EDMONTON, July 28 /CNW/ - Seair Inc. (SDS:TSX Venture Exchange) today
released its unaudited financial statements for the quarter and nine months
ending May 31, 2008.
Revenue for the quarter ending May 31, 2008 was $783,121, or 11% higher
than in the corresponding quarter in fiscal 2007 and 67% lower than the
immediately preceding quarter. Rental revenue from Septic's portable waste
water treatment units provided approximately 89% of total revenue in the
quarter. The revenue increase relative to fiscal 2007 is a result of Seair's
expanded fleet of portable waste water treatment units and the decline from
the quarter ending February 29, 2008 is due to the normal seasonal shut-down
in the western Canadian oil and gas sector, upon which Seair Septic relies for
the vast majority of its revenue. The impact of the larger fleet is partially
offset by decreased rental day rates for the portable waste water treatment
business. Fiscal 2008 day rates were approximately 25% lower than the rates
realized in fiscal 2007.
Seair continues to conduct business development activities in a variety
of end-use applications other than portable waste water treatment. Priority
markets include municipal water and waste treatment, golf course soil and
water treatment, food processing and aeration pond treatment at pulp and paper
mills and similar manufacturing facilities. The municipal treatment and
aeration pond applications are being handled directly by Seair whereas the
golf course and food processing initiatives are generally being addressed
through third party distributors.
Complete turnkey municipal water and waste treatment uses essentially the
same technologies and processes as used in Septic's portable units, although
on a much larger scale. In addition, Seair's products can be used at various
stages of existing conventional municipal waste water treatment to increase
the effectiveness of the overall process. Research and development studies are
underway to prove the effectiveness and economic viability of Seair's various
means to augment conventional municipal systems. However, penetrating the
municipal treatment market, either with full Seair systems or selectively
enhancing existing conventional treatment plants, will require additional
third party verification of the sustained effectiveness and unique
capabilities of Seair's solutions.
Construction has begun on a turn-key end-to-end Seair wastewater
treatment plant at the Village at Wolf Creek. As of the date of this document
Seair has completed and progress billed approximately 10% of the project work,
with most of the remaining work slated for fall 2008.
A Seair diffusion unit was installed in Airdrie, Alberta in spring 2008
to dissolve pure oxygen into the wastewater stream as it enters the
18 kilometer force main to Calgary's municipal wastewater treatment system.
This unit is part of a new lift station in Airdrie that was scheduled to
commence operations in May 2008 but start-up has been delayed for reasons not
connected to Seair's unit. Start-up is now scheduled for August 2008. The
objective in diffusing pure oxygen into the wastewater stream is to reduce
H(2)S levels, eliminate the need for other chemical treatment and enable an
aerobic state in the force main as the wastewater travels to Calgary for
Aeration pond applications involve larger-scale Seair diffusion towers to
better and more efficiently manage the dissolved oxygen level in large
industrial-use ponds. The objective is to displace large inefficient blowers
with Seair units that achieve superior end results with reduced operating
costs, including energy consumption and maintenance. The large Seair diffusion
towers are currently being field tested at commercial pulp and paper mills in
British Columbia and Alberta.
Seair's golf course solutions have been successfully implemented at a
number of courses throughout western Canada. The next stage of growth in this
segment is to target the larger year-round U.S. markets, particularly in areas
where chronic water shortages dictate that effluent be the primary source of
irrigation water. A distributor network is being established in these target
markets and Seair has designed and manufactured a golf-course specific
diffusion product. In addition, several customers with existing Seair golf
course installations are upgrading their equipment to include ozone treatment,
as it has been shown to have a powerful impact on pond cleaning and soil
A small Seair ozone diffusion system was successfully tested and
subsequently purchased by a California customer using it to ensure spinach is
free of contaminants such as E. coli. Ozonated water is applied to the spinach
as it is being packaged, as well as sprayed on the packaging equipment itself.
Gross profit for the quarter ending May 31, 2008 was $678,750 (87% of
revenue) compared to $1,594,714 (73% of revenue) in the quarter ending
February 29, 2008 and $594,280 (87% of revenue) for the quarter ending May 31,
2007. The portable waste water treatment rental model provides Seair with
strong gross profit percentages, although amortization of the rental units is
not included in cost of sales (it is included in amortization expense).
Total operating expenses declined by $217,164 to $1,442,414 from fiscal
2007 to fiscal 2008. Of this decrease, $1,095,000 was due to non-cash
stock-based compensation recorded in connection with incentive stock options
granted during the quarter ending May 31, 2007. This was offset by $187,556,
$99,213, $99,480 and $40,314 increases in interest on convertible debentures,
amortization, research and development and accretion of debenture issue costs,
respectively. Operating costs were $1,214,921 lower than for the quarter
ending February 29, 2008, stemming primarily from the inclusion of $1,296,000
of non-cash stock-based compensation expense in the second quarter of fiscal
Interest and bank charges have increased as a result of interest owing to
convertible debenture holders. The debentures bear interest at 8% per annum,
resulting in $200,000 of interest expense per quarter. As result of
conversions at the request of the debenture holders there were $8,849,000 of
debentures outstanding at May 31, 2008. This reduces the quarterly interest
burden to $176,980.
Amortization increased by $99,213 from the prior year due to the change
in accounting policy with respect to amortization of the portable wastewater
treatment plants and growth in the amount of depreciable assets. These assets
were previously amortized on a diminishing balance basis at rates of between
4% and 8% per annum. Effective the quarter ending February 29, 2008 the
amortization policy and rate has been changed to straight-line over a 10 year
Salaries and benefits increased by $154,351 as Seair expands to
accommodate its growing and diversifying business and makes compensation
adjustments to ensure quality personnel are retained in the highly competitive
Alberta labour market. For example, Seair has added research and development
personnel to advance applications outside of portable wastewater treatment.
Research and development costs of $99,480 (nil in fiscal 2007) pertain to
the establishment of a research department. Several studies are presently
underway in conjunction with the Edmonton Waste Management Centre of
Excellence as well as in-house research being conducted by Seair's research
and development team. Areas of research include municipal wastewater treatment
applications, pulp and paper applications and eradication of complex chemicals
from municipal and industrial water supplies.
In addition, research and development expense includes costs associated
with development of a ballast water treatment system. Pending legislation in
the United States and internationally will require ships to install ballast
water treatment systems to prevent the spread of non-native invasive species.
Seair is developing a commercial ballast water treatment system in conjunction
with a number of partners.
Net loss for the quarter ending May 31, 2008 was $759,434.
Working capital at May 31, 2008 was $1,617,024, down from $7,090,428 at
August 31, 2007 and $3,267,152 at February 29, 2008. The decrease in working
capital is a result of using a portion of the funds raised in June 2007 to
increase the portable wastewater treatment unit fleet size.
Accounts receivable at February 29, 2008 was $2,054,878, up $1,535,510
from August 31, 2007 and down $807,863 from February 29, 2008. These
fluctuations are considered a normal part of Septic's business cycle.
Accounts payable was $2,542,941 at May 31, 2008. This $1,695,496 increase
from August 31, 2007 is due to costs incurred in manufacturing additional
portable waste water treatment units.
Debenture holders converted 1,000, or 10% of the total issue, convertible
debentures into common shares during the quarter ending May 31, 2008. These
conversions resulted in 364,000 common shares being issued. Total year-to-date
conversions are 1,151 debentures (resulting in 418,964 common shares being
issued), or approximately 11% of the total debenture issue. There were
8,849 debentures outstanding at May 31, 2008 which, if fully converted,
represents potential dilution of 3,221,036 common shares.
Total capital expenditures for the quarter ending May 31, 2008 were
$1,139,921 (compared to $3,420,178 for the quarter ending February 29, 2008
and $11,059 for the quarter ending May 31, 2007), virtually all of which was
related to increasing the number of portable waste water treatment units.
Year-to-date capital expenditures are $5,219,217.
The complete financial statements are available at www.sedar.com.
Seair is a leading developer of patent protected diffusion and
sterilization technologies which allow for the efficient diffusion of gases
into a liquid, thereby facilitating numerous applications in a wide variety of
industries including wastewater treatment, pulp and paper, food processing,
aquaculture, agriculture/horticulture, sterilization, golf course irrigation
and pond treatment, animal enhancement and oil and gas. Seair's primary focus
is developing and selling equipment that diffuses gases, such as oxygen, ozone
or carbon dioxide, into a liquid, resulting in a supersaturate solution. The
major difference between Seair and other diffusion technologies is Seair's
ability to achieve extremely small bubble size, which in turn allows for the
mass transfer of gas to fluid. The result is a stable condition where gases
remain in solution for extended periods of time, leading to increased
productivity and lower operating costs. Seair provides diffusion-enhanced
portable wastewater treatment plants through its subsidiary, Seair Septic.
Parties interested in obtaining further information or receiving news
releases and corporate documents from Seair may email such request to
firstname.lastname@example.org or visit the Seair website at www.seair.ca.
This news release may contain certain forward-looking statements that
reflect the current views and/or expectations of Seair Inc. with respect to
its performance, business or future events. Such statements are subject to a
number of risks, uncertainties and assumptions. Actual results and events may
THE TSX VENTURE EXCHANGE HAS NOT REVIEWED AND DOES NOT ACCEPT
RESPONSIBILITY FOR THE ADEQUACY OR ACCURACY OF THIS RELEASE.
For further information:
For further information: Harold Kinasewich, Seair Inc., T: (780)
477-7188, F: (780) 477-2523, E: email@example.com