WILLIAMSVILLE, N.Y., April 13 /PRNewswire-FirstCall/ -- CVF Technologies Corporation (BULLETIN BOARD: CNVT) a holding company that is involved in the business of developing and managing early stage companies primarily engaged in the clean-tech sector today reported financial results for the fiscal year 2006.
2006 Financial Results - CVF's financial results can best be understood by examining the growth prospects for its portfolio companies and the strength of its balance sheet. In this report CVF will again emphasize these two areas. Judging CVF on its income statement alone is not very helpful due to significant changes in revenue and income that can occur from quarter to quarter and from year to year. An example of how this revenue fluctuation can occur is when CVF's ownership interest in one of its portfolio companies goes below 50%. The portfolio company may still have significant revenue as does Biorem whose revenue was cdn $12,008,000 for year ended December 31, 2006. However that revenue is not shown in CVF's income statement. It is therefore important to focus on CVF's business model which is to invest its capital and human resources primarily in early stage, clean-tech companies with significant growth potential. The intent is to develop these companies until they either go public as did Biorem in January 2005, or are acquired as was Gemprint in December 2005.
When these events occur there will be a significant increase in CVF's income, as there was in 2005, when Gemprint was sold. In order to pass this realization of value to its shareholders CVF may initiate a stock repurchase program as it did in 2006, when it repurchased a total of $1,626,400 of its preferred and common shares, or it may decide to issue dividends to its shareholders.
Portfolio Highlights - Biorem - (24% owned by CVF) had revenue of cdn $12,008,000 in 2006 (which is not included in CVF's consolidated revenue due to GAAP accounting rules) representing a new annual record for the Company after 6 years of continuous growth. The Company's long sales cycle and the variability in the size of the Company's orders may cause revenue fluctuations period to period. The reduced bookings toward the end of 2006 will slow the revenue in early 2007, however the majority of the new business opportunities remain intact and we expect those opportunities to be realized in 2007. The funnel of sales opportunities is significant and Biorem is aggressively working to convert these to orders in 2007. Working towards this goal, on April 3, 2007, Biorem announced a purchase order for cdn $1.6 million for odor control at a sewage waste plant in Hawaii.
Milestones reached by Biorem during 2006 were as follows:
-- The Company continued to invest in sales staff and research and
development activities. In 2006, the new Mytilus(TM) biotrickling
filter was introduced into the field with 5 installations now completed
or in construction. The successful introduction of this product line
has significantly broadened the sales opportunities for the Company.
Biorem is now the only biological odor management company that has a
comprehensive line of both biofilters and biotrickling filters for the
growing market.
-- Two new patent applications were filed for the use of a novel filter
media in biofilters and biotrickling filters. In addition, new
municipal Synergy(TM) products were introduced that incorporate
combined biological processes for reliable treatment results over a
broad range of air inlet conditions.
-- Progress was made in new markets areas in industry as well as
internationally. Two projects worth in excess of $2 million total were
completed or in progress in 2006 for odor control in new municipal
solid waste composting installations. Additionally, two municipal
biofilter systems were installed in Israel with high customer
satisfaction, further demonstrating Biorem's ability to compete for and
expand its business internationally.
-- In 2006 Biorem strengthened both the management team and the Board of
Directors. New positions of Director of Municipal Sales and VP of
Research were added, recognizing the importance of these two functions
in both near term and short term growth. Sales managers located in each
US sales region and a program to proactively manage the network of 26
manufacturers' reps provides improved representation across the
continent that is expected to result in increased sales productivity.
Internally, applications engineering and customer service groups were
created to improve customer response and satisfaction.
-- Two new board members were added in 2006 who provided excellent
supplementary guidance to the Company in strategic direction for
augmenting development of sales growth.
During 2006 Biorem completed a common share offering of 1,700,000 common shares at cdn $2.00 per share for gross proceeds of cdn $3,400,000. As of December 31, 2006 Biorem had cash and cash equivalents in the amount of cdn $4,449,000 and net working capital of cdn $5,817,500.
Xylodyne Corporation - (40% owned by CVF) In March and April of 2006 CVF invested $325,000 (Cdn) in Xylodyne Corporation, a newly formed company which focuses on the development and distribution of 4-wheel drive off road electric vehicles. These vehicles are offered to the personal recreational market as well as to government agencies, conservation authorities and the mining industry. Xylodyne is currently focusing its efforts on building its distribution network for its vehicles in the US and Canada. It has now signed dealers in New York, Delaware, Maryland, Massachusetts, and Ontario as it builds its US and Canadian dealer network for its electric vehicles. CVF owns 40% of the equity of the company plus holds a two year note for $313,000 (Cdn) from Xylodyne. Xylodyne achieved sales of $1,330,600 for its first calendar year (which represented 9 months of operations) and in 2007 Xylodyne will continue to aggressively work to expand its dealer network in the northeastern United States and Canada.
Ecoval - (85% owned by CVF) has made significant progress in Canada in 2006. Its licensee, Scotts Canada, has launched two additional herbicide sizes in 2006 for a total of three under the Scotts Ecosense brand name. The Ecosense herbicide is available in every major retail chain in Canada. Ecoval has also signed an exclusive distribution agreement with Plant Products the largest commercial, non-retail horticultural distributor in Canada for Ecoval's EcoClear herbicide product. The Scotts and Plant Products agreements are expected to make Ecoval's herbicide the most dominant of the non-chemical herbicide products in Canada. Ecoval now plans to leverage off its success in Canada to begin an aggressive marketing campaign in the US as it seeks out partners similar to what has been achieved in Canada. Ecoval is currently negotiating with several large multinational corporations to offer its herbicide product to the US market in an exclusive distribution or license agreement. This agreement when finalized has the potential to produce significant income to Ecoval in the future years. Ecoval hopes to complete these negotiations in the next 3-4 months. Ecoval is also in discussions with a number of companies to add additional products to the company.
G.P. Royalty Distribution Corporation. (formerly Gemprint Corp,) - (65% owned by CVF) was formed to receive potential royalty distributions from Collectors Universe Corp who purchased the assets of Gemprint in December 2005. The royalty agreement is for $1 for each Gemprint over 100,000 Gemprints per year until December 2010. Based on Collectors Universe's recent press releases they have made their G Cal diamond grading program a core part of their business model and Gemprint is a key component of it.
Petrozyme - (50% owned by CVF) is continuing to explore marketing opportunities for its proprietary biologically based remediation technologies for the petroleum and petrochemical industries. The company is seeking a partnership or licensing agreement with a major North American environmental company as well as licensing agreements in the Middle East.
CVF GAAP financial results for 2006 - On a consolidated basis CVF reported an increase in revenue of $1,054,700 for 2006 primarily due to an increase in sales from Xylodyne, its new investee company. It should also be noted that Biorem's revenue of cdn $12,008,000 for 2006 is not consolidated in CVF's financial statements as CVF owns less than 50% of Biorem.
Net loss for 2006 of $1,845,100 compared to income of $5,299,800 in 2005. This equates to a loss per share of $0.14 for 2006 compared to an income per share of $0.36 for 2005. This significant fluctuation of income is a result of CVF's business model, periodically realizing gains from the sale of all or a portion of its portfolio companies.
Three items accounted for the significant income in 2005 as follows:
-- CVF realized a net profit of $4,244,300 in 2005 from the sale of
Gemprint.
-- CVF realized gain of $1,541,600 in 2005 from sales of Biorem shares in
2005. CVF did not sell any of its shares in Biorem in 2006.
-- In 2005 CVF's portion of Biorem's income was $90,000 compared to CVF's
portion of Biorem's loss in 2006 of $188,100.
CVF Technologies Corporation (http://www.cvfcorp.com/) is headquartered in Williamsville, New York. CVF is a technology development company, whose principal business is sourcing, funding and managing emerging pre-public, clean-tech companies with significant market potential.
Certain statements made in this press release which are not historical facts are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Investors are cautioned that these statements involve risks and uncertainties, which may cause actual results or achievements to be materially different from any future results and achievements expressed or implied by the forward-looking statements. These risks include, but are not limited to, product demand and market acceptance risks for the products and technologies of CVF's subsidiary companies and investees; the impact of competitive products, technologies and pricing; delays or difficulties in developing, producing, testing and selling new products and technologies; the ability of the company's subsidiaries and investees to obtain necessary financing for their operations and to consummate initial public offerings of their stock; the effect of the Company's accounting policies; the effect of trade restrictions and other risks detailed in the company's Statement on Form 10-SB/A filed with the U.S. Securities and Exchange Commission and any subsequent filings with the Commission.
For more information please contact: http://www.cvfcorp.com/
