CVF Technologies Corporation Reports 3rd Quarter Results
November 15 2007 - 11:06AM
PR Newswire (US)
WILLIAMSVILLE, N.Y., Nov. 15 /PRNewswire-FirstCall/ -- CVF
Technologies Corporation (OTC:CNVT) (BULLETIN BOARD: CNVT) a
holding company that is involved in the business of developing and
managing early stage companies primarily engaged in the clean-tech
sector today reported financial results for the third quarter 2007.
Third Quarter 2007 Financial Results -- CVF's financial results can
best be understood by examining the growth prospects for its
portfolio companies. In this report CVF will again emphasize the
potential of its portfolio companies. Judging CVF on its income
statement alone is not very helpful due to significant changes in
revenue and income that can occur from quarter to quarter and from
year to year. An example of how this revenue fluctuation can occur
is when CVF's ownership interest in one of its portfolio companies
goes below 50%. The portfolio company may still have significant
revenue as does Biorem whose revenue was cdn $2,547,000 for the
third quarter 2007 and cdn $6,532,000 for the first nine months of
2007. However that revenue is not shown in CVF's income statement.
It is therefore important to focus on CVF's business model which is
to invest its capital and human resources primarily in early stage,
clean-tech companies with significant growth potential. The intent
is to develop these companies until they either go public as did
Biorem in January 2005, or are acquired as was Gemprint in December
2005. When these events occur there will be a significant increase
in CVF's income, as there was in 2005, when Gemprint was sold, and
in 2004, when CVF realized gains on Biorem. In order to pass this
realization of value to its shareholders CVF may initiate a stock
repurchase program as it did in 2006, when it repurchased a total
of $1,626,400 of its preferred and common shares, or it may decide
to issue dividends to its shareholders. Portfolio Highlights --
Biorem -- (24% owned by CVF) had revenue of cdn $2,547,000 in the
third quarter 2007 (which is not included in CVF's consolidated
revenue due to GAAP accounting rules). The Company's long sales
cycle and the variability in the size of the Company's orders may
cause revenue fluctuations period to period. The reduced bookings
toward the end of 2006 slowed the revenue in 2007, however the
majority of the new business opportunities remain intact and Biorem
expects those opportunities to be realized in the months ahead. As
of September 30, 2007 the order backlog increased by cdn $500,000
to cdn $9,500,000 from the cdn $9,000,000 reported at the end of
the second quarter, the second straight quarter of backlog
increase. Also, sales increased to cdn $2,547,400 from cdn
$2,214,600 in the prior quarter, representing two consecutive
quarters of sales increase. Biorem focused on building its order
backlog, cost reduction and price adjustments to improve its gross
margin. Biorem is projecting that the sales momentum and backlog
increase that has been building for two straight quarters will
continue. Since March 1, the Company has been receiving orders at
an annualized rate well exceeding cdn $14,000,000. To offset the
significant decrease in the value of the US dollar, the Company has
been shifting operational and project expenses to the US in order
to match the US based orders. Total operating expenses in the
quarter of cdn $1,589,000 was up cdn $290,000 or 22% compared to
the prior year. The variance is primarily attributable to cdn
$227,000 foreign exchange loss, which is reflective of the decrease
in the value of US dollar denominated working capital assets.
Biorem, at September 30, 2007, had cash and cash equivalents in the
amount of cdn $1,938,000 and net working capital of cdn $3,833,000
(which is not included in CVF's consolidated balance sheet due to
GAAP accounting rules). The cash balance and the unused credit
facilities available to Biorem are considered adequate to fund the
future operating requirements of the business. Xylodyne Corporation
-- (40% owned by CVF) In March and April of 2006 CVF invested cdn
$325,000 in Xylodyne Corporation, a newly formed company which
focuses on the development and distribution of 4-wheel drive off
road electric vehicles. These vehicles are offered to the personal
recreational market as well as to government agencies, conservation
authorities and the mining industry. Xylodyne is currently focusing
its efforts on building its distribution network for its vehicles
in the US and Canada. It has now signed dealers in New York,
Delaware, Maryland, Massachusetts, and Ontario as it aggressively
builds its US and Canadian dealer network for its electric
vehicles. CVF owns 40% of the equity of the company plus holds a
two-year note for $313,000 (Cdn) from Xylodyne. Xylodyne achieved
sales of $1,391,800 and a loss of $4,900 for the first nine months
of 2007. Ecoval -- (85% owned by CVF) The Ecosense herbicide,
produced and marketed by Scotts Canada, its licensee, is available
in every major retail chain in Canada and has become the leading
environmentally friendly herbicide in Canada. Ecoval has also
signed an exclusive distribution agreement with Plant Products the
largest commercial, non-retail horticultural distributor in Canada
for Ecoval's EcoClear herbicide product. The Scotts and Plant
Products agreements are expected to make Ecoval's herbicide the
dominant product of the non-chemical herbicide products in Canada.
Ecoval now plans to leverage off its success in Canada to begin an
aggressive marketing campaign in the US as it seeks out partners
similar to what has been achieved in Canada. Ecoval is continuing
its negotiations with large multinational corporations to offer its
herbicide product to the US market in an exclusive distribution
agreement. An agreement of this type has the potential to produce
significant income to Ecoval in future years. Ecoval hopes to
complete these negotiations in the coming months. Ecoval is also in
serious negotiations with a number of companies to add additional
products. G.P. Royalty Distribution Corporation (formerly Gemprint
Corp.) -- (65% owned by CVF) was formed to receive potential
royalty distributions from Collectors Universe Corp who purchased
the assets of Gemprint in December 2005. The royalty agreement is
for $1 for each Gemprint over 100,000 Gemprints per year until
December 2010. Based on Collectors Universe's recent press releases
they have made their G Cal diamond grading program a core part of
their business model and Gemprint is a key component of it.
Petrozyme -- (50% owned by CVF) is continuing to explore marketing
opportunities for its proprietary biologically based remediation
technologies for the petroleum and petrochemical industries. The
company is seeking a partnership or licensing agreement with a
major North American environmental company as well as licensing
agreements in the Middle East. CVF GAAP financial results for the
third quarter 2007 -- On a consolidated basis CVF reported a
decrease in revenue of $565,200 for the third quarter 2007 due to
the decrease in sales from Xylodyne, its new investee company. Net
loss for the third quarter 2007 of $810,000 compared to net loss of
$420,100 in the third quarter 2006 due primarily to the increased
loss at Biorem and foreign exchange losses from the rapid increase
in the value of the Canadian dollar. This equates to a loss per
share of $0.06 for the third quarter 2007 compared to a loss per
share of $0.03 for the third quarter 2006. CVF GAAP financial
results for the first nine months 2007 -- On a consolidated basis
CVF reported an increase in revenue of $549,900 or 54%. This was
due to Xylodyne (the new investee company which began operations in
April 2006) sales increasing by $536,600. Loss for the first nine
months 2007 was $1,654,000 compared to a loss of $1,648,500 in the
first nine months of 2006. This equates to a loss per share of
$0.13 for the 2007 first nine months compared to a loss per share
of $0.13 for the first nine months of 2006. Included in the first
nine months of 2007 is $63,700 of expense due to decline in the US
dollar compared to $145,100 in the first nine months of 2006. It
should also be noted that Biorem's quarterly revenue of cdn
$2,547,400 and its nine month revenue of cdn $6,531,600 is not
consolidated in CVF's financial statements as CVF owns less than
50% of Biorem. CVF Technologies Corporation
(http://www.cvfcorp.com/) is headquartered in Williamsville, New
York. CVF is a technology development company, whose principal
business is sourcing, funding and managing emerging pre-public,
clean-tech companies with significant market potential. Certain
statements made in this press release which are not historical
facts are made pursuant to the safe harbor provisions of the
Private Securities Litigation Reform Act of 1995. Investors are
cautioned that these statements involve risks and uncertainties,
which may cause actual results or achievements to be materially
different from any future results and achievements expressed or
implied by the forward-looking statements. These risks include, but
are not limited to, product demand and market acceptance risks for
the products and technologies of CVF's subsidiary companies and
investees; the impact of competitive products, technologies and
pricing; delays or difficulties in developing, producing, testing
and selling new products and technologies; the ability of the
company's subsidiaries and investees to obtain necessary financing
for their operations and to consummate initial public offerings of
their stock; the effect of the Company's accounting policies; the
effect of trade restrictions and other risks detailed in the
company's Statement on Form 10-SB/A filed with the U.S. Securities
and Exchange Commission and any subsequent filings with the
Commission. For more information please contact:
http://www.cvfcorp.com/ DATASOURCE: CVF Technologies Corporation
CONTACT: Robert L. Miller, Chief Financial Officer,
+1-716-565-4711, or Jeffrey Dreben, President & CEO,
+1-716-565-4711, both of CVF Technologies Corporation Web site:
http://www.cvfcorp.com/
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