EDMONTON, ON, Jan. 31 /CNW/ - Seair Inc. (SDS:TSX Venture Exchange) today
released its unaudited financial statements for the quarter ending
November 30, 2008.
Revenue for the quarter ending November 30, 2007 was $809,626, or 13%
higher than in the corresponding quarter in fiscal 2007 and 154% higher than
the immediately preceding quarter. Rental revenue from Seair's wholly-owned
subsidiary Seair Septic Inc.'s ("Septic") portable waste water treatment units
provided over 90% of total revenue in the quarter. The revenue increase
relative to fiscal 2007 is a result of Seair's expanded fleet of portable
waste water treatment units. However, the impact of the larger fleet is
partially offset by decreased rental day rates for the portable waste water
treatment business. Thus far, fiscal 2008 day rates are approximately 25%
lower than the rates realized in fiscal 2007.
Presently, all of Septic's customers come from the western Canadian oil
and gas industry. More particularly, Septic's revenue generally comes from
units deployed at remote oil and gas drilling sites. Drilling activity in
western Canada is concentrated during the winter months and effectively ceases
during spring break-up when drilling equipment is prohibited from using roads
while the roads dry up from the spring thaw. Drilling rig activity levels in
fiscal 2008 are considerably lower than in prior years and several Septic
customers have postponed or cancelled planned projects. Nevertheless, since
the start of the winter drilling season in mid-November, Septic's unit
deployment rate has stayed above 80%, including all newly manufactured units.
Septic reduced the pace of fleet expansion to match customer demand. As of the
date of this document, Septic's fleet size is 85 units, compared to 63 units
available at August 31, 2007. Any manufacturing capacity generated by reducing
the pace of fleet expansion has been consumed by manufacturing diffusion
systems for applications outside of portable waste water treatment.
The outflow from Septic's portable treatment units meets and exceeds the
surface discharge standards in place in all jurisdictions the units are
deployed. Stricter enforcement and possible tightening of surface discharge
standards will favourably impact Septic's market share. In addition, Septic
has established a number of strategic relationships in order to introduce
Seair's technology and processes as a waste treatment alternative for larger
and more permanent camps. Septic's goal is to shift a significant portion of
the fleet to year-round utilization by targeting these permanent and
semi-permanent camps as well as non-oil and gas camp situations such as
forestry and mining.
Seair continues to conduct business development activities in a variety
of end-use applications other than portable waste water treatment. Priority
markets include municipal water and waste treatment, golf course soil and
water treatment, food processing and aeration pond treatment at pulp and paper
mills and similar manufacturing facilities. The municipal treatment and
aeration pond applications are being handled directly by Seair whereas the
golf course and food processing initiatives are generally being addressed
through third party distributors.
Complete turnkey municipal water and waste treatment uses essentially the
same technologies and processes as used in Septic's portable units, although
on a much larger scale. In addition, Seair's products can be used at various
stages of existing conventional municipal waste water treatment to increase
the effectiveness of the overall process. Research and development studies are
underway to prove the effectiveness and economic viability of Seair's various
means to augment conventional municipal systems. However, penetrating the
municipal treatment market, either with full Seair systems or selectively
enhancing existing conventional treatment plants, will require additional
third party verification of the sustained effectiveness and unique
capabilities of Seair's solutions.
Aeration pond applications involve larger-scale Seair diffusion towers to
increase the dissolved oxygen level in large industrial-use ponds. The
objective is to displace large inefficient blowers with Seair units that
achieve superior end results with reduced operating costs, including energy
consumption and maintenance. The large Seair diffusion towers are currently
being field tested at a commercial pulp and paper mill in British Columbia.
Seair's golf course solutions have been successfully implemented at a
number of courses throughout western Canada. The next stage of growth in this
segment is to target the larger year-round U.S. markets, particularly in areas
where chronic water shortages dictate that effluent be the primary source of
irrigation water. A distributor network is being established in these target
markets and Seair has designed and manufactured a golf-course specific
Gross profit for the quarter ending November 30, 2007 was $588,122 (73%
of revenue) compared to $477,251 (66% of revenue) in the year ending November
30, 2006. The portable waste water treatment rental model provides Seair with
strong gross profit percentages, although amortization of the rental units is
not included in cost of sales (it is included in amortization expense).
Total operating expenses increased by $570,698 to $920,665 from fiscal
2007 to fiscal 2008. The largest contributors to this increase were salaries
and benefits (increase of $83,776), interest and bank charges (increase of
$200,474) and professional fees (increase of $113,880).
The increase in salaries and benefits was attributable to increased
headcount as Seair expands to accommodate its growing and diversifying
business, compensation adjustments to ensure quality personnel are retained in
the highly competitive Alberta labour market and retention of otherwise
seasonal personnel to test and prep new portable waste water treatment units
being received from the manufacturing facility.
Interest and bank charges have increased as a result of interest owing to
convertible debenture holders. The debentures bear interest at 8% per annum,
resulting in $200,000 of interest expense per quarter.
Professional fees include $40,000 of deferred convertible debenture issue
costs and $25,000 of accrued audit fees. There were no corresponding items in
the first quarter of fiscal 2007.
Research and development costs of $56,951 (nil in fiscal 2007) pertain to
the establishment of a research department primarily focused on municipal
waste water treatment solutions. Several studies are presently underway in
conjunction with the Edmonton Waste Management Centre of Excellence.
Net loss for the quarter ending November 30, 2007 was $331,721.
Working capital at November 30, 2007 was $6,205,348, down from $7,090,428
at August 31, 2007 and up from $25,282 at November 30, 2006. On June 20, 2007
Seair closed a $10 million convertible debenture financing. The resulting
strengthened working capital will enable Seair to systematically build market
position in selected industries, optimize margins and terms of business and
aggressively pursue new opportunities when warranted. The decrease in working
capital from August 31, 2007 to November 30, 2007 is a result of capital
expenditures from the expansion of Septic's fleet of portable waste water
Inventory increased by $1,930,957 to $2,148,871 from August 31, 2007 to
November 30, 2007. The increase was due work in progress on portable waste
water treatment units being manufactured as well as construction of diffusion
units for resale to non-oil and gas related customers.
Total capital expenditures for the quarter ending November 30, 2007 were
$659,117 (compared to $872,078 for the quarter ending November 30, 2006),
virtually all of which was related to increasing the number of portable waste
water treatment units. Additional capital expenditures are anticipated as
fleet expansion continues. A substantial portion of the increase in inventory
will ultimately be reflected as capital additions when manufacture of the
related portable waste water treatment units is completed.
The complete financial statements are available at www.sedar.com.
Seair is a leading developer of patent protected diffusion and
sterilization technologies which allow for the efficient diffusion of gases
into a liquid, thereby facilitating numerous applications in a wide variety of
industries including wastewater treatment, pulp and paper, food processing,
aquaculture, agriculture/horticulture, sterilization, golf course irrigation
and pond treatment, animal enhancement and oil and gas. Seair's primary focus
is developing and selling equipment that diffuses gases, such as oxygen, ozone
or carbon dioxide, into a liquid, resulting in a supersaturate solution. The
major difference between Seair and other diffusion technologies is Seair's
ability to achieve extremely small bubble size, which in turn allows for the
mass transfer of gas to fluid. The result is a stable condition where gases
remain in solution for extended periods of time, leading to increased
productivity and lower operating costs. Seair provides diffusion-enhanced
portable wastewater treatment plants through its subsidiary, Seair Septic.
Parties interested in obtaining further information or receiving news
releases and corporate documents from Seair may email such request to
email@example.com or visit the Seair website at www.seair.ca.
This news release may contain certain forward-looking statements that
reflect the current views and/or expectations of Seair Inc. with respect to
its performance, business or future events. Such statements are subject to a
number of risks, uncertainties and assumptions. Actual results and events may
THE TSX VENTURE EXCHANGE HAS NOT REVIEWED AND DOES NOT ACCEPT
RESPONSIBILITY FOR THE ADEQUACY OR ACCURACY OF THIS RELEASE.
For further information:
For further information: Harold Kinasewich, Seair Inc., T: (780)
477-7188, F: (780) 477-2523, E: firstname.lastname@example.org