Noveko International Inc. Announces Fourth Quarter and Fiscal 2009 Results


    
      Year marked by the strengthening of the group, product and market
        development and a 63.7% increase in revenues from continuing
                                 operations

                 Positive outlook for the current fiscal year
    -------------------------------------------------------------------------

    EKO / TSX
    
</pre>
<p/>
<p><location>MONTREAL</location>, <chron>Sept. 25</chron> /CNW Telbec/ - Noveko International Inc. ("the Company") today announces the financial results for its fourth quarter and fiscal year ended <chron>June 30, 2009</chron>.</p>
<p>"Despite a 63.7% increase in revenues from continuing operations over the previous year, we posted mixed results. However, they reflect the efforts we put into developing our products, distribution networks and group infrastructure by closing strategic acquisitions and adding key personnel, all of which are critical for our long-term growth. These developments required time and the investment of significant human and financial resources, the effects of which were felt all the more as the sales of our antimicrobial products are still only at their beginnings. Furthermore, certain items that affected our results had no impact on our cash position, such as stock-based compensation charge and goodwill impairment related notably to the recent conditions in a subsidiary's market," indicated André Leroux, Chairman of the Board and Chief Executive Officer of the Company.</p>
<p/>
<p>Financial Highlights for Continuing Operations (BLI's Operating Results Treated as Discontinued Operations)</p>
<p/>
<p>For the fiscal year and the fourth quarter, in comparison with the corresponding periods of the previous year:</p>
<p/>
<pre>
    
    - Consolidated revenues from continuing operations respectively up by
      63.7% to $12.2 million, and up by 44.7% to $3.4 million
    - Loss before amortization, financial expenses, income taxes, other items
      and discontinued operations - including stock-based compensation -
      respectively up by $7.6 million and down by $1.6 million
    - Loss from continuing operations respectively up by $14.8 million and
      $3.4 million
    
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<p/>
<p>"The pandemic threat gave us an opportunity to accelerate our growth, paving the way for a promising outlook throughout the current fiscal year and over the longer term. Our expected sales growth will improve our financial performance," added <person>Mr. Leroux</person>. "During the year, we concluded new agreements and partnerships that are already bearing fruit, as attested to by our significant order book for Noveko(TM) antimicrobial face masks and respirators and AZURO(TM) hand sanitizers, also demonstrating the greater interest in our know-how and expertise. In addition, we managed to have our suppliers increase their production capacity in order to meet the growing demand, thereby enabling us to better serve our clients."</p>
<p>"Integrating the acquired entities into our group, and especially pooling our technologies, allowed us to achieve significant breakthroughs in the air filtration segment, notably in the farming sector, although the market deployment of our Noveko antimicrobial air filters was not as rapid as expected, due to the difficult conditions currently prevailing in the swine industry. We are however confident of being well positioned to benefit from an eventual recovery. We also believe that the current fiscal year will be promising in regard to new applications for our air filters in the aeronautics, rail transport and building segments."</p>
<p>"All in all, we have the assets, organizational capabilities and human resources to further develop our primary growth vectors, namely our antimicrobial face masks and respirators, air filtration products, sanitizers and medical equipment," concluded <person>Mr. Leroux</person>.</p>
<p/>
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    Analysis of Operating Results

    Selected Consolidated Information
    (in thousands of $, except per-share amounts) (unaudited)
    -------------------------------------------------------------------------
                                       12 months             Three months
                                       (audited)              (unaudited)
                                   2009(1)     2008        2009(1)     2008
    -------------------------------------------------------------------------
    Revenues(2)                  12,162       7,428       3,373       2,331
    Gross margin                  5,481       3,650       1,100         951
    Loss before amortization,
    financial expenses,
    income taxes, other items
    and discontinued
     operations(3)              (21,579)    (13,991)     (5,002)     (6,585)
    Goodwill impairment
     charge(4)                   (3,600)          -      (3,600)          -
    Loss from continuing
     operations                 (28,860)    (14,071)    (10,262)     (6,825)
    Loss from discontinued
     operations                  (3,016)     (2,543)     (2,425)     (2,587)
    Net loss                    (31,876)    (16,613)    (12,637)     (9,412)
    Loss per Class A share
      (basic and diluted)
      Continuing operations   $   (0.43)  $   (0.26)  $   (0.15)  $   (0.12)
      Discontinued operations $   (0.05)  $   (0.04)  $   (0.04)  $   (0.05)
      Net loss                $   (0.48)  $   (0.30)  $   (0.19)  $   (0.17)
    Weighted average number
     of Class A shares
     outstanding basic and
     diluted (in thousands)      66,611      54,767      66,611      54,767
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
                                June 30,    June 30,
    Balance Sheet Data             2009        2008
    ------------------------------------------------
    Total assets                 50,897      62,858
    Shareholders' equity         38,487      49,773
    Total interest-bearing
     debt(5)                      4,163       4,547
    Cash, cash equivalents,
     deposit in trust and
     short-term investments       4,711      25,386
    ------------------------------------------------
    (1) The consolidated financial statements as at June 30, 2009 include the
        accounts of the Company and its wholly-owned subsidiaries.
    (2) Excluding BLI.
    (3) Including stock-based compensation charge of 11,036, 7,229, 1,742 and
        4,181 for the respective periods of 2009 and 2008, which has no
        impact on the cash balance.
    (4) Step one of the Company's annual goodwill impairment tests resulted
        in a preliminary impairment (without impact on cash) within the
        medical equipment segment (ECM) reflecting market conditions,
        primarily the economic slowdown and the restructuring periods under
        way in the swine and bovine industries.
    (5) Including long-term debt and its current portion, bank advances and
        bank loan, and short and long-term convertible debentures.

    -------------------------------
    Fiscal Year Ended June 30, 2009
    -------------------------------
    
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<p/>
<p>Our segmented information is now reported based on five business segments to provide a better representation of our primary growth vectors, namely : Noveko(TM) antimicrobial surgical masks and respirators, air filtration products, including Noveko(TM) antimicrobial air filters, as well as EPURAIR(TM) air quality systems, AZURO(TM) sanitizers, medical equipment, primarily ultrasound scanners for human and veterinary medicine, along with our medical equipment import and distribution activities, and other activities consisting primarily of the marketing management services offered by Magnum to external clients, and also the activities of the parent company, Noveko International, and Noveko Trading. Data for prior quarters have been reclassified to reflect this new presentation.</p>
<p/>
<p>Discontinued Operations</p>
<p/>
<p>Since Bolduc Leroux Inc.'s activities no longer fit with our growth strategy, we are actively continuing our efforts to sell this subsidiary.</p>
<p/>
<pre>
    
    Summary of Results from Discontinued Operations (BLI)
    (in thousands of $)
    -------------------------------------------------------------------------
    Fiscal Years Ended June 30,                         2009           2008
    -------------------------------------------------------------------------
    Revenues                                           5,590          7,088
    Gross margin                                         526          1,339
    Loss from discontinued operations                 (3,016)        (2,543)
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    For this reason, BLI's results of operations and assets and liabilities
have been withdrawn from continuing operations to be treated as discontinued
operations in the Company's financial statements for the fiscal year ended
June 30, 2009, as well as for the fiscal year ended June 30, 2008 for
comparative purposes.

    Consolidated and Segmented Revenues from Continuing Operations

    (in dollars)
    -------------------------------------------------------------------------
    Fiscal Years Ended June 30,                         2009           2008
    -------------------------------------------------------------------------
    Medical equipment                              7,558,144      6,894,908
    -------------------------------------------------------------------------
    Sanitizers                                       540,779        371,417
    -------------------------------------------------------------------------
    Face masks                                       602,947         39,657
    -------------------------------------------------------------------------
    Filtration                                     2,692,726         62,239
    -------------------------------------------------------------------------
    Other                                            767,718         59,742
    -------------------------------------------------------------------------
    Total                                         12,162,314      7,427,963
    -------------------------------------------------------------------------


    Consolidated revenues for the fiscal year ended June 30, 2009 grew by $4.7
million or 63.7% to $12.2 million. This growth came primarily from:

    - the $0.7 million increase in revenues from the medical equipment
      segment which benefited from the contribution of Noveko Algérie
      acquired in July 2008, whereas revenues from the sale of ultrasound
      scanners for use in veterinary medicine declined due to the decrease in
      selling prices for these devices at a time when the swine and bovine
      industries are experiencing difficulties worldwide - however, these
      selling price adjustments enabled ECM to maintain its sales volume and
      leadership in a more challenging market;
    - the increases of $0.5 million and $0.2 million in revenues recorded in
      the face masks and sanitizers segments respectively - it should be
      noted that the sharp increase in demand in the current context of a
      pandemic will yield benefits mostly in the coming fiscal years, given
      the sustained growth in orders for such products;
    - the $2.6 million increase in revenues from the filtration products
      segment thanks to the acquisition of Micron-Air and Purer Life,
      completed in July and August 2008 respectively, and the distribution
      agreements in the livestock farms market; and
    - the $0.7 million increase in revenues from the marketing management
      services offered by Magnum to external clients, namely manufacturers
      and distributors of pharmaceuticals, over-the-counter drugs and medical
      devices (other activities).
    
</pre>
<p/>
<p>The operating profit margin slipped from 49.1% for the fiscal year ended <chron>June 30, 2008</chron> to 45.1% for the fiscal year ended <chron>June 30, 2009</chron>. This decline is due primarily to the different product mix resulting from the acquisitions closed at the beginning of the fiscal year and downward adjustments in the prices of filtration products for livestock farms and medical equipment for use in veterinary medicine due to the difficulties that continue to affect the swine and bovine industries worldwide, as indicated previously.</p>
<p>Selling and administrative expenses increased by <money>$5.6 million</money> or 58.1% to <money>$15.3 million</money> due to the following main factors:</p>
<p/>
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    - the increase in the group's total payroll as a result of the
      acquisitions closed at the beginning of the year and the strengthening
      of the team at various levels of responsibility;
    - the costs related to product marketing and selling initiatives in the
      different business segments; and
    - the fees assumed by Noveko International with respect to its new status
      as a TSX-listed corporation.
    
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<p/>
<p>Stock-based compensation charge, which has no impact on the Company's cash balance, increased by <money>$3.8 million</money> compared with the previous year to <money>$11.0 million</money>. Primarily pursuant to the acquisitions closed at the beginning of the fiscal year, the Company granted stock options to employees and consultants entitling them to purchase a total of 2,950,000 Class A shares at an average exercise price of <money>$2.76</money> per share with a vesting period extending over 12 to 30 months.</p>
<p>Research and development costs increased by approximately <money>$0.3 million</money> over the previous year to <money>$1.2 million</money>, due notably to the costs related to the development phases and different effectiveness tests conducted in the face masks and filtration products segments.</p>
<p>Research and development tax credits grew by approximately <money>$0.3 million</money> to more than <money>$0.5 million</money>, this increase being divided almost equally among the filtration products, face masks and medical equipment segments.</p>
<p/>
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    Loss before Amortization, Financial Expenses, Income Taxes, Other Items
    -------------------------------------------------------------------------
    and Discontinued Operations
    ---------------------------

    (in dollars)
    -------------------------------------------------------------------------
    Fiscal Years Ended June 30,                         2009           2008
    -------------------------------------------------------------------------
    Medical equipment                               (238,542)      (172,337)
    -------------------------------------------------------------------------
    Sanitizers                                    (1,686,310)    (1,352,188)
    -------------------------------------------------------------------------
    Face masks                                    (2,286,884)    (1,682,842)
    -------------------------------------------------------------------------
    Filtration                                    (3,722,963)    (1,994,105)
    -------------------------------------------------------------------------
    Other                                        (13,644,590)    (8,789,796)
    -------------------------------------------------------------------------
    Total                                        (21,579,289)   (13,991,268)
    -------------------------------------------------------------------------
    
</pre>
<p/>
<p>Considering the aforementioned factors, the loss before amortization, financial expenses, income taxes, other items and discontinued operations totalled <money>$21.6 million</money>, compared with an operating loss of <money>$14.0 million</money> for the previous year.</p>
<p>Amortization expenses amounted to <money>$2.0 million</money>, this <money>$1.7 million</money> increase being primarily attributable to the acquisitions closed at the beginning of the fiscal year, of which nearly half came from the amortization of intangible assets, notably patents in the filtration products segment.</p>
<p>Financial expenses less investment revenues totalled <money>$2.2 million</money>, compared with a negative amount of approximately <money>$0.1 million</money> for the previous fiscal year.</p>
<p>The Company recorded a <money>$3.6 million</money> goodwill impairment charge in its financial statements as at <chron>June 30, 2009</chron> related to the medical equipment segment (ECM), which impairment is without impact on the Company's cash balance. When it initiated its step-one analysis as at <chron>June 30, 2009</chron>, using the discounted estimated future cash flows method, it was determined that a comprehensive step-two analysis of the goodwill for ECM would be required because the net book value of this unit exceeded its estimated fair value. The goodwill impairment charge reflects market conditions related to ECM, primarily the economic slowdown and the restructuring periods under way in the swine and bovine industries. With the assistance of an independent valuator, the Company is currently carrying out this comprehensive assessment including a detailed calculation of the estimated fair values of recorded and unrecorded intangible assets. The final impairment calculation is expected to be completed during fiscal 2010 and the resulting final adjustments, if any, would result in a non-cash adjustment to the consolidated statement of operations.</p>
<p/>
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    Net Loss from Continuing Operations

    (in dollars)
    -------------------------------------------------------------------------
    Fiscal Years Ended June 30,                         2009           2008
    -------------------------------------------------------------------------
    Medical equipment                             (4,284,262)      (311,347)
    -------------------------------------------------------------------------
    Sanitizers                                    (1,765,542)    (1,280,275)
    -------------------------------------------------------------------------
    Face masks                                    (2,294,519)    (1,740,628)
    -------------------------------------------------------------------------
    Filtration                                    (3,963,997)    (1,994,105)
    -------------------------------------------------------------------------
    Other                                        (16,551,391)    (8,744,373)
    -------------------------------------------------------------------------
    Total                                        (28,859,711)   (14,070,728)
    -------------------------------------------------------------------------
    
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<p/>
<p>Considering the aforementioned factors and the fact that the Company recorded income tax recoveries of more than <money>$0.3 million</money> and future income taxes of approximately <money>$0.3 million</money>, the net loss from continuing operations for the fiscal year ended <chron>June 30, 2009</chron> amounted to <money>$28.9 million</money>, compared with a net loss of <money>$14.1 million</money> for the previous fiscal year.</p>
<p>A <money>$3.0 million</money> loss from discontinued operations (BLI) was recorded in the year's results, compared with <money>$2.5 million</money> for the previous year; consequently, the net loss amounted to <money>$31.9 million</money>, compared with <money>$16.6 million</money> for the fiscal year ended <chron>June 30, 2008</chron>.</p>
<p>Considering a net change in unrealized gains on translation of the financial statements of self-sustaining foreign operations of <money>$0.5 million</money> for the fiscal year, compared with an unrealized loss of <money>$0.8 million</money> for the previous year, a net loss of <money>$31.4 million</money> represented the comprehensive loss for the fiscal year ended <chron>June 30, 2009</chron>, compared with a net loss of <money>$17.4 million</money> for the previous year.</p>
<p>The loss per Class A share (basic and diluted) from continuing operations amounted to <money>$0.43</money> on a weighted average of 66,610,725 outstanding shares, compared with a loss per share of <money>$0.26</money> on a weighted average of 54,767,174 shares for the previous fiscal year. The increased weighted average number of outstanding shares is due to the share issues during the fiscal year ended <chron>June 30, 2009</chron>. The net loss per Class A share (basic and diluted) totalled <money>$0.48</money>, after accounting for a loss from discontinued operations of <money>$0.05</money>, compared with <money>$0.30</money> for the previous year, after accounting for a loss from discontinued operations of <money>$0.04</money>.</p>
<p/>
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    Principal Quarterly Financial Information (Unaudited)

    -------------------------------------------------------------------------
    (in thousands of $,
     except per-share             First      Second       Third      Fourth
     amounts)                   Quarter     Quarter     Quarter     Quarter
    -------------------------------------------------------------------------
    Fiscal 2009
    -------------------------------------------------------------------------
    Revenues                      2,272       3,908       2,609       3,373
    -------------------------------------------------------------------------
    Loss from continuing
     operations                  (6,281)     (6,740)     (5,577)    (10,262)
    -------------------------------------------------------------------------
    Comprehensive loss           (6,699)     (5,305)     (6,931)     (9,411)
    -------------------------------------------------------------------------
    Loss per Class A share
     from continuing
     operations (basic and
     diluted)                     (0.10)      (0.10)      (0.08)      (0.15)
    -------------------------------------------------------------------------
    Fiscal 2008
    -------------------------------------------------------------------------
    Revenues                      1,295       2,182       1,621       2,331
    -------------------------------------------------------------------------
    Loss from continuing
     operations                  (2,127)     (1,701)     (3,418)     (6,825)
    -------------------------------------------------------------------------
    Comprehensive loss           (2,230)     (1,534)     (2,573)     (6,928)
    -------------------------------------------------------------------------
    Loss per Class A share
     from continuing operations
     (basic and diluted)          (0.04)      (0.04)      (0.06)      (0.12)
    -------------------------------------------------------------------------


    ----------------------------------
    Fourth Quarter Ended June 30, 2009
    ----------------------------------

    Consolidated and Segmented Revenues from Continuing Operations

    (in dollars)
    -------------------------------------------------------------------------
    Quarters Ended June 30,                             2009           2008
    -------------------------------------------------------------------------
    Medical equipment                              1,880,108      2,146,366
    -------------------------------------------------------------------------
    Sanitizers                                       151,702         77,816
    -------------------------------------------------------------------------
    Face masks                                       261,822         18,221
    -------------------------------------------------------------------------
    Filtration                                       962,782         28,595
    -------------------------------------------------------------------------
    Other                                            116,882         59,742
    -------------------------------------------------------------------------
    Total                                          3,373,296      2,330,740
    -------------------------------------------------------------------------


    Consolidated revenues for the fourth quarter ended June 30, 2009 grew by
$1.0 million or 44.7% to $3.4 million. This growth came primarily from:

    - a $934,187 increase in revenues from the filtration products segment
      thanks to the acquisition of Micron-Air and Purer Life and the new
      distribution agreements in the livestock farms market;
    - the increases of $243,601 and $73,886 in revenues recorded in the face
      masks and sanitizers segments respectively, reflecting a sales growth;
    - a $57,140 increase in revenues (other activities) from the marketing
      management services offered by Magnum to external clients, i.e.
      manufacturers and distributors of pharmaceutical, over-the-counter
      drugs and medical devices;
    - whereas revenues from the medical equipment segment decreased by
      $266,258 from the corresponding period of 2008, despite the
      contribution of Noveko Algérie. The decline in revenues in this segment
      is primarily attributable to the crisis in the swine and bovine
      industries worldwide.
    
</pre>
<p/>
<p>Selling and administrative expenses increased by <money>$1.4 million to $4.1 million</money>.</p>
<p>Stock-based compensation charge decreased by <money>$2.4 million</money> from the corresponding quarter of the previous year to <money>$1.7 million</money>. This decrease is due to the fact that in the fourth quarter of the year, the Company granted only a few new stock options, unlike last year when, in addition, the exercise price of the options was higher.</p>
<p>Research and development costs decreased by <money>$0.3 million</money> from the corresponding quarter of the previous year to <money>$0.3 million</money>, the platform of new-generation ultrasound scanners for use in human and veterinary medicine being virtually complete. Research and development tax credits remained relatively stable compared with the fourth quarter of 2008.</p>
<p/>
<pre>
    
    Loss before Amortization, Financial Expenses, Income Taxes, Other Items
    -------------------------------------------------------------------------
    and Discontinued Operations
    ---------------------------

    (in dollars)
    -------------------------------------------------------------------------
    Quarters Ended June 30,                             2009           2008
    -------------------------------------------------------------------------
    Medical equipment                               (232,346)      (337,081)
    -------------------------------------------------------------------------
    Sanitizers                                       (60,748)      (965,095)
    -------------------------------------------------------------------------
    Face masks                                      (722,912)    (1,063,331)
    -------------------------------------------------------------------------
    Filtration                                    (1,374,845)      (896,512)
    -------------------------------------------------------------------------
    Other                                         (2,611,145)    (3,322,811)
    -------------------------------------------------------------------------
    Total                                         (5,001,996)    (6,584,830)
    -------------------------------------------------------------------------


    Considering the aforementioned factors, the loss before amortization,
financial expenses, income taxes, other items and discontinued operations
amounted to $5.0 million for the fourth quarter ended June 30, 2009, down by
$1.6 million from the corresponding quarter of the previous year.

    Net Loss from Continuing Operations

    (in dollars)
    -------------------------------------------------------------------------
    Quarters Ended June 30,                             2009           2008
    -------------------------------------------------------------------------
    Medical equipment                             (3,539,670)      (350,334)
    -------------------------------------------------------------------------
    Sanitizers                                       (76,366)      (898,662)
    -------------------------------------------------------------------------
    Face masks                                      (715,256)    (1,076,629)
    -------------------------------------------------------------------------
    Filtration                                    (1,185,548)      (896,512)
    -------------------------------------------------------------------------
    Other                                         (4,745,288)    (3,602,621)
    -------------------------------------------------------------------------
    Total                                        (10,262,128)    (6,824,758)
    -------------------------------------------------------------------------
    
</pre>
<p/>
<p>The fourth-quarter net loss amounted to <money>$10.3 million</money>, compared with a net loss of <money>$6.8 million</money> for the corresponding quarter of the previous year, considering the aforementioned factors and a <money>$3.6 million</money> goodwill impairment charge attributable to ECM, as mentioned previously regarding the net loss for the fiscal year ended <chron>June 30, 2009</chron>. Considering a net change in gains on translation of the financial statements of self-sustaining foreign operations of <money>$0.9 million</money> for the quarter, whereas the net change in losses was <money>$0.1 million</money> for the fourth quarter of the previous year, a net loss of <money>$9.4 million</money> represented the fourth-quarter comprehensive loss, compared with <money>$6.9 million</money> for the corresponding quarter of the previous year.</p>
<p>The loss per Class A share (basic and diluted) from continuing operations amounted to <money>$0.15</money> on a weighted average of 66,610,725 outstanding shares, compared with a loss per share of <money>$0.12</money> on a weighted average of 54,767,174 shares for the previous year. The net loss per Class A share (basic and diluted) totalled <money>$0.19</money> after accounting for a loss from discontinued operations of <money>$0.04</money>, compared with <money>$0.17</money> for the previous year, after accounting for a loss from discontinued operations of <money>$0.05</money>.</p>
<p/>
<pre>
    
    --------------------------------------------
    Fiscal Year Highlights and Subsequent Events
    --------------------------------------------

    Listing on Toronto Stock Exchange: Effective July 28, 2008, the Company's
shares ceased trading on the TSX Venture Exchange and were listed on the
Toronto Stock Exchange.

    Acquisition of Subsidiaries:

    July 2008    Acquisition of Unitam International Management Corporation
                 Inc. ("Unitam"), an agency focused on the development of
                 international business services established in North America
                 and Asia. Unitam's activities have since been integrated
                 with those of Magnum. The process of winding up Unitam in
                 Magnum was initiated in June 2009.

    July 2008    Acquisition of SARL Noveko Algérie ("Noveko Algérie"), a
                 medical equipment import business in North Africa.

    July 2008    Acquisition of Groupe Conseils Micron-Air Inc. and two other
                 companies of the same group ("the Micron-Air group"), a
                 designer and manufacturer of air quality systems for the
                 residential and commercial markets sold under the
                 EPURAIR(TM) brand. Since July 2009, subsequent to a
                 reorganization to streamline the Company's corporate
                 structure, the activities formerly conducted by the Micron-
                 Air group are now conducted by Epurair Inc. ("Epurair").

    August 2008  Acquisition of Purer Life Technology Co., Ltd. (and U-Bond
                 Inc., an entity of the same group - collectively "Purer
                 Life"), a company that develops and manufactures
                 antimicrobial filtration fabric and holds an extensive
                 portfolio of intellectual property rights with multiple
                 applications. In May 2009, U-Bond Inc. was wound-up into
                 Noveko Trading.

    Agreements and Orders for Product Development and Marketing:
    
</pre>
<p/>
<p>Distribution Agreement with Aerosys Technologies - for the exclusive distribution of filters incorporating Noveko's antimicrobial filtration technology, worldwide, to aircraft manufacturers, aeronautics maintenance companies and air carriers and, in <location>France</location>, to the railway, auto manufacturing and defence industries. Aerosys Technologies also distributes Noveko(TM) surgical masks and AZURO(TM) hand sanitizers in the French market.</p>
<p>Distribution Agreement with Garda - for the distribution of Noveko(TM) antimicrobial surgical masks and respirators and Azuro(TM) hand sanitizers to Garda's client base.</p>
<p>Distribution Agreement with BLD Distribution - for the sale and promotion of the hand sanitizers within the <location>United States</location> to the foodservices and educational segments, industrial sectors such as janitorial, warehousing and farming, and government and pharmaceutical entities. BLD committed to purchase Noveko hand sanitizers for an amount of at least US$3 million within the first year.</p>
<p>Licence and Supply Agreement with Microban - Microban, the global leader in built-in antimicrobial product protection, offering durable antimicrobial solutions for consumer, industrial and healthcare products around the world, granted us the right to sell our line of AZURO(TM) hand sanitizers under the Microban(R) brand name. This global agreement also granted us the right to use the Microban(R) brand as the lead/host brand or ingredient brand, and the right and licence to use the Microban(R) antimicrobial technology and proprietary antimicrobial additives in the manufacture of Noveko(TM) surgical masks and respirators through <chron>December 31, 2012</chron>.</p>
<p>Air Transat Chooses Noveko(TM) Antimicrobial Technology - first order from Air Transat obtained in <chron>September 2009</chron> for some 500,000 Noveko(TM) antimicrobial face masks and respirators as well as for AZURO(TM) hand sanitizers. Additional orders are expected within the near term. The antimicrobial products purchased by Air Transat are intended to protect the airline's passengers, flights personnel and ground crew. Furthermore, discussions are still under way with Air Transat and the French company Aerosys Technologies to obtain the required certifications in order to equip Air Transat's aircraft fleet with filters incorporating Noveko's antimicrobial filtration technology.</p>
<p/>
<p>Private Placement of Approximately $10 Million:</p>
<p/>
<p>On <chron>September 4, 2009</chron>, we announced we had entered into an agreement with Desjardins Securities Inc. as lead agent on behalf of a syndicate of agents to raise approximately <money>$10 million</money> of units by way of a best efforts private placement. The placement process is currently under way and should close in the near term. Each unit will consist of one Class A share of the Company and one-half of one Class A share purchase warrant. The units will be offered to qualified investors in all Canadian provinces and potentially in other jurisdictions pursuant to applicable private placement exemptions. The offering is subject to the usual conditions and the receipt of all required regulatory approvals, including approval of the <location>Toronto</location> Stock Exchange.</p>
<p/>
<p>Progress at Operational Level:</p>
<p/>
<p>Agreement with McKesson Logistics Solutions - In <chron>August 2009</chron>, we concluded an agreement with McKesson Logistics Solutions ("MSL"), Canada's leading third-party logistics provider for the healthcare industry, pursuant to which MSL will provide us with full order-to-cash logistics management services, including order fulfillment, customer invoicing, accounts receivable management, customer service, storage, inventory and transportation management, for the distribution of our Noveko(TM) surgical masks and respirators and hand sanitizers.</p>
<p>Steps to Secure Foothold in <location>China</location> - The Company has taken steps to establish its presence in the Chinese market through a subsidiary in order to accelerate the development of its various activities in <location>China</location>.</p>
<p/>
<p>Progress in our Business Segments:</p>
<p/>
<p>Masks and Respirators</p>
<p/>
<p>Increased Demand and Production - At the end of <chron>April 2009</chron>, we made a first delivery of about one million face masks to <location>Mexico</location>, this number representing most of the face mask inventories then available at Noveko's Terrebonne warehouse. During the fourth quarter of the fiscal year, in order to attempt to meet the growing demand and given the limited quantity of face mask inventories available, we took the necessary steps to increase our production, primarily by enhancing our assembly capacity. First, during the fourth quarter of the fiscal year ended <chron>June 30, 2009</chron>, we started assembling the inventories of the various face mask components at our disposal. The assembly of these different components will enable us to gradually produce approximately 7 million face masks. The face masks thus assembled are delivered as they become available. Conversely, limited working capital and the time required to increase the assembly rate have actually caused the pace to somewhat slow down. We expect to be able to finish assembling most of these 7 million face masks in the coming quarter. Delivery of these face masks will therefore be spread over the current and next quarter.</p>
<p>Secondly, we started to produce approximately 20 million additional face masks during the fourth quarter of the fiscal year ended <chron>June 30, 2009</chron>. We expect to complete a large proportion of the production and assembly of these face masks in the second quarter ending <chron>December 31, 2009</chron>. We are also taking further steps to pursue the production of additional face masks.</p>
<p>The value of our firm orders for our face masks, for the period beginning <chron>July 1, 2009</chron>, currently totals <money>$12 million</money>. In addition to these orders, negotiations are under way with respect to several more orders, which could potentially represent sales of at least 50 million face masks for the current fiscal year.</p>
<p>We are still discussing with various suppliers to increase the assembly pace of the materials used in the manufacture of our face masks. We also remain on the lookout for opportunities to expand our production more efficiently. Consequently, after obtaining the expected net proceeds from the offering, we expect to gradually reach a monthly production rate of about 9 million face masks in the current fiscal year. We will thereby be in a position to produce a sufficient quantity of face masks to fill our existing order forecasts by the end of the current fiscal year.</p>
<p>Effectiveness of Noveko(TM) Antimicrobial Face Masks Against the A (H1N1) Influenza Virus -In <chron>May 2009</chron>, we received the preliminary results of tests conducted by Microbiotest Lab, an independent laboratory located in Sterling, Virginia, USA, on the Noveko(TM) face masks with respect to a strain of the A (H1N1) influenza virus similar to the one responsible for the human swine flu. The purpose of these tests was to evaluate the effectiveness of Noveko(TM) face mask materials in neutralizing this virus on direct contact and to simulate the use of the face mask by a user. The tests demonstrated the bio-efficacy of a log 3 reduction over a period of 30 minutes, in other words the effectiveness of our face masks in neutralizing 99.9% of the A (H1N1) influenza virus.</p>
<p>FDA certification process - At the beginning of <chron>April 2009</chron>, we filed the documentation relating to the results of the supplementary tests demonstrating a "log 4 reduction" bio-efficacy. Later in April, we held discussions with the FDA to clarify the request for information still required subsequent to its review of the test results submitted. We have taken the steps needed to fulfill these supplementary information requests. In this regard, we have been granted an extension until <chron>October 23, 2009</chron>.</p>
<p>In <chron>September 2009</chron>, we also held discussions with the FDA at a formal pre-IDE (investigational device exemption) meeting to consider an additional labelling claim for our Noveko(TM) face masks and respirators for their marketing as a medical device reducing exposure to airborne influenza particles. In this regard, dialogue is continuing to obtain clarifications and guidelines for providing the supportive data for a future submission to market the Noveko(TM) face masks and respirators with such an antiviral claim in the <location>United States</location>.</p>
<p>Additional Patent - In <chron>July 2009</chron>, the US Patent and Trademark Office ("USPTO") issued an additional patent for Noveko's antimicrobial filtration technology, a first patent having been issued by the USPTO in <chron>May 2006</chron>. This second U.S. patent reinforces the protection from which our antimicrobial face masks and respirators and antimicrobial air filters already benefit in several countries. In this regard, we would mention that an anonymous request for ex-parte re-examination of our patent was filed before the USPTO in <chron>May 2008</chron>. In <chron>July 2009</chron>, the USPTO rejected this request and our patent was thereby maintained.</p>
<p/>
<p>Air Filtration Products</p>
<p/>
<p>Air Filters for Farm Buildings - During the year, we equipped new Quebec-based hog farm sites through Monitrol and we also reaped the first benefits of the agreement with Geosane, although they were weaker than initially expected in light of the difficult conditions on global swine markets.</p>
<p>Air Filters for the Transportation Industry - We are also in talks with other railway companies that have shown an interest in the superior filtration capacity and increased longevity of our filtration technologies, characteristics that are particularly valued in the transportation industry.</p>
<p>In the aeronautics field, Aerosys Technologies has already successfully completed several of the prerequisite tests for the marketing of air filters incorporating Noveko's antimicrobial filtration technology in the aeronautics segment. Additional tests are under way, notably to certify the air filters in accordance with the industry's non-flammability standards. Aerosys Technologies also presented the new air filters incorporating Noveko(TM) technology at the <person>Paris Le Bourget</person> International Air and Space Show held in <chron>June 2009</chron>. Airlines have already shown an interest in fitting out their aircraft with such air filters, including Air Transat.</p>
<p>Air Filters in the Institutional, Commercial and Residential Markets - We proceeded with the first installations of air filters incorporating Noveko's technology antimicrobial in commercial buildings in the Greater <location>Montreal</location> Area. Performance tests are currently in progress and the initial results have proven positive.</p>
<p/>
<p>Sanitizers</p>
<p/>
<p>Increased Demand and Production - During the fiscal year ended <chron>June 30, 2009</chron>, the activities related to the sanitizers marketed under the Azuro(TM) brand were integrated with those of Noveko. The current context of a pandemic had led to a sharp increase in the demand for sanitizers. To that effect, the value of our firm orders for our hand sanitizers, for the period beginning <chron>July 1, 2009</chron>, currently totals <money>$6 million</money>.</p>
<p/>
<p>Medical Equipment</p>
<p/>
<p>Progress in human and veterinary ultrasonography - Over the next year, ECM plans to finalize the setting-up of an exclusive distributors network for the human medicine market, which already assures it of a presence in 28 countries. In <chron>April 2009</chron>, ECM was granted Health <location>Canada</location> approval to sell the Imagyne(TM) ultrasound scanner in healthcare institutions across <location>Canada</location>. In veterinary medicine, thanks to its well established network of 55 exclusive distributors, ECM remains a leader in the swine market, despite the crisis in the swine industry. In <chron>October 2008</chron>, ECM launched the V Scan(TM) ultrasound scanner, a compact and competitively-priced unit completing the line of ultrasound scanners for use in veterinary medicine. ECM is currently finalizing the development of another high-end ultrasound scanner that it intends to bring to market by the end of the 2009 calendar year.</p>
<p>Noveko Algérie - In <chron>April 2009</chron>, Noveko Algérie obtained significant new orders to supply various medical devices to the Algerian National Office of Equipment and Accessories for Handicapped People. The orders are estimated at approximately <money>$1.4 million</money>. The healthcare promotion in <location>Algeria</location> paves the way for promising breakthroughs for all our products, while also driving our medical equipment import activities.</p>
<p/>
<p>-------</p>
<p>Profile</p>
<p>-------</p>
<p/>
<p>Noveko International Inc. offers innovative solutions in the environmental and medical fields worldwide. Through its subsidiaries, the Company specializes primarily in the following business segments: the development, manufacturing and marketing of derivative products from its patented antimicrobial filtration technology, including air filters, surgical masks and respirators, along with other products with antimicrobial properties such as AZURO(TM) hand sanitizers - and the development, manufacturing and marketing of medical equipment, primarily portable real-time ultrasound scanners for use in human and veterinary medicine.</p>
<p/>
<p>Certain statements set forth in this press release constitute forward-looking statements. In some cases, these statements are identified by the use of terms such as "may", "could", "might", "intend", "should", "expect", "project", "plan", "believe", "estimate" or other comparable variants. These statements are based on the information available at the time they are written, on assumptions made by management and on the expectations of management, acting in good faith, regarding future events, including those relating to economic conditions, fluctuations in exchange rates and operating expenses, and the absence of unusual events entailing supplementary expenditures. Although management considers these assumptions and expectations reasonable based on the information available at the time they are written, they could prove inaccurate. Forward-looking statements are also subject, by their very nature, to known and unknown risks and uncertainties such as those related to the industry, acquisitions, labor relations, credit, key officers, supply and product liability. The actual results of Noveko International Inc. could differ materially from those indicated or underlying these forward-looking statements. The reader is therefore recommended not to unduly rely on these forward-looking statements. Forward-looking statements do not reflect the potential impact of special items, any business combination or any other transaction that may be announced or occur subsequent to the date hereof. Unless otherwise required under securities laws, the Company does not intend and undertakes no obligation to update or revise the forward-looking statements to account for new information, new events or new circumstances.</p>
<p/>
<pre>
    
    -------------------------------------------------------------------------
    The Management's Report, consolidated financial statements and
    accompanying notes for the fiscal year ended June 30, 2009 as well as the
    Annual Information Form will be filed on SEDAR (www.sedar.com).
    -------------------------------------------------------------------------


    Noveko International inc.

    Consolidated balance sheets

    June 30, 2009 and 2008

    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
                                                        2009           2008
    -------------------------------------------------------------------------

    Assets

    Current assets:
      Cash and cash equivalents                $     937,319  $  11,594,335
      Deposit in trust                                70,900      1,274,625
      Short-term investments                       3,702,958     12,516,884
      Accounts receivable                          3,845,527      2,939,068
      Inventories                                  7,288,071      4,295,672
      Prepaid expenses                               734,777        795,145
      Current portion of assets held for sale      1,998,371      3,750,470
    -------------------------------------------------------------------------
                                                  18,577,923     37,166,199

    Fixed assets                                   4,124,110      2,396,171
    Intangible assets                             10,041,542      2,119,835
    Other assets                                   1,198,345      1,442,283
    Future income taxes                               82,691        196,399
    Goodwill                                      13,035,189     13,708,240
    Non-current portion of assets held for sale    3,836,738      5,829,163
    -------------------------------------------------------------------------
                                               $  50,896,538  $  62,858,290
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    Liabilities and shareholders' equity

    Current liabilities:
      Bank advances                            $           -  $     132,108
      Bank loans                                     162,970        561,435
      Accounts payable and accrued liabilities     2,552,279      2,656,826
      Current portion of secured convertible
       debentures                                    964,710              -
      Current portion of long-term debt              754,584        416,944
      Current portion of liabilities held
       for sales                                   2,126,397      2,861,630
    -------------------------------------------------------------------------
                                                   6,560,940      6,628,943

    Long-term debt                                 1,455,182        973,426
    Secured convertible debentures                   825,117      2,462,909
    Future income taxes                            1,644,474        398,426
    Non-current portion of liabilities held
     for sales                                     1,924,217      2,621,403

    Shareholders' equity:
      Capital stock                               80,768,629     70,084,061
      Portion of secured convertible debentures
       included in equity                            372,473        611,537
      Warrants                                             -         85,983
      Contributed surplus                         18,718,376      7,967,778
      Accumulated other comprehensive income
       (loss)                                       (166,928)       347,359
      Deficit                                    (61,205,942)   (29,323,571)
    -------------------------------------------------------------------------
                                                  38,486,608     49,773,147
    -------------------------------------------------------------------------
                                               $  50,896,538  $  62,858,290
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------


    Noveko International inc.

    Consolidated statements of operations

    Years ended June 30, 2009 and 2008

    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
                                                        2009           2008
    -------------------------------------------------------------------------

    Revenues                                   $  12,162,314  $   7,427,963

    Cost of sales                                  6,681,206      3,778,387
    -------------------------------------------------------------------------
                                                   5,481,108      3,649,576

    Operating expenses:
      Administrative and selling expenses         15,320,326      9,693,075
      Stock-based compensation                    11,036,909      7,229,294
      Research and development                     1,247,938        983,975
      Research and development tax credits          (544,776)      (265,500)
      -----------------------------------------------------------------------
                                                  27,060,397     17,640,844

    -------------------------------------------------------------------------
    Loss before amortization, financial fees,
     income taxes, other items and
     discontinued operations                     (21,579,289)   (13,991,268)

    Amortization                                   2,038,401        361,055
    Financial expenses less investments
     revenues                                      2,246,674        (57,835)
    Goodwill impairment charge                     3,600,000              -
    -------------------------------------------------------------------------
                                                   7,885,075        303,220

    -------------------------------------------------------------------------
    Loss before income taxes                     (29,464,364)   (14,294,488)

    Income taxes:
      Current (recovered)                           (348,246)      (159,589)
      Future                                        (256,407)       (64,171)
      -----------------------------------------------------------------------
                                                    (604,653)      (223,760)

    -------------------------------------------------------------------------
    Net loss from continuing operations          (28,859,711)   (14,070,728)

    Net loss from discontinued operations         (3,015,903)    (2,542,660)
    -------------------------------------------------------------------------
    Net loss                                   $ (31,875,614) $ (16,613,388)
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    Basic and diluted loss per share:

      From continuing operations               $       (0.43) $       (0.26)
      From discontinued operations             $       (0.05) $       (0.04)
      Net loss                                 $       (0.48) $       (0.30)
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    Weighted average number of outstanding
     shares, basic and diluted                    66,610,725     54,767,174
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------


    Noveko International inc.

    Consolidated statements of comprehensive loss

    Years ended June 30, 2009 and 2008

    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
                                                        2009           2008
    -------------------------------------------------------------------------
    Net loss                                   $ (31,875,614) $ (16,613,388)

    Other comprehensive income, net of
     income taxes:

    Change in unrealized gains (losses) on
     translation of financial statements of
     self-sustaining foreign operations              514,287       (806,333)

    -------------------------------------------------------------------------
    Comprehensive loss                         $ (31,361,327) $ (17,419,721)
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------


    Noveko International inc.

    Consolidated statements of deficit and contributed surplus

    Years ended June 30, 2009 and 2008

    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
                                                        2009           2008
    -------------------------------------------------------------------------

    DEFICIT

    Deficit, beginning of year                 $ (29,323,571) $ (12,672,254)

    Restatement related to the adoption of
     new accounting policies                          49,243          3,161
    -------------------------------------------------------------------------

    Restated balance                             (29,274,328)   (12,669,093)

    Net loss                                     (31,875,614)   (16,613,388)

    Share issuance fees                              (56,000)       (41,090)

    -------------------------------------------------------------------------
    Deficit, end of year                       $ (61,205,942) $ (29,323,571)
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    CONTRIBUTED SURPLUS

    Contributed surplus, beginning of year     $   7,967,778  $   1,325,504

    Fair value of stock options granted           11,050,909      7,427,627

    Warrants expired                                       -         13,014

    Fair value of stock options exercised           (300,311)      (798,367)

    -------------------------------------------------------------------------
    Contributed surplus, end of year           $  18,718,376  $   7,967,778
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------


    Noveko International inc.

    Consolidated statements of cash flows

    Years ended June 30, 2009 and 2008

    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
                                                        2009           2008
    -------------------------------------------------------------------------

    Cash flows from operating activities:
      Net loss                                 $ (31,875,614) $ (16,613,388)
      Adjustments for:
        Loss from discontinued operations          3,015,903      2,542,660
        Future income taxes                         (256,407)       (64,171)
        Accreted interest on secured
         convertible debentures                      267,531        455,444
        Stock-based compensation                  11,036,909      7,229,294
        Gain on disposal of fixed assets              (7,231)             -
        Amortization                               2,134,489        361,055
        Goodwill impairment charge                 3,600,000              -
        Fair value adjustment on foreign
         denominated currency contracts              (76,885)             -
        Loss (gain) on fair value of
         short-term investments                         (838)       125,329
        Foreigh exchange gain on disposal of
         short-term investments                     (579,292)             -
        Foreign exchange loss (gain)                   6,175         (1,653)
        ---------------------------------------------------------------------
                                                 (12,735,260)    (5,965,430)
      Net change in non-cash working capital      (1,217,762)    (3,020,994)
      -----------------------------------------------------------------------
                                                 (13,953,022)    (8,986,424)

    Cash flows from financing activities:
      Net changes in bank advances                  (132,108)        68,020
      Net changes in bank loan                      (407,425)       561,435
      Increase in long-term debt                     181,766        208,533
      Repayment of long-term debt                   (459,236)      (627,314)
      Interest paid on secured convertible
       debentures                                   (165,660)      (212,727)
      Proceeds from Class A shares and
       warrants issued                             4,019,157     21,002,580
      Class A shares issue expenses                  (12,800)       (41,090)
      -----------------------------------------------------------------------
                                                   3,023,694     20,959,437

    Cash flows from investing activities:
      Business acquisitions                       (5,936,483)      (576,474)
      Acquisition of short-term investments      (61,566,736)   (65,244,308)
      Proceeds from disposal of short-term
       investments                                70,033,630     66,875,738
      Acquisition of fixed assets                   (689,722)    (1,832,125)
      Proceeds from disposal of fixed assets           8,859              -
      Acquisition of intangible assets              (429,536)       (98,067)
      Acquisition of other assets                    (58,150)      (368,883)
      Deposit in trust                                 1,685     (1,274,625)
      Deferred development costs, net of
       related research tax credits received        (342,183)      (348,154)
      -----------------------------------------------------------------------
                                                   1,021,364     (2,866,898)
    Cash generated (used) by continuing
     operations                                   (9,907,964)     9,106,115
    Cash used by discontinued operations            (735,541)      (264,450)
    -------------------------------------------------------------------------
                                                 (10,643,505)     8,841,665
    Foreign exchange gain (loss) on cash in
     foreign currencies                              (13,511)        84,176
    -------------------------------------------------------------------------
    Increase (decrease) in cash and cash
     equivalents                                 (10,657,016)     8,925,841
    Cash and cash equivalents, beginning
     of year                                      11,594,335      2,668,494
    -------------------------------------------------------------------------
    Cash and cash equivalents, end of year     $     937,319  $  11,594,335
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    Cash flows related to continuing operating activities include interest
    paid of $111,720 ($256,306 in 2008) and income taxes received for
    $258,763 ($225,336 in 2008).
    

For further information: For further information: Chantal Vennat, Director, Investor Relations and Corporate Communications, Noveko International Inc., (514) 875-0606, http://www.noveko.com

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