RE: RE: newsi will repost this crap
Seprotech Systems Inc (C-SET) - News Release
Seprotech loses $361,000 in fiscal Q2
2011-05-17 15:21 ET - News Release
Shares issued 51,321,926
SET Close 2011-02-23 C$ 0.03
Mr. Matthew Anderson reports
SEPROTECH ANNOUNCES SECOND QUARTER FISCAL 2011 RESULTS
Seprotech Systems Inc. has released unaudited results for the second quarter of fiscal 2011 with comparative unaudited results for the second quarter of fiscal 2010 and unaudited results for the six months ended Feb. 28, 2011, with comparative unaudited results for the six months ended Feb. 28, 2010.
Three months ended Feb. 28, Six months ended Feb. 28, 2011 2010 2011 2010
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00Revenue $495 $1,439 $1,519 $2,686Gross margin 181 548 424 1,126Net (loss) (361) (58) (598) (94)(Loss) per share (0.01) (0.00) (0.01) (0.00)
During the quarter ended Feb. 28, 2011, the company was in process of dealing with the customer overbilling problem previously disclosed and discussed below. Most of the work required to correct the problem was undertaken during the quarter ended Feb. 28, 2011, including previously announced board and management changes. The resolution of these problems, which were a considerable distraction to management, and a concern of the company's suppliers and customers, had a negative impact on second-quarter 2011 financial results.
Revenues for the interim period ended Feb. 28, 2011, were $495,000 compared with $1,439,000, a decline of $943,000 or 66 per cent. Sales of military, automotive and industrial installations declined, from $516,000 in the second quarter of 2010 to $270,000 (48 per cent) in the second quarter of 2011, and sales of RBC units decreased from $432,000 in the second-quarter 2010 to $166,000 (62 per cent) in the second quarter of 2011. Parts and service revenues decreased from $491,000 in the second quarter of 2010 to $59,000 in the second quarter of 2011 (88 per cent). The decline in military business was largely a timing issue with respect to completion of contract activities. RBC sales dropped off with the 2009 recession, and although a recovery is anticipated, it was not apparent in the quarter. RBC sales are also subject to seasonality, with the quarter ended Feb. 28 typically being a slow period.
Gross margins for the interim period ended Feb. 28, 2011, were $181,000 or 36 per cent compared with $548,000 or 38 per cent during the same period in 2009, a 2-per-cent deterioration which reflected the relative reduction in RBC and parts and service revenues as a percentage of the overall revenue mix.
Staffing levels had been maintained in anticipation of additional contracts, and in expectation of the overbilling problem being resolved more quickly than was the case, so operating expenses remained at relatively high levels, resulting in a net loss for the quarter of $361,000 compared with a net loss of $58,000 for the same period in 2010. Comparative 2009 data have been changed to reflect discontinued operations in 2009.
As more fully described in the company's press release dated May 10, 2011, the delay in completing the unaudited quarterly financial statements resulted from management's detection during the quarter of an overstatement of revenue by a material amount with respect to its financial statements for the quarters ended Nov. 30, 2009, Feb. 28, 2010, and May 31, 2010. The overstatement resulted from overbilling a customer over a period of approximately 12 months from July, 2009.
The delay in completing the fiscal 2010 audit, and consequent delay in completing both its annual and first- and second-quarter 2011 required regulatory filings has led to the imposition on the company of cease-trade orders from the Ontario, British Columbia and Manitoba securities commissions. On May 10, 2011, the company completed its required annual regulatory filings (audited financial statements for fiscal year ended Aug. 31, 2011, related management discussion and analysis, and officer certifications) and on May 13, 2011, the company filed its first-quarter 2011 unaudited financial statements and related filings. The company is in the process of applying to the OSC for a full revocation of the cease-trade order.