Pure Technologies Ltd. announces results for second quarter



    CALGARY, Aug. 22 /CNW/ - Pure Technologies Ltd., TSX-V: PUR, announces
total revenues of $2,488,000 for the quarter ended June 30, 2007. Net loss for
the period was $702,000, of which $493,000 was a loss on foreign currency.
Revenues year to date 2007 are $4,784,000, an increase of 20% over the first
six months of 2006.
    During this latest quarter, the Company continued to make progress in
business development and in efficiency in field operations. Improved operating
efficiency is reflected in considerably stronger margins for the period and
for the year to date compared to the corresponding periods last year.
    Our installed base of SoundPrint(R) AFO optical fibre systems continues
to grow at an impressive rate, as more water and wastewater agencies implement
long-term strategies to manage their prestressed pipeline infrastructure. This
will likely have a positive impact on our recurring revenues as multi-year
contracts for monitoring and technical support often follow the initial
installations.
    The successful test of SmartBall(R) in an oil pipeline operated by a
major energy company in the United States was an important milestone for the
Company during the quarter. On the basis of the success of this test and on
positive market interest in the technology, we are implementing an aggressive
marketing initiative in the oil and gas sector in North America and overseas
to complement significant demand for the product in the water sector.
    During the quarter, Pure completed a $15,000,000 (net $13,792,000) equity
financing. The response to the financing was very positive and emphasized the
interest in Pure's environmental technologies within the investment community.
The funds raised will provide the Company with the financial strength to
implement its international growth strategy.
    Our confirmed order backlog is in excess of $ 6.4 million and we have
received verbal confirmation of awards in excess of $11 million. Annualized
recurring revenue as of June 30, 2007 is in excess of $1.9 million, which may
increase in 2008 as monitoring contracts for AFO installations are renewed. As
well, there is a verbal confirmation of $3 million in recurring revenues that
will commence in 2008 and will span 3 years.

    Financial Overview

    Product sales revenue increased by 8.5% in the second quarter of 2007
compared to 2006. During the quarter, the Company changed its accounting
policy for revenue recognition for system sales contracts which are completed
in less than a year. The previous policy of the completed contract method was
changed to the percentage completion method, consistent with the policy for
contracts spanning more than one year. Percentage completion provides for a
more accurate measure of work performed by the Company and resulted in an
increase in revenues recognized this quarter.
    Year to date product sales revenue has increased 23% from last year, due
partially to the change in revenue recognition for the quarter but mainly to
the increased activity in 2007 compared to 2006.
    Second quarter monitoring revenue decreased over 2006 by 15%, mainly
attributable to the strength of the Canadian dollar, although it has been
steady based in the home currencies of our subsidiaries. Approximately 75% of
this revenue is denominated in currencies other than the Canadian dollar. For
2007 year to date, monitoring revenue is consistent with 2006 showing only a
1% reduction.
    Gross margins increased in this quarter to 70% from 51% in the second
quarter of 2006, consistent with the first quarter gross margin. Gross margins
during this quarter were affected positively by our product sales mix and by
improved field efficiency. This is also consistent with our year to date
results. For 2007, the gross margin is 71% compared to 53% in 2006.
    Marketing and promotion expense for the quarter decreased by 12% over the
second quarter of 2006. These expenses are heavily dependent on the amount of
travel that is done in a quarter, including tradeshows. Year to date, the
expenses are consistent within 1%.
    General and administrative expenses for the quarter are consistent with
the previous year's quarter. Total staff count has been steady over the past
year. 2007 year to date expenses are 6% lower than 2006, mainly due to a
reduction in legal and consulting expenses in 2007.
    Research and development expenses decreased to $164,000 in the quarter
versus $236,000 in the previous year's period. The Company continues its
capitalization of development costs for the SmartBall(R) leak detection
system, the major contributor to the decrease. This also accounts for the year
to date decrease of 20% compared to 2006.
    Depreciation and amortization for the second quarter of 2007 was $309,000
compared to $263,000 for the same period in 2006. Year to date, it has
increased by $107,000. The rise in depreciation and amortization expense
reflects capitalization of development costs for PureActiv, AFO systems, and
SmartBall(R). This level of depreciation and amortization expense is expected
to continue as these capitalized costs are expensed over their related
amortization period.
    Overall for both the second quarter and year to date in 2007, operating
expenses have decreased compared to 2006. The foreign exchange loss for the
quarter is due to the rise in the Canadian dollar. Most of the loss is an
unrealized loss due to revaluation of US dollar denominated accounts held in
Pure Technologies Ltd. Interest income has risen in the quarter and year to
date as the proceeds from the equity financing were invested in major Canadian
bankers acceptances.
    The Company's cash balance at June 30, 2007 was $17,123,000 compared to
$4,297,000 at December 31, 2006. The Company had $20,932,000 of working
capital as at June 30, 2007 compared to $8,161,000 at December 31, 2006. This
increase in cash and working capital is attributable to the completion of an
equity financing on April 30, 2007. The financing (net of all costs)
contributed $13,792,000 to cash. These proceeds will allow us to accelerate
the commercialization of the SmartBall(R) leak detection technology, enhance
our marketing efforts worldwide, and enable the development of new
technologies.

    
    2007 Q2 Financial Highlights

    Consolidated Statement     Three months ended:        Six months ended:
     of Operations            June 30,     June 30,     June 30,     June 30,
                                2007         2006         2007         2006
    -------------------------------------------------------------------------

    Product sales
     revenue              $ 2,252,000  $ 2,075,000  $ 4,192,000  $ 3,397,000
    Monitoring &
     technical support        236,000      276,000      592,000      596,000
                          ------------ ------------ ------------ ------------
    Total revenue           2,488,000    2,351,000    4,784,000    3,993,000

    Cost of sales             737,000    1,146,000    1,386,000    1,871,000

    Marketing                 616,000      701,000    1,304,000    1,297,000
    General and
     administrative           998,000      995,000    2,121,000    2,246,000
    Research and
     development              164,000      236,000      355,000      444,000
    Depreciation and
     amortization             308,000      263,000      599,000      492,000
    Foreign exchange
     loss                     493,000       82,000      206,000       76,000
    Interest income          (126,000)     (25,000)    (158,000)     (61,000)
                          ------------ ------------ ------------ ------------

    Net loss                 (702,000)  (1,047,000)  (1,029,000)  (2,372,000)

    Loss per share -
     basic and diluted    $     (0.02) $     (0.05) $     (0.04) $     (0.12)

    Weighted avg. shares
     - basic and diluted   28,973,537   20,318,161   26,328,390   20,301,681




    Consolidated Balance Sheet                      As at          As at
                                               June 30, 2007   Dec. 31, 2006
    -------------------------------------------------------------------------

    Assets
    Current assets
      Cash and cash equivalents                 $ 17,123,000    $  4,297,000
      Accounts receivable                          3,508,000       4,020,000
      Contracts in progress                           47,000          77,000
      Inventory                                      582,000         451,000
      Prepaid expenses                               388,000         311,000
      Net investment in lease                         85,000          93,000
                                                -----------------------------
                                                  21,733,000       9,249,000

    Property and equipment                         3,636,000       3,399,000
    Intangible assets                                483,000         500,000
    Net investment in lease                          218,000         281,000
    Other assets                                      71,000          74,000
                                                -----------------------------
                                                $ 26,141,000    $ 13,504,000

    Liabilities and Equity
    Current liabilities
      Accounts payable                          $    645,000    $    961,000
      Deposits on sales contracts                    156,000         127,000
                                                -----------------------------
                                                     801,000       1,088,000

    Shareholders' equity
      Share capital                               41,232,000      27,703,000
      Contributed surplus                            614,000         507,000
      Warrants                                       366,000          49,000
      Deficit                                    (16,872,000)    (15,843,000)
                                                -----------------------------
                                                $ 26,141,000    $ 13,504,000
    

    About Pure Technologies Ltd.

    Pure Technologies is an international technology company which has
developed patented and proprietary technologies for management and
surveillance of critical infrastructure around the world. Applications for
these technologies include water and wastewater pipelines, bridges, oil and
gas pipelines, transportation infrastructure, high-rise buildings, parking and
other critical structures. Pure provides its technologies from its
headquarters in Calgary, Canada and subsidiaries in Maryland, Arizona, and New
Jersey.

    Forward-Looking Statements

    This release contains forward-looking statements. Forward-looking
statements, without limitation, may contain the words "believes", "expects",
"anticipates", "estimates", "intends", "plans", or similar expressions.
Forward-looking statements are not guarantees of future performance. They
involve risks, uncertainties and assumptions and the Company's actual results
could differ materially from those anticipated. Forward-looking statements are
based on the opinions and estimates of Management at the date the statements
are made, and are subject to a variety of risks and uncertainties and other
factors that could cause actual events or results to differ materially from
those projected in the forward-looking statements. In the context of any
forward-looking information please refer to risk factors detailed in, as well
as other information contained in, the Company's filings with Securities
Regulators (www.sedar.com).

    (R) Registered Trademarks, property of Pure Technologies Ltd.
    (TM) Trademark, property of Pure Technologies Ltd.

    "The TSX Venture Exchange has not reviewed and does not accept
    responsibility for the adequacy or accuracy of this release"

    %SEDAR: 00006060E




For further information:

For further information: To find out more about Pure Technologies Ltd.
(TSX-V: PUR), visit our website at www.puretechnologiesltd.com, or contact
James E. Paulson, Chairman or Karen Keebler, Chief Financial Officer at (403)
266-6794 or e-mail to info@puretechnologiesltd.com

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