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CRYOPAK INDUSTRIES INC.
INTERIM CONSOLIDATED STATEMENTS OF LOSS AND DEFICIT
FOR THE THREE MONTHS ENDED JUNE 30, 2000 AND 1999
(Unaudited - Prepared by Management)
----------------2000------------------1999
Sales $ 685,031 $ 317,179
Cost of goods sold, Schedule 1 323,771 177,276
Gross profit 361,260 139,903
Operating expenses, Schedule 2 683,081 507,008
Operating loss ( 321,821) ( 367,105)
Other (income) expenses
Filing, listing, and transfer agent fees 3,197 5,125
Other income ( 33,121) -
( 29,924) 5,125
(Loss) for the period ( 291,897) ( 372,230)
(Deficit), beginning of period ( 10,199,372) 8,806,785)
(Deficit), end of period $( 10,491,269) $( 9,179,015)
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CRYOPAK INDUSTRIES INC.
SCHEDULE C – MANAGEMENT DISCUSSION
FOR THE THREE MONTHS ENDED JUNE 30, 2000
The Company is in the business of selling temperature controlling packing solutions. Our
customers are looking for “solutions” that will keep their products within a given temperature
range, be it hot or cold.
The Company developed and holds the patent for cryopak°, which is comprised of uniform,
laminate pouches filled with a clear non-toxic liquid, which is in fact a “phase-change” solution.
When frozen, cryopak° can provide uniform distribution of refrigeration temperatures over a large
area. In its’ unfrozen state, the product can provide superior insulation for products that need to
be protected from freezing. The uses and performance of cryopak° have been validated by
independent testing laboratories and by our growing success in the marketplace.
A recent successful test market of four retail sales units confirms that the Company will be able to
cross-over from industrial usage to the in-home retail market. Analysts estimate the retail
potential for the product to approach the $100 million level. Execution will be the key, and it is
with this in mind that the Company is currently reviewing all of its research with a view to
developing an appropriate national advertising program.
While this development work is proceeding, it is very pleasing to report that concurrently we have
achieved record sales for the quarter ended June 30, 2000, the first quarter of fiscal 2001. Sales
for the quarter at $685,031 were up 216% versus the same quarter a year ago. This performance
starts the year off appropriately and certainly buoys our efforts to penetrate the market in a
significant way.
During this first quarter, gross profit was up 258%! The additional improvement over the sales
momentum resulted from continued improvement in our cost structure and our efficiency in
producing the product. Margins improved from 44.1% in the same quarter last fiscal year to
52.7% in this quarter. Further confirming the correctness of our production move to Canada.
Operating expenses were up some 34.7% from the same quarter last fiscal year, again indicating
our continuing investment in marketing and investor relations. Marketing expenditures (+6.6%) in
the first quarter were focused on the development of our advertising campaign, servicing our
industrial accounts and increasing our penetration. It is anticipated that our investment will
increase as we expand our industrial sales force and prepare for our retail launch in the final
quarter of the current fiscal year. Our expenditures on investor relations (+264%) in addition to
normal expenditures, supported the Company’s move to have its shares listed on the OTC-BB,
which was achieved on August 7 th , 2000. This investment should have a significant impact on the
distribution and trading accessibility of the Company’s shares, in the United States over the
coming months.
The Company’s balance sheet was strengthened by the Company’s fundraising efforts, with the
arrangement of several private placements including a convertible debenture of $3,637,500 with
ICSOS of Geneva, Switzerland. It is anticipated that these funds will be used for acquisitionpurposes and for general working capital requirements, including the purchase of additional cryopak° machinery to increase our capacity. Further, the outstanding Class A Preferred Shares were converted to common shares at an imputed price of $0.95 per share.
As we look forward to the balance of the year, the Company continues to improve its potential:
· testing continued at increasing levels with both SmithKline Beecham and Aradigm Pharmaceuticals,
· initial testing has commenced with two new pharmaceutical companies (one of which was a direct reference from Wyeth-Ayerst),
· retail interest in our product continues to grow.
In summary, the first quarter results at record levels should be the first of a series of positive notes
for the Company. It is our objective to be cash-flow positive this year, and we have taken some
solid steps in that direction.
CRYOPAK INDUSTRIES INC.
“John F. Morgan”
John Morgan |
