Company continues to anticipate 2015 FDA clearance and
U.S. commercial launch following 2014 initial launch
in Europe and elsewhere
CAESAREA, Israel, March 25, 2015 /PRNewswire/ — LabStyle Innovations Corp. (OTCQB: DRIO), developer of the Dario™ Diabetes Management Solution, reported that it has published its financial and operational results for the year ended December 31, 2014 and in connection therewith is providing an update on recent corporate achievements and anticipated milestones for 2015.
Dario™, is a cloud-based, diabetes management solution which includes novel software applications combined with the patented, ‘all-in-one’, pocket-sized Dario™ Smart Meter that interfaces with a user’s mobile device.
LabStyle’s major 2014 highlights included the following:
- First revenues recorded in the fourth quarter from sales of Dario™.
- Shipments to distribution partners during the year ended December 31, 2014 amounted to $145,000.
- Received reimbursement status for Dario™ blood glucose test strips to be utilized together with the Dario™ Smart Meter in Italy, U.K , and Australia.
- Key U.S. patent issued in August 2014 for Glucose Monitor integration with phone jack of iOS/Android mobile devices.
- Partnership agreement signed with Israel’s leading healthcare HMO, Maccabi Healthcare, to implement its comprehensive Dario™ digital suite for patients and professionals aimed at remote, proactive care.
- Enriched and strengthened its Board of Directors and Scientific Advisory Board with leading market players and diabetes key opinion leaders.
Erez Raphael, LabStyle’s President and Chief Executive Officer, stated “2014 was an important year for LabStyle as we established our initial presence in the global blood glucose monitoring market. This was demonstrated by key accomplishments, as during the year we launched both the Dario app and Smart Meter on an initial basis, established manufacturing lines, secured insurance reimbursement in key countries, received positive feedback from users, and generated our first revenues from the sales of Dario. We are looking forward to 2015 as a year where we continue our expansion as we focus on increasing the number of markets in which Dario is approved, sold, and reimbursed, including the highly anticipated launch of Dario both in the U.S. and Canada.”
“The blood glucose monitoring industry is transforming to answer the patients and the healthcare systems need for increasing patient compliance and improving patient performance in order to prevent the plague diabetes and the immense burden it is putting on the healthcare system,” continued Mr. Raphael. “We believe that Dario fits right into this need, offering a comprehensive and tech driven yet intuitive and easy to use diabetes management solution. We have witnessed proven improvements in user performance and increased patient compliance. In addition, we look forward to capturing what we believe is an immense opportunity for Dario based on software licensing and added value services with HMOs and other strategic partners worldwide.”
LabStyle’s anticipated 2015 milestones include:
- U.S. FDA clearance for Dario expected in 2015 following the submission of new clinical data to FDA for 510(k) in March 2015 based on LabStyle’s recently announced positive 368 patients User Performance Study in the U.S.
- Commercial launch in U.S. and Canada expected in 2015 pending regulatory clearance.
- Anticipated expansion of market reach and sales in EMEA territories.
Summary of Financial Results
Revenues recognized under U.S. generally accepted accounting principles (GAAP) amounted to approximately $51,000. Cost of revenues for the year ended December 31, 2014 were approximately $2,274,000 compared with none for the year ended December 31, 2013. The increase was due to the commencement of initial commercial sales during March 2014 with first shipments occurring during April 2014. During 2014, LabStyle also recorded approximately $489,000 as impairment from a production line which ceased to be used in operations.
Research and development expenses for the year ended December 31, 2014 were approximately $3,943,000 compared with approximately $4,912,000 for the year ended December 31, 2013. The decrease was mainly due to the increased focus on manufacturing as well as sales and marketing efforts related to LabStyle’s commencement of initial commercial sales.
Sales, marketing and pre-production expenses were approximately $1,063,000 for the year ended December 31, 2014 compared with approximately $2,354,000 for the year ended December 31, 2013. The decrease was mainly due to pre-production costs which were recorded during 2013. During 2014, LabStyle began to ramp up manufacturing and commenced initial shipments to distributors and therefore did not record any additional pre-production costs.
General and administrative expenses for the year ended December 31, 2014 were approximately $3,640,000 compared to approximately $6,296,000 for the year ended December 31, 2013. The decrease was driven by cost reduction efforts, including a decrease in management compensation, overhead costs and outsourcing consulting expenses, as well as decrease in option compensation driven from decrease in the market value for LabStyle’s common stock, which resulted in fair value decrease of new awards granted during 2014.
Financing expenses for the year ended December 31, 2014 were mainly driven by gain of approximately $2,194,000 non-cash charge related to the revaluation of warrants offset by approximately $3,124,000 non-cash expense related to common stock consideration granted to the investors from LabStyle’s February 2014 private placement, compared with a loss related to the revaluation of warrants of approximately $293,000 for the year ended December 31, 2013.
Net loss for the year ended December 31, 2014 was approximately $16,055,000, or $1.85 per share, compared with a net loss of approximately $13,931,000, or $3.80 per share, for the year ended December 31, 2013. Net loss for the year ended December 31, 2014 included deemed dividend costs related to LabStyle’s September 2014 private placement issuance of convertible preferred stock in the amount of approximately $2,899,000 and approximately $279,000 related to consideration granted to the investors in LabStyle’s February 2014 private placement.
Non-GAAP adjusted loss, as detailed in the table below, for the year ended December 31, 2014 was approximately $8,628,000, or $0.99 per share, compared with a non-GAAP adjusted loss for the year ended December 31, 2013 of approximately $8,499,000, or $2.32 per share.
As of December 31, 2014, LabStyle had cash, cash equivalents and short-term bank deposits of approximately $1,536,000. During February and March, 2015, LabStyle raised approximately $2 million in gross proceeds from a private placement.
Note on Non-GAAP Measures
Readers should note that LabStyle has, in certain disclosures above ad 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 the Company’s consolidated financial statements prepared in accordance with GAAP and the reconciliations of the non-GAAP financial measure provided in the schedule below:
| UnauditedUS Dollars in thousands except stock and stock data | Year ended December 31, |
||||
| 2014 | 2013 | ||||
| Net income (loss) as reported | $ (16,055) | $ (13,931) | |||
| Adjustments: | |||||
| Depreciation | 549 | 839 | |||
| Impairment of production line | 489 | – | |||
| Revaluation of warrants | (2,194) | 293 | |||
| Issuance cost related to warrants to investors and service provider | 533 | – | |||
| Compensation to the February 2014 Investors from Exchange Agreement | 3,124 | – | |||
| Other finance expenses | 56 | 76 | |||
| Deemed dividend related to exchange agreement | 279 | – | |||
| Deemed dividend related to Series A Preferred Stock | 2,899 | – | |||
| EBITDA | $ (10,320) | $ (12,723) | |||
| Stock-based compensation | 1,692 | 3,213 | |||
| Expenses related to Issuance of common stock and warrants to service provider | – | 1,011 | |||
| Non-GAAP adjusted EBITDA | $ (8,628) | $ (8,499) | |||
| Weighted average number of common stock used in computing basic and diluted net loss per share | 8,678,953 | 3,662,615 | |||
| Non-GAAP adjusted EBITDA per stock | $ (0.99) | $ (2.32) | |||
About LabStyle Innovations
LabStyle Innovations Corp. (OTCQB:DRIO) develops and commercializes patented technology providing consumers with laboratory-testing capabilities using smart mobile devices. LabStyle’s flagship product is the Dario™ Diabetes Management Solution. Dario™ empowers people with diabetes to take charge of their health with the right tools, insights, and support in their pock-et. With access to both real-time and historical blood glucose data, Dario™ is designed to spot patterns, recommend the right treatments and support behavior change efforts.
Dario™ is a platform that combines an all-in-one, blood glucose meter, smart phone application (iOS & Android), website application and treatment tools to support more proactive and better informed decisions by patients, doctors and healthcare systems. The stylish and compact self-monitoring system combines a lancet to obtain a blood sample, a proprietary disposable test strip cartridge and a smartphone-driven glucose meter. LabStyle Innovations is led by an experienced management team with vast software, medical device and technology experience and guided by a world class board of directors and scientific advisory board. For more information: www.myDario.com and http://myDario.investorroom.com.
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 risks discussed in the Company’s filings with the U.S. Securities and Exchange Commission. Readers are cautioned that actual results (including, without limitation, the timing for and results of the Company’s commercial and regulatory plans for Dario™ as described herein) 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.
| CONSOLIDATED BALANCE SHEETS | ||||||
| U.S. dollars in thousands | ||||||
| December 31, | ||||||
| 2014 | 2013 | |||||
| ASSETS | ||||||
| CURRENT ASSETS: | ||||||
| Cash and cash equivalents | $ 1,453 | $ 2,263 | ||||
| Restricted cash | – | 38 | ||||
| Short-term bank deposits | 83 | 154 | ||||
| Inventories | 234 | – | ||||
| Other accounts receivable and prepaid expenses | 286 | 475 | ||||
| Total current assets | 2,056 | 2,930 | ||||
| LEASE DEPOSITS | 47 | 41 | ||||
| PROPERTY AND EQUIPMENT, NET | 978 | 1,145 | ||||
| Total assets | $ 3,081 | $ 4,116 | ||||
| CONSOLIDATED BALANCE SHEETS | ||||||
| U.S. dollars in thousands (except stock and stock data) | ||||||
| December 31, | ||||||
| 2014 | 2013 | |||||
| LIABILITIES AND STOCKHOLDERS’ DEFICIT | ||||||
| CURRENT LIABILITIES: | ||||||
| Trade payables | $ 708 | $ 586 | ||||
| Other accounts payable and accrued expenses | 908 | 920 | ||||
| Total current liabilities | 1,616 | 1,506 | ||||
| LIABILITY RELATED TO WARRANTS | 4,003 | 2,696 | ||||
| COMMITMENTS AND CONTINGENT LIABILITIES | ||||||
| CONVERTIBLE PREFERRED SHARES: | ||||||
| Series A Preferred Stock of $0.0001 par value -Authorized: 60,000 shares at December 31, 2014 and 2013; Issued and Outstanding: 41,652 shares and none at December 31, 2014 and 2013, respectively; Aggregate liquidation preference of $4,165 and none at December 31, 2014 and 2013, respectively |
2,757 |
– |
||||
| STOCKHOLDERS’ DEFICIT | ||||||
| Common Stock of $0.0001 par value -Authorized: 80,000,000 and 45,000,000 shares at December 31, 2014 and 2013, respectively; Issued and Outstanding: 16,233,430 and 4,014,381 shares at December 31, 2014 and 2013, respectively | 2 | *) | ||||
| Preferred Stock of $0.0001 par value -Authorized: 4,940,000 and 5,000,000 shares at December 31, 2014 and 2013, respectively; Issued and Outstanding: None at December 31, 2014 and 2013 | – | – | ||||
| Additional paid-in capital | 30,761 | 19,917 | ||||
| Accumulated deficit | (36,058) | (20,003) | ||||
| Total stockholders’ deficit | (5,295) | (86) | ||||
| Total liabilities and stockholders’ deficit | $ 3,081 | $ 4,116 | ||||
| *) Represents an amount lower than $1. | ||||||
| CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS | ||||||
| U.S. dollars in thousands (except stock and stock data) | ||||||
| Year ended December 31, | ||||||
| 2014 | 2013 | |||||
| Revenues | $ 51 | $ – | ||||
| Cost of revenues | 2,274 | – | ||||
| Impairment of production line | 489 | – | ||||
| Gross loss | 2,712 | – | ||||
| Operating expenses: | ||||||
| Research and development | $ 3,943 | $ 4,912 | ||||
| Sales, Marketing and pre-production costs | 1,063 | 2,354 | ||||
| General and administrative | 3,640 | 6,296 | ||||
| Total operating expenses | 8,646 | 13,562 | ||||
| Operating loss | 11,358 | 13,562 | ||||
| Financial expenses, net: | ||||||
| Revaluation of fair value of warrants | (2,194) | 293 | ||||
| Other financial expenses, net | 3,713 | 76 | ||||
| Total financial expenses, net | 1,519 | 369 | ||||
| Net loss | $ 12,877 | $ 13,931 | ||||
| Deemed dividend related to exchange agreement | 279 | – | ||||
| Deemed dividend related to Series A Preferred Stock | 2,899 | – | ||||
| Net loss attributable to holders of Common Stock | $ 16,055 | $ 13,931 | ||||
| Net loss per share: | ||||||
| Basic and diluted loss per share | $ 1.85 | $ 3.80 | ||||
| Weighted average number of Common Stock used in computing basic and diluted net loss per share | 8,678,953 | 3,662,615 | ||||
| CONSOLIDATED STATEMENT OF CASH FLOWS | |||||
| U.S. dollars in thousands | |||||
| Year ended December 31, | |||||
| 2014 | 2013 | ||||
| Cash flows from operating activities: | |||||
| Net loss | $ (12,877) | $ (13,931) | |||
| Adjustments required to reconcile net loss to net cash used in operating activities: | |||||
| Stock-based compensation and restricted shares | 1,692 | 4,224 | |||
| Issuance cost related to warrants to investors and service provider | 533 | – | |||
| Depreciation | 549 | 839 | |||
| Write-off of a production line | 489 | – | |||
| Decrease in other accounts receivable and prepaid expenses | 158 | 2 | |||
| Increase in inventories | (234) | – | |||
| Decrease (increase) in trade payables | (186) | 271 | |||
| Decrease in other accounts payable and accrued expenses | 365 | 603 | |||
| Incremental value to February 2014 Investors that resulted from Exchange Agreement | 3,124 | – | |||
| Change in the fair value of warrants to purchase shares of Common Stock | (2,194) | 293 | |||
| Others | – | 98 | |||
| Net cash used in operating activities | (8,581) | (7,601) | |||
| Cash flows from investing activities: | |||||
| Investment in short-term bank deposits | (91) | (162) | |||
| Proceeds of maturities of short-term bank deposit | 231 | 14 | |||
| Investment in lease deposit | (6) | (92) | |||
| Purchase of property and equipment | (563) | (1,400) | |||
| Net cash used in investing activities | (429) | (1,640) | |||
| Cash flows from financing activities: | |||||
| Proceeds from issuance of Common Stocks and warrants, net of issuance cost | 3,754 | 9,982 | |||
| Proceeds from issuance of Series A Preferred Stock and warrants, net of issuance cost | 4,096 | – | |||
| Proceeds from exercise of options and warrants | 350 | 292 | |||
| Net cash provided by financing activities | 8,200 | 10,274 | |||
| Increase (decrease) in cash and cash equivalents | (810) | 1,033 | |||
| Cash and cash equivalents at beginning of year | 2,263 | 1,230 | |||
| Cash and cash equivalents at end of year | $ 1,453 | $ 2,263 | |||
| Non-cash investing and financing activities: | |||||
| Purchase of property and equipment | $ 308 | $ 64 | |||
| Conversion of liability related to warrants to common stock | $ 9 | $ 416 | |||
| Conversation of Series A Preferred Stock | $ 46 | $ – | |||
© 2015 LabStyle Innovations Corp.
Contacts:
Press and Investor Relations
Brenda Zeitlin
LabStyle Innovations
1 800 896 9062
Brenda@mydario.com