Sofame Energy Recovery Masthead
Sofame Investor NewsAugust 2012
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200 GW of Energy Wasted

In This Issue
Sofame Sales Maintain Solid Pace in Third Quarter
Sofame Reduces CO2 Emissions and Fuel Bills - Power Generation CHP Applications

Editor's Message

Welcome to our latest issue of Sofame Investor News - focused on what the company is doing to achieve its business plan and create value for shareholders.

 

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The Sofame Power Team 

Sofame Sales Maintain Solid Pace in Third Quarter

  

MONTREAL, August 30th, 2012 -Sofame Technologies Inc. (TSXV: SDW) (OTC: SFMGF) has reported net sales of $431,429 in the third quarter ended June 30th, and a net loss of ($ 33,950).

  • Q3 2012 Net Sales of $ 431,429 compared to $ 397,156 in Q3 2011
  • Q3 2012 Gross Profit of $ 139,425 (32.3%) compared to $ 147,621 (37.2%) in Q3 2011
  • Sales after nine months were $ 1,480,176 in 2012 compared to $ 1,388,834 in 2011
  • Gross Profit after nine months was $ 620,332 (41.9%) in 2012 versus $ 112,520 (8.1%) in 2011
  • Operating Expenses after nine months were $ 411,567 (27.8%) compared to $ 557,635 (40.2%) in 2011
  • Net Earnings after nine months were $ 91,364 (6.2%) compared to a loss of ($ 551,843) (-39.7%) in 2011
  • EBITDA after nine months in 2012 was $ 414,152 versus a negative (- $ 251,344) as of June 30, 2011
  • $740,337 of current debts were converted to shares in the quarter

Note: These are the financial highlights only. Management`s Discussion and Analysis, the consolidated financial statements, cash flows, and notes thereto of Sofame Technologies Inc. are available at www.sedar.com.

 

Comments on the Third Quarter Ending June 30, 2012

 

The third quarter of fiscal 2012 demonstrated solid progress by Sofame in delivering flue gas heat recovery and industrial water heating systems in the United States and Canada. Sofame's outsourcing model is working effectively by allowing the company to minimize fixed expenses while delivering projects. The loss is attributed partly to severance settlements after protracted negotiations with former employees, and to extended start-up and controls programming costs after two heating and heat recovery systems were delivered. These costs are included in Cost of Sales for the third quarter and had the effect of slightly reducing the gross profit margin. Six contracts were awarded so far this year and several contracts are in final stages of pricing negotiations. Discussions with Synergy, a local Chinese rep firm, are nearly complete, and Synergy has begun marketing Sofame's products in China. The conversion of $740,337 of current debts to common shares in April was a milestone in stabilizing the Sofame's finances in the months ahead. Negotiations to refinance the $250,000 bridge loan with a more appropriate asset-based arrangement are currently under way with lenders in the Boston area.

 

These results are better than expected considering that over the last three years, Sofame has had to adjust to challenging market conditions including a historically low natural gas price - as low as $ 1.85 per Dekatherm. Gas prices have recently recovered to about $2.40/DT. Another challenge overcome by the Company is low corporate spending budgets for cost-saving plant improvements. Sofame has survived tight capital conditions by implementing an outsourcing model which has allowed it to cut overhead and incur costs only when contracts are in production. Two-year payback has become the norm for Sofame's industrial water heating solutions.

 

The management team at Sofame is confident that with low overhead costs, contracts in hand, and seasoned leaders experienced in the HVAC industry at the helm of the company, the 2012 fiscal year will continue positively.


 

Sofame Reduces CO2 Emissions and Fuel Bills:

Power Generation Applications

 

LNG Terminal using a GE Turbine, Montoire de Bretagne, France

An exciting new opportunity for Sofame is the way that direct contact technology has been applied to electric power generation. The U.S. electricity market is the world's largest, comprising one-fifth of both global demand and power plant capacity.

 

With natural gas prices at historic lows compared to all other fuels, many utilities are converting to gas-fired turbines which are about 40% efficient. In a well-run power plant generating electricity, steam and cooling for air conditioning, co-generation brings efficiency up to 70%. Sofame can take that number up to 99% if there is a need and a use for hot water at 135�F. The potential additional fuel savings of 29% represent a corresponding reduction in CO2 emissions.

 

Today, institutions, universities, hospitals and industrial plants are also opting to generate their own electricity due to the availability of clean-firing gas turbines. This trend led Siemens and Alstom to build gas turbine plants in the United States to meet the demand. Since the demand for electricity is ever on the rise, Sofame's direct contact heat recovery technology can cost-effectively help reduce the impact on the atmosphere.

So Energy Efficient. Sofame.