OPERATOR: Welcome to Corgenix Medical Corp. fiscal year 2008 conference call. On the line today we have Doug Simpson, Chief Executive Officer at Corgenix, and Bill Critchfield, Senior Vice President and Chief Financial Officer. Before we begin, I would like to remind our audience that this conference call is being provided for informational and discussion purposes and is not intended to provide and should not be relied upon as investment advice or an opinion regarding the appropriateness or suitability of any investment. Nothing herein should be construed to be an offer to sell or solicitation of an offer to buy any securities. This discussion will contain forward-looking statements regarding future events. The statements are just predictions and are subject to risks and uncertainties that could cause actual events or results to differ materially. These risks and uncertainties include failure to get regulatory approval for our products, market acceptance for approved products, management of rapid growth, risks of regulatory review and clinical trials, and intellectual property risks, and the need to acquire additional products. We would like to refer our audience to the documents that Corgenix Medical Corp. files from time to time with the Securities and Exchange Commission. I would now like to turn the call over to Doug Simpson.
DOUG SIMPSON, PRESIDENT, CEO, DIRECTOR, CORGENIX MEDICAL CORP.: Welcome. Thank you for joining us today on our fiscal year 2008 conference call. I have a brief introduction, then we will turn it over to Bill Critchfield, our Chief Financial Officer, to go into detail on our year-end financials. Following Bill's remarks, I will update you on our strategic opportunities and our continued plan for growth in fiscal year 2009, then finally we will open the call for your questions.
Most importantly, fiscal year 2008 was another record year for revenues for the Company, growing 13.5% to over $8.3 million. This growth was seen in all sectors of our business, North America and international, and across almost all product lines. This business growth was managed with lower operating expenses. Expenses this year were down from fiscal year 2007, resulting from the expense reduction plan we implemented over a year ago.
Also this year, we made significant reduction in our debt level. We are now only 15 months away from retiring the convertible debt of the 2005 financings. I would like to elaborate on the programs and the progress we've made this year in advancing our strategic areas, but first Bill will go over the results for the fiscal year ended June 30, 2008.
BILL CRITCHFIELD, CFO, SVP, CORGENIX MEDICAL CORP.: Thanks, Doug. Sales for the year increased 13.5% to $8,366,000 from $7,368,000 in the prior year. The sales decline was mainly attributable to a reduction in our contract manufacturing business. This reduction in contract manufacturing was primarily due to a new business strategy of our largest contract manufacturing customer, which resulted in a lower level of contract manufacturing orders from them. In fiscal 2009, we expect to more than make up for it with new contract manufacturing customers.
Domestic sales increased $771,000, or 14.2% for the year, while international sales increased $226,000, or 11.8% for the year. With respect to cost of sales, cost of sales had a significant increase in the current fiscal year from 38.4% last year to 48.2% this year. The increase was caused by several circumstances. First of all, there was an increase in raw material costs for the year; second, production problems encountered during the first quarter; and third, the write-off of some expired kits during the fourth quarter. Most of these, if not all of these factors, we do not expect to continue in the new fiscal year, and feel that the cost of sales will become more normalized as it was prior to fiscal 2008.
With respect to the operating loss, the year showed an operating loss of $602,000 versus an operating loss in the prior year of $858,000. The primary reasons for the reduction in the current period were the increase in sales combined with a concurrent reduction in operating expenses. As far as the segmentation of the operating expenses for the year, they showed a reduction from $5,397,000 in the prior year to $4,939,000 in the current year. This resulted primarily from decreases in research and development and general and administrative expenses, which were slightly offset by a small increase in sales and marketing expenses. Again that was attributed to product launch for AspirinWorks.
Interest expense for the year showed a reduction from $1,729,000 in the prior year to $1,545,000 in the current year. This decrease was primarily due to reduced amortization of the deferred financing costs and discount on the notes payable, brought about by the November 2006 12-month debt deferral agreement. It's important to note that of the $1,545,000 interest expense recorded for the year, only $149,100 was paid in cash.
With respect to the balance sheet, our cash balance was $1,521,000 versus $1,324,000 as of June 30, 2007. Also, our net cash burn for the current year declined to $469,300 in the current fiscal year from $1,553,000 in the prior period. Working capital as of June 30, 2008, was $2,889,000 versus $2,070,200 as of June 30, 2007. With respect to any guidance, without mentioning specific numbers, we feel that sales for the fiscal year ended June 30, 2009, the current year that we are now in, are expected to continue to grow but at a slower growth rate than we have experienced over the past two years. Now it's back to you, Doug.
DOUG SIMPSON: I want to start off and really talk about the fiscal year disappointments, and I am pleased to tell you that we really don't have much in the way of disappointments to report and comment on, other than the ones that we have already discussed. Obviously, the increase in cost of goods for the year was a concern, but we believe we have a handle on this and cost of goods in the future should be back closer to historical levels.
Our interest charges related to previous financings are still significantly impacting our bottom line, which should continue to decline going forward and cease entirely in 15 months.
Obviously, stock pricing is still a big issue for us. This is a tough time for all of the stock market and especially so for small public companies such as Corgenix. We are very frustrated as we continue to grow significantly in revenues, our losses are declining, we're retiring our debt level, and so on. Yet our stock price continues to languish. Obviously, if we can continue doing all the right things in building our business, retire our debt, the net income will be there and the stock price should follow accordingly.
For fiscal year accomplishments, I'd like to go over a few of the major ones for this fiscal year and then provide you with some insight into our plans for our next fiscal year. First, a couple of comments regarding fiscal performance that Bill just presented. This fiscal year, revenues grew over 13.5% from the prior year. This was achieved in a diagnostic medical market that is growing on average less than 5% annually. Compared to many other small publicly traded medical diagnostic companies, our growth rate is quite remarkable.
A particularly positive point is that this growth is in our core business. The AspirinWorks assay, while starting to contribute, has not had sufficient time, following FDA clearance last May, to do so in a major way. So when we look at our revenue numbers, with the growth of our core products, and then layer on the long-term opportunity from AspirinWorks and AtherOx, you can understand why we remain so positive about the future of our company.
On the operating expense side, the reductions in headcount and belt-tightening implemented last fiscal year are obviously paying off today. We're still managing our growth while at the same time managing to reduce our operating expenses. I'm quite proud of this achievement during a time in which revenues increased almost 14%.
Finally, a comment on net operating results. The principal goal for our management team of Corgenix is to eventually reach a level of sustained profitability, along with being net cash flow positive. This refers not only to operating income, but more importantly to net income. The results for the year speak for themselves as we have made huge strides. And I promise you that we are continuing to focus on this and as the interest …