Health & Fitness
Health and Fitness
Health and Fitness
Thu, May 19, 2011
Wed, May 18, 2011
Tue, May 17, 2011 
TEXARKANA, Texas--([ BUSINESS WIRE ])--LecTec Corporation (OTCBB: LECT) announced today that it has released its 2011 first quarter financial information. LecTeca™s cash and cash equivalents and certificates of deposit as of March 31, 2011 were $8,824,975 as compared to $9,036,400 as of March 31, 2010. Cash and cash equivalents and certificates of deposit do not include our litigation escrow account of $2,451,751 as of March, 2011 because it is still maintained in such account for the benefit of the Company. The decrease in cash and cash equivalents resulted primarily from operating expenses. Excluding litigation and non-cash stock option grant expenses, operating expenses for the 3 months ended March 31, 2011 were $358,602, a decrease of $35,873 compared to the same quarter in 2010. Such lower operating expenses were the result of reduced rent, salary, research and development and accounting expenditures, offset by increases in intellectual property and merger strategy related expenses.
"Each accomplishment continues to put past issues behind us and focus LecTec on its new path. We look forward to providing further information regarding our merger strategy in the near future. The continued support of the LecTec shareholders as our transition continues is greatly appreciated."
The Company recorded infringement income of $3,600,000 for the quarter ended March 31, 2011. This income was related to a settlement with Chattem, Inc., a defendant in the Companya™s patent litigation efforts. The Company received no infringement income during the first quarter ended March 31, 2010. The Company recorded royalty income of $25,007 and $19,529 for the three months ended March 31, 2011 and 2010, respectively, an increase of $5,478. Although royalty income increased in the first quarter, the Company does not expect an increase in sales by Novartis of its patch products using LecTec licensed intellectual property that would result in royalty revenue substantially different than that received in fiscal 2010.
The engagement with Rader, Fishman & Grauer (aRadera), special litigation counsel to the company, has ended and final reconciliations completed. As to the Chattem and Prince of Peace Settlements and sale of patents to Endo Pharmaceuticals, the aggregate net proceeds to the company, prior to federal taxation, will be $3,625,000.
Greg Freitag, LecTeca™s CEO, stated: aIt has been a busy and exciting start to the year. We completed our litigation efforts, sold a significant portion of our intellectual property and are pursuing our merger strategy with AxoGen, Inc. Despite such activity, we were able to reduce operating expenses through our cost containment plan that we began last year. Although operating expenses are expected to continue to see modest declines, costs related to our merger strategy are expected to increase.a
Mr. Freitag continued: aEach accomplishment continues to put past issues behind us and focus LecTec on its new path. We look forward to providing further information regarding our merger strategy in the near future. The continued support of the LecTec shareholders as our transition continues is greatly appreciated.a
About LecTec
The Company is an intellectual property (aIPa) licensing and holding company whose primary strategy is to pursue a merger to leverage its cash asset and improve shareholder value and liquidity. LecTec is in discussions with AxoGen, Inc. as a candidate for this strategy. LecTec also has a licensing agreement (aNovartis Agreementa) with Novartis Consumer Health, Inc., under which LecTec receives royalties from time to time based upon a percentage of Novartisa™ net sales of licensed products. LecTeca™s intellectual property portfolio contains domestic and international patents based on its original hydrogel patch technology and patent applications on a hand sanitizer patch. LecTec has completed through settlement its previous legal action against five defendants and on May 9, 2011 sold a significant portion of its hydrogel patch intellectual property to Endo Pharmaceuticals Inc. for $2,000,000. Such actions have ended LecTeca™s current pursuit of legal action regarding its intellectual property. The LecTec 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 is exploring the engagement of a strategic partner to complete its hand sanitizer patch development. An effort to monetize the remainder of LecTeca™s intellectual property is also ongoing, however, any substantial additional value is uncertain.
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, LecTeca™s dependence on royalty payments from Novartis Consumer Health, Inc., which is selling an adult vapor patch licensed from LecTec, LecTeca™s dependence on key personnel and Board of Director members, 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 LecTec holds, limitations on merger and acquisition opportunities, and other risks and uncertainties detailed from time to time in LecTeca™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, 2010.
