Ceapro Reports Record Sales for Second Quarter 2008, Announces Strategic Review Initiatives at AGM
EDMONTON, ALBERTA -- (MARKET WIRE) -- 08/27/08 -- Ceapro Inc. (TSX VENTURE: CZO) today reported 30% increase in sales for the second quarter ended June 30, 2008. Revenues reached a record level of $1,455,619 compared with $1,118,584 in the same period last year and compared to $856,000 for the first quarter of 2008. Marketing and business development initiatives undertaken during the past 12 months supported this growth. Globally Ceapro's lines of organic and conventional active ingredients are in greater demand. Expansion of the manufacturing plant, implemented over the last 9 months will allow increased capacity and productivity. As well, new distribution alliances with specialist marketers in the organic sector have products being distributed in France, the U.S. and Asia.
Strategic Review Initiatives
In May 2008 the Board mandated an external strategic review of Ceapro's business and organizational approach. Today, at the Annual Shareholder Meeting, Director and acting CEO Gilles Gagnon is disclosing the results: Focus will be on Company's core expertise - extracting active ingredients from natural sources with a view to accelerating growth and leveraging opportunities in global markets.
Corporate portfolio management will focus on cosmeceuticals, with increased emphasis on nutraceuticals. Out-licensing discussions with strategic partners are ongoing for its CeaProve(®) proprietary diabetes test meal. While a recent feasibility study found Ceapro technology has applications in the bio-energy sector, Ceapro will also look to out-license these applications to active participants in the sector. Ceapro will continue to review plant extract in-licensing opportunities.
Said Gilles Gagnon, "Our goal is to increase sales by 50% over the next 12 months. This should see Ceapro achieve profitability by the end of Q2 2009. We will also study expanding our manufacturing capabilities into environments conducive to our business."
Organizational Review and Nominations
Following the strategic review, Ceapro unveiled a fresh organizational chart with emphasis on new marketing and business development functions. It also announced the promotion of David Fielder to Chief Scientific Officer.
Recognizing its human resource capital, the Board of Directors granted share options to all employees.
Financial Highlights for Second Quarter and Six Month Period Ended June 30, 2008
- Sales of active ingredients to personal care markets were the highest on record. Total sales were $1,456,000 for the quarter and $2,308,000 for the six-month period, compared with $1,119,000 and $2,080,000 in the corresponding periods in 2007.
- Gross margins increased 10% in Q2 over Q1 as further improvements were realized from the plant expansion and higher revenues. Ceapro has faced pressures from higher labor costs and labor shortages, rising commodity prices, and a lower US dollar throughout 2008.
- Net loss for the quarter was $332,000 or $0.01 per share, compared with a net loss of $237,000 or $0.01 per share in 2007. An accrual for legal fees with respect to litigation in the amount of $755,000 increased the net loss to $1,087,000 or $0.02 per share. The Company recently began appeal proceedings with respect to the litigation.
The complete audited annual report and financial statements are available for review on SEDAR at http://sedar.com/Ceapro and on the Company's website at www.ceapro.com .
About Ceapro Inc.
Ceapro Inc. is a Canadian growth-stage biotechnology company. Primary business activities relate to the development and commercialization of organic products for personal care and cosmetic industries using proprietary technology and natural, renewable resources.
CEAPRO INC.
Consolidated Balance Sheets
June 30 December 31
2008 2007
(Unaudited) (Audited)
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ASSETS
CURRENT ASSETS
Cash and cash equivalents $40,371 $1,282,326
Accounts receivable 765,648 708,165
Inventories 459,514 156,584
Prepaid expenses and deposits 77,484 130,100
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1,343,017 2,277,175
RESTRICTED CASH 50,000 50,000
LICENSES 30,000 -
PROPERTY AND EQUIPMENT (NET OF
ACCUMULATED AMORTIZATION) 2,309,206 2,260,418
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$3,732,223 $4,587,593
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LIABILITIES
CURRENT LIABILITIES
Accounts payable and accrued liabilities $481,008 $494,413
Current portion of deferred revenue 57,125 107,007
Current portion of long-term debt 128,107 112,638
Currrent portion of royalties payable 300,321 138,185
SGGF legal fees (Note 12) 755,469 -
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1,722,030 852,243
DEFERRED ROYALTY REVENUE 294,885 328,377
EMPLOYEE FUTURE BENEFITS OBLIGATION 314,644 283,648
LONG-TERM DEBT 1,432,907 1,499,768
ROYALTIES PAYABLE 55,924 69,905
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3,820,390 3,033,941
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SHAREHOLDERS' EQUITY
SHARE CAPITAL 5,016,395 5,016,395
CONTRIBUTED SURPLUS 313,464 259,329
DEFICIT (5,418,026) (3,722,072)
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(88,167) 1,553,652
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$3,732,223 $4,587,593
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CEAPRO INC.
Consolidated Statements of Net Loss, Comprehensive Loss and Deficit
Unaudited
Six Months Ended June 30 Quarters Ended June 30
2008 2007 2008 2007
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Revenue
Sales $2,307,586 $2,080,210 $1,455,619 $1,118,584
Cost of goods
sold 1,373,884 911,464 809,330 501,329
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Gross margin 933,702 1,168,746 646,289 617,255
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Expenses
General and
administration 854,090 584,834 445,977 338,714
Royalties 218,034 196,538 137,659 105,683
Sales and marketing 274,279 192,755 136,517 119,983
Amortization 163,111 64,803 85,982 32,657
Interest on
long-term debt 42,544 19,922 21,088 10,291
Interest - other - 2,129 - 1,504
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1,552,058 1,060,981 827,223 608,832
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(Loss) income
from operations (618,356) 107,765 (180,934) 8,423
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Other income
(expenses)
Research and product
development (339,320) (271,130) (137,160) (169,168)
Bio-energy
feasibility study (14,371) (45,670) 3,865 (22,958)
Other income
(expenses) 31,562 (49,870) (17,626) (53,506)
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(322,129) (366,670) (150,921) (245,632)
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Loss before SGGF
legal fees and
income taxes (940,485) (258,905) (331,855) (237,209)
SGGF legal fees
(Note 12) (755,469) (755,469)
Income taxes
Current - 68,500 - 4,000
Reduction as a
result of applying
non-capital losses
carried forward
against the
current period's
taxable income - (68,500) - (4,000)
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NET LOSS AND
COMPREHENSIVE LOSS
FOR THE PERIOD (1,695,954) (258,905) (1,087,324) (237,209)
Deficit, beginning
of period (3,722,072) (2,332,738) (4,330,702) (2,354,434)
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Deficit, end
of period $(5,418,026) $(2,591,643) $(5,418,026) $(2,591,643)
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Net loss per share:
Basic $(0.04) $(0.01) $(0.02) $(0.01)
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Diluted $(0.04) $(0.01) $(0.02) $(0.01)
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CEAPRO INC.
Consolidated Statements of Cash Flows
Unaudited
Six Months Ended June 30 Quarters Ended June 30
2008 2007 2008 2007
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Operating Activities
Net loss for the
period $(1,695,954) $(258,905) $(1,087,324) $(237,209)
Items not affecting
cash
Amortization 163,111 64,803 85,982 32,657
Employee future
benefits
obligation 30,996 31,764 15,498 15,498
Recognition of
deferred royalty
revenue (26,366) (23,766) (16,633) (12,780)
Stock based
compensation 54,135 22,242 11,982 11,121
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(1,474,078) (163,862) (990,495) (190,713)
Changes in Non-Cash
Working Capital
Items
Accounts receivable (57,483) (323,708) 190,717 21,768
Inventories (302,930) (53,941) (145,918) 34,345
Prepaid expenses
and deposits 52,616 (87,376) 19,269 (132,131)
Accounts payable and
accrued liabilities (13,405) 552,416 (185,648) 230,378
Deferred revenue (57,008) (19,166) (14) (7,909)
SGGF legal fees 755,469 - 755,469 -
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(1,096,819) (95,637) (356,620) (44,262)
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Investing Activities
Purchase of licenses (30,000) - (30,000) -
Purchase of property
and equipment (211,899) (676,041) (12,544) (660,156)
Deposits for the
purchase of
property and
equipment - (23,082) - 32,703
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(241,899) (699,123) (42,544) (627,453)
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Financing Activities
Repayment of long-
term debt (51,392) (17,901) (30,972) (9,048)
Repayment of
callable debt - (23,975) - (12,103)
Proceeds from long
term debt - 556,838 - 556,838
Proceeds from
issuance of share
capital - 2,692,100 - 2,692,100
Share capital issue
costs - (277,692) - (277,692)
Proceeds from exercise
of stock options - 33,237 - 33,237
Increase in royalties
payable 148,155 15,969 72,046 2,641
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96,763 2,978,576 41,074 2,985,973
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Increase (decrease)
in cash and cash
equivalents (1,241,955) 2,183,816 (358,090) 2,314,258
Cash and cash
equivalents at
beginning of
period 1,282,326 310,926 398,461 180,484
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Cash and cash
equivalents at end
of period $40,371 $2,494,742 $40,371 $2,494,742
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Supplementary
Information
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Interest paid $42,544 $22,051 $21,088 $11,795
Royalties paid $82,260 $176,372 $82,260 $176,372
Cash and cash
Equivalents
consist of:
Cash on deposit
(overdraft) with
banks $(34,629) $488,402 $(34,629) $488,402
CAD$ term deposit 75,000 1,900,000 75,000 1,900,000
US$ term deposit - 106,340 - 106,340
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$40,371 $2,494,742 $40,371 $2,494,742
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Contacts: Ceapro Inc. Branko Jankovic Chief Financial Officer (Edmonton): 780-917-8376 info@ceapro.com www.ceapro.com Sun International Communications Nicole Blanchard, B.Sc., B.Comm anaging Partner (Montreal): 450-973-6600 nicole.blanchard@isuncomm.com
Released August 27, 2008