Puradyn Announces 2nd Quarter Financial Results

BOYNTON BEACH, Fla.--Puradyn Filter Technologies Incorporated (OTCBB:PFTI), the global bypass oil filtration system manufacturer, today reported results of operations for the second fiscal quarter ended June 30, 2007.

Net sales for the second quarter 2007 were $787,000, as compared to $855,000 for the second quarter 2006. Net sales year-to-date were $1.55 million compared to $1.68 million for the same period in 2006. Net sales decreased 8% for the second quarter of 2007, and 7% year to date for the comparable period in 2006. This decrease is attributable to an overall slowing of the economy in addition to the fact that one of the Company’s largest customers which install Puradyn product on most new equipment, over-purchased equipment in 2006, causing a decline in equipment purchased for the first half of 2007.

Cost of products sold increased by approximately $53,000, or 8% in the three-months ending June 30, 2007 as compared to the same time period in 2006; and by approximately $86,000, or 7%, from $1.26 million in 2006 to $1.35 million in 2007 for the six-months ended June 30. The increase is due in part to increases in reserves for slow-moving and obsolete inventory; a significant change in the product mix being sold and, within that mix, a notable increase in some of the material costs, such as the new additive formulation to meet 2007 requirements, all contributing to the overall negative impact on cost of products sold.

The Company reported a net loss of $498,000 or ($0.02) per share, basic and diluted, for the quarter ended June 30, 2007, compared to a net loss of $631,000 or ($0.02) per share, basic and diluted, for the same period in 2006. Basic and diluted weighted average shares used in the calculation for the three-months ended 2007 and 2006 were 27,514,923 and 25,349,432, respectively.

Kevin G. Kroger, President and COO, stated, “Net sales for the second quarter of 2007 were not as strong as anticipated, primarily due to the sluggish economy and the postponement of several fleet equipment purchases until later. On a positive note, sales for the Company’s filter line have increased year-to-date by 56% over the same time period in 2006, showing a continuous improvement in total unit population and confidence in the product’s performance.

“Even with the overall decline in net sales, we continue to make progress in our primary targeted markets. The construction and mining segment as well as the military segment continue to grow, as evidenced by another recent order from Freightliner for trucks to be equipped with our system for foreign military sales.”

Kroger continued, “Puradyn is now offering an enhanced model, PFT240, a sized-model which, until now, was offered only in the first-generation TF model line. The proprietary and high-efficiency technology remains the same and the enhancements were made primarily to allow the model to become more user-friendly. As this sized model is used on large equipment in the construction, industrial and marine market and handles up to 300 qts of oil, one of the enhancements includes a twist-on lid that provides easy access to the replaceable filter element and another feature which includes relocation of the heating element in order to avoid handling when hot. One of our major customers in the aggregates industry has taken the lead using this new product and has been extremely pleased with its performance. These unique features incorporated in this size of a system provide the customer a single filter system to meet the needs of large-sump capacity engines.

“On the corporate level, as we have done over the past couple years, we are still focused on areas of reducing costs and streamlining internal processes to reduce expenses without sacrificing safety and quality.

“Our investor base increased in June with the influx of cash proceeds of $975,000 from an accredited investor for the purchase of 1,300,000 shares of common stock at $0.75 per share. This purchase represents the first of two rounds of financing from an Italian investment firm which recognizes the possibilities available to Puradyn as a result of new emission requirements, global environmental concerns, and energy conservation.”

Kroger concluded, “Puradyn makes a solid commitment to its customers, current and potential, to safely extend oil drains and reduce oil and oil-related maintenance costs up to 90%. We also make a solid commitment to manufacture a product that is environmentally sound and cost-efficient. We provide a technology today that will help our customers reduce their operating costs and generation of environmentally hazardous waste oil, while at the same time reducing our dependency on foreign oil and.”

For further discussion relevant to the Company’s financial status, you can request a copy of the Company’s quarterly report on Form 10-QSB, at 561 547 9499, or go to the Investor Relations section of the Company’s website at www.puradyn.com. A copy is also available at the SEC website, www.sec.gov.