NEWS!!!!!Compression & Encryption Tech Inc -
Compression year-end financial review
Compression & Encryption Tech Inc
CYH
Shares issued 10,098,273
2000-03-06 close $3.15
Tuesday Mar 7 2000
Mr. Robert David reviews the company
The recent fiscal year of operations has proved to be quite dynamic. The company began the year with
significant orders from its large original equipment manufacturer customer. The company focused on
delivering products to them. Unfortunately, half way through the year, the company migrated its product
offering away from a compression solution and incorporated other feature sets that had not been
developed into the company's product. The company realized that in addition to updating its feature set,
the relatively low cost of bandwidth in North America forced decision makers not to adopt the company's
bandwidth optimization solution but instead to simply acquire more bandwidth from its
telecommunications service provider.
Through this process Compression recognized that it was the most economically feasible bandwidth
optimization solution in the international marketplace. However, creating product awareness in the world
market was a slow process, which consumed a lot of resources in order to effectively penetrate.
As a result the company refocused its resources into establishing its independent market channels within
the international marketplace. It encountered many obstacles within its target customers upon issues
dealing with the year 2000. Barriers to acceptance of its product were high, as no one seemed willing to
take the chance on complicating their data networks with the company's equipment prior to the Jan. 1
trigger.
The company has now passed that barrier and is experiencing growing interest in the international
marketplace for its products in their current format.
CONSOLIDATED STATEMENT OF OPERATIONS
Year ended July 31
1999 1998
Revenue $ 572,081 $ 790,768
Cost of
goods sold 258,061 400,154
---------- ----------
Gross profit 314,020 390,614
---------- ----------
Expenses
Selling, general
and admin 577,427 475,794
Amortization of
deferred
development
costs 162,499 194,868
Amortization of
capital assets 50,000 102,213
Interest and
bank charges 31,224 24,434
Interest on
obligations
under capital
lease 25,036 -
---------- ----------
846,186 797,309
---------- ----------
Loss before
the undernoted 532,166 406,695
Other
Writedown of
deferred
development
costs - 873,950
Writedown of
capital assets - 126,264
Writedown of
inventory 8,376 118,887
Gain on
forgiveness
of debt (11,074) (405,670)
Restructuring
costs - 168,165
Loss on sale of
capital assets 7,901 -
---------- ----------
Loss for the
year $ 537,369 $1,288,291
=======