BIOREM Technologies Inc.

BIOREM Technologies Inc.

August 03, 2006 08:00 ET

BIOREM Reports Second Quarter Results

GUELPH, ONTARIO--(CCNMatthews - Aug. 3, 2006) -


BIOREM Inc. (TSX VENTURE:BRM) ("Biorem" or "the Company") announced today its results for the three month and six month periods ending June 30, 2006, which are summarized in the following table:

Three-Month Period Six-Month Period
Ended June 30 Ended June 30
Information in table is in
thousands $ except per
share data 2006 2005 2006 2005
Revenue $2,770 $2,530 $6,032 $4,205
Gross Profit 666 1,043 1,527 1,716
EBITDA (611) 309 (790) 526
Net (Loss) Earnings (596) 149 (796) 240
Basic (Loss) Earnings per Share (0.06) 0.01 (0.08) 0.02
Diluted (Loss) Earnings per Share (0.06) 0.01 (0.08) 0.01
Weighted Average Common Shares 10,278 10,143 10,278 10,099

For the six month period ended June 30, 2006 consolidated revenue of $6,032,000 is up 43 percent over the same period last year and for the three-month period consolidated revenue of $2,770,000 is up 9 percent over the $2,530,000 reported in same period last year. Net loss for the three-month period was $596,000 versus net income of $149,000 for the same period last year.

New orders booked in the second quarter were $3,400,000 versus $700,000 in the first quarter of fiscal year 2006 and $5,500,000 for the same period last year. As of the end of the period, Biorem's order backlog had increased to $7,600,000 from the $7,000,000 reported at the end of the first quarter. Approximately fifty percent of the June 30, 2006 sales order backlog is scheduled for completion by December 31, 2006. The second quarter's new sales bookings include the previously announced $1,700,000 for a wastewater treatment facility in the southeastern U.S. and $1,000,000 for a composting facility in Sydney, Nova Scotia.

"Revenue from the Company's July 1, 2005 acquisition of U.S. based Biocube LLC accounted for the year over year increase in revenue in the second quarter," noted Brian Herner, President and CEO. "During 2006 we are investing in Biorem's sales and operating infrastructure to enable the Company to expand its penetration of identified market segments. Due to the long sales cycle in the business, these costs are having a negative short term impact on earnings but will continue to lay the foundation for future growth," added Mr. Herner.

Gross profit in the quarter of $666,000 was down 36 percent compared to last year. The decrease is attributable to a number of factors:

- $120,000 of non-recurring one time additional costs associated with projects that were substantially completed during the quarter;

- $170,000 of additional fixed operation costs associated with the acquisition of Victor, New York-based Biocube and other initiatives to support the Company's planned growth; and

- $100,000 attributable to decreased revenue from declines in the value of the US dollar.

"In the first half of 2006 we completed several large field erected systems that included a considerable amount of subcontracting. This resulted in lower average margins for the period," said Herner. "These projects are substantially complete and we expect margins for the balance of the year to recover to historical levels."

Total operating expenses in the quarter of $1,277,000 was up $543,000 or 74 percent compared to the prior year. The variance is attributable to a 32 percent increase in sales and marketing expenses invested in future revenue growth, a 43 percent increase in general and administrative expenses related to the going public and expanding into the U.S. as well as additional investments in technology which increased research and development expenses and foreign exchange adjustments on US dollar denominated receivables.

At the end of the period, the Company had cash and cash equivalents in the amount of $1,005,000 and net working capital of $2,444,000. The cash balance and the unused credit facilities available to the Company are considered adequate to fund the future operating requirements of the business.

BIOREM® manufactures BIOSORBENS™ biofilter media and is a leading supplier of biofilters for air pollution control in municipal and industrial applications, including the recently acquired BIOCUBE® modular units. With over 400 installed systems and over a decade of experience, the Company's biofilters are the technology of choice for odor control at Wastewater Treatment Plants across North America.

1. EBITDA is a non-GAAP earnings measure, therefore, it does not have any standardized meaning prescribed by Canadian generally accepted accounting principles and may not be similar to measures presented by other companies. EBITDA represents earnings before interest, income taxes, depreciation and amortization. This measure is important to management since it is used by potential lenders to evaluate the ongoing cash generating capability of the Company and thus the amounts those lenders are willing to lend to the Company.

The TSX Venture Exchange Inc. has in no way passed upon the merits of the proposed transaction and has neither approved nor disapproved of the contents of this release.

Forward-Looking Statements

This press release contains forward-looking statements based on current expectations. These forward-looking statements contain various risks and uncertainties that could cause actual results to differ materially from those reflected in the forward-looking statements. Risks and uncertainties about the Company's business are more fully discussed in the disclosure materials, financial statements and MD&A filed with the securities regulatory authorities in Canada on

The TSX Venture Exchange Inc. has not reviewed and does not accept responsibility for the adequacy or accuracy of this release.

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