Edmonton, Alberta - CV Technologies Inc. (TSX-VEN:CVQ) today announced the release of its second quarter Financial Statements. Mr. Kim Lucas, President & CEO, reports that the second quarter financials have continued to show the positive results of the Company's new two-pronged approach: expense restraints and revenue increases. CV Technologies has now completed its re-structuring, which saw a reduction of approximately 20 positions most of which were R&D based. CVT is well positioned to move forward with the commercialization of the HerbTechr product line and pharmaceutical candidates. Mr. Lucas further reports that CV Technologies will aggressively continue to expand its national and international marketing and distribution campaign to enhance HerbTechO product sales, with the goal of achieving positive earnings as soon as possible.
The consolidated net losses from continuing operations for the six-month period ending March 31, 2002, versus 2001 were $327,447 and $2,556,208, respectively. This significant decrease in net loss is a direct result of increasing sales and aggressive cost containment. Consolidated cash flow from operations for the three-month period ending March 31, 2002, was $13,538 compared with $10,221 for the first quarter ending December 31, 2001 and $(2,293,511) for the six-month period ending March 31, 2001. This is the first time in the Corporation's history that it has had two consecutive quarters of positive cash flow from operations, and is a result of the rationalization and increased sales focus. These net losses and cash flows are in line with management's expectations.
Revenues from natural health product sales for three- and six-month period ending March 31, 2002 were $390,021 and $766,331, respectively. This compares to $248,761 and $522,554 for the same periods of the previous year and represents increases of 57% and 47%, respectively. These increases are attributable to the increased volume of sales, resulting from the increased marketing focus, and to a focus on tightening the Company's discount structures.
Consistent with the previous year, a significant portion of the Company's revenue is derived from natural health product sales Compared to the previous periods, the gross margin increased from 40% to 70%. This is a direct effect of the Company's close monitoring of direct expenses, and realignment of its manufacturing processes. The Company will further enhance its marketing and distribution campaign for its premium quality natural health line of products in Canada and on a worldwide basis. Revenues from licenses and royalties are not expected to increase significantly until a strategic partnership for one of the Company's products is completed. The Company will continue to pursue licensing opportunities and collaborative alliances for its technologies, which is expected to contribute to future revenue generation. The extent and timing of such revenues, if any, will be dependent upon the scientific progress and acceptance of the products and the structure of proposed agr eements.
Total consolidated expenses for the three- and six-month period ending March 31, 2002 were $470,208 and $976,632, respectively, as compared to $1,642,168 and $2,924,879 for the three- and six-month period ending March 31, 2001.. The magnitude of these changes shows the companies commitment to achieving cost control and positive earnings as soon as possible.
CV Technologies' General & Administrative expenses were, $405,494, which represented 42% of the Company's total expenses. This decreased significantly compared to the previous year's expenses ($942,788 or 32% of total expenses). The cost associated with, business development, professional fees, insurance, investor relations, administration and corporate salaries and benefits, and various other expenses relating to the operation and growth of the Company are included in this category.
Quality Control and Product Development expenses were $339,913, and represented 35% of the Company's total expenses. This category saw a significant decrease, from $1,792,074 or 61% of the total expenses in 2001, when compared to the same six-month period the previous year. This decrease is mainly due to the reduction of major research & development expenditures, until such time as revenues permit re-investment in this area. The Company believes that by maintaining a small research and development program the essence of its research can be preserved.
Capital expenditures for six-month period ending March 31 totaled $62,303 of funds related to the maintenance and the continued prosecution of the Company's issued and pending patents and registered trademarks.
The complete Financial Statements & Notes, Management Discussion & Analysis and more information about CV Technologies, Inc. can be found at www.cvtechnologies.com
This news release contains forward-looking statements that involve risks and uncertainties, which may cause actual results to differ materially from the statements made. For this purpose, any statements that are contained herein that are not statements of historical fact may be deemed to be forward-looking statements. Without limiting the foregoing, the words "believes", "anticipates", "plans", "intends", "expects" and similar expressions are intended to identify forward-looking statements. Such risks and uncertainties include, but are not limited to, the need for capital, changing market conditions, completion of clinical trials, patient enrollment rates, uncertainty of pre-clinical, retrospective and early clinical trial results, the establishment of manufacturing processes and new corporate alliances, the timely development, regulatory approval and market acceptance of the Company's products, and other risks detailed from time to time in the Company's filings with Canadia n securities authorities.