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Press release from CNW Group


Friday, May 13, 2011

SEPROTECH ANNOUNCES FIRST QUARTER FISCAL 2011 RESULTS13:29 EDT Friday, May 13, 2011OTTAWA, May 13 /CNW/ - Seprotech Systems Incorporated (TSX-V: SET; "Seprotech" or the "Company") announces the following unaudited results for the first quarter of fiscal 2011 with comparative unaudited results for the first quarter of fiscal 2010, and summary audited results for the fiscal year ended August 31, 2010. Three Months Ended November 30   Year Ended     August 31       201020092010              2009    $000$000$000$000Revenue   1,0241,2475,1907,399Gross Margin      2445782,0562,220Net Loss     (237)(29)(625)(3,110)Loss per share     (0.01)(0.07)(0.01)(0.07)The first quarter of the 2011 fiscal year ended November 30 2010 continued to reflect lower than anticipated revenue contribution from the Company's core wastewater treatment business unit. However, operations continued to benefit from ongoing execution of the repair contract for Department of National Defence reverse osmosis water purification units, and from parts and service activities.Revenues for the quarter from sales of rotating biological contactors ("RBCs") increased from $155 in fiscal 2009 to $203, a 31% improvement. However, this comparison is against a low, recessionary base and the bounce-back to pre-recession levels of RBC sales has not been as quick as anticipated. The decline in military contract revenues results largely from variances in timing of delivery of units for refurbishment and does not represent a contractual change in the amount of business. The Company had staffed for a higher level of RBC business, which was not achieved, and accordingly further cuts imposed on operating expenses were too late and insufficient to offset the decline in consolidated revenues and margins, resulting in a net loss for the quarter of $237 compared with a net loss of $29 for the same period in 2009. Comparative 2009 data has been changed to reflect discontinued operations in 2009.As more fully described, in the Company's press release dated May 10, 2011 the delay in completing the unaudited quarterly financial statements resulted from management's detection during the quarter of an overstatement of revenue by a material amount with respect to its financial statements for the quarters ended November 30, 2009, February 28, 2010 and May 31, 2010. The overstatement resulted from over-billing a customer over a period of approximately 12 months from July 2009.The delay in completing the fiscal 2010 audit, and consequent delay in completing both its annual and first and second quarters' 2011 required regulatory filings has led to the imposition on the Company of cease trade orders from the Ontario, British Columbia and Manitoba securities commissions (respectively, the "OSC", the "BCSC" and the "MSC"). On May 10, 2011 the Company completed its required annual regulatory filings (audited financial statements for fiscal year ended August 31, 2011, related MD&A and officer certifications) and expects to file its second quarter 2011 unaudited financial statements and related filings on or before May 17, 2011. At that time the Company intends to make application to the OSC for a full revocation of the cease trade order.Seprotech is a provider of pre-engineered water and wastewater treatment solutions to the municipal/land development, resource sector and military market place, including Reverse Osmosis water purification systems, ROTORDISK® biological sewage treatment package plants and CrystalBlue™ membrane-based water recycling systems.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. The TSX Venture Exchange has neither approved nor disapproved of the information contained herein. Some of the statements in this press release, including those relating to the Company's strategies and other statements that are predictive in nature, that depend upon or refer to future events or conditions, or that include words such as "expects", "anticipates", "intends", "plans", "believes", "estimates" or similar expressions, are forward-looking statements within the meaning of securities laws. Forward-looking statements include, without limitation, the information concerning possible or assumed future results of operations of the Company. These statements are not historical facts but instead represent only the Company's expectations, estimates and projections regarding future events. The Company does not undertake any obligation to update or release any revisions to these forward-looking statements to reflect events or circumstances after the date of this presentation or to reflect the occurrence of unanticipated events, except as required by law.For further information: Mr. Matthew Anderson Investor Relations, Tel: (613) 523-1641 Fax: (613) 731-0851