To Our Shareholders: InVitro International finished the 1997 fiscal year by recording its lowest quarterly loss since becoming a public company in 1991. The loss for the quarter ended September 30, 1997, was $232,000, or $0.01 per share, compared to a loss of $568,000, or $0.04 per share in the quarter ended September 30, 1996. Our loss for the full 1997 fiscal year was $1,331,000, or $0.09 per share, compared to a loss of $1,898,000, or $0.15 per share in fiscal 1996.
As our shareholders are aware from prior announcements, InVitro has experienced significant financial difficulties primarily as a result of low sales volume. Erosion in demand for our non-animal safety testing alternatives continued in fiscal 1997 as revenues declined to $720,000 from $1,063,000 in fiscal 1996. To maintain the Company’s survival, operations have been significantly downsized during the last three years by staff reductions and other decreases in operating expenses. The Company’s plan of operation is to seek a suitable merger partner in an effort to preserve and hopefully enhance shareholder value. InVitro is a clean public company, free of debt, with a diversified shareholder base that should be attractive to an appropriate merger candidate.
For the present, we have been able to maintain and preserve the Company’s core business while merger possibilities are pursued. To compensate in part for sales staff reductions, we have added agents and partner laboratories that have been appointed and trained in Europe, Asia and the Unites States. With these changes and my agreement to defer temporarily a portion of the President’s salary, the most recent quarter ended December 31, 1997, showed a small increase in the Company’s cash position from operations as compared to September 30, 1997. This is the first time InVitro has experienced positive cash flow from operations in a fiscal quarter. If the Company can successfully maintain this position or the immediate future, your management is committed to preserving INVI’s core business and seeking new customers while continuing the search for a suitable merger partner.
Our preferred merger partner, Miragen Inc., to date has been unable to complete a transaction due to delays in obtaining additional financing. At the request of Miragen’s Board, I have agreed to serve on a part-time basis as Miragen’s Acting President and Chief Executive Officer. I believe this affords an excellent opportunity to assess Miragen’s potential and progress while it continues to pursue financing necessary for Miragen to become a viable merger prospect.
Notwithstanding my current role in Miragen, my topmost priority is to preserve INVI’s core business and to take any steps possible for INVI to attain the goal of standing on its own financially. As we maintain InVitro’s technology and core capabilities, the Company is impatiently waiting for government and industry to move toward non-animal testing. There are new glimmers of hope from time to time as, for example, November 1997 legislation passed in the United Kingdom that prohibits animal testing for new cosmetic products marketed in the U.K.
Thank you for your continued support. We encourage shareholders and friends of the Company to put pressure through your purchasing decisions on industries such as cosmetics, industrial chemicals, textiles, personal care products and petrochemical in support of non-animal safety testing methods. As always, I can be reached at 1-800-2-INVITRO, extension 260, if I can be of help or service.