Ceapro Reports First Quarter 2012 Financial Results and Provides a Corporate Update
EDMONTON, ALBERTA -- (Marketwire) -- 05/28/12 -- Ceapro Inc. (TSX VENTURE: CZO) ("Ceapro" or "the Company") today released financial results for the quarter ended March 31, 2012 and provided a corporate update.
FINANCIAL RESULTS FOR THE QUARTER ENDED MARCH 31, 2012
-- Total sales of $1,190,000 compared to $1,534,000 in 2011. -- Income from operations of $17,000 compared to $353,000 in 2011 -- Net loss of $4,000 compared to a net income of $330,000 for 2011.
"Our sales revenue and profits were lower in the first quarter versus last year and were the result of normal quarterly fluctuations", said Gilles Gagnon, Acting CEO of Ceapro. "Our results are best measured over the course of the entire year due to timing of orders and because different product mixes with different gross margins can have a big influence on quarterly results. Our operations in the quarter demonstrated solid operational performance while extra expenditures were required for launching a marketing study and to conduct a feasibility study related to manufacturing activities. We have continued to invest in our Company, our solid R&D program, and new technology to ensure Ceapro remains well noticed on the world innovation stage", added Mr. Gagnon.
CORPORATE UPDATE
Marketing and Sales:
New business:
-- First sales orders received from new customers serviced by Ross Organics
in the US Southwest
-- New distribution partners in Europe get strong interest in Ceapro
products. During the first quarter several new companies have begun
formulating with Ceapro products and placing small initial orders. We
are very pleased with their rapid acceptance and positive reception as
our experience has shown that the sales cycle will often run two years
or even longer for new customers.
Marketing strategy:
During the first quarter we launched a strategic marketing review to help determine the best way to increase the distribution and sales of Ceapro products across the globe. A US based company with exposure to the personal care industry was engaged to do a comprehensive review of our company and products, assess the markets, and determine the best strategy to grow. While we have successfully focused most of our limited resources on developing good products and processes as a sound foundation for success, it is now time to invest significantly in building out our marketing and sales network with the appropriate expertise to assist us in that regard. We will also take the opportunity to assess the branding of Ceapro.
Business Development:
-- Completion of a major world-wide avenanthramide technology licensing
agreement with Agriculture and Agri-Food Canada to allow product
expansion to several indications in cosmetics and potential access to
new food and nutraceutical markets
-- Ongoing discussions with potential distributors in European and Asia
Pacific markets .
Research and Development:
Our research and collaboration efforts have continued to generate positive news which we expect will translate into large gains in the future for Ceapro.
Avenanthramides:
-- The recent licensing of key avenanthramide process technology from
Agriculture and Agri-Foods Canada is a very important milestone. This
technology should support the growth of our flagship avenanthramide
products by allowing for greater increases in output capacity and then
enabling to pursue new markets like functional foods which were not
previously possible due to the limited commercial supply. We believe
that this market offers a great potential for our avenanthramides.
Research data from other parties also suggest that consumption of
avenanthramides have the ability to provide significant therapeutic
benefits for conditions such as inflammatory bowel syndrome, colon
cancer, and exercise induced inflammation. Given the expected
availability of higher quantities and concentrations of avenanthramides,
we look forward to the development of formulations suitable for the
functional food, nutraceutical and pharmaceutical areas
Beta Glucan
-- Beta glucan is another oat product with high potential. Ceapro customers
currently utilize this ingredient for skin moisturization, anti-aging,
wound and skin repair formulations. In order to further support new
claims, we recently completed a study demonstrating superior and longer
lasting skin moisturization of Ceapro Oat Beta Glucan versus Hyaluronic
acid, a similar molecular weight product also used for this indication.,
-- Beta glucan is also the ingredient in oats that is well known to
significantly reduce cholesterol levels ("the bad one"). In light of
this opportunity, Ceapro has successfully created a high purity powder
form of beta glucan from its liquid product at pilot scale using a novel
supercritical fluid drying process. This may allow for new formulations
to be launched into new markets like functional foods and drinks and
pharmaceuticals. The technology has attracted the interest of third
parties and may provide Ceapro an opportunity to generate additional
value through out-licensing.
Spearmint:
-- Yield
Our spearmint program is beginning its third growing season and we have
developed prototype extracts for analysis at our in-vitro lab in
Charlottetown. While we are relatively early in our studies, we are very
pleased with the results to date. We have previously obtained
concentrations of rosmarinic acid as high as 13.5% in our plants with
the super spearmint variety licensed from University of Guelph which is
up to 27 times higher than the usual concentration of 0.5% found in
regular spearmint varieties. This type of yield will provide a strong
competitive advantage for Ceapro.
-- Clinical trial
There is currently a very interesting clinical trial being conducted by
researchers at University of Guelph. Given rosmarinic acid has
recognized anti-inflammatory properties, the goal of this study is to
confirm expected beneficial effects of drinking a spearmint tea for the
improvement of conditions like osteoarthritis and cartilage degradation
of the knee, a patholology that affects more than 10% of the Canadian
population. This two arms controlled trial which has been set for 50
participants had already enrolled 40 participants. They will randomly
consume two cups of spearmint tea each day for four months- either a
regular spearmint tea or a super spearmint tea with high concentration
of rosmarinic acid. Expected results will be to confirm efficacy, if any
and to compare any dose response relationship of different
concentrations of rosmarinic acid.
-- Equine and Companion Animal Market
Before initiating the human clinical trial with the spearmint tea,
University of Guelph researchers conducted a study with horses where
they indeed demonstrated the positive effects on inflammation when
horses consumed the spearmint. Potential markets for equine and senior
companion animals where inflammation is a major issue are definitely
significant markets to consider in the future.
We have high expectations for this spearmint product for which we have obtained the rights for all indications from the University of Guelph. This is a great example of one plant that can produce several therapeutic products for several large markets that need solutions and represents a good example of how Ceapro may transition into the functional food or nutraceutical markets. It is also a great example of Canadian collaboration on the world stage and we expect this will be very beneficial for all the participants, and Canadian agriculture producers who may have opportunities to grow large volumes of a novel crop.
"As you can see, at Ceapro, we have a lot of exciting things to look forward in 2012 and beyond. The Ceapro team has worked very hard to develop these attractive growth opportunities and we anticipate this will result in increases in shareholder value", commented Mr. Gagnon.
The complete audited annual report and financial statements are available for review on SEDAR at http://sedar.com/Ceapro and on the Company's website at www.ceapro.com.
About Ceapro Inc.
Ceapro Inc. is a Canadian growth-stage biotechnology company. Primary business activities relate to the development and commercialization of active ingredients for personal care and cosmetic industries using proprietary technology and natural, renewable resources. To learn more about Ceapro, visit www.ceapro.com.
CEAPRO INC.
Consolidated Statements of Net Income (loss) and Comprehensive Income (loss)
Unaudited
Three Months Ended March 31,
2012 2011
$ $
(restated, note 18)
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Revenue 1,189,513 1,533,594
Cost of goods sold 520,694 612,248
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Gross margin 668,819 921,346
Research and product development 162,472 187,275
General and administration 391,888 304,511
Sales and marketing 71,426 30,028
Finance costs (note 12) 25,997 46,506
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Income from operations 17,036 353,026
Other operating loss (note 11) 20,552 23,063
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Net income (loss) and
comprehensive income (loss) for
the period (3,516) 329,963
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Net income (loss) per common
share:
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Basic (0.00) 0.01
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Diluted (0.00) 0.01
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Weighted average number of
common shares outstanding 60,278,948 56,508,241
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Neither TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in the policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release.
Contacts: Branko Jankovic Vice President and CFO Ceapro Inc. Telephone (Edmonton): 780.917.8376 Email: bjankovic@ceapro.com
Source: Ceapro Inc.
Released May 28, 2012