EX-99.2 9 v156896_ex99-2.htm Unassociated Document
 
EXHIBIT 99.2
 
CardioGenics Inc.

Consolidated Financial Statements

October 31, 2008 and 2007

With Independent Auditors’ Report

(Expressed in US Dollars)

 

 
 
CardioGenics Inc.
(A Development Stage Company)
Table of Contents
October 31, 2008 and 2007 

 
Independent Auditors’ Report
 
1
     
Consolidated Financial Statements
   
     
Balance Sheets
 
2
     
Statements of Operations and Deficit
 
3
     
Statements of Stockholders’ Deficiency
 
4-11
     
Statements of Cash Flows
 
12
     
Notes to Financial Statements
 
13-31

 

 
 
 
BDO Dunwoody LLP
Chartered Accountants
and Advisors
Royal Bank Plaza
P.O. Box 32
Toronto, Ontario, Canada M5J 2J8
Telephone: (416) 865-0200
Telefax:     (416) 865-0887

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
 
To the Directors and Shareholders of
CardioGenics Inc.
(A Development Stage Company)
 
We have audited the accompanying consolidated balance sheets of CardioGenics Inc. (a development stage company) as at October 31, 2008 and 2007 and the related consolidated statements of operations and deficit, stockholders’ deficiency and cash flows for the year ended October 31, 2008 and for the year ended October 31, 2007. 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 audits.
 
We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. Our audits included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the consolidated financial statements and assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.
 
In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of CardioGenics Inc. (a development stage company) as at October 31, 2008 and 2007 and the results of its operations and its cash flows for the year ended October 31, 2008 and the year ended October 31, 2007 in conformity with accounting principles generally accepted in the United States of America.
 
The accompanying consolidated financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 2 to the financial statements, the Company has suffered recurring net losses and negative cash flows from operations. These matters raise substantial doubt about the Company’s ability to continue as a going concern. Management’s plans regarding these matters are also described in Note 2. The accompanying consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty.
 
(Signed) “BDO Dunwoody LLP
 
Chartered Accountants, Licensed Public Accountants
 
Toronto, Ontario
July 29, 2009

 
1

 
  
CardioGenics Inc.
(A Development Stage Company)
Consolidated Balance Sheets (U.S. Dollars)
 


   
April 30,
   
October 31,
   
October 31,
 
   
2009
   
2008
   
2007
 
   
(Unaudited)
   
(Audited)
   
(Audited)
 
                   
Assets
                 
                   
Current
                 
Cash and Cash Equivalents
  $ 232,072     $ 253,872     $ 25,741  
Deposits and Prepaid Expenses
    8,251       8,309       21,753  
Refundable Taxes Receivable
    3,440       9,091       13,951  
Government Grants and Investment Tax Credits Receivable
    106,816       211,024       558,780  
      350,579       482,296       620,225  
Long Term
                       
Property and Equipment (Note 4)
    54,371       67,218       114,518  
Patents (Note 5)
    233,502       234,716       280,980  
      287,873       301,934       395,498  
    $ 638,452     $ 784,230     $ 1,015,723  
                         
Liabilities and Stockholders' Deficiency
                       
                         
Liabilities
                       
                         
Current
                       
Accounts Payable and Accrued Expenses (Note 8)
  $ 437,805     $ 408,870     $ 196,216  
Due to Director (Note 6)
    882,972       872,435       804,889  
Accrued Interest Payable (Note 9)
    394,619       565,931       378,749  
Debentures Payable (Note 9)
    637,000       1,006,972       1,006,972  
      2,352,396       2,854,208       2,386,826  
Long Term
                       
Debentures Payable (Note 9)
    380,694              
                         
Commitments and Contingent Liabilities (Note 13)
                       
                         
Stockholders' Deficiency (Note 10)
                       
                         
Common Stock
    1,448,220       1,211,949       1,211,949  
Additional Paid-in Capital
    841,292       841,292       609,712  
Deficit
    (4,603,671 )     (4,332,700 )     (2,979,479 )
Accumulated Other Comprehensive Income (Loss)
    219,521       209,481       (213,285 )
      (2,094,638 )     (2,069,978 )     (1,371,103 )
    $ 638,452     $ 784,230     $ 1,015,723  

See Independent Auditors’ Report.
The Notes to Consolidated Financial Statements are an integral part of this statement.

 
2

 

CardioGenics Inc.
(A Development Stage Company)
Consolidated Statements of Operations and Deficit (U.S. Dollars)
Six Months Ended April 30, 2009 and 2008, Years Ended October 31, 2008 and 2007 and
Cumulative from November 20, 1997(Date of Inception) to April 30, 2009


                           
Cumulative From
 
                           
November 20, 1997
 
   
For the Six Months Ended
   
For the Years Ended
   
(Date of Inception)
 
   
April 30,
   
April 30,
   
October 31,
   
October 31,
   
to April 30,
 
   
2009
   
2008
   
2008
   
2007
   
2009
 
   
(Unaudited)
   
(Unaudited)
   
(Audited)
   
(Audited)
   
(Unaudited)
 
Operating expenses
                             
Amortization of Property and Equipment
  $ 12,222     $ 16,565     $ 32,248     $ 36,428     $ 146,173  
General and Administrative
    56,035       70,952       177,169       109,358       1,488,247  
Write-off of Patent Application Costs
                29,928             29,928  
Research and Product Development, Net
                                       
of Investment Tax Credits
    71,042       29,758       24,531       294,538       1,094,421  
Total operating expenses and operating loss
    139,299       117,275       263,876       440,324       2,758,769  
                                         
Other expenses
                                       
Interest Expense and Bank Charges (Net)
    117,258       62,532       200,425       151,222       1,356,077  
Loss on Extinguishment of Debt
                231,580       44,096       275,676  
Loss (Gain) on Foreign Exchange
    14,414       151,725       657,340       (327,193 )     213,149  
Total other expenses
    131,672       214,257       1,089,345       (131,875 )     1,844,902  
                                         
Net Loss for the Period
    270,971       331,532       1,353,221       308,449       4,603,671  
                                         
Deficit, beginning of the Period
    4,332,700       2,979,479       2,979,479       2,671,030        
                                         
Deficit, end of the Period
  $ 4,603,671     $ 3,311,011     $ 4,332,700     $ 2,979,479     $ 4,603,671  
                                         
Basic and fully diluted Net Loss per Share (Note 12)
  $ 0.02     $ 0.03     $ 0.13     $ 0.03          
                                         
Weighted-average shares outstanding (Note 12)
    10,904,684       10,786,563       10,786,563       10,786,563          

See Independent Auditors’ Report.
The Notes to Consolidated Financial Statements are an integral part of this statement.

 
3

 

CardioGenics Inc.
(A Development Stage Company)
Consolidated Statements of Stockholders' Deficiency (U.S. Dollars)
Cumulative from November 20, 1997 (Date of Inception) to April 30, 2009

           
Deficit
         
           
Accumulated
 
Accumulated
     
       
Additional
 
During the
 
Other
 
Total
 
   
Common Stock
 
Paid-in
 
Development
 
Comprehensive
 
Stockholders'
 
   
Shares
   
Amount
 
Capital
 
Stage
 
Income (Loss)
 
Deficiency
 
                             
Issuance of common shares for cash November 1998
    760,000     $ 1               $ 1  
                                   
Issuance of common shares for cash December 1998, $.09
    380,000       35,036                 35,036  
                                   
Issuance of common shares for cash March 1998, $.09
    263,211       24,448                 24,448  
                                   
Issuance of common shares for cash April 1998, $.001
    6,196,789       5,703                 5,703  
                                   
Issuance of common shares for cash May 1998, $.17
    100,324       17,299                 17,299  
                                   
Issuance of common shares for cash August 1998, $.0002
    1,330,000       228                 228  
                                   
Issuance of common shares for cash September 1998, $.16
    40,130       6,571                 6,571  
                                   
Issuance of common shares for cash October 1998, $.16
    15,245       2,500                 2,500  
                                   
Comprehensive Income (Loss)
                                 
Net Loss
                   
(81,208
      (81,208 )
Other Comprehensive Income (Loss)
                                 
Currency Translation Adjustment
                       
(2,096
)   (2,096 )
Total Comprehensive Income (Loss)
                   
(81,208
(2,096
)   (83,304 )
Balance at October 31, 1998
    9,085,699     $ 91,786   $
  $
(81,208
$
(2,096
) $ 8,482  

See Independent Auditors’ Report.
The Notes to Consolidated Financial Statements are an integral part of this statement.

 
4

 

CardioGenics Inc.
(A Development Stage Company)
Consolidated Statements of Stockholders' Deficiency (U.S. Dollars)
Cumulative from November 20, 1997 (Date of Inception) to April 30, 2009

               
Deficit
             
               
Accumulated
   
Accumulated
       
         
Additional
   
During the
   
Other
   
Total
 
   
Common Stock
   
Paid-in
   
Development
   
Comprehensive
   
Stockholders'
 
   
Shares
   
Amount
   
Capital
   
Stage
   
Income (Loss)
   
Deficiency
 
                                     
Balance November 1, 1998
    9,085,699     $ 91,786     $     $ (81,208 )   $ (2,096 )   $ 8,482  
                                                 
Issuance of common shares for cash November 1998, $.16
    15,301       2,500                               2,500  
                                                 
Issuance of common shares for cash February 1999, $.19
    76,000       14,289                               14,289  
                                                 
Commission paid on issuance of common stock for cash February 1999
            (935 )                             (935 )
                                                 
Issuance of common shares for cash March 1999, $.19
    133,000       24,710                               24,710  
                                                 
Commission paid on issuance of common stock for cash March 1999
            (1,647 )                             (1,647 )
                                                 
Issuance of common shares for cash April 1999, $.19
    57,000       10,707                               10,707  
                                                 
Commission paid on issuance of common stock for cash April 1999
            (627 )                             (627 )
                                                 
Issuance of common shares for cash April 1999, $.20
    19,000       3,814                               3,814  
                                                 
Commission paid on issuance of common stock for cash April 1999
            (314 )                             (314 )
                                                 
Issuance of common shares for cash July 1999, $.18
    57,000       10,074                               10,074  
                                                 
Issuance of common shares for cash August 1999, $.18
    57,000       10,046                               10,046  
                                                 
Comprehensive Income (Loss)
                                               
Net Loss
                            (100,745 )             (100,745 )
Other Comprehensive Income (Loss)
                                               
Currency Translation Adjustment
                                    (3,489 )     (3,489 )
Total Comprehensive Income (Loss)
                            (100,745 )     (3,489 )     (104,234 )
Balance at October 31, 1999
    9,500,000     $ 164,403     $     $ (181,953 )   $ (5,585 )   $ (23,135 )

See Independent Auditors’ Report.
The Notes to Consolidated Financial Statements are an integral part of this statement.


 
5

 

CardioGenics Inc.
(A Development Stage Company)
Consolidated Statements of Stockholders' Deficiency (U.S. Dollars)
Cumulative from November 20, 1997 (Date of Inception) to April 30, 2009

               
Deficit
             
               
Accumulated
   
Accumulated
       
         
Additional
   
During the
   
Other
   
Total
 
   
Common Stock
   
Paid-in
   
Development
   
Comprehensive
   
Stockholders'
 
   
Shares
   
Amount
   
Capital
   
Stage
   
Income (Loss)
   
Deficiency
 
                                     
Balance November 1, 1999
    9,500,000     $ 164,403     $     $ (181,953 )   $ (5,585 )   $ (23,135 )
                                                 
Issuance of common shares for cash November 1999, $.66
    152,000       100,000                               100,000  
                                                 
Issuance of common shares as employee compensation December 1999, $.68
    5,000       3,396                               3,396  
                                                 
Issuance of common shares for cash March 2000, $.54
    126,669       68,456                               68,456  
                                                 
Issuance of common shares for cash April 2000, $.54
    11,400       6,128                               6,128  
                                                 
Loan Payable plus interest exchanged for shares July 2000, $.66
    170,240       112,000                               112,000  
                                                 
Issuance of common shares as employee compensation October 2000, $.66
    10,000       6,611                               6,611  
                                                 
Issuance of stock options in exchange for services rendered October 2000
          11,570                               11,570  
                                                 
Comprehensive Income (Loss)
                                               
Net Loss
                            (154,365 )             (154,365 )
Other Comprehensive Income (Loss)
                                               
Currency Translation Adjustment
                                    921       921  
Total Comprehensive Income (Loss)
                            (154,365 )     921       (153,444 )
Balance at October 31, 2000
    9,975,309     $ 472,564     $     $ (336,318 )   $ (4,664 )   $ 131,582  

See Independent Auditors’ Report.
The Notes to Consolidated Financial Statements are an integral part of this statement.

 
6

 

CardioGenics Inc.
(A Development Stage Company)
Consolidated Statements of Stockholders' Deficiency (U.S. Dollars)
Cumulative from November 20, 1997 (Date of Inception) to April 30, 2009

               
Deficit
             
               
Accumulated
   
Accumulated
       
         
Additional
   
During the
   
Other
   
Total
 
   
Common Stock
   
Paid-in
   
Development
   
Comprehensive
   
Stockholders'
 
   
Shares
   
Amount
   
Capital
   
Stage
   
Income (Loss)
   
Deficiency
 
                                     
Balance November 1, 2000
    9,975,309     $ 472,564     $     $ (336,318 )   $ (4,664 )   $ 131,582  
                                                 
Issuance of common shares as employee compensation October 2001, $.64
    11,150       7,094                               7,094  
                                                 
Issuance of stock options in exchange for services rendered October 2001
          22,269                               22,269  
                                                 
Comprehensive Income (Loss)
                                               
Net Loss
                            (116,261 )             (116,261 )
Other Comprehensive Income (Loss)
                                               
Currency Translation Adjustment
                                    (10,528 )     (10,528 )
Total Comprehensive Income (Loss)
                            (116,261 )     (10,528 )     (126,789 )
Balance at October 31, 2001
    9,986,459     $ 501,927     $     $ (452,579 )   $ (15,192 )   $ 34,156  
                                                 
Balance November 1, 2001
    9,986,459     $ 501,927     $     $ (452,579 )   $ (15,192 )   $ 34,156  
                                                 
Issuance of common shares for cash June 2002, $.64
    501,604       319,022                               319,022  
                                                 
Issuance of common shares for cash July 2002, $.65
    5,000       3,235                               3,235  
                                                 
Issuance of common shares for cash September 2002, $.63
    10,000       6,345                               6,345  
                                                 
Issuance of common shares as employee compensation October 2002, $.63
    15,000       9,505                               9,505  
                                                 
Issuance of stock options in exchange for services rendered October 2002
          70,518                               70,518  
                                                 
Comprehensive Income (Loss)
                                               
Net Loss
                            (158,457 )             (158,457 )
Other Comprehensive Income (Loss)
                                               
Currency Translation Adjustment
                                    (11,506 )     (11,506 )
Total Comprehensive Income (Loss)
                            (158,457 )     (11,506 )     (169,963 )
Balance at October 31, 2002
    10,518,063     $ 910,552     $     $ (611,036 )   $ (26,698 )   $ 272,818  

See Independent Auditors’ Report.
The Notes to Consolidated Financial Statements are an integral part of this statement.

 
7

 

CardioGenics Inc.
(A Development Stage Company)
Consolidated Statements of Stockholders' Deficiency (U.S. Dollars)
Cumulative from November 20, 1997 (Date of Inception) to April 30, 2009

               
Deficit
             
               
Accumulated
   
Accumulated
       
         
Additional
   
During the
   
Other
   
Total
 
   
Common Stock
   
Paid-in
   
Development
   
Comprehensive
   
Stockholders'
 
   
Shares
   
Amount
   
Capital
   
Stage
   
Income (Loss)
   
Deficiency
 
                                     
Balance November 1, 2002
    10,518,063     $ 910,552     $     $ (611,036 )   $ (26,698 )   $ 272,818  
                                                 
Issuance of common shares for cash May 2003, $.73
    28,500       20,838                               20,838  
                                                 
Issuance of warrants in conjunction with convertible debentures September 2003
                    358,406                       358,406  
                                                 
Issuance of common shares as employee compensation October 2003, $.76
    37,000       27,986                               27,986  
                                                 
Issuance of stock options in exchange for services rendered October 2003
          23,580                               23,580  
                                                 
Comprehensive Income (Loss)
                                               
Net Loss
                            (232,818 )             (232,818 )
Other Comprehensive Income (Loss)
                                               
Currency Translation Adjustment
                                    42,957       42,957  
Total Comprehensive Income (Loss)
                            (232,818 )     42,957       (189,861 )
Balance at October 31, 2003
    10,583,563     $ 982,956     $ 358,406     $ (843,854 )   $ 16,259     $ 513,767  
                                                 
Balance November 1, 2003
    10,583,563     $ 982,956     $ 358,406     $ (843,854 )   $ 16,259     $ 513,767  
                                                 
Issuance of warrants in conjunction with convertible debentures September 2004
                    152,628                       152,628  
                                                 
Issuance of common shares as employee compensation October 2004, $.80
    59,000       47,317                               47,317  
                                                 
Issuance of common shares as directors' compensation October 2004, $.80
    75,000       60,149