Cryopak Industries Inc.
TSX VENTURE : CYK

Cryopak Industries Inc.

November 16, 2005 09:00 ET

Cryopak Announces Second Quarter and Year to Date 2006 Results

VANCOUVER, BRITISH COLUMBIA--(CCNMatthews - Nov. 16, 2005) - Cryopak Industries Inc. (TSX VENTURE:CYK) today reported its results for the three and six months ended September 30, 2005.

Operating results

Sales for the six months ended September 30, 2005 increased to $8.5 million as compared to sales of $8.4 million for the six months ended September 30, 2004. Net loss for the period was $0.1 million as compared to a net loss of $0.5 million for the same period of the prior year. Sales for the quarter ended September 30, 2005 increased to $3.5 million as compared to sales of $3.4 million for the quarter ended September 30, 2004. Net loss for the quarter was $0.5 million as compared to a net loss of $0.6 million for the same period of the prior year.

"I am very pleased that we have been able to grow our Canadian dollar based gross sales by 22% and our American dollar based gross sales by 5% this quarter as compared to the same quarter last year, which shows the traction in our sales efforts," stated Mr. Martin Carsky, President and CEO of Cryopak. "So far this year we have achieved several of our key internal milestones for growing our pharmaceutical package segment. We have been able to penetrate the European marketplace, secure our dominant market position in Canada by adding new business with GlaxoSmithKline, and expand our pharma team with respected pharma executive Mr. Jim Antonopoulos," added Mr. Carsky.

"We are feeling very bullish about the opportunities for our company in the pharmaceutical package segment in Europe," added Mr. Don Easterbrook, VP, Global Pharmaceutical Services. "I think its important to note that we have really expanded our global capabilities in this area of our business, not just in terms of the products and technical services we offer our customers, but in the local partnerships we have developed in those markets."

While sales for the periods grew overall, both sales and gross profits were negatively impacted due to the weakening of the US dollar versus the Canadian dollar. Raw material and freight costs were also negatively impacted due to increases in oil prices. Sales and marketing expenses for the quarter increased to $0.5 million as compared to $0.4 million for the quarter ended September 30, 2004 and general and administrative costs for the quarter were reduced to $0.4 million as compared to $0.5 million in the previous year.

"The challenge that we continue to face, the same as many other Canadian exporters to the United States, is the continued strengthening of the Canadian dollar compared to the US dollar. So when the US dollar sales are converted to Canadian they end up being worth less to us than they were a year ago," stated Mr. Martin Carsky, President and CEO of Cryopak.

Convertible Loan Agreement

"Over the past year we have made significant progress in restructuring our balance sheet. We have negotiated a resolution to 70% of the Convertible Loan, raised $1.6 million in capital, and have commitments to raise an additional $0.5 million in equity by the end of November," stated Mr. Carsky.

In January 2005 the Company announced that it had concluded an agreement to extend the repayment of $1.6 million of principal on its outstanding Convertible Loan Agreement ("CLA"), which came due June 7, 2003. In June 2005 the Company announced that it had settled over $0.4 million of principal through a discounted payout. In September 2005 the Company announced that it had concluded an arrangement with several parties to extend repayment or settle an additional $0.6 million of principal on the CLA. Of the original $3.6 million in principal outstanding on the CLA, only $1.1 million remains unresolved and the Company is working diligently to come to some resolution with the remaining investor group.

Financing

In April 2005 the Company issued Secured Subordinate Convertible Debentures with a total principal amount of $1.644 million.

On October 19, 2005 the Company announced that it had received commitments with respect to a non-brokered private placement to raise up to $0.5 million, subject to regulatory approval. Under the terms of the proposed private placement, the Company plans to issue units at a price of C$0.20 per Unit. Each Unit will be comprised of one Common Share and one half of a Common Share Purchase Warrant, each Warrant entitling the holder to acquire one additional Common Share at a price of C$0.22 per share for a period of 24 months from the date of closing. It is anticipated that the Common Shares and Warrants will be subject to a four-month hold period. The Company anticipates completion of this private placement in November 2005.

John McEwen, Chairman of the Board commented, "We are very pleased with our progress in the pharmaceutical package segment, the resolution of 70% of the Convertible loan situation, and commitments to raise additional capital to fund the ongoing growth of the business."



CRYOPAK INDUSTRIES INC.
Consolidated Balance Sheets
(Unaudited)
(Expressed in Canadian dollars)

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September 30, March 31,
2005 2005
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(Unaudited)
Assets

Current Assets:
Accounts receivable $ 2,299,191 $ 2,237,834
Advances to related company - -
Inventory 1,914,010 1,670,503
Prepaid expenses 71,809 65,265
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4,285,010 3,973,602

Property, plant and equipment 740,672 877,846

Long-term deposits 116,335 116,335

Deferred financing costs 84,037 81,801

Intangibles and other assets 631,210 791,663

Goodwill 6,453,268 6,453,268
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$ 12,310,532 $ 12,294,515
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Liabilities and Shareholders' Equity

Current liabilities
Bank indebtedness $ 1,804,687 $ 1,999,297
Accounts payable and accrued
liabilities 2,821,505 3,555,659
Deferred revenues 89,293 -
Current portion of notes payable to
related parties 333,333 333,333
Current portion of obligations
under capital lease 162,778 153,225
Convertible loan 1,054,874 2,182,500
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6,266,470 8,224,014

Promissory notes 2,054,244 1,547,029

Convertible Debentures 1,644,000 -

Obligations under capital lease 133,911 217,764
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10,098,625 9,988,807

Shareholders' equity:
Share capital 9,393,383 9,393,383
Share purchase loan (394,000) (394,000)
Contributed surplus 1,432,316 1,409,116
Deficit (8,219,792) (8,102,791)
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2,211,907 2,305,708
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$ 12,310,532 $ 12,294,515
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Approved on behalf of the Board:

Martin Carsky Director John A. McEwen Director
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CRYOPAK INDUSTRIES INC.
Consolidated Statements of Operations and Deficit
(Unaudited)
(Expressed in Canadian dollars)

Three and six months ended September 30, 2005 and 2004

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Three months ended Six months ended
September 30, September 30,
2005 2004 2005 2004
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Sales $ 3,492,949 $ 3,363,756 $ 8,503,884 $ 8,386,330

Cost of Sales 2,804,061 2,456,936 6,383,231 5,630,819
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Gross Profit 688,888 906,820 2,120,653 2,755,511

Expenses:
Sales and
marketing 530,079 406,013 1,103,313 1,184,084
Administration 400,780 503,408 800,363 1,102,399
Amortization 226,579 264,981 481,062 551,064
Interest on
bank operating
line 56,032 43,730 102,106 88,298
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1,213,470 1,218,132 2,486,844 2,925,845
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Earnings
(loss) from
operations (524,582) (311,312) (366,191) (170,334)

Other earnings
(expenses):
Other income/
(expenses) 144,074 (130,936) 527,676 (112,450)
Interest on
long-term debt
and financing
costs (131,912) (116,466) (278,486) (234,035)
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Net income/(loss)
for the period (512,420) (558,714) (117,001) (516,819)

(Deficit),
beginning of
period (7,707,372) (6,451,133) (8,102,791) (6,493,028)
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(Deficit), end
of period (8,219,792) (7,009,847) (8,219,792) (7,009,847)
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Earnings/(loss)
per common
share:
Basic $ (0.08) $ (0.08) $ (0.02) $ (0.08)
Diluted $ (0.08) $ (0.08) $ (0.02) $ (0.08)
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CRYOPAK INDUSTRIES INC.
Consolidated Statements of Cash Flows
(Unaudited)
(Expressed in Canadian dollars)

Three and Six months ended September 30, 2005 and 2004

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Three months ended Six months ended
September 30, September 30,
2005 2004 2005 2004
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Cash provided
by (used) in:

Operations $ (512,420) $ (558,714) $ (117,001) $ (516,819)
Net loss for
the period
Items not
involving cash:
Amortization 226,579 264,981 481,062 551,064
Accretion of
convertible
loan - -
Stock-based
compensation 11,600 10,341 23,200 46,889
Interest on
exchanged
convertible
loan
capitalized 12,515 - 12,515 -
Forgiveness of
interest (185,930) - (324,145) -
Share issue
settlement - - -
Changes in
non-cash
operating
working
capital:
Accounts
receivable 544,254 1,301,253 (61,357) 684,637
Advances to
related
company - 12,605 - 34,666
Prepaid
expenses 16,966 106,591 (6,544) 11,718
Inventory (110,866) 55,855 (243,507) 35,424
Deferred
revenues 60,537 (99,492) 89,293 (62,253)
Accounts
payable and
accrued
liabilities 411,364 (21,458) (410,009) (312,059)
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474,599 1,071,962 (556,493) 473,267

Investments:
Acquisition of
property,
plant and
equipment (104,640) (16,087) (183,435) (40,363)
Acquisition of
subsidiaries - - - -
Term deposits -
restricted - - - -
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(104,640) (16,087) (183,435) (40,363)

Financing:
Change in bank
indebtedness (109,005) (974,673) (143,237) (126,999)
Issuance
(repayment) of
promissory
note (25,921) 330,000 (51,372) 330,000
Issuance
(repayment) of
convertible
debentures - - 1,644,000 -
Forgiveness of
convertible
loan (73,478) - (291,728) -
Repayment of
convertible
loan (122,948) - (341,198) -
Issuance/
(Repayment)
of notes
payable - (342,907) - (500,000)
Deferred
financing
costs (897) - (2,237) -
Share issue
costs - -
Repayment of
capital lease
obligations (37,710) (68,295) (74,300) (135,905)
Repayment of
term loan - -
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(369,959) (1,055,875) 739,928 (432,904)

Increase
(decrease) in
cash and cash
equivalents - - - -

Cash and cash
equivalents,
beginning of
period - - - -
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Cash and cash
equivalents,
end of period $ - $ - $ - $ -
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-------------------------------------------------------------------


About Cryopak

With ISO 9001:2000 certified facilities in Vancouver and Montreal, we are a leading provider of temperature-controlling products and solutions serving global pharmaceutical companies, as well as fine North American retailers and consumer goods companies. In our pharmaceutical business we engineer solutions and supply products that help our customers safely transport their temperature sensitive vaccines. In our retail business, we develop, manufacture and sell reusable ice substitutes, flexible hot and cold compresses, reusable gel ice and instant hot and cold packs. These products are marketed under such popular brand names as Ice-Pak™, Flexible Ice™ Blanket, Simply Cozy®, and Flex Pak™. We also manufacture these same products under private label for many well-known consumer goods companies. Our shares are listed on the TSX Venture Exchange under the symbol CYK. For more information about Cryopak, please visit our website address at: www.cryopak.com.

Contact Information

  • Cryopak Industries Inc.
    Martin Carsky
    President and CEO
    1-800-667-2532
    www.cryopak.com