MiMedx Group Announces Third Quarter Results

News provided by

MiMedx Group, Inc.

Oct 26, 2010, 07:30 ET

MARIETTA, Ga., Oct. 26 /PRNewswire-FirstCall/ -- MiMedx Group, Inc.  (OTC Bulletin Board: MDXG), an integrated developer, manufacturer and marketer of patent protected biomaterial-based products, announced today its results for the third quarter ended September 30, 2010.

Results for Third Quarter Ended September 30, 2010

The Company recorded revenues during the quarter of approximately $108,000, as compared to $0 revenue for the same period in 2009 and $322,000 in the second quarter of this year. The Company recorded a net loss of $2.9 million, or $0.05 per diluted common share, for the quarter, as compared to a net loss of $4.5 million, or $0.11 per diluted common share, for the same period in 2009 and a net loss of $2.7 million, or $0.04 per diluted common share, in the second quarter of 2010. Stockholder's equity as of September 30, 2010, was $5.7 million, compared to $6.1 million as of December 31, 2010, and $2.5 million as of September 30, 2009.

Parker H. "Pete" Petit, Chairman and CEO, stated, "The Company continues to make substantial progress on commercializing its two biomaterials, HydroFix™ and CollaFix™. The year to date revenues from our first HydroFix™ product introduced earlier this year have exceeded $500,000; however, our third quarter results did not meet management's expectations due primarily to a shortfall in our European sales.  European revenues were impacted by an unexpected illness and family medical problem experienced by our European sales representative, which resulted in almost six weeks of downtime that could not be covered by our U.S. based staff due to critical local priorities. In addition, our European revenues were also impacted by a delay in anticipated additional European regulatory approval."

"On a positive note," Mr. Petit continued, "for the second successive quarter, the number of HydroFix™ implants has more than doubled in the U.S., which demonstrates that physicians are using our product. Based upon current near-term revenue projections, the Company has decided to raise at least one more round of financing to take us through to what we hope will be our EBITDA breakeven point in  2011.  The Company expects to raise $5 million through the issuance of common stock and warrants through a Private Placement offering.  The Company intends to use the funds for working capital purposes, including, without limitation, to support expansion of our distribution channels and to fund our product development and regulatory approval processes."

Bill Taylor, President and COO commented, "We remain extremely positive on the potential of our two bio-materials, HydroFix™ and CollaFix™. There are a number of products in the regulatory pipeline that are expected to serve as catalysts for 2011 revenue growth. Additionally, in the third quarter, we added three new sales representative groups in the U.S., and outside of the U.S. we added one new distributor."

Earnings Call

MiMedx management will host a live broadcast of its second quarter conference call on October 26, 2010, beginning at 10:30 a.m. eastern time.  A listen-only simulcast of the MiMedx Group conference call will be available online at the Company's website at www.mimedx.com or at www.earnings.com.  A 30-day online replay will be available approximately one hour following the conclusion of the live broadcast.  The replay can also be found on the Company's website at www.mimedx.com or at www.earnings.com.

About the Company

MiMedx Group, Inc. ("MiMedx Group") is an integrated developer, manufacturer and marketer of patent protected biomaterial-based products. The Company is emerging from a development-focused start-up into a fully integrated operating company with an experienced team poised to capitalize on its science and technology. Our mantra is "Repair, don't replace" because our biochemists, engineers, designers and physicians believe it is better to augment repair when possible rather than replace traumatized, but otherwise healthy tissues and structures.  Our platform technologies, HydroFix™ and CollaFix™, have a vast number of potential applications in treating traumatized tissue and structures and we are focused on commercializing multiple applications of both technologies. In parallel, we are seeking strategic relationships, in selective categories, to more rapidly commercialize our technologies.  HydroFix™ and CollaFix™ are trademarks of MiMedx Group, Inc.

Safe Harbor Statement

This press release includes statements that look forward in time or that express management's beliefs, expectations or hopes.  Such statements are forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995.  These statements include, but are not limited to, the amount of money the Company expects to raise through the issuance of common stock and warrants,  the expected EBITDA breakeven point in 2011 and the impact on 2011 revenues from the Company's products that are in the regulatory pipeline. These statements are based on current information and belief, and are not guarantees of future performance.  Among the risks and uncertainties that could cause actual results to differ materially from those indicated by such forward-looking statements include that the Company may not be successful in raising its intended amount of capital through a private placement, that the timing of the offering may be delayed, that unanticipated events may prevent the Company from using the proceeds of the offering for the intended purpose, that to survive and achieve its goals the Company may require additional capital beyond the amount raised in the offering referenced in this release, which may be difficult or impossible to obtain, that the Company may not receive requisite regulatory clearances and/or approvals to be able to market a full range of products or that such clearances or approvals may be delayed, that cost reductions may not be sustained or be sufficient to enable the Company to achieve profitability, that the Company may not be able to establish an effective distribution system for its products in the U.S. or abroad, that the Company's products may not gain the anticipated acceptance in the marketplace or that acceptance may be delayed,  and the risk factors detailed from time to time in the Company's periodic Securities and Exchange Commission filings, including, without limitation, its 10-K filing for the fiscal year ended December 31, 2009. By making these forward-looking statements, the Company does not undertake to update them in any manner except as may be required by the Company's disclosure obligations in filings it makes with the Securities and Exchange Commission under the federal securities laws.

MIMEDX GROUP, INC. AND SUBSIDIARIES

(A DEVELOPMENT STAGE ENTERPRISE)

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited)















Period from










Inception



Three Months Ended

September 30,

Nine Months Ended

September 30,

(November 22, 2006)

through


2010

2009

2010

2009

September 30, 2010

REVENUES:









     Net Sales

$     108,027

$                 -

$     544,956

$                 -

$                  545,757











OPERATING COSTS AND EXPENSES:









     Cost of products sold

539,697

-

1,355,210

-

1,355,450

     Research and development expenses

842,929

949,281

2,168,043

2,200,168

10,907,879

     Acquired in-process research and development

-

-

-

-

7,177,000

     Selling, General and Administrative expenses

1,579,259

1,457,965

5,121,933

4,621,295

25,765,940

     Gain on sale of assets

-

-

-

-

(275,428)











LOSS FROM OPERATIONS

(2,853,858)

(2,407,246)

(8,100,230)

(6,821,463)

(44,385,084)











OTHER INCOME (EXPENSE), net









     Financing expense associated with issuance of
           common stock for registration rights waivers

-

(1,305,100)

-

(1,305,100)

(1,305,100)

     Financing expense associated with warrants issued









         in connection with convertible promissory note

-

(683,416)

-

(683,416)

(975,833)

     Net interest (expense) income, net

(584)

(90,814)

(592,866)

(146,124)

(222,496)

     Change in fair value of investment,









        related party

-

-

-

-

(41,775)






















LOSS BEFORE INCOME TAXES

(2,854,442)

(4,486,576)

(8,693,096)

(8,956,103)

(46,930,288)

     Income taxes

-

-

-

-

-











NET LOSS

(2,854,442)

(4,486,576)

(8,693,096)

(8,956,103)

(46,930,288)











Accretion of redeemable common stock and









      common stock with registration rights











      to fair value

-

-

-

-

(2,158,823)











Loss attributable to common shareholders

$ (2,854,442)

$ (4,486,576)

$ (8,693,096)

$ (8,956,103)

$           (49,089,111)











Net loss per common share









      Basic and diluted

$          (0.05)

$          (0.11)

$          (0.15)

$          (0.23)












Shares used in computing net loss per common share









      Basic and diluted

61,049,942

41,576,491

57,874,093

39,803,573























See notes to condensed consolidated financial statements

MIMEDX GROUP, INC. AND SUBSIDIARIES

(A DEVELOPMENT STAGE ENTERPRISE)

CONDENSED CONSOLIDATED BALANCE SHEETS







                                           ASSETS











September 30,





2010

December 31




(unaudited)

2009

Current assets:




   Cash and cash equivalents

$       428,493

$   2,653,537

   Accounts receivable, net

259,476

-

   Inventory


117,821

30,920

   Prepaid expenses and other current assets

123,669

121,277







                  Total current assets

929,459

2,805,734







Property and equipment,





   net of accumulated depreciation of $1,286,038




   and $948,445, respectively

861,189

1,049,597

Goodwill


857,597

857,597

Intangible assets, net of accumulated amortization of $1,965,623


    and $1,464,674, respectively

4,096,377

4,597,326

Deferred financing costs

-

192,627

Deposits and other long term assets

102,500

189,202







                   Total assets

$    6,847,122

$   9,692,083




LIABILITIES AND STOCKHOLDERS' EQUITY









Current liabilities:




   Accounts payable and accrued expenses

$    1,143,645

$      629,349

              Total current liabilities

1,143,645

629,349




Long term convertible debt, face value $3,472,000, less unamortized


     discount of $550,748 and including accrued interest of $69,604 (December)

-

2,990,856







               Total liabilities

1,143,645

3,620,205







Commitments and contingency (Notes 4 and 9)

-

-







Stockholders' equity:


   Preferred stock; $.001 par value; 5,000,000




         shares authorized and 0 (September and December) shares


          issued and outstanding

-

-

   Common stock; $.001  par value; 100,000,000 shares authorized;


       and 61,770,931 (September) and 50,002,887 (December) shares issued;

       61,720,931 (September) and 49,952,887 (December) shares outstanding

61,771

50,003

   Additional paid-in capital

54,767,409

46,454,482

   Treasury stock (50,000 shares at cost)

(25,000)

(25,000)

   Deficit accumulated during the development stage

(49,100,703)

(40,407,607)







                Total stockholders' equity

5,703,477

6,071,878







                 Total liabilities and stockholders' equity

$    6,847,122

$   9,692,083







See notes to condensed consolidated financial statements

SOURCE MiMedx Group, Inc.

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