Lorus
Therapeutics Inc.
|
||||
Interim
Consolidated Balance Sheets
|
As
at
|
As
at
|
|||||||
(amounts
in 000's)
|
August
31, 2007
|
May
31, 2007
|
||||||
(Canadian
dollars)
|
(Unaudited)
|
|||||||
ASSETS
|
||||||||
Current
|
||||||||
Cash
and cash equivalents
|
$ |
3,382
|
$ |
1,405
|
||||
Short
term investments (note 5)
|
13,686
|
7,265
|
||||||
Prepaid
expenses and other assets
|
727
|
335
|
||||||
Amount
held in escrow (note 1)
|
600
|
-
|
||||||
18,395
|
9,005
|
|||||||
Long-term
|
||||||||
Marketable
securities and other investments (note 5)
|
-
|
3,728
|
||||||
Fixed
assets
|
462
|
503
|
||||||
Deferred
arrangement costs
|
-
|
1,262
|
||||||
Goodwill
|
606
|
606
|
||||||
1,068
|
6,099
|
|||||||
$ |
19,463
|
$ |
15,104
|
|||||
LIABILITIES
|
||||||||
Current
|
||||||||
Accounts
payable
|
$ |
1,022
|
$ |
1,104
|
||||
Liability
to repurchase warrants
|
-
|
252
|
||||||
Deferred
gain on sale of shares (note 1)
|
600
|
-
|
||||||
Accrued
liabilities
|
880
|
1,421
|
||||||
2,502
|
2,777
|
|||||||
Long-term
|
||||||||
Secured
convertible debentures (note 6)
|
11,863
|
11,566
|
||||||
SHAREHOLDERS'
EQUITY
|
||||||||
Common
shares (note 3)
|
157,984
|
157,714
|
||||||
Equity
portion of secured convertible debentures
|
3,814
|
3,814
|
||||||
Stock
options (note 4(c))
|
4,983
|
4,898
|
||||||
Contributed
surplus (note 3(e))
|
8,543
|
8,525
|
||||||
Accumulated
other comprehensive income
|
-
|
-
|
||||||
Deficit
accumulated during development stage
|
(170,226 | ) | (174,190 | ) | ||||
5,098
|
761
|
|||||||
$ |
19,463
|
$ |
15,104
|
|||||
See
accompanying notes to the unaudited consolidated interim financial
statements
|
||||||||
Basis
of Presentation (note 1)
|
Lorus
Therapeutics Inc.
|
|||
Interim
Consolidated Statements of Loss and Deficit
(unaudited)
|
Period
|
||||||||||||
Three
|
Three
|
from
inception
|
||||||||||
(amounts
in 000's except for per common share data)
|
months
ended
|
months
ended
|
Sept.
5, 1986 to
|
|||||||||
(Canadian
dollars)
|
Aug.
31, 2007
|
Aug.
31, 2006
|
Aug
31, 2007
|
|||||||||
REVENUE
|
$ |
26
|
$ |
7
|
$ |
839
|
||||||
EXPENSES
|
||||||||||||
Cost
of sales
|
1
|
3
|
104
|
|||||||||
Research
and development
|
782
|
1,331
|
114,641
|
|||||||||
General
and administrative
|
736
|
788
|
52,059
|
|||||||||
Stock-based
compensation (note 4)
|
103
|
113
|
7,356
|
|||||||||
Depreciation
and amortization of fixed assets
|
79
|
100
|
9,304
|
|||||||||
Operating
expenses
|
1,701
|
2,335
|
183,464
|
|||||||||
Interest
expense on convertible debentures
|
270
|
265
|
2,502
|
|||||||||
Accretion
in carrying value of convertible debentures
|
266
|
219
|
2,417
|
|||||||||
Amortization
of deferred financing charges
|
32
|
25
|
313
|
|||||||||
Interest
income
|
(140 | ) | (67 | ) | (11,564 | ) | ||||||
Loss
from operations for the period
|
2,103
|
2,770
|
176,293
|
|||||||||
Gain
on sale of shares (note 1)
|
(6,094 | ) |
-
|
(6,094 | ) | |||||||
Net
(earnings)/loss and other comprehensive income for the
period
|
(3,991 | ) |
2,770
|
170,199
|
||||||||
Deficit,
beginning of period as previously reported
|
174,190
|
164,554
|
-
|
|||||||||
Change
in accounting policy (note 2)
|
27
|
-
|
27
|
|||||||||
Deficit,
beginning of period as revised
|
174,217
|
164,554
|
-
|
|||||||||
Deficit,
end of period
|
$ |
170,226
|
$ |
167,324
|
$ |
170,226
|
||||||
Basic
(earnings) loss per common share
|
$ | (0.02 | ) | $ |
0.01
|
|||||||
Diluted
(earnings) loss per common share
|
$ | (0.02 | ) |
n/a
|
||||||||
Weighted
average number of common shares outstanding
used in the calculation of:
|
||||||||||||
Basic
(earnings) loss per share
|
213,057
|
186,529
|
||||||||||
Diluted
(earnings) loss per share
|
227,266
|
n/a
|
||||||||||
See
accompanying notes to the unaudited consolidated interim financial
statements
|
Lorus
Therapeutics Inc.
|
|||
Interim
Consolidated Statements of Cash Flows (unaudited)
|
Period
|
||||||||||||
Three
|
Three
|
from
inception
|
||||||||||
(amounts
in 000's)
|
months
ended
|
months
ended
|
Sept.
5, 1986 to
|
|||||||||
(Canadian
Dollars)
|
Aug.
31, 2007
|
Aug.
31, 2006
|
Aug.
31, 2007
|
|||||||||
Cash
flows from operating activities:
|
||||||||||||
Earnings
(loss) for the period
|
$ |
3,991
|
$ | (2,770 | ) | $ | (170,199 | ) | ||||
Less:
Gain on sale of shares
|
(6,094 | ) |
-
|
(6,094 | ) | |||||||
Items
not involving cash:
|
||||||||||||
Stock-based
compensation
|
103
|
113
|
7,356
|
|||||||||
Interest
on convertible debentures
|
270
|
265
|
2,502
|
|||||||||
Accretion
in carrying value of convertible debentures
|
266
|
219
|
2,417
|
|||||||||
Amortization
of deferred financing charges
|
32
|
25
|
313
|
|||||||||
Depreciation,
amortization and write-down of fixed assets and acquired patents
and
licenses
|
79
|
493
|
21,865
|
|||||||||
Other
|
20
|
-
|
727
|
|||||||||
Change
in non-cash operating working capital
|
(1,015 | ) | (159 | ) |
267
|
|||||||
Cash
used in operating activities
|
(2,348 | ) | (1,814 | ) | (140,846 | ) | ||||||
Cash
flows from financing activities:
|
||||||||||||
Issuance
of debentures, net of issuance costs
|
-
|
-
|
12,948
|
|||||||||
Issuance
of warrants
|
-
|
-
|
37,405
|
|||||||||
Repurchase
of warrants
|
(252 | ) |
-
|
(252 | ) | |||||||
Proceeds
on sale of shares, net of amount held in escrow and arrangement
costs
|
7,356
|
-
|
6,094
|
|||||||||
Issuance
of common shares, net
|
-
|
11,654
|
109,025
|
|||||||||
Additions
to deferred financing charges
|
-
|
-
|
(245 | ) | ||||||||
Cash
provided by financing activities
|
7,104
|
11,654
|
164,975
|
|||||||||
Cash
flows from investing activities:
|
||||||||||||
Maturity
(purchase) of marketable securities and other investments,
net
|
(2,740 | ) |
754
|
(13,733 | ) | |||||||
Business
acquisition, net of cash received
|
-
|
-
|
(539 | ) | ||||||||
Acquired
patents and licenses
|
-
|
-
|
(715 | ) | ||||||||
Additions
to fixed assets
|
(39 | ) |
-
|
(6,108 | ) | |||||||
Proceeds
on sale of fixed assets
|
-
|
-
|
348
|
|||||||||
Cash
provided by (used in) investing activities
|
(2,779 | ) |
754
|
(20,747 | ) | |||||||
Increase
(decrease) in cash and cash equivalents
|
1,977
|
10,594
|
3,382
|
|||||||||
Cash
and cash equivalents, beginning of period
|
1,405
|
2,692
|
-
|
|||||||||
Cash
and cash equivalents, end of period
|
$ |
3,382
|
$ |
13,286
|
$ |
3,382
|
||||||
See
accompanying notes to the unaudited consolidated interim financial
statements
|
|
1.
|
Basis
of presentation
|
|
3. Share
capital
|
|
(a) Continuity
of common shares and warrants
|
Common
shares
|
Warrants
|
|||||||||||||||
(Amounts
and
units in 000’s
|
||||||||||||||||
except
Original Share amount)
|
Number
|
Amount
|
Number
|
Amount
|
||||||||||||
Balance
at November 30, 2006
|
||||||||||||||||
Original
Share
|
1
|
$ |
1
|
-
|
$ |
-
|
||||||||||
Balance,
May 31, 2007
|
1
|
$ |
1
|
-
|
$ |
-
|
||||||||||
Surrender
of Original Share
|
(1 | ) | (1 | ) |
-
|
-
|
||||||||||
Share
Exchange (note 1)
|
212,628
|
157,800
|
-
|
-
|
||||||||||||
Interest
payments (note b)
|
865
|
184
|
-
|
-
|
||||||||||||
Balance,
August 31, 2007
|
213,493
|
$ |
157,984
|
-
|
$ |
-
|
Common
Shares
|
Warrants
|
|||||||||||||||
(amounts
and units in 000's)
|
Number
|
Amount |
Number
|
Amount | ||||||||||||
Balance
at May 31, 2006
|
174,694
|
$ |
145,001
|
3,000
|
$ |
991
|
||||||||||
Equity
issuance (c)
|
33,800
|
11,640
|
-
|
-
|
||||||||||||
Interest
payments (b)
|
792
|
265
|
-
|
-
|
||||||||||||
Stock
option exercises
|
46
|
22
|
-
|
-
|
||||||||||||
Balance
at August 31, 2006
|
209,332
|
$ |
156,928
|
3,000
|
$ |
991
|
||||||||||
Interest
payments (b)
|
1,031
|
262
|
-
|
-
|
||||||||||||
Balance
at November 30, 2006
|
210,363
|
$ |
157,190
|
3,000
|
$ |
991
|
||||||||||
Interest
payments (b)
|
915
|
259
|
-
|
-
|
||||||||||||
Balance
at February 28, 2007
|
211,278
|
$ |
157,449
|
3,000
|
$ |
991
|
||||||||||
Interest
payments (b)
|
988
|
265
|
-
|
-
|
||||||||||||
Repurchase
of Warrants
|
-
|
-
|
(3,000 | ) | (991 | ) | ||||||||||
Balance
at May 31, 2007
|
212,266
|
$ |
157,714
|
-
|
-
|
|||||||||||
Interest
payments (b)
|
1,227
|
270
|
-
|
-
|
||||||||||||
Balance
at August 31, 2007
|
213,493
|
$ |
157,984
|
-
|
-
|
|
(b)
Interest payments
|
|
(c)
Equity issuances
|
|
(d)
Earnings/Loss per share
|
|
(e)
Continuity of contributed surplus
|
Three
months ended August 31, 2007
|
|
Three
months ended August 31, 2006(1)
|
||||||
Balance,
beginning of year
|
$ |
8,525
|
$ |
7,665
|
||||
Forfeiture
of stock options
|
18
|
16
|
||||||
Balance,
end of period
|
$ |
8,543
|
$ |
7,681
|
Three
months ended
|
Three
months ended
|
|||||||||||||||
August
31, 2007
|
August
31, 2006(1)
|
|||||||||||||||
Weighted
|
Weighted
|
|
||||||||||||||
Average
|
average
|
|||||||||||||||
Options
|
exercise
|
Options
|
exercise
|
|||||||||||||
(in
thousands)
|
price
|
(in
thousands)
|
price
|
|||||||||||||
Outstanding,
beginning of year
|
12,988
|
$ |
0.59
|
$ |
10,300
|
$ |
0.70
|
|||||||||
Granted
|
2,249
|
0.22
|
2,417
|
0.33
|
||||||||||||
Exercised
|
-
|
-
|
(46 | ) |
0.30
|
|||||||||||
Forfeited
|
(503 | ) |
0.69
|
(389 | ) |
0.58
|
||||||||||
Outstanding,
end of period
|
14,734
|
$ |
0.53
|
12,282
|
$ |
0.63
|
Three
months
|
||||||||
Three
months
|
|
ended
|
||||||
ended
|
August
31,
|
|||||||
August
31, 2007
|
2006(1)
|
|||||||
Risk-free
interest rate
|
4.75 | % | 4.50 | % | ||||
Expected
volatility
|
80 | % | 80 | % | ||||
Expected
life of options
|
5
years
|
5
years
|
||||||
Weighted
average fair value of options granted or modified during the
period
|
$ |
0.15
|
$ |
0.22
|
Three
months ended August 31, 2007
|
|
Three
months ended August 31, 2006(1)
|
||||||
Balance,
beginning of the year
|
$ |
4,898
|
$ |
4,525
|
||||
Stock
option expense
|
103
|
113
|
||||||
Forfeiture
of stock options
|
(18 | ) | (24 | ) | ||||
Balance,
end of period
|
$ |
4,983
|
$ |
4,614
|
As
at
August 31, 2007
|
||||||||||||||||
|
|
|||||||||||||||
(amounts
in
000’s)
|
Less
than
one
year maturities
|
Greater
than
one
year maturities
|
Total
|
Yield
to
maturity
|
||||||||||||
Held-to-maturity
investments:
|
||||||||||||||||
Fixed
income
government investments
|
$ |
1,525
|
$ |
-
|
$ |
1,525
|
3.91 | % | ||||||||
Corporate
instruments
|
9,627
|
9,627
|
3.85-4.60 | % | ||||||||||||
Held-for-trading
investments:
|
||||||||||||||||
Corporate
instruments
|
–
|
2,534
|
2,534
|
4.00-4.02 | % | |||||||||||
$ |
11,152
|
$ |
2,534
|
$ |
13,686
|
As
at May 31, 2007(1)
|
||||||||||||||||
(amounts
in 000’s)
|
Less
than
one
year maturities
|
Greater
than
one
year maturities
|
Total
|
Yield
to maturity
|
||||||||||||
Fixed
income government investments
|
$ |
1,549
|
$ |
-
|
$ |
1,549
|
3.91 | % | ||||||||
Corporate
instruments
|
5,716
|
3,728
|
9,444
|
3.89-4.11 | % | |||||||||||
$ |
7,265
|
$ |
3,728
|
$ |
10,993
|
August
31, 2007
|
May
31, 2007
|
|||||||
Non-capital
losses carried forward
|
$ |
784
|
$ |
24,459
|
||||
Research
and development expenditures
|
2,204
|
20,156
|
||||||
Book
over tax depreciation
|
1,065
|
1,904
|
||||||
Intangible
asset
|
3,855
|
-
|
||||||
Other
|
-
|
309
|
||||||
Future
tax assets
|
7,908
|
46,828
|
||||||
Valuation
allowance
|
(7,908 | ) | (46,828 | ) | ||||
$ |
-
|
$ |
-
|
2008
|
$ |
362
|
||
2009
|
741
|
|||
2010
|
141
|
|||
2015
|
10
|
|||
2026
|
11
|
|||
2027
|
4
|
|||
2028
|
1,019
|
|||
$ |
2,288
|