UNITED STATES SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                               FOURTH AMENDMENT TO
                                    FORM 20-F

    REGISTRATION STATEMENT PURSUANT TO SECTION 12(b) OR (g) OF THE SECURITIES
                              EXCHANGE ACT OF 1934

                         Commission file number 0-22952

                             CRYOPAK INDUSTRIES INC.
                             -----------------------
             (Exact name of Registrant as specified in its charter)

                             CRYOPAK INDUSTRIES INC.
                             -----------------------
                 (Translation of Registrant's name into English)

                            BRITISH COLUMBIA, CANADA
                            ------------------------
                 (Jurisdiction of incorporation or organization)

        1120-625 HOWE STREET, VANCOUVER, BRITISH COLUMBIA, CANADA V6C 2T6
        -----------------------------------------------------------------
                    (Address of principal executive offices)

 Securities registered or to be registered pursuant to Section 12(b) of the Act.

Title of each class                                  Name of each exchange on
                                                     which registered

                                      NONE
                                      ----

 Securities registered or to be registered pursuant to Section 12(g) of the Act

                                 Title of Class
                           COMMON STOCK, NO PAR VALUE
                 CLASS A PREFERRED STOCK, SERIES 1, NO PAR VALUE

          Securities for which there is a reporting obligation pursuant
                          to Section 15(d) of the Act

                                 Title of Class
                                      NONE

     Indicate the number of outstanding  shares of each of the issuer's  classes
of capital or common  stock as of the close of the period  covered by the annual
report: 17,255,740 common; 530 preferred as of March 31, 1999.

     Indicate  by check mark  whether the  registrant  (1) has filed all reports
required to be filed by Section 13 or 15(d) of the  Securities  Exchange  Act of
1934  during  the  preceding  12 months  (or for such  shorter  period  that the
registrants was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes [ ] No [ X ]

     Indicate by check mark which  financial  statement  item the registrant has
elected to follow. Item 17 [ X ] Item 18 [ ]

     (APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY  PROCEEDINGS  DURING THE
PAST FIVE YEARS)  Indicate by check mark  whether the  registrant  has filed all
documents  and  reports  required  to be filed by Section 12, 13 or 15(d) of the
Securities  Exchange Act of 1934  subsequent to the  distribution  of securities
under a plan confirmed by a court Yes [ ] No [ ]


<PAGE>

                                     PART I

Item 1. Description of Business

Cryopak Industries Inc.

Overview of Business
--------------------

     Cryopak  Industries Inc.  ("Cryopak",  the "Company") is in the business of
manufacturing  and selling thermal  packaging  solutions.  The Company's Cryomat
product is a patented,  flexible,  re-useable refrigerant product, which is sold
as a standalone  product or as part of a system (both corrugated and styrofoam).
This  product is  typically an ice  replacement.  Cryomat is  primarily  shipped
directly to the customers in response to purchase orders.  The principal markets
are seafood shipping, medical wraps and general thermal packaging. Over the last
five years,  the Company has  experienced  low but stable sales,  largely to the
seafood industry, and has suffered recurring losses from operations. The Company
has focused on identifying  key markets where the  opportunity  for  significant
sales  volumes  may  exist  or  be  created  and  has  established  certain  key
relationships   with  several   groups  that  provide   broader  North  American
distribution.  Cryopak's current major focus is on the food service and catering
applications  for the major  airlines  in Canada and the  United  States and the
pharmaceutical  industry.  The Company has  purchased a machine  that  Northland
Ice-Gel Products Inc. operates which is located in Vancouver,  British Columbia.
The Company has a binding  commercial  verbal agreement with Northland.  Written
instructions are given to Northland for  manufacturing  requirements.  Northland
only acts as operator of the machine.

     The  Company  relies  upon the  protection  offered by certain  patents and
trademarks.  The patents are expected to be in effect  until 2008.  The right to
exploit the patents has been licensed to the Company for an indefinite term, and
is critical to Cryopak's business. A gross royalty is payable to the licensor.

Company History
---------------

     Cryopak Industries Inc. ("Cryopak",  the "Company") was incorporated in the
province of British  Columbia,  Canada, on February 13, 1981 as 226896 B.C. Ltd.
On March 30,  1981 the  Company  changed its name to Consort  Energy  Corp.  The
Company changed its name again, to  International  Consort  Industries  Inc., on
April 30, 1990 and amended its name to Cryopak  Industries  Inc. on November 12,
1993. On January 3, 1996,  Cryopak  increased its authorized stock to a total of
two hundred  million  (200,000,000)  shares,  consisting of one hundred  million
(100,000,000)  shares of common stock with no par value and one hundred  million
(100,000,000)  shares of Class A  Preferred  Stock,  no par value,  of which one
thousand  five  hundred  (1,500)  were  designated  Class A  Convertible  Voting
Preference  Shares,  Series I. Cryopak has two  subsidiaries.  Cryopak  (Canada)
Corporation, a British Columbia, Canada,  corporation,  was incorporated on June
6, 1986 as 310302 B.C. Ltd. and changed its name to Cryopak (Canada) Corporation
on September 22, 1987. Cryopak  (International)  Inc. is a Barbados  corporation
incorporated  on August 29,  1995,  which is currently  inactive.  Additionally,
Cryopak (Canada) Corporation has a wholly-owned subsidiary, Cryopak Corporation,
a Nevada  corporation  formed on March 20,  1987 and has a fifty  percent  (50%)
interest  in  Cryopak  (Alberta)  Corporation,   a  dissolved  Alberta,   Canada
corporation.

     On February  28,  1995,  the Company  signed an  agreement  in principle to
acquire one hundred percent interest in Rogell  Enterprises  Ltd.  ("Rogell") of
Vancouver,  British Columbia,  Canada. Rogell is a private corporation formed in
1979 that was originally a picture  product  supplier and developed into a trade
showroom  display  center  carrying  design   furniture,   accessories,   framed
decorative art, limited editions and original imagery.  The proposed acquisition
was terminated on July 27, 1995.

     This acquisition had required a Cdn$2,000,000 financing package and Cryopak
had entered into an agreement with Discovery Capital Corporation of Vancouver to
arrange this financing via a venture  capital  corporation,  Cryopak  Industries
(VCC) Inc.,  ("VCC").  An  Investment  Agreement  was entered  into  between the
Company  and VCC on  March  13,  1995,  which  was  approved  by the  provincial
government and the Canadian Stock Exchange.  The Investment  Agreement allowed a
120 day period for fund  raising  and  contemplated  five  initial  closings  of
Cdn$100,000  each.  Initially,  VCC  invested  $500,000 in common  shares of the
Company at prices escalating with each $100,000 raised, starting at Cdn$0.40 per
share and going up to  Cdn$0.50,  Cdn$0.60,  Cdn$0.70  and finally  Cdn$0.80 per
share. Each share was accompanied by a non-transferable  warrant  exercisable at
$0.10 per share  premium to the  purchase  prices and expiring one year from the
issuance date. VCC has 105  shareholders  with all being Canadian except for one
being European.  The Investment Agreement also provided that VCC would invest in
Cryopak's Class A Preferred Shares at

<PAGE>

an offering  price of $1,000 per share.  Douglas  Reid, a member of the Board of
Directors of the Company, is the President of VCC and abstained from voting when
the board  voted to accept  this  Investment  Agreement.  Of the  Cdn$2,000,000,
$1,100,000 was received and the financing was closed on February 25, 1997. After
the proposed  acquisition  was  abandoned,  the funds from this  financing  were
designated for the construction of manufacturing facilities for Cryopak products
and to finance marketing programs. Shareholders own VCC.

     John McEwen, President and co-founder of Discovery Capital Corporation, was
appointed to the board of directors on August 17, 1995.  The board  consisted of
Harry Bygdnes, Robert Leigh Jeffs, and Douglas Reid.

     In September 1995, the Company entered into a joint distribution  agreement
with Unisource  Worldwide,  Inc.  ("Unisource") to introduce  Cryopak's products
regionally to each of ten Unisource  divisions  throughout the United States and
Canada.  Unisource  is a large  marketer  and  distributor  of paper and imaging
products and supply systems,  disposable paper and plastic products,  janitorial
supplies and  packaging  systems and is owned by Alco  Standard  Corporation,  a
distribution  company  headquartered  in Valley Forge, PA, with revenues of US$8
billion in 1994.  The focus of this agreement was the marketing of the Company's
ice substitute  product  targeting food processors,  shippers of perishables and
wholesale  and retail  food  distribution  companies  with  Unisource  acting as
Cryopak's marketing partner. Under the terms of the agreement,  Unisource was to
sell,  stock and  distribute  all Cryopak  products used in food  processing and
distribution  within each Unisource marketing region as distribution rights were
allocated. Internal problems at Unisource and a lack of positive response at the
divisional level impeded the rate of growth within the terms of the distribution
agreement.  As a result,  promised  purchases  were not  completed and plans for
national  distribution  with  Unisource were abandoned by the fiscal year end of
March 31, 1996. Instead,  the Company's  management began working with Unisource
regionally by offering educational programs and training in market segments that
demonstrate a high interest in marketing the Cryopak products. The effect was to
focus the Company's  marketing  efforts  towards those  distributors  that serve
potential customers directly.

     On July 14,  1995,  the Company  also signed an  agreement  with  Cavanaugh
Communications  Inc.  ("Cavanaugh")  of  Bryn  Mawr,  Pennsylvania,  to  provide
advertising and marketing  expertise to fulfill the obligations of the Unisource
agreement.  The agency's  focus was  positioning  Cryopak ice  substitute as the
preferred  refrigerant  for packaging,  shipping,  storing and displaying a wide
variety of foods,  beverages and other  perishables,  targeting food processors,
direct marketers and wholesale and retail food distribution companies. Cavanaugh
is the exclusive advertising and marketing company for Unisource.  This contract
was terminated when the Unisource deal was abandoned.

     Harley D.  Sinclair  joined the Company as its  Secretary  on November  23,
1995. At this time the officers were Harry Bygdnes,  Robert Leigh Jeffs, Douglas
Reid, and John McEwen.

     On January 1, 1996, the Company extended its Financial Management Agreement
with Strategic  Investments  Inc.  ("Strategic")  of  Springfield,  Ilinois,  to
December 1996,  rescindable by either party with 30 days' notice.  Strategic had
been receiving  US$5,000 per month under the terms of the Agreement but this was
amended  to $500 per month plus  certain  out-of-pocket  expenses,  for the last
twelve  months  of the  agreement.  The  agreement  was not  extended  after its
termination in December 1996.

     During the fiscal year ended March 31,  1996,  the  Company  began  working
directly with several pharmaceutical  companies in the United States and Canada.
These companies  provided Cryopak with existing  packaging and protocols used in
present shipping  situations by the Company's  competitors so that Cryopak could
perform comparison  testing.  The graphic comparisons of these independent tests
were then submitted to the pharmaceutical companies.

     Comparison testing similar to that done in the pharmaceutical  industry was
also  conducted in the seafood  industry.  Several  large  seafood  distributors
tested the Company's product Cryomat.

     Also during the fiscal year ended March 31, 1996 the Company entered into a
Memorandum of Understanding  with SCA Packaging of Sweden, the largest packaging
supplier  in Europe,  which began  distributing  the  Cryomat  product  into EEC
countries in the fall of 1996.  Similar agreements were negotiated in Mexico and
Indonesia. These agreements were never finalized.

     During the fiscal year ended March 31, 1997, the Company  focused on growth
in the pharmaceuticals, seafood, meat and poultry and airline and hotel catering
industries. Cryopak devoted much of its energies during this time to

<PAGE>

providing test data in each of these  industries  which compared Cryopak and its
products to existing  refrigerants  and conducted  onground and inflight testing
with  several  airlines.  The  Company  also sold  small  amounts  of product to
companies  in  Brazil,  Chile,  Taiwan  and Israel  during  this  year.  Cryopak
Industries also supplies its refrigerant product to Freshnex. Freshnex sells its
commodities to consumers  directly through the Internet.  Freshnex is a customer
of Cryopak  Industries  and there are no agreements  between  them.  Information
regarding  Freshnex  is  available  through the  Internet to connect  commercial
producers and suppliers to retail suppliers by ensuring  Freshnex's  commodities
are delivered within 24 hours by Federal Express in specially  designed packages
using Cryomat.

     K. Barry  Sparks  joined the Board of Directors of the Company on April 25,
1996. The board had the following  members:  Harry Bygdnes,  Robert Leigh Jeffs,
Douglas Reid, and John McEwen.

     On April 1, 1997,  the Company signed an exclusive  distribution  agreement
with Seafish  Systems Ltd. of New Zealand  ("Seafish").  The agreement  provided
that Seafish would market,  sell and distribute  products made by Cryopak in New
Zealand,   provide  marketing  information  including  levels  of  interest  and
potential  sales in the  market  area and to  assist in the  development  of new
market  territories  as  may be  determined  over  time.  In  exchange,  Seafish
committed to buying twelve  containers  of products  over the  following  twelve
months,  to be distributed in New Zealand,  Australia and other markets  jointly
agreed between the parties.

     James M.  Fletcher  was  appointed  to the Board of Directors on August 12,
1997.  The board  consisted  of 6 members:  Harry  Bygdnes,  Robert Leigh Jeffs,
Douglas Reid, John McEwen, K. Barry Sparks, and James Fletcher.

     On August 13, 1997, the Company  commenced a placement of 250,000 shares at
Cdn$0.50 per share for a total of  Cdn$125,000,  plus warrants for up to 250,000
additional  shares at Cdn$0.60 per share  exercisable  for up to two years.  The
proceeds from this offering,  which was approved by the Canadian Stock Exchange,
were used to reduce payables and for working  capital.  The offering was sold to
two investors:  a Canadian individual and a Canadian  corporation and was closed
on August 25, 1997 with all shares sold.

     The Company began testing its  refrigerant  systems on all Vancouver to Los
Angeles flights  operated by Canadian  Airlines on September 10, 1997. This test
was  considered  as a logistics  trial  period to determine  the most  effective
methods for handling the product.  The test lasted 60 days.  The product  worked
but Canadian Airlines did not purchase any product.

     The  requisite  12%  cumulative  dividend  on  Class A  Convertible  Voting
Preferred  Shares,  Series I, was  declared on  September  24, 1997 for the year
ended March 31, 1997.  The dividend was paid in common  shares  totaling  96,908
common shares at a deemed price of Cdn$0.495 per share  ($47,969.84  total).  Of
these  shares,  88,980 were subject to a hold period in British  Columbia  which
expired March 31, 1998.

     On February 2, 1998 K. Barry  Sparks  resigned  from the Board of Directors
for personal reasons and due to other business demands. The board consisted of 5
members: Harry Bygdnes, Robert Leigh Jeffs, Douglas Reid, John McEwen, and James
Fletcher.

     The Company began a placement of 777,777 common shares at Cdn$0.45 each for
a total of Cdn$350,000  on February 24, 1998.  This offering was approved by the
Canadian  Stock  Exchange.  The  proceeds  were used to repay debt.  The private
placement was completed with one Canadian shareholder.

     On March 27, 1998,  the Company  agreed to pay a bonus to David  Patriquin,
the guarantor on the Company's  US$167,285 equipment lease on a Model L-18 Pouch
Machine.  Part of the bonus was paid in cash at 1% per month  (Cdn$2,392) over a
maximum of 10 months,  ceasing  immediately if the guarantor was released during
the 10 month period. The remainder was paid in 119,608  non-transferable  common
stock warrants,  all issued,  exercisable for two years at Cdn$0.40 in the first
year and Cdn$0.46 in the second year. The Canadian Stock Exchange  approved this
transaction.

     The Company purchased a machine and placed it in the manufacturing facility
of  Northland  Ice-Gel  Inc.  The Company  instructs  and pays  Northland  as to
quantity as needed.  Manufacturing,  with this machine,  began during the fiscal
year ended March 31, 1999. This facility manufactures product to be delivered to
the United States,  Canada and the Pacific Rim. Sugar Foods produced the product
from April, 1987 until April, 1999 under a contractual arrangement.  The Company
pays to Northland  Custom  Packaging a rate for providing the labor  involved in
the

<PAGE>

manufacture of Cryopak's product. The rates used were verbally agreed to by both
companies  and is charged on a per piece  basis.  There is no minimum or maximum
amount  of  product  Northland  is  required  to  manufacture.  The  Company  is
responsible for the purchase,  delivery,  and payment of all raw materials.  The
machinery  can be  removed  at any  time if the  Company  is  dissatisfied  with
Northland's  performance.  The machine is used solely for the manufacture of the
Company's  product and is not to be used by  Northland  for any other  purposes.
Cryopak  purchased  the  machine  by  financing  through a lease to  manufacture
Cryopak's  patented  ice  blanket.  This  replaces  entirely  the  manufacturing
previously conducted by Sugar Foods.

     As  disclosed in Note 16 to the  financial  statements  the Company  issued
500,000  common shares in 1989  pursuant to the  acquisition  of a license.  The
value of $0.30 per share was determined as the twenty day average of the trading
value of shares prior to issue.  The Company  reflected this value ($150,000) in
its share  capital  issued and a  corresponding  value was ascribed to the asset
acquired.

     The Company is obligated to issue an  additional  3,000,000  common  shares
based upon the following formula of cash flow:

     Cumulative Cash Flow/$0.30-Number of Shares issued to Date

     The  calculation  is to be made annually  based upon the audited  financial
statements. Cash flow, per the agreement, is defined as cumulative net profit of
Cryopak (Canada)  Corporation  after tax in any given fiscal year of the Company
on a consolidated  basis with all subsidiaries of Cryopak  (Canada)  Corporaiton
after the  addition  back of  non-cash  items such as  depreciation,  depletion,
deferred taxes and other appropriate non-cash adjustments,  as calculated by the
Company's auditors.  To date the Company has not attained the required cash flow
to issue additional shares.

     In the opinion of management,  there is a high  likelihood of attaining the
cash flow required to issue the remaining  3,000,000 common shares by the end of
2005.

     The remaining  shares,  as and when issued,  will be recorded at their fair
market value and the income statement will record an expense in the same amount.
The  obligation  to issue the shares will be included in the  earnings per share
calculations.

     The Company commenced a placement of 1,000,000 shares at Cdn$0.40 per share
for  a  total  of  Cdn$400,000   on  April  23,  1998.  The  offering   included
non-transferable  warrants to purchase up to 1,000,000 additional shares for two
years at Cdn$0.40  per share for the first year and  Cdn$0.46  during the second
year.  The  proceeds  from this  offering  were used to reduce  payables and for
unallocated  working  capital and the  offering was closed on June 26, 1998 with
all shares sold. All shares were sold to Canadian and European  individuals  and
entities.

     On November 1, 1998, Cryopak declared the requisite 12% cumulative dividend
on its Class "A" Convertible Voting Preference Shares,  Series I, held by VCC on
the record date of March 31,  1998.  The Company  elected to pay the dividend in
common shares and issued  159,199  common  shares at a price of  Cdn$0.3995  per
share for a total of  Cdn$63,600.  The shares  were  subject to a hold period in
British Columbia which expired after March 31, 1999.

     Cryopak finalized a Cdn$3.6 million purchase order from Northwest  Airlines
on December 1, 1998 for the  refrigerant  products  of its  subsidiary,  Cryopak
(Canada) Corporation. This purchase order is for three years. Northwest Airlines
uses the Cryopak  product in interior  catering and  inflight  food and beverage
service.  Northwest  currently is not using the product.  First use should occur
during the first half of 2000.

     An offering was commenced on February 3, 1999 of 1,280,000 common shares at
Cdn$0.75 per share for net proceeds of Cdn$924,900. The offering was approved by
the  Canadian  Stock  Exchange  and was closed on March 19, 1999 with all shares
sold  to  European  corporations.  Finder's  fees  were  paid  to  two  European
corporations.

     On February 8, 1999  Cryopak  retained  the  services of European  Investor
Services  ("EIS")  to  coordinate  investor  relations  with a growing  group of
shareholders  across Europe.  EIS is an integrated  investor  relations  company
headquartered  in London and operating in all major financial  centers of Europe
and  specializing  in the high tech, new media and  biotechnology  sectors.  EIS
represents  small and medium North  American  companies  wishing to expand their
European  shareholder  bases  and  will  provide  corporate   information  to  a
developing  shareholder  base and ensure a flow of  information  to industry and
financial analysts advising the European financial  community as to the progress
and key  developments  of the  Company.  The  contract  is for six months at two
thousand pounds per month, subject to review after three months.  Currently, the
contract  has been  extended  to a month  to month  basis  and all  parties  are
complying with its terms.

     Nick Fuller was appointed Vice President of Public Relations of the Company
on February 11, 1999.

     John  Morgan  was  appointed  President  and CEO of  Cryopak's  subsidiary,
Cryopak Corporation,  on March 19, 1999. He was also appointed a director of the
Company  at  this  time.  Mr.  Morgan's  signing   incentive  was  a  forgivable
interest-free  loan  which  was used to  acquire  125,000  common  shares of the
Company at Cdn$0.776 per share, including 125,000 warrants exercisable after six
months'  employment.  The stock  purchase  was  approved by the  Canadian  Stock
Exchange.  Also on March 19, 1999,  Leigh Jeffs, a long-time member of the Board
of Directors, was appointed Chief Financial Officer of the Company.

     On April 1, 1999 the Company  retained  the  services  of CCRI  Corporation
("CCRI"), a Phoenix,  Arizona, based corporation,  to provide investor relations
and corporate finance services to the Company,  especially in the United States.
CCRI will provide  corporate  information to a developing  shareholder  base, as
well as ensure a flow of information to industry and financial analysts advising
the American financial  community as to the progress and key developments of the
Company.  The initial agreement is for twelve months at US$6,000 per month, plus
$20,000 for preparation and mailing of a Corporate Profile.

     Cryopak  sold 72,000  shares of its common  stock to CCRI at  Cdn$0.75  per
share for total  proceeds of Cdn$54,000  on April 8, 1999.  Each share came with
one warrant  exercisable for up to two years at Cdn$1.00 per share. The proceeds
from this offering were used for working capital.

<PAGE>

     On April 22, 1999 Ross G.  Morrison was elected to the  Company's  Board of
Directors.  The board is now comprised of 6 members: Harry Bygdnes, Robert Leigh
Jeffs, Douglas Reid, John McEwen, John Morgan, and Ross Morrison

Products
--------

     Cryopak markets Cryomat, a refrigerant product that maintains a temperature
range of 32-46 degrees Fahrenheit for longer than conventional  cooling products
such as ice,  dry ice and gel packs.  The  product  keeps  foods  fresh and cold
without freezing, unpleasant odor or watery mess. Cryopak can be handled without
risk of burning skin and does not produce carbon dioxide. Cryomat was tested and
independently evaluated for over twelve months by the North American airline and
food catering  industry (eg.  Northwest  Airlines,  Dobbs Catering,  and LSG Sky
Chefs)  and the  results  of  these  tests  showed  that it  possesses  superior
temperature  control  capabilities  over  competing  products,  while meeting or
exceeding the HACCP requirements established by the FDA.

     The Company has conducted  tests comparing the effects of its products with
dry ice and gel packs. The Company's product,  Cryopak,  was shown to maintain a
temperature  within a prescribed  range of  temperatures  for a longer period of
time as per graphs  included in exhibits,  an attribute  which is not  generally
available  with  competing  products.  The  unique  qualities  of  Cryopak  are;
flexibility,  reusable, blanket effect, no water mess, the ability to be wrapped
or layered  around  objects.  These  qualities  allow the  Cryopak to maintain a
consistent temperature for a longer time period.  Additionally,  Cryopak doesn't
have the  disadvantage  of dry ice which  produces  carbon  dioxide  during  the
sublimation  process thereby  displaces oxygen in enclosed  environments such as
aircrafts. Gel packs do not provide flexibility and/or coverage of cold for area
coverage for  consistent  temperature.  In the case of ice and dry-ice  product,
form is the key to  performance  criteria;  i.e., ice melts so the liquid causes
problems in  airplanes  and  dry-ice  sublimates  to CO2  causing  issues in air
quality.  Cryopak's form and flexibility  can be key to  performance.  Copies of
several  studies which verify these results are attached hereto as Exhibits 99.3
through 99.8. These include (i) an outline of  considerations  in the physics of
heat  transfer;  (ii) a study from U.B.C.  which  clearly shows that Cryopak out
performs gel paks in keeping the subject matter at a lower temperature;  (iii) a
study by Inchcape that proves that the "blanket"  effect of Cryopak allows it to
outperform  gels on a pound for pound basis;  (iv) a study  completed for Abbott
Laboratories  by the Company which clearly  outlines  Cryopak's  superiority  in
pharmaceutical  shipping,  which was a "blind" test; (v) a test completed for SB
which demonstrates  Cryopak's  superiority to dry ice in that it can deliver the
requested  temperature  range without risk; and (vi) results of tests  completed
with Northwest  Airlines to demonstrate  the product's  superiority  for airline
applications.  In all  situations  the  transfer of heat from the subject to the
Cryopak is key in that the blanket  effect  withdraws  more heat and  delivers a
cooler or colder product.

     Studies  conducted  by  independent  third  parties  confirm  that  Cryopak
maintains refrigeration temperatures of perishables for longer time periods than
competitive  products due to its even distribution of cold throughout the box as
illustrated by the U.B.C. study and Inchcape study.

     A study performed by the Company for Northwest Airlines showed that Cryopak
maintains uniform temperatures due to its "blanket effect".

     Cryomat consists of reusable sheets of liquid-filled  laminate pouches that
provide  refrigeration and insulation when frozen.  The sheets can be custom cut
to  various  sizes  or  into  individual  cubes  for  use  in a  wide  range  of
applications and has been U.S.D.A approved for use with food products, including
fish, meat and poultry.  The Company markets its Cryomat product to the airline,
pharmaceutical  and seafood  shipping  industries  and has begun to  investigate
marketing the product to the sports/healthcare industry.  Additionally,  Cryomat
is sold commercially in Canada under the name Cooler Mat.

     All of the  Company's  sales  are to  third-party  customers.  Sales to the
United  States  for  the  years  1997,  1998,  and  1999  are  73%,  67% and 88%
respectively.  International  sales are 24%, 29% and 7% for 1997,  1998 and 1999
with the majority to one customer,  Seafish Systems. Sales within Canada are 3%,
4% and 5% for 1997, 1998 and 1999.

     Three customers accounted for approximately 70%, 74% and 71% of total sales
for the financial years 1997, 1998 and 1999. They are Dura*Kold Corp.,  Polyfoam
Packers,  and Seafish  Systems for 1997 and 1998 and Dura*Kold  Corp.,  Polyfoam
Packers, and Wyeth-Ayerst Labs for 1999.

     There is no new product or service being offered.

<PAGE>

     The Company  conducts  research  and  development  activities  of a minimal
nature at this time but the activities are not separately  accounted for nor are
there allocated funds for these activities.

     The "perishable"  packaging industry is being faced with several pressures,
which have forced  corporations  within the industry to  reevaluate  traditional
methods of packing,  transporting and storing temperature sensitive goods. These
pressures  include the market and customer driven need for higher quality,  more
timely and  fresher  products,  a cost driven need to reduce the amount of waste
and spending on less effective  products and regulation  driven  requirements of
new food  safety  and health  standards  and the  United  States'  Food and Drug
Administration's  ("FDA")  regulations for the transport of pharmaceuticals  and
general handling and catering of perishable meals for public consumption.

     In December 1997, the FDA introduced the HACCP ("Hazard  Analysis  Critical
Control Point")  program,  a food handling  guideline system endorsed by the FDA
which was put into effect in December 1998. One portion of this program requires
that airline food be stored at temperatures below 41 degrees Fahrenheit. Because
the Company's  testing in the airline industry have shown that food stored using
its products  remain below this level,  this new regulation will have a positive
impact on the Company's sales.

     The "perishable"  packaging industry must also follow U.S.D.A.  regulations
in the United States and Agriculture Canada  regulations in Canada.  Cryomat has
been  U.S.D.A.  approved  and  Agriculture  Canada  accepted  for use with  food
products, including fish, meat and poultry.

     The Company's  Cryomat product has been registered with the U.S. Patent and
Trademark  Office as "Thermal  Packaging  Assembly"  and received  patent number
4,931,333  on June 5, 1990.  The product was also  patented in Canada on October
22, 1991 with patent number  1,291,073.  The patent expires in Canada on October
22, 2008 and in the United  States on June 5, 2007.  Both patents are held by D.
Lindley Henry. Lin Henry is a consultant for the company. A copy of the Canadian
patent is  attached  as an exhibit to this  registration  statement;  the United
States patent is available from the U.S.  Patent and Trademark  Office.  Because
these  expiration  dates are so far in the future,  the  Company  feels that the
patent  expirations  will  not make a  significant  impact  upon  the  Company's
business.

     The Company's subsidiary Cryopak Corporation has also trademarked the words
"Cryomat" and "Cryopak" with the United States Patent and Trademark Office.  The
"Cryomat"  trademark is registration number 1,420,052 dated December 9, 1986 and
the "Cryopak" trademark is registration  number 1,576,371  registered January 9,
1990.   These   trademarks   expire  December  9,  2006  and  January  9,  2001,
respectively.  Additionally,  Cryopak  Corporation has  trademarked  "Super Cool
System" with the Canadian  Trademark  Office,  registration  number  441,439 and
registration  date March 31, 1995,  as well as "Cooler  Cube" with  registration
number 441,438 and  registration  date March 31, 1995.  The Canadian  subsidiary
registered these trademarks.

Cryopak (Canada) Corporation

     Cryopak  (Canada)   Corporation,   ("CCC")  a  British  Columbia,   Canada,
corporation,  was  incorporated  on June 6, 1986 as 310302 B.C. Ltd. and changed
its name to Cryopak (Canada) Corporation on September 22, 1987. CCC has a wholly
owned subsidiary,  Cryopak Corporation, a Nevada corporation formed on March 20,
1987. Additionally,  CCC had a fifty percent (50%) interest in Cryopak (Alberta)
Corporation,  an Alberta,  Canada corporation formed in November 17, 1992, which
was  dissolved in 1998.  From  inception  until 1998,  CCC has been handling all
sales  activities  up to the point when the  Company  started  manufacturing  in
Vancouver.  From July 1998  onwards,  CCC has been in charge of all sales to the
United  States and  worldwide  while the  Company is  responsible  for all sales
within Canada.

Cryopak (International) Inc.

     Cryopak  (International)  Inc. is a Barbados  corporation  incorporated  on
August 29, 1995.  On March 19, 1996  Cryopak  (International)  Inc.,  reached an
agreement in principle  with Erik  Petersson & Company,  Inc.  ("EPC") of Miami,
Florida,  to secure sales and distribution  contracts for the Company's products
outside  North  America.  Under the terms of this  agreement,  EPC would be paid
Cdn$2,500  per month until  contracts  with  customers  were  signed,  plus five
percent  commission on total gross sales generated by EPC and warrants issued to
EPC's  principal,  Bertil I. Petersson,  based upon gross sales.  These warrants
were to be issued at a rate of 60,000  warrants  for the first  US$1,000,000  in
gross sales and 30,000  warrants for every  additional  US$500,000 in sales to a
maximum of 600,000 warrants. All warrants

<PAGE>

were  exercisable  for one  year  from  the  date  of  issuance.  The  agreement
stipulated a maximum of $10,000,000 gross sales,  which must be generated within
five years. EPC has provided Cdn$680,000 in sales and the Company has not issued
any warrants. As part of this agreement, EPC's principal,  Bertil I. Pertersson,
was to have been appointed to the Company's board of directors. However, Cryopak
International,  Inc. did not ratify the  appointment  and Mr.  Petersson did not
become a director.  Cryopak  (International)  Inc. has not had any activities to
date.

Item 2. Description of Property

     Cryopak's  principal executive offices are located at 1120-625 Howe Street,
Vancouver,  British Columbia, Canada V6C2T6. Cryopak leases office space for its
corporate  headquarters totaling 2,039 square feet at a rate of Cdn$2,378.83 per
month.  The current lease  expires on October 31, 2000.  The Company is reaching
maximum office capacity and will likely be seeking additional space prior to the
expiry of the existing lease.

     The  Company's  manufacturing  activities  are  currently  carried  out  by
Northland  Ice-Gel  Inc.  under the control of the  Company.  In  addition,  the
Company  contracts  with that  company to provide  supervision  and labor in the
manufacturing  activities.  There is no written  agreement  between  Cryopak and
Northland Ice-Gel, Inc./Northland Custom Packaging Inc. pertaining to the use of
the  Company's   machine   located  on  Northland's   property  and  Northland's
manufacture  of our  product.  There  is a Letter  of  Intent  for the  proposed
acquisition of Northland.  The Company is proposing to acquire Northland Ice-Gel
and Northland Custom Packaging to ensure additional  control over  manufacturing
operations  and  process  and to expand its  product  line with a  complementary
product line. The consideration to be paid would be approximately Cdn$3 million.
The purchase price would be payable  primarily in cash and would include 667,000
common shares of the Company and 500,000  performance escrow shares to be earned
out over five years. This acquisition  would provide adequate  additional office
space and product testing  facilities,  and would allow complete  monitoring and
direct control of all  manufacturing  and production  functions.  The additional
space acquired would be 10,000 square feet.

     Currently,   the  Company  and  Northland  Ice-Gel   Inc./Northland  Custom
Packaging Inc. are  negotiating  the terms of this  acquisition and have not yet
reached an agreement over  fundamental  issues.  If an agreement is reached,  it
must be approved by  Cryopak's  Board of Directors  and by the Canadian  Venture
Exchange.  A non-binding  Agreement in Principle was signed in September of 1999
and no definitive agreement has been reached. Many details have yet to be agreed
upon. As a result, management feels the acquisition is more not likely to occur.

Item 3. Legal Proceedings

     Neither  the Company  nor any of its  subsidiaries  is a party to any legal
proceeding at this time.

Item 4. Control of Registrant

     Cryopak is not  directly or  indirectly  owned or  controlled  by any other
corporation or by any foreign government.  The following table sets forth, as of
May 31, 1999,  the  beneficial  ownership of the Company's  Common Stock by each
person known by the Company to  beneficially  own more than 5% of the  Company's
Common Stock  outstanding  as of such date and by the officers and  directors of
the  Company as a group.  Except as  otherwise  indicated,  all shares are owned
directly.

<TABLE>
<CAPTION>
(1)                        (2)                                (3)                                (4)
                           Name and address of                Amount and Nature                  Percent of
Title of Class             beneficial owner                   Of Beneficial Ownership            Class
--------------             ----------------                   -----------------------            -----
<S>                        <C>                                <C>                                <C>
Common Shares              Exceptional Technologies Funds 3     977,777                          5.7%
                           1199 West Hastings Street, 5th Fl
Common Shares              Cryopak Industries (VCC) Inc.      1,043,722                          6.0%
Common Shares              Directors/Officers                 1,461,241                          8.5%
                                           Harry Bygdnes
                           Robert Leigh Jeffs
                           Douglas Reid
                           John McEwen
                           John Morgan
                           Ross Morrison

</TABLE>

<PAGE>

Item 5. Nature of Trading Market

     The  Company's  common  stock  trades  in Canada  on the  Canadian  Venture
Exchange.  Non-Canadian  investors are also able to trade the Company's stock on
this  Exchange.  As of March  31,  1999,  the  Company's  stock  was held by 388
American  shareholders,  which consisted of 34% of its total outstanding shares.
The high and low sales  prices for the  Company's  common  stock on the Canadian
Venture Exchange over the past two fiscal years are as follows:

<TABLE>
<CAPTION>
Fiscal Quarter                     High (Cdn$)                Low (Cdn$)
--------------                     -----------                ----------
<S>                                <C>                        <C>
April - June 1999                  $1.15                      $0.98
January - March 1999               $0.84                      $0.74
October - December 1999            $0.89                      $0.55
July - September 1998              $0.62                      $0.39
April - June 1998                  $0.46                      $0.36
January - March 1998               $0.43                      $0.36
October - December 1997            $0.42                      $0.26
July - September 1997              $0.52                      $0.41
April - June 1997                  $0.60                      $0.45

</TABLE>

Item 6. Exchange Controls and Other Limitations Affecting Security Holders

     Except  as  discussed  in Item 7 below,  the  Company  is not  aware of any
Canadian federal or provincial laws,  decrees,  or regulations that restrict the
export or import of capital, including foreign exchange controls, or that affect
the remittance of dividends,  interest or other payments to nonCanadian  holders
of Common  Shares.  The Company is not aware of any  limitations on the right of
nonCanadian  owners to hold or vote Common Shares imposed by Canadian federal or
provincial law or by the Company.

     The  Investment  Canada Act (the "Act")  governs  acquisitions  of Canadian
business  by a  nonCanadian  person or entity.  The Act  provides,  among  other
things,  for a review of an investment in the event of acquisition of control in
certain Canadian businesses in the following circumstances:

     (1)  if the  investor  is a  non-Canadian  and is not a resident of a World
          Trade Organization  ("WTO") country,  any direct acquisition having an
          asset value exceeding  $5,000,000 and any indirect  acquisition having
          an asset value exceeding $50,000,000;

     (2)  if the investor is a  non-Canadian  and is a resident of a WTO member,
          any direct  acquisition  having an asset value exceeding  $168,000,000
          unless the  business  is  involved  in uranium  production,  financial
          services, transportation services or a cultural business.

     An indirect  acquisition  of control by an investor  who is a resident of a
WTO  country is not  reviewable  unless the value of the assets of the  business
located  in  Canada  represents  more  than  50%  of  the  asset  value  of  the
transaction,  or the  business  is  involved  in uranium  production,  financial
services, transportation services or a cultural business.

     The Act  provides  that a  non-Canadian  investor can hold up to 1/3 of the
issued and outstanding capital of a Canadian  corporation without being deemed a
"control person", and that a non-Canadian  investor holding greater than 1/3 but
less than 1/2 of the issued and outstanding capital of a Canadian corporation is
deemed  to be a  control  person  subject  to a  rebuttable  presumption  to the
contrary  (i.e.  providing  evidence of another  control person or control group
holding greater number of shares).

     The Act  requires  notification  where  a  non-Canadian  acquires  control,
directly or indirectly,  of a Canadian business with assets under the thresholds
for  reviewable  transaction.  The  notification  process  consists  of filing a
notification within 30 days following the implementation of an investment.

Item 7. Taxation

<PAGE>

     The Income Tax Act (Canada) provides that interest and/or dividends paid to
persons  who are not  resident  in Canada are subject to taxation in Canada at a
rate of 25% of the amount so paid.  The tax is withheld by the payor at the time
of payment. The 25% withholding rate may be reduced where Canada and the country
of  residence  of the  recipient  have enacted a treaty with respect to taxes on
income and on capital.  The Canada United  States Income Tax  Convention of 1980
provides that the withholding  rate on dividends and interest will be 15% of any
paid. There are no other taxes eligible for persons not resident in Canada. Item
8. Selected Financial Data (Stated in Canadian Dollars)

<TABLE>
<CAPTION>
                                    Year             Year              Year             Year            Year
                                    Ended            Ended             Ended            Ended           Ended
                                    March 31,        March 31,         March 31,        March 31,       March31,
                                    1999             1998              1997             1996            1995
                                    ----             ----              ----             ----            ----
<S>                                 <C>              <C>               <C>              <C>             <C>
Net Sales or Operating Revenues     $1,295,159       $1,161,442        $1,140,242       $965,912        $1,053,456
Income (Loss) from Continuing
 Operations                         (   912,068)     (    638,553)     (    675,133)    (912,390)       (799,428)
Income (Loss) from Continuing
 Operations per common share        (        0.06)   (         0.05)   (          0.06) (      0.09)    (      0.09)
Total Assets                          2,036,700        1,364,297            892,598      969,860         789,332
Long-Term Obligations and
 Redeemable Preferred Stock
     Capital Leases                      249,057          320,015                0                  0               0
     Redeemable Preferred Stock               0                      0                0             0               0
Cash Dividends Declared per
 Common Share                              N/A             N/A                  N/A               N/A             N/A

</TABLE>

     The Company prepares its financial statements in accordance with accounting
principles  generally  accepted in Canada  ("Canadian  GAAP").  In addition  the
Company provides  supplementary  description of significant  differences between
Canadian GAAP and those in the United States ("U.S. GAAP") as follows:

     A.   Under U.S.  GAAP  development  costs are expensed as  incurred.  Under
          Canadian  GAAP  development  costs  subject  to certain  criteria  are
          deferred and amortized.

     B.   The Company has elected to follow Accounting  Principles Board Opinion
          No.  25  "Accounting  for  Stock  Issues  to  Employees"   (APB25)  in
          accounting  for its stock options.  Under APB25,  because the exercise
          price of the Company's  options for common shares granted to employees
          is not less than the fair market value of the underlying  stock on the
          date of grant, no compensation expense has been recognized.

     C.   Under U.S. GAAP,  stock based  compensation to  non-employees  must be
          recorded at the fair market value of the options and warrants granted.
          This compensation,  determined using a Black-Scholes pricing model, is
          expensed over the vesting periods of each option and warrant granted.

<PAGE>

     The  impact of  significant  variations  to U.S.  GAAP on the  Consolidated
Statements of Loss are as follows:

<TABLE>
<CAPTION>
                                                Year Ended March 31
                                     1999              1998              1997               1996              1995
                                     ----              ----              ----               ----              ----
<S>                                  <C>               <C>               <C>                <C>               <C>
Loss for the year, Canadian          $(    912,068)    $(    638,553)    $(    675,133)     $ (912,390)       $(799,428)
GAAP

Amortization of deferred                    14,822            14,822            14,822          14,822           14,822
development costs
Adjustment for stock based                                                                    ( 50,573)          (9,788)
compensation -                       (    574,868)     (    123,226)      (   190,351)
   Non employees

                                                                             (948,141)        (794,394)
Loss for the year, U.S.               ( 1,472,114)     (    746,957)      (   850,662)          $(0.09)          $(0.09)
GAAP
Loss per share, U.S. GAAP           $(       0.10)    $(       0.06)     $(      0.07)

</TABLE>

     Supplemental disclosure of pro forma loss and loss per share is as follows:

<TABLE>
<CAPTION>
                                                                         Year ended March 31
                                                            1999               1998               1997
                                                            ----               ----               ----
<S>                                                         <C>                <C>                <C>
Pro forma loss, U.S. GAAP                                   $( 1,785,577)      $(    784,485)     $(    875,991)
Pro forma loss per share, U.S. GAAP                         $(      0.12)      $(       0.06)     $(       0.07)

</TABLE>

     The  impact of  significant  variations  to U.S.  GAAP on the  Consolidated
Balance Sheets items are as follows:

<TABLE>
<CAPTION>
                                                                     Year Ended March 31
                                                                  1999                         1998
                                                                  ----                         ----
<S>                                                               <C>                          <C>
Assets                                                            $        2,018,172           $      1,330,947
Share Capital                                                           10,257,319                    7,485,544
Deficit                                                           (      9,400,181)            (      7,987,693)

</TABLE>

     As of September  13, 1999,  the exchange rate between the United States and
Canada was US$1.00 per  Cdn$1.4703.  Over the Company's  past five fiscal years,
the exchange rate per US$1.00 has varied as follows:

<TABLE>
<CAPTION>
                           Rate at          Average           Low               High
Fiscal Year Ended          Year End         Rate              Rate              Rate
-----------------          --------         ----              ----              ----
<S>                        <C>              <C>               <C>               <C>
March 31, 1999             $1.5092          $1.5033           $1.4173           $1.5765
March 31, 1998             $1.4166          $1.4023           $1.3669           $1.4639
March 31, 1997             $1.3843          $1.3609           $1.3306           $1.3843
March 31, 1996             $1.3632          $1.3629           $1.3282           $1.3987
March 31, 1995             $1.3990          $1.3824           $1.3408           $1.4235

</TABLE>

Item 9. Management's Discussion and Analysis of Financial Condition and
        Results of Operations

     The following  discussion  should be read in conjunction with the financial
statements  and notes  thereto  included  with this Form  20-F.  Except  for the
historical  information  contained  herein,  the discussion in this Registration
Statement  contains  certain  forward-looking  statements  that involve risk and
uncertainties,   such  as  statements  of  the  Company's   plans,   objectives,
expectations  and  intentions.  The cautionary  statements made in this document
should be read as being  applicable  to all related  forward-looking  statements
wherever they appear in this document. The Company's actual results could differ
materially from those discussed here.

<PAGE>

     The Company's  operating  history makes the prediction of future  operating
results difficult or impossible.

General Overview
----------------

     The Company's  business is the  manufacturing and sale of thermal packaging
solutions.  The Company's  Cryomat  product is a patented,  flexible,  re-usable
refrigerant  product,  which is sold as a  stand-alone  product  or as part of a
system  (both  corrugated  and  Styrofoam).  This  product is  typically  an ice
replacement  and is shipped  directly  to the  customer  in response to purchase
orders.  The principal markets were in the  transportation  of seafood,  medical
wraps, and general thermal packaging.  Over the last five years, the Company has
experienced  low but stable sales,  largely to the seafood  industry and medical
wraps. It has suffered recurring losses from operations. The Company has focused
on identifying key markets where the  opportunity for significant  sales volumes
may exist or be created  and has  established  certain  key  relationships  with
several groups that provide broader North American distribution.  Currently, the
Company  has  targeted  the   pharmaceutical   industry,   particularly  in  the
transportation of temperature-sensitive biologicals and pharmaceuticals.

Results of Operations
---------------------

     The  table  below  sets  out  key  components  of the  Company's  operating
statements,  both  numerically and as a percentage of sales,  for the last three
years.

<TABLE>
<CAPTION>
                                     1999                      1998                           1997
                                     ----                      ----                           ----
<S>                        <C>       <C>               <C>     <C>               <C>          <C>
Sales                      100%      $1,295,159        100%    $1,161,442        100%         $1,140,242
Cost of sales               57%         746,285         66%       763,018         59%            675,706
Gross Profit                43%         548,874         34%       398,424         41%            464,536
Selling and                113%       1,460,942         89%     1,036,977        100%          1,139,669
 administrative costs
Net loss                    70%         912,068         55%       638,553         59%            675,113

</TABLE>

     Sales have been relatively  stable over the last three years,  showing only
marginal  increases of 11.5% in 1999,  1.8% in 1998, and 18.0% in 1997. Over the
prior year, the Company has been seeking out markets  capable of producing large
sales volumes with high gross margins.

Cost of Sales and Gross Margins
-------------------------------

     The Company's  cost of sales was 57% in 1999, 66% in 1998, and 59% in 1997.
The cost of sales as a percentage of sales has been relatively stable, generally
approximately 57%.

     In 1998,  the cost of sales  was 66%.  In order to  encourage  sales to the
Asian and Australian/New  Zealand markets, the Company reduced its selling price
temporarily.  This  resulted in an increase in cost of sales as a percentage  of
sales.  Sales  efforts to those  regions  have  ceased  because of the  weakened
currencies there.  Sales efforts will resume when more favorable  exchange rates
occur.

     By acquiring  its own  equipment and  exercising  greater  control over the
manufacturing  process,  the Company has  reduced  its cost of  production.  The
Company  expects  higher  gross  margins  and  correspondingly  lower  costs  of
manufacturing in future years. The Company is currently using the  manufacturing
facilities of Northland Ice-Gel to manufacture its product.

Selling and Administrative Costs
--------------------------------

     The Company's  selling and  administrative  costs were 113% in 1999, 89% in
1998, and 100% in 1997. The costs were high relative to sales.  These costs were
related to:

     1.   the Company's marketing and financing activities;

<PAGE>

     2.   identifying   prospective   target   industry   groups   such  as  the
          transportation of fresh food and produce,  airline in-flight services,
          and  pharmaceutical  industry  requiring  specific  thermal  packaging
          solutions;

     3.   assisting  prospective  customers  in product  testing and  developing
          implementation strategies; and

     4.   developing  and  designing  of  thermal  packaging  solutions  to meet
          prospective customer needs.

     The  Company  is  faced  with a sales  cycle  of up to  2-1/2  to 3  years.
Accordingly,  the  Company  must  spend  considerable  amounts  of  money on its
marketing  efforts before  realizing  significant  sales. The result in 1999 and
prior  years  has  been a  large  investment  in  its  marketing  program  and a
corresponding  requirement to finance such costs through the equity markets. The
Company  anticipates that sales will increase in 2001 for the following reasons:

     1.   Wyeth-Ayerst  has  approved  Cryopak  as  a  key  component  of  their
          packaging for all temperature-sensitive products.

     2.   The sales cycle with other pharmaceutical  companies is moving through
          the completion of testing to the purchase stage.  SmithKline  Beecham,
          Aradigm, and Caremark are anticipated to place orders.

     3.   The retail contract signed with I.I.D.A. will result in new sales.

     4.   Changes to our inside sales department and customer service department
          should result in growth for our base business.

     5.   A new  sales  representative  will be  added  early  in the new  year,
          focused on the e- commerce, Internet-driven grocery business.

Liquidity
---------

     The Company  has relied  upon its  ability to raise  capital to finance its
ongoing  operating  losses and capital asset  requirements.  The Company  issued
stock totaling  $2,392,000 in 1999,  $291,890 in 1998, and $586,870 in 1997. The
Company has raised additional equity of $678,166 in the first nine months of the
current fiscal year ending March 31, 2000.

Capital Resources
-----------------

     The Company has financed capital expenditures in 1998 with a capital lease.
Such  financing  was  $368,313 in 1998.  At March 31,  1999,  the Company had no
specific commitments to make further capital expenditures,  nor does it have any
at December 31, 1999.

     While there are no capital expenditure  requirements currently, the Company
anticipates making further acquisitions as sale volumes increase.  To the extent
that such expenditures cannot be financed out of operating cash flow, additional
capital lease financing may be sought.

Item 9A. Quantitative and Qualitative Disclosures About Market Risk

Disclosures About Market Risk
-----------------------------

     In the courses of carrying on its  business,  the Company is subjected to a
variety of business risks,  including market risk associated with fluctuation in
interest  rates,  currency  exchange  rates  as  well as the  collectibility  of
accounts.

Collectibility of Accounts
--------------------------

     The Company  carefully  monitors  the  collection  of all  accounts and the
granting of credit. As the result of this policy, the Company has experienced no
material credit losses and does not anticipate future losses to be material. The
Company will continue its close monitoring of credit.

Currency Fluctuation Risk
-------------------------

     Approximately  95% of the  Company's  sales  revenue is in US  Dollars  and
substantially all of its costs of sales and administrative costs are in Canadian
dollars.  Its marketing costs including travel and consulting costs are incurred
in the country of origin.  The Company monitors exchange rates but had not taken
action to date to reduce its exposure to  significant  fluctuations  in currency
exchange rates.  Management will review its exposure and will take such remedial
steps as it considers necessary.

<PAGE>

Interest Rate Risk
------------------

     The  Company's  interest  expenses  and  income  are  subject to changes in
interest  rates.  Management  has  determined  that  fluctuation of up to 10% in
interest rates would not materially affect its financial  position or results of
operations.

     As at March 31, 1999,  the  capitalized  amount owing under long term lease
contracts  was  $333,601  with fixed  interest  until  maturity.  See Note 10 of
financial statements.

Item 10. Directors and Officers of Registrant

<TABLE>
Cryopak Industries Inc.
<CAPTION>
                                                                             Arrangements Material
Name                       Title(s)         Term of Office                   to Appointment
----                       --------         --------------                   --------------
<S>                        <C>              <C>                              <C>
Harry Bygdnes              President,       1981 to Present                  None
                           Director         1981 to Present                  None
Robert Leigh Jeffs         CFO,             March 1999 to Present            None
                           Director         June 1990 to Present             None
Harley D. Sinclair         Secretary        November 1995 to Present         None
Ross G. Morrison           Director         April 1999 to Present            None
John F. Morgan             Director         March 1999 to Present            None
John A. McEwen             Director         August 1995 to Present           None
Douglas R. Reid            Director         June 1990 to Present             None

</TABLE>

<TABLE>
Cryopak (Canada) Corporation
<CAPTION>
                                                                             Arrangements Material
Name                       Title(s)         Term of Office                   to Appointment
----                       --------         --------------                   --------------
<S>                        <C>              <C>                              <C>
Harry Bygdnes              Secretary,       1987 - Present                   None
                           Director
Robert Leigh Jeffs         President,       March 1987 to March 1999         None
                           Director         March 1987 to Present            None
John F. Morgan             President,       March 1999 to Present            None
                           CEO, and         March 1999 to Present            None
                           Director         March 1999 to Present            None

</TABLE>


Cryopak (International) Inc.
<TABLE>
<CAPTION>
                                                                             Arrangements Material
Name                       Title(s)         Term of Office                   to Appointment
----                       --------         --------------                   --------------
<S>                        <C>              <C>                              <C>
Harry Bygdnes              Director         August 1995 to Present           None
Robert Leigh Jeffs         Director         August 1995 to Present           None

</TABLE>

     All directors have a term of one year. Directors are elected at each annual
meeting  of the  Company.  The  terms  for  President,  CFO  and  Secretary  are
indefinite.

Item 11. Compensation of Directors and Officers

     During the  Company's  last fiscal year ended March 31,  1999,  the Company
paid an aggregate of Cdn$151,146 to its officers. The Company's directors do not
receive a salary, but are paid for out-of-pocket  expenses incurred as directors
of the Company.  Both the  Company's  officers and its  directors  have received
options for the Company's common stock at various exercise prices based upon the
average  trading  price for the ten trading days prior to the grant date.  There
are no amounts  set aside or  accrued  during  the last  fiscal  year to provide
pension,  retirement or similar benefits for the directors and officers pursuant
to  any  existing  plan  provided  or  contributed  to by  the  Company  or  its
subsidiaries.

<PAGE>

Item 12. Options to Purchase Securities from Registrant or Subsidiaries

     As of March 31, 1999, the following  stock  options,  all  exercisable  for
shares of the Company's common stock, were outstanding:

<TABLE>
<CAPTION>
Group Received                      Number of Shares            Exercise Price          Expiration Date
--------------                      ----------------            --------------          ---------------
<S>                                 <C>                         <C>                     <C>
Directors                             170,000                   $0.50                   June 13, 1999
                                      390,000                   $0.52                   August 17, 2000
                                      343,000                   $0.50                   January 7, 2001
                                       75,000                   $0.52                   June 19, 1999
                                      200,000                   $0.50                   September 2, 1999
Officers                              100,000                   $0.40                   June 26, 2000
                                      136,300                   $0.82                   August 17, 2000
Employees                              20,000                   $0.52                   June 16, 1999
                                      100,000                   $0.82                   February 11, 2001
                                      750,000*                  $0.76                   March 19, 2004
Directors and Officers              2,164,300
as a group (3 persons)
Total options outstanding           2,284,300

</TABLE>

*    These  options  will vest at a rate of  50,000 at the end of each  calendar
     quarter commencing March 31, 1999.

Item 13. Interest of Management in Certain Transactions

     Over the past five  fiscal  years,  the Company  has given  unsecured  cash
advances to NCK  Holdings,  Inc.  ("NCK"),  which is owned by Harry  Bygdnes and
Leigh Jeffs,  directors of Cryopak.  These  advances  have  included  Cdn$56,972
during the fiscal year ended March 31, 1995,  Cdn$109,339 during the fiscal year
ended March 31, 1996,  Cdn$ 90,668  during the fiscal year ended March 31, 1997,
Cdn$70,572 during the fiscal year ended March 31, 1998 and Cdn$48,868 during the
fiscal year ended  March 31,  1999.  These  amounts  were not repaid  during the
fiscal year ended March 31, 1995;  however,  commencing in the fiscal year ended
March 31, 1996 NCK began repaying the advances at a rate of Cdn$2,200 per month,
which amount includes eight percent annual interest. The unsecured cash advances
were paid against royalties, which were less than anticipated.

     The  Company  has also  paid  management  fees and  royalties  to NCK.  The
management fees were paid in exchange for management  services and the royalties
were in exchange for the rights to the patent for the Cryomat product.  Over the
past five fiscal years, these fees and royalties have been paid as follows:

<TABLE>
<CAPTION>
Fiscal Year Ended          Management Fees             Royalties
-----------------          ---------------             ---------
<S>                        <C>                         <C>
March 31, 1995             Cdn$210,000                 Cdn$17,722
March 31, 1996             Cdn$220,000                 Cdn$20,159
March 31, 1997             Cdn$220,000                 Cdn$22,934
March 31, 1998             Cdn$220,000                 Cdn$26,289
March 31, 1999             Cdn$220,000                 Cdn$26,261

</TABLE>

     During the fiscal year ended March 31, 1996,  the Company paid  commissions
to Discovery Capital Corporation,  the president and non-controlling shareholder
is John McEwen, who is also a member of Cryopak's board of directors. Mr. McEwen
provides assistance in market research, preparation of documents and planning of
offering of shares under  private  placements.  These  commissions  were paid in
exchange for sales of the Company's stock as part of the  Cdn$2,000,000  venture
capital  Investment  Agreement  entered into  between the Company and  Discovery
Capital  Corporation in March 1995 and totaled  Cdn$56,560.  The Company paid an
additional  Cdn$15,540 in professional fees and Cdn$23,500 in consulting fees to
Discovery Capital  Corporation during the fiscal year ended March 31, 1997, also
as a part of the terms of the Investment Agreement.

     Other amounts paid to affiliated  corporations  during the past five fiscal
years  include  Cdn$10,000  in  professional  fees paid to a company  owned by a
director  during the fiscal  years  ended  March 31, 1996 and March 31, 1998 and
professional  fees of  Cdn$22,200  paid in the fiscal year ended March 31, 1999.
The fees were paid to Reid

<PAGE>

& Company for advisory services. Douglas R. Reid is president of Reid & Company.
He  provides  general  corporate  consulting,   accounting  advice  and  related
assistance on financial matters including leases.

     The Company had accounts receivable of Cdn$12,446 owed by NCK Holdings Inc.
and Cdn$3,278  by Fulcrum  Development  Ltd., a company related by Harry Bygdnes
and Leigh  Jeff,  directors  in common,  during the fiscal  year ended March 31,
1997.  In the fiscal  year ended  March 31, 1998 the  accounts  receivable  were
Cdn$7,658 by NCK Holdings Inc. and Cdn$3,278 by Fulcrum  Development Ltd., whose
accounts  receivable  balance was also at Cdn$3,278 during the fiscal year ended
March 31,  1999.  The  amount  owing by  Fulcrum  Development  is in  respect to
recoverable  office  services  and costs  incurred  by the  Company on behalf of
Fulcrum  Development.  The amount owing by NCK Holdings were excess  payments of
royalties and are recoverable out of future royalty payments.  The payments made
were due to the actual royalty being less than anticipated.

                                     PART II

Item 14. Description of Securities to be Registered

Common Stock
------------

     Holders of the Common Stock are entitled to one vote for each share held by
them of record on the books of the  Company in all matters to be voted on by the
stockholders.  Holders of Common Stock are entitled to receive such dividends as
may be declared from time to time by the Board of Directors out of funds legally
available,  and in the event of  liquidation,  dissolution  or winding up of the
Company,  to share ratably in all assets remaining after payment of liabilities.
Declaration  of dividends on Common  Stock is subject to the  discretion  of the
Board of  Directors  and will  depend upon a number of  factors,  including  the
future earnings,  capital  requirements and financial  condition of the Company.
The Company has not  declared  dividends on its Common Stock in the past and the
management currently  anticipates that retained earnings,  if any, in the future
will be applied to the expansion and  development of the Company rather than the
payment of dividends.

     The holders of Common Stock have no preemptive or conversion rights and are
not  subject  to  further  calls or  assessments  by the  Company.  There are no
redemption or sinking fund provisions applicable to the Common Stock. The Common
Stock  currently  outstanding  is, and the Common  Stock  offered by the Company
hereby will, when issued, be validly issued, fully paid and nonassessable.

Class A Preferred Stock, Series 1
---------------------------------

     Holders of the Class A  Preferred  Stock,  Series I, shall be  entitled  to
receive notice of and attend all meetings of the shareholders of the Company and
shall have the right to vote at any such  meetings  on the basis of one vote for
each Series 1  Preferred  Share held.  The  consideration  for the issue of each
Class A Preferred Share, Series 1, shall be Cdn$1,000.

     Each Class A  Preferred  Share,  Series I, carry a 12%  annual,  cumulative
dividend, payable at the end of the Company's most recent fixed fiscal year end,
at the option of the Company,  in either cash or Common Shares, the value of the
Common Shares being  calculated on the basis of the Current  Trading  Price.  No
dividends  shall be  declared  or paid on any other  class of shares  unless and
until all unpaid dividends on the Series 1 Preferred Shares have been paid.

     At any time after December 31, 1996, each Class A Preferred  Share,  Series
I, shall be convertible  into Common Shares on the basis of a Common Share price
of Cdn$3.00 each, or at such lower price as may be provided below as follows:

     1.   Cdn$2.50  at any time  after  December  31,  1997,  provided  that the
          Current  Trading  Price  shall  never  have  exceeded  Cdn$2.99  after
          December 31, 1996;

     2.   Cdn$2.00  at any time  after  December  31,  1998,  provided  that the
          Current  Trading  Price  shall  never  have  exceeded  Cdn$2.99  after
          December 31, 1996 or Cdn$2.49 after December 31, 1997;

     3.   At any time after December 31, 1999, provided that the Current Trading
          Price shall never have exceeded  Cdn$2.99  after  December 31, 1996 or
          Cdn$2.49  after December 31, 1997 or Cdn$1.99 after December 31, 1998,
          at a Common  Share Price equal to that price  which  represents  a 15%
          discount to the then Current  Trading Price,  which Common Share price
          in no event shall be less than $0.95.

<PAGE>

Any  shares  not  converted  prior to May 12,  2000 shall be deemed to have been
converted on May 12, 2000 at the applicable conversion price described above. If
there is a subdivision or consolidation of the Class A Preferred Shares prior to
conversion  of the  Series I  Preferred  Shares  into  Common  Shares,  then the
applicable conversion formula shall be proportionally adjusted.

     In the event of a dissolution, winding up or other return of capital of the
Company,  registered holders of the Class A Preferred Shares, Series I, shall be
entitled to receive  the amount paid up on such shares and all unpaid  dividends
before  any  amount  shall be paid or any  property  or asset of the  Company is
distributed  to the  registered  holders of any other  classes of shares.  After
payment to the registered holders of the Series I Preferred Shares of the amount
so payable to them as provided above, they shall not be entitled to share in any
future distribution for the property or assets of the Company.


                                     PART IV

Item 17. Financial Statements



                             CRYOPAK INDUSTRIES INC.


                        Consolidated Financial Statements
                            Year Ended March 31, 1999
                        and Independent Auditors' Report


<PAGE>

                          INDEPENDENT AUDITORS' REPORT

To the Shareholders
Cryopak Industries Inc.

We have audited the consolidated balance sheets of Cryopak Industries Inc. as at
March 31, 1999 and 1998 and the consolidated  statements of loss and deficit and
changes in  financial  position  for each of the years in the three year  period
ended  March  31,  1999.  These  consolidated   financial   statements  are  the
responsibility of the company's management.  Our responsibility is to express an
opinion on these financial statements based on our audit.

We conducted our audit in accordance with auditing standards  generally accepted
in Canada.  Those standards  require that we plan and perform an audit to obtain
reasonable  assurance whether the consolidated  financial statements are free of
material  misstatement.  An audit includes examining,  on a test basis, evidence
supporting the amounts and disclosures in the consolidated financial statements.
An audit also includes assessing the accounting  principles used and significant
estimates  made by  management,  as well as  evaluating  the  overall  financial
statements.

In our opinion,  these consolidated  financial statements present fairly, in all
material respects,  the financial  positions of the company as at March 31, 1999
and 1998 and the  results of its  operations  and the  changes in its  financial
position  for each of the years in the three year period ended March 31, 1999 in
accordance with accounting  principles generally accepted in Canada. As required
by the Company Act (British  Columbia),  we report that,  in our opinion,  these
principles have been applied on a consistent basis.

Signed "Hay & Watson"

Chartered Accountants

Vancouver, BC
June 11, 1999


              COMMENTS BY INDEPENDENT AUDITORS FOR U.S. READERS ON
                        CANADA-U.S. REPORTING DIFFERENCES

In the United States,  reporting  standards for auditors require the addition of
an explanatory  paragraph  (following the opinion  paragraph) when the financial
statements are affected by conditions and events that cast substantial  doubt on
the company's ability to continue as a going concern, such as those described in
Note 1 to the financial  statements.  Our report to the shareholders  dated June
11, 1999 is expressed in accordance with Canadian  reporting  standards which do
not permit a reference to such events and  conditions  in the  Auditors'  Report
when these are adequately disclosed in the financial statements.

Signed "Hay & Watson"

Chartered Accountants

Vancouver, BC
June 11, 1999

<PAGE>

CRYOPAK INDUSTRIES INC.
Consolidated Balance Sheets
March 31
(Stated in Canadian Dollars)

<TABLE>
<CAPTION>
                                                                     1999               1998
                                                                     ----               ----
<S>                                                                  <C>                <C>
ASSETS

Current
  Cash                                                                   $  640,299          $   3,417
  Accounts receivable, net of allowance for uncollectible
  Inventory (Note 3)                                                         20,608             36,757
  Prepaid expenses                                                           14,075             12,196
  Due from employees                                                         24,448             32,117
----------------------------------------------------------------- ------------------ ------------------
                                                                          1,060,213            421,773
Term deposit - Restricted (Note 4)                                          125,649            119,609
Investments (Note 5)                                                             75             25,442
Capital Assets (Note 6)                                                     429,652            416,945
Advance to Related Company (Note 7)                                          48,868             70,572
Intangibles (Note 8)                                                        372,243            429,565
----------------------------------------------------------------- ------------------ ------------------
                                                                        $ 2,036,700        $ 1,364,297
----------------------------------------------------------------- ------------------ ------------------

LIABILITIES

Current
  Accounts payable and accrued liabilities                               $  276,966         $  532,440
  Note payable (Note 9)                                                           -            350,000
  Current portion of capital lease obligation                                84,544             80,174
----------------------------------------------------------------- ------------------ ------------------
                                                                            361,510            962,614
Capital Lease Obligation (Note 10)                                          249,057            320,015
Deferred Income Taxes                                                        20,467             20,467
----------------------------------------------------------------- ------------------ ------------------
                                                                            631,034          1,303,096
----------------------------------------------------------------- ------------------ ------------------

SHAREHOLDERS' EQUITY

Share Capital (Note 11)
  Issued and outstanding
    Class A preferred shares, Series I                                      530,000            530,000
Deficit                                                                 (8,806,785)        (7,831,117)
----------------------------------------------------------------- ------------------ ------------------
                                                                          1,405,666             61,201
----------------------------------------------------------------- ------------------ ------------------
                                                                        $ 2,036,700        $ 1,364,297
----------------------------------------------------------------- ------------------ ------------------

</TABLE>

APPROVED BY THE BOARD:

/s/ Harry Bygdnes
-----------------
Director

/s/ R. Leigh Jeffs
------------------
Director

<PAGE>

CRYOPAK INDUSTRIES INC.
Consolidated Statements of Loss and Deficit
Year Ended March 31
(Stated in Canadian Dollars)


<TABLE>
<CAPTION>
                                                                 1999             1998             1997
----------------------------------------------------------- ---------------- ---------------- ---------------
<S>                                                             <C>              <C>             <C>
Sales                                                           $ 1,295,159      $ 1,161,442     $ 1,140,242
Cost of goods sold                                                  746,285          763,018         675,706
----------------------------------------------------------- ---------------- ---------------- ---------------
Gross profit                                                        548,874          398,424         464,536
Operating expenses (Schedule 1)                                   1,448,456        1,023,556       1,130,823
----------------------------------------------------------- ---------------- ---------------- ---------------
Operating loss                                                (    899,582)    (    625,132)   (    666,287)
----------------------------------------------------------- ---------------- ---------------- ---------------
Other (Income) Expenses
  Filing, listing and transfer agent fees                            25,289           20,321          17,006
  Other income                                               (      12,803)  (        6,900)               (
----------------------------------------------------------- ---------------- ---------------- ---------------
                                                             (      12,486)   (      13,421)               (
                                                                                                      8,846)
----------------------------------------------------------- ---------------- ---------------- ---------------
Loss before income taxes                                      (    912,068)    (    638,553)   (    675,133)
----------------------------------------------------------- ---------------- ---------------- ---------------
Net loss for the year                                         (    912,068)    (    638,553)   (    675,133)
Dividends paid on Class A Preferred Shares                   (      63,600)   (      47,970)               -
----------------------------------------------------------- ---------------- ---------------- ---------------
Net loss for the year attributable to common
   Shareholders                                               (    975,668)    (    686,523)   (    675,133)
Deficit, beginning of year                                     ( 7,831,117)     ( 7,144,594)    ( 6,469,461)
----------------------------------------------------------- ---------------- ---------------- ---------------
Deficit, end of year                                          $( 8,806,785)    $( 7,831,117)   $( 7,144,594)
----------------------------------------------------------- ---------------- ---------------- ---------------
Loss per share                                                    $    0.07        $    0.05       $    0.06
----------------------------------------------------------- ---------------- ---------------- ---------------
Weighted average common shares outstanding                       14,937,561       12,597,083      11,691,097
----------------------------------------------------------- ---------------- ---------------- ---------------

</TABLE>

<PAGE>

CRYOPAK INDUSTRIES INC.
Schedule of Dividends Paid on Class A Preferred Shares
(Stated in Canadian Dollars)

<TABLE>
<CAPTION>
Year End                                         Number of Common                Amount
                                                 Shares Issued
----------------------------------- ---------------------------- --------------------------
<S>                                              <C>                             <C>
March 31, 1997                                                -                          -
March 31, 1998                                           96,908                    $47,970
March 31, 1999                                          159,199                     63,600
----------------------------------- ---------------------------- --------------------------

</TABLE>

The fair value of the shares  issued as dividends  was  determined  each year by
reference to the average  trading price of the common shares for twenty business
days prior to the Company's year end.

<PAGE>

CRYOPAK INDUSTRIES INC.
Consolidated Statements of Changes in Financial Position
Year Ended March 31
(Stated in Canadian Dollars)

<TABLE>
<CAPTION>
                                                                    1999            1998            1997
-------------------------------------------------------------- --------------- --------------- ---------------
<S>                                                             <C>             <C>             <C>
Operating Activities
  Net loss for the year                                         $(   912,068)   $(   638,553)   $(   675,133)
  Adjustment for:
    Depreciation and amortization                                     114,730          77,783          79,564
    Loss from short term investment                                        25               -               -
  Changes in non-cash working capital
    Proceeds from (repayment of) advances - related                         -           4,789   (     15,815)
    (Increase) decrease in accounts receivable                   (   143,106)   (     75,603)           3,290
    Decrease (increase) in amount due from employees                    7,669           8,001   (     29,900)
    Decrease in inventory                                              16,149              22          15,404
    (Increase) decrease in prepaid expenses                    (       1,879)           3,466  (       6,186)
    (Decrease) increase in accounts payable                      (   255,474)         156,853   (     40,587)
-------------------------------------------------------------- --------------- --------------- ---------------
  Cash used in operating activities                               (1,173,954)    (   463,242)    (   669,363)
-------------------------------------------------------------- --------------- --------------- ---------------
Financing Activities
    Issue of shares                                                 2,392,733         291,890         586,870
    Share issue costs                                           (     72,600)
    Shares returned to treasury                                             -  (       8,000)               -
    Liabilities settled by issue of company shares                          -               -          56,560
    (Repayment of) proceeds from note payable and capital        (   416,588)         718,313   (      5,806)
    Bank overdraft                                                          -               (             834
    Payment of dividend                                              (63,600)   (     47,970)               -
-------------------------------------------------------------- --------------- --------------- ---------------
  Cash provided by financing activities                             1,839,945         953,399         638,458
-------------------------------------------------------------- --------------- --------------- ---------------
Investing Activities
    Acquisition of capital assets                               (     44,773)    (   387,227)    (    20,811)
    Advances from related company                                      21,704          20,096          18,671
    Term deposit - restricted                                  (       6,040)    (   119,609)               -
-------------------------------------------------------------- --------------- --------------- ---------------
  Cash used in investing activities                             (     29,109)    (   486,740)   (      2,140)
-------------------------------------------------------------- --------------- --------------- ---------------
Increase (Decrease) in Cash                                           636,882           3,417    (    33,045)
Cash, Beginning of Year                                                 3,417               -          33,045
-------------------------------------------------------------- --------------- --------------- ---------------
Cash, End of Year                                                   $ 640,299         $ 3,417         $     -
-------------------------------------------------------------- --------------- --------------- ---------------

</TABLE>

<PAGE>

CRYOPAK INDUSTRIES INC.
Notes to Consolidated Financial Statements
March 31, 1999 and 1998
(Stated in Canadian Dollars)


1.   GOING-CONCERN

     These  financial  statements  are  prepared  on  the  basis  of  accounting
     principles  applicable to a going  concern,  which assumes the Company will
     continue in operation for the foreseeable future and be able to realize its
     assets and  satisfy  liabilities  in the  normal  course of  business.  The
     ability  of the  Company  to  continue  as a  going  concern  is  primarily
     dependent upon its ability to continue to obtain the financing necessary to
     continue operations and, ultimately,  profitable operations.  Management is
     of the opinion  sufficient working capital will be obtained from injections
     of  capital  and from  operations  to meet the  Company's  liabilities  and
     commitments as they become due.

     These consolidated  financial  statements do not give effect to adjustments
     that would be  necessary  should the  Company  not be able to continue as a
     going concern and therefore be required to realize its assets and liquidate
     its  liabilities in other than the normal course of business and at amounts
     different from those recorded in these consolidated financial statements.


2.   SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

     Cryopak  Industries Inc. (the  "Company"),  incorporated  under the laws of
     British  Columbia,  is in the  business  of the  manufacturing  and sale of
     thermal  packaging  solutions.  The Company produces a patented,  flexible,
     re-usable refrigerant product.

     The Company prepares its accounts in accordance with accounting  principles
     generally  accepted in Canada.  A  reconciliation  of amounts  presented in
     accordance with United States accounting principles is detailed in Note 18.

     The following is a summary of significant  accounting  policies used in the
     preparation of these consolidated financial statements:

     Basis of Consolidation
     ----------------------

     These consolidated financial statements include the accounts of the Company
     and its wholly-owned subsidiaries, Cryopak (International) Inc. (inactive),
     a Barbados  corporation,  Cryopak (Canada) Corporation and its wholly-owned
     subsidiary Cryopak Corporation, a Nevada corporation.

     Measurement Uncertainty
     -----------------------

     The  preparation  of financial  statements  in  conformity  with  generally
     accepted  accounting  principles  requires management to make estimates and
     assumptions  that affect the reported  amount of assets and liabilities and
     disclosure  of  contingent  assets  and  liabilities  at  the  date  of the
     financial  statements  and the  reported  amount of revenues  and  expenses
     during  the  reporting  period.  Significant  areas  requiring  the  use of
     management   estimates  relate  to  the   determination  or  impairment  of
     intangible  assets  (deferred  charges,  goodwill and  pre-opening  costs).
     Financial  results as  determined  by actual events could differ from those
     estimates.

<PAGE>

CRYOPAK INDUSTRIES INC.
Notes to Consolidated Financial Statements
March 31, 1999 and 1998
(Stated in Canadian Dollars)


2.   SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Cont'd)

     Inventories
     -----------

     Inventories are valued at the lower of cost or net realizable  value.  Cost
     is determined by the first-in first-out (FIFO) method of valuation.

     Investments
     -----------

     Current  investments  are  recorded at the lower of cost and market  value.
     Long-term  investments are recorded at cost unless there has been a loss in
     value that is other than a temporary decline,  in which case the investment
     is written down to fair market value.

     Depreciation
     ------------

     Capital  assets are recorded at cost and are  depreciated  on the following
     basis at the rates indicated:

<TABLE>
<CAPTION>
<S>                                                                  <C>
Computer Hardware                                                    3 years straight-line
Computer Software                                                    2 years straight-line
Furniture & Fixture, Office Equipment                                5 years straight-line
Machinery                                                            5 years straight-line
Motor Vehicle                                                        30% declining balance

</TABLE>

     Patent Licence
     --------------

     The patent licence is recorded at cost and is amortized on a  straight-line
     basis over seventeen years.

     Deferred Development Costs
     --------------------------

     The deferred  development costs are recorded at cost and are amortized on a
     straight-line basis over ten years.

     Foreign Currency Translation
     ----------------------------

     Monetary  items  denominated  in foreign  currencies  are  translated  into
     Canadian  dollars using exchange rates in effect at the balance sheet date.
     All other assets and  liabilities  are translated at rates  prevailing when
     the asset was acquired or  liabilities  incurred.  Income and expense items
     are  translated  at  the  exchange  rates  in  effect  on the  date  of the
     transaction.  Resulting  exchange  gains and  losses  are  included  in the
     determination of loss for the year.

<PAGE>

CRYOPAK INDUSTRIES INC.
Notes to Consolidated Financial Statements
March 31, 1999 and 1998
(Stated in Canadian Dollars)


2.   SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Cont'd)

     Goodwill
     --------

     The excess of cost of the  purchase of a  subsidiary  company over the fair
     value  of  assets  acquired  (disclosed  in  these  consolidated  financial
     statements  as  goodwill)  is  amortized  on  a  straight-line  basis  over
     seventeen years.

     Financial Instruments
     ---------------------

     The fair values of the Company's cash,  investments,  accounts  receivable,
     amounts due from employees,  advance to related  company,  accounts payable
     and accrued  liabilities,  bank indebtedness,  and capital lease obligation
     were estimated to approximate their carrying value.

     Revenue Recognition
     -------------------

     Sales are recognized upon shipment of products.


3.   INVENTORIES

<TABLE>
<CAPTION>

                                                            1999               1998
                                                            ----               ----
<S>                                                         <C>                <C>
Raw material                                                $   5,348
Finished goods                                                 15,260             36,757
-------------------------------------------------- ------------------- ------------------
                                                            $  20,608          $  36,757
-------------------------------------------------- ------------------- ------------------

</TABLE>

4.   TERM DEPOSIT

     The term deposit is held by the Canadian  Western Bank as security on lease
     financing for a machine acquired in 1998 (Note 10).

5.   INVESTMENTS

<TABLE>
<CAPTION>

                                                                                1999            1998
                                                                                ----            ----
<S>                                                                             <C>             <C>
Marketable securities - market value at March 31, 1999 - $75 (1998
Artwork                                                                              -             25,342
--------------------------------------------------------------------- ----------------- ----------------
                                                                                $   75          $  25,442
--------------------------------------------------------------------- ----------------- ----------------

</TABLE>

     During the year the  Company  changed its  intended  use of the artwork and
     decided to keep it as office furnishings.  As a result the artwork has been
     reclassified to capital assets.

<PAGE>

CRYOPAK INDUSTRIES INC.
Notes to Consolidated Financial Statements
March 31, 1999 and 1998
(Stated in Canadian Dollars)


6.   CAPITAL ASSETS

<TABLE>
<CAPTION>
                                                                1999
                                                                Accumulated      Net Book
                                                  Cost          Depreciation     Value
                                                  ----          ------------     -----
<S>                                               <C>           <C>              <C>
Artwork                                           $ 25,342           $    -      $ 25,342
Computer Hardware                                   36,698           27,478         9,220
Computer Software                                    2,215            1,084         1,131
Furniture and Fixtures                              59,696           56,907         2,789
Motor Vehicle under Capital Lease                   40,594           28,759        11,835
Machinery under Capital Lease                      399,279           39,928       359,351
Machinery                                           18,445            1,844        16,601
Office Equipment                                     4,113              730         3,383
--------------------------------------------- ------------- ---------------- -------------
                                                  $586,382        $ 156,730      $429,652

</TABLE>


<TABLE>
<CAPTION>
                                                                1998
                                                                Accumulated      Net Book
                                                  Cost          Depreciation     Value
                                                  ----          ------------     -----
<S>                                               <C>             <C>            <C>
Computer Hardware                                 $ 45,852        $  34,168      $ 11,684
Computer Software                                    2,544            2,419           125
Furniture and Fixtures                              80,967           78,252         2,715
Motor Vehicle under Capital Lease                   40,594           23,686        16,908
Machinery under Capital Lease                      383,943                -       383,943
Office Equipment                                     2,099              529         1,570
--------------------------------------------- ------------- ---------------- -------------
                                                  $555,999        $ 139,054      $416,945

</TABLE>

7.   ADVANCE TO RELATED COMPANY

<TABLE>
<CAPTION>
                                                           1999             1998               1997
                                                           ----             ----               ----
<S>                                                        <C>              <C>                <C>
Balance, beginning of year                                 $ 70,572         $  90,668          $ 109,339
Interest charge for the year                                  4,696             6,304              7,729
Payments received                                           (26,400)          (26,400)           (26,400)
------------------------------------------------- ------------------ ----------------- ------------------
Advance to N.C.K. Holdings Inc.                            $ 48,868          $ 70,572           $ 90,668
------------------------------------------------- ------------------ ----------------- ------------------

</TABLE>

     The related company,  N.C.K. Holdings Inc., is owned by two directors.  The
     advance is unsecured  and is repayable  in monthly  installments  of $2,200
     including  interest  of 8% per  annum.  During  the year the  Company  paid
     management  fees of $220,000  (1998 - $220,000)  and  royalties  of $26,261
     (1998 - $26,289) to N.C.K. Holdings Inc.

<PAGE>

CRYOPAK INDUSTRIES INC.
Notes to Consolidated Financial Statements
March 31, 1999 and 1998
(Stated in Canadian Dollars)


8.   INTANGIBLES


<TABLE>
<CAPTION>
                                                                1999                           1998
                                                                Accumulated      Net Book      Net Book
                                                  Cost          Depreciation     Value         Value
                                                  ----          ------------     -----         -----
<S>                                               <C>               <C>          <C>           <C>
Incorporation Cost                                $  3,111          $     -      $  3,111      $  3,111
Deferred Development Costs                         114,017           95,489        18,528        33,350
Patent Licence                                     566,323          291,497       274,826       308,140
Goodwill                                           156,155           80,377        75,778        84,964
--------------------------------------------- ------------- ---------------- ------------- -------------
                                                  $839,606        $ 467,363     $ 372,243      $429,565
--------------------------------------------- ------------- ---------------- ------------- -------------

</TABLE>

9.   NOTE PAYABLE

<TABLE>
<CAPTION>
                                                                              1999         1998
                                                                              ----         ----
<S>                                                                           <C>          <C>
Note payable to a company related by two directors in common, bearing
interest at the rate of 12% per annum, secured by a general security
agreement on all the Company's assets, fully repaid during the year.          $    -       $ 350,000
------------------------------------------------------------------------ --------------- ---------------

</TABLE>

10.  CAPITAL LEASE OBLIGATIONS

<TABLE>
<CAPTION>

                                                                                   1999           1998
                                                                                   ----           ----
<S>                                                                                <C>            <C>
Capital lease obligation with interest at 10.25%, maturing November 1, 1999        $  17,990      $  25,231
Capital lease obligation with interest at 10.6%, maturing July 20, 2002 (Note 4)
Capital lease obligation with interest at 17%, maturing October 20, 2001              12,922              -
                                                                                     333,601        400,189
Less:  current portion                                                                84,544         80,174
-------------------------------------------------------------------------- ----------------- --------------
                                                                                   $ 249,057      $ 320,015
-------------------------------------------------------------------------- ----------------- --------------

</TABLE>

     The future minimum lease payments required are as follows:

<TABLE>
<CAPTION>
<S>                                       <C>
2000                                      $  158,775
2001                                         121,449
2002                                         118,711
2003                                          38,293
2004                                               -

</TABLE>

     Included in these amounts is imputed interest of $62,148.

<PAGE>

CRYOPAK INDUSTRIES INC.
Notes to Consolidated Financial Statements
March 31, 1999 and 1998
(Stated in Canadian Dollars)



11.  SHARE CAPITAL

<TABLE>
    Authorized
<CAPTION>
<S>                 <C>
100,000,000         common shares without par value
100,000,000         Class A preferred shares without par value, of which 1,500 are designated Class
                    A convertible voting preferred shares, Series I

</TABLE>

     The following changes occurred in share capital:

<TABLE>
      Common shares
      Issued and outstanding
<CAPTION>

                                                                         1999
                                                                    Number of
                                                                    Shares              Amount
                                                                    ------              ------
<S>                                                                 <C>                 <C>
Balance, beginning of year                                          12,815,064          $7,362,318
---------------------------------------------------------------------------------------------------
Issued during the year
For cash, pursuant to the exercise of stock options                  1,173,700             581,633
For cash, pursuant to private placements                             3,057,777           1,710,000
For finder's fee                                                        50,000              37,500
For payment of dividend on Class A preferred
Share issue costs                                                            -          (   72,600)
---------------------------------------------------------------------------------------------------
                                                                     4,440,676           2,320,133

---------------------------------------------------------------------------------------------------
Balance, end of year                                                17,255,740          $9,682,451
---------------------------------------------------------------------------------------------------

</TABLE>

<TABLE>
<CAPTION>
                                                                    1998
                                                                    Number of
                                                                    Shares              Amount
                                                                    ------              ------
<S>                                                                 <C>                 <C>
Balance, beginning of year                                          12,245,156          $7,078,428
---------------------------------------------------------------------------------------------------
Issued during the year
For cash, pursuant to the exercise of stock options                    243,000             118,920
For cash, pursuant to private placements                               250,000             125,000
For payment of dividend on Class A preferred
    Shares, Series I                                                    96,908              47,970
---------------------------------------------------------------------------------------------------
                                                                       589,908             291,890
Acquired during the year                                               (20,000)             (8,000)
---------------------------------------------------------------------------------------------------
Balance, end of year                                                12,815,064          $7,362,318
---------------------------------------------------------------------------------------------------

</TABLE>

<PAGE>

CRYOPAK INDUSTRIES INC.
Notes to Consolidated Financial Statements
March 31, 1999 and 1998
(Stated in Canadian Dollars)


11.  Share Capital (Cont'd)

<TABLE>
<CAPTION>
                                                                    1997
                                                                    Number of
                                                                    Shares              Amount
                                                                    ------              ------
<S>                                                                 <C>                 <C>
Balance, beginning of year                                          11,229,065          $6,699,998
---------------------------------------------------------------------------------------------------
Issued during the year
For cash, pursuant to the exercise of stock options                    647,255             242,070
For cash, pursuant to the exercise of warrants                         116,000              34,800
For cash, pursuant to private placements                               150,000              45,000
For settlement of debt                                                 102,836              56,560
---------------------------------------------------------------------------------------------------
                                                                     1,016,091             378,430
---------------------------------------------------------------------------------------------------
Balance, end of year                                                12,245,156          $7,078,428

</TABLE>

<TABLE>
Class A preferred shares, Series I
<CAPTION>
                                                              1999
                                                              Number of Shares          Amount
                                                              ----------------          ------
<S>                                                           <C>                       <C>
Balance, beginning and end of year                                         530           $ 530,000
------------------------------------------------------------ ------------------ -------------------

</TABLE>

<TABLE>
<CAPTION>
                                                                     1998
                                                                     Number of Shares           Amount
                                                                     ----------------           ------
<S>                                                                  <C>                        <C>
Balance, beginning and end of year                                                530           $ 530,000

</TABLE>

<TABLE>
<CAPTION>
                                                                    1997
                                                                    Number of Shares     Amount
                                                                    ----------------     ------
<S>                                                                 <C>                  <C>
Balance, beginning of year                                                 265           $ 265,000
Issued during the year for cash                                            265             265,000
------------------------------------------------------------ ------------------ -------------------
Balance, end of year                                                       530           $ 530,000
------------------------------------------------------------ ------------------ -------------------

</TABLE>

     Each Class A preferred  share Series I carries a 12%,  cumulative  dividend
     payable at $120 per share at the company's  fiscal year end, in either cash
     or common  shares at the  option of the  Company.  Dividends  in arrears at
     March 31, 1999 amounted to $64,039.

     The Series I preferred  shares are  convertible  into common  shares at the
     rate of one  common  share  for  each $3 of paid  up  capital  or the  rate
     provided below:

(i)  $2.00 at any time  after  December  31,  1998,  provided  that the  Current
     Trading  Price shall never have exceeded  $2.99 after  December 31, 1996 or
     $2.49 after December 31, 1997.

<PAGE>

CRYOPAK INDUSTRIES INC.
Notes to Consolidated Financial Statements
March 31, 1999 and 1998
(Stated in Canadian Dollars)


11.  Share Capital (Cont'd)

(ii) at any time after December 1, 1999, provided that the Current Trading Price
     shall  never have  exceeded  $2.99 after  December  31, 1996 or $2.49 after
     December 1, 1997 or $1.99 after  December 31, 1998, at a common share price
     equal to that price which  represents  a 15%  discount to the then  Current
     Trading  Price,  which  common  share  price in no event shall be less than
     $0.95;

     But if not so  converted  prior to May 12,  2000,  such  Series I preferred
     shares  shall be  deemed  to have  been  converted  on May 12,  2000 at the
     applicable  conversion  price  described  above.  The Current Trading Price
     means the average trading price of the common shares on a recognized public
     stock exchange for the preceding 20 business days.

     On March 31, 1999, the following stock options were outstanding:

<TABLE>
<CAPTION>
                                                  No. of Shares    Exercise Price       Expiry Date
                                                  -------------    --------------       -----------
<S>                                               <C>              <C>                  <C>
Directors                                           170,000             $0.50           June 13, 1999
                                                    390,000              0.52           August 17, 2000
                                                    343,000              0.50           January 7, 2001
                                                     75,000              0.52           June 19, 1999
                                                    100,000              0.50           September 2, 1999
                                                    150,000              0.50           September 2, 1999
Officer                                             100,000              0.40           June 26, 2000
                                                    136,300              0.82           August 17, 2000
Employee                                             20,000              0.52           June 16, 1999
                                                    100,000              0.82           February 11, 2001
                                                   *750,000              0.76           March 19, 2004
</TABLE>

*    These  options  will vest at a rate of  50,000 at the end of each  calendar
     quarter commencing March 31, 1999 and are subject to shareholder approval.

     On March 31, 1999, the following share purchase warrants were outstanding:


<TABLE>
<CAPTION>
No. of Warrants        Exercise Price     Expiry Date
<S>                    <C>                <C>
250,000                $0.60              August 18, 1999
250,000                 0.46              April 29, 2000
225,000                 0.46              May 13, 2000
135,000                 0.46              May 29, 2000
265,000                 0.46              June 3, 2000
125,000                 0.46              June 17, 2000
119,608                 0.46              March 20, 2000
1,369,608

</TABLE>

<PAGE>

CRYOPAK INDUSTRIES INC.
Notes to Consolidated Financial Statements
March 31, 1999 and 1998
(Stated in Canadian Dollars)


11.  Share Capital (Cont'd)

     Share  purchase  warrant  transactions  for the  respective  years  were as
     follows:

<TABLE>
<CAPTION>

                                                                              No. of Warrants
                                                                              ---------------
<S>                                                                           <C>
Balance, August 31, 1996                                                           116,000
Warrants exercised during the year at $0.30 per share                             (116,000)
------------------------------------------------------------------------ ------------------
Balance, August 31, 1997                                                                 -
Issued pursuant to a private placement of common shares
       exercisable at $0.60 per share                                              250,000
------------------------------------------------------------------------ ------------------
Balance, August 31, 1998                                                           250,000
Issued pursuant to a loan guarantee exercisable at $0.40 - $0.46
Issued pursuant to a private placement of common shares
       exercisable at $0.40 - $0.46 per share                                    1,000,000
------------------------------------------------------------------------ ------------------
Balance, August 31, 1999                                                         1,369,608

</TABLE>

12.  INCOME TAXES

     The Company has estimated losses  available for utilization  against future
     years' taxable incomes which, if unused, will expire as follows:

<TABLE>
<CAPTION>
<S>                                                  <C>
2000                                                 $  296,801
2001                                                  1,089,726
2002                                                    658,014
2003                                                    710,475
2004                                                    599,008
2005                                                    649,840
2006                                                    882,657

</TABLE>

13.  LEASES

     The minimum  annual rental  commitments  for operating  leases in effect at
     March 31, 1999 are as follows:

<TABLE>
<CAPTION>
<S>                                                      <C>
2000                                                     47,790
2001                                                     27,456
2002                                                      1,627

</TABLE>

<PAGE>

CRYOPAK INDUSTRIES INC.
Notes to Consolidated Financial Statements
March 31, 1999 and 1998
(Stated in Canadian Dollars)


14.  RELATED PARTY TRANSACTIONS

     Related party  transactions not otherwise  disclosed in these  consolidated
     financial statements are as follows:

     (a)  Professional  fees  include  $22,200  paid  to a  company  owned  by a
          director of the Company.

     (b)  As of March 31,  1999,  accounts  receivable  include  $28,316  (1998:
          $7,658)  receivable from N.C.K.  Holdings Inc., a company owned by two
          directors,   and  $3,278  (1998:   $7,658)   receivable  from  Fulcrum
          Developments Ltd., a company related by two directors in common.


15.  SUBSEQUENT EVENTS

     The following share transactions took place subsequent to the year end:

     (a)  Issued 72,000 units for gross proceeds of $54,000.  Each unit consists
          of one common share and one  non-transferable  share purchase warrant.
          Each warrant entitles the holder to purchase one common share at $1.00
          on or before May 4, 2001.

     (b)  Issued  125,000 units to a director of the Company for gross  proceeds
          of $97,000.  The Company  provided an interest-free  loan,  forgivable
          under certain  conditions,  for the purchase of these units. Each unit
          consists of one common share and one  non-transferable  share purchase
          warrant. Each warrant entitles the holder to purchase one common share
          at $0.776 on or before September 20, 1999.

     (c)  Granted  290,000  stock  options  to  directors  and  officers  of the
          Company, exercisable on or before April 21, 2001 at $0.86 per share.

     (d)  Issued 326,300  common shares for gross proceeds of $175,166  pursuant
          to the exercise of stock options.


16.  CONTRACTUAL OBLIGATIONS

     Pursuant to an agreement dated December 20, 1989 with N.C.K. Holdings Inc.,
     for the acquisition of a license for the use of patents, the Company issued
     500,000 common shares at a value of $0.30 each  ($150,000).  The Company is
     further  obligated  under the terms of the agreement to issue an additional
     3,000,000  common  shares  based upon certain  cumulative  cash flow of its
     subsidiary, Cryopak Canada and its subsidiary.

     To date,  the cash flow criteria of the agreement has not been attained and
     therefore no additional shares have been issued. The license will expire in
     2025 at which time the obligation to issue any unissued  additional  shares
     will cease.

<PAGE>

CRYOPAK INDUSTRIES INC.
Notes to Consolidated Financial Statements
March 31, 1999 and 1998
(Stated in Canadian Dollars)


17.   CONTINGENT LIABILITIES

     The Year 2000 Issue arises because many computerized systems use two digits
     rather than four to identify a year.  Date-sensitive  systems may recognize
     the  Year  2000 as 1900  or some  other  date,  resulting  in  errors  when
     information  using  Year 2000  dates is  processed.  In  addition,  similar
     problems  may  arise in some  systems  which use  certain  dates in 1999 to
     represent  something  other than a date. The effects of the Year 2000 Issue
     may be  experienced  before,  on, or after  January  1, 2000,  and,  if not
     addressed,  the impact on operations and financial reporting may range from
     minor errors to significant  systems failure which could affect an entity's
     ability to conduct  normal  business  operations.  It is not possible to be
     certain  that all  aspects of the Year 2000  Issue  affecting  the  entity,
     including  those related to the efforts of customers,  suppliers,  or other
     third parties will be fully resolved.

18.  GENERALLY ACCEPTED ACCOUNTING PRINCIPLES IN THE UNITED STATES

     The Company  prepares the consolidated  financial  statements in accordance
     with accounting  principles generally accepted in Canada ("Canadian GAAP").
     In addition the Company provides  supplementary  description of significant
     differences  between  Canadian  GAAP and those in the United  States ("U.S.
     GAAP") as follows:

     (a)  Under U.S.  GAAP  development  costs are expensed as  incurred.  Under
          Canadian  GAAP  development  costs  subject  to certain  criteria  are
          deferred and amortized.

     (b)  Under U.S.  GAAP,  non-cash items such as  liabilities,  dividends and
          finder's  fee paid by issue of company  shares are  excluded  from the
          statement of changes in financial  position.  Under Canadian GAAP, the
          gross  amount  of  non-cash  items  are  included  in  the  respective
          operating, investing, or financing activities as applicable.

     (c)  The Company has elected to follow Accounting  Principles Board Opinion
          No.  25  "Accounting  for  Stock  Issues  to  Employees"   (APB25)  in
          accounting  for its stock options.  Under APB25,  because the exercise
          price of the Company's  options for common shares granted to employees
          is not less than the fair market value of the underlying  stock on the
          date of grant, no compensation expense has been recognized.

     (d)  Under U.S. GAAP,  stock based  compensation to  non-employees  must be
          recorded at the fair market value of the options and warrants granted.
          This compensation,  determined using a Black-Scholes pricing model, is
          expensed over the vesting periods of each option and warrant granted.

<PAGE>

CRYOPAK INDUSTRIES INC.
Notes to Consolidated Financial Statements
March 31, 1999 and 1998
(Stated in Canadian Dollars)


18.  GENERALLY ACCEPTED ACCOUNTING PRINCIPLES IN THE UNITED STATES (Cont'd)

     The  impact of  significant  variations  to U.S.  GAAP on the  Consolidated
     Statements of Loss are as follows:

<TABLE>
<CAPTION>
                                                                     Year Ended March 31
                                                                  1999               1998                1997
                                                                  ----               ----                ----
<S>                                                               <C>                <C>                 <C>
Loss for the year, Canadian GAAP                                  $(    912,068)     $(    638,553)      $(    675,133)
Amortization of deferred development costs                               14,822             14,822              14,822
Adjustment for stock based compensation -
   non employees                                                   (    574,868)      (    123,226)       (    190,351)
                                                                   (  1,472,114)      (    746,957)       (    850,662)
Loss per share, U.S. GAAP                                         $(       0.10)     $(       0.06)      $(          0.07)

</TABLE>

Pro forma information regarding net income and earnings per share is required by
Statement of Financial  Accounting  Standard No. 123 "Accounting for Stock Based
Compensation"  (SFA123),  which also requires that the information be determined
as if the Company has accounted for its employee stock options granted in fiscal
periods  beginning  subsequent  to December  1994 under the fair value method of
that  statement.  The fair value for these  options was estimated at the date of
grant using a Black-Scholes  pricing model with the following  weighted  average
assumptions  for the years ended March 31,  1999,  1998 and 1997,  respectively:
risk  free  interest  rates  of 5.2%,  5.8% and  6.8%;  dividend  yields  of 0%;
volatility factors of the expected market price of the Company's common stock of
1.23; and a weighted  average  expected life of the options of four, one and .65
years.

The Black Scholes  options  valuation  model was developed for use in estimating
the fair value of trade options which have no vesting restrictions and are fully
transferable.  In addition,  option valuation models require the input of highly
subjective assumptions including the expected stock price volatility. Because of
the  Company's  employee  stock  options  have   characteristics   significantly
different from those of traded  options,  and because  changes in the subjective
input assumptions can materially affect the fair value estimate, in management's
opinion,  the  existing  models do not  necessarily  provide a  reliable  single
measure of the fair value of its employee stock options.

Supplemental disclosure of pro forma loss and loss per share is as follows:

<TABLE>
<CAPTION>

                                                                     Year ended March 31
                                                              1999              1998               1997
                                                              ----              ----               ----
<S>                                                           <C>               <C>                <C>
Pro forma loss, U.S. GAAP                                     $(  1,785,577)    $(     784,485)    $(     875,991)
Pro forma loss per share, U.S. GAAP                           $(       0.12)    $(        0.06)    $(        0.07)

</TABLE>

<PAGE>

CRYOPAK INDUSTRIES INC.
Notes to Consolidated Financial Statements
March 31, 1999 and 1998
(Stated in Canadian Dollars)



18.  GENERALLY ACCEPTED ACCOUNTING PRINCIPLES IN THE UNITED STATES (Cont'd)

     The  impact of  significant  variations  to U.S.  GAAP on the  Consolidated
     Balance Sheets items are as follows:

<TABLE>
<CAPTION>
                                                                             Year Ended March 31
                                                                      1999                        1998
                                                                      ----                        ----
<S>                                                                   <C>                          <C>
Assets                                                                $  2,018,172                 $  1,330,947
Share Capital                                                           10,257,319                    7,485,544
Deficit                                                               (  9,400,181)                (  7,987,693)

</TABLE>

     The  impact of  significant  variations  to U.S.  GAAP on the  Consolidated
     Statements of Changes in Financial Position items are as follows:

<TABLE>
<CAPTION>
                                                                          Year Ended March 31
                                                              1999              1998               1997
                                                              ----              ----               ----
<S>                                                           <C>               <C>                <C>
Cash used in operating activities
   - Canadian and US GAAP                                     $(  1,173,954)    $(     463,242)    $(     669,363)
Cash provided by financing activities
   - Canadian GAAP                                                 1,839,945            954,233            637,624
Issue of shares                                               (     101,000)     (      47,970)    (       56,560)
Liabilities settled by issue of company shares                             -                  -             56,560
Dividends paid by issue of company shares                             63,600             47,970                  -
Finders fee paid by issue of company shares                           37,500                  -                  -
Cash provided by financing activities
   - US GAAP                                                       1,839,945            954,233            637,624
Cash used in investing activities
   - Canadian GAAP and US GAAP                               $(      29,109)    $(     486,740)   $(        2,140)

</TABLE>

<PAGE>

CRYOPAK INDUSTRIES INC.
Consolidated Schedules of Operating Expenses
Year Ended March 31
(Stated in Canadian Dollars)


                                                                      Schedule 1

<TABLE>
<CAPTION>
                                                              1999              1998              1997
                                                              ----              ----              ----
<S>                                                           <C>               <C>               <C>
Bad debts                                                     $  53,529         $   29,125        $    7,245
Commissions                                                       4,144                520               884
Corporate printing, financial and public relations              117,043             85,181           138,150
Depreciation and amortization                                    72,958             77,783            79,564
Foreign exchange                                                 20,640             10,876             1,355
Interest and bank charges                                        41,746             15,301            16,549
Interest on capital lease obligation                             38,912              2,595             3,434
Management fees                                                 220,000            220,000           220,000
Marketing                                                       201,347             57,944            87,337
Office supplies and stationery                                   80,250             68,798            58,197
Professional fees                                                98,867             56,291            74,399
Rent                                                             53,915             52,861            52,459
Royalties                                                        53,328             51,258            44,903
Salaries and benefits                                           151,146            126,769           117,960
Storage                                                           4,507             10,459             9,899
Telephone                                                        37,790             41,994            50,748
Travel and entertainment                                        180,770             97,769           155,138
Vehicle                                                          17,564             18,032            12,602
                                                              $1,448,456        $1,023,556        $1,130,823

</TABLE>

<PAGE>

CRYOPAK INDUSTRIES INC.
Consolidated Schedule of Allowance for Uncollectible Accounts
Year Ended March 31
(Stated in Canadian Dollars)

                                                                      Schedule 2

<TABLE>
<CAPTION>
<S>                                                                                    <C>
Balance, March 31, 1996                                                                $  56,026
Accounts receivable written off during the year                                           37,836
Additional allowance provided                                                              6,720
Balance, March 31, 1997                                                                   24,910
Accounts receivable written off during the year                                          (24,910)
Additional allowance provided                                                             21,155
Balance March 31, 1998                                                                    21,155
Additional allowance provided                                                             53,529
Balance, March 31, 1999                                                                $  74,684

</TABLE>



<PAGE>


                            CRYOPAK INDUSTRIES INC.

                       CONSOLIDATED FINANCIAL STATEMENTS
                           YEAR ENDED MARCH 31, 1998
                              AND AUDITORS' REPORT



Hay & Watson CHARTERED ACCOUNTANTS

August 06, 1998

Messrs. Harry Bydgnes and Leigh Jeffs
Cryopak Industries Inc.
1125 - 625 Howe Street
Vancouver, B.C. V6C 2T6

Dear Sirs:

During our  examination  of the  consolidated  financial  statements  of Cryopak
Industries  Inc.  for the year ended March 31,  1998,  we reviewed  the existing
system of accounting  procedures and internal  control and such review indicated
certain areas which we believe should be brought to your attention. We have also
recommended  certain  changes to achieve  consistent  application  of accounting
policies adopted by the company.

1.   INVENTORY

During our  examination  we found that  there were only  limited  records of the
inventory kept at the various  locations.  The lack of proper records has caused
the company to run out of inventory and to buy back  inventory from customers in
order to fill other  customers'  orders.  This  causes  the  company to lose its
profit margin on the sale as well as showing the company at a  disadvantage.  On
an ongoing  basis,  sales  staff and the  receptionist  have to call the storage
companies  to know if they can fill  orders,  causing  delays and poor  customer
relations.

The value of inventory at year-end is essential to the  preparation of financial
statements,  and  deficiencies  in that  area may  result in a  qualified  audit
report. A proper recording system for inventory is essential and must be updated
periodically.  All  shipments  in and  out of the  outside  warehouses  must  be
supported by a written  confirmation from the warehouses  confirming the date of
shipment.

The company's  inventory records should be compared with the quantities reported
by the storage companies periodically. A count at year-end must be performed and
reconciled to your record.

The overall  responsibility for the inventory needs to be given to a responsible
and  knowledgeable  staff  member.  During  the  course  of the  audit,  we have
discussed  the  implementation  of an  adequate  temporary  system on a computer
spreadsheet  with  Laila.  However  the  company  would  benefit  from  the full
integration of its invoicing and inventory  systems with its accounting  system.
We are available to further discuss and help with the  implementation  of such a
system.


2.   SAMPLES

During our testing, we also found there is no system to account for samples sent
to  customers.  Since the  company  is trying to  develop  new  markets  for the
product, the cost for samples may be significant.  In order to prevent customers
from getting  products  without  paying,  to follow up on new  customers  and to
maintain better internal control, samples that are given away should be properly
recorded,  and  periodically  reviewed by  management.  Large  shipments of free
samples should be authorized and approved by management.  Completed records will
also facilitate the reconciliation of inventory on hand between your records and
the records from the warehouses.

3.   EXPENSE ALLOCATION AND TAX PLANNING

Various expenses such as rent, telephone,  promotion and advertising,  salaries,
office  expenses,  insurance,  and  professional  fees,  are  common to  Cryopak
Industry,  Cryopak Canada,  and Cryopak  International.  Currently,  the bulk of
these expenses is carried by Cryopak Industries.  However, the operations of the
group are  recorded  in  Cryopak  Canada and will  eventually  result in taxable
income.  To ensure  that full  advantage  is taken of all  expenses  and that no
losses carried forward are lost due to expiry, management should start to review
the allocation of expenses.  In addition, we recommend that the tax implications
of U.S. and worldwide operations be reviewed periodically.

4.   EXERCISE OF STOCK OPTIONS

During our review of share  capital  transactions,  it was noted that when stock
options are  exercised  by members of  management,  cash is not always  received
prior to the issue of the shares.  It is a contravention of the B.C. Company Act
to issue shares prior to receiving payment in fall.

5.   MANAGEMENT FEES

Currently  there are no contracts or invoices  which  indicate  what  management
remuneration  is..  We  recommend  that  management   remuneration  be  properly
documented.

6.   PETTY CASH

Currently,  no  control  is  in  place over the petty cash. The company does not
record  the  detail  of  expenditures  included in each petty cash disbursement.
Therefore, even  though  the  company  keeps all its petty cash receipts, we are
unable  to  trace  the  receipts  back to the petty cash expenses in the general
ledger.

7.   CREDIT CARD EXPENSES

During our tests of expenses,  we found that both  personal and business  credit
cards were used to pay for business  expenses and that  personal  expenses  were
charged to the  business  credit  cards as well as  personal  credit  cards.  In
addition,  some of the credit card  payments  made by the company and applied to
the personal  credit cards were not  properly  supported by expense  reports and
invoices. We recommend that business expenses be paid with business credit cards
only so as to be  easily  distinguished  from  the  personal  expenses.  If some
business  expenses have to be paid by personal  credit card, then those expenses
should be documented on an expense report supported by proper receipts.  We also
recommend that personal expenses be charged to personal credit cards only.


<PAGE>

8.   SUPPORTING DOCUMENTATION

During  the course of the audit, our analyses  sometimes proved difficult due to
the lack of supporting documentation such as invoices.

Management should ensure that supporting  documentation be obtained and retained
for all  company  expenditures.  The  supporting  documentation  is  required to
provide sufficient audit evidence for the audit and for future reference.

We  recommend  that  cheques  only be issued when there is  adequate  supporting
documentation. If invoices are unavailable, then a memo providing details of the
expenditure, approved by management should be used as supporting documentation.

9.   YEAR 2000

The  Year  2000  date  change  could  have a  significant  impact  on any of the
Company's equipment that operates with some form of micro-processor system. Some
of the  computer  systems and other  systems  such as  telephone  systems may be
susceptible to the Year 2000 issue.

We are taking this  opportunity  to stress the importance of the Year 2000 issue
and the significant  operational and financial risk it poses for the Company. We
encourage  management to consider the Year 2000 issue as  equipment,  facilities
and computer software programs are acquired.  This should also include taking in
consideration  the impact on those  systems that may be critical to the business
but may be managed by third parties such as service bureaus.

We have noted improvements  during the year in the recording of transactions and
performing  accounting  routines. The  most  significant matter which we believe
still needs to be addressed is the recording of and controls over inventory.

We would be pleased to discuss any of these  comments and  recommendations  with
you in greater detail.  We would, at this time, like to thank you and your staff
for their  assistance and cooperation  extended during the audit.  Please do not
hesitate to contact this office if we may be of further assistance.

Yours very truly,

Chartered Accountants


<PAGE>

                            CRYOPAK INDUSTRIES INC.
                          Consolidated Balance Sheets
                                    March 31
                          (Stated in Canadian Dollars)


<TABLE>
<CAPTION>

                                            1998                 1997
<S>                                         <C>                  <C>
ASSETS
Current
        Cash                                $    3,417           $        -
        Accounts receivable                    217,677              146,863
        Inventory                               36,757               36,779
        Term deposit - Restricted (Note 3)     119,609                    -
        Prepaid expenses                        12,196               15,662
        Due from employees                      32,117               40,118
                                            __________            _________
                                               421,773              239,422

Investments (Note 4)                            25,442               25,442
Capital Assets (Note 5)                        416,945               50,179
Advance to Related Company (Note 6)             70,572               90,668
Intangibles (Note 7)                           429,565              486,887
                                            __________           __________
                                            $1,364,297           $  892,598

LIABILITIES
Current
        Bank indebtedness                   $        -           $      834
        Accounts payable and
           accrued liabilities                 532,440              375,587
        Note payable (Note 8)                  350,000                    -
        Current portion of
           capital lease obligation             80,174                6,345
                                            __________           __________
                                               962,614              382,766

Capital Lease Obligation (Note 9)              320,015               25,531
Deferred Income Taxes   20,467                  20,467               20,467
                                            __________           ___________
                                             1,303,096              428,764

SHAREHOLDERS' EQUITY

Share Capital (Note 10)
        Issued and outstanding
        Common shares                        7,362,318             7,078,428
        Class A preferred shares, Series 1     530,000               530,000
Deficit                                     (7,831,117)           (7,144,594)
                                            ___________           ___________
                                                61,201               463,834
                                            $1,364,297            $  892,598

</TABLE>

APPROVED BY THE BOARD:

Director

Director

<PAGE>

                             CRYOPAK INDUSTRIES INC
                  Consolidated Statements of loss and Deficit
                              Year Ended March 31
                          (Stated in Candian Dollars)


<TABLE>
<CAPTION>

                                   1998           1997           1996

<S>                                <C>            <C>            <C>
Sales                              $1,161,442     $1,140,242     $  965,912
Cost of Sales                         763,018        675,706        557,611
Gross Profit                          398,424        464,536        408,301
Operating Expenses
   (Schedule 1)                       938,375        992,673      1,158,036
Operating Loss                     (  539,951)    (  528,137)    (  749,735)
Other (Income) Expenses
 Filing, listing and
     transfer agent fees               20,321         17,006         26,870
 Corporate printing, financial
     and public relations              85,181        138,150        129,994
Loan payment as guarantor                   -              -              -
 Other income                      (    6,900)    (    8,160)    (      384)
                                   ___________    ___________    ___________
                                       98,602        146,996        162,998

Loss before income taxes           (  638,553)    (  675,133)    (  912,390)
Income taxes (recovery)                     -              -     (      343)
Net loss for the year              (  638,553)    (  675,133)    (  912,390)
Dividends                          (   47,970)             -              -
Deficit, beginning of the year     (7,144,594)    (6,469,461)    (5,557,071)
Deficit, end of year              $(7,831,117)   $(7,144,594)   $(6,469,461)

Loss per share                     $     0.05     $     0.06     $     0.09
Weighted average common
  shares outstanding                12,597,083     11,691,097     10,637,948

</TABLE>
<PAGE>

                            CRYOPAK INDUSTRIES INC.
            Consolidated Statements of Changes in Financial Position
                              Year Ended March 31
                          (Stated in Canadian Dollars)


<TABLE>
<CAPTION>

                                        1998          1997           1996
<S>                                     <C>           <C>            <C>
Cash Flow from Operating Activities
Operations
        Net loss                     $( 638,553)     $( 675,133)     $( 912,390)
        Depreciation and amortization    77,783          79,564          72,984
                                      ( 560,770)      ( 595,569)      ( 839,406)

Changes in other operating items
        Advance to related companies      4,789       (  15,815)              -
        Accounts receivable           (  75,603)          3,290        ( 51,134)
        Due from employees                8,001       (  29,900)       ( 10,218)
        Intangibles                           -               -        (  3,113)
        Inventory                            22          15,404        ( 22,270)
        Investments                           -               -        ( 25,342)
        Prepaid expenses                  3,466       (   6,186)       (  5,867)
        Accounts payable                156,853       (  40,587)         69,541
Cash used for operating activities    ( 463,242)      ( 669,363)       (887,809)

Cash Flow from Financing Activities
        Issue of shares                 291,890         586,870         992,070
        Shares returned to treasury   (   8,000)              -               -
        Liabilities settled by issue
          of company shares                   -          56,560               -
        Note payable and capital
          lease obligation               718,313      (   5,806)         37,682
        Payment of dividend            (  47,970)             -               -
Cash provided by financing activities    954,233        637,624       1,029,752

Cash Flow from Investing Activities
        Acquisition of capital assets  ( 387,227)     (  20,811)       ( 51,867)
        Advances(to)from related company  20,096         18,671        ( 52,367)
Cash used for investing activities     ( 367,131)     (   2,140)       (104,234)

Increase (Decrease) in cash during year  123,860      (  33,879)         37,709
Cash (Bank indebtedness),
  beginning of year                    (     834)        33,045        (  4,664)
Cash (Bank indebtedness), end of year $  123,026     $(     834)      $  33,045


Cash is comprised of
        Cash (indebtedness)          $    3,417     $(      834)      $  33,045
        Tenn deposit                    119,609               -               -
                                     $  123,026     $(      834)      $  33,045


</TABLE>
<PAGE>

                            CRYOPAK INDUSTRIES INC.
                   Notes to Consolidated Financial Statements
                            March 31, 1998 amd 1997
                          (Stated in Canadian Dollars)

1.   SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

     These  consolidated  financial  statements have been prepared in accordance
with  generally  accepted  accounting  principles  in Canada  and  reflect   the
following policies:

Basis of Presentation
---------------------

These consolidated financial statements include the accounts of the Company  and
its  wholly-owned  subsidiaries,  CRYOPAK  ( International )  Inc., a   Barbados
corporation,  CRYOPAK ( Canada )  Corporation  and  its  wholly-owned subsidiary
CRYOPAK Corporation, a Nevada corporation, and its proportionate interest  (50%)
in a joint venture, CRYOPAK (Alberta) Corporation.

Inventories
-----------

Inventories are valued at the  lower of cost  or net  realizable value.  Cost is
determined by the first-in first-out (FIFO) method of valuation.

Investments
-----------

Current  investments  are  recorded  at  the  lower  of  cost and  market value.
Long-term investments are recorded as cost unless there has been a loss in value
that is other than a temporary decline, in which case  the investment is written
down to fair market value.

Depreciation
------------

Capital assets are recorded at cost.

The Company records depreciation on its capital assets using  the  straight-line
method over five years, except for motor vehicles  where  the  declining balance
method is used at the rate of 30% per annum.

Patent Licence
--------------

The patent licence is recorded at cost and is amortized on a straight-line basis
over seventeen years.

Deferred Development Costs
--------------------------

The  deferred  development  costs  are  recorded at  cost and are amortized on a
straight-line basis over ten years.

Foreign Currency
----------------

Foreign  currency  accounts are  translated  using the temporal  method  whereby
current assets and current  liabilities  are  translated to Canadian  dollars at
year end  exchange  rates,  other  assets  and  liabilities  at  exchange  rates
prevailing at the dates of transactions, and revenue and expenses at the average
rate during the year.  Gains and losses from foreign  currency  translation  are
included in the consolidated statements of loss and deficit.

Goodwill
--------

The excess of cost of the purchase of a  subsidiary  company over the fair value
of assets  acquired  (disclosed in these  consolidated  financial  statements as
goodwill) is amortized on a straight-line basis over seventeen years.


<PAGE>

Financial Instruments
---------------------

The fair values of the Company's cash, investments, accounts receivable, amounts
due from employees,  advance to related  company,  accounts  payable and accrued
liabilities,  bank indebtedness,  and capital lease obligation were estimated to
approximate their carrying value.

2. OPERATIONS

These financial statements have been prepared on the assumption that the Company
is a going concern.

The ability of the Company to continue as a going  concern,  which  contemplates
the realization of assets and the satisfaction of liabilities and commitments in
the normal course of business, is dependent on obtaining the financing necessary
to continue operations and, ultimately, profitable operations.

3. TERM DEPOSIT

The term  deposit is held by the  Canadian  Western  Bank as  security  on lease
financing for a machine acquired during the year (Note 9).

4. INVESTMENTS

<TABLE>
<CAPTION>

                                   1998                  1997
<S>                                <C>                   <C>
Marketable securities -
market value at March 31,
1998 - $200
1997 - $325                        $   100               $   100
Artwork                             25,342                25,342
                                  ________               _______
                                   $25,442               $25,442
</TABLE>

5.  CAPITAL ASSETS

<TABLE>
<CAPTION>

                           1998                                   1997
               Cost        Accumulated        Net Book            Net Book
                           Depreciation       Value               Value
<S>            <C>         <C>                <C>                 <C>
Computer       $ 48,396    $ 36,586           $ 11,810            $ 26,607
Furniture
  and Fixtures    83,066      78,781              4,285               5,344
Motor Vehicle
  under Capital
Lease           40,594      23,687             16,907              18,228
Machinery under
  Capital Lease 383,943           -            383,943                   -
               ________    ________           ________             ________
               $555,999    $139,054           $416,945             $ 50,179

</TABLE>

6.  ADVANCE TO RELATED COMPANY

<TABLE>
<CAPTION>

                                      1998                 1997
<S>                                   <C>                  <C>
Advance to N.C.K. Holdings Inc.       $70,572              $90,668

</TABLE>

    The related company is owned by two directors.  The advance is unsecured and
    is  repayable in monthly installments of $2,200 including interest of 8% per
    annum.  During the year the Company paid management fees of $220,000 (1997 -
    $220,000) and royalties of $26,289 (1997 - $22,934) to N.C.K. Holdings Inc.

<PAGE>

7.  INTANGIBLES

<TABLE>
<CAPTION>

                                 1998                        1997
                                 Accumulated      NetBook    NetBook
                      Cost       Depreciation     Value      Value

<S>                   <C>        <C>              <C>        <C>
Incorporation Cost    $  3,111   $      -         $  3,111   $  3,111
Deferred Development
  Costs                114,017     80,667           33,350     48,172
Patent Licence         566,323    258,183          308,140    341,454
Goodwill               156,155     71,191           84,964     94,150
                      ________   ________         ________    ________
                      $839,606   $410,041         $429,565    $486,887

</TABLE>

8.  NOTE PAYABLE

<TABLE>
<CAPTION>

                                        1998                  1997
<S>                                     <C>                   <C>
Note payable to a company related
by two directors in common, bearing
interest at the rate of 12% per annum
repayable April 30, 1998, and
secured by a general security agreement
on all the Company's assets.  The loan
was converted to share capital
subsequent to the year end (Note 14(a)).
The interest accrued on the loan was
forgiven.                               $350,000                 -

</TABLE>

9.  CAPITAL LEASE OBLIGATIONS

<TABLE>
<CAPTION>

                                        1998                  1997
<S>                                     <C>                   <C>
Capital lease obligation with interest
at 10.25%, maturing November 1,
1999                                    $ 25,231               $ 31,876
Capital lease obligation with interest
at 10.6%, maturing July 20, 2002
(Note 3)                                 374,958                      -
                                        ________               ________
                                         400,189                 31,876

Less: current portion                     80,174                  6,345
                                        ________               ________
                                        $320,015               $ 25,531

</TABLE>

The future minimum lease payments required are as follows:

<TABLE>
<CAPTION>

<S>            <C>
1999           $117,064
2000            126,487
2001            107,824
2002            107,824
2003             35,941

</TABLE>

Included in these amounts is imputed interest of $94,951.

<PAGE>

10. SHARE CAPITAL

<TABLE>
<CAPTION>

Authorized
<S>             <C>
100,000,000     common share's without par value
100,000,000     Class A preferred shares without par value, of which 1,500
                are designated Class A convertible voting preferred shares,
                Series I

</TABLE>

The following changes occurred in share capital:

<TABLE>
Common shares
Issued and outstanding
<CAPTION>
                                1998                  1997
                                Number of             Number of
                                Shares     Amount     Shares       Amount
<S>                             <C>        <C>        <C>          <C>
Balance, beginning of year      12,245,156 $7,078,428 11,229,065   $6,699,998
Issued during the year
For cash, pursuant to the
   exercise of stock options       243,000 118,920       647,255      242,070
For cash, pursuant to the
   exercise of warrants                  -       -       116,000       34,800
For cash, pursuant to
   private placement               250,000 125,000       150,000       45,000
For settlement of debt                   -       -       102,836       56,560
For payment of dividend
    on Class A preferred
    shares, Series 1                96,908  47,970             -            -
                                __________ _______     _________      _______
                                   589,908 291,890     1,016,091      378,430

Acquired during the year           (20,000) (8,000)            -            -
Balance, end of year            12,815,064 $7,362,318 12,245,156   $7,078,428

Balance, beginning of year             530 $  530,000        265   $  265,000
Issued during the year for cash          -          -        265      265,000
Balance, end of year                   530    530,000        530      530,000

</TABLE>

Each class A preferred share Series I carries a 12%, cumulative dividend payable
at  the company's fiscal year end, in either cash or common shares at the option
of the Company.  Dividends in arrears at March 31, 1998 amounted to $64,039.

The Series I  preferred shares are  covertible into common shares at the rate of
one common share for each $3 of paid up capital or the rate provided below:

(i) $2.50 at any time after December 31, 1997, provided that the Current Trading
    Price shall never have exceeded $2.99 after December 31, 1996;

(ii) $2.00 at any  time  after  December 31, 1998,  provided  that  the  Current
     Trading  Price  shall never exceeded $2.99 after December 31, 1996 or $2.49
     after December 31, 1997;

(iii) at any time after December 1, 1999,  provided  that  the  Current  Trading
      Price shall never have exceeded $2.99  after  December 31, 1996  or  $2.49
      after December 1, 1997 or $1.99 after December 31, 1998, at a common share
      price  equal  to  that price  which  represents a 15% discount to the then
      Current  Trading Price, which common share price in no event shall be less
      than $0.95;

But if not so  coverted prior  to  May 12, 2000, such  Series I preferred shares
shall  be  deemed  to  have  been  converted  on  May 12, 2000 at the applicable
conversion  price  described above.  The Current Trading Price means the average
trading price of the common shares on a recognized public stock exchange for the
preceeding 20 business days.

On March 31, 1998, the following stock options were outstanding:

<TABLE>
<CAPTION>

               No. Of Shares            Exercise Price      Expiry Date
<S>            <C>                      <C>                 <C>
Directors      145,000                  $0.50               June 13, 1999
               152,500                   0.52               June 16, 1999
               145,000                   0.50               June 13, 1999
                77,500                   0.52               June 16, 1999
               100,000                   0.50               September 2, 1999
               150,000                   0.50               September 2, 1999

Officers       240,000                   0.50               April 10, 1999

Employees       20,000                   0.52               June 16, 1999

</TABLE>

On  March 31, 1998, 250,000 warrants were outstanding.  The warrants entitle the
holder to purchase 250,000 common shares at an exercise price of $0.60 per share
and expire August 18, 1998.

<PAGE>

11. INCOME TAXES

The Company has losses  available for utilization  against future years' taxable
incomes which, if unused, will expire as follows:
<TABLE>
<CAPTION>

<S>    <C>
1999   $  276,415
2000      296,801
2001    1,089,726
2002      658,014
2003      710,475
2004      599,008
2005      649,840

</TABLE>

12. LEASES

The minimum annual rental commitments for operating leases  in effect  at  March
31, 1998 are as follows:

<TABLE>
<CAPTION>

<S>     <C>
1999    $  47,832
2000       47,832
2001       27,480
2002        1,627

</TABLE>

13. RELATED PARTY TRANSACTIONS

Related  party  transactions  not  otherwise  disclosed  in  these  consolidated
financial statements are:

(a)  Professional fees include $10,000 paid  to a company owned by a director of
     the Company.

(b)  As of March 31, 1998, accounts  receivable  include $7,658  receivable from
     N.C.K.  Holdings  Inc.,  a  company  owned  by  two  directors  and  $3,278
     receivable  from  Fulcrum  Developments Ltd.,  a  company  related  by  two
     directors in common.

14. SUBSEQUENT EVENTS

The following share transactions took place subsequent to the year end:

(a)  Issued 777,777 common shares for gross proceeds of $350,000 pursuant to the
     conversion of debt (Note 8).

(b)  Issued 1,000,000 units  for  gross proceeds of $400,000. Each unit consists
     of one common share and one non-transferable  share purchase warrant.  Each
     warrant entitles  the  holder  to  purchase one common share at $0.40 on or
     before April 23, 1999, or at $0.46 on or before April 23, 2000.

(c)  Issued 119,608  warrants  to the person  acting as  guarantor  on a capital
     lease.  Each  warrant  entitles the  holder to purchase one common share at
     $0.40 on or before March 20, 1999, or at $0.46 on or before March 20, 2000.

15. CONTRACTUAL OBLIGATIONS

(a)  Pursuant  to  an  agreement  dated  March 20, 1998,  which  is  subject  to
     regulatory approval, the Company committed to pay a bonus to a  third party
     for a guarantee of a capital lease. The capital lease is $374,958 (Note 9).
     The bonus is payable in monthly installments of $2,392 commencing April 20,
     1998 up to a maximum of $23,920 and can  be canceled  if  the  Company  can
     obtain a release of the guarantee.  In  addition  the  Company  must  issue
     119,608 share  purchase  warrants  (Note 14(c)).   The warrants will expire
     within 30 days of the Company obtaining a release of the guarantee.

(b)  Pursuant to an agreement dated December 20, 1989 with N.C.K. Holdings Inc.,
     as  part  of  the  consideration  for  a  licence,  the  Company has made a
     commitment to  issue  up  to  3,000,000  common shares  of its capital (the
     "performance shares") based upon certain performance criteria.

16. CONTINGENT LIABILITIES

Should  sales of racks not meet expectations, the Company is liable for the cost
of the molds, the balance of which was approximately $30,000 at March 31, 1998.

17.  UNITED STATES GENERALLY ACCEPTED ACCOUNTING PRINCIPLES

(a)  Generally accepted accounting principles ("GAAP") used in the United States
     of  America  differ  in  certain   respects  from  GAAP  used  in Canada. A
     difference  that materially affects these consolidated financial statements
     is that  United States  GAAP require deferred development costs be expensed
     as incurred  whereas Canadian GAAP allows these expenses to be deferred and
     amoritzed.  Had  the  consolidated  financial  statements  been prepared in
     accordance  with United States  GAAP  as  described  above,  the  following
     changes would have been made:

<TABLE>
<CAPTION>

                                            1998        1997        1996
<S>                                         <C>         <C>         <C>
Total assets-Canadian GAAP                  $1,364,297  $  892,598  $  969,860
Deferred Development costs                      33,350      48,172      62,994
Total assets-United States GAAP              1,330,947     884,426     906,866

Shareholders' equity-Candaian GAAP              61,201     463,834     495,537
Deferred development costs                      33,350      48,172      62,994
Shareholders' equity-United States GAAP         27,851     415,662     432,543

Net loss-Canadian GAAP                         638,553     675,133     912,390
Amortization of deferred development costs      14,822      14,822      14,822
Net loss-United States GAAp                    623,731     660,311     897,568

</TABLE>

<PAGE>

(b) United States GAAP require non-cash investing and financing activities to be
    excluded from the consolidated statements of changes in financial  position,
    whereas  Canadian  GAAP  require  these  activities  to  be  included in the
    statement.   Had   the  consolidated   statement  of  changes  in  financial
    position  been  prepared  in   accordance  with  U.S.  GAAP   the  following
    transactions would have been excluded:

<TABLE>
<CAPTION>

                                                1998     1997    1996
<S>                                             <C>      <C>     <C>
Liabilities settled by issue of company shares  $     -  $56,560 $    -

</TABLE>

<TABLE>
<CAPTION>

                                                1998      1997    1996
<S>                                             <C>       <C>     <C>
Basic loss per share calculated in accordance
with U.S. GAAP is:                              $(0.05)   $(0.06) $(0.09)

</TABLE>
<PAGE>

Hay & Watson Chartered Accountants

                                                                Auditors' Report
To the Shareholders
Cryopak Industries Inc.

We have audited the consolidated balance sheets of Cryopak Industries Inc. as at
March 31, 1998 and 1997 and the consolidated  statements of loss and deficit and
of changes in financial  position for each of the years in the three year period
ended  March  31,  1998.  These  consolidated   financial   statements  are  the
responsibility of the company's management.  Our responsibility is to express an
opinion on these financial statements based on our audit.

We conducted our audit in accordance with auditing standards  generally accepted
in Canada.  Those standards  require that we plan and perform an audit to obtain
reasonable  assurance whether the consolidated  financial statements are free of
material  misstatement.  An audit includes examining,  on a test basis, evidence
supporting the amounts and disclosures in the consolidated financial statements.
An audit also includes assessing the accounting  principles used and significant
estimates  made by  management,  as well as  evaluating  the  overall  financial
statements.

In our opinion,  these consolidated  financial statements present fairly, in all
material respects,  the financial  positions of the company as at March 31, 1998
and 1997 and the  results of its  operations  and the changes in its cash flows;
for  each of the  years  in the  three  year  period  ended  March  31,  1998 in
accordance with accounting  principles generally accepted in Canada. As required
by the Company Act of British  Columbia,  we report that, in our opinion,  these
principles  have been applied on a consistent  basis with that of the  preceding
year.

Chartered Accountants

Vancouver, BC
June 25, 1998

<PAGE>

Hay & Watson CHARTERED ACCOUNTANTS

26 August 1997

Messrs. Harry Bydgnes and Leigh Jeffs
Cryopak Industries Inc.
1120 - 625 Howe Street
Vancouver, B.C. V6C 2T6

Dear Sirs:

During our  examination  of the  consolidated  financial  statements  of Cryopak
Industries  Inc.  for the year ended March 31,  1997,  we reviewed  the existing
system of accounting  procedures and internal  control and such review indicated
certain areas which we believe should be brought to your attention. We have also
recommended  certain  changes to achieve  consistent  application  of accounting
policies adopted by the company.

1. INVENTORY

During our examination we found that there were no records of the inventory kept
at the various locations.  In addition, no one had arranged for inventory counts
to be done at year-end although  previously  advised by us to do so. The lack of
proper  records has caused the company to run out of  inventory  and to buy back
inventory from customers in order to fill other customers'  orders.  This causes
the company to lose its profit margin on the sale as well as showing the company
at a disadvantage.  On an ongoing basis, sales staff and the receptionist should
call the storage  companies to know if they can fill orders and therefore  avoid
delays and poor customer relations.

The value of inventory at year-end is essential to the  preparation of financial
statements,  and  deficiencies  in that  area may  result in a  qualified  audit
report.  A proper  recording  system  for  inventory  is  essential  and must be
established  immediately.  All  shipments  in and out of the out of the  outside
warehouses must be supported by a written confirmation including the date of the
shipment.

The company's  inventory records should be compared with the quantities reported
by the storage companies periodically. A count at year-end must be performed and
reconciled to your record.

1822 West 2nd Avenue, Vancouver, B.C. V6J 1H9 e(604) 732-1466 Fax (604) 732-3133
The overall responsibility for the inventory should be assigned to a responsible
and  knowledgable  staff  member.  It  should  not be  given  to  staff  with no
accounting training or experience.

During the course of the  audit,  we have  discussed  the  implementation  of an
adequate  temporary  system on a computer  spreadsheet  with Laila.  However the
company would benefit from the full  integration  of its invoicing and inventory
systems with its accounting system. We are available to further discuss and help
with the implementation of such a system.

2. EXPENSE ALLOCATION AND TAX PLANNING

Various expenses such as rent, telephone,  promotion and advertising,  salaries,
office  expenses,  insurance,  and  professional  fees,  are  common to  Cryopak
Industries Inc., Cryopak (Canada)  Corporation and Cryopak  (International) Ltd.
Currently, the majority of the expenses are allocated to Cyropak Industries Inc.
However,   the  operations  of  the  group  are  recorded  in  Cyropak  (Canada)
Corporation  and will eventually  result in taxable income.  To ensure that full
advantage is taken of all expenses and that no losses  carried  forward are lost
due to expiry,  management should start to review the allocation of expenses. In
addition,  we  recommend  that  the  tax  implications  of  U.S.  and  worldwide
operations be reviewed periodically.

3. PRICE LISTING

During our testing of sales  invoices,  except for the agreement with Unisource,
no official price list for the company's  products was kept in the office.  As a
result we were unable to trace  whether  the unit  prices on the sales  invoices
were  accurate.  A current  price  list  should be kept in the  office to ensure
standard  and  accurate  pricing  was given to  customers.  Special  pricing and
discounts should be approved and initialed by an authorized person.

4. EXERCISE OF STOCK OPTIONS

During our review  of  share  capital transactions, it was noted that when stock
options are exercised by members of management cash is not always received prior
to the issue of the shares.  It is a contravention of the Company Act of British
Columbia  to issue shares prior to receiving payment in full. In addition, stock
options exercised  by  employees  were  paid  by  way  of  loans advanced to the
employees. These loans were not  secured  by  promissory  notes  or  other  such
documents.

5. MANAGEMENT FEES

Currently  there are no contracts or invoices  which  indicate  what  management
remuneration   is.  We  recommend  that  management   remuneration  be  properly
documented.

<PAGE>

6. PETTY CASH

Currently,  no control is in place over the petty  cash.  The  company  does not
record  the  detail  expenditure  included  in  each  petty  cash  disbursement.
Therefor,  even though the  company  keeps all its petty cash  receipts,  we are
unable to trace the  receipts  back to the petty cash  expenses  in the  general
ledger.

7. EXPENSES PAID BY CREDIT CARD

During our tests of expenses,  we found that both  personal and business  credit
cards were used to pay for business  expenses and that  personal  expenses  were
charged to the  business  credit  cards as well as  personal  credit  cards.  In
addition,  some of the credit card  payments  made by the company and applied to
the  personal  credit card were not properly  supported  by expense  reports and
invoices.

We recommend that business expenses be paid with business credit card only so as
to be easily distinguished from the personal expenses. If some business expenses
have  to be paid  by  personal  credit  card,  then  those  expenses  should  be
documented on an expense report supported by proper receipts.  We also recommend
that personal expenses be charged to personal credit cards only.

8. GST

In our sales test, we found some invoices to Canadian  customers did not include
GST. Therefore,  the GST collected and payable are understated,  and the company
may be liable for the tax on those sales.  GST is applied to all eligible  goods
sold to  Canadian  companies  even  though  invoices  are  billed  in a  foreign
currency.

9. SUPPORTING DOCUMENTATION

During the course of the audit,  our analyses  sometimes proved difficult due to
the lack of supporting documentation (e.g., invoices).

Management should ensure that supporting  documentation be obtained and retained
for all  company  expenditures.  The  supporting  documentation  is  required to
provide  sufficient  evidence  for the  audit  and  for  future  references.  We
recommend  that  cheques  only be  issued  when  there  is  adequate  supporting
documentation. If invoices are unavailable, then a memo providing details of the
expenditure, approved by management should be used as supporting documentation.

10. SUGAR FOOD CORPORATION INVOICES

It was noted that  Sugar  Food  Corporation  is no longer  providing  a detailed
listing  of goods  shipped  out and  billed  to  customers.  They send a monthly
statement  which only shows the total purchases and  administration  fee for the
month.  As a result,  we are unable to check if the unit cost billed is accurate
and what types of products are being sold.

We strongly  recommend that the company require Sugar Food Corporation to report
in the same detailed manner as in the past.

We have noted improvements  during the year in the recording of transactions and
performing  accounting  routines  raised by us last year.  The most  significant
matter  which we believe  still needs to be  addressed  is the  recording of and
control over inventory.

We would be pleased to discuss any of these  comments and  recommendations  with
you in  greater  detail.  We would  like to thank  you and your  staff  for your
assistance and cooperation  extended during the audit. Please do not hesitate to
contact us if we may be of further assistance.

Yours very truly,

HAY & WATSON

Bruce S. Hay

<PAGE>

                            CRYOPAK INDUSTRIES INC.
                       CONSOLIDATED FINANCIAL STATEMENTS
                           YEAR ENDED MARCH 31, 1997
                              AND AUDITORS' REPORT


                            CRYOPAK INDUSTRIES INC.
                   INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
                             MARCH 31,1997 AND 1996



                                Auditors, Report
                                 Balance Sheets
                  Consolidated Statements of Loss and Deficit
            Consolidated Statements of Changes in Financial Position
                   Notes to Consolidated Financial Statements
                  Consolidated Schedules of Operating Expenses

Hay & Watson CHARTERED ACCOUNTANTS

AUDITORS' REPORT

To the Shareholders of
Cryopak Industries Inc.

We have audited the consolidated balance sheets of Cryopak Industries Inc. as at
March 31, 1997 and 1996 and the consolidated  statements of loss and deficit and
of changes in financial  position for each of the years in the three year period
ended  March  31,  1997.  These  consolidated   financial   statements  are  the
responsibility of the company's management.  Our responsibility is to express an
opinion on these consolidated financial statements based on our audit.

We conducted our audit in accordance with auditing standards  generally accepted
in Canada.  Those standards  require that we plan and perform an audit to obtain
reasonable  assurance whether the consolidated  financial statements are free of
material  misstatement.  An audit includes examining,  on a test basis, evidence
supporting the amounts and disclosures in the consolidated financial statements.
An audit also includes assessing the accounting  principles used and significant
estimates  made by  management,  as well as  evaluating  the  overall  financial
statement presentation.

In our opinion,  these consolidated  financial statements present fairly, in all
material  respects,  the financial  position of the company as at March 31, 1997
and 1996 and the results of its operations and the changes in its cash flows for
each of the years in the three year period  ended  March 31, 1997 in  accordance
with  accounting  principles  generally  accepted in Canada,  As required by the
Company  Act  of  British  Columbia.  we  report  that,  in our  opinion,  these
principles  have been applied on a basis  consistent  with that of the preceding
year.

CHARTERED ACCOUNTANTS

Vancouver, B.C.
June 27, 1997

1822 West 2nd Avenue, Vancouver, B.C. V6J IH9  (604) 732-1466 Fax (604) 732-3133

<PAGE>

Hay & Watson CHARTERED ACCOUNTANTS

COMMENTS BY AUDITORS FOR U.S. READERS
ON CANADA - U.S. REPORTING DIFFERENCES

In the United States,  reporting  standards for auditors require the addition of
an explanatory  paragraph  (following the opinion  paragraph) when the financial
statements are affected by conditions and events that cast substantial  doubt on
the company's ability to continue as a going concern, such as those described in
Note 2 to the financial  statements.  Our report to the shareholders  dated June
27, 1997 is expressed in accordance with Canadian  reporting  standards which do
not permit a reference to such events and  conditions  in the  Auditors'  Report
when these are adequately disclosed in the financial statements.

CHARTERED ACCOUNTANTS

Vancouver, B.C.
June 27, 1997

1822 West 2nd Avenue, Vancouver, B.C. V6J IH9  (604) 732-1466 Fax (6041 732-3133

<PAGE>

                            CRYOPAK INDUSTRIES INC.

                          CONSOLIDATED BALANCE SHEETS
                     MARCH 31 (Stated in Canadian Dollars)

<TABLE>
<CAPTION>

ASSETS                                       1997               1996
<S>                                          <C>                <C>
Current
     Cash                                    $        -         $     33,045
     Accounts receivable                        146,863              134,338
     Inventory                                   36,779               52,183
     Investments (Notes I and 3)                 25,442               25,442
     Prepaid expenses                            15,662                9,476
     Due from employees                          40,118               10,218
                                             __________         ____________
                                                264,864              264,702

Capital assets (Notes I and 4)                   50,179               51,610
Advance to related company (Note 5)              90,668              109,339
Intangibles (Notes I and 6)                     486,887              544,209
                                             __________          ___________
                                             $  892,598          $   969,860

LIABILITIES

Current
     Bank indebtedness                              834                    -
     Accounts payable and accrued liabilities   375,587              416,174
     Current portion of capital lease obligation  6,345                5,874
                                             __________          ___________
                                             $  382,766          $   422,048

Capital lease obligation (Note 7)                25,531               31,808
Deferred income taxes                            20,467               20,467
                                             ___________         ___________
                                             $  428,764          $   474,323

SHAREHOLDERS' EQUITY

Share capital (Note 8)
     Issued and outstanding
          12,245,156 (1996 - 11,229,065)
            common shares                     7,078,428            6,699,998
          530 (1996 - 265) class "A"
            preferred shares, Series 1          530,000              265,000

(Deficit)                                    (7,144,594)          (6,469,461)

                                                 463,834             495,537
                                              __________           _________
                                              $  892,598           $ 969,860

</TABLE>

APPROVED BY THE BOARD:

DIRECTOR

DIRECTOR

<PAGE>

                            CRYOPAK INDUSTRIES INC.

                  CONSOLIDATED STATEMENTS OF LOSS AND DEFICIT
                              YEAR ENDED MARCH 31
                          (Stated in Canadian Dollars)

<TABLE>
<CAPTION>

                              1997           1996               1995
<S>                           <C>            <C>                <C>
Sales                         $1,140,242     $  965,912         $1,053,456
Cost of sales                    675,706        557,611            637,545
Gross profit                     464,536        408,301            415,911
Operating expenses, Schedule 1   992,673      1,158,036          1,062,998
Operating (loss)                 528,137        749,735            647,087
Other (income) expenses
 Filing, listing and transfer
    agent fees                    17,006         26,870             21,157
 Corporate printing, financial
    and public relations         138,150        129,994            142,617
 Loan payment as guarantor             -          6,518                  -
 Write off of loans payable            -              -            (11,295)
 Other income                 (    8,160)      (    384)           (   138)
                              ___________      _________          _________
                              $  146,996       $162,998           $ 152,341

(Loss) before income taxes    (  675,133)      (912,733)           (799,428)
Income taxes (recovery)                -       (    343)           (    340)
Net (loss) for the year       (  675,133)      (912,390)           (799,768)
(Deficit), beginning of year  (6,469,461)     (5,557,071)        (4,757,303)
(Deficit), end of year        (7,144,594)     (6,469,461)        (5,557,071)
(Loss) per share              (     0.06)     (     0.09)        (     0.09)
Weighted average common shares
        outstanding           11,691,097      10,637,948          9,280,487

</TABLE>
<PAGE>

                            CRYOPAK INDUSTRIES INC.
            CONSOLIDATED STATEMENTS OF CHANGES IN FINANCIAL POSITION
                              YEAR ENDED MARCH 31
                          (Stated in Canadian Dollars)

<TABLE>
<CAPTION>

                                       1997            1996         1995
<S>                                    <C>             <C>          <C>
Cash flow from operating activities
 Operations
 Net (loss)                            $(   675,133)   $(  912,390) $(  799,768)
 Depreciation and amortization               79,564         72,984      236,623
 Write off of loans payable                                              11,295
                                       _____________   ____________ ____________
                                        (    595,569)   (  839,406)  (  574,440)

Changes in other operating items
 Advances to related companies          (     15,815)            -            -
 Accounts receivable                           3,290    (   51,134)      69,278
 Due from employees                     (     29,900)   (   10,218)       5,240
 Intangibles                                       -    (    3,113)           -
 Inventory                                    15,404    (   22,270)      63,364
 Investments                                       -    (   25,342)           -
 Prepaid expenses                       (      6,186)   (    5,867)           -
 Accounts payable                       (     40,587)       69,541       89,492
Cash used for operating activities      (669,363,887)   (  887,809)    (347,066)

Cash flow from financing activities
  Issue of shares                            586,870       992,070      315,260
  Liabilities settled by issue of company
    shares                                    56,560             -       34,000
  Loans payable and capital lease obligation ( 5,806)       37,682            -
Cash provided by financing activities        637,624     1,029,752      349,260
Cash flow from investing activities
 Acquisition of capital assets               ( 20,811)   (  51,867)    ( 14,287)
 Advances (to) from related company           189,671    (  52,367)       5,587
Cash used for investing activities           (  2,140)   ( 104,234)     ( 8,700)
Increase (decrease) in cash during the year  ( 33,879)      37,709      ( 6,506)
Cash (bank indebtedness), beginning of the year33,045    (   4,664)       1,842
Cash (bank indebtedness), end of year       $(    834)   $  33,045      $(4,664)

</TABLE>
<PAGE>

                            CRYOPAK INDUSTRIES INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                             MARCH 31, 1997 AND 1998
                          (Stated in Canadian Dollars)

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

These  financial  statements  have been  prepared in accordance  with  generally
accepted accounting principles in Canada and reflect the following policies:

Basis of Presentation
---------------------

These consolidated financial statements  include  the accounts of the Company an
and its wholly-owned  subsidiaries, Cryopak  (International)  Inc.,  a  Barbados
corporation, Cryopak F(Mada) Corporation and its wholly-owned subsidiary Cryopak
Corporation,  a Nevada  corporation,  and its proportionate  interest (50%) in a
joint venture, Cryopak (Alberta) Corporation.

Inventories
-----------

Inventories  are valued at the lower of cost or net  realizable  value.  Cost is
determined by the first-in first-out (FIFO) method of valuation.

Investments
-----------

Investments are recorded at the lower of cost and market value.

Depreciation
------------

Capital assets are recorded at cost.

The Company records  depreciation on its capital assets using the  straight-line
method over five years,  except for motor vehicles  where the declining  balance
method is used at the rate of 30% per anum.

Patent Licence
--------------

The patent4icence is recorded at cost and is amortized on a straight-line  basis
over seventeen years.

Deferred Development Costs
--------------------------

The  deferred  development  costs are  recorded at cost and are  amortized  on a
straight-line basis over ten years.

Foreign Currency
----------------

Foreign  currency  accounts are  translated  using the temporal  method  whereby
current assets and current  liabilities  are  translated to Canadian  dollars at
year end  exchange  rates,  other  assets  and  liabilities  at  exchange  rates
prevailing at the dates of transactions, and revenue and expenses at the average
rate during the year.  Gains and losses from foreign  currency  translation  are
included in the consolidated statement of loss and deficit.

Goodwill
--------

The excess of cost of the purchase of a  subsidiary  company over the fair value
of assets  acquired  (disclosed in these  consolidated  financial  statements as
goodwill) is amortized on a straight-line  basis over seventeen years.

CRYOPAK INDUSTRIES INC.

<PAGE>

2. OPERATIONS

These financial statements have been prepared on the assumption that the Company
is a going concern.

The ability of the Company to continue as a going  concern,  which  contemplates
the realization of assets and the satisfaction of liabilities and commitments in
the normal course of business, is dependent on obtaining the financing necessary
to continue operations and, ultimately, profitable operations.

3. INVESTMENTS

<TABLE>
<CAPTION>
                              1997               1996
<S>                           <C>                <C>
Marketable securities -
 market value at March 31,
 1997 - $325
 1996 - $475                  $   100            $   100
Artwork                        25,342             25,342
                              ________           ________
                              $25,442            $25,442

</TABLE>

4. CAPITAL ASSETS

<TABLE>
<CAPTION>
                                                  1997            1996
                                  Accumulated     Net Book        Net Book
                       Cost       Depreciation    Value           Value
<S>                    <C>        <C>             <C>             <C>
Computer               $ 45,617   $ 19,010        $ 26,607        $ 14,137
Furniture and fixtures   82,562     77,218           5,344           2,968
Motor vehicle under
  capital lease          40,594     22,366          18,228          34,505
                       ________   ________        ________        ________
                       $168,773   $118,594        $ 50,179        $ 51,610

</TABLE>

5. ADVANCE TO RELATED COMPANY

<TABLE>
<CAPTION>

                                1997            1996
<S>                             <C>             <C>
Advance to N.C.K. Holdings Inc. $ 90,668        $109,339

</TABLE>

The related company is owned by two directors. The advance is unsecured, and  is
repayable  in monthly installments of $2,200 including interest of 8% per annum.
During the year the  Company  paid management fees of $220,000 (1996 - $220,000)
and royalties of $22,934 (1996 - $20,159) to N.C.K. Holdings Inc.

6. INTANGIBLES

<TABLE>
<CAPTION>
                                                    1997            1996
                                    Accumulated     Net Book        Net Book
                           Cost     Amortization    Value           Value
<S>                        <C>      <C>            <C>             <C>
Incorporation costs        $  3,111 $      -       $  3,111        $  3,111
Deferred development costs  114,017   65,845         48,172          62,994
Patent licence              566,323  224,869        341,454         374,768
Goodwill                    156,155   62,005         94,150         103,336
                           ________ ________       _________       ________
                           $839,606 $352,719       $486,887        $544,209

</TABLE>

7. CAPITAL LEASE OBLIGATION

<TABLE>
<CAPTION>

<S>                             <C>         <C>
Capital lease payable,
with interest of 10.25%,
due November 1, 1999            $31,876     $37,682

Less: current portion             6,345       5,874
                                _______     _______
                                $25,531     $31,808

</TABLE>

The future minimum lease payments required are $37,143 payable as follows:

<TABLE>
<CAPTION>

<S>     <C>
1998    $  9,240
1999       9,240
2000      18,663

</TABLE>

Included in these amounts is imputed interest of $5,267.

<PAGE>

8. SHARE CAPITAL

<TABLE>
<CAPTION>

Authorized
<S>         <C>
100,000,000 common shares without par value
100,000,000 Class "A" preferred  shares  without  par  value, of which 1,500 are
            designated class "A" convertible voting preferred shares, Series I.

</TABLE>

The following changes occurred in share capital:

<TABLE>

Common shares
Issued and outstanding
<CAPTION>

                            1997                         1996                           1995
                     Number                       Number                        Number
                     of                           of                            of
                     Shares        Amount         Shares         Amount         Shares         Amount
<S>                  <C>           <C>            <C>            <C>            <C>            <C>
Balance, beginning
  year               11,229,065    $6,699,998     9,677,542      $5,972,928     8,966,542      $5,623,668

Issued during the year
 For cash               913,255       321,870     1,551,523         727,070       661,000         315,260
 For settlement
   of debt              102,836        56,560         -                -           50,000          34,000
                      _________       _______     _________        ________       _______         _______
                      1,016,091       378,430     1,551,523         727,070       711,000         349,260
Balance, end
 of year             12,245,156     $7,078,42    11,229,065      $6,699,998     9,677,542      $5,972,928

</TABLE>

Class A preferred shares, Series I

<TABLE>
<CAPTION>

<S>                                <C>       <C>            <C>       <C>
Balance, beginning of year         265       $265,000       -         $    -
Issued during the year for cash    265        265,000       265         265,000
Balance, end of year               530       $530,000       265       $ 265,000

</TABLE>
<PAGE>

Each  class "A"  preferred  share  Series I carries a 12%,  cumulative  dividend
payable at the company's fiscal year end, in either cash or common shares at the
option of the  Company.  Dividends  in arrears  at March 31,  1997  amounted  to
$48,048.

The Series I preferred  shares are convertible into common shares at the rate of
one common share for each $3.00 of paid up capital or the rate provided below:

(1) $2.50 at any time after December 31, 1997, provided that the Current Trading
Price shall never have exceeded $2.99 after December 31, 1996;

(ii) $2.00  at  any  time  after  December 31, 1998,  provided  that the Current
Trading  Price  shall never have exceeded $2.99 after December 31, 1996 or $2.49
after December 31, 1997.

(iii) at any time after  December 31, 1999,  provided  that the Current  Trading
Price shall never have  exceeded  $2.99 after  December  31, 1996 or $2.49 after
Decemb~r  31, 1997 or $1.99 after  December  31,  1998,  at a common share price
equal to that price which  represents a 15% discount to the then Current Trading
Price, which common share price in no event shall be less than $0.95;

but if not so converted  prior to May 12, 2000,  such Series I preferred  shares
shall  be  deemed  to have  been  converted  on May 12,  2000 at the  applicable
conversion  price described  above.  The Current Trading Price means the average
trading price of the common shares on a recognized public stock exchange for the
preceding 20 business days.

On March 31, 1997, the following stock options were outstanding:

<TABLE>
<CAPTION>

                Number of  Exercise  Expiry
                Shares     Price     Date
<S>             <C>        <C>       <C>
Directors       38,000     $0.44     November 7,1997
               490,000      0.50     June 13, 1999
                75,000      0.45     May 27,1997
                96,909      0.55     August 22, 1997
               100,000      0.42     April 26,1998
Officers        35,000      0.44     November 7,1997
Employees       20,000      0.45     May 27, 1997
                80,000      0.40     January 12,1999

</TABLE>

9. INCOME TAXES

The Company has losses  available for utilization  against future years' taxable
incomes which, if unused, will expire as follows:

<TABLE>
<CAPTION>

<S>   <C>
1998  $  274,933
1999     276,415
2000     296,801
2001   1,089,726
2002     658,014
2003     710,475
2004     599,008

</TABLE>

10. LEASES

The minimum annual rental  commitments  for operating  leases in effect at March
31, 1997 are as follows:

<TABLE>
<CAPTION>

<S>     <C>
1998    $17,570
1999     10,570
2000     10,570
2001      1,627
2002      1,627

</TABLE>

11. RELATED PARTY TRANSACTIONS

Related  party  transactions  not  otherwise  disclosed  in  these  consolidated
financial statements are:

(a) Professional and consulting fees include $15,540 and $23,500,  respectively,
paid  to  Discovery  Capital  Corporation,  the  president  and  non-controlling
shareholder of which is a director of the Company. As of March 31, 1997, $14,142
was payable to Discovery Capital Corporation.

(b) As of March 31, 1997,  accounts  receivable  include $12,446 receivable from
N.C.K.  Holdings Inc.,  a  company owned by two directors, and $3,278 receivable
from Fulcrum Developments. Ltd., a company related by two directors in common.

12. SUBSEQUENT EVENTS

The following events occurred subsequent to the year end:

(a) The  following  common  shares  were  issued  pursuant  to the  exercise  by
directors of share purchase options:

<TABLE>
<CAPTION>

Date of exercise        Number of       Exercise        Total
                        Shares          Price           Proceeds
<S>                     <C>             <C>             <C>
April 30, 1997          38,000          $0.44           $ 16,720

June 16, 1997           60,000           0.50             30,000

</TABLE>
<PAGE>

(b) The following share options were issued after the end of the year:

<TABLE>
<CAPTION>

                Number of    Exercise   Expiry
                Shares       Price      Date
<S>             <C>          <C>        <C>
Employee        240,000      $0.50      April 10, 1999
Directors (1)   230,000       0.52      June 16, 1999
Employee (1)    20,000        0.52      June 16, 1999

</TABLE>

(1) subject to regulatory approval

13. CONTRACTUAL OBLIGATIONS

Pursuant to an agreement  dated December 20, 1989 with N.C.K.  Holdings Inc., as
part of the  consideration  for a licence,  the Company has made a commitment to
issue up to 3,000,000  common shares of its capital (the  "performance  shares")
based upon certain performance criteria.

The issue of the shares is subject to regulatory  approval which to date has not
been sought.

14. CONTINGENT LIABILITIES

(a) Should  sales  of racks not meet expectations, the Company is liable for the
 cost of the moulds, the balance of which was approximately $30,000 at March 31,
 1997.

(b) A company has filed a complaint against the Company in respect of the use of
a registered trademark. The outcome of the claim is not determinable.

<PAGE>

15. UNITED STATES GENERALLY ACCEPTED ACCOUNTING PRINCIPLES

Generally accepted  accounting  principles ("GAAP") used in the United States of
America  differ in certain  respects from GAAP used in Canada. A difference that
materially affects these consolidated financial statements is that United States
GAAP require deferred development costs be expensed as incurred whereas Canadian
GAAP allows these  expenses to be deferred and amortized.  Had the  consolidated
financial  statements  been  prepared in  accordance  with United States GAAP as
described above, the following changes would hive been made:

<TABLE>
<CAPTION>

                                  1997      1996      1995
<S>                               <C>       <C>       <C>
Total Assets - Canadian GAAP      $892,598  $969,860  $789,332
Deferred development costs        ( 48,172) ( 62,994) ( 77,816)
Total Assets - United States GAAP $844,426  $906,866  $711,516

</TABLE>

<TABLE>
<CAPTION>

                                  1997       1996      1995
<S>                               <C>        <C>       <C>
Shareholders' equity -
  Canadian GAAP                   $463,834   $495,537  $415,857
Deferred development costs        ( 48,172)  ( 62,994) ( 77,816)

Shareholders' equity -
  United States GAAP              $415,662   $432,543  $338,041

                                  1997       1996      1995

Net Loss - Canadian GAAP          $675,133)  (912,390) (799,768)
Amortization of deferred
  development costs                 14,822     14,822   187,045
Net Loss - United States GAAP     $(660,311)  $(897,568)$(612,723)

</TABLE>

(b)  United States  GAAP  require non-cash investing and financing activities to
be  excluded  from the Consolidated Statements of Changes in Financial Position,
whereas  Canadian GAAP require these activities to be included in the Statement.
Had  the Consolidated Statement of Changes - in Financial Position been prepared
in accordance with U.S.GAAP the following transactions would have been excluded:

<TABLE>
<CAPTION>

                                                1997     1996         1995
<S>                                             <C>      <C>          <C>
Liabilities settled by issue of company shares  $56,560  $   -    $34,000

</TABLE>

(c) Basic loss per share calculated in accordance with U.S. GAAP is:

<TABLE>
<CAPTION>

                          1997     1996         1995
<S>                       <C>      <C>          <C>
                          0.06     0.09         0.07

</TABLE>
<PAGE>

                            CRYOPAK INDUSTRIES INC.
                  CONSOLIDATED SCHEDULES OF OPERATING EXPENSES
                              YEAR ENDED MARCH 31
                          (Stated in Canadian Dollars)

<TABLE>
<CAPTION>
                                   1997         1996           1995
<S>                                <C>          <C>            <C>
Bad debts                          7,245        $ 32,668       $ 28,731
Commissions                          884           3,681          9,110
Depreciation and amortization     79,564          72,984        236,623
Foreign exchange                   1,355           2,867         33,228
Interest and bank charges         16,549          11,435         16,178
Interest on capital lease
  obligation                       3,434           1,156              -
Management fees and commissions  220,000         220,000        210,000
Marketing                         87,337         173,157         46,222
Office supplies and stationery    58,197          54,587         49,781
Professional fees                 74,399         155,698         75,088
Rent                              52,459          48,576         47,838
Royalties                         44,903          30,239         26,584
Salaries and benefits            117,960         122,610        146,677
Storage                            9,899           8,362         16,751
Telephone                         50,748          41,899         46,662
Travel                           155,138         167,284         64,460
Vehicle                           12,602          10,833          9,065
                                ________      __________     __________
                                $992,673      $1,158,036     $1,062,998

</TABLE>

<PAGE>


                            CRYOPAK INDUSTRIES INC.

                       CONSOLIDATED FINANCIAL STATEMENTS
                           YEAR ENDED MARCH 31, 1998
                              AND AUDITORS' REPORT



Hay & Watson CHARTERED ACCOUNTANTS

August 06, 1998

Messrs. Harry Bydgnes and Leigh Jeffs
Cryopak Industries Inc.
1125 - 625 Howe Street
Vancouver, B.C. V6C 2T6

Dear Sirs:

During our  examination  of the  consolidated  financial  statements  of Cryopak
Industries  Inc.  for the year ended March 31,  1998,  we reviewed  the existing
system of accounting  procedures and internal  control and such review indicated
certain areas which we believe should be brought to your attention. We have also
recommended  certain  changes to achieve  consistent  application  of accounting
policies adopted by the company.

1.   INVENTORY

During our  examination  we found that  there were only  limited  records of the
inventory kept at the various  locations.  The lack of proper records has caused
the company to run out of inventory and to buy back  inventory from customers in
order to fill other  customers'  orders.  This  causes  the  company to lose its
profit margin on the sale as well as showing the company at a  disadvantage.  On
an ongoing  basis,  sales  staff and the  receptionist  have to call the storage
companies  to know if they can fill  orders,  causing  delays and poor  customer
relations.

The value of inventory at year-end is essential to the  preparation of financial
statements,  and  deficiencies  in that  area may  result in a  qualified  audit
report. A proper recording system for inventory is essential and must be updated
periodically.  All  shipments  in and  out of the  outside  warehouses  must  be
supported by a written  confirmation from the warehouses  confirming the date of
shipment.

The company's  inventory records should be compared with the quantities reported
by the storage companies periodically. A count at year-end must be performed and
reconciled to your record.

The overall  responsibility for the inventory needs to be given to a responsible
and  knowledgeable  staff  member.  During  the  course  of the  audit,  we have
discussed  the  implementation  of an  adequate  temporary  system on a computer
spreadsheet  with  Laila.  However  the  company  would  benefit  from  the full
integration of its invoicing and inventory  systems with its accounting  system.
We are available to further discuss and help with the  implementation  of such a
system.


2.   SAMPLES

During our testing, we also found there is no system to account for samples sent
to  customers.  Since the  company  is trying to  develop  new  markets  for the
product, the cost for samples may be significant.  In order to prevent customers
from getting  products  without  paying,  to follow up on new  customers  and to
maintain better internal control, samples that are given away should be properly
recorded,  and  periodically  reviewed by  management.  Large  shipments of free
samples should be authorized and approved by management.  Completed records will
also facilitate the reconciliation of inventory on hand between your records and
the records from the warehouses.

3.   EXPENSE ALLOCATION AND TAX PLANNING

Various expenses such as rent, telephone,  promotion and advertising,  salaries,
office  expenses,  insurance,  and  professional  fees,  are  common to  Cryopak
Industry,  Cryopak Canada,  and Cryopak  International.  Currently,  the bulk of
these expenses is carried by Cryopak Industries.  However, the operations of the
group are  recorded  in  Cryopak  Canada and will  eventually  result in taxable
income.  To ensure  that full  advantage  is taken of all  expenses  and that no
losses carried forward are lost due to expiry, management should start to review
the allocation of expenses.  In addition, we recommend that the tax implications
of U.S. and worldwide operations be reviewed periodically.

4.   EXERCISE OF STOCK OPTIONS

During our review of share  capital  transactions,  it was noted that when stock
options are  exercised  by members of  management,  cash is not always  received
prior to the issue of the shares.  It is a contravention of the B.C. Company Act
to issue shares prior to receiving payment in fall.

5.   MANAGEMENT FEES

Currently  there are no contracts or invoices  which  indicate  what  management
remuneration  is..  We  recommend  that  management   remuneration  be  properly
documented.

6.   PETTY CASH

Currently,  no  control  is  in  place over the petty cash. The company does not
record  the  detail  of  expenditures  included in each petty cash disbursement.
Therefore, even  though  the  company  keeps all its petty cash receipts, we are
unable  to  trace  the  receipts  back to the petty cash expenses in the general
ledger.

7.   CREDIT CARD EXPENSES

During our tests of expenses,  we found that both  personal and business  credit
cards were used to pay for business  expenses and that  personal  expenses  were
charged to the  business  credit  cards as well as  personal  credit  cards.  In
addition,  some of the credit card  payments  made by the company and applied to
the personal  credit cards were not  properly  supported by expense  reports and
invoices. We recommend that business expenses be paid with business credit cards
only so as to be  easily  distinguished  from  the  personal  expenses.  If some
business  expenses have to be paid by personal  credit card, then those expenses
should be documented on an expense report supported by proper receipts.  We also
recommend that personal expenses be charged to personal credit cards only.


<PAGE>

8.   SUPPORTING DOCUMENTATION

During  the course of the audit, our analyses  sometimes proved difficult due to
the lack of supporting documentation such as invoices.

Management should ensure that supporting  documentation be obtained and retained
for all  company  expenditures.  The  supporting  documentation  is  required to
provide sufficient audit evidence for the audit and for future reference.

We  recommend  that  cheques  only be issued when there is  adequate  supporting
documentation. If invoices are unavailable, then a memo providing details of the
expenditure, approved by management should be used as supporting documentation.

9.   YEAR 2000

The  Year  2000  date  change  could  have a  significant  impact  on any of the
Company's equipment that operates with some form of micro-processor system. Some
of the  computer  systems and other  systems  such as  telephone  systems may be
susceptible to the Year 2000 issue.

We are taking this  opportunity  to stress the importance of the Year 2000 issue
and the significant  operational and financial risk it poses for the Company. We
encourage  management to consider the Year 2000 issue as  equipment,  facilities
and computer software programs are acquired.  This should also include taking in
consideration  the impact on those  systems that may be critical to the business
but may be managed by third parties such as service bureaus.

We have noted improvements  during the year in the recording of transactions and
performing  accounting  routines. The  most  significant matter which we believe
still needs to be addressed is the recording of and controls over inventory.

We would be pleased to discuss any of these  comments and  recommendations  with
you in greater detail.  We would, at this time, like to thank you and your staff
for their  assistance and cooperation  extended during the audit.  Please do not
hesitate to contact this office if we may be of further assistance.

Yours very truly,

Chartered Accountants


<PAGE>

                            CRYOPAK INDUSTRIES INC.
                          Consolidated Balance Sheets
                                    March 31
                          (Stated in Canadian Dollars)


<TABLE>
<CAPTION>

                                            1998                 1997
<S>                                         <C>                  <C>
ASSETS
Current
        Cash                                $    3,417           $        -
        Accounts receivable                    217,677              146,863
        Inventory                               36,757               36,779
        Term deposit - Restricted (Note 3)     119,609                    -
        Prepaid expenses                        12,196               15,662
        Due from employees                      32,117               40,118
                                            __________            _________
                                               421,773              239,422

Investments (Note 4)                            25,442               25,442
Capital Assets (Note 5)                        416,945               50,179
Advance to Related Company (Note 6)             70,572               90,668
Intangibles (Note 7)                           429,565              486,887
                                            __________           __________
                                            $1,364,297           $  892,598

LIABILITIES
Current
        Bank indebtedness                   $        -           $      834
        Accounts payable and
           accrued liabilities                 532,440              375,587
        Note payable (Note 8)                  350,000                    -
        Current portion of
           capital lease obligation             80,174                6,345
                                            __________           __________
                                               962,614              382,766

Capital Lease Obligation (Note 9)              320,015               25,531
Deferred Income Taxes   20,467                  20,467               20,467
                                            __________           ___________
                                             1,303,096              428,764

SHAREHOLDERS' EQUITY

Share Capital (Note 10)
        Issued and outstanding
        Common shares                        7,362,318             7,078,428
        Class A preferred shares, Series 1     530,000               530,000
Deficit                                     (7,831,117)           (7,144,594)
                                            ___________           ___________
                                                61,201               463,834
                                            $1,364,297            $  892,598

</TABLE>

APPROVED BY THE BOARD:

Director

Director

<PAGE>

                             CRYOPAK INDUSTRIES INC
                  Consolidated Statements of loss and Deficit
                              Year Ended March 31
                          (Stated in Candian Dollars)


<TABLE>
<CAPTION>

                                   1998           1997           1996

<S>                                <C>            <C>            <C>
Sales                              $1,161,442     $1,140,242     $  965,912
Cost of Sales                         763,018        675,706        557,611
Gross Profit                          398,424        464,536        408,301
Operating Expenses
   (Schedule 1)                       938,375        992,673      1,158,036
Operating Loss                     (  539,951)    (  528,137)    (  749,735)
Other (Income) Expenses
 Filing, listing and
     transfer agent fees               20,321         17,006         26,870
 Corporate printing, financial
     and public relations              85,181        138,150        129,994
Loan payment as guarantor                   -              -              -
 Other income                      (    6,900)    (    8,160)    (      384)
                                   ___________    ___________    ___________
                                       98,602        146,996        162,998

Loss before income taxes           (  638,553)    (  675,133)    (  912,390)
Income taxes (recovery)                     -              -     (      343)
Net loss for the year              (  638,553)    (  675,133)    (  912,390)
Dividends                          (   47,970)             -              -
Deficit, beginning of the year     (7,144,594)    (6,469,461)    (5,557,071)
Deficit, end of year              $(7,831,117)   $(7,144,594)   $(6,469,461)

Loss per share                     $     0.05     $     0.06     $     0.09
Weighted average common
  shares outstanding                12,597,083     11,691,097     10,637,948

</TABLE>
<PAGE>

                            CRYOPAK INDUSTRIES INC.
            Consolidated Statements of Changes in Financial Position
                              Year Ended March 31
                          (Stated in Canadian Dollars)


<TABLE>
<CAPTION>

                                        1998          1997           1996
<S>                                     <C>           <C>            <C>
Cash Flow from Operating Activities
Operations
        Net loss                     $( 638,553)     $( 675,133)     $( 912,390)
        Depreciation and amortization    77,783          79,564          72,984
                                      ( 560,770)      ( 595,569)      ( 839,406)

Changes in other operating items
        Advance to related companies      4,789       (  15,815)              -
        Accounts receivable           (  75,603)          3,290        ( 51,134)
        Due from employees                8,001       (  29,900)       ( 10,218)
        Intangibles                           -               -        (  3,113)
        Inventory                            22          15,404        ( 22,270)
        Investments                           -               -        ( 25,342)
        Prepaid expenses                  3,466       (   6,186)       (  5,867)
        Accounts payable                156,853       (  40,587)         69,541
Cash used for operating activities    ( 463,242)      ( 669,363)       (887,809)

Cash Flow from Financing Activities
        Issue of shares                 291,890         586,870         992,070
        Shares returned to treasury   (   8,000)              -               -
        Liabilities settled by issue
          of company shares                   -          56,560               -
        Note payable and capital
          lease obligation               718,313      (   5,806)         37,682
        Payment of dividend            (  47,970)             -               -
Cash provided by financing activities    954,233        637,624       1,029,752

Cash Flow from Investing Activities
        Acquisition of capital assets  ( 387,227)     (  20,811)       ( 51,867)
        Advances(to)from related company  20,096         18,671        ( 52,367)
Cash used for investing activities     ( 367,131)     (   2,140)       (104,234)

Increase (Decrease) in cash during year  123,860      (  33,879)         37,709
Cash (Bank indebtedness),
  beginning of year                    (     834)        33,045        (  4,664)
Cash (Bank indebtedness), end of year $  123,026     $(     834)      $  33,045


Cash is comprised of
        Cash (indebtedness)          $    3,417     $(      834)      $  33,045
        Tenn deposit                    119,609               -               -
                                     $  123,026     $(      834)      $  33,045


</TABLE>
<PAGE>

                            CRYOPAK INDUSTRIES INC.
                   Notes to Consolidated Financial Statements
                            March 31, 1998 amd 1997
                          (Stated in Canadian Dollars)

1.   SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

     These  consolidated  financial  statements have been prepared in accordance
with  generally  accepted  accounting  principles  in Canada  and  reflect   the
following policies:

Basis of Presentation
---------------------

These consolidated financial statements include the accounts of the Company  and
its  wholly-owned  subsidiaries,  CRYOPAK  ( International )  Inc., a   Barbados
corporation,  CRYOPAK ( Canada )  Corporation  and  its  wholly-owned subsidiary
CRYOPAK Corporation, a Nevada corporation, and its proportionate interest  (50%)
in a joint venture, CRYOPAK (Alberta) Corporation.

Inventories
-----------

Inventories are valued at the  lower of cost  or net  realizable value.  Cost is
determined by the first-in first-out (FIFO) method of valuation.

Investments
-----------

Current  investments  are  recorded  at  the  lower  of  cost and  market value.
Long-term investments are recorded as cost unless there has been a loss in value
that is other than a temporary decline, in which case  the investment is written
down to fair market value.

Depreciation
------------

Capital assets are recorded at cost.

The Company records depreciation on its capital assets using  the  straight-line
method over five years, except for motor vehicles  where  the  declining balance
method is used at the rate of 30% per annum.

Patent Licence
--------------

The patent licence is recorded at cost and is amortized on a straight-line basis
over seventeen years.

Deferred Development Costs
--------------------------

The  deferred  development  costs  are  recorded at  cost and are amortized on a
straight-line basis over ten years.

Foreign Currency
----------------

Foreign  currency  accounts are  translated  using the temporal  method  whereby
current assets and current  liabilities  are  translated to Canadian  dollars at
year end  exchange  rates,  other  assets  and  liabilities  at  exchange  rates
prevailing at the dates of transactions, and revenue and expenses at the average
rate during the year.  Gains and losses from foreign  currency  translation  are
included in the consolidated statements of loss and deficit.

Goodwill
--------

The excess of cost of the purchase of a  subsidiary  company over the fair value
of assets  acquired  (disclosed in these  consolidated  financial  statements as
goodwill) is amortized on a straight-line basis over seventeen years.


<PAGE>

Financial Instruments
---------------------

The fair values of the Company's cash, investments, accounts receivable, amounts
due from employees,  advance to related  company,  accounts  payable and accrued
liabilities,  bank indebtedness,  and capital lease obligation were estimated to
approximate their carrying value.

2. OPERATIONS

These financial statements have been prepared on the assumption that the Company
is a going concern.

The ability of the Company to continue as a going  concern,  which  contemplates
the realization of assets and the satisfaction of liabilities and commitments in
the normal course of business, is dependent on obtaining the financing necessary
to continue operations and, ultimately, profitable operations.

3. TERM DEPOSIT

The term  deposit is held by the  Canadian  Western  Bank as  security  on lease
financing for a machine acquired during the year (Note 9).

4. INVESTMENTS

<TABLE>
<CAPTION>

                                   1998                  1997
<S>                                <C>                   <C>
Marketable securities -
market value at March 31,
1998 - $200
1997 - $325                        $   100               $   100
Artwork                             25,342                25,342
                                  ________               _______
                                   $25,442               $25,442
</TABLE>

5.  CAPITAL ASSETS

<TABLE>
<CAPTION>

                           1998                                   1997
               Cost        Accumulated        Net Book            Net Book
                           Depreciation       Value               Value
<S>            <C>         <C>                <C>                 <C>
Computer       $ 48,396    $ 36,586           $ 11,810            $ 26,607
Furniture
  and Fixtures    83,066      78,781              4,285               5,344
Motor Vehicle
  under Capital
Lease           40,594      23,687             16,907              18,228
Machinery under
  Capital Lease 383,943           -            383,943                   -
               ________    ________           ________             ________
               $555,999    $139,054           $416,945             $ 50,179

</TABLE>

6.  ADVANCE TO RELATED COMPANY

<TABLE>
<CAPTION>

                                      1998                 1997
<S>                                   <C>                  <C>
Advance to N.C.K. Holdings Inc.       $70,572              $90,668

</TABLE>

    The related company is owned by two directors.  The advance is unsecured and
    is  repayable in monthly installments of $2,200 including interest of 8% per
    annum.  During the year the Company paid management fees of $220,000 (1997 -
    $220,000) and royalties of $26,289 (1997 - $22,934) to N.C.K. Holdings Inc.

<PAGE>

7.  INTANGIBLES

<TABLE>
<CAPTION>

                                 1998                        1997
                                 Accumulated      NetBook    NetBook
                      Cost       Depreciation     Value      Value

<S>                   <C>        <C>              <C>        <C>
Incorporation Cost    $  3,111   $      -         $  3,111   $  3,111
Deferred Development
  Costs                114,017     80,667           33,350     48,172
Patent Licence         566,323    258,183          308,140    341,454
Goodwill               156,155     71,191           84,964     94,150
                      ________   ________         ________    ________
                      $839,606   $410,041         $429,565    $486,887

</TABLE>

8.  NOTE PAYABLE

<TABLE>
<CAPTION>

                                        1998                  1997
<S>                                     <C>                   <C>
Note payable to a company related
by two directors in common, bearing
interest at the rate of 12% per annum
repayable April 30, 1998, and
secured by a general security agreement
on all the Company's assets.  The loan
was converted to share capital
subsequent to the year end (Note 14(a)).
The interest accrued on the loan was
forgiven.                               $350,000                 -

</TABLE>

9.  CAPITAL LEASE OBLIGATIONS

<TABLE>
<CAPTION>

                                        1998                  1997
<S>                                     <C>                   <C>
Capital lease obligation with interest
at 10.25%, maturing November 1,
1999                                    $ 25,231               $ 31,876
Capital lease obligation with interest
at 10.6%, maturing July 20, 2002
(Note 3)                                 374,958                      -
                                        ________               ________
                                         400,189                 31,876

Less: current portion                     80,174                  6,345
                                        ________               ________
                                        $320,015               $ 25,531

</TABLE>

The future minimum lease payments required are as follows:

<TABLE>
<CAPTION>

<S>            <C>
1999           $117,064
2000            126,487
2001            107,824
2002            107,824
2003             35,941

</TABLE>

Included in these amounts is imputed interest of $94,951.

<PAGE>

10. SHARE CAPITAL

<TABLE>
<CAPTION>

Authorized
<S>             <C>
100,000,000     common share's without par value
100,000,000     Class A preferred shares without par value, of which 1,500
                are designated Class A convertible voting preferred shares,
                Series I

</TABLE>

The following changes occurred in share capital:

<TABLE>
Common shares
Issued and outstanding
<CAPTION>
                                1998                  1997
                                Number of             Number of
                                Shares     Amount     Shares       Amount
<S>                             <C>        <C>        <C>          <C>
Balance, beginning of year      12,245,156 $7,078,428 11,229,065   $6,699,998
Issued during the year
For cash, pursuant to the
   exercise of stock options       243,000 118,920       647,255      242,070
For cash, pursuant to the
   exercise of warrants                  -       -       116,000       34,800
For cash, pursuant to
   private placement               250,000 125,000       150,000       45,000
For settlement of debt                   -       -       102,836       56,560
For payment of dividend
    on Class A preferred
    shares, Series 1                96,908  47,970             -            -
                                __________ _______     _________      _______
                                   589,908 291,890     1,016,091      378,430

Acquired during the year           (20,000) (8,000)            -            -
Balance, end of year            12,815,064 $7,362,318 12,245,156   $7,078,428

Balance, beginning of year             530 $  530,000        265   $  265,000
Issued during the year for cash          -          -        265      265,000
Balance, end of year                   530    530,000        530      530,000

</TABLE>

Each class A preferred share Series I carries a 12%, cumulative dividend payable
at  the company's fiscal year end, in either cash or common shares at the option
of the Company.  Dividends in arrears at March 31, 1998 amounted to $64,039.

The Series I  preferred shares are  covertible into common shares at the rate of
one common share for each $3 of paid up capital or the rate provided below:

(i) $2.50 at any time after December 31, 1997, provided that the Current Trading
    Price shall never have exceeded $2.99 after December 31, 1996;

(ii) $2.00 at any  time  after  December 31, 1998,  provided  that  the  Current
     Trading  Price  shall never exceeded $2.99 after December 31, 1996 or $2.49
     after December 31, 1997;

(iii) at any time after December 1, 1999,  provided  that  the  Current  Trading
      Price shall never have exceeded $2.99  after  December 31, 1996  or  $2.49
      after December 1, 1997 or $1.99 after December 31, 1998, at a common share
      price  equal  to  that price  which  represents a 15% discount to the then
      Current  Trading Price, which common share price in no event shall be less
      than $0.95;

But if not so  coverted prior  to  May 12, 2000, such  Series I preferred shares
shall  be  deemed  to  have  been  converted  on  May 12, 2000 at the applicable
conversion  price  described above.  The Current Trading Price means the average
trading price of the common shares on a recognized public stock exchange for the
preceeding 20 business days.

On March 31, 1998, the following stock options were outstanding:

<TABLE>
<CAPTION>

               No. Of Shares            Exercise Price      Expiry Date
<S>            <C>                      <C>                 <C>
Directors      145,000                  $0.50               June 13, 1999
               152,500                   0.52               June 16, 1999
               145,000                   0.50               June 13, 1999
                77,500                   0.52               June 16, 1999
               100,000                   0.50               September 2, 1999
               150,000                   0.50               September 2, 1999

Officers       240,000                   0.50               April 10, 1999

Employees       20,000                   0.52               June 16, 1999

</TABLE>

On  March 31, 1998, 250,000 warrants were outstanding.  The warrants entitle the
holder to purchase 250,000 common shares at an exercise price of $0.60 per share
and expire August 18, 1998.

<PAGE>

11. INCOME TAXES

The Company has losses  available for utilization  against future years' taxable
incomes which, if unused, will expire as follows:
<TABLE>
<CAPTION>

<S>    <C>
1999   $  276,415
2000      296,801
2001    1,089,726
2002      658,014
2003      710,475
2004      599,008
2005      649,840

</TABLE>

12. LEASES

The minimum annual rental commitments for operating leases  in effect  at  March
31, 1998 are as follows:

<TABLE>
<CAPTION>

<S>     <C>
1999    $  47,832
2000       47,832
2001       27,480
2002        1,627

</TABLE>

13. RELATED PARTY TRANSACTIONS

Related  party  transactions  not  otherwise  disclosed  in  these  consolidated
financial statements are:

(a)  Professional fees include $10,000 paid  to a company owned by a director of
     the Company.

(b)  As of March 31, 1998, accounts  receivable  include $7,658  receivable from
     N.C.K.  Holdings  Inc.,  a  company  owned  by  two  directors  and  $3,278
     receivable  from  Fulcrum  Developments Ltd.,  a  company  related  by  two
     directors in common.

14. SUBSEQUENT EVENTS

The following share transactions took place subsequent to the year end:

(a)  Issued 777,777 common shares for gross proceeds of $350,000 pursuant to the
     conversion of debt (Note 8).

(b)  Issued 1,000,000 units  for  gross proceeds of $400,000. Each unit consists
     of one common share and one non-transferable  share purchase warrant.  Each
     warrant entitles  the  holder  to  purchase one common share at $0.40 on or
     before April 23, 1999, or at $0.46 on or before April 23, 2000.

(c)  Issued 119,608  warrants  to the person  acting as  guarantor  on a capital
     lease.  Each  warrant  entitles the  holder to purchase one common share at
     $0.40 on or before March 20, 1999, or at $0.46 on or before March 20, 2000.

15. CONTRACTUAL OBLIGATIONS

(a)  Pursuant  to  an  agreement  dated  March 20, 1998,  which  is  subject  to
     regulatory approval, the Company committed to pay a bonus to a  third party
     for a guarantee of a capital lease. The capital lease is $374,958 (Note 9).
     The bonus is payable in monthly installments of $2,392 commencing April 20,
     1998 up to a maximum of $23,920 and can  be canceled  if  the  Company  can
     obtain a release of the guarantee.  In  addition  the  Company  must  issue
     119,608 share  purchase  warrants  (Note 14(c)).   The warrants will expire
     within 30 days of the Company obtaining a release of the guarantee.

(b)  Pursuant to an agreement dated December 20, 1989 with N.C.K. Holdings Inc.,
     as  part  of  the  consideration  for  a  licence,  the  Company has made a
     commitment to  issue  up  to  3,000,000  common shares  of its capital (the
     "performance shares") based upon certain performance criteria.

16. CONTINGENT LIABILITIES

Should  sales of racks not meet expectations, the Company is liable for the cost
of the molds, the balance of which was approximately $30,000 at March 31, 1998.

17.  UNITED STATES GENERALLY ACCEPTED ACCOUNTING PRINCIPLES

(a)  Generally accepted accounting principles ("GAAP") used in the United States
     of  America  differ  in  certain   respects  from  GAAP  used  in Canada. A
     difference  that materially affects these consolidated financial statements
     is that  United States  GAAP require deferred development costs be expensed
     as incurred  whereas Canadian GAAP allows these expenses to be deferred and
     amoritzed.  Had  the  consolidated  financial  statements  been prepared in
     accordance  with United States  GAAP  as  described  above,  the  following
     changes would have been made:

<TABLE>
<CAPTION>

                                            1998        1997        1996
<S>                                         <C>         <C>         <C>
Total assets-Canadian GAAP                  $1,364,297  $  892,598  $  969,860
Deferred Development costs                      33,350      48,172      62,994
Total assets-United States GAAP              1,330,947     884,426     906,866

Shareholders' equity-Candaian GAAP              61,201     463,834     495,537
Deferred development costs                      33,350      48,172      62,994
Shareholders' equity-United States GAAP         27,851     415,662     432,543

Net loss-Canadian GAAP                         638,553     675,133     912,390
Amortization of deferred development costs      14,822      14,822      14,822
Net loss-United States GAAp                    623,731     660,311     897,568

</TABLE>

<PAGE>

(b) United States GAAP require non-cash investing and financing activities to be
    excluded from the consolidated statements of changes in financial  position,
    whereas  Canadian  GAAP  require  these  activities  to  be  included in the
    statement.   Had   the  consolidated   statement  of  changes  in  financial
    position  been  prepared  in   accordance  with  U.S.  GAAP   the  following
    transactions would have been excluded:

<TABLE>
<CAPTION>

                                                1998     1997    1996
<S>                                             <C>      <C>     <C>
Liabilities settled by issue of company shares  $     -  $56,560 $    -

</TABLE>

<TABLE>
<CAPTION>

                                                1998      1997    1996
<S>                                             <C>       <C>     <C>
Basic loss per share calculated in accordance
with U.S. GAAP is:                              $(0.05)   $(0.06) $(0.09)

</TABLE>
<PAGE>

Hay & Watson Chartered Accountants

                                                                Auditors' Report
To the Shareholders
Cryopak Industries Inc.

We have audited the consolidated balance sheets of Cryopak Industries Inc. as at
March 31, 1998 and 1997 and the consolidated  statements of loss and deficit and
of changes in financial  position for each of the years in the three year period
ended  March  31,  1998.  These  consolidated   financial   statements  are  the
responsibility of the company's management.  Our responsibility is to express an
opinion on these financial statements based on our audit.

We conducted our audit in accordance with auditing standards  generally accepted
in Canada.  Those standards  require that we plan and perform an audit to obtain
reasonable  assurance whether the consolidated  financial statements are free of
material  misstatement.  An audit includes examining,  on a test basis, evidence
supporting the amounts and disclosures in the consolidated financial statements.
An audit also includes assessing the accounting  principles used and significant
estimates  made by  management,  as well as  evaluating  the  overall  financial
statements.

In our opinion,  these consolidated  financial statements present fairly, in all
material respects,  the financial  positions of the company as at March 31, 1998
and 1997 and the  results of its  operations  and the changes in its cash flows;
for  each of the  years  in the  three  year  period  ended  March  31,  1998 in
accordance with accounting  principles generally accepted in Canada. As required
by the Company Act of British  Columbia,  we report that, in our opinion,  these
principles  have been applied on a consistent  basis with that of the  preceding
year.

Chartered Accountants

Vancouver, BC
June 25, 1998

<PAGE>

Hay & Watson CHARTERED ACCOUNTANTS

26 August 1997

Messrs. Harry Bydgnes and Leigh Jeffs
Cryopak Industries Inc.
1120 - 625 Howe Street
Vancouver, B.C. V6C 2T6

Dear Sirs:

During our  examination  of the  consolidated  financial  statements  of Cryopak
Industries  Inc.  for the year ended March 31,  1997,  we reviewed  the existing
system of accounting  procedures and internal  control and such review indicated
certain areas which we believe should be brought to your attention. We have also
recommended  certain  changes to achieve  consistent  application  of accounting
policies adopted by the company.

1. INVENTORY

During our examination we found that there were no records of the inventory kept
at the various locations.  In addition, no one had arranged for inventory counts
to be done at year-end although  previously  advised by us to do so. The lack of
proper  records has caused the company to run out of  inventory  and to buy back
inventory from customers in order to fill other customers'  orders.  This causes
the company to lose its profit margin on the sale as well as showing the company
at a disadvantage.  On an ongoing basis, sales staff and the receptionist should
call the storage  companies to know if they can fill orders and therefore  avoid
delays and poor customer relations.

The value of inventory at year-end is essential to the  preparation of financial
statements,  and  deficiencies  in that  area may  result in a  qualified  audit
report.  A proper  recording  system  for  inventory  is  essential  and must be
established  immediately.  All  shipments  in and out of the out of the  outside
warehouses must be supported by a written confirmation including the date of the
shipment.

The company's  inventory records should be compared with the quantities reported
by the storage companies periodically. A count at year-end must be performed and
reconciled to your record.

1822 West 2nd Avenue, Vancouver, B.C. V6J 1H9 e(604) 732-1466 Fax (604) 732-3133
The overall responsibility for the inventory should be assigned to a responsible
and  knowledgable  staff  member.  It  should  not be  given  to  staff  with no
accounting training or experience.

During the course of the  audit,  we have  discussed  the  implementation  of an
adequate  temporary  system on a computer  spreadsheet  with Laila.  However the
company would benefit from the full  integration  of its invoicing and inventory
systems with its accounting system. We are available to further discuss and help
with the implementation of such a system.

2. EXPENSE ALLOCATION AND TAX PLANNING

Various expenses such as rent, telephone,  promotion and advertising,  salaries,
office  expenses,  insurance,  and  professional  fees,  are  common to  Cryopak
Industries Inc., Cryopak (Canada)  Corporation and Cryopak  (International) Ltd.
Currently, the majority of the expenses are allocated to Cyropak Industries Inc.
However,   the  operations  of  the  group  are  recorded  in  Cyropak  (Canada)
Corporation  and will eventually  result in taxable income.  To ensure that full
advantage is taken of all expenses and that no losses  carried  forward are lost
due to expiry,  management should start to review the allocation of expenses. In
addition,  we  recommend  that  the  tax  implications  of  U.S.  and  worldwide
operations be reviewed periodically.

3. PRICE LISTING

During our testing of sales  invoices,  except for the agreement with Unisource,
no official price list for the company's  products was kept in the office.  As a
result we were unable to trace  whether  the unit  prices on the sales  invoices
were  accurate.  A current  price  list  should be kept in the  office to ensure
standard  and  accurate  pricing  was given to  customers.  Special  pricing and
discounts should be approved and initialed by an authorized person.

4. EXERCISE OF STOCK OPTIONS

During our review  of  share  capital transactions, it was noted that when stock
options are exercised by members of management cash is not always received prior
to the issue of the shares.  It is a contravention of the Company Act of British
Columbia  to issue shares prior to receiving payment in full. In addition, stock
options exercised  by  employees  were  paid  by  way  of  loans advanced to the
employees. These loans were not  secured  by  promissory  notes  or  other  such
documents.

5. MANAGEMENT FEES

Currently  there are no contracts or invoices  which  indicate  what  management
remuneration   is.  We  recommend  that  management   remuneration  be  properly
documented.

<PAGE>

6. PETTY CASH

Currently,  no control is in place over the petty  cash.  The  company  does not
record  the  detail  expenditure  included  in  each  petty  cash  disbursement.
Therefor,  even though the  company  keeps all its petty cash  receipts,  we are
unable to trace the  receipts  back to the petty cash  expenses  in the  general
ledger.

7. EXPENSES PAID BY CREDIT CARD

During our tests of expenses,  we found that both  personal and business  credit
cards were used to pay for business  expenses and that  personal  expenses  were
charged to the  business  credit  cards as well as  personal  credit  cards.  In
addition,  some of the credit card  payments  made by the company and applied to
the  personal  credit card were not properly  supported  by expense  reports and
invoices.

We recommend that business expenses be paid with business credit card only so as
to be easily distinguished from the personal expenses. If some business expenses
have  to be paid  by  personal  credit  card,  then  those  expenses  should  be
documented on an expense report supported by proper receipts.  We also recommend
that personal expenses be charged to personal credit cards only.

8. GST

In our sales test, we found some invoices to Canadian  customers did not include
GST. Therefore,  the GST collected and payable are understated,  and the company
may be liable for the tax on those sales.  GST is applied to all eligible  goods
sold to  Canadian  companies  even  though  invoices  are  billed  in a  foreign
currency.

9. SUPPORTING DOCUMENTATION

During the course of the audit,  our analyses  sometimes proved difficult due to
the lack of supporting documentation (e.g., invoices).

Management should ensure that supporting  documentation be obtained and retained
for all  company  expenditures.  The  supporting  documentation  is  required to
provide  sufficient  evidence  for the  audit  and  for  future  references.  We
recommend  that  cheques  only be  issued  when  there  is  adequate  supporting
documentation. If invoices are unavailable, then a memo providing details of the
expenditure, approved by management should be used as supporting documentation.

10. SUGAR FOOD CORPORATION INVOICES

It was noted that  Sugar  Food  Corporation  is no longer  providing  a detailed
listing  of goods  shipped  out and  billed  to  customers.  They send a monthly
statement  which only shows the total purchases and  administration  fee for the
month.  As a result,  we are unable to check if the unit cost billed is accurate
and what types of products are being sold.

We strongly  recommend that the company require Sugar Food Corporation to report
in the same detailed manner as in the past.

We have noted improvements  during the year in the recording of transactions and
performing  accounting  routines  raised by us last year.  The most  significant
matter  which we believe  still needs to be  addressed  is the  recording of and
control over inventory.

We would be pleased to discuss any of these  comments and  recommendations  with
you in  greater  detail.  We would  like to thank  you and your  staff  for your
assistance and cooperation  extended during the audit. Please do not hesitate to
contact us if we may be of further assistance.

Yours very truly,

HAY & WATSON

Bruce S. Hay

<PAGE>

                            CRYOPAK INDUSTRIES INC.
                       CONSOLIDATED FINANCIAL STATEMENTS
                           YEAR ENDED MARCH 31, 1997
                              AND AUDITORS' REPORT


                            CRYOPAK INDUSTRIES INC.
                   INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
                             MARCH 31,1997 AND 1996



                                Auditors, Report
                                 Balance Sheets
                  Consolidated Statements of Loss and Deficit
            Consolidated Statements of Changes in Financial Position
                   Notes to Consolidated Financial Statements
                  Consolidated Schedules of Operating Expenses

Hay & Watson CHARTERED ACCOUNTANTS

AUDITORS' REPORT

To the Shareholders of
Cryopak Industries Inc.

We have audited the consolidated balance sheets of Cryopak Industries Inc. as at
March 31, 1997 and 1996 and the consolidated  statements of loss and deficit and
of changes in financial  position for each of the years in the three year period
ended  March  31,  1997.  These  consolidated   financial   statements  are  the
responsibility of the company's management.  Our responsibility is to express an
opinion on these consolidated financial statements based on our audit.

We conducted our audit in accordance with auditing standards  generally accepted
in Canada.  Those standards  require that we plan and perform an audit to obtain
reasonable  assurance whether the consolidated  financial statements are free of
material  misstatement.  An audit includes examining,  on a test basis, evidence
supporting the amounts and disclosures in the consolidated financial statements.
An audit also includes assessing the accounting  principles used and significant
estimates  made by  management,  as well as  evaluating  the  overall  financial
statement presentation.

In our opinion,  these consolidated  financial statements present fairly, in all
material  respects,  the financial  position of the company as at March 31, 1997
and 1996 and the results of its operations and the changes in its cash flows for
each of the years in the three year period  ended  March 31, 1997 in  accordance
with  accounting  principles  generally  accepted in Canada,  As required by the
Company  Act  of  British  Columbia.  we  report  that,  in our  opinion,  these
principles  have been applied on a basis  consistent  with that of the preceding
year.

CHARTERED ACCOUNTANTS

Vancouver, B.C.
June 27, 1997

1822 West 2nd Avenue, Vancouver, B.C. V6J IH9  (604) 732-1466 Fax (604) 732-3133

<PAGE>

Hay & Watson CHARTERED ACCOUNTANTS

COMMENTS BY AUDITORS FOR U.S. READERS
ON CANADA - U.S. REPORTING DIFFERENCES

In the United States,  reporting  standards for auditors require the addition of
an explanatory  paragraph  (following the opinion  paragraph) when the financial
statements are affected by conditions and events that cast substantial  doubt on
the company's ability to continue as a going concern, such as those described in
Note 2 to the financial  statements.  Our report to the shareholders  dated June
27, 1997 is expressed in accordance with Canadian  reporting  standards which do
not permit a reference to such events and  conditions  in the  Auditors'  Report
when these are adequately disclosed in the financial statements.

CHARTERED ACCOUNTANTS

Vancouver, B.C.
June 27, 1997

1822 West 2nd Avenue, Vancouver, B.C. V6J IH9  (604) 732-1466 Fax (6041 732-3133

<PAGE>

                            CRYOPAK INDUSTRIES INC.

                          CONSOLIDATED BALANCE SHEETS
                     MARCH 31 (Stated in Canadian Dollars)

<TABLE>
<CAPTION>

ASSETS                                       1997               1996
<S>                                          <C>                <C>
Current
     Cash                                    $        -         $     33,045
     Accounts receivable                        146,863              134,338
     Inventory                                   36,779               52,183
     Investments (Notes I and 3)                 25,442               25,442
     Prepaid expenses                            15,662                9,476
     Due from employees                          40,118               10,218
                                             __________         ____________
                                                264,864              264,702

Capital assets (Notes I and 4)                   50,179               51,610
Advance to related company (Note 5)              90,668              109,339
Intangibles (Notes I and 6)                     486,887              544,209
                                             __________          ___________
                                             $  892,598          $   969,860

LIABILITIES

Current
     Bank indebtedness                              834                    -
     Accounts payable and accrued liabilities   375,587              416,174
     Current portion of capital lease obligation  6,345                5,874
                                             __________          ___________
                                             $  382,766          $   422,048

Capital lease obligation (Note 7)                25,531               31,808
Deferred income taxes                            20,467               20,467
                                             ___________         ___________
                                             $  428,764          $   474,323

SHAREHOLDERS' EQUITY

Share capital (Note 8)
     Issued and outstanding
          12,245,156 (1996 - 11,229,065)
            common shares                     7,078,428            6,699,998
          530 (1996 - 265) class "A"
            preferred shares, Series 1          530,000              265,000

(Deficit)                                    (7,144,594)          (6,469,461)

                                                 463,834             495,537
                                              __________           _________
                                              $  892,598           $ 969,860

</TABLE>

APPROVED BY THE BOARD:

DIRECTOR

DIRECTOR

<PAGE>

                            CRYOPAK INDUSTRIES INC.

                  CONSOLIDATED STATEMENTS OF LOSS AND DEFICIT
                              YEAR ENDED MARCH 31
                          (Stated in Canadian Dollars)

<TABLE>
<CAPTION>

                              1997           1996               1995
<S>                           <C>            <C>                <C>
Sales                         $1,140,242     $  965,912         $1,053,456
Cost of sales                    675,706        557,611            637,545
Gross profit                     464,536        408,301            415,911
Operating expenses, Schedule 1   992,673      1,158,036          1,062,998
Operating (loss)                 528,137        749,735            647,087
Other (income) expenses
 Filing, listing and transfer
    agent fees                    17,006         26,870             21,157
 Corporate printing, financial
    and public relations         138,150        129,994            142,617
 Loan payment as guarantor             -          6,518                  -
 Write off of loans payable            -              -            (11,295)
 Other income                 (    8,160)      (    384)           (   138)
                              ___________      _________          _________
                              $  146,996       $162,998           $ 152,341

(Loss) before income taxes    (  675,133)      (912,733)           (799,428)
Income taxes (recovery)                -       (    343)           (    340)
Net (loss) for the year       (  675,133)      (912,390)           (799,768)
(Deficit), beginning of year  (6,469,461)     (5,557,071)        (4,757,303)
(Deficit), end of year        (7,144,594)     (6,469,461)        (5,557,071)
(Loss) per share              (     0.06)     (     0.09)        (     0.09)
Weighted average common shares
        outstanding           11,691,097      10,637,948          9,280,487

</TABLE>
<PAGE>

                            CRYOPAK INDUSTRIES INC.
            CONSOLIDATED STATEMENTS OF CHANGES IN FINANCIAL POSITION
                              YEAR ENDED MARCH 31
                          (Stated in Canadian Dollars)

<TABLE>
<CAPTION>

                                       1997            1996         1995
<S>                                    <C>             <C>          <C>
Cash flow from operating activities
 Operations
 Net (loss)                            $(   675,133)   $(  912,390) $(  799,768)
 Depreciation and amortization               79,564         72,984      236,623
 Write off of loans payable                                              11,295
                                       _____________   ____________ ____________
                                        (    595,569)   (  839,406)  (  574,440)

Changes in other operating items
 Advances to related companies          (     15,815)            -            -
 Accounts receivable                           3,290    (   51,134)      69,278
 Due from employees                     (     29,900)   (   10,218)       5,240
 Intangibles                                       -    (    3,113)           -
 Inventory                                    15,404    (   22,270)      63,364
 Investments                                       -    (   25,342)           -
 Prepaid expenses                       (      6,186)   (    5,867)           -
 Accounts payable                       (     40,587)       69,541       89,492
Cash used for operating activities      (669,363,887)   (  887,809)    (347,066)

Cash flow from financing activities
  Issue of shares                            586,870       992,070      315,260
  Liabilities settled by issue of company
    shares                                    56,560             -       34,000
  Loans payable and capital lease obligation ( 5,806)       37,682            -
Cash provided by financing activities        637,624     1,029,752      349,260
Cash flow from investing activities
 Acquisition of capital assets               ( 20,811)   (  51,867)    ( 14,287)
 Advances (to) from related company           189,671    (  52,367)       5,587
Cash used for investing activities           (  2,140)   ( 104,234)     ( 8,700)
Increase (decrease) in cash during the year  ( 33,879)      37,709      ( 6,506)
Cash (bank indebtedness), beginning of the year33,045    (   4,664)       1,842
Cash (bank indebtedness), end of year       $(    834)   $  33,045      $(4,664)

</TABLE>
<PAGE>

                            CRYOPAK INDUSTRIES INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                             MARCH 31, 1997 AND 1998
                          (Stated in Canadian Dollars)

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

These  financial  statements  have been  prepared in accordance  with  generally
accepted accounting principles in Canada and reflect the following policies:

Basis of Presentation
---------------------

These consolidated financial statements  include  the accounts of the Company an
and its wholly-owned  subsidiaries, Cryopak  (International)  Inc.,  a  Barbados
corporation, Cryopak F(Mada) Corporation and its wholly-owned subsidiary Cryopak
Corporation,  a Nevada  corporation,  and its proportionate  interest (50%) in a
joint venture, Cryopak (Alberta) Corporation.

Inventories
-----------

Inventories  are valued at the lower of cost or net  realizable  value.  Cost is
determined by the first-in first-out (FIFO) method of valuation.

Investments
-----------

Investments are recorded at the lower of cost and market value.

Depreciation
------------

Capital assets are recorded at cost.

The Company records  depreciation on its capital assets using the  straight-line
method over five years,  except for motor vehicles  where the declining  balance
method is used at the rate of 30% per anum.

Patent Licence
--------------

The patent4icence is recorded at cost and is amortized on a straight-line  basis
over seventeen years.

Deferred Development Costs
--------------------------

The  deferred  development  costs are  recorded at cost and are  amortized  on a
straight-line basis over ten years.

Foreign Currency
----------------

Foreign  currency  accounts are  translated  using the temporal  method  whereby
current assets and current  liabilities  are  translated to Canadian  dollars at
year end  exchange  rates,  other  assets  and  liabilities  at  exchange  rates
prevailing at the dates of transactions, and revenue and expenses at the average
rate during the year.  Gains and losses from foreign  currency  translation  are
included in the consolidated statement of loss and deficit.

Goodwill
--------

The excess of cost of the purchase of a  subsidiary  company over the fair value
of assets  acquired  (disclosed in these  consolidated  financial  statements as
goodwill) is amortized on a straight-line  basis over seventeen years.

CRYOPAK INDUSTRIES INC.

<PAGE>

2. OPERATIONS

These financial statements have been prepared on the assumption that the Company
is a going concern.

The ability of the Company to continue as a going  concern,  which  contemplates
the realization of assets and the satisfaction of liabilities and commitments in
the normal course of business, is dependent on obtaining the financing necessary
to continue operations and, ultimately, profitable operations.

3. INVESTMENTS

<TABLE>
<CAPTION>
                              1997               1996
<S>                           <C>                <C>
Marketable securities -
 market value at March 31,
 1997 - $325
 1996 - $475                  $   100            $   100
Artwork                        25,342             25,342
                              ________           ________
                              $25,442            $25,442

</TABLE>

4. CAPITAL ASSETS

<TABLE>
<CAPTION>
                                                  1997            1996
                                  Accumulated     Net Book        Net Book
                       Cost       Depreciation    Value           Value
<S>                    <C>        <C>             <C>             <C>
Computer               $ 45,617   $ 19,010        $ 26,607        $ 14,137
Furniture and fixtures   82,562     77,218           5,344           2,968
Motor vehicle under
  capital lease          40,594     22,366          18,228          34,505
                       ________   ________        ________        ________
                       $168,773   $118,594        $ 50,179        $ 51,610

</TABLE>

5. ADVANCE TO RELATED COMPANY

<TABLE>
<CAPTION>

                                1997            1996
<S>                             <C>             <C>
Advance to N.C.K. Holdings Inc. $ 90,668        $109,339

</TABLE>

The related company is owned by two directors. The advance is unsecured, and  is
repayable  in monthly installments of $2,200 including interest of 8% per annum.
During the year the  Company  paid management fees of $220,000 (1996 - $220,000)
and royalties of $22,934 (1996 - $20,159) to N.C.K. Holdings Inc.

6. INTANGIBLES

<TABLE>
<CAPTION>
                                                    1997            1996
                                    Accumulated     Net Book        Net Book
                           Cost     Amortization    Value           Value
<S>                        <C>      <C>            <C>             <C>
Incorporation costs        $  3,111 $      -       $  3,111        $  3,111
Deferred development costs  114,017   65,845         48,172          62,994
Patent licence              566,323  224,869        341,454         374,768
Goodwill                    156,155   62,005         94,150         103,336
                           ________ ________       _________       ________
                           $839,606 $352,719       $486,887        $544,209

</TABLE>

7. CAPITAL LEASE OBLIGATION

<TABLE>
<CAPTION>

<S>                             <C>         <C>
Capital lease payable,
with interest of 10.25%,
due November 1, 1999            $31,876     $37,682

Less: current portion             6,345       5,874
                                _______     _______
                                $25,531     $31,808

</TABLE>

The future minimum lease payments required are $37,143 payable as follows:

<TABLE>
<CAPTION>

<S>     <C>
1998    $  9,240
1999       9,240
2000      18,663

</TABLE>

Included in these amounts is imputed interest of $5,267.

<PAGE>

8. SHARE CAPITAL

<TABLE>
<CAPTION>

Authorized
<S>         <C>
100,000,000 common shares without par value
100,000,000 Class "A" preferred  shares  without  par  value, of which 1,500 are
            designated class "A" convertible voting preferred shares, Series I.

</TABLE>

The following changes occurred in share capital:

<TABLE>

Common shares
Issued and outstanding
<CAPTION>

                            1997                         1996                           1995
                     Number                       Number                        Number
                     of                           of                            of
                     Shares        Amount         Shares         Amount         Shares         Amount
<S>                  <C>           <C>            <C>            <C>            <C>            <C>
Balance, beginning
  year               11,229,065    $6,699,998     9,677,542      $5,972,928     8,966,542      $5,623,668

Issued during the year
 For cash               913,255       321,870     1,551,523         727,070       661,000         315,260
 For settlement
   of debt              102,836        56,560         -                -           50,000          34,000
                      _________       _______     _________        ________       _______         _______
                      1,016,091       378,430     1,551,523         727,070       711,000         349,260
Balance, end
 of year             12,245,156     $7,078,42    11,229,065      $6,699,998     9,677,542      $5,972,928

</TABLE>

Class A preferred shares, Series I

<TABLE>
<CAPTION>

<S>                                <C>       <C>            <C>       <C>
Balance, beginning of year         265       $265,000       -         $    -
Issued during the year for cash    265        265,000       265         265,000
Balance, end of year               530       $530,000       265       $ 265,000

</TABLE>
<PAGE>

Each  class "A"  preferred  share  Series I carries a 12%,  cumulative  dividend
payable at the company's fiscal year end, in either cash or common shares at the
option of the  Company.  Dividends  in arrears  at March 31,  1997  amounted  to
$48,048.

The Series I preferred  shares are convertible into common shares at the rate of
one common share for each $3.00 of paid up capital or the rate provided below:

(1) $2.50 at any time after December 31, 1997, provided that the Current Trading
Price shall never have exceeded $2.99 after December 31, 1996;

(ii) $2.00  at  any  time  after  December 31, 1998,  provided  that the Current
Trading  Price  shall never have exceeded $2.99 after December 31, 1996 or $2.49
after December 31, 1997.

(iii) at any time after  December 31, 1999,  provided  that the Current  Trading
Price shall never have  exceeded  $2.99 after  December  31, 1996 or $2.49 after
Decemb~r  31, 1997 or $1.99 after  December  31,  1998,  at a common share price
equal to that price which  represents a 15% discount to the then Current Trading
Price, which common share price in no event shall be less than $0.95;

but if not so converted  prior to May 12, 2000,  such Series I preferred  shares
shall  be  deemed  to have  been  converted  on May 12,  2000 at the  applicable
conversion  price described  above.  The Current Trading Price means the average
trading price of the common shares on a recognized public stock exchange for the
preceding 20 business days.

On March 31, 1997, the following stock options were outstanding:

<TABLE>
<CAPTION>

                Number of  Exercise  Expiry
                Shares     Price     Date
<S>             <C>        <C>       <C>
Directors       38,000     $0.44     November 7,1997
               490,000      0.50     June 13, 1999
                75,000      0.45     May 27,1997
                96,909      0.55     August 22, 1997
               100,000      0.42     April 26,1998
Officers        35,000      0.44     November 7,1997
Employees       20,000      0.45     May 27, 1997
                80,000      0.40     January 12,1999

</TABLE>

9. INCOME TAXES

The Company has losses  available for utilization  against future years' taxable
incomes which, if unused, will expire as follows:

<TABLE>
<CAPTION>

<S>   <C>
1998  $  274,933
1999     276,415
2000     296,801
2001   1,089,726
2002     658,014
2003     710,475
2004     599,008

</TABLE>

10. LEASES

The minimum annual rental  commitments  for operating  leases in effect at March
31, 1997 are as follows:

<TABLE>
<CAPTION>

<S>     <C>
1998    $17,570
1999     10,570
2000     10,570
2001      1,627
2002      1,627

</TABLE>

11. RELATED PARTY TRANSACTIONS

Related  party  transactions  not  otherwise  disclosed  in  these  consolidated
financial statements are:

(a) Professional and consulting fees include $15,540 and $23,500,  respectively,
paid  to  Discovery  Capital  Corporation,  the  president  and  non-controlling
shareholder of which is a director of the Company. As of March 31, 1997, $14,142
was payable to Discovery Capital Corporation.

(b) As of March 31, 1997,  accounts  receivable  include $12,446 receivable from
N.C.K.  Holdings Inc.,  a  company owned by two directors, and $3,278 receivable
from Fulcrum Developments. Ltd., a company related by two directors in common.

12. SUBSEQUENT EVENTS

The following events occurred subsequent to the year end:

(a) The  following  common  shares  were  issued  pursuant  to the  exercise  by
directors of share purchase options:

<TABLE>
<CAPTION>

Date of exercise        Number of       Exercise        Total
                        Shares          Price           Proceeds
<S>                     <C>             <C>             <C>
April 30, 1997          38,000          $0.44           $ 16,720

June 16, 1997           60,000           0.50             30,000

</TABLE>
<PAGE>

(b) The following share options were issued after the end of the year:

<TABLE>
<CAPTION>

                Number of    Exercise   Expiry
                Shares       Price      Date
<S>             <C>          <C>        <C>
Employee        240,000      $0.50      April 10, 1999
Directors (1)   230,000       0.52      June 16, 1999
Employee (1)    20,000        0.52      June 16, 1999

</TABLE>

(1) subject to regulatory approval

13. CONTRACTUAL OBLIGATIONS

Pursuant to an agreement  dated December 20, 1989 with N.C.K.  Holdings Inc., as
part of the  consideration  for a licence,  the Company has made a commitment to
issue up to 3,000,000  common shares of its capital (the  "performance  shares")
based upon certain performance criteria.

The issue of the shares is subject to regulatory  approval which to date has not
been sought.

14. CONTINGENT LIABILITIES

(a) Should  sales  of racks not meet expectations, the Company is liable for the
 cost of the moulds, the balance of which was approximately $30,000 at March 31,
 1997.

(b) A company has filed a complaint against the Company in respect of the use of
a registered trademark. The outcome of the claim is not determinable.

<PAGE>

15. UNITED STATES GENERALLY ACCEPTED ACCOUNTING PRINCIPLES

Generally accepted  accounting  principles ("GAAP") used in the United States of
America  differ in certain  respects from GAAP used in Canada. A difference that
materially affects these consolidated financial statements is that United States
GAAP require deferred development costs be expensed as incurred whereas Canadian
GAAP allows these  expenses to be deferred and amortized.  Had the  consolidated
financial  statements  been  prepared in  accordance  with United States GAAP as
described above, the following changes would hive been made:

<TABLE>
<CAPTION>

                                  1997      1996      1995
<S>                               <C>       <C>       <C>
Total Assets - Canadian GAAP      $892,598  $969,860  $789,332
Deferred development costs        ( 48,172) ( 62,994) ( 77,816)
Total Assets - United States GAAP $844,426  $906,866  $711,516

</TABLE>

<TABLE>
<CAPTION>

                                  1997       1996      1995
<S>                               <C>        <C>       <C>
Shareholders' equity -
  Canadian GAAP                   $463,834   $495,537  $415,857
Deferred development costs        ( 48,172)  ( 62,994) ( 77,816)

Shareholders' equity -
  United States GAAP              $415,662   $432,543  $338,041

                                  1997       1996      1995

Net Loss - Canadian GAAP          $675,133)  (912,390) (799,768)
Amortization of deferred
  development costs                 14,822     14,822   187,045
Net Loss - United States GAAP     $(660,311)  $(897,568)$(612,723)

</TABLE>

(b)  United States  GAAP  require non-cash investing and financing activities to
be  excluded  from the Consolidated Statements of Changes in Financial Position,
whereas  Canadian GAAP require these activities to be included in the Statement.
Had  the Consolidated Statement of Changes - in Financial Position been prepared
in accordance with U.S.GAAP the following transactions would have been excluded:

<TABLE>
<CAPTION>

                                                1997     1996         1995
<S>                                             <C>      <C>          <C>
Liabilities settled by issue of company shares  $56,560  $   -    $34,000

</TABLE>

(c) Basic loss per share calculated in accordance with U.S. GAAP is:

<TABLE>
<CAPTION>

                          1997     1996         1995
<S>                       <C>      <C>          <C>
                          0.06     0.09         0.07

</TABLE>
<PAGE>

                            CRYOPAK INDUSTRIES INC.
                  CONSOLIDATED SCHEDULES OF OPERATING EXPENSES
                              YEAR ENDED MARCH 31
                          (Stated in Canadian Dollars)

<TABLE>
<CAPTION>
                                   1997         1996           1995
<S>                                <C>          <C>            <C>
Bad debts                          7,245        $ 32,668       $ 28,731
Commissions                          884           3,681          9,110
Depreciation and amortization     79,564          72,984        236,623
Foreign exchange                   1,355           2,867         33,228
Interest and bank charges         16,549          11,435         16,178
Interest on capital lease
  obligation                       3,434           1,156              -
Management fees and commissions  220,000         220,000        210,000
Marketing                         87,337         173,157         46,222
Office supplies and stationery    58,197          54,587         49,781
Professional fees                 74,399         155,698         75,088
Rent                              52,459          48,576         47,838
Royalties                         44,903          30,239         26,584
Salaries and benefits            117,960         122,610        146,677
Storage                            9,899           8,362         16,751
Telephone                         50,748          41,899         46,662
Travel                           155,138         167,284         64,460
Vehicle                           12,602          10,833          9,065
                                ________      __________     __________
                                $992,673      $1,158,036     $1,062,998

</TABLE>

Item 18. Financial Statements

     The Registrant has chosen to file Financial Statements under Item 17 above.

Item 19. Financial Statements and Exhibits

<TABLE>
                                  EXHIBIT INDEX
<CAPTION>
        <S>                                  <C>
        Exhibit 1                            Private Placement Memorandum*
        Exhibit 3
           Exhibit 3.1                       Articles of Incorporation -
                                                Cryopak Industries Inc.*
           Exhibit 3.2                       Articles of Amendment*
           Exhibit 3.3                       Articles of Incorporation -
                                                B.C., Ltd.*
           Exhibit 3.4                       Articles of Incorporation -
                                                Consort Energy Corp.*
        Exhibit 10
           Exhibit 10.1                      Consulting Agreement*
           Exhibit 10.2                      Client Agreement*
           Exhibit 10.3                      Lease Agreement*
        Exhibit 23
           Exhibit 23.1                      Consent of Independent Auditor
        Exhibit 27                           Financial Data Schedule
        Exhibit 99
           Exhibit 99.1                      Patent*
           Exhibit 99.2                      Certificate of Name Change*
           Exhibit 99.3                      Discussion of Physics of the
                                                Product*
           Exhibit 99.4                      University of British Columbia
                                                Evaluation*
           Exhibit 99.5                      Inchcape Testing Evaluation*
           Exhibit 99.6                      Abbott Labs Evaluation*
           Exhibit 99.7                      SmithKline Beecham Evaluation*
           Exhibit 99.8                      Northwest Airlines Evaluation*

</TABLE>

*    signifies exhibit previously submitted

<PAGE>

                                   SIGNATURES

     Pursuant to the  requirements of Section 12 of the Securities  Exchange Act
of 1934, the  registrant  certifies  that it meets all of the  requirements  for
filing on Form  20-F and has duly  caused  this  registration  statement  annual
report to be signed on its behalf by the undersigned, thereunto duly authorized.

                                                         CRYOPAK INDUSTRIES INC.


                                                               /s/ Harry Bygdnes
                                                               -----------------
                                                        Harry Bygdnes, President


     This offering  statement  has been signed by the  following  persons in the
capacities and on the dates indicated.


/s/ Harry Bygdnes                                               6/2/00
-----------------                                               ------
Harry Bygdnes, Director                                         Date

/s/ Robert Leigh Jeffs                                          6/2/00
----------------------                                          ------

/s/ Douglas R. Reid                                             6/2/00
-------------------                                             ------

/s/ Ross G. Morrison                                            6/2/00
--------------------                                            ------
Ross G. Morrison, Director                                      Date

/s/ John F. Morgan                                              6/2/00
------------------                                              ------
John F. Morgan, Director                                        Date

/s/ John McEwen                                                 6/2/00
---------------                                                 ------
John A. McEwen, Director                                        Date