Forbes Medi-Tech Inc. (TSE:FMI and NASDAQ:FMTI) announced that it has secured sterols supply agreements for up to $40 million over a two-year period based on customer forecasts. This includes a major supply agreement between its manufacturing joint venture, Phyto-Source LP, and a large multinational company. The identity of the customer and contractual terms and conditions, for competitive reasons, will not be disclosed.
"This is a tremendous achievement for Forbes," said Charles Butt, President and CEO of Forbes Medi-Tech Inc. "We now have contracts for over 80% of our plant's capacity. These contracts are a true testament to our sterol manufacturing capabilities and the increasing demand for phytosterols in today's functional food and dietary supplement market."
Manufacturing of the phytosterols will be conducted by the Phyto-Source joint venture manufacturing facility in Pasadena, Texas, a 50-50 joint venture between Forbes and Chusei (USA) Inc. Forbes anticipates recognizing approximately 60 --70 % of the total revenue under these supply agreements on its income statement.
Approximately 800 tonnes of Phyto-Source's 1000 tonne annual production capacity has been secured by these new and existing contracts.
Under the new and existing contracts Forbes' revenue is scheduled to increase for at least three quarters commencing in the fourth quarter of 2002. Based on these contracts, the Company has increased its revenue projections for 2002 to $8 million. As the Company is continuing to negotiate additional sterols contracts, revenue guidance for 2003 will be announced in the fourth quarter of 2002.