OTTAWA, May 10 /CNW/ - Seprotech Systems Incorporated (TSXV: SET); ("Seprotech" or the "Company") announces the following unaudited results for the fourth quarter of 2010 and audited results for the fiscal year ended August 31, 2010.

  Three Months Ended
August 31
      Year Ended
August 31
          2010   2009       2010   2009
  $000   $000       $000   $000
Revenue 1,440   1,849       5,190   7,399
Gross Margin 396   587       2,056   2,220
Net Loss (552)   (2,473)       (625)   (3,110)
Loss per share (0.01)   (0.07)       (0.01)   (0.07)

The fiscal year ended August 31, 2010 was again a very challenging year for the Company, with the revenue contribution from the Company's core wastewater treatment business unit remaining depressed. The decision to sell back to the vendor the Envirosearch Operations Inc. business further added to the challenges faced by management. Despite these setbacks, operations benefited from the stability offered by the repair contract for Department of National Defence reverse osmosis water purification units, the contract continuing beyond fiscal year end and ultimately being extended until April 2011.

As a result of the downturn in activities in both the mining sector (remote operations) and the housing and municipal development sectors, revenues for the year from sales of rotating biological contactors ("RBCs") fell from $7,399 in fiscal 2009 to $5,190, a 30% decline. In response to the reduction in revenues, management imposed further cuts to operating expenses and the resulting net loss for the year was reduced from $3,110 for the year ended August 31, 2009 (which included a one-time write-down of goodwill by $2,003) to $625 for the same period in 2010. Comparative data has been changed to reflect discontinued operations in 2009.

The delay in completing the fiscal 2010 audit resulted from management's detection, subsequent to year-end, of an overstatement of revenue by a material amount with respect to its financial statements for the quarters ended November 30, 2009, February 28, 2010 and May 31, 2010. The overstatement resulted from over-billing a customer over a period of approximately 12 months from July 2009. The Company immediately brought the billing discrepancy to the attention of its customer, and subsequently determined that the over-billing amounted to $315,584 spread over the fiscal year ended August 31, 2010. As a consequence of the over-billing, interim unaudited financial statements for the periods ended November 30, 2009, February 28, 2010 and May 31, 2010 have been amended and restated, and filed on March 25, 2011. The impact of the over-billing is fully reflected in the August 31, 2010 financial statements, and did not impact any subsequent fiscal periods. The amount of the over-billing has been repaid in full.

The delay in completing the fiscal 2010 audit, and consequent delay in completing both its annual and first and second quarters' 2011 required regulatory filings has led to the imposition on the Company of cease trade orders from the Ontario, British Columbia and Manitoba securities commissions (respectively, the "OSC", the "BCSC" and the "MSC"). The BCSC's cease trade order will be automatically revoked upon completion of the required regulatory filings, but the OSC and MSC cease trade orders will only be revoked upon application by the Company. Seprotech is targeting to complete its required regulatory filings (including quarterly interim financial statements and related MD&A and officer certifications for the first and second quarters of 2011) on or before May 16, 2011, and at that time intends to make application to the OSC for a full revocation of the cease trade order.

The Company has also been notified by the TSX Venture Exchange (the "TSXV") that if it does not complete its reinstatement to trading on or before May 25, 2011, the Company's securities will be transferred to NEX at that time. The Company intends to make application to the TSXV for reinstatement as soon as it is compliant with respect to its required filings, as described above. The Company believes that, other than the delayed filings described above, it otherwise meets the continuous listing requirements of the TSXV.

Seprotech is a provider of pre-engineered water and wastewater treatment solutions to the municipal/land development, resource sector and military market place, including Reverse Osmosis water purification systems, ROTORDISK® biological sewage treatment package plants and CrystalBlue™ membrane-based water recycling systems.

Neither TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in the policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release. The TSX Venture Exchange has neither approved nor disapproved of the information contained herein. Some of the statements in this press release, including those relating to the Company's strategies and other statements that are predictive in nature, that depend upon or refer to future events or conditions, or that include words such as "expects", "anticipates", "intends", "plans", "believes", "estimates" or similar expressions, are forward-looking statements within the meaning of securities laws. Forward-looking statements include, without limitation, the information concerning possible or assumed future results of operations of the Company. These statements are not historical facts but instead represent only the Company's expectations, estimates and projections regarding future events. The Company does not undertake any obligation to update or release any revisions to these forward-looking statements to reflect events or circumstances after the date of this presentation or to reflect the occurrence of unanticipated events, except as required by law.


SOURCE Seprotech Systems Incorporated

For further information:

Mr. Matthew Anderson, Investor Relations
Tel: (613) 523-1641
Fax: (613) 731-0851

Profil de l'entreprise

Seprotech Systems Incorporated

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