|
Liabilities and
equity |
|
|
|
CURRENT
LIABILITIES: |
|
|
|
Trade and other payables: |
|
|
|
Trade accounts payable |
2,332 |
3,726 |
628 |
Other |
2,596 |
3,161 |
699 |
T o t a l current liabilities |
4,928 |
6,887 |
1,327 |
NON-CURRENT
LIABILITIES: |
|
|
|
Provision for royalties to the Israeli
Office of Chief Scientist |
6,001 |
5,236 |
1,616 |
Liability for severance pay - net |
48 |
76 |
13 |
T o t a l non-current
liabilities |
6,049 |
5,312 |
1,629 |
T o t a l liabilities |
10,977 |
12,199 |
2,956 |
EQUITY: |
|
|
|
Equity attributable to owners of
the parent: |
|
|
|
Share capital - issued and outstanding
-- |
|
|
|
December 31, 2010 – 7,777,436 shares
September 30, 2011 - 7,821,506 shares |
|
|
|
Ordinary shares |
2,563 |
2,549 |
690 |
Share premium and other
reserves |
228,987 |
227,015 |
61,688 |
Warrants and equity portion of
convertible debt |
3,048 |
3,048 |
821 |
Accumulated losses |
(215,052) |
(186,168) |
(57,934) |
|
19,546 |
46,444 |
5,265 |
Non-controlling
interest |
(1,069) |
2,944 |
(287) |
T o t a l equity |
18,477 |
49,388 |
4,978 |
T o t a l liabilities and
equity |
29,454 |
61,587 |
7,934 |
|
D. MEDICAL
INDUSTRIES LTD. CONDENSED CONSOLIDATED STATEMENTS OF
COMPREHENSIVE LOSS NIS in thousands except per share data
(Continued) - 1 |
|
|
|
|
Convenience
translation into US$ (in thousands) |
|
Three months
ended September 30 |
Nine months ended
September 30 |
Year ended December
31, |
Three months ended September
30 |
Nine months ended September
30 |
|
2011 |
2010 |
2011 |
2010 |
2010 |
2011 |
2011 |
|
(Unaudited) |
(Audited) |
(Unaudited) |
CONTINUING
OPERATIONS: |
|
|
|
|
|
|
|
Sales-net |
305 |
-- |
1,145 |
1,264 |
1,264 |
82 |
308 |
Cost of sales |
2,377 |
2,144 |
8,402 |
4,873 |
9,085 |
640 |
2,263 |
Gross loss |
2,072 |
2,144 |
7,257 |
3,609 |
7,821 |
558 |
1,955 |
Research and development expenses |
4,958 |
3,671 |
12,904 |
7,724 |
13,689 |
1,336 |
3,476 |
Selling and marketing expenses |
946 |
1,087 |
2,660 |
2,409 |
2,962 |
255 |
717 |
General and administrative expenses |
3,017 |
2,287 |
9,154 |
6,776 |
9,737 |
813 |
2,466 |
Other (income) expenses - net |
(27) |
(367) |
(255) |
(265) |
(867) |
(7) |
(68) |
Operating loss |
10,966 |
8,822 |
31,720 |
20,253 |
33,342 |
2,955 |
8,546 |
|
|
|
|
|
|
|
|
Finance income |
(231) |
(54) |
(455) |
(177) |
(243) |
(63) |
(123) |
Fair value losses on warrants at fair
value through profit or loss |
-- |
-- |
-- |
2,469 |
2,469 |
-- |
-- |
Finance costs |
807 |
648 |
1,059 |
1,050 |
2,275 |
217 |
285 |
Finance costs - net |
576 |
594 |
604 |
3,342 |
4,501 |
154 |
162 |
LOSS FOR THE PERIOD FROM
CONTINUED OPERATIONS |
11,542 |
9,416 |
32,324 |
23,595 |
37,843 |
3,109 |
8,708 |
|
|
|
|
|
|
|
|
DISCONTINUED
OPERATION |
|
|
|
|
|
|
|
Loss (gain) for the period from
discontinued operation |
(3,619) |
529 |
64 |
7,553 |
8,051 |
(975) |
17 |
LOSS AND TOTAL COMPREHENSIVE LOSS
FOR THE PERIOD |
7,923 |
9,945 |
32,388 |
31,148 |
45,894 |
2,134 |
8,725 |
|
D. MEDICAL
INDUSTRIES LTD. CONDENSED CONSOLIDATED STATEMENTS OF
COMPREHENSIVE LOSS NIS in thousands except per share data
(Continued) - 2 |
|
|
|
|
Convenience
translation into US$ (in thousands) |
|
Three months
ended September 30 |
Nine months ended
September 30 |
Year ended December
31, |
Three months ended September
30 |
Nine months ended September
30 |
|
2011 |
2010 |
2011 |
2010 |
2010 |
2011 |
2011 |
|
(Unaudited) |
(Audited) |
(Unaudited) |
LOSS (GAIN) ATTRIBUTABLE
TO: |
|
|
|
|
|
|
|
Owners of the parent: |
|
|
|
|
|
|
|
From continued operations |
11,209 |
8,730 |
31,285 |
22,472 |
35,775 |
3,019 |
8,428 |
From discontinued operations |
(3,619) |
283 |
(2,401) |
6,528 |
6,951 |
(975) |
(647) |
|
7,590 |
9,013 |
28,884 |
29,000 |
42,726 |
2,044 |
7,781 |
Non-controlling interest: |
|
|
|
|
|
|
|
From continued operations |
333 |
686 |
1,039 |
1,123 |
2,068 |
90 |
280 |
From discontinued operations |
-- |
246 |
2,465 |
1,025 |
1,100 |
-- |
664 |
|
333 |
932 |
3,504 |
2,148 |
3,168 |
90 |
944 |
|
7,923 |
9,945 |
32,388 |
31,148 |
45,894 |
2,134 |
8,725 |
|
|
|
|
|
|
|
|
LOSS (GAIN) PER SHARE FROM CONTINUED
AND DISCONTINUED OPERATIONS ATTRIBUTABLE TO THE |
|
|
|
|
|
|
|
EQUITY HOLDERS OF THE
COMPANY: |
|
|
|
|
|
|
|
Basic and diluted |
|
|
|
|
|
|
|
From continued operations |
1.43 |
1.24 |
4.01 |
3.61 |
5.44 |
0.38 |
1.08 |
From discontinued operations |
(0.46) |
0.04 |
(0.31) |
1.05 |
1.05 |
(0.12) |
(0.08) |
|
0.97 |
1.28 |
3.70 |
4.66 |
6.49 |
0.26 |
1.00 |
CONTACT: Company Contact:
Amir Loberman
Chief Financial Officer
D. Medical Industries Ltd.
T: +972-73-2507100
info@springnow.com
North American Investor Contact:
Stephen Kilmer
T: 212-618-6347
M: 905-906-6908
stephen@dmedicalindustries.com
Israeli Investor Relations:
Michal Efraty
T: +972-3-6950380
M: +972-52-3044404
michal@efraty.com
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