As
at
|
As
at
|
|||||||
(amounts
in
000's)
|
November
30,
2007
|
May
31,
2007
|
||||||
(Canadian
dollars)
|
(Unaudited)
|
|||||||
ASSETS
|
||||||||
Current
|
||||||||
Cash
and cash
equivalents
|
$ | 4,938 | $ | 1,405 | ||||
Short
term investments (note
5)
|
9,847 | 7,265 | ||||||
Prepaid
expenses and other
assets
|
629 | 335 | ||||||
Amount
held in escrow (note
1)
|
600 | - | ||||||
16,014 | 9,005 | |||||||
Long-term
|
||||||||
Marketable
securities and other
investments (note 5)
|
- | 3,728 | ||||||
Fixed
assets
|
383 | 503 | ||||||
Deferred
financing
charges
|
- | - | ||||||
Deferred
arrangement
costs
|
- | 1,262 | ||||||
Goodwill
|
606 | 606 | ||||||
Acquired
patents and
licenses
|
- | - | ||||||
989 | 6,099 | |||||||
$ | 17,003 | $ | 15,104 | |||||
LIABILITIES
|
||||||||
Current
|
||||||||
Accounts
payable
|
$ | 387 | $ | 1,104 | ||||
Liability
to repurchase
warrants
|
- | 252 | ||||||
Deferred
gain on sale of shares
(note 1)
|
600 | - | ||||||
Accrued
liabilities
|
1,093 | 1,421 | ||||||
2,080 | 2,777 | |||||||
Long-term
|
||||||||
Secured
convertible debentures
(note 6)
|
12,170 | 11,566 | ||||||
SHAREHOLDERS'
EQUITY
|
||||||||
Common
shares (note
3)
|
158,255 | 157,714 | ||||||
Equity
portion of secured
convertible debentures
|
3,814 | 3,814 | ||||||
Stock
options (note
4(c))
|
4,605 | 4,898 | ||||||
Contributed
surplus (note
3(e))
|
9,130 | 8,525 | ||||||
Warrants
|
- | - | ||||||
Deficit
accumulated during
development stage
|
(173,051 | ) | (174,190 | ) | ||||
2,753 | 761 | |||||||
$ | 17,003 | $ | 15,104 |
Period
|
||||||||||||||||||||
Three
|
Three
|
Six
|
Six
|
from
inception
|
||||||||||||||||
(amounts
in 000's except for per
common share data)
|
months
ended
|
months
ended
|
months
ended
|
months
ended
|
Sept.
5, 1986
to
|
|||||||||||||||
(Canadian
dollars)
|
Nov.
30,
2007
|
Nov.
30,
2006
|
Nov.
30,
2007
|
Nov.
30,
2006
|
Nov.
30,
2007
|
|||||||||||||||
REVENUE
|
$ | 1 | $ | 23 | $ | 27 | $ | 30 | $ | 840 | ||||||||||
EXPENSES
|
||||||||||||||||||||
Cost
of
sales
|
- | 3 | 1 | 6 | 104 | |||||||||||||||
Research
and
development
|
1,247 | 1,122 | 2,029 | 2,453 | 115,888 | |||||||||||||||
General
and
administrative
|
1,103 | 1,407 | 1,839 | 2,195 | 53,162 | |||||||||||||||
Stock-based
compensation (note
4)
|
209 | 150 | 312 | 263 | 7,565 | |||||||||||||||
Depreciation
and amortization of
fixed assets
|
80 | 100 | 159 | 200 | 9,384 | |||||||||||||||
Operating
expenses
|
2,639 | 2,782 | 4,340 | 5,117 | 186,103 | |||||||||||||||
Interest
expense on convertible
debentures
|
271 | 262 | 541 | 527 | 2,773 | |||||||||||||||
Accretion
in carrying value of
convertible debentures
|
273 | 227 | 539 | 446 | 2,690 | |||||||||||||||
Amortization
of deferred financing
charges
|
34 | 27 | 66 | 52 | 347 | |||||||||||||||
Interest
income
|
(175 | ) | (158 | ) | (315 | ) | (225 | ) | (11,739 | ) | ||||||||||
Loss
from operation for the
period
|
3,041 | 3,117 | 5,144 | 5,887 | 179,334 | |||||||||||||||
Gain
on sale of shares (note
1)
|
(216 | ) | - | (6,310 | ) | - | (6,310 | ) | ||||||||||||
Net
loss/(earnings) and other
comprehensive
|
||||||||||||||||||||
income
for the
period
|
2,825 | 3,117 | (1,166 | ) | 5,887 | 173,024 | ||||||||||||||
Deficit,
beginning of period as
previously reported
|
170,226 | 167,322 | 174,190 | 164,552 | - | |||||||||||||||
Change
in accounting policy (note
2)
|
- | - | 27 | - | 27 | |||||||||||||||
Deficit,
beginning of period as
revised
|
170,226 | 167,322 | 174,217 | 164,552 | ||||||||||||||||
Deficit,
end of
period
|
$ | 173,051 | $ | 170,439 | $ | 173,051 | $ | 170,439 | $ | 173,051 | ||||||||||
Basic
loss (earnings) per
share
|
$ | 0.01 | $ | 0.01 | $ | (0.01 | ) | $ | 0.03 | |||||||||||
Diluted
loss (earnings) per
share
|
n/a | n/a | $ | (0.01 | ) | n/a | ||||||||||||||
Weighted
average number of common
shares
|
||||||||||||||||||||
outstanding
used in
the calculation of
|
||||||||||||||||||||
Basic
(earnings) loss
per share
|
214,351 | 209,992 | 213,704 | 198,261 | ||||||||||||||||
Diluted
(earnings)
loss per share
|
n/a | n/a | 227,266 | n/a |
Period
|
||||||||||||||||||||
Three
|
Three
|
Six
|
Six
|
from
inception
|
||||||||||||||||
(amounts
in
000's)
|
months
ended
|
months
ended
|
months
ended
|
months
ended
|
Sept.
5, 1986
to
|
|||||||||||||||
(Canadian
Dollars)
|
Nov.
30,
2007
|
Nov.
30,
2006
|
Nov.
30,
2007
|
Nov.
30,
2006
|
Nov.
30,
2007
|
|||||||||||||||
Cash
flows from
operating activities:
|
||||||||||||||||||||
Earnings
(loss)
for the period
|
$ | (2,825 | ) | $ | (3,117 | ) | $ | 1,166 | $ | (5,887 | ) | $ | (173,024 | ) | ||||||
Less:
Gain on
sale of shares
|
(216 | ) | - | $ | (6,310 | ) | (6,310 | ) | ||||||||||||
Items
not
involving cash:
|
||||||||||||||||||||
Stock-based
compensation
|
209 | 150 | 312 | 263 | 7,565 | |||||||||||||||
Interest
on
convertible debentures
|
271 | 262 | 541 | 527 | 2,773 | |||||||||||||||
Accretion
in
carrying value of convertible debentures
|
273 | 227 | 539 | 446 | 2,690 | |||||||||||||||
Amortization
of
deferred financing charges
|
34 | 27 | 66 | 52 | 347 | |||||||||||||||
Depreciation,
amortization and write-down of fixed assets and acquired patents
and
licenses
|
80 | 362 | 159 | 855 | 21,945 | |||||||||||||||
Other
|
(39 | ) | - | (19 | ) | - | 688 | |||||||||||||
Change
in
non-cash operating working capital
|
(324 | ) | (496 | ) | (1,339 | ) | (655 | ) | (57 | ) | ||||||||||
Cash
used in operating
activities
|
(2,537 | ) | (2,585 | ) | (4,885 | ) | (4,399 | ) | (143,383 | ) | ||||||||||
Cash
flows from financing
activities:
|
||||||||||||||||||||
Issuance
of
debentures, net of issuance costs
|
- | - | - | - | 12,948 | |||||||||||||||
Issuance
of
warrants
|
- | - | 37,405 | |||||||||||||||||
Repurchased
of
warrants
|
- | - | (252 | ) | - | (252 | ) | |||||||||||||
Proceeds
on sale of
shares, net of
amount held in escrow and arrangement costs
|
216 | - | 7,572 | - | 6,310 | |||||||||||||||
Issuance
of
common shares, net
|
- | - | - | 11,654 | 109,025 | |||||||||||||||
Additions
to
deferred financing charges
|
- | - | - | - | (245 | ) | ||||||||||||||
Cash
provided by financing
activities
|
216 | - | 7,320 | 11,654 | 165,191 | |||||||||||||||
Cash
flows from investing
activities:
|
||||||||||||||||||||
Maturity
(purchase) of marketable securities and other investments,
net
|
3,877 | (3,661 | ) | 1,137 | (2,907 | ) | (9,856 | ) | ||||||||||||
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
|
3,877 | (3,661 | ) | 1,098 | (2,907 | ) | (16,870 | ) | ||||||||||||
Increase
(decrease) in cash and
cash equivalents
|
1,556 | (6,246 | ) | 3,533 | 4,348 | 4,938 | ||||||||||||||
Cash
and cash equivalents,
beginning of period
|
3,382 | 13,286 | 1,405 | 2,692 | - | |||||||||||||||
Cash
and cash equivalents, end of
period
|
$ | 4,938 | $ | 7,040 | $ | 4,938 | $ | 7,040 | $ | 4,938 |
|
(a) Continuity
of common shares and warrants
|
Common
Shares
|
Warrants
|
|||||||||||||||
(amounts
and units in 000's
except
|
Number
|
Amount
|
Number
|
Amount
|
||||||||||||
Original
Share
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
(b)
|
865 | 184 | - | - | ||||||||||||
Balance
at August 31,
2007
|
213,493 | $ | 157,984 | - | $ | - | ||||||||||
Interest
payments
(b)
|
1,280 | 271 | - | - | ||||||||||||
Balance
at November 30,
2007
|
214,773 | $ | 158,255 | - | $ | - |
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 | ||||||||||
Balance
at May 31,
2007
|
212,266 | $ | 157,714 | - | $ | - | ||||||||||
Interest
payments
(b)
|
1,227 | 270 | - | - | ||||||||||||
Balance
at August 31,
2007
|
213,493 | $ | 157,984 | - | $ | - | ||||||||||
Interest
payments
(b)
|
1,280 | 271 | - | - | ||||||||||||
Balance
at November 30,
2007
|
214,773 | $ | 158,255 | - | $ | - |
|
(b)
Interest payments
|
|
(c)
Equity issuances
|
|
(d)
Earnings/Loss per share
|
|
(e)
Continuity of contributed surplus
|
Six
months
ended
|
Six
months
ended
|
|||||||
November
30,
2007
|
November
30, 2006(1)
|
|||||||
Balance,
beginning of
year
|
$ | 8,525 | $ | 7,665 | ||||
Forfeiture
of stock
options
|
605 | 37 | ||||||
Balance,
end of
period
|
$ | 9,130 | $ | 7,702 |
(1)
The
comparative amounts represent those of Old Lorus - see note
1.
|
Six
months
ended
|
Six
months
ended
|
|||||||||||||||
November
30,
2007
|
November
30, 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
|
2,699 | 0.22 | 5,318 | 0.30 | ||||||||||||
Exercised
|
- | - | (46 | ) | 0.30 | |||||||||||
Forfeited
|
(1,675 | ) | 0.77 | (1,506 | ) | 0.48 | ||||||||||
Outstanding, end
of
period
|
14,012 | $ | 0.50 | 14,066 | $ | 0.55 |
|
(1)
|
The
comparative amounts represent those of Old Lorus - see note 1.
|
Three
months
|
Six
months
|
Three
months
|
Six
months
|
|||||||||||||
ended
|
ended
|
ended
|
ended
|
|||||||||||||
Nov
30,
2007
|
Nov
30,
2007
|
Nov
30, 2006(1)
|
Nov
30, 2006(1)
|
|||||||||||||
Risk
free interest
rate
|
4.75 | % | 4.75 | % | 4.50 | % | 4.50 | % | ||||||||
Expected
dividend
yield
|
0 | % | 0 | % | 0 | % | 0 | % | ||||||||
Expected
volatility
|
80 | % | 80 | % | 75 | % | 75-80 | % | ||||||||
Expected
life of
options
|
5
years
|
5
years
|
5
years
|
5
years
|
||||||||||||
Weighted
average fair value of
options granted or modified in the period
|
$ | 0.15 | $ | 0.15 | $ | 0.18 | $ | 0.20 |
Six
months
ended
|
Six
months
ended
|
|||||||
November
30,
2007
|
November
30, 2006(1)
|
|||||||
Balance,
beginning of the
year
|
$ | 4,898 | $ | 4,525 | ||||
Stock
option
expense
|
312 | 113 | ||||||
Forfeiture
of stock
options
|
(605 | ) | (24 | ) | ||||
Balance,
end of
period
|
$ | 4,605 | $ | 4,614 |
|
(1)
|
The
comparative amounts represent those of Old Lorus - see note 1.
|
As
at November 30,
2007
|
||||||||||||||||
Less
than
|
Greater
than
|
|||||||||||||||
one
year
|
one
year
|
Yield
to
|
||||||||||||||
(amounts
in
000’s)
|
maturities
|
maturities
|
Total
|
maturity
|
||||||||||||
Held-to-maturity
investments:
|
||||||||||||||||
Fixed
income government
investments
|
$ | 1,540 | $ | - | $ | 1,540 | 3.91 | % | ||||||||
Corporate
instruments
|
7,816 | - | 7,816 | 3.85 - 4.60 | % | |||||||||||
Held-for-trading
investments:
|
||||||||||||||||
Corporate
instruments
|
- | 491 | 491 | 4.00 - 4.02 | % | |||||||||||
$ | 9,356 | $ | 491 | $ | 9,847 |
As
at May 31, 2007(1)
|
||||||||||||||||
Less
than
|
Greater
than
|
|||||||||||||||
one
year
|
one
year
|
Yield
to
|
||||||||||||||
(amounts
in
000’s)
|
maturities
|
maturities
|
Total
|
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 |
|
(1)
|
The
comparative amounts represent those of Old Lorus - see note 1.
|
6.
|
Secured
convertible debentures
|
Significant components of the Company's future tax assets are as follows: | ||||||||
November
30,
2007
|
May
31,
2007
|
|||||||
Non-capital
losses carried
forward
|
$ | 1,552 | $ | 24,459 | ||||
Research
and development
expenditures
|
2,199 | 20,156 | ||||||
Book
over tax
depreciation
|
1,109 | 1,904 | ||||||
Intangible
asset
|
3,855 | - | ||||||
Other
|
- | 309 | ||||||
Future
tax
assets
|
8,715 | 46,828 | ||||||
Valuation
allowance
|
(8,715 | ) | (46,828 | ) | ||||
$ | - | $ | - |
2008
|
$ | 362 | ||
2009
|
741 | |||
2010
|
141 | |||
2015
|
10 | |||
2026
|
11 | |||
2027
|
4 | |||
2028
|
3,348 | |||
$ | 4,617 |
8.
|
Contingent
Liability
|