MRRM Inc. - Directors' report and management discussion and analysis of the financial condition and results of operations - Interim 2009.Q4 - February 28, 2009 (4th Quarter)



    
    The following discussion and analysis should be read in conjunction with
    the Annual Report. Included in these documents may be forward-looking
    statements with respect to the Company. These forward-looking statements
    by their nature necessarily involve risks and uncertainties that could
    cause actual results to differ materially from those contemplated by such
    statements. The Company considers the assumptions on which these forward-
    looking statements are based to be reasonable at the time they were
    prepared but cautions the reader that these assumptions regarding future
    events, many of which are beyond the control of the Company, may
    ultimately prove to be incorrect.

    The unaudited interim consolidated financial statements were prepared by
    the Company in accordance with Canadian generally accepted accounting
    principles and have not been reviewed by the Company's auditors. Certain
    comparative figures have been reclassified to conform with the
    presentation adopted in the financial statements.

         Extract of information from the Annual Report which will be
               circulated on May 28, 2009 to the shareholders.

    Additional documents and information are available at the System for
    Electronic Document Analysis and Retrieval (SEDAR) and can be assessed
    through the internet: For MRRM's profile go to www.sedar.com or for
    documents go to www.sedar.com Information is also available on the
    Corporate website at www.MRRM.ca.
    

    MONTREAL, May 7 /CNW Telbec/ -

    Consolidated Earnings And Comprehensive Income and Retained Earnings
    --------------------------------------------------------------------

    Revenues for the year (last year) were $61,117,000 ($49,224,000)
increasing by $11,893,000 (24.2%). As shown in the segmented information,
sales and income from operating activities amounted to $61,916,000
($49,342,000) being 101.3% (100.2%) of total revenues. Income from corporate
totaled $-799,000 ($-118,000). Unrealized losses in fair market value of the
portfolio amounted to $-926,000 ($-369,000). Operating Revenues increased by
$12,574,000 (25.5%) compared to last year. Revenue from Corporate decreased by
$681,000 of which $557,000 was attributable to a lower unrealized fair value
of investments held for trading.
    Costs and expenses for the year (last year) were $61,065,000
($49,204,000), an increase of $11,861,000 (24.1%). Costs related to operating
activities, before exchange and interest, increased by $11,814,000 (24.2%).
Expenses related to corporate decreased by $10,000.
    Operating results are discussed later on in this report.
    The impact of the fluctuating Canadian dollar resulted in a currency
exchange gain of $121,000 for the year compared to a gain last year of
$44,000. As disclosed in the Notes, the net exposures were as follows: at
February 28, 2009, US($404,000); at February 29, 2008, US$1,438,000; at
November 30, 2008, US($550,000); at November 30, 2007, US($440,000). The above
US dollars include the equivalents for euros and pounds sterling which are not
material.
    During the first quarter, the Company entered into foreign exchange
futures which matured this fiscal year and covered a significant portion of
its USF requirements. The Company uses the fair value accounting method for
such instruments. Under this method any unrealized gains or losses caused by
fluctuation to the market value are to be recorded in earnings for the year.
    Interest expensed on bank indebtedness and the reducing term loan
amounted to $328,000 compared to $312,000 last year for an increase of
$16,000. Interest of $48,000 pertaining to the Time-Wise project was
capitalized in the first quarter last year. Total interest accrued and paid
amounted to $328,000 compared to $360,000 last year. Interest related to the
long-term debt was $149,000 compared to $185,000 last year. As well this year,
the company expensed an additional $119,000 due to variation in fair value of
the interest rate swap which is a component of the long term debt facility.
    The Earnings before income taxes for the year were $52,000 compared to
$20,000 last year, an increase of $32,000. Earnings from operating activities
were $1,031,000 ($328,000), an increase of $703,000. Earnings from corporate
were $-979,000 compared to $-308,000, a decrease of $671,000.
    Income taxes for the year were $194,000 and ($50,000) last year. Details
of the income tax components are presented in the Notes to the financial
statements.
    Net Earnings (loss) for the year were ($142,000) and $70,000 last year or
($0.06) for the year and $0.03 per share last year.
    Dividends paid last year amounted to $127,000. As indicated in the MD&A
for the first quarter, the declaration of the quarterly dividend has been
suspended in order to support the cash requirements resulting from the
Time-Wise investment. The declaration and payment of dividends is at the
discretion of the Board of Directors.

    
    -------------------------------------------------------------------------
    ANNUAL RESULTS          2009       2008       2007       2006       2005
                           ------     ------     ------     ------     ------
    (Expressed in
     thousands, except
     for amounts per         $          $          $          $          $
     share - unaudited)     ---        ---        ---        ---        ---
    -------------------------------------------------------------------------
    Revenues              61,117     49,224     51,164     42,707     41,165
    -------------------------------------------------------------------------
    Net Earnings (loss)     (142)        70      1,093      1,050      1,938
    -------------------------------------------------------------------------
    Net Earnings (loss)
     per share             (0.06)      0.03       0.43       0.41       0.76
    -------------------------------------------------------------------------
    Total Assets          37,923     33,449     32,223     28,296     26,652
    -------------------------------------------------------------------------
    Total long-Term
     Financial
     Liabilities           2,248      2,868      3,651        580        261
    -------------------------------------------------------------------------
    Dividends Per
     share                  0.00       0.05       0.35       0.35       0.35
    -------------------------------------------------------------------------


    Summary of Quarterly Results
    ----------------------------

    The following financial summary is derived from the company's financial
statements for each of the eight most recently completed fiscal quarters.

    -------------------------------------------------------------------------
    Summary of
     Quarterly
     Financial
     Results
     for the
     eight    Feb 28, Nov 30, Aug 31, May 31, Feb 29, Nov 30, Aug 31, May 31,
     most       2009    2008    2008    2008    2008    2007    2007    2007
     recent    (2009.  (2009.  (2009.  (2009.  (2008.  (2008.  (2008.  (2008.
     fiscal       Q4)     Q3)     Q2)     Q1)     Q4)     Q3)     Q2)     Q1)
     quarters ------- ------- ------- ------- ------- ------- ------- -------
    -------------------------------------------------------------------------
    (Expressed
     in
     thousands,
     except for
     amounts
     per
     share -
     unaudited)    $       $       $       $       $       $       $       $
    -------------------------------------------------------------------------
    Revenues  16,502  16,962  14,091  13,562  10,682  12,703  12,968  12,871
    -------------------------------------------------------------------------
    Net
     Earnings
     (loss)     (200)   (343)    287     114    (134)    214     121    (131)
    -------------------------------------------------------------------------
    Earnings
     (loss)
     per
     share     (0.08)  (0.14)   0.11    0.05   (0.05)   0.08    0.05   (0.05)
    -------------------------------------------------------------------------
    Dividends
     per
     share      0.00    0.00    0.00    0.00    0.00    0.00    0.00    0.05
    -------------------------------------------------------------------------
    

    Revenues for this quarter were $16,502,000 ($10,682,000), an increase of
$5,820,000 (54.5%). Revenue from operating activities amounted to $16,752,000
($10,807,000) being 101.5% (101.2%) of total revenues. Income from corporate
totaled $-250,000 ($-125,000). Operating revenues for the quarter increased by
$5,945,000 (55.0%) compared to this quarter last year. Revenue from Corporate
decreased by $125,000 of which $135,000 was attributable to loss on disposals
of marketable securities.
    Costs and expenses for the quarter were $16,590,000 ($10,987,000), an
increase of $5,603,000 (51.0%). Costs related to operating activities, before
exchange and interest, increased by $5,491,000 (50.5%).
    Included in the financial results for this quarter are investment tax
credits of $61,000 representing the balance of total claimed from Ontario for
fiscal year 2008 and 75% of total claimed for fiscal year 2009. The
comparative amount for this quarter last year was $263,000.
    Interest expense for this quarter was $71,000 compared to $95,000 this
quarter last year and was $95,000 in 2009.Q1, $77,000 in 2009Q2 and $85,000 in
2009Q3. As well this year, the company expensed an additional $119,000 due to
variation in fair value of the interest rate swap which is a component of the
long term debt facility.
    Loss before income taxes for this quarter was $88,000 compared to
$305,000 last year. Earnings from operating activities were $201,000 compared
to ($136,000) last year, an increase of $337,000 and corporate were ($289,000)
compared to ($169,000) last year, a decrease of $120,000.
    Income taxes for this quarter were $112,000 compared to ($171,000) last
year. Additional information is presented in the Notes to the financial
statements.
    Net loss for the quarter was $200,000 compared to $134,000 last year or
($0.08) compared to ($0.05) per share last year.

    Consolidated Cash Flows, Liquidity and Balance Sheets
    -----------------------------------------------------

    Cash generated by operating activities, net earnings before changes for
non-cash items was ($142,000) for the year compared to $70,000 last year.
Non-cash operating items were flat for the year compared to funds generated of
$1,000 for this year last year.
    In investing activities, the Company added $602,000 of net property,
plant and equipment compared to $1,017,000 last year; last year, this amount
included $319,000 for the investment in the new value added Time-Wise rice
line which became available for commercial production in June 2007.
    Working capital amounted to $1,965,000 at the end of this year, an
increase of $1,214,000 compared to $751,000 at last fiscal year-end. This
change was attributable to a net increase in current assets of $6,230,000 and
a net increase in current liabilities of $5,016,000.

    Available credit facilities

    During this quarter, the credit facilities were renegotiated to increase
the revolving line of credit to $6,750,000 CDN from $4,750,000 {or its US
equivalent}. The 5 year reducing term facility initially borrowed at fiscal
year-end 2007 for $3,500,000 remains unchanged. The revolving line of credit
bears interest at the Canadian prime rate for Canadian loans and U.S. base
rates for U.S. loans and, optionally, the Company may take advantage of
Bankers Acceptances. The reducing term facility is at a combined fixed rate
for interest and fees of 5.83% for the term of the loan. The financial
covenants and arrangements relating to these facilities are detailed in the
Notes to the audited consolidated financial statements. These covenants are
being respected and have been met.

    Receivables increased by $2,630,000 compared to last fiscal year-end.
Account balances are substantially current, there are no anticipated serious
collection issues and any potential write-offs have been provided for in the
accounts.

    Inventories increased by $3,420,000 (45.8%) as a result of the increased
cost of rice while overall volumes of rice decreased by 3.7%.

    Marketable securities - see table below for financial summary and
investment mix.

    Property, plant and equipment decreased by $600,000 comprised of
additions of $603,000, disposals of $8,000, and amortization of $1,195,000.

    Bank indebtedness was $4,596,000 compared to $3,298,000 at last year-end,
an increase of $1,298,000. This is mainly attributable to increases in the
cost of rice over last year.

    Payables increased by $3,682,000 mainly arising from increases in amounts
due by the agency business and to the value of rice purchases.

    Long-term debt is being repaid in accordance with the arrangements of the
five year reducing term facility agreement as described under credit
facilities.

    Future income taxes, net liability, increased by $215,000 after netting a
decrease of $142,000 for the unrealized change in  fair value of investments
held for trading at February 28, 2009.

    Shareholders' equity decreased by $142,000 to $16,658,000 from
$16,800,000 and represents $6.57 ($6.63) per share.

    Capital stock remained unchanged at $539,000 and represents 2,535,000
issued common shares.

    
    The MRRM Inc. shares have a very limited distribution and are
    infrequently traded on the TSX-Venture Exchange under the symbol MRR.

                                                    www.TSX-Venture Exchange
                                                    ------------------------
    

    Critical Accounting Policies:
    -----------------------------

    The Company's critical accounting policies are those that it believes are
the most important in determining its financial condition and results. A
summary of the Company's significant accounting policies, including the
critical accounting policies, is set out in the notes to the consolidated
financial statements in the annual report for the year ended February 29,
2008. An extract of these policies is set out in the notes to the quarterly
consolidated financial statements.

    Future Accounting Changes:
    International Financial Reporting Standards (IFRS)

    In 2005, the Accounting Standards Board of Canada (AcSB) announced that
accounting standards in Canada are to converge with IFRS. In March 2009, the
CICA published an updated version of its "Implementation Plan for
Incorporating International Financial Reporting Standards from Canadian GAAP".
    This plan includes an outline of the key decisions that the CICA will
need to make as it implements the Strategic Plan for publicly accountable
enterprises that will converge Canadian generally accepted accounting
standards with IFRS. While IFRS uses a conceptual framework similar to
Canadian GAAP, there are significant differences in accounting policy which
must be addressed. The CICA has confirmed the changeover date from current
Canadian GAAP to IFRS for year ends beginning on or after January 1, 2011.
    The Company has formed a committee which is currently assessing the
future impact of these new standards on its consolidated financial statements.

    Discussion of Results:
    ----------------------

    In Dainty Foods, net sales increased by $12,153,000 (26.1%) for the year
and by $5,851,000 (57.4%) for the quarter compared to last year while overall
rice sales volumes increased by 8.7% for the year and 16.7% for the quarter.
Costs and expenses increased by $11,611,000 (25.0%) and increased by
$5,471,000 (53.0%) for the quarter and earnings before income taxes for the
year increased by $542,000 and by $380,000 compared to this quarter last year.
    The increase in sales and costs for the year and the quarter were mainly
attributable to increased sales of flour and bagged rice compared to last
year. The cost of rice reached historic highs during calendar 2008 peaking
during July and August. Rumours of a world shortage were rampant and panic
buying erupted during April and May, 2008. The financial impact to Dainty
Foods was minimized through the forward purchase of rice contracts. Prices
began to soften in late summer and into the new crop year, but remained high
into early 2009. Prices for most rices continue to gradually soften, but
modulate based on the international market conditions.
    Selling price increases on our branded and private label items that were
introduced during the year have contributed to improved margins.
    Although cost of sales increased in line with increased sales, and
operating, selling, and administrative expenses increased for the year,
earnings before income taxes increased by $542,000.
    The company continues to pursue new value-added retail type products some
of which will be outsourced until volumes and economies develop to a point
where in-house production is viable. This outsourcing will minimize capital
investment while enhancing Dainty Foods' offerings in the retail marketplace
for both branded and private label items. New selling relationships are also
being developed that are intended to add strength to our retail sales efforts.
    In Robert Reford, revenue increased by $421,000 (15.2%) for the year and
by $94,000 (15.3%) for the quarter compared to last year.
    Earnings before income taxes for the year increased by $161,000 for the
year and decreased by $43,000 compared to this quarter last year.
    While these increases are very favourable, based on current market
conditions, and recent developments in the Global economies, expectations for
the next quarter remain uncertain.
    As mentioned in the last MD&A, on July 1, 2008 this division entered into
a joint revenue sharing agreement with Norton Lilly International, Inc. to
handle vessel and port operations coast to coast in Canada as well as at U.S.
Great Lakes. This relationship has had a positive impact on revenue this
fiscal year.
    In Corporate Investments, portfolio income is summarized as follows:

    
                                     For the year           For the quarter
                                    --------------         -----------------
    -------------------------------------------------------------------------
                                    2009        2008        2009        2008
                                   ------      ------      ------      ------
    -------------------------------------------------------------------------
    Dividend and interest
     income                     $184,000    $163,000     $38,000     $41,000
    -------------------------------------------------------------------------
    Capital gains (losses)      -$57,000     $88,000   -$117,000     $18,000
    -------------------------------------------------------------------------
    Unrealized change in
     Fair Value                -$926,000   -$369,000   -$171,000   -$184,000
                               ----------  ----------  ----------  ----------
    -------------------------------------------------------------------------
    Totals:                    -$799,000   -$118,000   -$250,000   -$125,000
                               ----------  ----------  ----------  ----------
    -------------------------------------------------------------------------

    Global financial markets dipped further into crisis and stock market
values plunged deeply during the last two quarters. Our investment results
have been negatively impacted as shown by comparative figures above. The
portfolio remains conservatively invested and no significant policy changes
are foreseen. Changes to percentages in the investment mix reflect changes in
market values and not in investment strategy. The Corporate Investments
continue to be held with a long term view.

    -------------------------------------------------------------------------
    Investment Mix        Feb 28,    Nov 30,    Aug 31,    May 31,    Feb 29,
                           2009       2008       2008       2008       2008
                        (2009.Q4)  (2009.Q3)  (2009.Q2)  (2009.Q1)  (2008.Q4)
                        ---------  ---------  ---------  ---------  ---------
    -------------------------------------------------------------------------
    Cash & Equivalents      21.0%      15.6%       9.5%       5.0%       8.0%
    -------------------------------------------------------------------------
    Bonds                   20.3%      20.5%      19.2%      23.1%      23.8%
    -------------------------------------------------------------------------
    Preferred               13.1%      13.1%      14.2%      14.0%      14.0%
    -------------------------------------------------------------------------
    Canadian Equities       27.3%      30.8%      37.3%      38.7%      35.5%
    -------------------------------------------------------------------------
    U.S. & Foreign
     Equities               18.3%      20.0%      19.8%      19.2%      18.7%
    -------------------------------------------------------------------------
    

    Certification

    The Company's management, under the direction and supervision of the
Chief Executive Officer and Chief Financial Officer, continually evaluates the
effectiveness of the Company's disclosure controls and procedures and has
concluded that such disclosure controls and procedures are effective.
    The Company's management is also responsible for establishing and
maintaining internal controls over financial reporting. These controls were
designed to provide reasonable assurance regarding the reliability of
financial reporting and the preparation of financial statements for external
purposes in accordance with Canadian GAAP.
    There have been no changes in the Company's internal controls over
financial reporting during this quarter that have materially affected, or are
reasonably likely to materially affect, its internal control over financial
reporting.

    Outlook

    Time-Wise products will continue to grow in tonnage versus last year as
we realize the benefit of entry into the USA retail market and the addition of
an American processor in December, 2008. Notwithstanding, we are not
optimistic that early projections on Time-Wise sales will be met as the market
continues to move to faster consumer preparation times and processors are
resistant to use Time-Wise as a replacement in current product formulations.
    Rice flour sales are expected to remain strong and incremental sales
revenue is expected from the launches of new and innovative co-packed products
late in the next quarter.
    The ship agency results are expected to reflect a weakened economy
requiring fewer shipments into North American ports.
    While the company is anticipating continued growth in food processing and
selling, and while it will be maintaining a strong position within the ship
agency services business, further growth in the first quarter of 2010 will be
impacted by several factors including (i) the demand for Time-Wise value added
products (ii) the ability of the company to secure rice at competitive prices
(iii) the rate of acceptance of new co-packed products (iv) the ability within
the marketplace to manage price increases to cover increased costs, and (v)
general economic conditions.

    Risks and Uncertainties

    Overview

    Management of risk includes properly identifying, communicating and
controlling the risks which may cause a serious impact to the business.
Management is confident that the Company employs effective procedures to
address all material risks.

    Ability to Achieve Revenue Results

    The Company has two operating divisions which are engaged in the food
industry and ship agency services. Les Aliments Dainty Foods relies on
continued demand for our brands and products. Robert Reford relies on its
ability to offer on a competitive basis a full range of ship agency services
to its international clients. To achieve our business results, we must develop
and sell products and services that appeal to our consumers and customers. Our
success also depends on effective sales, promotion and marketing programs in
an increasingly competitive environment. We must build mutually beneficial
sustainable relationships with our customers. Our ability to execute in these
areas will determine how successful we are in growing and sustaining superior
sales and profitability. Our performance will be dependent on our ability to
sell quality services and products at the most competitive prices. The
continued success is partly driven by leading edge innovation as evidenced by
the new value added product line.

    Ability to Address Cost and Expense Concerns

    The Company's costs are subject to fluctuations, particularly due to
changes in bulk rice prices and grain yields, raw materials, cost of labor,
foreign exchange and interest rates. The Company's success is partly dependent
on management's ability to address and manage these fluctuations through
pricing actions, cost reduction and cost avoidance projects, and effective and
sound sourcing and business decisions as well as the effective and efficient
adoption of IT solutions.

    Economic Conditions

    Economic conditions, natural disasters and political unrest may result in
business interruption, inflation or deflation with a resulting impact on the
demand for our products and services. Our success will depend in part on our
ability to manage our business through these disruptions.

    Environment

    The environment we do business in may be altered by changes in laws and
regulations both in Canada and the United States, as well as internationally.
Changes include product-related laws and regulations as well as accounting and
taxation requirements, environmental, competitive and other factors. Les
Aliments Dainty Foods may be faced with dangers and risks of liability faced
by all food processors, such as the potential contamination of ingredients by
bacteria. The rice mill has quality control procedures to reduce such risks
and has not experienced any material contamination issues. The occurrence of a
contamination problem could result in a costly product recall and damage to
our reputation for superior product quality and value. We maintain adequate
product liability and other insurance coverage to mitigate contamination
issues that may arise. Robert Reford minimizes liability risk by establishing
that all purchases ordered in its capacity as agent for goods and services
delivered to the ships are "on behalf of" the principals (ship owners or
operators) as authorized by them. The vendors are instructed accordingly. Our
ability to manage regulatory, tax and legal matters and to be able to resolve
pending matters within current estimates may impact our results.

    In Recognition

    Now in our 127th year we continue to thrive as we face new challenges. We
thank our employees for a job well done and everyone directly associated with
the Company presently and in the past. We are grateful to our loyal customers
and suppliers who make a significant contribution to our success.

    
    On behalf of the Board

    (signed)                                        (signed)

    Nikola M. Reford                             Terry Henderson
    Chairman                             President & Chief Executive Officer

    Dated at Montreal (Westmount), Quebec,  May 7, 2009.


    MRRM  Inc.
    CONSOLIDATED EARNINGS
    And COMPREHENSIVE INCOME

    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    (unaudited)         For the TWELVE Months Ending  For the Quarter Ending
                        ----------------------------  ----------------------
                                February    February    February    February
                                --------    --------    --------    --------
                                      28,         29,         28,         29,
                                      --          --          --          --
                                    2009        2008        2009        2008
                                    ----        ----        ----        ----
                                    '000        '000        '000        '000

    Revenues
      Sales                      $61,916     $49,342     $16,752     $10,807
      Decrease in fair
       value of marketable
       securities held for
       trading                      (799)       (118)       (250)       (125)
                              ----------- ----------- ----------- -----------

                                  61,117      49,224      16,502      10,682
                              ----------- ----------- ----------- -----------

    Costs and expenses
      Cost of sales,
       selling and
       administrative             59,544      47,810      16,102      10,618
      Amortization                 1,195       1,126         298         297
      Exchange gain                 (121)        (44)          0         (23)
      Interest on
       long-term debt                149         185          33          42
      Other interest                 179         127          38          53
      Change in fair value
       of interest rate
       swap                          119           0         119           0
                              ----------- ----------- ----------- -----------

                                  61,065      49,204      16,590      10,987
                              ----------- ----------- ----------- -----------

    Earnings (loss) before
     income taxes                     52          20         (88)       (305)
                              ----------- ----------- ----------- -----------

    Income taxes (recovery)
      Current                        (21)        307         (71)        117
      Future                         215        (357)        183        (288)
                              ----------- ----------- ----------- -----------
                                     194         (50)        112        (171)
                              ----------- ----------- ----------- -----------

    Net earnings (loss)
     and comprehensive
     income (loss)                 ($142)        $70       ($200)      ($134)
                              ----------- ----------- ----------- -----------
                              ----------- ----------- ----------- -----------

    Basic earnings (loss)
     per share                    ($0.06)      $0.03      ($0.08)     ($0.05)
                                  -------      -----      -------     -------
                                  -------      -----      -------     -------

    -------------------------------------------------------------------------
    -------------------------------------------------------------------------


    MRRM  Inc.
    CONSOLIDATED RETAINED EARNINGS

    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    (unaudited)         For the TWELVE Months Ending  For the Quarter Ending
                        ----------------------------  ----------------------
                                February    February    February    February
                                --------    --------    --------    --------
                                      28,         29,         28,         29,
                                      --          --          --          --
                                    2009        2008        2009        2008
                                    ----        ----        ----        ----
                                    '000        '000        '000        '000

    Balance, beginning of
     period                      $16,261     $16,318     $16,319     $16,395
    Net earnings (loss)             (142)         70        (200)       (134)
                              ----------- ----------- ----------- -----------

                                  16,119      16,388      16,119      16,261

    Dividends                          0         127           0           0
                              ----------- ----------- ----------- -----------

    Balance, end of period       $16,119     $16,261     $16,119     $16,261
                              ----------- ----------- ----------- -----------
                              ----------- ----------- ----------- -----------

    -------------------------------------------------------------------------
    -------------------------------------------------------------------------


    MRRM  Inc.
    CONSOLIDATED CASH FLOWS

    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    (unaudited)         For the TWELVE Months Ending  For the Quarter Ending
                        ----------------------------  ----------------------
                                February    February    February    February
                                --------    --------    --------    --------
                                      28,         29,         28,         29,
                                      --          --          --          --
                                    2009        2008        2009        2008
                                    ----        ----        ----        ----
                                    '000        '000        '000        '000

    OPERATING ACTIVITIES
    Net earnings (loss)            ($142)        $70       ($200)      ($134)
    Defined benefit plan
     payments                        (70)        (55)        (19)        (19)
                                     ----        ----        ----        ----
                                    (212)         15        (219)       (153)
                                    -----         --        -----       -----
    Non-cash items
      Change in fair value
       of marketable
       securities held for
       trading                       983         281         288         165
      Change in fair value
       of interest rate swap         119           0         119           0
      Loss on disposal of
       equipment                       7           0           0           0
      Amortization                 1,195       1,126         298         297
      Pension benefit cost            30         (57)          8           9
      Future income taxes            215        (357)        183        (288)
                                     ---        -----        ---        -----
                                   2,549         993         896         183
      Change in accounts
       receivable                 (2,630)        166       2,166       1,371
      Change in inventories       (3,420)       (589)       (415)     (1,853)
      Change in tax credits
       receivable                   (211)         57          83         392
      Change in prepaids              32          48          16          89
      Change in accounts
       payable                     3,682        (513)     (1,638)      1,147
      Change in income
       taxes payable                  (2)       (161)       (225)       (263)
                              ----------- ----------- ----------- -----------
      Non-cash operating
       items generated
       (used)                          0           1         883       1,066
                              ----------- ----------- ----------- -----------
    Cash flows from
     operating activities           (212)         16         664         913
                              ----------- ----------- ----------- -----------

    INVESTING ACTIVITIES

    Marketable securities           (382)     (1,671)       (162)       (582)
    Disposals of
     marketable securities           560       1,520         152         551
    Property, plant and
     equipment                      (603)     (1,017)       (260)       (217)
    Disposal of equipment              1           0           0           0
    Cash surrender value
     of life insurance
     policy                           (5)          0          (5)          0
                              ----------- ----------- ----------- -----------
    Cash flows from
     investing activities           (429)     (1,168)       (275)       (248)
                              ----------- ----------- ----------- -----------

    FINANCING ACTIVITIES

    Bank indebtedness              1,298       1,900        (222)       (507)
    Long-term debt                  (657)       (621)       (167)       (158)
    Dividends                          0        (127)          0           0
                              ----------- ----------- ----------- -----------
    Cash flows from
     financing activities            641       1,152        (389)       (665)
                              ----------- ----------- ----------- -----------

    Net change in cash and
     cash, end of year                 0           0           0           0

                              ----------- ----------- ----------- -----------
                              ----------- ----------- ----------- -----------

    Dividends per share            $0.00       $0.05       $0.00       $0.00
                                   -----       -----       -----       -----
                                   -----       -----       -----       -----

    -------------------------------------------------------------------------
    -------------------------------------------------------------------------


    MRRM Inc.
    (Formerly: Mount Royal Rice Mills Limited)
    CONSOLIDATED BALANCE SHEETS

    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    (unaudited)                                            As at       As at
                                                        February    February
                                                        --------    --------
                                                              28,         29,
                                                              --          --
                                                            2009        2008
                                                            ----        ----
                                                            '000        '000
    ASSETS

    Current
      Accounts receivable                                 $6,825      $4,195
      Inventories                                         10,891       7,471
      Tax credits receivable                               1,106         895
      Prepaids                                               141         172
      Future income taxes                                     15          15
                                                      ----------- -----------
                                                          18,978      12,748

    Marketable securities, at fair value                   3,720       4,881

    Property, plant and equipment, net                    15,220      15,820

    Cash surrender value of life insurance policy              5           0
                                                      ----------- -----------

                                                         $37,923     $33,449
                                                      ----------- -----------
                                                      ----------- -----------

    LIABILITIES

    Current
      Bank indebtedness                                   $4,596      $3,298
      Accounts payable                                    11,626       7,944
      Income taxes payable                                    21          28
      Current portion of long-term liabilities               770         727
                                                      ----------- -----------
                                                          17,013      11,997
                                                      ----------- -----------

    Long-term debt, reducing term loan maturing
     in 2012                                               1,523       2,222
    Fair value of interest rate swap                         119           0
    Accrued benefit liability                                606         646
    Future income taxes                                    2,004       1,784
                                                      ----------- -----------

                                                          21,265      16,649
                                                      ----------- -----------
    SHAREHOLDERS' EQUITY

    Capital stock
      Common shares, without nominal or par value
       authorized in an unlimited number
      Issued          2,535,000 shares                       539         539

    Retained earnings                                     16,119      16,261
                                                      ----------- -----------
                                                          16,658      16,800
                                                      ----------- -----------

                                                         $37,923     $33,449
                                                      ----------- -----------
                                                      ----------- -----------

    -------------------------------------------------------------------------
    -------------------------------------------------------------------------


    MRRM Inc.
    NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    (unaudited)                                February 28, 2009
                                               -----------  ----

    1- Accounting Policies, Financial Risk management and Supplementary
       Information

    The unaudited interim consolidated financial statements were prepared by
the Company in accordance with Canadian generally accepted accounting
principles and have not been reviewed by the Company's auditors.
    The accounting policies and procedures used in preparing these unaudited
interim consolidated financial statements are the same as those used in
preparing the audited annual consolidated financial statements for the year
ended February 29, 2008 except for new accounting policies that have been
adopted effective March 1, 2008. These unaudited interim statements should be
read along with the audited annual statements and notes included in the
Company's last Annual Report. Certain comparative figures have been
reclassified to conform with the presentation adopted at last fiscal year-end.

    Accounting changes

    On March 1, 2008, in accordance with the applicable transitional
provisions, the Company adopted the new recommendations of the Canadian
Institute of Chartered Accountants ("CICA") Handbook Section 1535, "Capital
Disclosures"; Section 3031, "Inventories"; Section 3862, "Financial
Instruments - Disclosures"; and Section 3863, "Financial Instruments -
Presentation".

    Capital Disclosures

    In December 2006, the CICA published Section 1535, "Capital Disclosures".
This new standard establishes disclosure requirements concerning capital such
as: qualitative information about an entity's objectives, policies and
processes for managing capital; quantitative data about what it regards as
capital; whether the entity has complied with any externally imposed capital
requirements and, if not, the consequences of such non-compliance. The Company
has adopted this Section as of March 1, 2008. The implementation of this new
standard had no impact on the Company's financial results and position.

    Inventories

    Section 3031 provides more extensive guidance on the determination of cost
and its subsequent recognition as an expense including any write-down to net
realizable value. It also provides guidance on the cost formulas that are used
to assign costs to inventories.

    The changes to this section affect the following, in particular:

    - Certain costs, such as storage costs and general and administrative
      expenses that do not contribute to bring the inventories to their
      present location and condition, are precisely excluded from the cost of
      inventories and expensed during the year in which they are incurred;
    - The reversal of the write-down to net realizable value amounts when
      there is a subsequent increase in the value of the inventories is now
      required;
    - The valuation of inventory at the lower of cost and replacement cost is
      no longer allowed;
    - The new standard also requires additional disclosures.

    There is no impact to the Company's financial results and position as a
result of this new standard.

    Financial instruments

    In December 2006, the CICA published new Sections 3862, "Financial
Instruments - Disclosures, and 3863, "Financial Instruments - Presentation",
which were adopted by the Company on March 1, 2008. These new accounting
standards address disclosures and presentation and have no impact on the
Company's financial results.

    Reporting revenue gross as a principal versus net as an agent

    During the year ended February 28, 2009, the Company applied the
recommendation of the CICA Emerging Issues Committee ("EIC") No. 123
"Reporting Revenue Gross as a Principal versus Net as an Agent" with respect
to payments made to sub-agents in the ship agency services. Historically, the
Company did not apply this EIC with respect to payments made to sub-agents
since the related amounts were determined to be insignificant to the
consolidated financial statements. However, in the light of an increase in the
use of sub-agents, such amounts have become significant in the year. This EIC
requires that the ship agency revenues be presented gross of sub-agent fees
paid. Accordingly, the Company retroactively reclassified $474,000 of
sub-agent fees historically presented as a reduction of revenues to cost of
sales, selling and administrative expenses. This reclassification did not
change the Company's reported net earnings for the year ended February 29,
2008. For the year ended February 28, 2009, there are $558,000 of sub-agent
fees included in cost of sales, selling and administrative expenses.

    Future accounting standards

    Goodwill and Intangible Assets

    In February 2008, the CICA issued Section 3064, "Goodwill And Intangible
Assets", which supersedes Section 3062, "Goodwill and other intangible assets"
and Section 3450, "Research and Development Costs". The Section 3064 sets out
standards for recognition, measurement, presentation  and  disclosure  of 
goodwill and intangible  assets.  This  accounting standard is  effective  for
fiscal  years  beginning  on  or  after October 1, 2008 and the Company will
implement it as of March 1, 2009. The Company is currently assessing the
impact that the application of this new section will have on the consolidated
financial statements.

    International Financial Reporting Standards (IFRS)

    In February 2008, Canada's Accounting Standards Board (AcSB) confirmed
that Canadian GAAP, as used by publicly accountable enterprises, will be
superseded by International Financial Reporting Standards (IFRS) for fiscal
years beginning on or after January 1, 2011. The Corporation will be required
to report under IFRS for its interim and annual financial statements for the
fiscal year ending February 29, 2012. The Corporation is currently preparing
its IFRS conversion plan. This plan will be aimed in particular at identifying
the differences between IFRS and the Canadian GAAP, assessing their impact and
analyzing the various policies that the Corporation will elect to adopt. Early
indication is that we will have no significant issues in adopting the new
standards within the required time frame.

    2- Financial Instruments and Financial Risk factors

    The Company's financial instruments recognized in the balance sheet
consist of bank indebtedness, marketable securities, accounts receivable,
accounts payable, the interest rate swap and long-term debt. The carrying
value of these balance sheet items approximates their fair market value. The
Company is exposed to a number of different financial risks arising from
normal course business exposure, as well as the Company's use of financial
instruments. These risk factors include credit risk, interest rate risk,
liquidity risk, currency risk and price risk.

    Derivative Financial Instruments

    The Company uses derivative financial instruments to manage its exchange
risk and interest rate risk. The Company does not use hedge accounting;
accordingly, the derivative financial instruments are recognized at their fair
value on the balance sheet and changes in fair value are recognized in
earnings for the year.

    Fair value

    Accounts receivable, bank indebtedness and accounts payable are financial
instruments whose fair values approximate their carrying values due to their
short-term maturity. The portfolio of marketable securities has been
designated as a financial asset held for trading. These investments are
recorded at fair value based on the current bid price at the balance sheet
date with fair value changes recorded and disclosed in the Statement of
Earnings. The Company uses an interest rate swap arrangement through its
bankers to effectively fix the variable rate pertaining to the Reducing term
loan which matures in February 2012. This arrangement has fixed the interest
rate at 5.83% to maturity. The swap had a negative fair value of $119,000 at
February 28, 2009 and has been recorded in long-term liabilities under fair
value of interest rate swap and recognized in Consolidated Earnings and
Comprehensive Income under other expenses. The fair value was determined based
on the prices obtained from the Company's lender for similar instruments.

    Currency risk

    The Company is exposed to foreign currency risks due to its imports of
bulk rice from the USA and overseas. During the first quarter of the year
ended February 28, 2009, the Company entered into foreign exchange futures
which matured during the year. These futures covered a significant portion of
the Company's U.S. Fund requirement. The Company uses the fair value
accounting method for such instruments. Under this method any unrealized gains
or losses caused by fluctuation to the market value are to be recorded in
income for the year.
    As at February 28, 2009, assets denominated in U.S. dollars consisting of
cash, accounts receivable and marketable securities totalled US$4,331,721,
assets denominated in euros consisting of marketable securities totalled
25,677 euros (US$3,011,366; 25,803 euros and 9,240 pounds sterling
respectively as at February 29, 2008). Bank indebtedness and accounts payable
denominated in U.S. dollars totalled US$4,735,904 (US$1,630,875 as at February
29, 2008).

    Credit risk

    The Company, in the normal course of operations, monitors the financial
condition of its customers and reviews the credit history of each new
customer. Amounts owing from one customer represent 23% (16% in 2008) of total
trade accounts. The Company establishes an allowance for doubtful accounts
that corresponds to the credit risk of its specific customers, historical
trends and economic circumstances.

    Interest rate risk

    Receivables and payables are non-interest bearing. Bank indebtedness bears
interest at the Canadian prime rate for Canadian loans and U.S. base rates for
U.S. loans and, optionally, the Company may take advantage of Bankers
Acceptances. The interest rate risk relating to the reducing term loan is as
described under Fair value above. For this quarter, a 0.5% hypothetical
increase in the prime rate on bank indebtedness would increase interest
expense by approximately $3,000. A 0.5% decrease in the prime rate would have
had a reverse effect. The Company's marketable securities bear interest at
fixed rates and the Company is, therefore, exposed to the risk of changes in
fair value resulting from interest rate fluctuations.

    Liquidity risk

    The Company believes that future cash flows from operations and
availability under existing credit facilities from banking institutions will
be sufficient to meet its obligations. Under senior management's supervision,
the Company manages its liquidity according to financial forecast and expected
cash flows.

    Price risk

    The Company's price risk arises from changes in raw material prices, which
are significantly influenced by the fluctuating underlying markets. The
Company's objectives in managing its price risk are three fold: i) to protect
its financial results for the period from significant fluctuations in raw
material costs, ii) to anticipate, to the extent possible, and plan for
significant changes in the raw material markets and iii) to ensure sufficient
availability of raw materials required to meet the Company's manufacturing
requirements. To manage its exposure to price risks, the Company closely
monitors current and anticipated changes in market prices and develops
pre-buying strategies and patterns, and seeks to adjust its selling prices
when market conditions permit. Historical results indicate management's
ability to rapidly identify fluctuations in raw material prices and, to the
extent possible, incorporate such fluctuations in the Company's selling
prices.


                                February    February    February    February
                                --------    --------    --------    --------
                                      28,         29,         28,         29,
                                      --          --          --          --
                                    2009        2008        2009        2008
                                    ----        ----        ----        ----

                                    '000        '000        '000        '000

    3- Information included in the Statement Of Earnings

        Income taxes paid
         (received)                  $19       ($468)      ($154)      ($380)
                                     ---       ------      ------      ------
                                     ---       ------      ------      ------
        Gross research and
         development costs          $218        $506        $218        $506
                                    ----        ----        ----        ----
                                    ----        ----        ----        ----

        Investment tax credits      $160        $514         $61        $263
                                    ----        ----         ---        ----
                                    ----        ----         ---        ----

    During the year, the Company recorded investment tax credits on research
    and development costs in the amount of $160,000 ($514,000 in 2008).
    Included in this amount is $49,000 relating to 2009 and $111,000 relating
    to the 2008 income tax fillings ($114,000 relating to 2008 and $400,000
    relating to amendments to the tax filings of 2006 and 2007 in 2008).

        Interest on long-term
         debt                       $149        $185         $33         $42
        Interest on bank
         indebtedness and
         other                      $179        $175          38          53
                                    ----        ----          --          --
        Total Interest paid         $328        $360         $71         $95
        Less, interest
         capitalized                   0          48           0           0
                                       -          --           -           -
        Interest expensed           $328        $312         $71         $95
                                    ----        ----         ---         ---
                                    ----        ----         ---         ---

    4 - Income Taxes

        Tax at combined basic
         federal and
         provincial income
         tax rate                    $16          $7
        Non-taxable portion
         of capital losses
         (gains)                       9         (16)
        Tax-free income              (30)        (30)
        Decreased in fair
         value of investments        143          59
        Non-deductible
         expenses                     32          32
        Recovery of prior
         year income taxes             0          27
        Reduction in future
         income tax due to
         decrease in rates           (11)       (180)
        Other                         35          51
                                      --          --
                                    $194        ($50)
                                    ----        -----
                                    ----        -----

        Effective tax rate          -%(*)        -%(*)      -%(*)       -%(*)
                                    --           --         --          --
                                    --           --         --          --
    (*)The effective tax rates for these periods are not meaningful and have
    been omitted.

    5- Segmented Information

      Revenue

        Food processing and
         selling                 $58,734     $46,581     $16,044     $10,193
        Ship agency services       3,182       2,761         708         614
                                   -----       -----         ---         ---
        Operating                 61,916      49,342      16,752      10,807
        Corporate                   (799)       (118)       (250)       (125)
                                    -----       -----       -----       -----
                                 $61,117     $49,224     $16,502     $10,682
                                 -------     -------     -------     -------
                                 -------     -------     -------     -------

      Earnings

        Food processing and
         selling                    $756        $214        $253       ($127)
        Ship agency services         275         114         (52)         (9)
                                     ---         ---         ----         ---
        Operating                  1,031         328         201        (136)
        Corporate                   (979)       (308)       (289)       (169)
                                    -----       -----       -----       -----

      Earnings (loss)
       before income
       taxes                          52          20         (88)       (305)
        Income Taxes                 194         (50)        112        (171)
                                     ---         ----        ---        -----
      Net Earnings (loss)          ($142)        $70       ($200)      ($134)
                                   ------        ---       ------      ------
                                   ------        ---       ------      ------

      Assets

        Food processing and
         selling                 $33,273     $27,408       ($872)       ($19)
        Ship agency services         934       1,156        (999)        (77)
                                     ---       -----        -----        ----
        Operating                 34,207      28,564      (1,871)        (96)
        Corporate                  3,716       4,885        (289)       (124)
                                   -----       -----        -----       -----
                                 $37,923     $33,449     ($2,160)      ($220)
                                 -------     -------     --------      ------
                                 -------     -------     --------      ------

      Capital expenditures

        Food processing and
         selling                    $597      $1,012        $260         $215
        Ship agency services           6           5           0            2
                                       -           -           -            -
        Operating                    603       1,017         260          217
        Corporate                      0           0           0            0
                                       -           -           -            -
                                    $603      $1,017        $260         $217
                                    ----      ------        ----         ----
                                    ----      ------        ----         ----

      Amortization

        Food processing and
         selling                  $1,144      $1,086        $287        $287
        Ship agency services          51          40          11          10
                                      --          --          --          --
                                  $1,195      $1,126        $298        $297
                                  ------      ------        ----        ----
                                  ------      ------        ----        ----

    6- Capital disclosures

    The Company defines its capital as long-term debt (including the current
portion), shareholders' equity, minus cash and cash equivalents. Capital is
calculated as follows:

        Short-term and current
         portion of long-term
         debt                     $5,295      $3,955       ($210)      ($498)
        Long-term debt             1,642       2,222         (60)       (167)
        Shareholders' equity      16,658      16,800        (200)       (134)
                                  ------      ------        -----       -----
                                 $23,595     $22,977       ($470)      ($799)
                                 -------     -------       ------      ------
                                 -------     -------       ------      ------


    The Company's objectives for managing its capital structure are to ensure
financial capacity, liquidity and flexibility to maintain a strong capital
base to sustain ongoing development and operations.
    The Company's credit facilities are subject to a number of covenants and
these have been met as indicated under "Liquidity risk". These covenants are
as follows: i) A revolving line of credit secured by accounts receivable and
marketable securities; and ii) Maintain a Debt Service Coverage ratio of not
less than 1.25 on a pre-dividend basis and 1.00 on a post-dividend basis.
    The primary source of capital is shareholders' equity. During the last
quarter of the year, the credit facilities were renegotiated to increase the
revolving line of credit to $6,750,000 CDN from $4,750,000 (or its US
equivalent). The 5 year reducing term facility initially borrowed during
fiscal year-end 2007 for $3,500,000 remains unchanged. The revolving line of
credit bears interest at the Canadian prime rate for Canadian loans and U.S.
base rates for U.S. Loans and, optionally, the Company may take advantage of
Bankers Acceptances. The reducing term facility is at a combined fixed rate
for interest and fees of 5.83% for the term of the loan. These covenants are
being respected and have been met. The Corporation is not subject to any
external capital restrictions and has no commitments to sell common shares.
    




For further information:

For further information: Lou Younan, Vice-President Finance & CFO, MRRM 
Inc., (514) 908-7777, Fax: (514) 906-0220, mr@mrrm.ca

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