May 1, 2005
SEAIR ANNOUNCES RESULTS FOR QUARTER ENDING FEBRUARY 28, 2005
Edmonton, Alberta CANADA, May 01, 2005 /FSC/ - Seair Inc. (SDS - TSX Venture), announces the release of its unaudited interim financial statements for the three months ending February 28, 2005.
SEAIR's consolidated sales and financial performance is summarized as follows for the quarter and six months ending February 28, 2005 (with comparative figures for the quarter and six months ending February 29, 2004):
| 3 Months Ending | 9 Months Ending | |||||
| 28-Feb-05 | 28-Feb-04 | Change | 28-Feb-05 | 28-Feb-04 | Change | |
| Revenue | $46,085 | $44,313 | 4% | $67,432 | $241,141 | -72% |
| Gross Profit | 10,348 | 2,341 | 342% | 13,741 | 111,489 | -88% |
| Net Loss | (127,643) | (238,938) | -47% | (279,369) | (358,518) | -22% |
| Basic Loss per share | (0.01) | (0.02) | 53% | (0.02) | (0.02) | 32% |
Year over year revenue for the quarter increased 4%, though for the six months ending February 28, 2005 revenue was down 72% from the prior year. Revenue was unusually high in the quarter ending November 30, 2003 as a result of initial successes in the greenhouse industry. However, these revenues did not prove to be sustainable and, therefore, Seair has re-emphasized the development and implementation of a comprehensive, diverse and sustainable sales structure. Some product sales do arise while channels and related sales infrastructure
are being developed, those sales are not considered to be indicative of what should be realized once the appropriate channels and reference customers are in place.
As noted, Seair has de-emphasized the greenhouse market in favour of what are believed to be more lucrative and sustainable target markets. Seair's current primary target markets involve waste water remediation, sterilization and animal enhancement opportunities. While shifting to these markets did result in a revenue decline, management believes the impact of Seair's technology in the current target applications will be significantly more profound, demonstrable and immediate than was the case with greenhouses.
Seair intends to develop each of these target markets by combining reference customers with a suitable sales and marketing infrastructure for each sector. For animal enhancement, Seair's initial reference customer utilized Seair's diffusion products to provide oxygenated water to race horses. Subsequent to conclusion of the trial the customer sought, and was granted, distributor rights for Seair's equipment in the North American standardbred horse racing industry. Seair has recently signed a number of other distributors in a variety of industries and geographic locations. The Company is working with these new distributors to establish reference customers and obtain testimonials to augment awareness and credibility in the target industries.
Revenue for the quarter ending November 30, 2004 includes an $11,000 credit granted to a greenhouse industry customer for equipment returned to Seair. This credit reduced the revenue that would otherwise have been reported for the six months ending February 28, 2005.
Quarter over quarter revenue growth was $24,738, or 116%. However, this apparently high growth rate must be taken with caution, as Seair is at the earliest point of its revenue generation phase.
Seair remains at the initial stages of penetration in the waste water remediation and sterilization markets with initial reference customers presently at various points along the sales cycle in these target markets. Completing the sales cycle with these initial reference companies is Seair's current priority and will be followed by an assessment of each of the specific industries in order to appropriately prioritize and assign sales and marketing resources.
Gross margins were 22% in the quarter ending February 28, 2005 versus 5% in the quarter ending February 29, 2004. Because revenue levels were relatively low in both of these quarters the gross margin rate is not considered to be representative of what will arise at full sales levels. Cost of sales includes a number of unusual items that, at full sales levels, do not materially impact the gross margin percentage. However, at low sales levels the unusual items can significantly impact the gross margin percentage. For example, included in cost of sales is $29,810 of other production costs. These costs are relatively fixed in nature and, accordingly, when sales are low the impact of these fixed costs can be dramatic on Seair's gross margin percentage. Management expects gross margins to be in the 50% to 70% range at target sales levels.
Operating expenditures totaled $137,991 for the quarter ending February 28, 2005 versus $241,279 for the quarter ending February 29, 2004. This $103,288 decline in operating expenditures, a 43% reduction, is attributable to general cost control measures implemented in recent quarters. Total personnel related costs in the quarter were $67,945 (versus $81,930 for the quarter ending February 29, 2004). Operating cost personnel increased by $17,542,
or 51% while management compensation declined by $31,527, or 67%. With customer interest building Seair will ensure its design, production, delivery and installation capabilities are not compromised. Accordingly, where reductions are in order they are being applied first and foremost at the management compensation level. Seair management is committed to ensuring the maximum possible portion of the Company's financial resources flow directly to sales
generation, product manufacturing, delivery, installation and customer service.
Product testing and trade show costs stem from Seair's post-research phase marketing initiatives. While initial testing and trade show strategies were intended to create general awareness, Seair is now narrowing and customizing the awareness and acceptance strategies to align with the overall prioritization of target markets. Testing is now commonly directed at specific industries and specific customers, with a strong likelihood of near-term sales should
the test results confirm Seair's equipment achieved previously agreed-upon targets. Seair is now involved or planning a number of such tests in waste water remediation and sterilization applications. These targeted demonstrations, trials and tests can be completed at low or virtually no cost to Seair.
The year over year quarterly loss declined $111,295, or 47%. Reduced losses are attributable to significant cost reductions realized in recent quarters.
Working capital at February 28, 2005 was $189,064, down from $476,397 at August 31, 2004 and down $123,763 from working capital of $312,827 at November 30, 2004. Further details with respect to SEAIR's second quarter results, including the complete financial statements, will be available at www.sedar.com.
About SEAIR
SEAIR is a leading developer of proprietary diffusion and sterilization technologies. These patent-pending technologies allow for the efficient diffusion of gases into a liquid, thereby facilitating numerous applications in a wide variety of industries, including waste water treatment, pulp and paper, 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 gas bubble size, which in turn allows for the mass transfer of gas to fluid. The result is a stable condition where the gases remain in solution for extended periods of time, leading to increased productivity and lower operating costs.
Parties interested in obtaining further information or receiving news releases and corporate documents from SEAIR may e-mail such request to seair@telus.net or visit the SEAIR web site at:www.seair.ca
FOR FURTHER INFORMATION PLEASE CONTACT:
Harold Kinasewich
SEAIR Inc.
T: 780 477 7188
F: 780 477 6622
E: seair@telus.net
This News Release includes certain “forward-looking statement” as such term is commonly understood. There can be no assurance that such statement will prove to be accurate. Actual results and future events could differ materially from those anticipated in such statements. Readers are cautioned not to place undue reliance on these forward-looking statements that speak only as of the date of this announcement. Important factors that could cause actual
results to differ materially from the Corporation’s expectations include, among others, the ongoing results of current search. All subsequent written and oral forward-looking statements attributable to the Corporation or persons acting on its behalf are expressly qualified in their entirety by this notice. While the Corporation anticipates that subsequent events and developments may cause the Corporation’s views to change, the Corporation specifically disclaims any obligation to update these forward-looking statements. These forward-looking
statements should not be relied upon as representing the Corporation’s views as of any date subsequent to the date of this release.
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