EDMONTON, AB (CVQ - TSX VEN). CV Technologies Inc. (CVT) today released its Q1 financial results for fiscal 2004 and Annual Report for fiscal 2003
Company President, CEO and Chief Scientific Officer, Dr. Jacqueline Shan says, "CVT has reached a turning point in its life. We have generated significant increases in sales and gross profit. More importantly, we have built the momentum to assure success in fiscal 2004. Our performance in the Q1 F'04 demonstrates that our strategy is working."
The strategies implemented in 2003 have resulted in an exceptionally strong first quarter in fiscal 2004. It was the first ever, profitable quarter in the Company's history. In the first quarter of 2004, CVT generated a profit of $265,679 or 16.4 % of sales versus a loss of $199,259 or -42% of sales for the same quarter last year. Q1 profitability was driven by a 341% increase in sales and a 2.2% improvement in the cost of goods sold which was attributable to greater operating efficiencies.
CVT's record sales in Q1 are due to the expansion of its retail distribution network combined with enhanced account productivity. Further, its initiatives in public relations and branding via science and business events, along with media advertising and corporate accounts has increased consumer demand for COLD-fX(R).
Q1's consolidated sales were $1.6 million versus $474,000 in the same quarter last year. CVT's accounts receivable was 349% of that of the first quarter in fiscal 2003. Higher accounts receivable were the direct result of record sales in this quarter.
Operating expenditures increased by $309,000 quarter-over-quarter. However, this represented an improvement from 105% of sales in Q1 F'03 to 50% of sales in Q1 F'04. These higher operating expenditures were due to 1) an aggressive marketing campaign that involved radio advertisements and sponsorships to raise public awareness of our lead product, COLD-fX, 2) higher costs incurred in clinical trials and research and development, 3) higher salaries for field marketing representatives and new management leadership; and 4) higher office and occupancy costs explained mostly by a one time charge associated with the start-up of CVT's commercialization office in Calgary Alberta.
Looking to the future, Dr. Shan says, "Thing are looking positive for 2004. Our distribution and sales will continue to increase as we further our penetration in Ontario, Quebec and Atlantic Canada. In the very near future we will announce more news in this particular area." Currently 60% of our sales are generated mostly in Western Canada while 90% of our sales are from CVT's lead product, COLD-fX. Continued growth opportunities are also possible by introducing new marketing programs for CVT's other ChemBioPrintÖ based products."
CV Technologies also released its annual report for fiscal 2003. Fiscal 2003 represented a year in transition. Going into 2003, management at CV Technologies recognized numerous priorities: 1) need to strengthen and expand its distribution network, 2) need to increase corporate and COLD-fX brand awareness and consumer demands; and 3) need to continue clinical research and R&D activities which further differentiates CVT from its competitors.
These efforts had contributed to a consolidated loss of $1.80 million in fiscal 2003 versus $1.18 million in fiscal 2002. The increase in losses can be explained by i) a one-time charge of $364,000 associated with the termination of an Edmonton office lease, ii) a more than two fold increase in the cost of marketing to maximize sales and distribution, iii) 30% higher salaries and benefits as CVT strengthened its management team; iv) higher office and occupancy charges associated with consulting charges and foreign exchanges losses, from $167,323 to $309,795.
However, CVT improved its current ratios by reducing its current liabilities from $900,100 to $529,382, as a result of the termination of that Edmonton office lease and improved cash flow management. CVT raised $1.39 million through private placements, warrant and option exercises in preparation for an aggressive retail program to be launched in fiscal 2004.
Dr. Shan said, "The expenditures were part of our over-all strategy to get the word out to the public about COLD-fX and its effectiveness. And it's working."