Covalon Technologies Ltd.
TSX VENTURE : COV

Covalon Technologies Ltd.

January 28, 2010 16:59 ET

Covalon Announces Latest Financial Results

- Increased Revenue, Decreased Expenses and Reduced Losses in Past Two Quarters - Continued Strong Balance Sheet with No Debt and Resources Including $5.9 Million in Cash and Equivalents - Directors Discontinue Cash Compensation in Favour of Awarded Stock Options - CEO and CFO Demonstrate Continued Commitment by Exercising Stock Options

MISSISSAUGA, ONTARIO--(Marketwire - Jan. 28, 2010) - Covalon Technologies Ltd. (the "Company" or "Covalon")(TSX VENTURE:COV), is pleased to announce the release of its financial statements for the fiscal year ending September 30, 2009, the fourth quarter of fiscal 2009 ending September 30, 2009 and the first quarter of fiscal 2010 ending December 31, 2009.

Mr. William Jackson, Covalon's Chief Financial Officer, Chief Business Officer and Co-Founder stated, "I am extremely pleased with Covalon's improved financial performance over the last two quarters. Due to concerted effort on the part of all of Covalon's staff, we have increased revenue, increased gross margins, decreased expenses and reduced losses as shown in the tables below.



Summary Results for Fourth Quarter of Fiscal 2009 ended September 30, 2009
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Fiscal Q4 2009 Fiscal Q4 2008 Improvement Improvement
Ended Sept 30, Ended Sept 30, Over Prior Over Prior
2009 2008 Period Period
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(Announced Today) (Comparison) (In Dollars)(In Percentage)

Product Sales
& Licensing
Revenues $603,914 $371,477 $232,437 62.6%

Gross Margin 50.0% 39.1% N/A 27.9%

Expenses $1,157,221 $1,801,785 $644,564 35.8%

Net Income (Loss) ($844,459) ($1,608,315) $763,856 47.5%

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Summary Results for First Quarter of Fiscal 2010 ended December 31, 2009
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Fiscal Q1 2010 Fiscal Q1 2009 Improvement Improvement
Ended Dec 31, Ended Dec 31, Over Prior Over Prior
2009 2008 Period Period
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(Announced Today) (Comparison) (In Dollars)(In Percentage)

Product Sales
& Licensing
Revenues $794,670 $358,670 $436,000 121.6%

Gross Margin 55.8% 33.9% N/A 64.6%

Expenses $896,360 $1,572,591 $676,231 43.0%

Net Income (Loss) ($443,358) ($1,347,464) $904,106 67.1%

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Covalon continues to have a strong balance sheet with no debt and $5,928,742 in cash, cash equivalents and short term investments as of December 31, 2009. The loss per share for the first quarter was $0.006 per share compared with $0.018 for the first quarter of the previous year.

For the 2009 fiscal year ending September 30, 2009, Covalon had product sales and licensing revenues of $2,092,526 compared to $1,846,718 for the 2008 fiscal year ended September 30, 2008. For the 2009 fiscal year ending September 30, 2009, the Company incurred a net loss $4,874,809 ($0.07 per share) compared to a net loss of $3,740,847 ($0.05 per share) for the 2008 fiscal year ended September 30, 2008.

These financial statements and associated Management Discussions and Analysis (MD&A) filings are available on SEDAR at www.sedar.com and on the Company's website at www.covalon.com.

Dr. Frank DiCosmo, Covalon's President, CEO and Co-Founder stated, "Due to a real team effort on everyone's part at Covalon, we continue to develop new exciting technologies, pursue new sales opportunities and do everything we can to reduce expenses."

Mr. Martin Bernholtz, Covalon's newly-appointed Chairman of the Board stated, "I am pleased to announce that the Board of Directors, in an effort to reduce cash expenses have unanimously voted to immediately discontinue cash compensation for its services and instead be compensated only through stock options. To that end, the Board approved the awarding of 855,000 options, vesting quarterly over one year, at an exercise price of $0.31 to be exercised within five years for four Covalon Directors. Dr. DiCosmo and Mr. Jackson, as senior executives of the Company, are not awarded stock options or compensated in any other way for their being Directors of the Company.

"It is also worth noting that both Dr. DiCosmo and Mr. Jackson demonstrated their continued confidence in our Company by exercising stock options at an exercise price of $0.30 prior to their expiration in December of 2009", said Mr. Bernholtz.

About Covalon

Covalon Technologies Ltd. is an advanced medical products company that develops, patents and commercializes therapeutic biomaterials for wound care and surgical applications and coatings. Polymer chemistry and surface coating technology have been combined to create a range of time-release drug delivery platforms that are applied to medical devices to treat many critical conditions. A variety of applications for these technologies have been identified and specific products have been developed. The products offer features and benefits providing solutions to many of the problems caused by current devices and their material properties which are used by most medical device manufacturers and suppliers. The problems include infection, poor biocompatibility and microbial attachment.

This news release contains forward-looking statements which reflect the Company's current expectations regarding future events. The forward-looking statements are often, but not always, identified by the use of words such as "seek", "anticipate", "plan, "estimate", "expect", "intend" and statements that an event or result "may", "will", "should", "could" or "might" occur or be achieved and other similar expressions. These forward-looking statements involve risk and uncertainties, including the difficulty in predicting product approvals, acceptance of and demands for new products, the impact of the products and pricing strategies of competitors, delays in developing and launching new products, the regulatory environment, fluctuations in operating results and other risks, any of which could cause results, performance, or achievements to differ materially from the results discussed or implied in the forward-looking statements. Many risks are inherent in the industry; others are more specific to the Company. Investors should consult the Company's ongoing quarterly filings for additional information on risks and uncertainties relating to these forward-looking statements. Investors should not place undue reliance on any forward-looking statements. The Company assumes no obligation to update or alter any forward-looking statements whether as a result of new information, further events or otherwise.

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Contact Information

  • Covalon Technologies Ltd.
    Frank DiCosmo, Ph.D
    President & CEO
    (905) 568-8400
    (905) 568-5200 (FAX)
    www.covalon.com