TORONTO, ONTARIO--Invesprint Corporation of Toronto today reported financial results for its first quarter ended July 31, 2003. Sales from continuing operations for the first quarter of fiscal 2004 were $6.8 million compared to $8.7 million in the first quarter of fiscal 2003. On November 20, 2002, the Company announced that its largest label customer had chosen alternate suppliers for its label needs. While significant progress has been made to replace this business, the loss of this customer adversely impacted sales in the first quarter of this year. Consolidated gross margin was 7.5% of sales compared to 26.8% in the first quarter last year. Lower sales combined with increased capacity at Jonergin Pacific that came on-stream late in fiscal 2003 and was not fully utilized, resulted in substantially lower margins. Selling, general and administrative expenses were slightly lower than in the first quarter last year. Administrative expenses for the first quarter of fiscal 2004 included severance expense of $74,000 related to the closing of the corporate office in Toronto. The loss from discontinued operations for the first quarter of fiscal 2004 was $308,000 compared to net earnings of $191,000 in the first quarter last year. The loss in the first quarter of fiscal 2004 included a foreign exchange loss of $300,000 reflecting the appreciation of the Canadian dollar from the Company's year end to the closing date of the Company's disposition of its interest in Jay Packaging Group, Inc. The loss from continuing operations for the first quarter was $853,000 ($0.16 per share) compared to earnings of $279,000 ($0.05 per share) for the first quarter of fiscal 2003. The net loss for the period was $1,161,000 ($0.22 per share) compared to net earnings of $470,000 ($0.09 per share) in the same period last year. The Company has been advised by one of its lessors that it believes that the Company may have technically breached a covenant under its equipment leases due to the sale of its interests in Kree Technologies Inc. and Jay Packaging earlier in the year, despite the fact that these sales generated substantial cash and improved the financial position of the Company. The Company does not believe it breached this covenant under the lease in question and believes that it will be able to resolve the covenant issue with the lessor. "When announcing our fiscal 2003 results, I said we had significant work ahead of us," stated Vince Hockett, President and Chief Executive Officer. "This work began in earnest in out first quarter when we identified and accounted for most of our problems. While the resulting performance remains unacceptable, I am confident that we are effectively addressing our operating and strategic issues. We will continue this work for the next few quarters." Hockett continued, "Today, our main issue is to grow revenues. In the last 60 days I have visited many customers; I am happy to report that Jonergin and Jonergin Pacific have excellent reputations and over the next few months will have opportunities to increase volume. Hockett also stated that, "While we are focusing on revenue generating activities, we have not lost sight of cost control imperatives. Between our two operating locations and our corporate office, we have eliminated almost $1,000,000 in annual expenses. These reductions are significant steps on our path to profitability and will help us remain competitive in the marketplace." Through its Jonergin operations in Montreal, Quebec and Napa, California, Invesprint manufactures prime labels for the wine & spirits, pharmaceutical and petrochemical markets.