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Gold/Mining/Energy : Innomat Solutions Corp (INAT - was Stackpal, STAX) -- Ignore unavailable to you. Want to Upgrade?

To: terry astle who wrote (341)	6/1/1998 9:33:00 PM
From: John BOYCE	Read Replies (2) \| Respond to of 580

Disappointing 1st Q results posted today. JUNE 1, 1998 InnoMat Announces First Quarter Results TORONTO, ONTARIO--InnoMat Solutions Corp. reported its results for the first quarter ended March 31, 1998. Sales for the quarter, of $438,479 were down 40 percent from last year's $726,332. However, the gross margin on these sales increased by $6,710, from $48,601 last year to $55,311 this year. The improved gross margin percentage, from 6.7 percent to 12.6 percent is part of the strategy announced last fall to be more selective in the business that the Company accepts and by focusing on higher margin revenue streams. During the quarter the Company utilized short-term financing with high costs in order to secure the initiatives discussed below. In addition, we moved our head office and incurred significant costs to establish InnoMat Technologies Inc., which is in the start-up phase. Financing commissions and legal fees, interest charges and relocation expenses significantly impacted operating losses for the period. As a result the Company's Operating loss was $381,624 compared to $179,439 last year. Mr. Paul E. Kavanagh, Chairman of InnoMat Solutions Corp. stated "the staff at InnoMat were extremely busy during the first three months of 1998 to ensure that effective execution of the new strategy developed last summer took place. To this end, we are proud that the acquisition of the exclusive rights to the exciting, new, TPF(r) plastics manufacturing process was completed. In mid-February we established our new subsidiary, InnoMat Technologies Inc. to begin exploiting this technology. Introduction of the capabilities of TPF(r) gained significant market interest both from potential end users of TPF(r) produced products and plastics manufacturers. This was evidenced by a number of prototype orders from InnoMat customers, for a variety of different types of products. As well, discussions commenced with over 10 manufacturers interested in accessing the TPF equipment and licensing the control system software." Mr. Kavanagh added "the completion of this transaction, and associated financing by way of a convertible debenture, consumed a great deal of the company's resources. Nevertheless, management believes this investment will have significant, long-term benefits for the Company." During the first quarter of 1998 the company pursued an opportunity to rapidly accelerate the strategy of becoming a vertically integrated organization by finalizing an agreement for execution to acquire the assets of Brunswick International Container Systems Inc. Brunswick is a pioneer in managing returnable container programs and material handling logistics, offering major manufacturers a host of services including, packaging engineering, returnable container leasing, depot services, assets tracking and transportation. Brunswick currently has a number of long term contracts with major auto parts manufacturers. Brunswick will be a large consumer of containers and storage products made by the TPF(r) process. The addition of Brunswick to the InnoMat group of companies will now provide InnoMat customers with 'one-stop shopping' for their specialized materials handling requirements. InnoMat is well positioned to address growing concerns of manufacturers to reduce costs of handling and shipping their products, reducing damage and assuming more environmental responsibility through the use of returnable containers. This transaction is pending Brunswick's shareholders approval and is expected to close in June. These two transactions are essential to building a solid competitive foundation and market differentiation for InnoMat. With sales efforts during the first quarter being focused on developing end-user interest and market development for TPF products, this had a short-term impact on our results. Revenues during the period of $438.0k were disappointing, in that, the majority of shipments were from the backlog carried over from sales made in late 1997 rather than new business. As well, certain large potential supply contracts have experienced delays beyond our control. Nevertheless, gross margins on new business generated during the past few months have increased from 6 percent in mid-1997 to 24 percent. This is a result of the strategic shift away from selling commodity products to more customized solutions. The company entered the second quarter with an order backlog of $830.0k. Sales of TPF equipment and software license fees and revenues derived from the consolidation of 'Brunswick' operations are scheduled to commence in June 1998 and will have a positive affect on revenues and profitability of the company throughout the remainder of 1998. Short-term cash requirements have restricted the company from accelerating growth and we are currently addressing the issue. The rebuilding of InnoMat is well underway and the results from these efforts should begin to pay-off. To our shareholders, who have been patient and supportive throughout this process over the past nine months, we are extremely appreciative. We look forward to meeting many of our shareholders at our upcoming Annual General Meeting, June 8th at 2:00 p.m. Board of Trade of Metropolitan Toronto, 1 First Canadian Place. The Corporation's shares are quoted on the Canadian Dealing Network (CDN) under the trading symbol INAT. There are currently 45,415,701 common shares issued and outstanding. The Corporation's 12g3-2 (b) exemption with the Securities and Exchange Commission (US) is No. 82-4262. The information provided herein has not been approved or disapproved by regulatory authorities.