N@N

LecTec Corporation Announces Third Quarter Results

^{Published on 2010-11-15 13:35:48 - Market Wire}
 

TEXARKANA, Texas--([ BUSINESS WIRE ])--LecTec Corporation (OTCBB: LECT) announced today that it has released its 2010 third quarter financial information. LecTeca™s cash and cash equivalents as of September 30, 2010 were $9,283,697 as compared to $15,766,107 as of September 30, 2009. Cash and cash equivalents does not include our litigation escrow account of $603,690 as of September 30, 2010. The decrease in cash and cash equivalents resulted primarily from operating expenses and a cash dividend distribution of $4,298,350 and payment of income taxes of approximately $1,100,000 in prior quarters. Operating expenses for the third quarter 2010 were $639,878, an increase over previous quarters due to certain significant expenses including litigation expenses of $275,708, funded from our litigation escrow account, resulting from our preparation for our January 2011 trial, approximately $64,500 related to our management and director transition, including costs of the Annual Meeting of Shareholders, and a non-cash compensation expense of $78,660. Royalty income was $26,373 for the third quarter, an unexpected increase of $2,158 from third quarter 2009. Although royalty income increased in the third quarter, there was still a decrease of $27,477 for the nine months ended September 30, 2010 as compared to the same period in 2009 which continued the trend of lower sales by Novartis of its patch products using LecTec licensed intellectual property.

Greg Freitag, LecTeca™s CEO stated: aThird Quarter had a number of moving parts, but with the management/director transition complete, and clear focus on our business plan, we are settling into normalized operations. Our preparation for trial is aggressively proceeding and will continue until its start in January. We have established deal flow for possible M&A transactions and are at various stages of review with a number of opportunities; however, there can be no assurance when, or if, we will be able to complete a transaction. Pursuit of relationships to try and derive value from our intellectual property is also ongoing. Our business plan is being pursued with the intent to manage cash and trim operating expenses, provided, however, expenses related to litigation and M&A efforts will fluctuate based on activity in those areas.a

About LecTec

LecTec is an intellectual property (aIPa) licensing and holding company with approximately $9.3M in cash at September 30, 2010. LecTec holds multiple domestic and international patents based on its original hydrogel patch technology and has also filed for a provisional patent forits hand sanitizer patch. The LecTec hydrogel patch technology allows for a number of potential applications, including its previously marketed TheraPatch® products, while its anti-microbial hand sanitizer patch is intended to be dry, thereby rendering the patch harmless in the event that it is licked, chewed, or exposed to the eye. An initial prototype of the hand sanitizer patch has been developed and LecTec intends to engage a strategic partner to complete its hand sanitizer patch development. Pursuit of manufacturing and marketing/co-marketing partners for products from LecTeca™s IP is also ongoing. LecTec has a licensing agreement (aNovartis Agreementa) with Novartis Consumer Health, Inc., which pays royalties to LecTec from time to time, within the terms of the Novartis Agreement, based upon a percentage of Novartisa™ net sales of licensed products. LecTec takes legal action as necessary to protect its IP and is currently involved in two patent infringement actions. Finally, LecTec is pursuing a merger/acquisition strategy with the intent to leverage its cash asset and improve shareholder value and liquidity. The Companya™s website is [ www.lectec.com ].

Cautionary Statements

This press release contains forwarda"looking statements concerning possible or anticipated future results of operations or business developments which are typically preceded by the words abelieves,a awants,a aexpects,a aanticipates,a aintends,a awill,a amay,a ashould,a or similar expressions. Such forward-looking statements are subject to risks and uncertainties, which could cause results or developments to differ materially from those, indicated in the forwarda"looking statements. Such risks and uncertainties include, but are not limited to, the Companya™s dependence on royalty payments from Novartis Consumer Health, Inc., which is selling an adult vapor patch licensed by the Company, the Companya™s dependence on key personnel and Board of Director members, the Companya™s pending patent infringement litigation against Chattem, Inc. and Prince of Peace Enterprises, Inc., the issuance of new accounting pronouncements, information disseminated on internet message boards from posters expressing opinions that may or may not be factual, the availability of opportunities for license, sale or strategic partner agreements related to patents that the Company holds, limitations on market expansion opportunities, and other risks and uncertainties detailed from time to time in the Companya™s filings with the Securities and Exchange Commission, and particularly as described in the aRisk Factorsa included in our Form 10a"K for the year ended December 31, 2009.