Consolidated Mercantile Incorporated reports Second Quarter financial results

Share Name	Share Symbol	Market	Type
Consolidated Mercantile (MM)	NASDAQ:CSLMF	NASDAQ	Ordinary Share

Consolidated Mercantile (NASDAQ:CSLMF)
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Consolidated Mercantile Incorporated (TSX - "CMC" - common) (NASDAQ - "CSLMF" - common) TORONTO, Aug. 16 /PRNewswire-FirstCall/ -- Revenues for the six months ended June 30, 2006 decreased to approximately $14.7 million from $18.2 million in the comparable 2005 period. Sales reflect the consolidation of Distinctive Designs Furniture Inc., the Company's furniture manufacturing subsidiary. Competitive market conditions resulted in reduced sales volumes at Distinctive. Net Loss for the period was $4.2 million compared to $1.9 million in the preceding year. Results for the period were impacted by the furniture operations, the Company's equity position at Polyair and a revaluation of the future income tax benefits on non-capital loss carry forwards. Loss per share for the period was $0.82 compared with $0.38 in the comparable 2005 period. CONSOLIDATED STATEMENT OF OPERATIONS ------------------------------------------------------------------------- (Unaudited) Six Months ended June 30 2006 2005 SALES $ 14,695,047 $ 18,184,462 COST OF SALES 13,411,386 16,387,606 ------------ ------------ 1,283,661 1,796,856 ------------ ------------ INVESTMENT INCOME (LOSS) 16,813 250,169 ------------ ------------ EXPENSES Selling and administrative 3,083,196 3,721,076 Amortization 217,088 250,000 Interest on long-term debt - 26,359 Loss (gain) on foreign exchange 88,840 (373,979) Loss on extinguishment of debt - 320,000 ------------ ------------ 3,389,124 3,943,456 ------------ ------------ LOSS FROM OPERATIONS BEFORE THE UNDERNOTED (2,088,650) (1,896,431) Equity loss of significantly influenced companies (622,693) (417,222) Write-down of investment in significantly influenced company (991,732) - ------------ ------------ (1,614,425) (417,222) ------------ ------------ LOSS BEFORE INCOME TAXES AND NON-CONTROLLING INTEREST (3,703,075) (2,313,653) Income taxes (recovered) 550,005 (655,654) ------------ ------------ LOSS BEFORE NON-CONTROLLING INTEREST (4,253,080) (1,657,999) Non-controlling interest 1,023,299 650,709 ------------ ------------ LOSS FROM CONTINUING OPERATIONS (3,229,781) (1,007,290) Share of loss from discontinued operations of significantly influenced company (932,866) (876,815) ------------ ------------ NET LOSS FOR THE PERIOD $ (4,162,647) $ (1,884,105) ------------ ------------ ------------ ------------ LOSS PER SHARE Loss per share from continuing operations Basic $ (0.64) $ (0.20) Diluted $ (0.64) $ (0.20) Loss per share from discontinued operations Basic $ (0.18) $ (0.18) Diluted $ (0.18) $ (0.18) Loss per share Basic $ (0.82) $ (0.38) Diluted $ (0.82) $ (0.38) CONSOLIDATED BALANCE SHEET ------------------------------------------------------------------------- (Unaudited) June 30 December 31 2006 2005 ASSETS CURRENT Cash and cash equivalents $ 4,801,763 $ 7,064,845 Short-term investments (market value - $5,887,992; 2005 - $3,929,552) 5,788,944 3,916,062 Accounts receivable 4,703,273 6,284,546 Income taxes recoverable - 611,389 Inventories 4,661,743 5,608,494 Prepaid expenses 625,993 293,112 Future income taxes 53,685 69,538 ------------ ------------ 20,635,401 23,847,986 INVESTMENTS 4,253,395 6,779,250 PROPERTY, PLANT AND EQUIPMENT 1,523,581 1,786,574 FUTURE INCOME TAXES 404,633 856,267 ------------ ------------ $ 26,817,010 $ 33,270,077 ------------ ------------ ------------ ------------ LIABILITIES CURRENT Bank indebtedness $ 4,045,862 $ 5,132,074 Accounts payable and accrued liabilities 2,835,414 2,991,443 Income taxes payable 847,205 868,003 Current portion of long-term debt 9,996 9,996 ------------ ------------ 7,738,477 9,001,516 LONG-TERM DEBT 558,519 562,685 NON-CONTROLLING INTEREST 1,685,716 2,709,015 FUTURE INCOME TAXES 156,400 166,400 ------------ ------------ 10,139,112 12,439,616 ------------ ------------ SHAREHOLDERS' EQUITY CAPITAL STOCK 2,839,453 2,840,353 CONTRIBUTED SURPLUS 59,411 59,411 CUMULATIVE TRANSLATION ACCOUNT (1,035,823) (1,048,467) RETAINED EARNINGS 14,814,857 18,979,164 ------------ ------------ 16,677,898 20,830,461 ------------ ------------ $ 26,817,010 $ 33,270,077 ------------ ------------ ------------ ------------ Consolidated Mercantile Incorporated is a management holding company which provides merchant banking and effects its investment strategy through investment in and management of its core strategic industries including furniture, packaging products and finance. "Safe Harbor" statement under the Private Securities Reform Act of 1995: This release contains forward-looking statements which reflect management's current views of future events and operation. These forward-looking statements are based on assumption and external factors, including assumptions relating to product pricing, competitive market conditions, financial data and other risks or uncertainties detailed from time to time in the Company's filings with the Securities and Exchange Commission. These forward-looking statements represent the Company's judgement as of the date of this release and any changes in the assumptions or external factors could produce significantly different results. DATASOURCE: Consolidated Mercantile Incorporated CONTACT: Stan Abramowitz, Secretary, (416) 920-0500

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CSLMF Consolidated Mercantile (MM)