Fytokem announces Q2 2007 financial results



    TSX Venture Exchange: FYT

    SASKATOON, Aug. 29 /CNW/ - Fytokem Products Inc. (the Company) today
announced its financial results for the second quarter of 2007. Sales for the
quarter were on target and bring year to date revenue up to 55% of the total
2006 revenue. Unit sales for each product line are ahead of the average
quarterly sales for 2006.
    "Our Q2 results reflect the costs of several transitional efforts
currently underway that will further develop the basis for increased sales,"
said Art Hesje, President and CEO of Fytokem. "I expect our efforts aimed at
product improvement and new products to result in strengthened revenue in the
future."
    Consumers are selecting preservative-free finished products and we are
also seeing our customers develop their own preservative systems. We are
accommodating both of these trends with the development of new product formats
that provide the same competitive efficacies and yet appeal to a wider range
of customers and products. During the quarter we completed product development
work on preservative-free product formats for our current product lines. Work
on these products began over a year ago. These newly formatted products will
now be introduced to the market and further development will be based on
customer feedback.
    In addition, we continue to work on developing other revenue sources
based on recovering and developing the value of our research library.

    About Fytokem Products Inc.

    Fytokem Products Inc. develops and delivers proven natural ingredients to
leading formulators in the personal care, nutraceutical and pharmaceutical
industries. The Company has been issued patents for technology related to two
of its products and has other patent applications pending.
    Fytokem has two product lines currently offered in the market. Canadian
Willowherb(TM) is a multi-function plant extract with strong efficacies as an
anti-irritant, and anti-oxidant that also has application as an acne
treatment. Tyrostat(TM) is a multi-efficacy plant extract sold primarily for
its use as a tyrosinase inhibitor which provides skin-lightening efficacy.

    The TSX Venture Exchange does not accept responsibility for the adequacy
or accuracy of this release. Statements contained in this news release, which
are not historical facts, are forward-looking statements that involve risks,
uncertainties and other factors that could cause actual results to differ
materially from those expressed or implied by such forward-looking statements.
Fytokem disclaims any intention or obligation to update or revise any
forward-looking statement, whether as a result of new information, future
events or otherwise.


    
    Fytokem Products Inc.
    Statements of Income (Loss) and Deficit
    (Unaudited)

                            Three Months Ended          Six Months Ended
                                  June 30                   June 30

                              2007         2006         2007         2006
                          ------------ ------------ ------------ ------------
    REVENUE
      Sales               $   229,946  $   339,762  $   469,106  $   621,481
      Cost of sales            95,816      112,897      205,809      202,540
                          ------------ ------------ ------------ ------------
      Gross margin            134,130      226,865      263,297      418,941
      Other revenue                 -            -            -            1
                          ------------ ------------ ------------ ------------
                              134,130      226,865      263,297      418,942
    EXPENSES
      Product development      45,035       39,356       85,638       73,614
      Marketing                20,878       22,595       42,938       43,739
      Finance and
       administration          86,871       81,082      157,293      151,952
      Amortization              5,611        6,296       11,265       12,528
      Interest on long
       term debt               11,630       10,024       23,751       19,780
      Dividend interest
       on Series A
       Preferred Shares         9,870        8,564       19,267       16,352
      Accretion on
       convertible demand
       loan                     3,311        7,986        7,744       16,676
      Stock compensation
       expense                  3,033        7,922        6,033       15,467
                          ------------ ------------ ------------ ------------
                              186,239      183,825      353,929      350,108
                          ------------ ------------ ------------ ------------

    NET INCOME (LOSS)         (52,109)      43,040      (90,632)      68,834

                          ------------ ------------ ------------ ------------
    DEFICIT, BEGINNING OF
     PERIOD                 5,109,274    4,939,644    5,070,751    4,965,438

    DEFICIT, END OF
     PERIOD               $ 5,161,383  $ 4,896,604  $ 5,161,383  $ 4,896,604
                          ------------ ------------ ------------ ------------
                          ------------ ------------ ------------ ------------

    BASIC AND DILUTED
     (LOSS) INCOME PER
     SHARE (Note 7)       $    (0.003) $     0.002  $    (0.005) $     0.004
                          ------------ ------------ ------------ ------------
                          ------------ ------------ ------------ ------------



    Fytokem Products Inc.
    Balance Sheets
    June 30, 2007 and December 31, 2006
    (Unaudited)

                                                     June 30,    December 31,
                                                       2007          2006
                                                   ------------  ------------
    CURRENT ASSETS
      Cash                                         $    83,975   $       643
      Accounts receivable                               47,923        57,518
      Inventories                                      219,373       230,381
      Prepaid expenses                                     486           501
                                                   ------------  ------------
                                                       351,757       289,043

    DEFERRED FINANCE CHARGES                               724         1,808
    CAPITAL ASSETS                                      33,262        41,126
                                                   ------------  ------------
                                                   $   385,743   $   331,977
                                                   ------------  ------------
                                                   ------------  ------------

    CURRENT LIABILITIES
      Accounts payable and accrued liabilities     $   655,325   $   513,972
      Accrued liability relating to Series A
       Preferred Shares                                136,011       116,743
      Current portion of long term debt (Note 3)       243,378       273,378
                                                   ------------  ------------
                                                     1,034,714       904,093

    LONG TERM DEBT (Note 3)                            427,719       419,975
                                                   ------------  ------------
                                                     1,462,433     1,324,068
                                                   ------------  ------------

    CAPITAL DEFICIENCY
      Common Shares (Note 4)                         3,895,499     3,895,499
      Equity portion of convertible demand loan         56,683        56,683
      Contributed surplus (Note 6)                     132,511       126,478
      Deficit                                       (5,161,383)   (5,070,751)
                                                   ------------  ------------
                                                    (1,076,690)     (992,091)
                                                   ------------  ------------
                                                   $   386,743   $   331,977
                                                   ------------  ------------
                                                   ------------  ------------



    Fytokem Products Inc.
    Statements of Cash Flows
    (Unaudited)

                            Three Months Ended          Six Months Ended
                                  June 30                   June 30

                              2007         2006         2007         2006
                          ------------ ------------ ------------ ------------
    CASH FLOWS FROM (USED
     IN) OPERATING
     ACTIVITIES
    Net income (loss)     $   (52,109) $    43,040  $   (90,632) $    68,834
    Items not affecting
     cash
      Amortization              5,611        6,296       11,265       12,528
      Non-cash interest
       expense                    542          634        1,083        1,268
      Non-cash accretion
       expense                  3,311        7,986        7,744       16,676
      Non-cash stock
       compensation
       expense                  3,033        7,921        6,033       15,466
                          ------------ ------------ ------------ ------------
                              (39,612)      65,877      (64,507)     114,772
    Changes in non-cash
     working
      Accounts receivable     154,730      (10,250)       9,595     (116,319)
      Inventories               7,301      (58,576)      11,007       28,031
      Prepaid expenses           (133)         138           16           29
      Accounts payable
       and accrued
       liabilities            (30,095)      79,847      141,354       19,140
      Accrued liability
       relating to Series
       A Preferred Shares       9,870        8,564       19,268       16,352
                          ------------ ------------ ------------ ------------
                              102,061       85,600      116,733       62,005
                          ------------ ------------ ------------ ------------

    CASH FLOWS USED IN
     INVESTING ACTIVITIES
      Acquisition of
       equipment               (3,401)           -       (3,401)      (1,242)
                          ------------ ------------ ------------ ------------
                               (3,401)           -       (3,401)      (1,242)
                          ------------ ------------ ------------ ------------

    CASH FLOWS (USED IN)
     FROM FINANCING
     ACTIVITIES
      Proceeds from
       issuance of common
       shares                       -            -            -       15,000
      Repayment of long
       term debt              (15,000)     (15,878)     (30,000)     (26,726)
                          ------------ ------------ ------------ ------------
                              (15,000)     (15,878)     (30,000)     (11,726)
                          ------------ ------------ ------------ ------------

    NET INCREASE (DECREASE)
     IN CASH DURING THE
     PERIOD                    83,660       69,722       83,332       49,037

    CASH POSITION,
     BEGINNING OF PERIOD          315       15,175          643       35,860
                          ------------ ------------ ------------ ------------
    CASH POSITION, END OF
     PERIOD               $    83,975  $    84,897  $    83,975  $    84,897
                          ------------ ------------ ------------ ------------
                          ------------ ------------ ------------ ------------

    SUPPLEMENTAL
     INFORMATION
      Cash interest paid  $    11,089  $     9,390  $    22,668  $    18,512
                          ------------ ------------ ------------ ------------
                          ------------ ------------ ------------ ------------
    





For further information:

For further information: Art Hesje, President and CEO, Fytokem Products
Inc., (306) 668-2552 tel, (306) 978-2436 fax, ahesje@fytokem.com,
www.fytokem.com

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FYTOKEM PRODUCTS INC.

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