Lorus
Therapeutics Inc.
|
||||||||
Interim
Consolidated Balance Sheets
|
||||||||
As
at
|
||||||||
(amounts
in 000's)
|
August
31, 2008
|
As
at
|
||||||
(Canadian
dollars)
|
(Unaudited)
|
May
31, 2008
|
||||||
ASSETS
|
||||||||
Current
|
||||||||
Cash
and cash equivalents
|
$ | 7,202 | $ | 2,652 | ||||
Short
term investments (note 7)
|
4,095 | 6,784 | ||||||
Prepaid
expenses and other assets
|
844 | 721 | ||||||
Amount
held in escrow (note 1 (b))
|
- | 600 | ||||||
12,141 | 10,757 | |||||||
Long-term
|
||||||||
Fixed
assets
|
204 | 244 | ||||||
Goodwill
|
606 | 606 | ||||||
810 | 850 | |||||||
$ | 12,951 | $ | 11,607 | |||||
LIABILITIES
|
||||||||
Current
|
||||||||
Accounts
payable
|
$ | 761 | $ | 923 | ||||
Accrued
liabilities (note 10)
|
1,620 | 1,194 | ||||||
Deferred
gain on sale of shares (note 1 (b))
|
- | 600 | ||||||
2,381 | 2,717 | |||||||
Long-term
|
||||||||
Secured
convertible debentures (note 8)
|
13,119 | 12,742 | ||||||
SHAREHOLDERS'
DEFICIENCY
|
||||||||
Share
Capital (note 5)
|
||||||||
Common
shares
|
161,750 | 158,743 | ||||||
Equity
portion of secured convertible debentures
|
3,814 | 3,814 | ||||||
Stock
options (note 6(c))
|
5,052 | 4,961 | ||||||
Contributed
surplus
|
9,181 | 9,181 | ||||||
Warrants
|
417 | - | ||||||
Deficit
accumulated during development stage
|
(182,763 | ) | (180,551 | ) | ||||
(2,549 | ) | (3,852 | ) | |||||
$ | 12,951 | $ | 11,607 | |||||
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, 2008
|
Aug.
31, 2007
|
Aug
31, 2008
|
|||||||||
REVENUE
|
$ | 3 | $ | 26 | $ | 859 | ||||||
EXPENSES
|
||||||||||||
Cost
of sales
|
- | 1 | 105 | |||||||||
Research
and development
|
1,178 | 782 | 121,124 | |||||||||
General
and administrative
|
841 | 736 | 56,052 | |||||||||
Stock-based
compensation (note 6)
|
91 | 103 | 8,063 | |||||||||
Depreciation
and amortization of fixed assets
|
43 | 79 | 9,585 | |||||||||
Operating
expenses
|
2,153 | 1,701 | 194,929 | |||||||||
Interest
expense on convertible debentures
|
217 | 270 | 3,478 | |||||||||
Accretion
in carrying value of convertible debentures
|
377 | 298 | 3,573 | |||||||||
Amortization
of deferred financing charges
|
- | - | 412 | |||||||||
Interest
income
|
(82 | ) | (140 | ) | (12,048 | ) | ||||||
Loss
from operation for the period
|
2,662 | 2,103 | 189,485 | |||||||||
Gain
on sale of shares (note 1 (b))
|
(450 | ) | (6,094 | ) | (6,749 | ) | ||||||
Net
loss (earnings) and other comprehensive loss (income) for the
period
|
2,212 | (3,991 | ) | 182,736 | ||||||||
Deficit,
beginning of period as previously reported
|
180,551 | 174,190 | - | |||||||||
Change
in accounting policy
|
- | 27 | 27 | |||||||||
Deficit,
beginning of period as revised
|
180,551 | 174,217 | ||||||||||
Deficit,
end of period
|
$ | 182,763 | $ | 170,226 | $ | 182,763 | ||||||
Basic
and diluted loss (earnings) per common share
|
$ | 0.01 | $ | (0.02 | ) | |||||||
|
||||||||||||
|
||||||||||||
Weighted
average number of common shares outstanding used in the calculation
of
|
||||||||||||
Basic loss (earnings) per share | 228,407 | 213,057 | ||||||||||
Diluted
loss (earnings) per share (note 5(d))
|
228,407 | 227,266 | ||||||||||
See
accompanying notes to the unaudited interim consolidated 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, 2008
|
Aug.
31, 2007
|
Aug.
31, 2008
|
|||||||||
Cash
flows from operating activities:
|
||||||||||||
Earnings
(loss) for the period
|
$ | (2,212 | ) | $ | 3,991 | $ | (182,736 | ) | ||||
Items
not involving cash:
|
||||||||||||
Gain
on sale of shares
|
$ | (450 | ) | $ | (6,094 | ) | (6,749 | ) | ||||
Stock-based
compensation
|
91 | 103 | 8,063 | |||||||||
Interest
on convertible debentures
|
217 | 270 | 3,478 | |||||||||
Accretion
in carrying value of convertible debentures
|
377 | 266 | 3,573 | |||||||||
Amortization
of deferred financing charges
|
- | 32 | 412 | |||||||||
Depreciation,
amortization and write-down of fixed assets and acquired patents and
licenses
|
43 | 79 | 22,146 | |||||||||
Other
|
(7 | ) | 20 | 448 | ||||||||
Change
in non-cash operating working capital
|
141 | (1,015 | ) | 629 | ||||||||
Cash
used in operating activities
|
(1,800 | ) | (2,348 | ) | (150,736 | ) | ||||||
Cash
flows from financing activities:
|
||||||||||||
Issuance
of debentures, net of issuance costs
|
- | - | 12,948 | |||||||||
Issuance
(Repurchase) of warrants
|
417 | (252 | ) | 37,570 | ||||||||
Proceeds
on sale of shares, net of arrangement costs and guarantee (note
1)
|
450 | 7,356 | 6,749 | |||||||||
Issuance
of common shares, net of issuance costs (note 5)
|
2,790 | - | 111,815 | |||||||||
Cash
provided by financing activities
|
3,657 | 7,104 | 169,082 | |||||||||
Cash
flows from investing activities:
|
||||||||||||
Maturity
(purchase) of marketable securities and other investments,
net
|
2,696 | (2,740 | ) | (4,108 | ) | |||||||
Business
acquisition, net of cash received
|
- | - | (539 | ) | ||||||||
Acquired
patents and licenses
|
- | - | (715 | ) | ||||||||
Additions
to fixed assets
|
(3 | ) | (39 | ) | (6,130 | ) | ||||||
Proceeds
on sale of fixed assets
|
- | - | 348 | |||||||||
Cash
(used in) provided by
|
||||||||||||
investing
activities
|
2,693 | (2,779 | ) | (11,144 | ) | |||||||
Increase
(decrease) in cash and cash equivalents during the period
|
4,550 | 1,977 | 7,202 | |||||||||
Cash
and cash equivalents, beginning of period
|
2,652 | 1,405 | - | |||||||||
Cash
and cash equivalents, end of period
|
$ | 7,202 | $ | 3,382 | $ | 7,202 | ||||||
See
accompanying notes to the unaudited consolidated interim financial
statements
|
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) |
Three months ended August 31, 2008 and 2007 |
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) |
Three months ended August 31, 2008 and 2007 |
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) |
Three months ended August 31, 2008 and 2007 |
•
|
Maintain
its ability to continue as a going concern in order to provide returns to
shareholders and benefits to other stakeholders;
|
•
|
Maintain a flexible capital structure which optimizes the cost of capital at acceptable risk; |
•
|
Ensure
sufficient cash resources to fund its research and development activity,
to pursue partnership and collaboration opportunities and to maintain
ongoing operations.
|
August
31, 2008
|
May
31, 2008
|
|||||||
Financial
assets
|
||||||||
Cash
and cash equivalents, consisting of term deposits, and guaranteed
investment certificates, held for trading, measured at fair
value
|
$ | 7,202 | $ | 2,652 | ||||
Short-term
investments, held-to-maturity, recorded at amortized
cost
|
3,615 | 6,304 | ||||||
Short-term
investments, held-for-trading, recorded at fair
value
|
480 | 480 | ||||||
Amount
held in escrow, measured at amortized cost
|
- | 600 | ||||||
Financial Liabilities | ||||||||
Accounts
payable, measured at amortized cost
|
761 | 923 | ||||||
Accrued
liabilities, measured at amortized cost
|
1,620 | 1,194 | ||||||
Secured
convertible debentures, measured at amortized cost
|
13,119 | 12,742 |
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) |
Three months ended August 31, 2008 and 2007 |
Common
Shares
|
Warrants
|
|||||||||||||||
(amounts
and units in 000's)
|
Number
|
Amount
|
Number
|
Amount
|
||||||||||||
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 | - | $ | - | ||||||||||
Interest
payments (b)
|
1,452 | 258 | - | - | ||||||||||||
Balance
at February 29, 2008
|
216,225 | $ | 158,513 | - | $ | - | ||||||||||
Interest
payments (b)
|
1,424 | 230 | - | - | ||||||||||||
Balance
at May 31, 2008
|
217,649 | $ | 158,743 | - | $ | - | ||||||||||
Interest
payments (b)
|
2,038 | 217 | - | - | ||||||||||||
Issuance
of units (c)
|
28,539 | 2,790 | 14,269 | 417 | ||||||||||||
Balance
at August 31, 2008
|
248,226 | $ | 161,750 | 14,269 | $ | 417 |
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) |
Three months ended August 31, 2008 and 2007 |
Three
months ended August 31, 2008
|
Three
months ended August 31, 2007
|
|||||||
Balance,
beginning of year
|
$ | 9,181 | $ | 8,525 | ||||
Forfeiture
of stock options
|
- | 18 | ||||||
Balance,
end of period
|
$ | 9,181 | $ | 8,543 |
Three
months ended
|
Three
months
ended
|
|||||||||||||||
August
31,
2008
|
August
31, 2007
|
|||||||||||||||
Weighted
|
Weighted
|
|||||||||||||||
Average
|
average
|
|||||||||||||||
Options
|
exercise
|
Options
|
exercise
|
|||||||||||||
(in
thousands)
|
price
|
(in
thousands)
|
price
|
|||||||||||||
Outstanding,
beginning of year
|
16,438 | $ | 0.45 | 12,988 | $ | 0.59 | ||||||||||
Granted
|
4,224 | 0.12 | 2,249 | 0.22 | ||||||||||||
Exercised
|
- | - | - | - | ||||||||||||
Forfeited
|
(319 | ) | 0.22 | (503 | ) | 0.69 | ||||||||||
Outstanding,
end of period
|
20,343 | $ | 0.39 | 14,734 | $ | 0.53 |
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) |
Three months ended August 31, 2008 and 2007 |
Three
months
ended
August
31, 2008
|
Three
months
ended August 31, 2007 |
|||||||
Risk-free
interest rate
|
3.5 | % | 4.75 | % | ||||
Expected
volatility
|
76 | % | 80 | % | ||||
Expected
life of options
|
5
years
|
5
years
|
||||||
Weighted
average fair value of options granted or modified during the
period
|
$ | 0.08 | $ | 0.15 |
Three
months ended August 31, 2008
|
Three
months ended August 31, 2007
|
|||||||
Balance,
beginning of the year
|
$ | 4,961 | $ | 4,898 | ||||
Stock
option expense
|
91 | 103 | ||||||
Forfeiture
of stock options
|
- | (18 | ) | |||||
Balance,
end of period
|
$ | 5,052 | $ | 4,983 |
As
at August 31, 2008
|
||||||||||||||||
(amounts
in 000’s)
|
Less
than
one
year
maturities
|
Greater
than
one
year
maturities
|
Total
|
Yield
to
maturity |
||||||||||||
Corporate
instruments
(including guaranteed investment certificates, medium-term notes and fixed-term notes) |
3,615 | 480 | 4,095 | 2.77 - 2.96 | % | |||||||||||
$ | 3,615 | $ | 480 | $ | 4,095 |
As
at May 31, 2008
|
||||||||||||||||
(amounts
in 000’s)
|
Less
than
one
year
maturities
|
Greater
than
one
year
maturities
|
Total
|
Yield
to
maturity |
||||||||||||
Corporate
instruments
(including guaranteed investment certificates, medium-term notes and fixed-term notes) |
6,304 | 480 | 6,784 | 3.89 - 4.6 | % | |||||||||||
$ | 6,304 | $ | 480 | $ | 6,784 |
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) |
Three months ended August 31, 2008 and 2007 |
(i)
|
prior
to, at or after the effective time of the Arrangement ("Effective Time")
and directly or indirectly relating to any of the assets of Old Lorus
transferred to New Lorus pursuant to the Arrangement (including losses for
income, sales, excise and other taxes arising in connection with the
transfer of any such asset) or conduct of the business prior to the
Effective Time;
|
(ii)
|
prior
to, at or after the Effective Time as a result of any and all interests,
rights, liabilities and other matters relating to the assets transferred
by Old Lorus to New Lorus pursuant to the Arrangement;
and
|
(iii)
|
prior
to or at the Effective Time and directly or indirectly relating to, with
certain exceptions, any of the activities of Old Lorus or the
Arrangement.
|