MONTREAL, Aug. 30, 2012 /CNW Telbec/ - Sofame Technologies Inc. (TSXV: SDW) (OTC: SFMGF) has reported net sales of $431,429 in the third quarter ended June 30th, and a net loss of ($ 33,950).
- Q3 2012 Net Sales of $ 431,429 compared to $ 397,156 in Q3 2011
- Q3 2012 Gross Profit of $ 139,425 (32.3%) compared to $ 147,621 (37.2%) in Q3 2011
- Sales after nine months were $ 1,480,176 in 2012 compared to $ 1,388,834 in 2011
- Gross Profit after nine months was $ 620,332 (41.9%) in 2012 versus $ 112,520 (8.1%) in 2011
- Operating Expenses after nine months were $ 411,567 (27.8%) compared to $ 557,635 (40.2%) in 2011
- Net Earnings after nine months were $ 91,364 (6.2%) compared to a loss of ($ 551,843) (-39.7%) in 2011
- EBITDA after nine months in 2012 was $ 414,152 versus a negative (- $ 251,344) as of June 30, 2011
- $740,337 of current debts were converted to shares in the quarter
Note: These are the financial highlights only. Management`s Discussion and Analysis, the consolidated financial statements, cash flows, and notes thereto of Sofame Technologies Inc. are available at www.sedar.com.
Comments on the Third Quarter Ending June 30, 2012
The third quarter of fiscal 2012 demonstrated solid progress by Sofame in delivering flue gas heat recovery and industrial water heating systems in the United States and Canada. Sofame's outsourcing model is working effectively by allowing the company to minimize fixed expenses while delivering projects. The loss is attributed partly to severance settlements after protracted negotiations with former employees, and to extended start-up and controls programming costs after two heating and heat recovery systems were delivered. These costs are included in Cost of Sales for the third quarter and had the effect of slightly reducing the gross profit margin. Six contracts were awarded so far this year and several contracts are in final stages of pricing negotiations. Discussions with Synergy, a local Chinese rep firm, are nearly complete, and Synergy has begun marketing Sofame's products in China. The conversion of $740,337 of current debts to common shares in April was a milestone in stabilizing the Sofame's finances in the months ahead. Negotiations to refinance the $250,000 bridge loan with a more appropriate asset-based arrangement are currently under way with lenders in the Boston area.
These results are better than expected considering that over the last three years, Sofame has had to adjust to challenging market conditions including a historically low natural gas price - as low as $ 1.85 per Dekatherm. Gas prices have recently recovered to about $2.40/DT. Another challenge overcome by the Company is low corporate spending budgets for cost-saving plant improvements. Sofame has survived tight capital conditions by implementing an outsourcing model which has allowed it to cut overhead and incur costs only when contracts are in production. Two-year payback has become the norm for Sofame's industrial water heating solutions.
The management team at Sofame is confident that with low overhead costs, contracts in hand, and seasoned leaders experienced in the HVAC industry at the helm of the company, the 2012 fiscal year will continue positively.
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.
SOURCE: SOFAME TECHNOLOGIES INC.
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