Tuesday, 31 July 2007

JER Q3 Results Moving In Right Direction

JER (JER - TSX V) is beginning to show early signs of traction with the release of Q3 2007 (May 31) results, which saw revenues rise to $166,827. This was a 216% increase over Q2 2007 at $52,825 and 96% increase over Q1 at $85,272. Revenue for the nine months was $304,924.


The losses are still hefty as for Q3F07 JER recorded a net loss of $1,283,023, or $0.05 per share, as compared to a loss of $761,184, or $0.03 over Q3 2006. For the nine months ended May 31, 2007, JER recorded a net loss of $3,235,992, or $0.12 per share, as compared to a loss of $1,584,367, or $0.06 per share, for the same period in 2006.

However, what caught our eye was the following:

"Over the first three quarters of fiscal 2007, JER's new management team successfully overcame a number of challenges that had previously hindered the Company's performance and growth. JER is now producing top quality biocomposite compound pellets on an ongoing basis through both of its pellet production lines in Delta, British Columbia. Production is currently up to two shifts five days per week as well as scheduled overtime in order to meet sales obligations. Management is now focused on selling out both lines to nameplate operating capacity using three shifts per day."

Based on the above statement, we take it as an indication that the new management team under the leadership of CEO Ed Trueman has made serious strides forward especially in context of his statement that, "A number of customer relationships are maturing from initial formulation customization and trials to full production supply contracts. In addition, the Company's new sales and marketing team is generating more product interest, sample requests and trial orders than ever before," states Mr. Trueman. "We expect to reach the milestone of running three shifts daily on both our pellet production lines during Q4 2007."

This has been a long haul for JER to get to this point and we've certainly seen the ups and downs over the past couple of years that The Howard Group has been involved with the company. Obviously, sales are not near the point of paying the bills but with the late June announcement that JER had raised approximately $2 million in a $0.60 unit private placement and several million more dollars expected to close by mid-August, the Company has some breathing room.

The big issue that has plagued JER has been production problems. However, this was welcome news:


"The Company is now producing high quality biocomposite 4x8 foot panels in thicknesses of 3mm to 10mm, which it is selling for applications as diverse as wall boards, door skins, flooring substrates and outdoor sign backing materials. Capitalizing on the expertise of its new Chief Technology Officer, Mr. Peter Kelly, JER has also engaged in the development of a new die design that will allow it to achieve greater thicknesses and improved output. Installation of this die is expected in Q4 2007."

To read the news release click here.