AdvanSource Biomaterials Corporation (NYSE Amex: ASB), a leading developer of advanced polymer materials for a broad range of medical devices, today announced financial results for its fiscal 2010 second quarter ended September 30, 2009.
Total revenues for the three months ended September 30, 2009 were $518,000 as compared with $989,000 for the comparable prior year period, a decrease of $471,000, or 47.6%. Total revenues for the six months ended September 30, 2009 were $968,000 as compared with $1,863,000 for the comparable prior year period, a decrease of $895,000, or 48.0%.
Product sales of our biomaterials for the three months ended September 30, 2009 were $316,000 as compared with $409,000 for the comparable prior year period, a decrease of $93,000, or 22.7%. Product sales of our biomaterials for the six months ended September 30, 2009 were $555,000 as compared with $722,000 for the comparable prior year period, a decrease of $167,000, or 23.1%. Although the three and six month period product sales decreased as compared with the comparable prior year periods, primarily due to a decrease in shipments of our biomaterials to our existing customer base, in the second quarter of fiscal 2010 the Company realized a $77,000, or 32.2%, increase in product sales over the first quarter of fiscal 2010. The sequential quarter growth is attributable to product sales to new customers in addition to increased sales to our existing customer base.
License, royalty and development fees for the three months ended September 30, 2009 were $202,000 as compared with $580,000 for the comparable prior year period, a decrease of $378,000 or 65.2%. License, royalty and development fees for the six months ended September 30, 2009 were $413,000 as compared with $1,141,000 for the comparable prior year period, a decrease of $728,000 or 63.8%. The decrease in license, royalty and development fees during the three and six month periods ended September 30, 2009 is primarily a result of an amendment to an agreement with a major customer from whom we derive a majority of our license, royalty and development fee revenue. The amendment to this agreement resulted in the reduction of royalty fees paid to us per unit of sale of our customer’s product.
Gross profit on total revenues for the three months ended September 30, 2009 was $227,000, or 43.8% of total revenues, compared with $609,000, or 61.6% of total revenues, for the comparable prior year period. Gross profit on total revenues for the six months ended September 30, 2009 was $338,000, or 34.9% of total revenues, compared with $1,136,000, or 61.0% of total revenues, for the comparable prior year period. The decrease in gross profit dollars and gross profit as a percentage of total revenues is due to the decrease of product sales and license, royalty and development fees compared to the prior year period.
Gross profit on product sales for the three months ended September 30, 2009 was $25,000, or 7.9% of product sales, compared with gross profit of $29,000, or 7.1% of product sales, for the comparable prior year period. Gross profit on product sales for the six months ended September 30, 2009 was a loss of $75,000, or 13.5% of product sales, compared with a loss of $5,000, or 0.7% of product sales, for the comparable prior year period. Gross profit on product sales was much improved for the second quarter of fiscal 2010 as compared with the first quarter of fiscal 2010, where we reported a loss of $100,000 or 41.8%. The improved gross margin in the second quarter of fiscal 2010 is a result of increased product sales within a relatively stable fixed cost environment and continued improvements in operating efficiencies.
Research and development expenses for the three months ended September 30, 2009 were $159,000 as compared with $231,000 for the comparable prior year period, a decrease of $72,000 or 31.2%. Research and development expenses for the six months ended September 30, 2009 were $341,000 as compared with $414,000 for the comparable prior year period, a decrease of $73,000 or 17.6%. During the three and six month periods ended September 30, 2009, we increased our research and development expenditures in the development of new biomaterials and related applications while expenditures related to the CardioPass clinical trials decreased.