LabStyle Innovations Reports First Quarter Results

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LabStyle Innovations Reports First Quarter Results

Company makes significant strides in progressing Dario towards anticipated market launch, pending regulatory approvals

RAMAT GAN, Israel--(BUSINESS WIRE)-- LabStyle Innovations Corp. (OTCQB/OTCBB: DRIO), developer of the Dario™ smartphone-based medical device and diabetes management system, today reported its financial and operational results for the three months ended March 31, 2013 and provided a business update.


Highlights of the first quarter of 2013 and recent weeks included:

  • Effectiveness of LabStyle's initial registration statement on February 14, 2013, which allowed for trading in the company's common stock to commence on the OTCQB Marketplace and the OTC Bulletin Board under the symbol "DRIO" in April 2013.
  • Continued progress towards obtaining CE mark clearance to market Dario in Europe, which is expected in the coming months.
  • Continued to work with existing contract manufacturers and other suppliers to prepare for the anticipated commercial launch of Dario in Europe later this year.
  • Engaged Farla Medical as distribution partner for Dario in the U.K. and Belgium.
  • Launched a private placement offering which closed on May 10, 2013, raising gross proceeds of $10.0 million through the sale of an aggregate of 4.0 million shares of common stock and warrants to purchase an additional 2.0 million shares.

Management Commentary

"This has been a particularly exciting and busy time for LabStyle. We continue to make significant progress towards commercializing our Dario™ diabetes management system, which will target the estimated $10 billion worldwide market for self-monitoring of blood glucose," said Dr. Oren Fuerst, LabStyle's Chairman and Chief Executive Officer. "Following up on the operational, regulatory and intellectual property work we have been engaged in for more than two years, we spent the March quarter and recent weeks preparing for the commercial launch of Dario in Europe by continuing our work with our manufacturing partner and signing our first distributor. With CE mark clearance to market Dario in Europe anticipated to be obtained in the coming months, and with a strengthened balance sheet, we believe we are well positioned to scale-up manufacturing and address anticipated demand for our product in Europe. We are also accelerating our intellectual property programs and preparing submissions for regulatory clearance of Dario in multiple jurisdictions, including the U.S., India and Brazil. Of course, we were very pleased that our initial SEC registration statement was declared effective in February and that public trading in our common stock commenced in April, and we are very grateful for the support of our investors."

"We believe that Dario has the potential to significantly change the diabetes care landscape," continued Dr. Fuerst. "Dario will offer what we believe to be a superior user experience for diabetics, with a stylish, easy to use, convenient and feature-rich product that is designed to improve diabetes care. Also, we believe our Dario cloud-based services will support patient decision-making while potentially providing the patient's caregivers and physicians with valuable data to improve patient care. Beyond this, the rich data set generated by Dario users, which will be captured in a secure and privacy compliant fashion, could also lead to the development of innovative treatments and therapeutics, clinical programs and other quality of life improving diabetes related products and services. Also, we plan to continue to aggressively develop our intellectual property around blood glucose monitoring as well as additional indications of rapid testing of body fluids using mobile devices and cloud-based services."

LabStyle believes that its financial results demonstrate the careful deployment during the company's pre-revenue stage of the nearly $6 million in investor funding that was secured during the period from October 2011 through March 31, 2013 towards the progression of its business goals.

Research and development expenses for the first quarter of 2013 were $675,414, compared with $171,670 for the first quarter of 2012. The increase was largely due to recruitment of new employees and progress in product development.

Marketing and pre-production costs were $497,028 in the first quarter of 2013 as LabStyle prepared for the expected commercial launch of Dario in Europe later in the year. Those expenses included inter alia depreciation expenses amounting to $112,689 and were derived from investments made by LabStyle in its production line of approximately $376,000 in cash during the first quarter of 2013. There were no marketing and pre-production costs in the first quarter of 2012.

General and administrative expenses for the first quarter of 2013 were $1,903,725, compared with $323,076 in the prior-year quarter. The increase was largely due to non-cash stock-based compensation expense of $1,078,933 in the 2013 quarter, compared with $126,593 in the 2012 quarter, and a non-cash expense of $392,870 related to the issuance of common stock and warrants to a service provider.

Financing expenses were mainly driven by a $2,135,997 non-cash charge related to the revaluation of warrants during the first quarter of 2013, compared with a gain related to the revaluation of warrants of $21,117 in the first quarter of 2012.

Overall, the net loss for the first quarter of 2013 was $5,226,869, or $0.35 per share, compared with a net loss of $570,883, or $0.05 per share, for the first quarter of 2012. Overall Non-GAAP loss was $1,246,302, or $0.08 per share, versus a loss of $0.03 per share in the corresponding period in 2012.

LabStyle used $971,291 in cash to fund operating activities during the first quarter of 2013. As of March 31, 2013, LabStyle had cash, cash equivalents, restricted cash and short-term bank deposits of $330,846. Subsequent to the close of the first quarter, LabStyle raised net proceeds of approximately $9.0 million from an equity offering of common stock and warrants.

Non-GAAP Measures

Readers should note that LabStyle has, in the schedule below, supplemented its GAAP net income/loss with a non-GAAP measure of adjusted EBITDA. Management believes that this non-GAAP financial measure provides useful supplemental information to management and investors regarding LabStyle's performance, facilitates a more meaningful comparison of results for current periods with previous operating results, and assists management in analyzing future trends, making strategic and business decisions and establishing internal budgets and forecasts. A reconciliation of non-GAAP adjusted EBITDA to GAAP net income/loss in the most directly comparable GAAP measure is provided in the schedule below.

There are limitations in using this non-GAAP financial measure because it is not prepared in accordance with GAAP and may be different from non-GAAP financial measures used by other companies. This non-GAAP financial measure should not be considered in isolation or as a substitute for GAAP financial measures. Investors and potential investors should consider non-GAAP financial measures only in conjunction with LabStyle's consolidated financial statements prepared in accordance with GAAP and the reconciliations of the non-GAAP financial measure provided in the schedule below:

 
   Three months ended

March 31,

2013 2012
Unaudited
 
Net loss as reported$ 5,226,869$570,883
Adjustments:
Depreciation117,5971,503
Revaluation of warrants2,135,997(21,117)
Other Finance expenses14,705 97,254 
 
EBITDA$ 2,958,570$493,243
 
Stock based compensation1,319,398126,593

Expenses related to Issuance of

Common Stock and warrants to

service provider

392,870 - 
 
Non-GAAP adjusted loss$ 1,246,302$366,650 
 

Weighted average number of common

stock used in computing basic and

diluted net loss per share

14,808,56310,899,912
Non-GAAP adjusted loss per share$ 0.08$0.03 
 

About LabStyle Innovations

LabStyle Innovations Corp. has developed and is commercializing a patent-pending technology that seeks to bring laboratory testing capabilities to consumers in a distinctive, easy-to-use and affordable way through the use of smartphones such as iPhones and Androids and other mobile devices. LabStyle's initial product is Dario™, a stylish, easy-to-use medical device and software system that will compete in the more than $10 billion estimated worldwide market for patient self-monitoring of blood glucose (SMBG) products. Dario is a comprehensive, patent-pending system that combines an all-in-one SMBG device consisting of a lancet (to obtain a blood sample), a device-specific disposable test strip cartridge and a smartphone-driven glucose reader adaptor, coupled with a smartphone app and cloud-based data services. LabStyle is presently pursuing patent applications in multiple jurisdictions covering the specific processes related to blood glucose level measurement as well as more general methods of rapid tests of body fluids using mobile devices and cloud-based services.

Cautionary Note Regarding Forward-Looking Statements

This news release and the statements of representatives and partners of LabStyle Innovations Corp. (the Company) related thereto contains or may contain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Statements that are not statements of historical fact may be deemed to be forward-looking statements. Without limiting the generality of the foregoing, words such as "plan," "project," "potential," "seek," "may," "will," "expect," "believe," "anticipate," "intend," "could," "estimate" or "continue" are intended to identify forward-looking statements. Readers are cautioned that certain important factors may affect the Company's actual results and could cause such results to differ materially from any forward-looking statements that may be made in this news release. Factors that may affect the Company's results include, but are not limited to, regulatory approvals, product demand, market acceptance, impact of competitive products and prices, product development, commercialization or technological difficulties, the success or failure of negotiations and trade, legal, social and economic risks, and the risks associated with the adequacy of existing cash resources. Additional factors that could cause or contribute to differences between the Company's actual results and forward-looking statements include, but are not limited to, those discussed in the Company's filings with the U.S. Securities and Exchange Commission. Readers are cautioned that actual results (including, without limitation, those related to the outcome of regulatory review of the Company's products and the Company's anticipations for commercial launch of its products) may differ significantly from those set forth in the forward-looking statements. The Company undertakes no obligation to publicly update any forward-looking statements, whether as a result of new information, future events or otherwise, except as required by applicable law.

 

LABSTYLE INNOVATIONS CORP. AND ITS SUBSIDIARY
(A Development-Stage Company)

 

 

CONDENSED CONSOLIDATED BALANCE SHEETS

U.S. dollars

 
   March 31,  December 31,
20132012
UnauditedAudited
ASSETS
 
CURRENT ASSETS:
Cash and cash equivalents

$

294,897

$1,230,034
Restricted cash13,78213,422
Short-term bank deposit22,16721,566
Other accounts receivable and prepaid expenses 408,578  401,522 
 

Total current assets

 739,424  1,666,544 
 
LEASE DEPOSIT 32,280  31,545 
 
PROPERTY AND EQUIPMENT, NET 1,291,959  617,364 
 

Total assets

$2,063,663 $2,315,453 
 
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
 
CURRENT LIABILITIES:
Trade payables$708,758$250,352
Other accounts payable and accrued expenses 486,785  316,403 
 

Total current liabilities

 1,195,543  566,755 
 
LIABILITY RELATED TO WARRANTS (Note 4) 4,953,738  2,817,741 
 
COMMITMENTS AND CONTINGENT LIABILITIES
 
STOCKHOLDERS' DEFICIT (Note 5):

Common Stock of $0.0001 par value -

Authorized: 45,000,000 shares at March 31, 2013 and December
31, 2012; Issued: 15,146,033 (unaudited) and 14,547,689 shares at
March 31, 2013 and December 31, 2012, respectively; Outstanding:
15,146,033 (unaudited) and 14,547,689 shares at March 31, 2013
and December 31, 2012, respectively

1,5141,454

Preferred Stock of $0.0001 par value -

Authorized: 5,000,000 shares at March 31, 2013 and December 31,
2012; Issued: None at March 31, 2013 and December 31, 2012;
Outstanding: None at March 31, 2013 and December 31, 2012

--
Additional paid-in capital7,211,6595,001,425
Deficit accumulated during the development stage (11,298,791) (6,071,922)
 

Total stockholders' deficit

 (4,085,618) (1,069,043)
 

Total liabilities and stockholders' deficit

$2,063,663 $2,315,453 
 
 

LABSTYLE INNOVATIONS CORP. AND ITS SUBSIDIARY
(A Development-Stage Company)

 

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

U.S. dollars

 
   Three months ended

March 31,

2013  2012
Unaudited
 
Operating expenses:
Research and development$675,414$171,670
Marketing and pre-production costs497,028-
General and administrative 1,903,725  323,076 
 
Total operating loss3,076,167494,746
 
Revaluation of warrants2,135,997(21,117)
Other financial expense 14,705  97,254 
 
Financial expenses, net 2,150,702  76,137 
 
Net loss$5,226,869 $570,883 
 
Net loss per share
 
Basic and diluted loss per share$(0.35)$(0.05)
 

Weighted average number of common

stock used in computing basic and
diluted net loss per share

 14,808,563  10,899,912 



LHA
Kim Sutton Golodetz, 212-838-3777
Kgolodetz@lhai.com
or
Bruce Voss, 310-691-7100
Bvoss@lhai.com
or
@LHA_IR_PR
or
LabStyle Innovations Corp.
Dr. Oren Fuerst, 646-652-6531
Chairman/CEO
oren@mydario.com

KEYWORDS:   United States  North America  New York

INDUSTRY KEYWORDS:

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