Donlar Corporation Announces Second Quarter and First Half 2003 Results
BEDFORD PARK, Ill.--Aug. 1, 20039, 2003--Donlar Corporation (OTC: DLRC), a world leader in green chemistry, products and technology, today announced that the Company reported revenue of approximately $1.1 million for the second quarter ended June 30, 2003, up 12% from revenue reported for the second quarter of 2002. For the first six months of 2003, the Company reported revenue of approximately $2.2 million, up 17% over the same time period in 2002.The Company reported revenue for the second quarter of 2003 of $1,136,783 compared to $1,014,403 for the second quarter of 2002, an increase of approximately 12%. The Company continues to see its main revenue growth in the oil field services industry and continues to develop sales in the agricultural market. Net loss in the second quarter of 2003 was reduced to approximately $1.2 million, compared to a net loss of $1.6 million for the second quarter of 2002. The decrease in net loss was primarily attributable to a reduction in interest expense relating to conversion of debt.
The Company reported revenue for the first half of 2003 of $2,218,898 compared to $1,892,087 for the first six months of 2002, an increase of approximately 17%. The Company reported a net loss in the first six months of 2003 of $5.6 million compared to a net loss of approximately $4.1 million for the comparable six-month period in 2002. The increase in net loss was primarily attributable to expenses relating to the merger of Donlar Corporation and Donlar Biosyntrex Corporation in the first quarter 2003, as well as the conversion of debt.
Larry Koskan, President and CEO of Donlar, stated: "We are pleased with the acceptance of Donlar's scale and corrosion inhibitor products in the oil production, water treatment, detergents and mining industries. Our agricultural business has continued to develop with positive results in plant health and yield enhancement in the premium vegetable markets. Our markets are responding to our protein polymer technology, which is leading to revenue growth and wider acceptance of Donlar's products. The Company continues to focus on achieving sales growth in all our markets, maintaining good expense control and developing new products, all demonstrating our commitment of quality products and services to our customers, employees and shareholders."
About Donlar
Donlar Corporation is at the forefront of providing a new class of protein biopolymers that help customers by providing solutions while satisfying environmental concerns for the creation of non-toxic products for a wide range of industrial, agricultural and consumer markets. The Company's non-hazardous, non-toxic, hypoallergenic, environmentally friendly and biodegradable thermal polyaspartate (TPA) biopolymers are protected by 187 Company-owned patents. The Company's applications for its products include the markets of oil field operations, fertilizers, detergents and water treatment. Donlar's beta-protein biopolymers are manufactured in its 50,000 square foot facility located in Peru, Illinois. (www.donlar.com)
This press release contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. Actual results could differ materially from those projected in the forward-looking statements, which involve a number of risks and uncertainties. The contents of this release should be considered in conjunction with the risk factors in Donlar Corporation's most recent filings with the Securities and Exchange Commission on Forms 10-QSB and 10-KSB and current reports on Form 8-K.
DONLAR CORPORATION
CONDENSED BALANCE SHEET (UNAUDITED)
JUNE 30, 2003
ASSETS
Current assets
Cash $91,320
Receivables 311,920
Inventories, net 724,835
Prepaid expenses 74,173
-------------
Total current assets 1,202,248
Property and equipment, net 8,356,279
Patents 1,748,876
Other assets 239,970
-------------
Total assets $11,547,373
=============
LIABILITIES AND SHAREHOLDERS' DEFICIT
Current liabilities
Current portion of convertible debt $21,033,352
Short term notes payable 71,000
Accounts payable 648,699
Accrued expenses 4,229,738
-------------
Total current liabilities 25,982,789
Shareholders' deficit
Common stock, no par value 37,068,228
Senior convertible preferred stock, no par value 19,905,500
Additional paid-in capital 84,258,805
Accumulated deficit (155,667,949)
-------------
Total shareholders' deficit (14,435,416)
-------------
Total liabilities and shareholders' deficit $11,547,373
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DONLAR CORPORATION
CONDENSED STATEMENTS OF OPERATIONS
(UNAUDITED)
For the three months For the six months
ended June 30, ended June 30,
2003 2002 2003 2002
------------ ------------ ------------ ------------
Revenues $1,136,783 $1,014,403 $2,218,898 $1,892,087
Cost of revenue 854,715 752,072 1,532,830 1,610,059
Research and
Development 147,954 133,216 308,832 270,152
Selling, general
and administrative 522,138 255,087 1,266,707 1,029,543
------------ ------------ ------------ ------------
Total operating
expenses 1,524,807 1,140,375 3,108,369 2,909,754
------------ ------------ ------------ ------------
Loss from
operations (388,024) (125,972) (889,471) (1,017,667)
Other income
(expense)
Interest expense (798,252) (1,610,141) (2,138,925) (2,977,436)
Debt conversion
expense - - (2,579,527) (289,655)
Gain on disposal
of fixed assets - - - 74,478
Other 7,587 139,398 7,588 160,743
------------ ------------ ------------ ------------
Total other expense (790,665) (1,470,743) (4,710,864) (3,031,870)
------------ ------------ ------------ ------------
Loss before income
taxes (1,178,689) (1,596,715) (5,600,335) (4,049,537)
Provision for
income taxes - - - -
------------ ------------ ------------ ------------
Net loss before
extraordinary item (1,178,689) (1,596,715) (5,600,335) (4,049,537)
Extraordinary loss
on retirement of
debt - - - (1,212,120)
------------ ------------ ------------ ------------
Net loss $(1,178,689) $(1,596,715) $(5,600,335) $(5,261,657)
============ ============ ============ ============
Net loss per common
share:
Basic: (0.06) (0.06) (0.27) (0.20)
Diluted: (0.06) (0.06) (0.27) (0.20)
Weighted average
shares
of common stock
outstanding:
Basic 20,793,360 25,831,050 20,793,360 25,831,050
Diluted 20,793,360 25,831,050 20,793,360 25,831,050
DONLAR CORPORATION
CONDENSED STATEMENTS OF CASH FLOWS (UNAUDITED)
FOR THE SIX MONTHS ENDED JUNE 30,
2003 2002
------------ ------------
Cash flows from operating activities
Net loss $(5,600,335) $(5,261,657)
Adjustments to reconcile net loss to net
cash
used in operating activities
Depreciation and amortization 544,793 542,343
Issuance of Common Stock for services - 27,536
Interest expense related to amortization
of debt discount 44,955 2,007,544
Debt conversion expenses 2,579,527 289,655
Gain on disposal of fixed assets - (74,478)
Change in assets and liabilities
Receivables (3,400) 29,628
Inventories 204,981 576,834
Prepaid expenses and other assets (58,605) (9,594)
Accounts payable 377,904 (1,002,911)
Accrued expenses 1,941,704 (399,980)
------------ ------------
Net cash provided by (used in)
operating activities 31,524 (3,275,080)
Cash flows from investing activities
Proceeds from sale of property and
equipment - 103,942
Purchase of property and equipment (42,542) (34,715)
Purchase of patents - (83,255)
------------ ------------
Net cash used in investing
activities (42,542) (14,028)
Cash flows from financing activities
Principal repayments of convertible notes - (17,111,948)
Proceeds from issuance of convertible notes - 20,970,107
Principal repayments of notes payable - (263,000)
Proceeds from notes payable - 11,000
Deferred financing costs - (270,419)
------------ ------------
Net cash provided by financing
activities - 3,335,740
------------ ------------
Net (decrease) increase in cash and cash
equivalents (11,018) 46,632
Cash and cash equivalents at beginning of
period 102,338 3,746
------------ ------------
Cash and cash equivalents at end of period $91,320 $50,378
============ ============
Supplemental disclosure of cash flow
information:
Interest paid $3,332 $28,184
Income tax paid - -