Post by
Flexy6 on Dec 09, 2005 12:33pm
President’s Message to Shareholders
President’s Message to Shareholders
December 6, 2005
Good evening, Ladies and Gentlemen.
This evening, I would like to briefly update you about progress your company has made in its current status, and most importantly – where we go from here.
For this report, please allow me to expand the reporting period to the present time, even though YE was almost half a year ago.
In the all important financial area of your company, we report somewhat lower operating costs, close to $900,000 dollars in technology income, $800,000 dollars in gross sales of proprietary equipment, with an additional $120,000 in technology income subsequent to the year end. It still left the company with a $1,600,000 (6 cents/share) loss for FY05, ending June 30, 2005. This needs to be turned around.
Important activities, especially marketing and the needed upgrading of critical equipment in our North Vancouver plant, have been held back by a lack of operating funds. With the very recent refinancing of the company, we have the opportunity to move forward on a few critical fronts. We have already purchased an in-house evaporator which, when installed, along with required plant maintenance, will simultaneously improve the plant economics and make it possible to significantly increase both solid and liquid fertilizer production. The $2M private placement funding along with a further planned non-dilutive investment, should give IBR the freedom to start our first full-scale majority-owned plant. The proposed further investment would be obtained by selling a portion of that plant’s future profits.
On the R&D side it has been a year of successes. The collaboration with three strong research institutions, including the National Research Council funded 18 month program, is well on the way to yielding the successes we targeted. These in-house, and outside contracted activities are focused on continuing to make incremental improvements to the IBR process, to the existing IBR fertilizers, and creating exciting new products, all with the goal of making the technology and products more easily marketable. Although we are unable to talk about some of the important details until the company can put the imperative intellectual property security in place, we can assure you that this is an exciting area for the future of your company. Partly in recognition of the scientific/economic-targeted progress made by our people and our outside partners, the NRC has just awarded IBR another $108K grant for the researching and commercialization of a brand new agricultural product with very large market potential. These R&D initiatives will continue on an expanded pace in this current year.
The past year’s commercial growing trials again corroborated previous exciting results. For example, on our potato trials the growers more than doubled their per acre profits by adding Genica liquid and solid fertilizer, at a cost of 6% of their total costs for the year.
Technology sales and plant ownership positions by IBR will largely determine shareholder value in the immediate future. Although IBR will not receive further license fees from the China market, we are confident that IBR will have future proprietary equipment sales to that country. I am pleased to report that the first plant in China demonstrated its successful commissioning last spring. The IBR EATAD technology is working as anticipated. This is an important milestone, if for no other reason than to demonstrate that the process works independently of climate, geography and feedstock variations.
The New York area license sale, although frustratingly delayed, nevertheless holds promise for multiple plant starts and license sales in the near future. Permitting and funding for these plants are reportedly almost complete with the first plant now projected to start in early spring, with equipment orders immediately thereafter.
IBR is hopeful that Ben will be able to deliver a further major licensing deal in Iran. We are also working on a deal in Malaysia, with further interest prospects in Toronto, Quebec, the Middle East, India and Holland.
Currently, our most important project to move IBR’s marketing efforts forward is the prospect of local dairy and chicken manure processing plants. We hope to have the financing in place shortly to proceed with one or both of these plants. IBR would earn operating profits in addition to receiving full license and royalty income streams. In both cases, IBR would be the majority owner.
On the issue of Corporate Governance, in addition to the two quality Directors added last year, the board is actively recruiting one or two more strong independent Directors. We want to acknowledge the contributions of existing directors, and their willingness to serve you, the shareholders, in spite of the risks and liabilities attached, especially since the company has not been able to provide Directors & Officers’ insurance. We also want to acknowledge the long-term contribution made by John McLeod, who passed away in September.
I wish to emphasize that the company is proud of its hardworking and dedicated employees, especially their cheerfulness in the face of some rather insecure financial times. We thank them.
In summary, I invite you to challenge your company to take advantage of the development work done in the past, and specifically set the following twelve-month goals for the management, employees, and your Board of Directors to achieve:
1. Make the Company profitable
2. Start building one plant with a significant company ownership position
3. One additional plant to be started by a license-purchaser
4. Company to add shareholder value, with the market then attributing a higher share price
I hope that the board and management can stand in front of you in one year and report success on all of the above targets.
Thank you for your support and attendance here tonight.
Elmer B. Friesen
President & CEO
International Bio Recovery Corp.