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CryoCath Announces Fiscal 2008 Second Quarter Results
Date:5/12/2008

http://www.cryocath.com Toronto Stock Exchange Symbol: CYT

MONTREAL, May 12 /PRNewswire-FirstCall/ - CryoCath(R) Technologies Inc., the global leader in cryotherapy products to treat cardiac arrhythmias, today announced financial results for the second quarter, ended March 31, 2008.

Selected Second Quarter Financial and Operational Highlights:

- Accelerated revenue growth in Q2 2008 to $10.2 million or a 37.6%

increase over comparable electrophysiology (EP) revenue in Q2 2007.

- Continued expansion of active Arctic Front(R) user sites outside the

USA - from 34 at the end of Q1 2008 to 45 at the end of Q2 2008.

Cumulatively, an estimated 2,600 procedures have been performed with

Arctic Front.

- Grew the number of installed consoles worldwide by 37 in Q2 to a

total of over 500 consoles worldwide (net of IDE consoles).

- Achieved significant growth of our flagship product Arctic Front with

sales 284% over the same quarter last year.

- Reached a gross profit of 54.0% which is a significant step forward

from Q1 2008 and keeps us on track towards achieving our long-term

goal of at least 70% gross margins post launch in the U.S.

- Achieved a net loss of $6.1 million, which is similar to the net loss

in Q2 2007 despite reduced revenue due to the sale of the surgical

business.

Subsequent significant events following 2nd quarter highlights:

- Achieved key milestone of consenting 270 patients in our pivotal STOP

AF IDE Trial in the United States.

- Secured a gross proceed of $17.4 million from equity financing.

- Appointed Mrs. Ginette Gagne as the Company's new Chief Financial

Officer.

"This has been a strong quarter from a commercial point of view, topped off with achieving some outstaloss on foreign

exchange embedded

derivatives (18,464) 43,679 (41,175) (14,022)

Unrealized foreign

exchange loss

(gain) (564,930) 58,092 (611,427) 58,092

Accretion in balance

of sale receivable (56,403) - (112,025) -

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(5,403,590) (3,616,482) (10,339,599) (5,252,592)

Net change in

non-cash working

capital balances

relating to

operations 1,144,263 (1,774,460) (2,662,821) (3,000,842)

Decrease in net

investments

in leases - - - 5,967

(Decrease) increase

in deferred revenue 68,233 29,041 30,335 178,309

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Cash flows related

to operating

activities (4,191,094) (5,361,901) (12,972,085) (8,069,158)

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INVESTING ACTIVITIES

Proceeds from

maturities of

short-term

investments 7,929,494 1,992,697 12,892,248 5,616,907

Decrease (increase)

in cash subject

to restrictions (840,625) 109,375 (687,500) (1,531,250)

Acquisition of

intellectual

property (86,743) (112,800) (155,949) (223,192)

Acquisition of

property, plant,

and equipment (74,755) (292,459) (125,752) (573,956)

Placement of

consoles at

customers'

premises (359,885) (499,429) (740,554) (926,008)

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Cash flows related

to investing

activities 6,567,486 1,197,384 11,182,493 2,362,501

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FINANCING ACTIVITIES

Issuance of

common shares 382,820 120,105 435,803 120,105

Repayment of employee

share purchase loans - - - 2,550

Increase in deferred

financing charges (70,000) - (70,000) (167)

Increase in

long-term debt 4,000,000 - 4,000,000 3,534,000

Repayment of

long-term debt (2,326,099) (221,223) (2,635,001) (442,123)

Increase (decrease)

in bank

indebtedness 200,000 3,000,000 (878,400) 3,000,000

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Cash flows related

to financing

activities 2,186,721 2,898,882 852,402 6,214,365

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Effect of exchange

rate change on

cash and cash

equivalents 224,946 (41,848) 285,953 (41,848)

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Net change in

cash and cash

equivalents 4,788,059 (1,307,483) (651,237) 465,860

Cash and cash

equivalents,

beginning of

period 3,700,548 10,951,466 9,139,844 9,178,123

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Cash and cash

equivalents,

end of period 8,488,607 9,643,983 8,488,607 9,643,983

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Cash and cash

equivalents

consist of:

Cash 2,325,111 7,338,183 2,325,111 7,338,183

Cash equivalents -

commercial paper

and other

investments with

maturities less

than 90 days 6,163,496 2,305,800 6,163,496 2,305,800

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8,488,607 9,643,983 8,488,607 9,643,983

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Supplemental cash

flow information

Cash paid during

the period for

Interest 732,140 68,293 1,502,340 86,643

Income taxes 5,090 - 10,216 -

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nding milestones in the weeks following." said Jan Keltjens, President and CEO of CryoCath. "The uptake of Arctic Front in Europe and other markets is strong and is fuelling global growth. Achieving the 270 consented patients milestone in the STOP AF trial is a significant step towards achieving our goal of U.S. approval. We are looking forward to completing therapies and obtaining 12-month follow-up data from the trial in the second calendar quarter of 2009. Supported by the successful financing, we can move full steam ahead and drive commercial expansion of Arctic Front, create the required capacity increase and support ongoing innovation."

Financial Results

The Company's total revenue reached $10.2 million in the second quarter of fiscal 2008, a 9.3% decline as compared to $11.3 million for the corresponding period in 2007, including sales from the divested surgical business of $3.8 million. For the six-month period ending March 31, 2008, total revenues were $18.9 million, a 11.3% decline as compared to $21.3 million in the same period a year ago, including sales from the divested surgical business of $7.3 million.

EP disposable revenues for the second quarter were $6.7 million, or a growth of 21.9% as compared to $5.5 million for the second quarter of 2007. U.S. sales of these products were $3.0 million, as compared to $3.6 million. This 17.2% decline was impacted by negative movements in exchange rate of 13.6%. OUS sales of these products were $3.7 million as compared to $1.9 million, or a growth of 98%.

Other EP revenues, which consist of console sales and rentals, as well as various accessories and services, for the second quarter were $3.5 million, a 82.9% growth, as compared to $1.9 million for the second quarter of 2007. US sales of these products were $2.0 million, a 39.8% increase as compared to $1.4 million. OUS sales of these products were $1.5 million, as compared to $0.5 million.

Gross profits for the second quarter of fiscal 2008 were $5.5 million, 54.0% of sales compared with $7.1 million or 63.4% of sales in the second quarter of fiscal 2007. On a six-month year-to-date basis, gross margins were $10.0 million or 53.0% of sales, versus $13.2 million or 62.2% of sales from the same period a year ago. The difference is primarily due to volume loss due to the surgical portfolio divestiture combined with a product mix in favor of lower margin consoles which are showing rapid growth ahead of disposable sales growth.

Net research and development expenses for the quarter ended March 31, 2008 were $3.4 million compared to $2.7 million in the same quarter last year. On a six-month year-to-date basis, R&D expenses were $5.6 million compared to $4.8 million in the same period in 2007. The change is entirely related to the acceleration of enrollment in our STOP AF IDE pivotal trial.

The Company's sales and marketing expenses for the second quarter of 2008 decreased to $5.4 million compared to $6.4 million in the same period last year. On a six-month year-to-date basis, sales and marketing expenses were $9.7 million versus $11.9 million for the same period a year ago. The change is a result of the surgical portfolio divestiture with the elimination of commissions and fees combined with increasing efficiencies in the sales and marketing process.

Administrative expenses for the second quarter of 2008 were $2.7 million compared with $2.3 million for the same period last year. On a six-month year-to-date basis, administrative expenses were $5.4 million versus $3.9 million for the same period a year ago. The change is primarily related to investments in resources to build a robust infrastructure required to support rapid, sustainable growth while continuing the required programs on controls and compliance.

CryoCath's net loss for the second quarter ended March 31, 2008 is $6.1 million or ($0.16) per share from a loss of $6.0 million or ($0.16) per share in the second quarter of fiscal 2007.

Operating burn for the second quarter was $5.4 million versus $3.6 million in the second quarter of 2007. On a six-month year-to-date basis, the operating burn was $10.3 million compared to $5.3 million in 2007. EBITDA for the quarter was at ($4.4) million, a decrease of ($0.3) million compared to prior year period. On a year-to-date basis, EBITDA decreased by ($2.9) million to a total of ($8.9) million as compared to a loss of ($6.0) million prior year.

The Company, as of March 31, 2008, had access to approximately $15.9 million in cash and borrowing facilities as compared to $19.4 million at the end of December, 2007.

The Company will host a conference call to discuss the second quarter and provide an update on its business Monday, May 12, at 4:30 PM (EST.) The call will be audio-cast live from CryoCath's website and archived for 90 days.
Complete financials will be filed at http://www.sedar.com.

About CryoCath

CryoCath - http://www.cryocath.com - is a medical technology company that leads the world in cryotherapy products to treat cardiac arrhythmias. With a priority focus on providing physicians with a complete solution of catheter products to treat cardiac arrhythmias, CryoCath has multiple products approved in the U.S., across Europe and several ROW countries. The Company is developing additional products to expand its pipeline of products to treat cardiac arrhythmias.

This press release includes "forward-looking statements" that are subject to risks and uncertainties, including with respect to the timing of regulatory trials and their outcome. For information identifying legislative or regulatory, economic, climatic, currency, technological, competitive and other important factors that could cause actual results to differ materially from those anticipated in the forward looking statements, see CryoCath's annual report available at http://www.sedar.com under the heading Risks and Uncertainties in the Management's Discussion and Analysis section.

Consolidated Balance Sheets (unaudited)

As at March 31 September 30

2008 2007

$ $

ASSETS

Current Assets

Cash and cash equivalents 8,488,607 9,139,844

Cash subject to restrictions 500,000 612,500

Short-term investments held-to-maturity 2,002,233 14,894,481

Accounts receivables 8,069,275 7,027,518

Investment tax credits receivable 765,610 296,840

Inventories 6,506,589 7,701,067

Prepaid expenses 519,230 1,143,381

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Total current assets 26,851,544 40,815,631

Cash subject to restrictions 1,500,000 700,000

Balance of sale receivable 1,712,873 1,563,195

Consoles at customers' premises 1,426,380 1,475,631

Property, plant, and equipment 2,421,100 2,881,313

Intellectual property 2,904,771 2,876,325

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36,816,668 50,312,095

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LIABILITIES AND SHAREHOLDERS' EQUITY

Current Liabilities

Bank indebtedness 5,597,888 6,476,288

Accounts payable and accrued liabilities 11,009,869 14,410,438

Fair value of derivative financial

instruments - 41,175

Current portion of long-term debt 1,011,577 1,236,032

Current portion of deferred revenue 633,494 615,546

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Total current liabilities 18,252,828 22,779,479

Long-term debt 24,652,572 22,927,229

Deferred revenue 306,556 294,169

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Total Liabilities 43,211,956 46,000,877

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Shareholders' equity

Capital stock 181,494,494 181,041,609

Contributed Surplus 10,235,511 9,215,635

Deficit (198,125,293) (185,946,026)

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Total shareholders' equity (6,395,288) 4,311,218

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36,816,668 50,312,095

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Consolidated Statement of Operations and Comprehensive Loss and Deficit

(unaudited)

Three months Three months Six months Six months

ended March ended March ended March ended March

31, 2008 31, 2007 31, 2008 31, 2007

$ $ $ $

REVENUES

Sales (including

rental income

of $244,337 and

$528,896; 2007 -

$218,923 and

$384,985) 10,232,151 11,279,363 18,883,335 21,292,451

Cost of sales

(including

amortization

and write-off

of $346,375

and $687,864;

2007 - $885,947

and $1,553,307) 4,711,284 4,132,395 8,884,509 8,051,336

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Gross Profit 5,520,867 7,146,968 9,998,826 13,241,115

Interest income 138,992 59,628 396,158 173,028

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5,659,859 7,206,596 10,394,984 13,414,143

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EXPENSES

Research and

development 3,463,016 2,993,414 6,105,331 5,196,687

Investment tax

credits (99,999) (254,040) (468,770) (354,975)

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Net research and

development 3,363,017 2,739,374 5,636,561 4,841,712

Administrative 2,677,085 2,294,081 5,370,169 3,857,292

Sales and marketing 5,353,404 6,439,070 9,743,341 11,933,323

Amortization of

intellectual

property 61,355 73,088 121,662 114,835

Amortization of

property, plant,

and equipment 280,136 263,103 551,924 430,994

Amortization of

deferred

financing

charges 102,427 118,705 205,888 258,698

Interest on

long-term debt 572,621 626,674 1,238,954 1,213,048

Loss (Gain) on

foreign exchange

embedded

derivatives (18,464) 43,679 (41,175) (14,022)

Foreign exchange

(gain) loss (905,499) 238,931 (684,266) (726,160)

Stock-based

compensation

expense 509,498 395,934 1,036,957 769,756

Other expenses 141,000 - 141,000 299,274

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12,136,580 13,232,639 23,321,015 22,978,750

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Net loss and other

comprehensive

loss before

undernoted item (6,476,721) (6,026,043) (12,926,031) (9,564,607)

Income from

manufacturing

agreement 418,228 - 756,980 -

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Net loss and other

comprehensive

loss before

income taxes (6,058,493) (6,026,043) (12,169,051) (9,564,607)

Income taxes (5,091) - (10,216) -

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Net loss and other

comprehensive

loss (6,063,584) (6,026,043) (12,179,267) (9,564,607)

-------------------------------------------------------------------------

Deficit, beginning

of period (192,061,709) (170,509,291) (185,946,026) (166,970,727)

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Deficit, end

of period (198,125,293) (176,535,334) (198,125,293) (176,535,334)

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Weighted average

number of common

shares 38,245,559 37,974,433 38,192,419 37,973,848

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Basic and diluted

loss per share (0.16) (0.16) (0.32) (0.25)

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Consolidated Statement of Cash Flows (unaudited)

Three Months Three Months Six Months Six Months

Ended March Ended March Ended March Ended March

31, 2008 31, 2007 31, 2008 31, 2007

$ $ $ $

OPERATING ACTIVITIES

Net loss and other

comprehensive

loss for the

period (6,063,584) (6,026,043) (12,179,267) (9,564,607)

Items not

affecting cash

Stock-based

compensation

expense 509,498 395,934 1,036,957 769,756

Interest

capitalized on

long-term debt - 571,013 - 1,140,355

Amortization of

intellectual

property 64,275 514,265 127,502 974,417

Amortization of

consoles at

customers' premises 221,747 269,474 440,470 478,312

Amortization of

property, plant,

and equipment 401,844 438,399 793,478 646,407

Amortization of

deferred financing

charges 102,427 118,705 205,888 258,698

Unrealized (gain)


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SOURCE CryoCath Technologies Inc.
Copyright©2008 PR Newswire.
All rights reserved

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