- Release Date: 01/10/12 12:45
- Summary: GENERAL: BLT: Share Placement and Share Purchase Plan October 2012
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BLT 01/10/2012 09:45 GENERAL REL: 0945 HRS BLIS Technologies Limited GENERAL: BLT: Share Placement and Share Purchase Plan October 2012 BLIS Technologies Limited Letter to Shareholders Share Placement and Share Purchase Plan October 2012 BLIS Technologies Limited (BLIS and/or the Company) is seeking new investment to further progress the development of both food and nutraceuticalapplications for the company's novel probiotics. Probiotics are live bacteria that confer a health benefit for the user. BLIS has established a strong position as a global leader in developing oral probiotics, with products containing the company's probiotics sold in several markets internationally. Background Over the last two years, BLIS has continued to progress the commercialisation of its probiotics, BLIS K12 and BLIS M18, and the company has achieved a number of significant milestones. However, due to revenues from nutraceutical sales taking longer tobuild than anticipated and the adverse consequences forboth our financial performance and position,further capital is required. The Directorscontracted Murray & Co to conduct a strategic and financial review of the Company earlier this year and subsequently mandated them to raisefunds for the company. Although presented with several alternative capital raising options pursuant to the mandate,the Board considers that none of these proposals are sufficiently advanced at this stage to provide the funding certainty required in the current economic environment. The Board therefore determined to launch this Share Purchase Plan and Placement.Further, the Board is of the view that in the absence of a successful Share Purchase Plan supplemented by funds raised pursuant to the Murray & Co mandate, a capital raising in the form of a pro-rata issue to shareholders in conjunction with a further review of the Company's operations would likely be required in the 2014 financial year. BLIS has not yet returned a profit,and expects to report an operating deficit of $1.3m in the 2013 financial year. BLIS has no plans to pay a dividend to shareholders but will reconsider this at such time as the Company returns a profit. Theexpected deficit of the Company is substantially higher than that anticipated earlier this year and is based on revised expectations for ingredient sales into the United States and China. No meaningful ingredient sales into these markets are anticipated before the 2014 financial year due to delaysin the launch of products containing BLISK12 in China and a review of immediate supply chain requirements by our recently-appointed distributor, Stratum Nutrition.The decision by shareholders to maintain an NZX listing has also added to previously forecast compliance costs. The Companyhas conducted a further review of operations and operating costs and undertaken market analysis in conjunction with Stratum Nutrition. The reviews have confirmed the potential of our operations and consequently the Board and Management remain committed to the Company's commercialisation strategy. As a result, the Company continues to invest inintellectual property protection, regulatory approval processes, targeted product development, and clinical work. The Company has generated considerable interest and activity from several large international companies who are seeking to develop and market products in the oral probiotics category. The investment by these parties reflects ourstrong patent position (supported by trade secrets, especially in product formulation, and trade marks), a solid scientific base,clinical data, regulatory approvals and the strong market position of our exemplar products in New Zealand. Notable recent achievements include GRAS (Generally Recognized AsSafe) status for K12 in food applications, a positive legal opinion allowing the sale of ingredients in the European Union and the signing of the distribution agreement with Novus Nutrition Brands (Stratum Nutrition). The launch of BLIS K12 ice cream by Gourmet is also important as it enables BLIS to show customers anexemplarproductand to extend the consumer benefits to a broader audience.However the complexities of the regulatory environment have increased and this has slowed market access.In addition, the time-scale for the introduction of new productsby major corporates has lengthened with the current global financial situation. The Company recognises that the product focus must be broadened to provide the opportunity for a more diversified revenue stream and therefore we have advanced the evaluation of companion animal and other applications. New funds and the application of the new investment In order to continue to progress, further funds are required. The terms and details of the Share Purchase Plan including the price for new shares are set out in the attached documents. The funds will be applied to ensuring that the Company can maintain core competencies whilst investing further in the development of its on-line presence andpursuing opportunities provided from GRAS and the pathway now open tothe Company through the EU regulatory process. The funds will also support the release of M18 in the New Zealand market, planned for late September, initially through our website. The BLIS products BLIS has oral probiotic products in the market in New Zealand and has established ingredient sales in the United States, Europe and Asia. The Company's primary focus is on Streptococcus salivarius K12, an oral bacterium that produces bacteriocin-like inhibitory substances that provide protection against a range of oral conditions. S. salivarius is a natural inhabitant of the human mouth with K12 being a particular strain that produces bacteriocin-like substances (salivaricins) which act as natural antibiotics and inhibit the growth of undesirable bacteria. The K12 strain is active against Streptococcus pyogeneswhich causes conditions including strep throat. The company has also generated good clinical evidence (published) for the effectiveness of K12 against halitosis/bad breath. BLIS has also developed M18 (another strain of S. salivarius), for which there is evidence of activity against S. mutans, a pathogen implicated in caries (tooth decay).We also have numerous customers who travel very frequently report that their regular use of BLIS K12 has meant that they have a much reduced incidence of ill-health following travel. The company has developed significant expertise around the production of these probiotics that ensures that the organisms are stable and are active in the mouth of the user. This is an important area of trade secrets. Sales and marketing The sale of products via the BLIS website(http://www.blis.co.nz).has provided relevant data about our consumers which is proving valuable in helping stimulate further interest, especially in the dietary supplement market. The Company has committed to upgrading its web site and continuing with its execution of the web strategy. BLIS is also actively involved in supporting Stratum Nutrition in its capacity as the major distributor to the USA and Europe of BLIS products, and is supporting our partner in the Chinese market, as they work to introduce products there. BLIS Technologies has relationships with two major international companies who are each investigating further applications of the company's probiotic ingredients. Scientific and clinical Internationally, there is increasing scientific coverageof the BLIS K12 strain with independent researchers investigating the properties and efficacy of the organism. In support of the regulatory approval processes, the company also expects to make further investments in clinical trials. These trials are designed to support the evidence-base for our products, and the importance of the ongoing involvement of our partners in this area cannot be over-stated and is essential in opening up new markets for the Company's advanced probiotics.The Company continues to make good progress in this. Conclusion Your support of the Share Purchase Plan will enable the company to maintain its core competencies, support the launch of K12 icecream and M18 dietary supplements in New Zealand and continue with the execution of its branded ingredients strategy for advanced probiotics internationally. Yours faithfully BLIS Technologies Limited End CA:00227946 For:BLT Type:GENERAL Time:2012-10-01 09:45:03
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