BioteQ Environmental Technologies Inc.
TSX : BQE

BioteQ Environmental Technologies Inc.

August 14, 2007 18:06 ET

BioteQ Issues Second Quarter Financial Results

VANCOUVER, BRITISH COLUMBIA--(Marketwire - Aug. 14, 2007) - BioteQ Environmental Technologies Inc. (TSX:BQE), today reported fiscal second quarter results for the period ended June 30, 2007. All figures are in Canadian dollars and are in accordance with Canadian GAAP.

Revenue for the second quarter of fiscal 2007 was $1,072,045 compared with $1,286,121 in the second quarter of 2006, due to a change in the Caribou contract as previously announced and an unusually late spring melt at Raglan. Net loss for the quarter was $666,840 or a basic and diluted loss of $0.01 per share compared with a loss of $315,773 or a basic and diluted loss of $0.01 per share in the second quarter of 2006, primarily attributable due to non-cash items. Plant operating profit for the second quarter of 2007 was $474,000 compared to $432,000 for the second quarter of 2006. Although there was a loss for the quarter of $666,840, non-cash charges totaled $546,000 resulting in a cash loss from operating activities for the quarter of $121,000 compared to a loss of $153,000 in the second quarter of 2006.

"We are pleased to report another quarter with all of our plants operating at profitable levels. Our Bisbee plant recorded a very successful quarter, we increased the processing capacity at Raglan to offset a delay in available water, and we successfully completed our operating commitments at Caribou. We have four new plants in the construction phase: two will begin commissioning this fiscal year and two in the first half of 2008 that will add substantially to our revenue base. Based on current conditions, our existing operations and expected startup of new plants, the Company forecasts a positive cash flow from operating activities for 2007," stated Brad Marchant, President and CEO.

Financial Highlights for Second Quarter 2007

Revenues declined by 17% for the quarter compared to the same period last year, primarily due to a delay in production at the Raglan plant because of unusually slow melt conditions in the Arctic that resulted in lack of water for processing, and also because of a change in the contract structure for the Caribou operation to a cost-plus basis that came into effect in the third quarter of 2006 (reducing the operating risk to BioteQ). The Bisbee plant revenue was slightly higher in the quarter from a 12% increase in copper production compared to the same period last year, offset by a small reduction in the average copper price realized and a deteriorating US dollar.

Plant and other operating expenses decreased in the current quarter due largely to the revised contract and the lower volume of water treated at Caribou compared to 2006, and because of reduced costs at Raglan due to the unusually slow spring melt to provide water for treatment. Bisbee operating costs increased in proportion to the increase in copper production for the quarter.

General & administrative expenses, amortization & other in the quarter show an increase of $393,000 over 2006. G&A costs increased by $147,000, due largely to the new TSX listing fees of $158,000 when the company graduated to the TSX from the Toronto Venture Exchange on May 29, 2007.

Stock based compensation charges increased by $414,000 to $447,000 in the second quarter of 2007, reflecting the fair value charges for stock options, granted mostly in 2006. Additional non-cash charges in the quarter included amortization of property plant and equipment totaling $91,000 compared to $97,000 for the same period in 2006.

Marketing and development costs of $160,000 are very similar to 2006 for the same period. Expenditures in the current period have related primarily to marketing in Chile and operating costs for BioteQ's new laboratory facility starting in 2007.

The current quarter incurred a foreign exchange loss on US dollars of $120,000, compared to $14,000 in 2006. The Company has some cash and receivables in US dollars which have deteriorated in value during the quarter with the rapid fall in the US dollar.

BioteQ ended the quarter with a strong balance sheet. Cash, cash equivalents and short-term investments totaled $28.2 million with no long term debt. BioteQ is very active with new projects under construction in 2007, two of which are expected to be operating before the end of the year. BioteQ normally looks for at least a minimum 3 year payback in assessing its new projects, which are expected to cost approximately $11 million this year. Capital expenditures of almost $2 million were incurred in the second quarter. The current cash reserves will cover the planned capital expenditures in 2007 and also fund the Company's anticipated construction projects for 2008.

The Company's second quarter fiscal 2007 financial statements and MD&A have been filed on SEDAR, www.sedar.com and on our website, www.bioteq.ca.

Operations Highlights for Second Quarter 2007

During the quarter, the Company's principle operations were the Bisbee plant, the Raglan plant, and also treatment plants under contract at Caribou. The Company met all environmental and safety objectives at its operations during the period, and all of the plant operations reported a profit in the second quarter. A summary of plant operating revenues and costs for the second quarter 2007 is shown below:



-------------------------------------------------------------
Plant Plant
Plant Revenues Operating Costs Operating Profit
Q2 Q2 Q2
-------------------------------------------------------------
Bisbee 610,000 303,000 307,000
Raglan 240,000 124,000 116,000
Caribou 187,000 152,000 35,000
Other 35,000 19,000 16,000
-------------------------------------------------------------
Total $ 1,072,000 $ 598,000 $ 474,000
-------------------------------------------------------------


The Bisbee plant operated well, producing 12% more copper during the second quarter than the same period in 2006. The plant has continued to operate consistently, achieving close to a flawless record for mechanical availability during the quarter.

The Raglan plant started discharging treated water in April, approximately one month earlier than last year. However, a slow melting season in the Arctic resulted in a depletion in available water to treat during May and part of June. In spite of this delay, BioteQ expects to treat approximately 800,000 cubic meters of water this year, matching the volume treated last year. This is feasible because of process improvements made to the original design that have enabled BioteQ to double the processing capacity of the plant.

During the quarter BioteQ completed its contract for water treatment operations at Caribou and the adjacent Restigouche sites. Effective July 31, 2007, BioteQ is no longer responsible for water treatment operations at Caribou and has re-deployed senior personnel associated with the project to new development projects owned by BioteQ.

Business Highlights for Second Quarter 2007

In June, BioteQ signed an option agreement to purchase 100% of the shares of Dennerik Engineering and Fabricating Company Limited for consideration of cash and shares. Dennerik is a private company which provides engineering and fabrication services to the mining, metallurgical, water treatment and processing industries. The acquisition of Dennerik could increase BioteQ's capacity to develop new projects by providing access to relevant engineering, fabrication and project management expertise.

BioteQ has several projects at various stages: operational, construction and developmental. The following chart summarizes the major projects:



First Year of
Company Location Name Operation(2)
--------------------------------------------------------------------------
Operations:
----------
Blue Note Metals (1) New Brunswick Caribou 2002
Phelps Dodge Arizona Bisbee 2004
Xstrata Northern Quebec Raglan 2004

Construction Projects(2):
------------------------
Phelps Dodge (built, awaiting
client infrastructure) Oklahoma Blackwell 2008
Aditya Birla Australia Mt Gordon 2007
Breckenridge/Summit County/
US EPA Colorado Wellington Oro 2008
Jiangxi Copper Jiangxi, China Dexing 2007
Columbia Metals Mexico Lluvia de Oro 2008

(1) The contract with Blue Note Metals to operate their lime plants ended
on July 31, 2007
(2) Future dates based on current project estimates


During the quarter, the Company decided to install a larger plant than originally anticipated at Mt Gordon, increasing capacity from 250 cubic metres per hour capacity to 400 cubic meters per hour, to accommodate possible production expansion in the future. This change increased the total capital cost expected to $C 4.3 million, from the previously announced $C 3 million.

Conference Call for Discussion of Second Quarter Results

BioteQ will conduct a teleconference call to discuss the second quarter results for the period ended June 30, 2007 on Wednesday, August 15, 2007 at 8:00 a.m. Pacific Time, 11:00 a.m. Eastern Time. To participate in the conference call please dial 416-340-2217 or 1-866-696-5910 and enter reference number 3231358#, about 5-10 minutes prior to 8:00 am PDT. Please refer to the BioteQ earnings teleconference call.

A recording of the conference call will be available on the Company's website at www.bioteq.ca. The recording will also be available from August 15, 2007 through August 29, 2007, by dialing (416) 695-5800, conference reference number 3231358#.

Corporate Profile

BioteQ is establishing itself as a leader in the treatment of acid contaminated water through the use of its patented BioSulphide® Process and the ChemSulphide® Process. Focused on the mining industry, BioteQ has partnered with leading metal producers including Phelps Dodge, Breakwater, CVRD-INCO, Jiangxi Copper, Aditya Birla and Xstrata as well as utilities operator EPCOR Water Services and the US EPA, to finance, design, build and operate mine site water treatment plants which recover saleable metals in addition to meeting ever stricter environmental regulations.

The Toronto Stock Exchange has not reviewed and does not accept responsibility for the adequacy or the accuracy of this release.

On behalf of the Board of Directors,

Brad Marchant

STATEMENT REGARDING FORWARD-LOOKING INFORMATION

Except for statements of historical fact relating to the Company, certain information contained herein constitutes "forward-looking statements" within the meaning of Section 21E of the United States Securities Exchange Act of 1934, as amended. Forward-looking statements are frequently characterized by words such as "plan", "expect", "project", "intend", "believe", "anticipate" and other similar words, or statements that certain events or conditions "might" or "will" occur. Forward-looking statements are based on the opinions and estimates of management at the date the statements are made, and are subject to a variety of risks and uncertainties and other factors that could cause actual events or results to differ materially from those projected in the forward-looking statements. These factors include the inherent risks involved in the development, construction and operation of water treatment plants, variations in water quality, fluctuating metal prices, the possibility of project cost overruns or unanticipated costs and expenses, uncertainties relating to the availability and costs of financing needed in the future and other factors described in the section entitled "Risks" in the Company's Annual Report for the Year Ended December 31, 2006. Circumstances or management's estimates or opinions could change. The reader is cautioned not to place undue reliance on forward-looking statements.

Financial Statements are attached.

For a printable version see http://www.bioteq.ca/reports.html.



BioteQ Environmental Technologies Inc.
Consolidated Balance Sheets

June 30 2007 Dec 31 2006
(Unaudited)
$ $
Assets

Current assets
Cash and cash equivalents 3,527,368 1,914,068
Short-term investments 24,680,009 25,285,846
Trade receivables 426,065 521,273
Receivable from joint venture partner 170,458 64,790
Taxes receivable 307,383 186,447
Inventory (note 7) 33,266 251,652
Prepaid expenses 284,554 120,246
Other receivables 90,652 89,164
------------------------
29,519,755 28,433,486
Property, plant and equipment (note 8) 7,257,188 5,042,592
Intangible asset (note 9) 209,056 224,542
Deferred financing costs - 32,771
------------------------
36,985,999 33,733,391
------------------------
------------------------
Liabilities

Current liabilities
Accounts payable and accrued liabilities 1,379,910 992,794
Joint venture partner payable 338,440 -
Bank loan 307,455 398,670
------------------------
2,025,805 1,391,464
------------------------
Shareholders' Equity

Capital stock, warrants and contributed
surplus (note 10) 47,435,761 43,834,716

Deficit (12,475,567) (11,492,789)
------------------------
34,960,194 32,341,927
------------------------
36,985,999 33,733,391
------------------------
------------------------
Commitments (note 12)

Subsequent events (note 13)


P. Bradley Marchant George W. Poling,
------------------- ----------------
Director Director


BioteQ Environmental Technologies Inc.
Consolidated Statements of Operations, Comprehensive Loss and Deficit
(Unaudited)

3 months ended June 30 6 months ended June 30
---------------------- ----------------------
2007 2006 2007 2006
$ $ $ $

Revenue 1,072,045 1,286,121 2,188,617 2,030,970
----------------------------------------------

Operating expenses
Plant and other operating
costs 597,831 853,849 1,253,504 1,594,957
Amortization of property,
plant and equipment 90,645 97,109 181,133 188,302

Amortization of intangible
asset 7,743 7,743 15,486 7,743
Deferred financing costs
written off - 20,990 32,771 27,988
General and administrative
expenses 606,297 458,712 1,140,637 861,954
Stock-based compensation
charge 446,992 32,947 679,200 46,921
Marketing and development
costs 160,207 158,217 307,781 274,179
----------------------------------------------

1,909,715 1,629,567 3,610,512 3,002,044
----------------------------------------------

Loss before the under noted 837,670 343,446 1,421,895 971,074

Interest income (296,507) (60,295) (585,358) (113,488)

Interest expense 5,675 18,936 11,984 44,256

Foreign exchange loss 120,002 13,686 134,257 16,762
----------------------------------------------

Loss and comprehensive loss
for the period 666,840 315,773 982,778 918,604
----------------------------------------------
Deficit - Beginning of
period, as reported 11,808,727 10,377,373 11,492,789 9,744,198
Interest income adjustment - (30,344) - -
----------------------------------------------
As restated 11,808,727 10,347,029 11,492,789 9,744,198
----------------------------------------------

Deficit - End of period 12,475,567 10,662,802 12,475,567 10,662,802
----------------------------------------------

Loss per share - basic and
diluted (0.01) (0.01) (0.02) (0.03)

Weighted average number of
shares outstanding
(excludes 7,000,000
performance based
escrow shares (note 10) 53,931,898 37,903,514 53,695,233 37,250,520


BioteQ Environmental Technologies Inc.
Consolidated Statements of Cash Flows
(Unaudited)
3 months ended June 30 6 months ended June 30
---------------------- ----------------------
2007 2006 2007 2006
$ $ $ $

Cash flows from (used in)
operating activities

Loss for the period (666,840) (315,773) (982,778) (918,604)
Items not affecting cash
Amortization of property,
plant and equipment 90,645 97,109 181,133 188,302
Amortization of
intangible asset 7,743 7,743 15,486 7,743
Deferred financing costs
written off (note 3) - 20,990 32,771 27,988
Accretion of Series A
debentures - 3,939 - 10,084
Stock-based compensation
charge 446,992 32,947 679,200 46,921
Change in non-cash working
capital items 985,645 (477,877) 646,750 (331,118)
----------------------------------------------

864,185 (630,922) 572,562 (968,684)
----------------------------------------------

Cash flows from (used in)
financing activities
Proceeds from exercise of
warrants and options 1,859,322 1,422,934 2,921,845 2,344,297
Deferred financing costs - (82,496) - (83,496)

Repayment of bank loan (45,924) (42,946) (91,215) (85,372)
----------------------------------------------

1,813,398 1,297,492 2,830,630 2,175,429
----------------------------------------------

Cash flows from (used in)
investing activities
Purchase of property, plant
and equipment (1,967,889) (77,760) (2,395,729) (214,774)
Short-term investments (9,816,239) (989,780) 605,837 (3,935,030)
Purchase of intangible
asset - - - (247,770)
----------------------------------------------

(11,784,128) (1,067,540) (1,789,892) (4,397,574)
----------------------------------------------

Increase (Decrease) in cash
and cash equivalents (9,106,545) (400,970) 1,613,300 (3,190,829)

Cash and cash equivalents -
Beginning of period 12,633,913 2,928,716 1,914,068 5,718,575
----------------------------------------------

Cash and cash equivalents -
End of period 3,527,368 2,527,746 3,527,368 2,527,746
----------------------------------------------

Supplemental cash flow
information

Interest paid 5,675 14,997 11,984 34,172

Withholding taxes paid and
receivable - - 136,434 -

Contact Information

  • BioteQ Environmental Technologies Inc.
    Tanja McQueen
    Investor Relations
    1-800-537-3073
    or
    BioteQ Environmental Technologies Inc.
    Caren Holtby
    Investor Relations
    1-800-537-3073
    Email: investor@bioteq.ca
    Website: www.bioteq.ca
    or
    Wolfe Axelrod Weinberger Assoc. LLC - In the U.S.
    Adam P. Lowensteiner
    (212) 370-4500
    Email: adam@wolfeaxelrod.com
    or
    Wolfe Axelrod Weinberger Assoc. LLC - In the U.S.
    Alisa Steinberg
    (Media)
    (212) 370-4500
    (212) 370-4505 (FAX)
    Email: alisa@wolfeaxelrod.com