PSP's forbearance extended as firm breaks even in Q2

Elizabeth Howell
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As struggling Pacific Safety Products (TSX-V:PSP) broke even in its second-quarter results, the soft-armour maker announced the bank has extended its forbearance period until March 31.

Pacific Safety Products makes body armour similar to what this soldier, working in Afghanistan, is wearing. (Photo courtesy DND)

PSP's adjusted earnings before interest, taxes, depreciation and amortization was at a break-even point, compared with a $200,000 profit for Q2 2010.

Sales stood 32 per cent lower than last year, at $5.1 million, although they did increase from the first quarter by 17.5 per cent.

These results are the first ones posted since the courts allowed PSP to merge with Zuni Holdings Inc. on Dec. 31, a measure that gave Zuni control of 54.2 per cent of the company and was intended to give financial stability to PSP, which had bled red ink through 2010.

"We are focused on customer relationship stability and growth in the marketplace", stated PSP chief executive Doug Lucky.

"With the merger financing complete, we are building from a sound foundation of capabilities including valued supplier partnerships, and we are aggressively moving forward to address market opportunities."

Opearting expenses decreased 15.2 per cent annually to $1.4 million in the second quarter of 2010, with working capital standing around $300,000.

PSP had struggled in the marketplace since arriving in Ottawa from the west coast, a move that was intended to bring the firm geographically closer to the competition.

Following a failed $4.6 million company takeover offer and a subsequent refusal to buy out PSP's entire headborne system, in 2010 Revlon Eyewear Inc. bought the helmet-liner portion for $275,000 and a four-per-cent royalty on gross sales. It and later picked up the rest of the system for $100,000.

PSP raised cash late in 2010 with a $1-million private placement. Its forbearance had been set to expire Feb. 28.

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