May 18, 2011

Microbix reports Q2 results

For the quarter ended March 31, 2011, Microbix Biosystems Inc. reported revenues of CAD1,761,905 (US$1,714,800), a 4% decrease from CAD1,831,186 (US$1,782,200) for the same period in 2010, but on a currency-adjusted basis sales volume grew by 3% compared to the same quarter last year when record sales were recorded.

For six months, sales decreased to CAD2,574,599 (US$2,505,800) from CAD3,057,724 (US$2,976,000), a decline of 16% over the same period in 2010.  Lower sales were primarily due to a one-time reduction in purchases by a large customer in the first quarter, as well as the strong Canadian dollar as Microbix records most of its sales in US dollars and Euros.

Operating expenses were 6% higher due to start-up costs related to the Hunan Joint Venture.  These results have contributed to the higher operating loss for the quarter which was CAD629,086 (US$612,300) compared to an operating loss of CAD576,177 (US$560,800) for the same period last year. Cash flow for the quarter was negative CAD44,749 (US$43,600) compared to positive CAD653,930 (US$636,400) for the same period last year.  This difference was the result of reduced cash from operations, as well as a smaller equity financing late in the quarter. The net loss for six months was CAD1,363,447 (US$1,327,000) compared to a net loss of CAD1,316,207 (US$1,281,000) in the previous year.

The company was recently informed by Hunan Province of certain fundamental changes they want to make to the terms and conditions of the originally signed Joint Venture Agreement. In Microbix's opinion this would significantly raise the risk on the project for shareholders. Microbix and Crucible management are working to bridge the gap with Hunan, and discussions are ongoing with the Government of Hunan Province and China's Central Government. Earlier in the year, Microbix announced it had formed Crucible International Biotechnologies Corp. which is responsible for all activities relating to the Hunan joint venture in China.

Microbix CEO, William J. Gastle, said, "Virology product volume increased again this quarter as we continue expanding our diagnostic product offering. We have additional companies evaluating licensing Urokinase because of increased interest in effective, safe, and approved pharmaceuticals. LumiSort has made significant progress towards commercialisation as the new intellectual property is broadened and the invention is being reduced to practice in the next few months. As a major shareholder, I am pleased with the company's second quarter performance and I am very excited about recent developments with LumiSort. We are working to resolve the issues with Hunan as soon as possible."