to February 28, after the company put heavy emphasis on research, development and patenting of new processes for the production of acetylene and related products during the last two years.

The $6.1-million loss (26.3 cents a share) came on revenues of about $1.2 million. The operating loss was $4.7 million.

Last year the company posted a net loss of $3 million (14 cents per share) on revenues of $1.4 million. The operating loss was $4.6 million.

The majority of Kemgas debt was converted to equity through a private placement at the end of the last fiscal year. Of the 27 million Kemgas shares outstanding, some 70 percent are held by European financial institutions and portfolio managers.

Chairman, president and chief executive Kenneth G. Jackson said that about half of their losses in the year ending this February was due to the write-off of goodwill, patents and servicing of convertible loan interest.

The other half stemmed from the company's heavy investment in research and development. The firm will continue to invest in the development of improved and patented technologies, but the amount as a percentage of total revenue is expected to be substantially less than it has been in the past two years.

Mr. Jackson said: "We have entered a transition period and are now focusing greater management attention on commercialising our new processes, which we expect to stimulate cash flow during the next 12 to 18 months.

"We foresee a sharp rise in revenues as these processes are licensed to customers worldwide and Kemgas launches new businesses based on the processes.'' Kemgas has developed a more efficient process for producing acetylene gas, with greater yields and at substantially less cost than current methods.

The company has also reduced the impurities in carbide lyme, the by-product of acetylene production, so that it can be converted into high grade calcium salts such as precipitated calcium carbonite (PCC).

PCC is used as a filler and extender in a variety of industrial applications, from paper and plastics to adhesives and foodstuffs. The PCC market is about four million tons a year and growing at a rate of ten percent annually.