Dynetek reports 2007 six month and second quarter results



    
    -   Record six month total revenues of $18.6 million - up 6% from the
        first six months of 2006
    -   Positive cash flow from operations of $1.0 million for the first
        six months of 2007
    

    CALGARY, Aug. 14 /CNW/ - Dynetek Industries Ltd. (TSX:DNK), a leader in
the design, manufacturing and marketing of proprietary fuel storage cylinders
and systems for compressed natural gas (CNG) and hydrogen, today reported
results for the three months and six months ended June 30, 2007.

    
    Financial Highlights

    -   Total revenue for the six months ended June 30, 2007 of $18.6 million
        increased $1.0 million or 6% from the same period of 2006.
    -   Cash flow from operations of $1.0 million for the first six months of
        2007 and cash deficiency from operations of ($1.1) million for the
        second quarter of 2007.
    -   Fifteenth consecutive quarter of positive EBITDA(1)
    -   Confirmed order book in excess of $14.9 million, with the majority to
        be delivered in the second half of 2007.
    -   Loss of ($2.1) million for the six months ended June 30, 2007 and
        ($2.3) million for the three months ended June 30, 2007 relates to
        the impairment of the future tax asset, which has been directly
        affected by the deferral of tenders for the European bus markets into
        2008. The reduction of the future income tax asset is a non-cash
        item.
    

    Christian Rasche, President and Chief Executive Officer, pointed out that
the second quarter revenues are also a result of Dynetek successfully
achieving all planned deliverables for the hydrogen fuel system development
project for DaimlerChrysler in cooperation with Magna Steyr. "The fact that
all milestones of this challenging project were accomplished on time
underlines once again Dynetek's expertise in the development and manufacturing
of storage systems for hydrogen and natural gas."
    Despite second quarter cylinder and system sales being 27% lower than in
Q2 2006, Dynetek was still able to increase total revenue for the six months
ended June 30, 2007 by $ 1.0 million due to increased research and development
revenues, stronger component sales and intensified contract development
service activities. This highlights the importance of the diversification of
Dynetek's product offering that allows the Company to buffer market demand
variations for the different products.
    As indicated in our news release and interim report for Q1 2007, the
reason for lower than expected cylinder and systems sales is a result of
requests for tenders by many European bus manufacturers being unexpectedly
deferred until later 2007 and into 2008. "For this reason we expect that our
European cylinder and system sales in Q3 and Q4 2007 will be lower than the
levels achieved in 2006 for the comparable periods. Dynetek is undertaking
measures to control spending and to increase activities in other areas to
minimize the impact of the slower than expected European market, The lower
revenues for CNG cylinder and system sales will be compensated with a higher
revenue in R&D activities which reflects the increasing activities in the
hydrogen market," commented Mr. Rasche. "We expect the activities in the
European market to pick up by Q1 2008. Dynetek is very well positioned in the
CNG market place where opportunities will enable the Company to achieve the
long-term goals of net income and continued revenue growth."

    (1) EBITDA is a non-GAAP financial measure that is defined and discussed
    in the Non-GAAP Financial Measures section of the Management's Discussion
    and Analysis.

    OPERATIONAL HIGHLIGHTS

    In the first six months of 2007, Dynetek achieved total revenues of
$18.6 million compared to $17.6 million for the same period of 2006. Cylinder
and system sales for the six months ended June 30, 2007 were $15.2 million
compared to $16.3 million for the same period of 2006. In the second quarter
of 2007, Dynetek achieved total revenues of $8.1 million (2006 - $8.8 million)
with cylinder and system sales of $5.8 million (2006 - $8.1 million) and
research and development revenue of $2.3 million (2006 - $0.6 million). The
Company recorded cash flow from operations of $1.0 million for the six months
ended June 30, 2007, compared to $1.4 million for the same period of 2006.
Cash deficiency from operations for the three months ended June 30, 2007 was
($1.1) million compared to cash flow from operations of $0.4 million for the
same period of 2006. The Company continues to have positive EBITDA(1) and
reported $1.7 million for the six months ended June 30, 2007 and positive
EBITDA(1) of $0.8 million for the three months ended June 30, 2007
representing the fifteenth consecutive quarter.
    Dynetek reported a loss of ($2.1) million for the six months ended
June 30, 2007 and ($2.3) million for the three months ended June 30, 2007. The
loss is the result of the impairment of the future tax asset, which has been
directly affected by the deferral of tenders for the European bus markets into
2008. The reduction of the future income tax asset is a non-cash item.
    The Company continues to focus its compressed natural gas cylinder and
system sales in areas such as California and Europe. In Europe, the Company
has seen strong growth due to the need to meet regulatory environmental
emission reduction requirements and the positive price differential in favour
of natural gas compared to diesel. Dynetek's proprietary technology provides
advantages such as less weight, more compressed natural gas on board and less
operating costs, being the value proposition we offer our customers that our
competitors cannot provide. In the first six months of 2007, Dynetek's
European operations achieved cylinder and system sales of $8.9 million (2006 -
$9.5 million). For the quarter ended June 30, 2007, Dynetek's European
operations achieved cylinder and system sales of $3.1 million (2006 -
$4.3 million). The cylinder and system sales from the Canadian operations for
the six months ended June 30, 2007 were $6.3 million (2006 - $6.8 million).
Cylinder and system sales from the Canadian operations for the quarter ended
June 30, 2007 were $2.5 million (2006 - $3.8 million).
    Dynetek's research and development team continues to focus its efforts on
compressed hydrogen and related storage requirements. During the first six
months of 2007 the Company continued to work with 9 different OEMs, including
Ford, Hyundai, DaimlerChrysler and Nissan, to design, manufacture and deliver
the hydrogen storage solution on 12 confidential development programs.
    In February of 2007 Dynetek accepted a purchase order representing
approximately $7 million (CAD) in compressed hydrogen system sales with Magna
Steyr, an operating unit of Magna International Inc. The purchase order
involves the development, certification and supply of 700bar compressed
hydrogen fuel storage systems, including related engineering, to Magna Steyr
in connection with DaimlerChrysler's fuel cell program. Dynetek delivered the
first storage system under this project in July of 2007.

    (1) EBITDA is a non-GAAP financial measure that is defined and discussed
    in the Non-GAAP Financial Measures section of the Management's Discussion
    and Analysis.

    MANAGEMENT'S DISCUSSION AND ANALYSIS

    The following sets out management's discussion and analysis of our
financial position and results of operations for the three months and
six months ended June 30, 2007 and 2006. The interim management's discussion
and analysis (MD&A) updates our annual MD&A included in our 2006 Annual Report
to Shareholders, to which readers are referred. No update is provided where an
item is not material or where there has been no material change from the
discussion in our annual MD&A.

    Non-GAAP Financial Measures

    Dynetek Industries Ltd. ('the Company") reports its financial results in
accordance with generally accepted accounting principles (GAAP). It also
occasionally uses certain non-GAAP financial measures, such as EBITDA, working
capital and non-cash working capital. Dynetek defines EBITDA as earnings
before interest, taxes, stock based compensation, non-cash foreign exchange,
depreciation, amortization and impairment of other assets. Dynetek defines
working capital as current assets less current liabilities. Dynetek defines
non-cash working capital as current assets less cash and current liabilities.
These non-GAAP financial measures are always clearly indicated. The Company
believes that non-GAAP financial measures provide investors and analysts with
useful information so that they can better understand the financial results
and perform a better analysis of the Company's growth and profitability
potential. Since non-GAAP financial measures do not have a standardized
definition, they may differ from the non-GAAP financial measures used by other
companies. The Company strongly encourages investors to review its financial
statements and other publicly filed reports in their entirety and not rely on
a single non-GAAP financial measure.

    
    Financial Highlights

    (tabular amounts in thousands of Canadian dollars, except share capital
    and per share data)
    (unaudited)
                                  Three months ended        Six months ended
                                             June 30                 June 30
                             ------------------------------------------------
                                    2007        2006        2007        2006
    Revenue

    Cylinder and system sales      5,838       8,090      15,160      16,323
    Research and development
     income                        2,259         644       3,177       1,262
    Investment and other
     income                           38          38         308          57
                             ------------------------------------------------
                                   8,135       8,772      18,645      17,642

    Net income (loss)             (2,309)       (149)     (2,142)         67
    Net income (loss) per
     common share (basic and
     fully diluted)                (0.11)      (0.01)      (0.10)       0.00
    EBITDA(1)                        784         566       1,694       1,386
    Capital expenditures             443         385         731         830
    Cash and cash equivalents      1,600       2,619       1,600       2,619
    Non-cash working
     capital(1)                   11,003      12,168      11,003      12,168
    Working capital(1)            12,603      14,787      12,603      14,787
    Cash flow (deficiency)
     from operations              (1,126)        380         993       1,376
    Total assets                  44,500      44,964      44,500      44,964
    Long-term debt                 1,544       1,327       1,544       1,327
    Common shares
     outstanding              20,940,451  20,940,451  20,940,451  20,940,451
    Weighted average common
     shares outstanding       20,940,451  20,939,911  20,940,451  20,939,911
    -------------------------------------------------------------------------

    (1) EBITDA, working capital and non cash working capital are non-GAAP
        financial measures that are defined and discussed in the Non-GAAP
        Financial Measures section of the Management's Discussion and
        Analysis.
    

    Cylinder and system sales for the six months ended June 30, 2007 were
$15.2 million, down 7% from $16.3 million for the same period of 2006.
Cylinder and system sales for the three months ended June 30, 2007 were
$5.8 million, down $2.3 million or 28% for the same period in 2006. The
primary reason for the reduction in cylinder and system sales for both the six
months and three months ended June 30, 2007 is the unexpected deferral of
tenders by European bus manufacturers.

    Research and development income for the six months ended June 30, 2007
was $3.2 million, up 146% or $1.9 million from the same period in 2006.
Research and development income for the second quarter of 2007 was
$2.3 million, up 283% or $1.7 million from the same period of 2006. The
primary reason for the increase in research and development income for both
the six months and three months ended June 30, 2007 is the revenues relating
to the Magna Steyr purchase order involving the design, certification and
supply of 700bar compressed hydrogen fuel storage systems. During the first
six months of 2007, Dynetek continued to be involved with Natural Resources
Canada (NRCan) and 9 different Original Equipment Manufacturers (OEMs),
including Ford, Hyundai, DaimlerChrysler and Nissan, to design, manufacture
and deliver the hydrogen storage solution on 12 confidential development
programs. Revenues received from the OEMs regarding these projects are
recorded on billing milestones outlined in the contracts and, therefore,
timing differences occur between when costs are incurred and funding is
received. Non-repayable cost shared monies received from NRCan are recorded as
revenue in the period it is invoiced.

    Investment and other income for the six months ended June 30, 2007 was
$0.3 million, compared to $57,000 for the same period in 2006. In the second
quarter of 2007, investment and other income was $38,000 comparable to the
same period of 2006.

    Cost of goods sold was $12.4 million for the six months ended June 30,
2007 compared to $12.5 million for the same period in 2006. Cost of goods sold
was $4.8 million for the three months ended June 30, 2007 compared to
$6.3 million for the same period in 2006. Corresponding contribution margins
for the six months ended June 30, 2007 were $2.8 million, or 18% of sales
compared to $3.8 million, or 23% of sales for the same period of 2006.
Corresponding contribution margins for the three months ended June 30, 2007
were $1.0 million, or 17% of sales compared to $1.8 million, or 22% of sales
for the same period of 2006. The margin reduction is due primarily to the
airfreight costs incurred in the first quarter and the reduced cylinder and
system sales volumes in the second quarter to cover fixed manufacturing costs.

    General and administrative expense was $1.9 million for the six months
ended June 30, 2007 which is comparable to the same period of 2006. General
and administrative expense was $1.0 million for the three months ended
June 30, 2007 comparable to the same period of 2006. Overall general and
administration costs decreased as a percentage of revenue from 11% in the
first six months of 2006 to 10% in the first six months of 2007. Overall
general and administration costs increased as a percentage of revenue from 11%
in the second quarter of 2006 to 12% in the second quarter of 2007. This
increase in the second quarter is the result of lower cylinder and system
sales volumes.

    Research and product development expense was $1.8 million for the six
months ended June 30, 2007 compared to $1.0 million for the same period in
2006. Research and product development expense was $1.2 million for the
quarter ended June 30, 2007 compared to $0.5 million for the same period in
2006. The increase in expenses is reflective of the increase in revenue
resulting from the additional programs in the first half of 2007 compared to
the same period of 2006. Research and development expense consists of
materials, labour and costs of benefits and overhead related to research and
development activity.
    The majority of Dynetek's research and development programs are co-funded
with major OEMs and government (NRCan). The funding from the OEMs for the
research and development programs is recorded as research and development
revenue based on billing milestones outlined in the contracts. This can result
in timing differences between when costs are incurred and funding is received.
The government funding is recorded either as research and development income
or loans. The cost shared monies received from NRCan, which is non-repayable,
are recorded as research and development revenue in the period it is invoiced
and the repayable government cost shared monies are recorded as a loan.

    Marketing expense was $0.7 million for the six months ended June 30,
2007, compared to $0.8 million for the same period of 2006. Marketing expense
was $0.4 million for the three months ended June 30, 2007, comparable to the
same period of 2006. Overall marketing expense was 5% of sales for the six
months ended June 30, 2007 which is comparable to the same period of 2006.
Overall marketing expense was 7% of sales for the three months ended June 30,
2007 compared to 5% of sales for the same period of 2006. The increase in this
percentage in the second quarter is the result of lower cylinder and system
sales.

    Interest Expense was $0.1 million for the six months ended June 30, 2007,
$0.1 million higher than the $nil for the same period of 2006. Interest
expense was $33,000 for the three months ended June 30, 2007, compared to $nil
for the same period of 2006.

    Depreciation was $0.8 million for the six months ended June 30, 2007,
$0.1 million higher than the $0.7 million for the same period of 2006.
Depreciation was $0.4 million for the three months ended June 30, 2007, which
is comparable to the same period of 2006.

    Amortization was $0.5 million for the six months ended June 30, 2007,
which was $0.2 million higher than the same period of 2006. Amortization was
$0.2 million for the three months ended June 30, 2007, which is comparable to
the same period of 2006. Items included in amortization expense include
process and development costs, patents and deferred start-up costs for the
European operation.

    Foreign exchange for six months ended June 30, 2007 was a loss of
($0.1) million compared to a loss of ($0.2) million in the same period of
2006. Foreign exchange for three months ended June 30, 2007 was a loss of
($0.1) million which is comparable to the same period of 2006. Dynetek's
Canadian operations invoices the majority of its revenue in US dollars and the
European operation invoices in Euros. The Company reports its results in
Canadian dollars but the revenues are generated in US dollars, Euros and
Canadian dollars. The foreign exchange loss in the first six months of 2007
and the second quarter of 2007 is a result of a weakening of the Euro against
the Canadian dollar resulting in a negative impact on the foreign denominated
accounts receivable and cash when translating into Canadian dollars for
financial reporting purposes and the settlement of accounts receivable
transactions during the period.

    Future Income Tax for the first six months of 2007 were $2.1 million
compared to $nil for the same period of 2006. The future income taxes for the
three months ended June 30, 2007 were $2.3 million compared to $nil for the
same period of 2006. During the second quarter of 2007 the Company considered
the future income tax asset impaired due to the deferral of sales for the
European bus markets into 2008 and reduced the future income tax asset value
to $nil. For tax purposes the non-capital losses that the future tax asset
represents are still available for use by the Company to reduced taxable
income until 2010 and were not affected by the recorded impairment for book
purposes.

    Net Loss for the six months ended June 30, 2007 was ($2.1) million or
($0.10) per common share compared to net income of $67,000 or $nil per common
share for the comparable period of 2006. Net loss for the three months ended
June 30, 2007 was ($2.3) million or ($0.11) per common share compared to
($0.1) million or ($0.01) per common share for the same period of 2006. The
net loss for the three and six months ended June 30, 2007 is substantially the
result of the impairment of the future income tax asset, and a decrease in
contribution margin on cylinder and system sales which is offset by positive
margin on the research and development projects in the periods.

    Summary of Quarterly Results

    The following table shows selected unaudited financial information for
the past nine quarters ending June 30, 2007. The information has been obtained
from our quarterly unaudited financial statements, which have been prepared in
accordance with Canadian GAAP and, in the opinion of management, have been
prepared using accounting policies consistent with the audited financial
statements and include all adjustments necessary for the fair presentation of
the results of the interim periods. We expect our operating results to vary
significantly from quarter to quarter and they should not be relied upon to
predict future information.


    
    (thousands of
     Canadian dollars           ---------------------------------------------
     except per share data)      June 30 Sept. 30  Dec. 31  Mar. 31  June 30
     (unaudited)                    2005     2005     2005     2006     2006
                               ----------------------------------------------

    Revenues
      Cylinder and system sales    6,356    5,631    5,858    8,233    8,090
      Research & development
       income                        683      362      603      618      644
      Investment & other income       11       12      317       19       38
                               ----------------------------------------------
                                   7,050    6,005    6,778    8,870    8,772
    Operating expenses
      Cost of goods sold           4,796    4,139    4,538    6,241    6,307
      Marketing & general
       and admin.                  1,347    1,118    1,548    1,331    1,384
      Research & product
       development                   645      604      461      478      515
                               ----------------------------------------------
                                   6,788    5,861    6,547    8,050    8,206
                               ----------------------------------------------
    Earnings before interest,
     income taxes, non-cash
     foreign exchange,
     depreciation &
     amortization, stock based
     compensation, and
     impairment of other
     assets,(1)                      262      144      231      820      566
                               ----------------------------------------------
    Interest                           -        -        -        -        -
    Foreign exchange (gain)
     loss                            127      357      258       70      146
    Depreciation & amortization      411      449      466      486      518
    Stock based compensation          99      100      105       48       51
    Impairment of other assets         -      535        -        -        -
    Income taxes                       -        -        -        -        -
                               ----------------------------------------------
                                     637    1,441      829      604      715
                               ----------------------------------------------
    Net earnings (loss)             (375)  (1,297)    (598)     216     (149)
                               ----------------------------------------------
                               ----------------------------------------------

    Earnings (loss) per share
    Basic and fully diluted        (0.02)   (0.06)   (0.03)    0.01    (0.01)
                               ----------------------------------------------
                               ----------------------------------------------


    (thousands of
     Canadian dollars          -------------------------------------
     except per share data)     Sept. 30  Dec. 31  Mar. 31  June 30
     (unaudited)                    2006     2006     2007     2007
                               -------------------------------------

    Revenues
      Cylinder and system sales    8,275   11,334    9,322    5,838
      Research & development
       income                        376      771      918    2,259
      Investment & other income       13       14      270       38
                               -------------------------------------
                                   8,664   12,119   10,510    8,135
    Operating expenses
      Cost of goods sold           6,393    9,513    7,630    4,817
      Marketing & general
       and admin.                  1,387    1,802    1,312    1,350
      Research & product
       development                   567      650      658    1,184
                               -------------------------------------
                                   8,347   11,965    9,600    7,351
    Earnings before interest,
     income taxes, non-cash
     foreign exchange,
     depreciation &
     amortization stock based
     compensation, and
     impairment of other
     assets,(1)                      317      154      910      784
                               -------------------------------------
    Interest                          22       62       68       33
    Foreign exchange (gain)
     loss                              6       75       (1)     115
    Depreciation & amortization      546    1,018      568      642
    Stock based compensation          54       56       28       28
    Impairment of other assets         -        -        -        -
    Income taxes                       -      150       80    2,275
                               -------------------------------------
                                     628    1,361      743   (3,093)
                               -------------------------------------
    Net earnings (loss)             (311)  (1,207)     167   (2,309)
                               -------------------------------------
                               -------------------------------------

    Earnings (loss) per share
    Basic and fully diluted        (0.02)   (0.05)    0.01    (0.11)
                               -------------------------------------
                               -------------------------------------

    (1) EBITDA is a non-GAAP financial measure that is defined and discussed
        in the Non-GAAP Financial Measures section of the Management's
        Discussion and Analysis.


    Intangible assets and deferred costs
    (thousands of Canadian dollars)
    (unaudited)                   Three months ended        Six months ended
                                             June 30                 June 30
                                    2007        2006        2007        2006
    -------------------------------------------------------------------------

    Patents                           10          21          16          22
    Certification costs              153         278         423         628
    Deferred Costs                    17          24          62          44
    -------------------------------------------------------------------------
                                     180         323         501         694
    -------------------------------------------------------------------------
    

    Intangible asset expenditures for the six months ended June 30, 2007 were
$0.5 million compared to $0.7 million for the same period of 2006. Intangible
asset expenditures for the three months ended June 30, 2007 were $0.2 million
compared to $0.3 million for the same period of 2006. The additions for the
three and six months ended June 30, 2007 were due to certification and patent
costs incurred during the period. The Company will invest in patents and costs
associated with product certification in future years to ensure protection of
our intellectual property, developed products and production processes.

    
    Capital Expenditures
    (thousands of Canadian dollars)
    (unaudited)                   Three months ended        Six months ended
                                             June 30                 June 30
                                    2007        2006        2007        2006
    -------------------------------------------------------------------------

    Building and leaseholds          227          16         236          23
    Manufacturing equipment        1,152         165       1,413         351
    Office furniture and other
     equipment                        51          14         103          19
    Computer hardware and
     software                          9          16          21          18
    Manufacturing equipment
     under construction             (996)        174      (1,042)        419
    -------------------------------------------------------------------------
                                     443         385         731         830
    -------------------------------------------------------------------------
    

    Capital expenditures for the six months ended June 30, 2007 were
$0.7 million compared to $0.8 million for the same period in 2006. Capital
expenditures for the three months ended June 30, 2007 were $0.4 million which
is comparable to the same period in 2006.
    The Company's capital resource requirements consist of capital
expenditures to maintain and improve the existing production line.

    Financial Resources and Liquidity

    To date, the Company has met its liquidity needs through its working
capital position and operating bank line. Due to the unexpected deferral of
European bus tenders the Company is evaluating several alternative funding
arrangements to meet its current liquidity needs until the anticipated
recovery of the European bus markets in early 2008.
    The Company's actual funding requirements and financing alternatives
could vary depending on a number of factors, including the increase or
decrease of the CNG system sales on a global basis, the progress of research
and development projects and the development of additional relationships with
strategic partners. Dynetek is undertaking measures to control spending and to
increase activities in other areas to minimize the impact of the slower than
expected European Bus market.
    As at June 30, 2007 Dynetek had cash and cash equivalents of
$1.6 million, compared to $1.4 million at March 31, 2007 and $2.0 million at
December 31, 2006. Dynetek was cash flow positive from operations of
$1.0 million for the six months ended June 30, 2007 and a cash flow deficiency
from operations of ($1.1) million for the three months ended June 30, 2007.
Dynetek's working capital(1) level was $12.6 million at June 30, 2007,
compared to $12.5 million at March 31, 2007 and $12.1 million at December 31,
2006.
    The Company's investment in inventory resulted in an increase of
$2.0 million to $14.0 million at June 30, 2007 from December 31, 2006.
Work-in-progress represented by confirmed orders increased by $1.3 million
from the December 31, 2006 levels to $5.4 million. Raw material levels
increased by $0.3 million from the December 31, 2006 levels to $4.3 million as
a result of carbon fiber deliveries received at the end of June. Finished
goods inventory increased by $0.4 million from the December 31, 2006 levels to
$4.2 million from the December 31, 2006 levels.
    At June 30, 2007 accounts receivable were $5.4 million, a reduction of
$2.8 million when compared to December 31, 2006. This decrease is a result of
the reduction of cylinder and system sales compared to the fourth quarter of
2006. The Company seeks to manage the collection of receivables, the use of
its operating bank line and the payment of payables in a manner that working
capital levels will continue to fund ongoing operations. Accounts payable at
June 30, 2007 were $5.0 million, compared to $7.2 million as at December 31,
2006. This decrease is representative of the decreases in production compared
to the fourth quarter of 2006. Deferred revenue was $1.3 million compared to
$0.7 million at December 31, 2006. The increase is mainly due to an advance
payment made by Magna Steyr in connection with DaimlerChrysler's fuel cell
program.
    At June 30, 2007 the Company had drawn down $2.3 million of the
$5.0 million operating bank line with a major chartered bank.
    The long-term debt relates to repayable research and development funding
supplied by NRCan. These agreements allow Dynetek to retain the intellectual
property and to receive long-term funding. During the first half of 2007 the
Company recorded $0.3 million of long-term debt relating to the repayable
research and development funding supplied by NRCan. The debt is repayable only
in the form of royalties based on specific related commercial product sales
and is interest free. The Company has $0.2 million to be repaid in 2007.
    The Company believes that additional cost shared monies will continue to
be available from governments and OEMs for future research and development
projects.
    Dynetek continues to build on the strong strategic alliances with several
major OEMs whereby confidential joint funding has been obtained to develop
complete hydrogen fuel storage systems. Other research programs with strategic
partners, such as government bodies, who provide financial and technical
support, are also in place to explore other storage applications in the energy
marketplace.

    (1) Working capital is a non-GAAP financial measures that is defined and
    discussed in the Non-GAAP Financial Measures section of the Management's
    Discussion and Analysis

    Transactions with Related Parties

    For the six months ended June 30, 2007, the Company purchased under
normal terms and conditions $3.7 million (2006 - $5.1 million) of material
used in the production of lightweight fuel storage systems from Mitsubishi
Rayon Corporation, a shareholder of the Company.

    
    Outstanding Share Data

    Issued and outstanding:                            Number of      Dollar
                                                          Shares      Amount
    Balance at December 31, 2006                      20,940,451      52,433
    -------------------------------------------------------------------------
    Balance at June 30, 2007                          20,940,451      52,433
    -------------------------------------------------------------------------


                                                         June 30 December 31
                                                            2007        2006
    -------------------------------------------------------------------------

    Securities convertible into common shares:
    Stock options                                      1,194,500   1,170,500
    Warrants                                             756,738     756,738
    -------------------------------------------------------------------------
    

    As at August 10, 2007 common shares outstanding were 20,940,451, options
outstanding of 1,194,500 and warrants outstanding of 756,738.

    CHANGES IN ACCOUNTING POLICIES

    As required by the Canadian Institute of Chartered Accountants ("CICA"),
on January 1, 2007, the Company adopted CICA Handbook section 1530,
Comprehensive Income; Section 3251, Equity; Section 3855, Financial
Instruments - Recognition and Measurement; Section 3861, Financial Instruments
- Disclosure and Presentation; Section 3865, Hedges; and Section 1506,
Accounting Changes. See Note 3 to the Consolidated Financial Statements for
further details.

    INTERNAL CONTROL OVER FINANCIAL REPORTING

    There were no changes in the Company's internal control over financial
reporting that occurred during the most recent interim period that materially
affected, or is reasonably likely to materially affect, the Company's internal
control over financial reporting.

    OUTLOOK

    The Company remains committed to its strategic plan it began over six
years ago. Dynetek will continue to grow its CNG revenue stream globally
through targeted marketing initiatives. As in the past, the Company will
create access to new revenue opportunities for storing compressed gases by
working closely with customers and partners to deliver storage solutions.
    Dynetek will seek new partners and customers, and will adjust its product
offerings to maintain and grow revenue streams. Dynetek will evaluate and
expand its supplier base to ensure supplier capacity can match the Company's
growth curve. Dynetek will continue to carry out research and development
projects to contribute to ongoing growth and profitability.

    
    Major economic and environmental factors contribute to continuing
high-growth in natural gas demand and related markets and hence a positive
intermediate and longer term outlook for Dynetek.

    -   The high growth rate in demand for natural gas stems from the
        comparative advantages of natural gas compared to diesel, gasoline
        and bio-fuels.
    -   Natural gas is cleaner with less toxic emissions than diesel or
        gasoline; and
    -   A growing natural gas infrastructure. Continuing investment in
        infrastructure is adding to the number of compressed natural gas
        refueling centers.
    

    The markets for our products are and will continue to be worldwide. At
the local level, customers include fleet-owners as well as OEM's. Dynetek will
review its product portfolio to generate a larger market potential to cover
all market requirements.
    Dynetek expects to incur a loss in Q3 and Q4 2007 because of a temporary
slowdown in the demand for its products, specifically a postponement of public
transit bus manufacturing in Europe. Strong economic and environmental forces
suggest Dynetek's growth will resume. When this happens we look forward to
profitability achieved through carefully selected capital investments to
achieve a high sales growth rate and higher margins along with ongoing
rationalizing throughout the organization

    Additional information relating to Dynetek

    Additional information concerning Dynetek, including the AIF, is
available on SEDAR at www.sedar.com.

    Dynetek Industries Ltd. is a leading international company engaged in the
design, manufacturing and marketing of fueling systems and high-pressure
components including valves and regulators. The key component of the storage
system is the DyneCell(R) cylinder, capable of storing high pressure gases
including compressed natural gas (CNG), hydrogen, and various industrial
gases. Dynetek's cylinder and fuel storage systems applications include but
are not limited to: the transportation industry, including passenger
automobiles, light and heavy-duty trucks, transit and school buses; the bulk
hauling of compressed gases; and stationary storage or ground storage
refueling applications.

    Forward looking statements

    In addition to historical information, this news release contains
forward-looking statements and should be read in conjunction with the
financial statements and related notes for the year ended December 31, 2006
and quarterly interim reports for 2007. Forward-looking statements are based
upon current assumptions, expectations and estimates that involve a number of
risks and uncertainties and actual results could differ materially from those
discussed in the forward-looking statements. Readers are encouraged to review
the section in the Management's Discussion and Analysis titled 'Principal
Risks and Uncertainties' for a discussion of factors that could affect
Dynetek's future operations and financial results. Forward-looking statements
are based upon management's assumptions, expectations and estimates at the
time the statements are made. Dynetek does not update forward-looking
statements should circumstances or management's assumptions, expectations or
estimates change, except where required by law.


    
    CONSOLIDATED BALANCE SHEETS
    (thousands of Canadian dollars)
    (unaudited)
                                                         June 30 December 31
                                                            2007        2006
    -------------------------------------------------------------------------

    ASSETS
    Current assets
      Cash and cash equivalents                            1,600       2,030
      Accounts receivable                                  5,389       8,246
      Inventory (note 4)                                  13,907      11,859
      Prepaids and other                                     402         696
    -------------------------------------------------------------------------
                                                          21,298      22,831

    Intangible assets and deferred costs                   5,963       5,917

    Capital assets                                        17,239      17,263

    Future income tax (note 9)                                 -       2,355
    -------------------------------------------------------------------------

                                                          44,500      48,366
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    LIABILITIES
    Current liabilities
      Operating bank line                                  2,270       2,650
      Accounts payable and accrued liabilities             4,918       7,171
      Deferred revenue (note 2)                            1,282         720
      Current portion of long-term debt                      225         185
    -------------------------------------------------------------------------
                                                           8,695      10,726

    Long-term debt                                         1,544       1,293

    SHAREHOLDERS' EQUITY
      Share capital (note 5)                              52,433      52,433
      Contributed surplus (note 6)                         2,447       2,391
      Deficit                                            (20,619)    (18,477)
      Accumulated other comprehensive income                   -           -
    -------------------------------------------------------------------------
                                                         (34,261)     36,347

                                                          44,500      48,366
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    See accompanying notes to the unaudited interim consolidated financial
    statements



    CONSOLIDATED STATEMENTS OF NET INCOME (LOSS), COMPREHENSIVE INCOME (LOSS)
    AND DEFICIT
    (thousands of Canadian dollars except share capital and per share
     amounts)
    (unaudited)
                                  Three months ended        Six months ended
                                             June 30                 June 30
                                    2007        2006        2007        2006
    -------------------------------------------------------------------------

    REVENUE
      Cylinder and system
       sales                       5,838       8,090      15,160      16,323
      Research and development
       income                      2,259         644       3,177       1,262
      Investment and other
       income                         38          38         308          57
    -------------------------------------------------------------------------
                                   8,135       8,772      18,645      17,642
    EXPENSES
      Cost of goods sold           4,817       6,307      12,447      12,548
      General and administrative     967         989       1,943       1,884
      Research and product
       development                 1,184         515       1,842         993
      Marketing                      383         395         719         831
      Interest expense                33           -         101           -
      Depreciation                   397         355         755         688
      Amortization of intangible
       assets and deferred costs     245         163         455         316
      Foreign exchange loss          115         146         114         216
      Stock based compensation
       (note 5)                       28          51          56          99
    -------------------------------------------------------------------------
                                   8,169       8,921      18,432      17,575
    -------------------------------------------------------------------------
    Net income (loss) before
     income taxes                    (34)       (149)        213          67
    -------------------------------------------------------------------------

    PROVISION FOR TAXES
      Future income tax (note 9)   2,275           -       2,355           -
    -------------------------------------------------------------------------
                                   2,275           -       2,355           -
    -------------------------------------------------------------------------

    NET INCOME (LOSS) AND
     COMPREHENSIVE INCOME
     (LOSS) (note 3)              (2,309)       (149)     (2,142)         67
    -------------------------------------------------------------------------

    Deficit, beginning
     of period                   (18,310)    (16,810)    (18,477)    (17,026)
    -------------------------------------------------------------------------
    DEFICIT, END OF PERIOD       (20,619)    (16,959)    (20,619)    (16,959)
    -------------------------------------------------------------------------

    Per Share Information
    Net income (loss) per
     share (basic and diluted)     (0.11)      (0.01)      (0.10)       0.00
    Weighted average number of
     common shares
     outstanding              20,940,451  20,939,911  20,940,451  20,939,911
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    See accompanying notes to the unaudited interim consolidated financial
    statements



    CONSOLIDATED STATEMENT OF CASH FLOWS
    (thousands of Canadian dollars)
    (unaudited)
                                  Three months ended        Six months ended
                                             June 30                 June 30
                                    2007        2006        2007        2006
    -------------------------------------------------------------------------
    Cash flows provided by
     (used for) operating
     activities
    NET INCOME (LOSS)             (2,309)       (149)     (2,142)         67
    Items not involving cash
      Depreciation                   397         355         755         688
      Amortization of
       intangible assets
       and deferred costs            245         163         455         316
      Stock based compensation        28          51          56          99
      Future income tax            2,275           -       2,355           -
      Unrealized foreign
       exchange loss (gain)           84        (179)         94         (99)
    -------------------------------------------------------------------------
                                     720         241       1,573       1,071
    Changes in non-cash
     working capital
      Accounts receivable          2,705       1,094       2,857         493
      Inventory                   (1,914)       (542)     (2,048)     (1,193)
      Prepaid expenses                86          95         294         277
      Accounts payable and
       accrued liabilities          (501)       (392)     (2,253)        350
      Deferred revenue            (2,236)       (314)        562         236
      Unrealized foreign
       exchange gain relating
       to non-cash working
       capital                        14         198           8         142
    -------------------------------------------------------------------------
    Cash flow (deficiency)
     from operations              (1,126)        380         993       1,376
    -------------------------------------------------------------------------

    INVESTING ACTIVITIES
      Additions to intangible
       assets and deferred
       costs                        (180)       (323)       (501)       (694)
      Additions to capital
       assets                       (443)       (385)       (731)       (830)
    -------------------------------------------------------------------------
                                    (623)       (708)     (1,232)     (1,524)
    -------------------------------------------------------------------------
    FINANCING ACTIVITIES
      Operating bank line          1,990           -        (380)          1
      Long-term debt                  91           -         291           -
      Exercise of options              -           -           -           1
    -------------------------------------------------------------------------
                                   2,081           -         (89)          1
    -------------------------------------------------------------------------

    Foreign exchange loss on
     cash held in a foreign
     currency                        (98)        (19)       (102)        (43)
    -------------------------------------------------------------------------
    Increase (decrease) in
     cash and cash equivalents       234        (347)       (430)       (190)

    Cash and cash equivalents,
     beginning of period           1,366       2,966       2,030       2,809
    -------------------------------------------------------------------------

    Cash and cash equivalents,
     end of period                 1,600       2,619       1,600       2,619
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    Interest income received during the six month period ended June 30, 2007
    was $15,000 (2006 - $25,000) and the three month period ended June 30,
    2007 was $6,200 (2006 - $1,200). Interest paid during the six month
    period ended June 30, 2007 was $0.1 million (2006 - $ nil) and the three
    month period ended June 30,2007 was $33,000 (2006 - $nil).

    See accompanying notes to the unaudited interim consolidated financial
    statements



    SELECTED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
    For the three and six months ended June 30, 2007 and 2006 and as at
    June 30, 2007 and December 31, 2006
    (tabular amounts in thousands of Canadian dollars, except share capital
    amounts)
    (unaudited)

    1.  BASIS OF PRESENTATION

    The unaudited interim consolidated financial statements of Dynetek
    Industries Ltd. ("Dynetek" or "the Company") have been prepared by
    management in accordance with Canadian generally accepted accounting
    principles. The unaudited interim consolidated financial statements have
    been prepared following the same accounting policies and methods of
    computation as the most recent annual audited consolidated financial
    statements for the year ended December 31, 2006. The unaudited interim
    consolidated financial statements should be read in conjunction with the
    audited consolidated financial statements and the notes thereto in the
    Company's Annual Report for the year ended December 31, 2006.

    2.  SIGNIFICANT ACCOUNTING POLICIES

    a)  Revenue recognition

    Cylinder and system revenue is recognized when finished goods are shipped
    to the customer.

    Research and development revenue is generated by projects co-funded with
    the original equipment manufacturers (OEMs) and government agencies. This
    revenue is recognized when contractual deliverables and milestones are
    met. Timing differences can occur between when costs are incurred and
    when revenue is invoiced and earned. Customer billings for services not
    yet rendered or customer deposits are received and deferred and
    recognized as revenue when the services are rendered and finished goods
    are shipped to the customer. Any associated deferred revenue is included
    in current liabilities.

    b)  Research and development costs

    Research and development costs are expensed as incurred.

    3.  CHANGES IN ACCOUNTING POLICIES

    As required by the Canadian Institute of Chartered Accountants ("CICA"),
    on January 1, 2007, the Company adopted CICA Handbook section 1530,
    Comprehensive Income; Section 3251, Equity; Section 3855, Financial
    Instruments - Recognition and Measurement; Section 3861, Financial
    Instruments - Disclosure and Presentation; Section 3865, Hedges; and
    Section 1506, Accounting Changes.

    a)  Comprehensive Income and Equity

    Upon adoption of Section 1530, the Company revised its "Consolidated
    Statement of Operations and Deficit" to include the newly required
    Statement of Comprehensive Income by creating a "Consolidated Statement
    of Net Income, Comprehensive Income and Deficit", and added to the
    Consolidated Balance Sheet "Accumulated Other Comprehensive Income" as a
    component of Shareholders' Equity.

    b)  Financial Instruments

    i)     Financial assets and financial liabilities

    Under the new CICA standards, financial assets and financial liabilities
    are initially recognized at fair value and are subsequently accounted for
    based on their classification. The classification depends on the purpose
    for which the financial instruments were acquired and their
    characteristics. Except in very limited circumstances, the classification
    is not changed subsequent to initial recognition.

    The new CICA standards require that all financial assets be classified in
    one of the five categories; 1) loans and receivables, 2) assets held-to-
    maturity, 3) assets available-for-sale, 4) other financial liabilities,
    and 5) held-for-trading. Financial instruments classified as held-for-
    trading or available-for-sale items as a result of initially adopting
    this section are measured at fair value. Gains or losses on re-
    measurement of held-for-trading items are recognized as an adjustment to
    opening retained earnings, while gains and losses on re-measurement of
    available-for-sale items are recognized as an adjustment to opening
    Accumulated Other Comprehensive Income.

    Financial instruments that are classified as held-for-trading or
    available-for-sale are re-measured each reporting period at fair value
    with the resulting gain or loss recognized immediately in net income and
    other comprehensive income, respectively. All other financial instruments
    are accounted for at amortized cost with foreign exchange gains and
    losses recognized immediately in net income. The recognition, de-
    recognition and measurement policies followed in financial statements for
    periods prior to the adoption of this standard are not reversed and,
    therefore, those financial statements are not restated.

    ii)    Classification of financial instruments

    The Company has applied the following classifications to each of its
    significant categories of financial instruments outstanding as of
    January 1, 2007:

      Cash and cash equivalents               Designated as held-for-trading
      Accounts receivable                       Loans and receivables
      Accounts payable and accrued            Other liabilities
       liabilities
      Operating bank line                     Other liabilities
      Long-term debt                          Other liabilities

    iii)   Derivatives

    At June 30, 2007 and December 31, 2006 the Company had no derivatives.

    iv)    Embedded derivatives

    Derivatives embedded in other financial instruments or contracts are
    separated from their host contracts and accounted for as derivatives when
    their economic characteristics and risks are not closely related to those
    of the host contract; the terms of the embedded derivative are the same
    as those of a free standing derivative; and the combined instrument or
    contract is not measured at fair value, any changes in fair value
    recognized in the income statement. At June 30, 2007 and December 31,
    2006 the Company had no embedded derivatives.

    v)     Determination of fair value

    The fair value of a financial instrument on initial recognition is the
    transaction price, which is the fair value of the consideration given or
    received. Subsequent to initial recognition, fair value is determined by
    using valuation techniques which refer to observable market data.

    vi)    Transaction Costs

    At June 30, 2007 and December 31, 2006 the Company had no transaction
    costs.

    c)  Hedge accounting

    Section 3865 specifies the criteria that must be satisfied in order for
    hedge accounting to be applied and the accounting for each of the
    permitted hedging strategies: fair value hedges and cash flow hedges.
    Hedge accounting is discontinued prospectively when the derivative no
    longer qualifies as an effective hedge, or the derivative is terminated
    or sold, or upon the sale or early termination of the hedged item. The
    Company did not have any hedging contracts outstanding as at June 30,
    2007 and December 31, 2006.

    d)  Accounting Changes

    Effective January 1, 2007, the Company also adopted CICA section 1506,
    "Accounting Changes". Under this standard, voluntary changes to
    accounting policies are allowed only in situations where they provide
    financial statements users with more reliable and relevant information.
    Policy changes are applied retroactively unless it is impractical to
    determine the period or cumulative impact of the change. Corrections of
    prior period errors are retroactively applied to the financial statements
    while changes in accounting estimates are prospectively applied with the
    changes included in earnings. This section applies to all changes in
    policies and estimates or corrections of prior period errors in periods
    beginning on or after January 1, 2007.

    4.  INVENTORY

                                                         June 30 December 31
                                                            2007        2006
    -------------------------------------------------------------------------
    Raw materials                                          4,331       3,957
    Work-in-progress                                       5,384       4,126
    Finished goods                                         4,192       3,776
    -------------------------------------------------------------------------
                                                          13,907      11,859
    -------------------------------------------------------------------------

    5.  SHARE CAPITAL

    The issued and outstanding common shares of the Company along with
    securities convertible into common shares are as follows:

    Issued and outstanding:
                                                       Number of
                                                          Shares      Amount
    Balance at December 31, 2006                      20,940,451      52,433
    -------------------------------------------------------------------------
    Balance at June 30, 2007                          20,940,451      52,433
    -------------------------------------------------------------------------

                                                         June 30 December 31
                                                            2007        2006
    -------------------------------------------------------------------------

    Securities convertible into common shares:
    Stock options                                      1,194,500   1,170,500
    Warrants                                             756,738     756,738
    -------------------------------------------------------------------------

    The estimated fair value of the options used for accounting purposes has
    been determined using the Black Scholes option-pricing model with the
    following assumptions:

                                                                  Six months
                                                                       ended
                                                                     June 30
    -------------------------------------------------------------------------
                                                            2007        2006

    Weighted average risk-free interest rate                4.59%       1.75%
    Weighted average expected life 5 years 5 years
    Estimated volatility in the market price of the
     common shares                                            76%         82%
    Dividend yield                                             0%          0%

    The weighted average fair value per option was $1.73 for the six months
    ended June 30, 2007 and $2.16 for the comparable period of 2006.

    During the first six months of 2007, 56,000 (2006 - 15,000) options were
    issued to employees.

    6.  CONTRIBUTED SURPLUS

    The following table summarizes information about contributed surplus.

    Balance at December 31, 2006                                       2,391
    Stock based compensation expense                                      44
    -------------------------------------------------------------------------
    Balance at June 30, 2007                                           2,435
    -------------------------------------------------------------------------

    7.  TRANSACTIONS WITH RELATED PARTIES

    For the six months ended June 30, 2007, the Company purchased under
    normal terms and conditions $3.7 million (2006 - $5.1 million) of
    material used in the production of lightweight fuel storage systems from
    Mitsubishi Rayon Corporation, a shareholder of the Company.


    8.  SEGMENTED INFORMATION

    The Company currently conducts business in one operating segment, which
    involves the manufacture and sale of lightweight fuel storage systems.
    The majority of the Company's operations and assets relating to
    commercial production were located in Canada at June 30, 2007. Revenues
    attributed to foreign countries are based on the location of the
    customer.

                                  Three months ended        Six months ended
                                             June 30                 June 30
                                     2007       2006        2007        2006
    Cylinder and system sales
      Canada                         840          92         958         175
      United States                1,121         262       3,701       1,147
      Japan                          504         165       1,094         480
      European Union               3,152       4,337       8,932       9,518
      Australia                        -       2,988           -       4,607
      Other                          221         246         475         396
    -------------------------------------------------------------------------
                                   5,838       8,090      15,160      16,323
    -------------------------------------------------------------------------

    9.  PROVISION FOR INCOME TAXES

    The future income tax asset represented non-capital loss carry forwards
    that the Company expected to utilize in future periods to offset current
    taxes payable. Based on the delays in orders received in the European bus
    market place, the Company determined that for financial statement
    purposes the asset was impaired and has reduced the value to $nil. The
    balance of $2.3 million was expensed to the income statement. The non-
    capital loss carry-forwards for income tax have not been affected by the
    financial statement impairment.



    Corporate Information    Officers and Management Bankers
                                                     Bank of Nova Scotia
    Board of Directors       Heinz O. Portmann       Calgary, Alberta
                             Chairman of the Board
    Heinz O. Portmann                                Auditors
    Chairman of the Board    Christian W. Rasche     Deloitte & Touche LLP
    Dynetek Industries Ltd.  President and           Calgary, Canada
    Calgary, Alberta         Chief Executive Officer
                                                     Legal Counsel
    Peter A. Leus(i)(*)      Michael D. Portmann     Gowling Lafleur
    Director                 Vice President and      Henderson LLP
    Starlaw Holdings Ltd.    General Manager         Calgary, Alberta
    Montreal, Quebec
                             Ulrich Imhof            Transfer Agent and
    William K. Kovalchuk(*)  Vice President,         Registrar
    President                Engineering             CIBC Mellon Trust
    Claret Asset                                     Company
    Management Corp.         Karen Y. Minton         with offices in
    Montreal, Quebec         Vice President Finance, Toronto, Montreal
                             and Chief Financial     and Calgary
    Larry A. Wright(*)(v)    Officer
    Executive Vice President
    Multimatic Inc                                   Stock Listing
    Markham, Ontario         Norman E. Hall          Toronto Stock Exchange
                             Corporate Secretary     Trading Symbol: DNK
    Robb D. Thompson(i)(v)
    Vice President Finance,
    and
    Chief Financial Officer                          Investor Relations
    Berkana Energy Corp.                             To obtain additional
    Calgary, Alberta         Corporate Head Office   information about
                             4410 - 46th Avenue SE   Dynetek or to be
    Christian W. Rasche      Calgary, Alberta,       placed on our mailing
    President and            Canada                  list for quarterly
    Chief Executive          Officer  T2B 3N7        reports please
    Dynetek Industries Ltd.  Tel (403) 720 0262      Contact either:
    Ratingen, Germany        Fax (403) 720 0263      Christian W. Rasche
                             Web site:               Karen Minton
                             www.dynetek.com         Dynetek Industries Ltd.
                                                     Investor Relations
                                                     4410 - 46th Avenue SE
                             Subsidiary              Calgary, Alberta,
                             Dynetek Europe GmbH     Canada
                             Breitscheider Weg 117a  T2B 3N7
                             D-40885 Ratingen        Germany Tel
                             Germany                 +44 210230963 20
                             Tel +44 210230963 20    Calgary Tel
                             Fax +44 210230963 10    (403) 720 0262
                                                     Fax (403) 720 0263
                                                     Email:
                                                     invest@dynetek.com

    (*) Audit Committee member
    (i) Compensation Committee member
    (v) Corporate Governance Committee member
    

    %SEDAR: 00014127E




For further information:

For further information: Christian Rasche, President and Chief Executive
Officer; Karen Minton, Vice President Finance, and CFO, Dynetek Industries
Ltd., 4410 46th Avenue SE, Calgary, Alberta, T2B 3N7, Tel Calgary: (403)
720-0262, Tel Germany: + 44 2102 30963-20, Toll free: (888) 396-3835, Fax
Calgary: (403) 720-0263, Fax Germany: +442102 30963-10, Web: www.dynetek.com

Organization Profile

Dynetek Industries Ltd.

More on this organization


Custom Packages

Browse our custom packages or build your own to meet your unique communications needs.

Start today.

CNW Membership

Fill out a CNW membership form or contact us at 1 (877) 269-7890

Learn about CNW services

Request more information about CNW products and services or call us at 1 (877) 269-7890