Coretec Inc.
TSX : CYY

Coretec Inc.

October 23, 2007 18:05 ET

Coretec Announces Third Quarter 2007 Results

Third quarter loss of $0.03 per share

TORONTO, ONTARIO--(Marketwire - Oct. 23, 2007) - Coretec Inc. (TSX:CYY) today reported its financial results for the third quarter ended September 30, 2007. Sales in the 2007 third quarter were $21.9 million, an increase of $0.1 million sequentially or 0.4% as compared to sales of $21.8 million in Q2 2007, and up $0.4 million or 1.9% from sales of $21.5 million in the same period of the prior year.

In the 2007 third quarter, the Company recorded gross profit of $3.9 million or 18.0% of sales, a decrease of $0.3 million sequentially or 7.1% as compared to gross profit of $4.2 million in Q2 2007, and down $1.1 million or 22% from gross profit of $5.0 in the comparable period in 2006.

A loss of $0.6 million or $0.03 per share was recorded in the 2007 third quarter, unchanged sequentially as compared to Q2 2007, and down $1.0 million as compared to the prior year quarter which had income of $0.4 million or $0.02 per share. The 2007 third quarter included $0.1 million of foreign exchange losses. This compares with a loss on foreign exchange of $0.4 million in Q2 2007 and no foreign exchange gain or loss in the prior year period.

Earnings before interest, taxes, depreciation and amortization (EBITDA) in the third quarter of 2007 was $0.8 million, as compared to EBITDA of $0.9 million in Q2 2007. Q3 2007 EBITDA decreased $1.0 million or 56% as compared to EBITDA of $1.8 million in the second quarter of 2006.

Paul Langston, President and CEO of Coretec Inc. said, "The Company's unsatisfactory financial performance relates to industry, currency exchange rate and operational issues. From an industry perspective the Company suffered from the general slowdown in the PCB market. According to IPC (the North American PCB industry association), industry shipments and bookings in 2007 through to the end of August are off 10% and 13% respectively versus the same period in 2006. The industry slowdown has impacted product pricing and overall throughput. Additionally the rapid appreciation of the Canadian dollar relative to other major currencies has had a material impact on the Company's revenue line and cost structure. From an operational perspective the Company was challenged by an increased degree of product complexity processed during the quarter as well as year to date at all sites. With respect to product yields, the Company is installing new equipment in Q4 2007 that will assist with the production of more challenging products."

Coretec is one of the leading designers and fabricators of printed circuit boards for the prototype and quick turnaround production segments of the North American and European markets. Coretec distinguishes itself from its competitors by providing an extensive suite of printed circuit board services including field applications engineering support and education; technology roadmap consulting, CAD layout; rapid response manufacturing for prototypes; quick turn production for small-to-middle volume quantity requirements; and facilitation of higher volume requirements via partnerships in lower cost jurisdictions. The Company is also differentiated by its broad range of PCB technologies.

This news release contains "forward-looking statements" within the meaning of the United States Securities Litigation Reform Act of 1995, and applicable Canadian Securities Legislation. Forward-looking statements include, but are not limited to, statements with respect to financial performance, opportunities, new market for growth and financial position. Generally these forward-looking statements can be identified by the use of forward-looking terminology such as "plans", "expects" or "does not expect", "is expected", "budget", "scheduled", "estimates", "forecast", "intends", "anticipates", or "does not anticipate", or "believes" or variations of such words and phrases, or state that certain actions, events or results "may", "could", "would", "might", or "will be taken", "occur", or "be achieved". Please be cautioned that any such forward-looking statements are not guarantees of future performance and involve significant risks and uncertainties. Actual results or developments may vary materially from those projected or implied in the forward-looking statements as a result of any number of factors, including currency exchange rate fluctuations; variability of operating results; dependence on certain industries; management of growth and expansion; integration of operations; ability to attract and retain key personnel; nature of sales; product complexity and product defects; international operations; material cost fluctuations and limited availability of raw materials; potential loss of customers; competition; industry contraction and slow economic growth; technological change and process development; environmental liability; need for additional financing; product liability; pricing pressure; ability to reduce costs; and other risks discussed in the section entitled "Risk Factors" in Coretec's Annual Information Form dated March 8, 2007 which can be obtained at www.sedar.com.

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