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Escalon® Medical Corp. Reports Second Quarter Fiscal 2014 Results; New Product Introductions Underway

ARDMORE, Pa., Feb. 14, 2014 /PRNewswire/ -- Escalon Medical Corp. (Nasdaq: ESMC) today announced its operating results for the second fiscal quarter and six months ended December 31, 2013. 

For the fiscal second quarter, consolidated product revenue was $3.1 million, flat with the first fiscal quarter of 2014 but down compared to the $3.6 million in the prior year period.  For the six months ended December 31, 2013, consolidated product revenue increased approximately 5% to $6.2 million from $5.9 million in the year ago period.

For the fiscal second quarter ended December 31, 2013, the company reported a net loss of $109,000, or $0.01 per share, and a net loss from continuing operations of $83,000, or $0.01 per share.  This compares to net income of $4.0 million, or $0.53 per share, for the year ago period, which includes a net gain of $4.0 million related to the sale of Drew and related debt settlement.  Net income from continuing operations was $126,527, or $0.02 per share, for the year ago period.  For the first six months of fiscal 2014, the company reported a net loss of $95,000, or $0.01 per share, and a net loss from continuing operations of $44,000.  This compares to net income of $3.6 million, or $0.46 per share, which includes the $4.0 million gain.  The net loss from continuing operations was $497,864, or $0.07 per share, for the first six months of the prior fiscal year.

Year to date in fiscal 2014, margins remained steady at 50.1% compared to 49.7% in the prior year period.  Marketing, general and administrative expenses decreased by 13.9% primarily due to declines in payroll expenses.  As a result of the planned update of existing products as well as the introduction of new products, research and development expenses for the first six months of fiscal 2014 grew by 32.1% to $700,000 from $530,000 in the prior year period.

At December 31, 2013, the Company had $2.6 million of cash and no long term debt and its continuing operations were near breakeven on a cash basis with a net use of cash of $44,433 in the first six months of fiscal 2014.

"We remain committed to reinvesting in our ophthalmic product line to develop and deliver new best-in-class ophthalmic ultrasound solutions," commented Chief Executive Officer, Richard J. DePiano, Jr.  "We have seen a strong reception to our first new product, the VuMAX® HD introduced earlier in calendar 2013, with solid sales both internationally and with several top institutions in the U.S.  Early indications for our next new product, the VuPad™, which was previewed at the annual meeting of the American Academy of Ophthalmology in November, are promising.  We filed a 510(k) pre-market clearance application for the VuPad™ with the US FDA in late January and anticipate clearance in our third fiscal quarter, followed shortly thereafter by approval from other regulatory bodies."

"While we have considerable work ahead of us, we're pleased to have reported growth in sales year over year and are further encouraged given the preliminary market feedback regarding the soon-to-be-released VuPad™ product.  With an improved financial position, we are poised to pursue strategic growth opportunities to leverage our technology and exciting research and development programs."

About Escalon Medical  
Founded in 1987, Escalon Medical Corp. (NASDAQ: ESMC) specializes in the development, marketing and distribution of ophthalmic diagnostic imaging and surgical products branded under the Sonomed Escalon name.  Products include a variety of ophthalmic ultrasound, digital imaging and photography, and image management systems as well as surgical products including intraocular gases, fiber optic light guides and sources, and other surgical vitreoretinal instruments.  The Company seeks to grow its ophthalmic business by further developing and diversifying its product offering through internal development programs, strategic partnerships, and the acquisition of technology so as to best leverage the Company's distribution capabilities. The Company has headquarters in Ardmore, Pennsylvania and research and development, manufacturing and distribution operations in Lake Success, New York, New Berlin, Wisconsin and Stoneham, Massachusetts.  For additional information visit www.escalonmed.com and www.sonomedescalon.com

Forward Looking Statements    
This press release contains statements that are considered forward-looking under the Private Securities Litigation Reform Act of 1995, including statements about the Company's future prospects. These statements are based on the Company's current expectations and are subject to a number of uncertainties and risks, and actual results may differ materially. The uncertainties and risks include whether the Company is able to: develop, obtain regulatory clearance of and launch new products, implement its growth and marketing strategies; improve upon the operations of the Company including the ability to make acquisitions and the integration of any acquisitions it may undertake, if any, of which there can be no assurance; grow our remaining ophthalmic business unit; improve our financial position; implement cost reductions; generate cash; and identify, finance and enter into business relationships and acquisitions.  Other factors include uncertainties and risks related to: new product development, commercialization, manufacturing and market acceptance of new products; marketing acceptance of existing products in new markets; research and development activities, including failure to demonstrate clinical efficacy; delays by regulatory authorities, scientific and technical advances by the Company or third parties; introduction of competitive products; ability to reduce staffing and other costs and retain benefit of prior reductions; third party reimbursement and physician training, and general economic conditions.  Further information about these and other relevant risks and uncertainties may be found in the Company's report on Form 10- K for year ended June 30, 2013, and its other filings with the Securities and Exchange Commission, all of which are available from the Securities and Exchange Commission as well as other sources.

 

--financial tables to follow--

 

ESCALON MEDICAL CORP. AND SUBSIDIARY

Unaudited Condensed Consolidated Statements of Operations

 


Six Months Ended


Six Months Ended


December 30,


December 31


2013


2012


2013


2012









Revenues, net

$  3,078,485


$ 3,640,761


$  6,208,568


$5,901,338









Costs and expenses:








    Cost of goods sold

1,510,322


1,776,054


3,066,536


2,972,452

    Marketing, general and administrative

1,280,427


1,488,915


2,493,390


2,894,501

    Research and development

377,042


266,169


700,232


530,367

       Total costs and expenses

3,167,791


3,531,138


6,260,158


6,397,320









(Loss) income from operations

(89,306)


109,623


(51,590)


(486,982)

Other income (expense)








     Other income (expense)

6,535


16,842


7,603


81,623

     Interest income

56


62


117


91

     Interest expense

--


--


--


(92,596)

         Total other income (expense)

6,591


16,904


7,720


(10,882)

Net (loss) income from continuing operations

(82,715)


126,527


(43,870)


(497,864)

Net (loss) income from discontinued

      operations, before tax

(25,834)


3,946,858


(51,439)


4,137,824

Net (loss) income

$   (108,549)


$   3,993,385


$   (95,309)


$   3,559,960

Basic and Diluted Net (Loss) Income per Share








     Continuing operations

$    (0.01)


$      0.02


$             --


$     (0.07)

     Discontinued operations

--


0.51


(0.01)


0.54

      Net income (loss)

$   (0.01)


$      0.53


$      (0.01)


$      0.47

Weighted Average Shares - basic

7,526,430


7,526,430


7,526,430


7,526,430

Weighted Average Shares - diluted 

7,526,430


7,526,430


7,526,430


7,526,430

 

Selected Balance Sheet Data (Unaudited)

 


December 31, 2013

June 30, 2013

Cash and Cash Equivalents

$2,565,156

$2,654,701

Inventory

2,235,488

1,853,686

Working Capital

3,857,328

4,003,293

Total Assets

7,470,302

7,272,165

Total Liabilities

3,732,370

3,443,239

Stockholders' Equity

3,737,932

3,828,926

 

SOURCE Escalon Medical Corp.

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