Epicore BioNetworks Inc. Continues Strong Fiscal Year 2011

for the period ended 31 December 2010

CALGARY, Feb. 28 /CNW/ - Epicore continues to grow its sales as the world slowly recovers from recession.  Sales at $1.0 million slightly beat (by 1%) a record quarter two set last year.  For the year to date (YTD) sales were $2.0 million or 20% ahead of prior year. Shrimp prices have risen significantly due to supply shortages caused by disease and natural disasters and by high demand, especially in Asia.  Producers have relied on Epicore products to deliver higher productivity from hatcheries and farms.  The Epicore sales team and our distributors continued to add new customers and to pursue new applications for Epicore products.  Epicore continued a major initiative to improve its science resources, which should position the Company for significant future growth and increase the reliability of its manufacturing operations.  Some highlights versus prior fiscal year were:

  • Increased quarterly sales to $1.0 million (a 1% increase) and to $2.0 million YTD (a 20% increase).
  • Decreased quarterly gross profit due to product sales mix from $0.65 to $0.62 million (a 4% decrease).
  • Increased quarterly operating expenses 6% to $0.5 million due to inflationary cost increases.
  • Decreased EBITDA 32% to $0.1 million due to lower gross margin and higher expenses.
  • Generated another quarter of positive net income ($0.03 million) despite a 237% increase in income tax.
  • Achieved approximately same basic and diluted earnings per share as prior year quarter two.  
  • Increased shareholders' equity to $3.8 million (a 54% increase compared to prior year).
  • Higher cash of $1.1 million compared to $1.0 million in prior year quarter two (an 18% increase).

Gross profit decreased 4% versus prior year and gross margin decreased from 65.5% to 62.1%, both primarily due to the sales mix.  Operational expenses increased by 6% due to inflationary increases. In fiscal 2010 Epicore recognized its $0.89 million of net operating loss as a future income tax asset.  Because the NOL was no longer available to offset income before tax, these quarter two fiscal 2011 results include an income tax expense of $0.07 million, versus a prior year tax expense of $0.02 million.  While quarter two EBITDA was lower than prior year, year to date EBITDA ($0.33 million) was 56% higher than first half fiscal 2010 (at $0.22 million).  The following table summarizes some key financial results: 

  For the Quarter Ending December 31
  (US$) 2010 2009
Sales                  1,003,000            995,000
Gross Profit           623,000            651,000
Operating Expenses                   511,000            481,000
Income Before Tax               101,000    162,000
Income Tax Expense                  68,000      20,000
Net Income                                  32,000            141,000
EBITDA           122,000    180,000

Cash at the end of September was $1.1 million, an increase of 18% over prior year quarter two.  With these funds, expected sales revenue growth and continued relatively low operating costs, management expects there will be sufficient cash to meet the fiscal year's financial requirements, to fund expansion of aquaculture and environmental remediation marketing efforts and to pursue new strategies for enhancing shareholder value.  In support of its growth strategy, the Company anticipates additional expenditure during fiscal 2011 in property, plant and equipment, through the addition of capital equipment and enhancements to its production facility in New Jersey, and in product development through its ongoing R&D programs.  This is expected to be financed by a combination of the Company's cash reserves, continued positive earnings and third-party financing.   

The financial statements of the company have been prepared in accordance with Canadian GAAP.  Epicore BioNetworks Inc. is a public corporation with a registered office in Calgary, Alberta, Canada and with shares listed on the TSX Venture Exchange (symbol EBN).  [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.]

This press release contains forward-looking statements that involve significant risks and uncertainties.  The actual results, performance or achievements of the company might differ materially from the results, performance or achievements of the company expressed or implied by such forward-looking statements.  Such forward-looking statements include, without limitation, those regarding the future growth of the Company, expected improvements in the quality and reliability of manufacturing operations, acceleration of the Company's penetration into new business areas, the development plans of the company, the expected timing and results of such development and the expectation by management that there will be sufficient cash to meet the fiscal year's financial requirements.  We can provide no assurance that such development will proceed as currently anticipated, that the expected timing or results of such development will be realized or that the company will be able to generate sufficient cash to meet its obligations.  We are subject to various risks, including the uncertainties of product development, markets for our products and regulatory review, our need for additional capital to fund our operations, our reliance on collaborative partners, our history of losses, and other risks inherent in the biotechnology industry.

SOURCE Epicore BioNetworks Inc.

For further information:

Mr. William P. Long (Chief Executive Officer) USA. Tel: 609-267-9118, Email: Investors@EpicoreBioNetworks.com

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