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EDMONTON, July 29 /CNW/ - Seair Inc. (SDS:TSX Venture Exchange) today released its unaudited financial statements for the quarter ending May 31, 2010. Full financial statements are available at www.sedar.com.
Seair summary results for the three months ending May 31, 2010 are as follows:
Revenue $1,017,519
Gross profit 720,125
Net loss (222,442)
Loss per share (0.008)
Revenue for the quarter ending May 31, 2010 was $1,017,519, or 7% higher than the third quarter of fiscal 2009. Historically third quarter revenue has been dominated by Seair Septic Inc. ("Septic") rentals. However in fiscal 2010 only 14% of total third quarter revenue came from Septic's rental of wastewater treatment units. The bulk of third quarter revenue came from the wastewater treatment plant project at Wolf Creek, aeration systems sold to Canfor and ongoing rental revenue from dewatering systems at Syncrude.
The Wolf Creek wastewater treatment plant is Seair's first complete turnkey facility for a residential community. The plant will use essentially the same technologies and processes as Septic's portable units, although on a much larger scale and with full nutrient removal. The Wolf Creek plant is nearly complete and commissioning is scheduled to begin this summer. Seair's total revenue from this project is estimated to be around $1.2 million, of which approximately $1.0 million has been recognized and billed to May 31, 2010. The completed plant is expected to be Seair's reference site in pursuing similar opportunities in other residential communities.
Syncrude continues to rent dewatering units from Seair for the Aurora mine. Seair's oil sands dewatering solution was presented by a Syncrude representative at the April 2010 CONRAD Symposium. Seair is currently approaching other oil sands companies about this production-ready solution. In addition, Seair is conducting ongoing testing and demonstration of other oil sands solutions with a variety of companies. These projects include accelerated tailing pond settling using diffused CO(2), removal of naphthenic acids with diffused ozone and reducing corrosion in SAGD make-up water. In July 2010 Seair announced plans to partner with North American Energy Partners in pursuing tailing pond projects with oil sand-based producers.
Aeration pond applications involve larger-scale Seair diffusion towers to better and more efficiently manage the dissolved oxygen level in large industrial-use ponds. The objective is to displace large inefficient blowers with Seair units that achieve superior end results with reduced operating costs, including energy consumption and maintenance. Initial results from Canfor's pulp mill in Taylor, British Columbia suggest energy savings of over 80% can be realized using Seair's equipment while achieving superior dissolved oxygen levels. Canfor completed their implementation of Seair aeration equipment at Taylor by purchasing two units during the quarter ending May 31, 2010. Trials and demonstration projects continue at a number of other pulp mills in western Canada. BC Hydro is supporting several of these projects.
The groundwater treatment and turnkey wastewater treatment plants are new revenue streams for Seair. Other applications in municipal wastewater treatment, such as the sewage oxygenation system operating in Airdrie, Alberta, are also approaching commercialization.
At present, Septic's fleet deployment is linked directly to oil and gas camp usage, with such usage normally peaking during winter months. However, in fiscal 2010 camp activity levels have been extremely low and, therefore, demand for on-site wastewater treatment has been very weak. Septic's customers have advised that major projects continue to be deferred until industry conditions become more favorable. As a result the majority of Septic's fleet remained idle through the third quarter and will not realistically be deployed until fall, at the earliest. In light of these weak market conditions, Seair has developed a plan whereby some of the existing Septic units can be modified for use in water sweetening (i.e., H(2)S reduction) applications. Management intends to closely monitor the status of the remote wastewater treatment sector and will assess the business case for converting units to water sweetening in late summer.
Gross profit for the quarter ending May 31, 2010 was $720,125 (71% of revenue) compared to $694,347 (73% of revenue) in the quarter ending May 31, 2009. This $25,778 increase in gross profit is due to increased revenue from non-Septic sources offsetting the decrease in Septic fleet deployment. The gross profit percentage is down slightly from the prior year because margins on the Wolf Creek project are being impacted by one-time costs associated with bringing this first-of-a-kind project to completion. These regulatory and engineering costs should not recur to this magnitude on subsequent similar projects.
Total operating expenses decreased by $318,566 to $946,992 (25% decrease) from fiscal 2009 to fiscal 2010. The largest net contributors to this decrease were as follows.
Amortization of equipment held for rental or resale, or essentially the Septic fleet, was changed from a declining balance basis to a usage basis. Low fleet deployment rate results decreased amortization by $232,659 (74% lower than prior fiscal year).
Salaries and benefits decreased by $90,571 (23%) as a result of head count reductions. Fewer support personnel were required as a result of the low Septic fleet deployment rate and any additional work associated with the growing oil sands and municipal wastewater sectors is being done by existing Seair staff.
Professional fees are up $27,787 (60%) but the fiscal 2010 amount includes $69,500 of compensation payable to independent directors in connection with their quarterly retainer and meeting fees. All year-to-date accrued costs were recorded in the quarter ending May 31, 2010 and there were no corresponding fees in fiscal 2009. Accrued fees will be paid when Seair has positive net income in a quarter. Apart from these fees, professional fees and contract services are down as a result of scaling back and termination of projects that do not have strong prospects for near-term revenues.
Seair has not reduced research and development efforts even though reported R&D costs decreased by $19,345, or 24%. However, several projects are directed at specific customer needs and, in those cases, Seair expects the customer to directly handle many of the out-of-pocket costs such as independent laboratory testing. In addition, Seair has applied for and been granted federal government funding for specific research and development initiatives. This funding serves to reduce the net R&D cost to Seair while allowing the Company to continue a very active project agenda.
Advertising/promotion and investor relations costs have not increased but are expected to do so in upcoming quarters. The collaboration with North American Energy Partners on oil sands initiatives and the commissioning of the Wolf Creek wastewater treatment plant are events that will trigger increased promotional activity. As well, Seair has engaged Uptick Communications Inc. ("Uptick") to perform investor relations and public relations services. The Uptick engagement has a two year term with monthly fees of $6,667 for the first six months. As previously announced, Uptick was granted 30,000 incentive stock options on July 19, 2010 (exercisable for 5 years at $0.85 per share).
Net loss for the quarter ending May 31, 2010 was $222,442, a $344,645 improvement over the same quarter in fiscal 2009.
About Seair
Seair develops proprietary equipment that diffuses gases into liquids. The introduction of oxygen, ozone or carbon dioxide results in a supersaturated solution, that meets environmental standards and customer needs. Seair's patented technologies can produce extremely small bubbles which are more efficient than other diffusion technologies. Our technologies are used in a variety of applications in the oil and gas industry. We also service customers in such diverse fields as wastewater treatment, pulp and paper, food processing, aquaculture, agriculture/horticulture, sterilization, golf course irrigation and pond treatment and animal enhancement.
Seair is a leading developer of patent-protected diffusion and sterilization technologies, which allow for the efficient diffusion of gases into liquids, thereby facilitating numerous applications in a wide variety of industries, including wastewater treatment, pulp and paper production, food processing, aquaculture, agriculture/horticulture, sterilization, golf course irrigation and pond treatment, animal enhancement and oil and gas. Seair's primary focus is developing and selling equipment that diffuses gases, such as oxygen, ozone or carbon dioxide, into a liquid, resulting in a supersaturated solution. The major difference between Seair's and others' diffusion technologies is Seair's ability to achieve extremely small bubble size, which in turn allows for the mass transfer of gas to fluid. The result is a stable condition, where gases remain in solution for extended periods of time, leading to increased productivity and lower operating costs. Seair provides diffusion-enhanced portable wastewater treatment plants through its subsidiary, Seair Septic.
Parties interested in obtaining further information or receiving news releases and corporate documents from Seair may email such requests to [email protected] or visit the Seair website at www.seair.ca.
This news release contains forward-looking statements relating to the future operations of the Seair Inc. and other statements that are not historical facts. Forward-looking statements are often identified by terms such as "may", "should", "anticipate", "expects" and similar expressions. Any statements that are contained in this news release that are not statements of historical fact may be deemed to be forward-looking statements. Such forward-looking statements are subject to important risks, uncertainties and assumptions. The reader is cautioned that assumptions used in the preparation of any forward-looking information may prove to be incorrect. Events or circumstances may cause actual results to differ materially from those predicted, as a result of numerous known and unknown risks, uncertainties, and other factors, many of which are beyond the control of Seair Inc. As a result, we cannot guarantee that any forward-looking statement will materialize and the reader is cautioned not to place undue reliance on any forward-looking information. Such information, although considered reasonable by management at the time of preparation, may prove to be incorrect and actual results may differ materially from those anticipated. Forward-looking statements contained in this news release are expressly qualified by this cautionary statement.
The forward-looking statements contained in this news release are made as of the date of this news release, and Seair Inc. does not undertake any obligation to update publicly or to revise any of the included forward-looking statements, whether as a result of new information, future events or otherwise, except as expressly required by Canadian securities law.
Neither the TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in the policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release.
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For further information: Harold Kinasewich, Seair Inc., T: 780 477 7188, F: 780 477 6622, E: [email protected]
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