Epicore BioNetworks Inc. Strong Results in Fiscal Year 2010 for the year
ended 30 June 2010
CALGARY, Oct. 28 /CNW/ - Fiscal 2010 started in the depths of a severe economic downturn but recovered strongly as the year progressed to deliver record sales. Quarters two, three and four set Company records. Fiscal 2010 sales at $3.8 million were the highest in Company history and were 20% above prior year. Despite the downturn the world continued to consume shrimp and the Epicore sales team adjusted to changing market conditions. They redoubled efforts to add new customers and to explore new applications. While many companies cut back in 2009, Epicore continued a major initiative to improve its science resources, which should position the Company for significant future growth. Some highlights versus prior fiscal year were:
- Increased sales from $3.2 million to $3.8 million (a 20% increase).
- Increased gross profit from $2.0 million to $2.4 million (a 20% increase).
- Generated another year of positive net income ($0.45 million or 14% above prior year), before adding the benefit of recognition of an income tax asset.
- Generated net income of $1.3 million including the benefit of recognition of an income tax asset of $0.89 million.
- Achieved basic and diluted earnings per share of $0.06, up from $0.02.
- Increased shareholders' equity from $2.3 million to $3.7 million (a 59% increase).
- Increased cash from $0.8 to $1.0 million (a 24% increase).
Gross profit grew 20% primarily due to the sales increase. Because of sales mix Epicore was able to maintain year-over-year gross margin despite some raw material cost increases. Operational expenses increased by 24% due to research spending and increased selling effort. Research and development expenses increased 116% because of increased Company scientific resources. With these increased and talented resources management expects to improve the quality and reliability of its manufacturing operations and to accelerate the Company's penetration into new business areas.
Fiscal 2010 saw a change in management's estimate of the recoverability of the accumulated net operating losses (NOL) that Epicore generated in its early years. Previously, there was uncertainty of future realization of the NOL to offset taxable income. Continued profitable operations have created a more likely than not scenario that the NOL will be utilized. Canadian generally accepted accounting principles ("GAAP") dictate that under this scenario the NOL must be recognized as a future income tax asset. The effect of this change is a one-time increase in net income (and shareholder equity) of $0.89 million. Epicore recorded net income growth of 14% over fiscal 2009 prior to the adjustment for future tax credit and 241% after the adjustment, as the following results show:
(US$) | 2010 | 2009 | |
Sales | 3,844,000 | 3,190,000 | |
Gross Profit | 2,414,000 | 1,991,000 | |
Operating Expenses | 1,833,000 | 1,488,000 | |
Other Expenses | 35,000 | 36,000 | |
Current Income Tax Expense | 71,000 | 82,000 | |
Future Income Tax Benefit | (888,000) | 0 | |
Net Income (Loss) | 1,363,000 | 385,000 |
Cash at the end of June was $1.0 million, an increase of 24% over prior year. With these funds, expected sales revenue growth and continued relatively low operating costs, management expects there will be sufficient cash to meet the fiscal year's financial requirements, to fund expansion of aquaculture and environmental remediation marketing efforts and to pursue new strategies for enhancing shareholder value. In support of its growth strategy, the Company anticipates additional expenditure during fiscal 2011 in property, plant and equipment, through the addition of capital equipment and enhancements to its production facility in New Jersey, United States of America, and in product development through its ongoing R&D programs. This is expected to be financed by a combination of the Company's cash reserves, continued positive earnings and third-party financing.
The financial statements of the company have been prepared in accordance with Canadian GAAP. Epicore BioNetworks Inc. is a public corporation with a registered office in Calgary, Alberta, Canada and with shares listed on the TSX Venture Exchange (symbol EBN). [Neither 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.]
This press release contains forward-looking statements that involve significant risks and uncertainties. The actual results, performance or achievements of the company might differ materially from the results, performance or achievements of the company expressed or implied by such forward-looking statements. Such forward-looking statements include, without limitation, those regarding the future growth of the Company, expected improvements in the quality and reliability of manufacturing operations, acceleration of the Company's penetration into new business areas, the development plans of the company, the expected timing and results of such development and the expectation by management that there will be sufficient cash to meet the fiscal year's financial requirements. We can provide no assurance that such development will proceed as currently anticipated, that the expected timing or results of such development will be realized or that the company will be able to generate sufficient cash to meet its obligations. We are subject to various risks, including the uncertainties of product development, markets for our products and regulatory review, our need for additional capital to fund our operations, our reliance on collaborative partners, our history of losses, and other risks inherent in the biotechnology industry.
For further information:
please contact: Mr. William P. Long (Chief Executive Officer) USA. Tel: 609-267-9118, Email: [email protected]
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