Pure Technologies Ltd. announces results for second quarter

    CALGARY, Aug. 11 /CNW/ - Pure Technologies Ltd., TSX-V: PUR, announces
total revenues of $5,394,000 for the quarter ended June 30, 2008 and net
income of $209,000. For the second quarter of 2007, total revenue was
$1,950,000 and the net loss was $548,000 from continuing operations. Pure's
year-to-date revenue and income of $11,420,000 and $2,114,000 respectively are
significantly higher than for the corresponding period in 2007 which was
$4,129,000 for total revenue and a net loss of $259,000 from continuing
    During the quarter, Pure finalized the acquisition of Price Brothers (UK)
Ltd., a U.K.-based pipe engineering consultancy. For the quarter, $907,000 of
revenue and $177,000 of income were recognized from PBUK. Integration of the
companies is progressing well and together we are pursuing additional business
opportunities in Libya. We also completed commissioning of a SoundPrint(R) AFO
fibre-optic monitoring in a wastewater pipeline in Muskegon, Michigan, the
first such application in a wastewater line. This is an important development
that will allow us to pursue new opportunities in the sector.
    Also during the quarter, Pure generated approximately $400,000 in
revenues from our SmartBall(R) leak detection system in the water and
wastewater sectors, completing projects in Florida, Hawaii and Denver. In the
oil and gas sector, we undertook a successful field trial for a major North
American mid-stream pipeline operator.
    We continue to invest heavily in marketing and business development in
the water and oil and gas pipeline sectors, with an increasing emphasis on
international markets. In June, we hosted a major international workshop on
pipeline assessment and management attended by delegates from nine countries
representing water agencies, oil & gas pipeline operators and consultants. We
have attended a number of international conferences and exhibitions, and we
have successfully completed SmartBall demonstrations in the UK and, subsequent
to quarter end, in Malaysia and Brazil.

    Financial Overview

    Product sales revenue increased by 175% in the second quarter of 2008
compared to 2007. During the quarter, the first wastewater AFO system was
successfully developed, installed and commissioned at Muskegon, Michigan. Two
major bridge projects were completed; a SoundPrint(R) monitoring system
installation on the Luling Bridge in Louisiana and a Cablescan project in
Pennsylvania. These three major projects, along with inspection services and
the revenue from PBUK, accounted for the significant increase in revenue.
    Year to date product sales revenue has increased 190% from the prior
year. The increased activity in the second quarter, along with the completion
of phase 1 and 2 of the Great Man-Made River Authority (GMRA) project in Libya
during the first quarter, resulted in the year to date increase.
    Monitoring revenue increased over the second quarter of 2007 by 188%.
During the quarter, the recurring technical support revenue from the GMRA
project began to be recognized. The ongoing AFO projects along with the GMRA
project resulted in the increase for the quarter and the 94% increase year to
date 2008 from 2007.
    Gross margins were 60% compared to 64% in quarter 2 of 2007. Year to date
gross margins are 64% for 2008 and 69% for 2007. The Company targets a 60%
gross margin and this gross margin can fluctuate with the product mix of its
    Marketing and promotion expense for the quarter increased by 120% and
100% year to date over 2007. During this quarter, a workshop was held in
Calgary bringing together customers from across the globe to hear
presentations on current infrastructure issues. AFO and SmartBall
demonstrations were conducted, and an oil and gas seminar was also held to
introduce the Company's technologies to the hydrocarbon market. We continue to
promote our products on the international market through participation in
conferences worldwide in both the water and wastewater industries and the oil
and gas sector. As a result of these initiatives, demonstrations of the
SmartBall were completed in Los Angeles, Atlanta and the United Kingdom.
Several others demonstrations are planned for quarter 3 and 4 including
Malaysia, Mexico, South America and Libya.
    General and administrative expenses increased 124% in the quarter from
2007. The majority of this increase is due to the acquisition of PBUK. Other
than the direct cost of sales, all other expenses are categorized as general
and administrative. The year to date increase of 71% represents the increase
from PBUK as well as the additional staff hired in the first quarter.
    Research and development expenses increased 188% in the quarter from 2007
and 259% for the year. Additional staff was added in the latter half of 2007.
2007 projects related mainly to the further development of SmartBall. These
costs were capitalized over the course of 2007 based on the Company's
accounting policy for development expenses. For 2008, the work within this
department has been focused on new product research and is not capitalized.
    Depreciation and amortization for 2008 increased by 38% compared to the
first quarter of 2007 and 34% for the year. The rise in depreciation and
amortization expense reflects capitalization of development costs for AFO
systems and SmartBall, particularly the costs capitalized in 2007.
    Operating expenses have increased 116% for the quarter and 85% for the
year while revenues have risen by 177% both for the quarter and year to date.
As indicated in our 2007 prospectus financing, the Company anticipated
increasing expenses in both marketing and research and development through new
staff and market initiatives centered largely on SmartBall. From the
development work completed in 2007, these initiatives are now materializing
and are expected to continue throughout 2008 with the end result of additional
revenues. The acquisition of PBUK has added significant revenues along with
additional G&A expenses.
    The Company's cash balance at June 30, 2008 was $9,905,000 compared to
$16,452,000 at December 31, 2007. This decrease is partially due to
acquisition of PBUK and purchase of property and equipment and partially due
to cash required to service the contracts completed in the first half of the
year. With this decrease in cash came an increase in receivables of
$7,700,000. Payments of $7,857,000 were received subsequent to quarter end
with a significant portion of this reflecting payments related to GMRA.
    Revenue generation continues to grow. Marketing efforts, on an
international basis, are expected to develop into revenue producing projects
within the latter half of the year. Focused efforts on SmartBall within North
America have provided numerous projects including both water and wastewater
applications. The oil and gas industry efforts are gaining traction and
several pilot projects are scheduled over the next few months. Current
confirmed backlog is in excess of $10,900,000. Pure has also received verbal
confirmation of projects in excess of $1,400,000 which are subject to the
normal contract review process and final documentation. Annualized monitoring
and technical support revenue under contract is in excess of $2,900,000.

    2008 Q2 Financial Highlights

    Consolidated              Three months ended:           Six months ended:
     Statement of          June 30,      June 30,      June 30,      June 30,
     Operations               2008          2007          2008          2007

    Product sales
     revenue          $  4,714,000  $  1,714,000  $ 10,273,000  $  3,537,000
    Monitoring &
     technical support     680,000       236,000     1,149,000       592,000
                      ------------- ------------- ------------- -------------
    Total revenue        5,394,000     1,950,000    11,422,000     4,129,000

    Cost of sales        2,149,000       702,000     4,125,000     1,298,000

    Marketing              830,000       378,000     1,528,000       763,000
    General and
     administrative      1,614,000       721,000     2,872,000     1,683,000
    Research and
     development           355,000       123,000       696,000       194,000
    Depreciation and
     amortization          285,000       206,000       539,000       402,000
    Foreign exchange
     loss (gain)            11,000       494,000      (268,000)      206,000
    Interest income        (72,000)     (126,000)     (197,000)     (158,000)
                      ------------- ------------- ------------- -------------

    Income (loss)
     from continuing
     operations            222,000      (548,000)    2,127,000      (259,000)

    Taxes                   13,000             -        13,000             -

     operations                  -      (154,000)            -      (770,000)
                      ------------- ------------- ------------- -------------

    Net income (loss)      209,000      (702,000)    2,114,000    (1,029,000)

    Income (loss)
     per share
      - basic         $        .01  $       (.02) $        .07  $      (0.04)
      - diluted       $        .01  $       (.02) $        .06  $      (0.04)

    Weighted avg.
      - basic           32,498,676    28,973,537    32,323,428    26,328,390
      - diluted         33,053,473    28,973,537    32,916,505    26,328,390


                                                         As at         As at
                                                       June 30,      Dec. 31,
    Consolidated Balance Sheet                            2008          2007

    Current assets
      Cash and cash equivalents                   $  9,905,000  $ 16,452,000
      Accounts receivable                           16,583,000     8,883,000
      Inventory                                      1,844,000       908,000
      Prepaid expenses                                 670,000       277,000
      Net investment in lease                           72,000        70,000
                                                    29,074,000    26,590,000

    Property and equipment                           3,016,000     2,612,000
    Intangible assets                                1,284,000       508,000
    Goodwill                                         1,883,000        43,000
    Net investment in lease                            144,000       175,000
    Other assets                                        27,000        27,000
                                                  $ 35,428,000  $ 29,955,000

    Liabilities and Equity
    Current liabilities
      Accounts payable                            $  2,356,000  $    657,000
      Deposits on sales contracts                      111,000        31,000
                                                     2,467,000       688,000

    Future income taxes                                219,000             -

    Shareholders' equity
      Share capital                                 43,459,000    42,161,000
      Contributed surplus                              883,000       655,000
      Warrants                                         107,000       272,000
      Deficit                                      (11,707,000)  (13,821,000)
                                                  $ 35,428,000  $ 29,955,000


    Pure Technologies is an international technology company which has
developed patented technologies for inspection, monitoring and management of
critical infrastructure around the world. Pure operates from its headquarters
in Calgary, Canada and through subsidiaries in Maryland, New Jersey, and the
UK. Pure's proprietary product portfolio includes SoundPrint(R), a continuous
acoustic structural monitoring system for buildings, bridges and structures;
SoundPrint(R) AFO, a fiber-optic distributed acoustic sensing system for
monitoring and surveillance of pipelines; and SmartBall(R), a revolutionary
new leak detection technology for water, wastewater and hydrocarbon pipelines.

    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.

    "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: 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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