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CVF Technologies Corporation Reports 1st Quarter Results

Posted on: Tuesday, 15 May 2007, 18:00 CDT

WILLIAMSVILLE, N.Y., May 15 /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 first quarter 2007.

First Quarter 2007 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 $1,770,000 for the first quarter 2007. 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 $1,770,000 in the first quarter 2007 (which is not included in CVF's consolidated revenue due to GAAP accounting rules). 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 slowed the revenue in early 2007, however the majority of the new business opportunities remain intact and Biorem expects 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, subsequent to quarter end, on April 3, 2007, Biorem announced a purchase order for cdn $1.6 million for odor control at a sewage waste plant in Hawaii, cdn $850,000 of new orders in Ontario and on May 1 announced a cdn $750,000 order for Coyote Springs, Nevada.

The order backlog, which was cdn $7,500,000 at December 31, 2006 increased to over cdn $9,000,000 reflecting the impact of these orders received soon after the end of the quarter. Two thirds of the order backlog is scheduled for completion by December 31, 2007.

The order for Coyote Springs is part of a new waster water treatment plant that will service a new 43,000 acre, 65 square mile community. Reuse water from the plant will be utilized for irrigation for landscaping and golf courses within the community. When finished, Coyote Springs will bring over 150,000 homes and nearly a half-million jobs to one of the fastest growing regions in America.

Commenting on the 1st quarter operating results, Peter Bruijns, Biorem's President and CEO said, "We are pleased to see an increase in the momentum on our orders, which should have a positive impact on revenue in the last half of this fiscal year."

The gross margin of 35% is up from the gross margin reported in 2006 of 26%. Gross profit in the quarter of cdn $618,000 is down cdn $226,000 from 2006 due to the decrease in revenue. 2006 gross margin was negatively impacted by two large municipal projects that were sold at less than normally achieved margins due to sub-contracted flow through costs.

The decline in gross profit was partially offset by a cdn $69,000 or 7% reduction in total operating expenses compared to the prior year. The decrease is mainly attributable to reduced selling expenses. Variable selling expenses are lower due to the decrease in revenue. Discretionary travel and marketing expenses are also lower this year compared to 2006.

BIOREM's cash position and working capital position at March 31, 2007 remained strong at cdn $3,950,000 (which is not included in CVF's consolidated balance sheet due to GAAP accounting rules).

Xylodyne Corporation -- (40% owned by CVF) In March and April of 2006 CVF invested cdn $325,000 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 $662,200 for its first quarter 2007 and a profit of $51,500 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) 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 the first quarter 2007 -- On a consolidated basis CVF reported an increase in revenue of $661,000 for the first quarter 2007 due to the sales from Xylodyne, its new investee company (their were no sales in the first quarter 2006 as Xylodyne began operations in April 2006).

Net loss for the first quarter 2007 of $437,900 compared to net loss of $480,800 in the first quarter 2006. This equates to a loss per share of $0.03 for the first quarter 2007 compared to a loss per share of $0.04 for the first quarter 2006.

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.

CVF Technologies Corporation

CONTACT: Robert L. Miller, Chief Financial Officer, +1-716-565-4711, orJeffrey Dreben, President & CEO, +1-716-565-4711, both of CVF TechnologiesCorporation

Web site: http://www.cvfcorp.com/

Source: PRNewswire-FirstCall

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