Maintains Positive Cash Flow

MONTREAL, May 13 /PRNewswire-FirstCall/ -- Avensys Corporation (OTC Bulletin Board: AVNY; FRANKFURT WKN: A0M9YA), a leading manufacturer of high-end fiber optic components, and a distributor and integrator of environmental and process monitoring systems, today reported its financial results for the third quarter of fiscal year 2009, ended March 31, 2009.

Third Quarter Fiscal 2009 Results

Total consolidated revenue for the fiscal third quarter 2009 ended March 31, 2009, was $5.4 million compared to $5.8 million in the same period a year ago. For the third quarter of fiscal 2009, consolidated gross profit was $1.9 million compared to $2.0 million year-over-year. Gross margin as a percentage of revenues, for the quarter, increased to 35.4% compared to 34.7% in the same period a year ago. Cash flow generated by operations for the third quarter was $285,000 as compared to cash used in operations of $691,627 for the same period a year ago.

Net loss for the third quarter was $134,257 versus $273,779 in the same period of the previous year, and includes a provision for severance costs of $218,000.

Nine Month Fiscal 2009 Results

Total consolidated revenue for the nine months ended March 31, 2009, rose 12.5% to $16.5 million, from the $14.7 million recorded for the same period a year ago.

For the nine months ended March 31, 2009, gross profit on a consolidated basis was $5.5 million as compared to $5.3 million in the same period a year ago. During this period, gross margin was 33.2%, as a percentage of consolidated revenues, compared to 36.3% for the same period a year ago. Cash used in operations during the first nine months was $35,000, compared to cash used in operations of $1.6 million for the same period a year ago.

For the nine months ended March 31, 2009, net loss was $4.1 million as compared to $2.8 million during the same period a year ago. Included in the net loss of $4.1 million is a loss on impairment of goodwill of $3.9 million taken in the second quarter ended December 31, 2008.

Avensys Solutions

Avensys' environmental and process monitoring business, Avensys Solutions, continued to see growth, 25.1% for the current quarter, compared to the same period a year ago. This growth is a result of the positive integration from the Willer Engineering acquisition, which offset the negative impact of the current economic downturn, since revenues generally lagged behind our expectations.

During the third quarter, we further continued the restructuring of Avensys Solutions by reducing the size and related costs of our management team. Dr. Hassan Kassi was appointed chief operating officer (COO) of Avensys Inc., and is now responsible for the operations of both divisions: Avensys Tech and Avensys Solutions. In addition, Mr. Pierre Michaud was promoted as vice-president of Sales & Marketing for Avensys Solutions.

Avensys Tech

Avensys' optical component business, Avensys Tech, reported revenues for the third quarter period, ending March 31, 2009 of $2.9 million, a 23% decline from the $3.8 million reported for the same period a year earlier. Avensys Tech experienced a softening in demand from the telecommunications market during this quarter, particularly as it relates to undersea components and demodulators. This decline was partially offset by an increase in demand of multi-mode combiners for the industrial fiber laser market and an increase in revenues derived from contracts to build leading-edge high power fiber laser components and systems. We continue to ship substantial quantities of Fiber Bragg Gratings.

President and Chief Executive Officer, John G. Fraser of Avensys Corporation, commented, "We are confident that our efforts to diversify our offering, conserve cash, reduce costs and increase our sales efforts has allowed us to weather this challenging economic environment."

Mr. Fraser added, "Management believes that Avensys will survive the current economic downturn, however, the current capital structure may not be sufficient to support its future growth objectives and technology development. To this end, the Company has engaged Connecticut-based Lightwave Advisors Inc., a financial advisory firm, to assist the Company in reviewing and evaluating its financial and strategic alternatives."

About Avensys Corporation

Avensys Corporation operates Avensys Inc., its wholly-owned core subsidiary. Avensys Inc., through its manufacturing division Avensys Technologies, designs, manufactures, distributes, and markets high reliability optical components and modules as well as FBGs for the telecom market, and high power devices and sub-assemblies for the industrial market. Avensys Technologies is also a pioneer in the development of packaged fiber-based sensors and possesses licences in regards to leading edge intellectual property. Avensys Solutions, the other division of Avensys Inc., is an industry leader in providing instrumentation and integrated solutions for the monitoring of industrial processes and environmental surveillance applications for air, water and soil in the Canadian marketplace. To find out more about Avensys Solutions, please visit our website at www.avensyssolutions.com. For Avensys Corporation company news and updates you can also visit www.avensyscorporation.com.

Forward-Looking Statements:

Except for historical information contained herein, the statements in this news release are forward-looking statements that are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Forward-looking statements involve known and unknown risks and uncertainties, which may cause a company's actual results, performance and achievement in the future to differ materially from forecasted results, performance, and achievement. These risks and uncertainties are described in the Company's periodic filings with the Securities and Exchange Commission. The Company undertakes no obligation to publicly release the result of any revisions to these forward-looking statements that may be made to reflect events or circumstances after the date hereof, or to reflect the occurrence of unanticipated events or changes in the Company's plans or expectations.

     
    For more information, please contact:
    Ms. Sherine Attia
    Avensys Corporation
    Tel:  1.877.904.6030

Use of Non-GAAP Financial Measures

The Company provides non-GAAP financial measures, such as adjusted EBITDA, to complement its consolidated financial statements presented in accordance with GAAP. Non-GAAP financial measures do not have any standardized definition and, therefore, are unlikely to be comparable to similar measures presented by other reporting companies. These non-GAAP financial measures are intended to supplement the user's overall understanding of the Company's current financial and operating performance and its prospects for the future. Specifically, the Company believes the non-GAAP results provide useful information to both management and investors by identifying certain expenses, gains and losses that, when excluded from the GAAP results, may provide additional understanding of the Company's core operating results or business performance, which management uses to evaluate financial performance for purposes of planning for future periods. However, these non-GAAP financial measures are not intended to supersede or replace the Company's GAAP results.

The company uses adjusted EBITDA (earnings before interest, taxes, depreciation and amortization, adjusted for debentures and preferred shares accretion, and changes in fair value of derivative instruments) as a non-GAAP financial measure in this press release. A reconciliation of EBITDA to the operating loss for the first quarter of 2009 is as follows: 




                         Adjusted EBITDA
               (Expressed in thousands of US Dollars)

                                       For the Three  For the Nine
                                        Months Ended  Months Ended
                                          March 31,     March 31,
                                        2009   2008   2009   2008

    Net Income (Loss)                   (134) (274) (4,056) (2,835)
    Plus
     Interest expense, net                83    53     236     238
     Depreciation and amortization       262   323     834     940
     Loss on impairment of goodwill        -     -   3,889       -
     Loss on redemption of convertible
      debentures                           -     -       -   1,423
     Debentures and preferred shares
      accretion                          342   234     953     679
     Change in fair value of derivative
      financial instruments             (440)   97  (1,617)   (242)
     Income Tax Benefit                 (181) (275)   (538)   (870)

    Adjusted EBITDA (Loss)               (68)  158    (299)   (667)



    Condensed Financial Statements

                     Consolidated Statements of Operations
     (Expressed in thousands of U.S. Dollars, except for per share amounts)

                                 For the Three          For the Nine
                                 Months Ended           Months Ended
                                   March 31,              March 31,
                                2009       2008        2009        2008
                                  $          $           $           $

    Revenue                    5,410       5,781      16,497      14,659

    Cost of Revenue            3,496       3,775      11,020       9,336

    Gross Margin               1,914       2,006       5,477       5,323

    Operating Expenses

    Depreciation and
     amortization                208         222         644         712
    Selling, general and
     administration            1,790       1,676       5,062       4,786
    Loss on impairment of
     goodwill                      -           -       3,888           -
    Research and development     250         644       1,004       1,806

    Total Operating Expenses   2,248       2,542      10,598       7,304

    Loss from Operations        (334)       (536)     (5,121)     (1,981)

    Other Income (Expenses)       29        (359)        537      (2,355)
    Income Tax Benefit -
     Refundable tax credits      181         275         538         870
    Non-Controlling Interest       -           -           -           -
    Results of Discontinued
     Operations                  (10)        346         (10)        631

    Net Loss                    (134)       (274)     (4,056)     (2,835)

    Net Loss per share -
     Basic and Diluted         (0.00)      (0.00)      (0.04)      (0.03)

    Weighted Average
     Common Shares
     Outstanding          99,086,152  98,290,264  99,082,755  96,866,392



                          Consolidated Balance Sheets
                    (Expressed in thousands of U.S. Dollars)

                                                 March 31,   June 30,
                                                   2009        2008
                                                    $           $
                    ASSETS

    Current Assets                                8,114       9,836
    Property and equipment, net                   1,760       2,490
    Intangible assets                             2,753       3,879
    Goodwill                                          -       4,645
    Deferred financing costs                        311         405
    Deposits                                        125          85
    Total Assets                                 13,063      21,340

     LIABILITIES AND STOCKHOLDERS' EQUITY
    Total Current Liabilities                     8,460       9,137
    Long-term debt, less current portion             90         191
    Convertible debentures                        1,415       1,299
    Balance of purchase price payable             1,259       1,706
    Derivative financial instruments                117       1,364
    Total Liabilities                            11,341      13,697
    Non-controlling Interest                          -           8
    Total Stockholders' Equity                    1,722       7,635
    Total Liabilities and Stockholders'
     Equity                                      13,063      21,340

SOURCE Avensys Corporation