[LECTEC CORPORATION LOGO]
EXHIBIT 99.1
Contact: Rodney A. Young, CEO (952-933-2291)
LECTEC REPORTS 2003 FIRST QUARTER UNAUDITED FINANCIAL
RESULTS
NET SALES INCREASE BY 9%; OPERATING LOSSES REDUCED BY 62%
MAY 7, 2003 - - MINNETONKA, MN - LECTEC CORPORATION (OTCBB: LECT) reported today
that net sales for the first quarter ended March 31, 2003 increased 8.7% to
$1,645,000 from $1,514,000 for the prior year quarter ended March 31, 2002, the
result of a rebound from soft contract manufacturing sales in the prior year as
well as a shift in strategic focus from retail consumer products to contract
manufacturing. Contract manufacturing net sales increased to $1,334,000 for the
first quarter of 2003 from $352,000 for the first quarter of 2002. Offsetting
the contract manufacturing sales increase was a decline in therapeutic retail
consumer brand product sales, which decreased 63% in the first quarter of 2003
to $312,000, from $838,000 in the prior year. The decline was attributable to a
planned reduction in the number of products the Company offers to the retail
market and the discontinued active promotion of the NeoSkin(R) line of skin care
products due to the inability to fund national advertising programs. The net
loss for the first quarter of 2003 was $359,000, or $.09 per share, compared to
a net loss for the first quarter of 2002 of $807,000, or $.20 per share. Gross
profit as a percentage of net sales for first quarter of 2003 was 29.9% compared
to 30.7% for the first quarter of 2002.
LecTec's total operating expenses decreased 36.6% from prior year levels to
$782,000 for the first quarter ended March 31, 2003, due to effective cost
elimination and management initiatives focused on company-wide expense
reductions. Sales and marketing expenses decreased 57.8%, general and
administrative expenses declined 19.0% and research and development decreased
40.0% for the first quarter of 2003 compared to the first quarter of 2002, due
primarily to significant reductions in promotional expenses, reduction in staff
and other cost-control measures.
"It is exciting to report that our contract manufacturing sales increased. We
believe it is further confirmation of our vision and a testament to the heavy
lifting and creativity that we applied when we first launched multiple products
under our TheraPatch(R) brand four years ago," commented Rodney A. Young
Chairman, CEO and President of LecTec Corporation. "When we first entered the
OTC topical drug delivery market we had the challenge of building OTC patch
awareness, building our brand awareness and attracting large
pharmaceutical-healthcare consumer product companies as customers. Today, OTC
patch awareness is rapidly growing as indicated by the increased number of
competitors entering the market and by the significant growth the market is
experiencing. The OTC topical patch drug delivery market has grown from under
$10 million just four years ago, and is now trending to over $100 million
today,"(1) Young stated.
"In addition to attracting global pharmaceutical-healthcare consumer products
companies like Novartis Consumer Health, Inc. and Johnson & Johnson Consumer
Products, who became customers based on the strength of our intellectual
property and the success of our TheraPatch brand, we are currently in
discussions and working with potential new customers. For now, we are still an
under-capitalized OTC pharmaceutical and skincare contract manufacturing
company, which is rich in intellectual property and OTC hydrogel patch
development expertise. We are continuing our focused efforts to establish a
funding source in the form of a strategic investor, partner or an acquirer to
help maximize our leading technology position in this fast growing OTC patch
market," concluded Young.
(1) Information Resource Data, Chicago, IL
LecTec is a health care and consumer products company that develops,
manufactures and markets products based on its advanced skin interface
technologies. Primary products include a full line of over-the-counter
therapeutic patches for muscle aches and pain, insect bites, minor skin rashes,
cold sores, coughs due to colds and minor sore throats, sinus and allergy,
psoriasis, and NeoSkin Rejuvenation products.
This press release contains forward-looking statements that may include
statements regarding intent, belief or current expectations of the company and
its management. These forward-looking statements are not guarantees of future
performance and involve a number of risks and uncertainties that may cause the
company's actual results to differ materially from the results discussed in
these statements. Factors that might cause such differences include, but are not
limited to, buying patterns of major customers, competitive forces including new
products or pricing pressures, costs associated with and acceptance of the
company's TheraPatch brand strategy, impact of interruptions to production,
dependence on key personnel, need for regulatory approvals, the ability to
satisfy funding requirements for operating needs, expansion or capital
expenditures and other risks and uncertainties detailed from time to time in the
company's filings with the Securities and Exchange Commission, and particularly
in Exhibit 99.01 to our Form 10-K filed in April 2003.
# # #
LECTEC CORPORATION
STATEMENTS OF OPERATIONS
(unaudited)
(in thousands except per share data) Three months ended March 31,
---------------------------------
2003 2002
----------- -----------
Net sales $ 1,645 $ 1,514
Cost of goods sold 1,154 1,049
----------- -----------
Gross profit 491 465
Operating expenses
Sales and marketing 198 469
General and administrative 482 595
Research and development 102 169
----------- -----------
782 1,233
----------- -----------
Loss from operations (291) (768)
Other income (expenses)
Interest expense (19) (39)
Loss on sale of building (52) -
Other, net 3 -
Loss before income taxes ----------- -----------
(359) (807)
Income taxes - -
----------- -----------
Net loss $ (359) $ (807)
=========== ===========
Net loss per share (basic and diluted) $ (0.09) $ (0.20)
Weighted average shares outstanding (basic and diluted) 3,966 3,950
BALANCE SHEET DATA
(in thousands) (unaudited)
March 31, 2003 December 31, 2002
-------------- -----------------
Cash and cash equivalents $ 397 $ 672
Receivables, net 187 319
Inventories 1,170 1,011
Property, plant and equipment, net 680 1,750
Total assets 3,059 4,150
Accounts payable and accrued expenses 1,366 1,368
Customer deposits 613 650
Current maturities of long-term obligations 306 1,154
Shareholders' equity 765 967