Afexa Life Sciences Inc.

Afexa Life Sciences Inc.

August 05, 2005 09:03 ET

CV Technologies Inc.-Developer of Preventative Natural Therapeutics Including COLD-fX®-Releases Q3, 2005 Results; CVT Acquires Asian Rights to Company Product Line

EDMONTON, ALBERTA--(CCNMatthews - Aug. 5, 2005) - CV Technologies Inc. (CVT) (TSX VENTURE:CVQ) today released its financial and operating results for the third quarter of fiscal 2005 (April, May, June 2005). The Company reported net sales of $2.8 million compared to $1.2 million for the same period last year, a quarter over quarter increase of 131%. Year to date the net sales were $24.7 million ($4.1 million in 2004). The reduction in sales in Q3 compared to Q2 and Q1 of fiscal 2005 was anticipated and tracks with the seasonality the industry experiences in the cold and flu category. However according to ACNielsen, COLD-fX® has maintained its leadership position as the # 1 selling product within the category.

Despite a Company loss of $446 thousand for Q3, CVT succeeded in generating a positive cash flow of $1.0 million from operating activities which includes working capital items. The company is in a very strong cash position with cash at the end of the quarter of $7.5 million plus an accumulated inventory of COLD-fX equivalent to $30 million in sales. The total working capital at the end of Q3 was $12.9 million. The company also received a significant increase in its operating bank credit line from $2.5 million to $7.5 million. CVT's strong cash position will allow the Company to continue to build inventory and invest in branding initiatives for COLD-fX and REMEMBER-fX® in Q4 and 2006.

The loss in Q3 was mainly due to the implementation this year of new accounting standards required by regulatory bodies in respect to stock option compensation. A total of $554 thousand relating to stock options was expensed for the quarter. This transaction occurred on a non-cash basis. The loss was also partly due to CVT's continuing investment in the expenses associated with brand building efforts related to COLD-fX and REMEMBER-fX, and continuing clinical and new product research and development activities.

In announcing the results, president & CEO Dr. Jacqueline Shan said, "We are very pleased with our financial status and business progress to date. We have met the challenges associated with rapid commercial growth in the sales of COLD-fX from Q1 and Q2. And during Q3, we developed and implemented strategies and systems to better prepare for sales in the next cold and flu season. We are accumulating a significant amount of inventory, establishing solid financial, operational systems and resources, and continuing the development and implementation of a solid marketing and brand building program. These initiatives will position CVT well for future anticipated growth".

Other Company Developments:

Subsequent to quarter-end, the Company solidified its rights in Asia. It purchased 902,611 common shares in its subsidiary, ChemBioPrint Asia Limited ("CBP Asia") for virtually 100% ownership. The value of the transaction represented a total cash consideration of $155 thousand (CDN). CBP Asia was a joint venture established in 1999 in Hong Kong. CVT had a non-controlling interest of 42.6% in CBP Asia, a company which held the licensing rights to use ChemBioPrint technology, to develop, distribute and sell COLD-fX® and other ChemBioPrint based products in Asia. This acquisition provides CVT with full control of its technology and products in the Asian market and positions the Company for long term global growth.

Financial Statements and Management Discussion and Analysis will be updated this evening on SEDAR.


CV Technologies was founded in 1992. It aims to become a global leader in the development and commercialization of evidence based, natural medicines for disease prevention and health maintenance. CVT's lead product - COLD-fX® - the top selling cold remedy in Canada according to ACNielsen, strengthens the immune system and is widely used as a leading anti-cold, anti-flu, non-prescription treatment. COLD-fX's unique, patented, mechanism of action was developed and standardized according to the Company's ChemBioPrint (CBP) technology. The CBP process precisely identifies the chemical profile and biological activity of multi-active components in natural compounds. The CBP process provides a manufacturing protocol that ensures each batch of compound delivers verifiable and provable health benefits.

This news release contains forward-looking statements that involve risks and uncertainties, which may cause actual results to differ materially from the statements made. For this purpose, any statements that are contained herein that are not statements of historical fact may be deemed to be forward-looking statements. Without limiting the foregoing, the words "believes", "anticipates", "plans", "intends", "expects" and similar expressions are intended to identify forward-looking statements. Such risks and uncertainties include, but are not limited to, the need for capital, changing market conditions, completion of clinical trials, patient enrolment rates, uncertainty of pre-clinical, retrospective and early clinical trial results, the establishment of manufacturing processes and new corporate alliances, the timely development, regulatory approval and market acceptance of the Company's products, and other risks detailed from time to time in the Company's filings with Canadian securities authorities.

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