EX-99.2 3 exhibit99-2.htm INTERIM FINANCIAL STATEMENTS FOR THE THREE MONTHS ENDED JUNE 30, 2012 Exhibit 99.2
Exhibit 99.2

Burcon NutraScience Corporation

Condensed Consolidated Interim Financial Statements
Three months ended June 30, 2012 and 2011
(Unaudited)
(Prepared in Canadian dollars)




Burcon NutraScience Corporation
Condensed Consolidated Interim Balance Sheets
(Unaudited)
(Prepared in Canadian dollars)

 

  June 30,   March 31,  
  2012   2012  
  $   $  
Assets        
Current assets        
Cash and cash equivalents 2,755,011   3,856,929  
Restricted cash (note 1(b)) -   361,600  
Short-term investments 2,301,863   2,301,961  
Amounts receivable (note 9) 35,910   37,027  
Prepaid expenses   82,600     117,991  
  5,175,384   6,675,508  
Property and equipment 594,629   626,488  

Deferred development costs - net of accumulated amortization of $nil (March 31, 2012- $nil) (notes 4 and 5)

2,223,435   1,969,172  
Goodwill   1,254,930     1,254,930  
    9,248,378     10,526,098  
Liabilities        
Current liabilities        
Accounts payable and accrued liabilities (note 9) 514,898   916,652  
Deferred revenue   285,790     222,656  
    800,688     1,139,308  
Shareholders’ Equity (note 5)        
Capital stock 48,206,384   48,061,704  
Contributed surplus 4,009,595   4,009,595  
Options 10,162,586   10,209,388  
Deficit   (53,930,875 )   (52,893,897 )
    8,447,690     9,386,790  
    9,248,378     10,526,098  


Going concern
(note 1)

Subsequent events (note 13)

Approved by the Audit Committee of the Board of Directors

(signed) J. Douglas Gilpin Director (signed) Lawrence Wang Director


The accompanying notes are an integral part of these condensed consolidated interim financial statements.





Burcon NutraScience Corporation
Condensed Consolidated Interim Statements of Operations and Comprehensive Loss
(Unaudited)
For the three months ended June 30, 2012 and 2011
(Prepared in Canadian dollars)

 

  2012   2011  
  $   $  
Expenses        
General and administrative (note 6) 745,000   1,169,020  
Research and development (note 7)   321,299     63,974  
Loss from operations (1,066,299 ) (1,232,994 )
Interest and other income (note 9)   29,321     43,248  
Loss and comprehensive loss for the period   (1,036,978 )    (1,189,746 )
Basic and diluted loss per share (note 8)   (0.035 )   (0.040 )


The accompanying notes are an integral part of these condensed consolidated interim financial statements.




Burcon NutraScience Corporation
Condensed Consolidated Interim Statements of Changes in Equity
(Unaudited)
For the three months ended June 30, 2012 and 2011
(Prepared in Canadian dollars)

 

  Number of                
  fully paid                
  common                
  shares                
  (unlimited                
  number of                
  common                
  shares             Total  
  without par Capital Contributed         shareholders’  
  value) stock surplus Options   Deficit   equity  
    $ $ $   $   $  

Balance - March 31, 2011

29,805,557 47,158,758 3,762,983 8,915,059   (46,931,555 ) 12,905,245  

Net loss

- - - -   (1,189,746 ) (1,189,746 )

Options exercised for cash

165,517 471,723 - -   -   471,723  

Transferred from options on exercise of options

- 316,378 - (316,378 ) -   -  

Stock-based compensation expense

  -     -     -     373,781     -     373,781  

Balance - June 30, 2011

  29,971,074     47,946,859     3,762,983     8,972,462     (48,121,301 )   12,561,003  

Balance - March 31, 2012

29,993,074 48,061,704 4,009,595 10,209,388   (52,893,897 ) 9,386,790  

Net loss

- - - -   (1,036,978 ) (1,036,978 )

Options exercised for cash

27,934 91,015 - -   -   91,015  

Transferred from options on exercise of options

- 53,665 - (53,665 ) -   -  

Stock-based compensation expense

  -     -     -     6,863     -     6,863  
 

Balance - June 30, 2012

  30,021,008     48,206,384     4,009,595     10,162,586     (53,930,875 )   8,447,690  


The accompanying notes are an integral part of these condensed consolidated interim financial statements.





Burcon NutraScience Corporation
Condensed Consolidated Interim Statements of Cash Flows
(Unaudited)
For the three months ended June 30, 2012 and 2011
(Prepared in Canadian dollars)

 

  2012   2011  
  $   $  
Cash flows from operating activities        
Loss for the period (1,036,978 ) (1,189,746 )

Items not affecting cash

       

Amortization of property and equipment

28,843   11,060  

Loss on disposal of property and equipment

-   (3,359 )

Stock-based compensation expense

  6,863     266,095  
  (1,001,272 ) (915,950 )
Changes in non-cash working capital items        

Amounts receivable

1,117   (115,521 )

Prepaid expenses

35,391   12,538  

Accounts payable and accrued liabilities

(401,754 ) 120,934  

Deferred revenue

  63,134     34,811  
    (1,303,384 )   (863,188 )
Cash flows from investing activities        
Decrease in short-term investments 98   2,609  
Decrease (increase) in restricted cash 361,600   (349,724 )
Acquisition of property and equipment (3,550 ) (36,259 )
Development costs deferred (247,697 ) (423,703 )
Proceeds from disposal of property and equipment   -     3,745  
    110,451     (803,332 )
Cash flows from financing activities        
Issue of capital stock   91,015     471,723  
Decrease in cash and cash equivalents (1,101,918 ) (1,194,797 )
Cash and cash equivalents - Beginning of period   3,856,929     9,628,020  
Cash and cash equivalents - End of period   2,755,011     8,433,223  
Cash and cash equivalents consist of        
Cash 2,755,011   34,895  
Cash equivalents   -     8,398,328  
    2,755,011     8,433,223  
Supplemental disclosure of non-cash investing activities        

Stock-based compensation charged to deferred development costs

-   107,686  

Amortization of property and equipment charged to deferred development costs

6,566   30,783  


The accompanying notes are an integral part of these condensed consolidated interim financial statements.





Burcon NutraScience Corporation
Notes to Condensed Consolidated Interim Financial Statements
(Unaudited)
Three months ended June 30, 2012 and 2011
(Prepared in Canadian dollars)

 

1 Going concern

 

Burcon NutraScience Corporation (Burcon or the Company) is an incorporated entity headquartered in Vancouver, Canada.

These consolidated financial statements have been prepared on a going concern basis, which assumes that the Company will be able to continue its operations for the foreseeable future and will be able to realize its assets and discharge its liabilities in the normal course of business.

As at June 30, 2012, the Company had not earned revenues from its technology, had an accumulated deficit of $53,930,875 and had relied on equity financings, private placements, rights offerings and other equity transactions to provide the financing necessary to undertake its research and development activities. At June 30, 2012, the Company had cash and cash equivalents of $2,755,011 and short-term investments of $2,301,863. These conditions indicate that existence of material uncertainty that casts substantial doubt about the ability of the Company to meet its obligations as they become due and, accordingly, its ability to continue as a going concern.

The Company’s ability to continue as a going concern is dependent upon the Company raising additional capital. Management plans to raise additional equity capital through an equity financing; however there can be no assurance that the steps management is taking will be successful. The Company will continue to receive quarterly initial license fees from its license and production agreement with Archer Daniels Midland Company (ADM) and expects to receive royalty revenues once sales of CLARISOY™ commence (see note 2). Burcon may also receive proceeds from the exercise of options expiring in September 2012. However, the amount and timing of royalty revenues and proceeds from options cannot be ascertained at this time. If the Company is unable to raise additional capital through an equity financing, it will be necessary to reduce the level of various expenditures, including research and development and patent expenditures that are not required for the license and production agreement.

These consolidated financial statements do not reflect the adjustments to the carrying values of assets and liabilities, the reported revenues and expenses, and the balance sheet classifications that would be necessary if the Company were unable to realize its assets and settle its liabilities as a going concern in the normal course of operations. Such adjustments could be material.

(1)



Burcon NutraScience Corporation
Notes to Condensed Consolidated Interim Financial Statements
(Unaudited)
Three months ended June 30, 2012 and 2011
(Prepared in Canadian dollars)

 

2 Nature of operations


Burcon is a research and development company that is developing its plant protein extraction and purification technology in the field of functional, renewable plant proteins. The Company has developed CLARISOY™, a soy protein isolate and is developing Puratein®, Supertein™ and Nutratein™, three canola protein isolates; and PEAZAZZ™, a pea protein isolate.

a)     

CLARISOY™

 

On March 4, 2011, Burcon signed a license and production agreement (Soy Agreement) with ADM to license its CLARISOY™ technology to ADM on an exclusive basis to produce, market and sell CLARISOY™ soy protein worldwide. The terms of the Soy Agreement include: (a) the license to ADM of all intellectual property, including know-how and trade secrets, concerning the manufacture and use of CLARISOY™, (b) payments to Burcon on a quarterly basis that began upon certain approval by the Environment Protection Agency and continue until the first bona fide arm’s length sale of CLARISOY™ manufactured in a semi- works production facility, (c) the engineering and design of an initial commercial CLARISOY™ production plant to be completed by ADM and (d) a royalty structure that incorporates financial incentives for ADM to expand sales globally. ADM will make royalty payments to Burcon on the sales of CLARISOY™ under the 20-year Soy Agreement. Maintaining the CLARISOY™ soy protein patent portfolio during the term of the Soy Agreement will be the responsibility of Burcon.

b)     

Puratein®, Supertein™ and Nutratein™

 

Burcon had a license and development agreement (Canola Agreement) with ADM to commercialize Burcon’s canola protein ingredients, including Puratein® and Supertein™. On March 1, 2011, Burcon and ADM amended the Canola Agreement to provide a one-year extension to March 1, 2012 to facilitate continued research. In connection with the U.S. regulatory recognition process, Burcon agreed to reimburse ADM its share of the costs being US$360,000 (CA$359,100). During the first quarter of fiscal 2012, these funds were deposited in US dollars to an interest-bearing escrow account held in trust for Burcon and ADM. Unless Burcon and ADM agreed to any further retentions or amendments, the funds held in the escrow account, including any accrued interest, would be released to ADM, and upon receipt, all intellectual property, reports, studies or other materials prepared by ADM, Burcon or by a third party in connection with the U.S. regulatory recognition process would be deemed to be owned solely by Burcon and ADM will have no further rights with respect thereto. The Canola Agreement terminated on March 1, 2012 and the funds held in the escrow account were released to ADM in April 2012. Given the termination of the Canola Agreement, Burcon is free to choose alternative paths for commercialization of is technology for the production of canola proteins.

(2)



Burcon NutraScience Corporation
Notes to Condensed Consolidated Interim Financial Statements
(Unaudited)
Three months ended June 30, 2012 and 2011
(Prepared in Canadian dollars)

 

c)     

PEAZAZZ™

 

Burcon has developed a novel pea protein isolate that it has branded PEAZAZZ™. Until April 2012, Burcon held exclusive negotiations with a potential partner to commercialized PEAZAZZ™ and the associated protein extraction technology. On April 23, 2012, Burton announced that although discussions with this potential partner are ongoing, the exclusivity period had lapsed. Therefore, Burcon is free to consider additional routes-to-market for its PEAZAZZ™ pea protein.

3 Significant accounting policies


Basis of presentation

These condensed consolidated interim financial statements have been prepared in accordance with International Accounting Standards (IAS) 34, Interim Financial Reporting, as issued by the International Accounting Standards Board (IASB), on a basis consistent with those followed in the most recent annual consolidated financial statements. These condensed consolidated interim financial statements do not include all of the information required for full annual financial statements and were approved and authorized for issue by the Audit Committee of the Board of Directors on August 9, 2012.

The policies applied in these condensed consolidated interim financial statements are based on IFRS issued and outstanding as of June 30, 2012. The condensed consolidated interim financial statements should be read in conjunction with the Company’s IFRS consolidated annual financial statements for the year ended March 31, 2012.

Principles of consolidation

These condensed consolidated interim financial statements include the accounts of the Company and its subsidiary, Burcon NutraScience (MB) Corp. A subsidiary is an entity in which the Company has control, directly or indirectly, where control is defined as the power to govern the financial and operating policies of an enterprise so as to obtain benefits from its activities. All material intercompany transactions and balances have been eliminated on consolidation.

Details of the Company’s subsidiary at June 30, 2012 are as follows:

  Place of Interest  
  incorporation % Principal activity
Burcon NutraScience (MB) Corp. Manitoba, Canada 100 Research and development


(3)




Burcon NutraScience Corporation
Notes to Condensed Consolidated Interim Financial Statements
(Unaudited)
Three months ended June 30, 2012 and 2011
(Prepared in Canadian dollars)


Future accounting changes

Certain new standards, interpretations and amendments to existing standards have been issued by the IASB or IFRIC.

  • IFRS 7 - Financial instruments - disclosures

    Amended to enhance disclosure requirements related to offsetting financial assets and financial liabilities. Effective for annual periods beginning on or after January 1, 2013.

    IFRS 7 was also amended to require additional disclosures on transition from IAS 39 to IFRS 9, effective on adoption of IFRS 9.

  • IFRS 9 - Financial instruments - classification and measurement

    The first part of a new standard on classification and measurement of financial assets and financial liabilities that will replace IAS 39, Financial Instruments - Recognition and Measurement. IFRS 9 has two measurement categories of financial assets: amortized cost and fair value. All equity instruments are measured at fair value. A debt instrument is at amortized cost only if the entity is holding it to collect contractual cash flows and the cash flows represent principal and interest. Otherwise, it is at fair value through profit or loss. Financial liabilities are measured at either at fair value through profit and loss or amortized cost. IFRS 9 was updated in October 2010 to include guidance on financial liabilities and derecognition of financial instruments. Effective for years beginning on or after January 1, 2015.

  • New standards addressing scope of reporting entity

    IFRS 10, Consolidated Financial Statements, replaces the guidance on control and consolidation in IAS 27,
    Consolidated and Separate Financial Statements, and SIC-12, Consolidation - Special Purpose Entities. IFRS 10 changes the definition of control over IFRS so that the same criteria are applied to all entities to determine control.

    IFRS 11, Joint Arrangements, replaces IAS 31, Interests in Joint Ventures. IFRS 11 reduces the types of joint arrangements to two: joint ventures and joint operations. IFRS 11 requires the use of equity accounting for interests in joint ventures, eliminating the existing policy choice of proportionate consolidation for jointly controlled entities under IAS 31. Entities that participate in joint operations will follow accounting much like that for jointly controlled assets and jointly controlled operations under IAS 31.

    IFRS 12, Disclosure of Interests in Other Entities, sets out the disclosure requirements for entities reporting under IFRS 10 and IFRS 11, and replaces the disclosure requirements currently found in IAS 28,
    Investments in Associates.

    These standards are effective for years beginning on or after January 1, 2013.

(4)



Burcon NutraScience Corporation
Notes to Condensed Consolidated Interim Financial Statements
(Unaudited)
Three months ended June 30, 2012 and 2011
(Prepared in Canadian dollars)

 

  • IFRS 13 - Fair value measurement and disclosure requirements

    Provides a single source of guidance on how to measure fair value where its use is already required or permitted by other IFRS and enhances disclosure requirements for information about fair value measurements. Effective for years beginning on or after January 1, 2013.

  • IAS 1 - Presentation of Financial Statements

    IAS 1 is amended to change the disclosure of items presented in other comprehensive income (OCI), including a requirement to separate items presented in OCI into two groups based on whether or not they may be recycled to profit or loss in the future. Effective for periods beginning on or after July 1, 2012.

  • IAS 32 - Financial Instruments: Presentation

    Amended to clarify requirements for offsetting of financial assets and financial liabilities. Effective for years beginning or after January 1, 2014.

The Company is currently assessing the impact of these standards and the expected dates of adoption.

4 Deferred development costs

 

  $
Cost at March 31, 2012 1,969,172
Current period additions   254,263  
Cost at June 30, 2012   2,223,435  
Amortization and impairment at March 31, 2012 -
Current period amortization   -  
Amortization and impairment at June 30, 2012    -  
Net book value at June 30, 2012   2,223,435  
Cost at March 31, 2011 190,284
Current period additions   1,778,888  
Cost at March 31, 2012   1,969,172  
Amortization and impairment at March 31, 2011 -
Current period amortization   -  
Amortization and impairment at March 31, 2012   -  
Net book value at March 31, 2012   1,969,172  


(5)




Burcon NutraScience Corporation
Notes to Condensed Consolidated Interim Financial Statements
(Unaudited)
Three months ended June 30, 2012 and 2011
(Prepared in Canadian dollars)

 

5 Shareholders’ equity

 

a) Capital stock

 

Authorized

Unlimited number of common shares without par value

b) Contributed surplus

 

Contributed surplus comprises the value ascribed to expired warrants and options and forfeited vested options, previously categorized in either warrants or options, as applicable, within shareholders’ equity.

c)     

Options

 

The Company has a stock option plan in which all directors, officers, employees and consultants of the Company and its subsidiary are eligible to participate.

 

At June 30, 2012, 1,967,920 (March 31, 2012 - 1,995,854) options to purchase common stock are outstanding from the stock option plan. These options, when vested under the terms of the plan, are exercisable at prices ranging between $3.30 and $9.60 per common share. At the annual general meeting held on September 1, 2011, the shareholders of the Company approved to amend the stock option plan from a “fixed” plan to a “rolling” plan, under which it would permit the issuance of that number of options up to a maximum of 10% of the issued and outstanding common shares. An additional 1,034,180 (March 31, 2012 - 1,003,453) options may be granted in future years under this plan. Unless otherwise determined by the board of directors, the options have a term of 10 years from the date of grant. The vesting terms are determined at the discretion of the board of directors at the time of grant. During the years ended March 31, 2012 and 2011, the estimated average vesting period of the outstanding options was 18 months (2011 - 20 months). The remaining outstanding vesting period at June 30, 2012 was approximately 10 months. All grants are recognized using graded vesting, with each vesting tranche being valued separately, and the fair value of each tranche recognized over its respective vesting period.

  Three months ended June 30,      
        2012   Year ended March 31, 2012  
      Weighted     Weighted
      average     average
  Number of   exercise Number of   exercise
  options   price options   price
      $     $

Outstanding - Beginning of period

1,995,854   7.32 2,040,871   6.94

Granted

-   - 200,000   7.42

Exercised

(27,934 ) 3.26 (187,517 ) 2.90

Forfeited/Expired

  -   -   (57,500 ) 8.47

Outstanding - End of period

  1,967,920   7.38   1,995,854   7.32


(6)




Burcon NutraScience Corporation
Notes to Condensed Consolidated Interim Financial Statements
(Unaudited)
Three months ended June 30, 2012 and 2011
(Prepared in Canadian dollars)

 

The following table summarizes information about stock options outstanding and exercisable at June 30, 2012:

          Options outstanding     Options exercisable  
    Weighted      
  Number average Weighted Number Weighted
Range of outstanding remaining average exercisable average
exercise at June 30, contractual exercise at June 30, exercise
prices 2012 life price 2012 price
$   (years) $   $
3.30 350,420 0.20 3.30 350,420 3.30
5.67 to 6.78 527,500 2.97 5.97 527,500 5.97
8.05 to 9.60   1,090,000   7.67 9.38   1,081,667     9.38
    1,967,920         1,959,587    

 

The fair value of each option is estimated as at the date of grant or other measurement date using the Black-Scholes option pricing model and the following weighted average assumptions:

  Three months    
  ended Year ended  
  June 30, March 31,  
  2012 2012  
Dividend yield N/A 0.0%
Expected volatility N/A 63.6%
Risk-free interest rate N/A 1.8%
Expected forfeitures N/A 11.1%
Expected average option term (years) N/A 8.4  

 

The expected volatility and expected forfeitures are based on historical volatility and forfeitures. The risk-free rate of return is the yield on a zero-coupon Canadian treasury bill of a term consistent with the expected average option term. The expected average option term is the average expected period to exercise, based on the historical activity patterns for each individually vesting tranche.

There were no options granted during the three months ended June 30, 2012. The weighted average fair value of the options granted during the year ended March 31, 2012 was $4.97 per option.

Included in research and development expenses is $nil (2011 - $5,761) (note 7) of stock-based compensation and included in general and administrative expenses is $6,863 (2011 - $260,334) (note 6) of stock-based compensation. Included in deferred development costs is $nil (March 31, 2012 - $107,686) of stock-based compensation.

(7)



Burcon NutraScience Corporation
Notes to Condensed Consolidated Interim Financial Statements
(Unaudited)
Three months ended June 30, 2012 and 2011
(Prepared in Canadian dollars)

 

6 General and administrative

 

  2012 2011
  $ $
Salaries and benefits (note 5) 280,177 589,723
Professional fees 267,004 384,008
Investor relations 84,817 77,671
Other 42,103 50,179
Office supplies and services (note 9) 39,346 28,332
Travel and meals 20,877 28,466
Management fees (note 9) 9,827 9,842
Amortization of property and equipment   849     799  
    745,000     1,169,020  

 

7 Research and development

 

  2012 2011
  $ $
Salaries and benefits (note 5) 217,995 20,488
Laboratory operation 48,200 23,562
Amortization of property and equipment 27,994 10,261
Rent 16,194 4,998
Analyses and testing 10,230 4,496
Travel and meals   686     169  
    321,299     63,974  


(8)




Burcon NutraScience Corporation
Notes to Condensed Consolidated Interim Financial Statements
(Unaudited)
Three months ended June 30, 2012 and 2011
(Prepared in Canadian dollars)

 

8 Basic and diluted loss per share

 

The following table sets forth the computation of basic and diluted loss per share:

  2012   2011  
  $   $  

Loss for the period, being loss attributable to common shareholders - basic and diluted

  1,036,978     1,189,746  
  Shares   Shares  

Weighted average common shares - basic and diluted

  29,995,574     29,884,619  

Basic and diluted loss per share

  (0.035 )   (0.040 )

 

For the three months ended June 30, 2012 and 2011, the Company excluded all potential common share equivalents from the diluted loss per share calculation as they were anti-dilutive.

9 Related party transactions

 

The Company engaged a company that is controlled by an entity that has significant influence over Burcon for the following related party transactions:

Included in general and administrative expenses for the three months ended June 30, 2012 is $15,791 (2011 -$13,997) for office space rental, services, and equipment rental.

For the three months ended June 30, 2012, included in management fees is $9,828 (2011 - $9,842) for services provided. At June 30, 2012, $4,213 (March 31, 2012 - $2,113) of this amount is included in accounts payable and accrued liabilities. For the three months ended June 30, 2012, included in interest and other income is $7,334 (2011 - $4,948) for management services provided. At June 30, 2012, $1,958 (March 31, 2012 - $2,396) of this amount is included in amounts receivable.

(9)



Burcon NutraScience Corporation
Notes to Condensed Consolidated Interim Financial Statements
(Unaudited)
Three months ended June 30, 2012 and 2011
(Prepared in Canadian dollars)

 

10 Key management compensation

 

Key management includes the Company’s CEO and COO. Remuneration of key management comprises:

  2012 2011
  $ $
Short-term benefits 92,635 158,855
Option-based awards    6,863     142,318  
    99,498     301,173  

 

Short-term benefits comprise salaries, fees and benefits.

Option-based awards represent the cost to the group of senior management and directors’ participation in the incentive stock option plan, as measured by the fair value of instruments granted accounted for in accordance with IFRS 2, Share-based Payment. For details of these plans refer to note 5 to the financial statements.

11 Financial instruments

 

Credit risk

The financial instruments that potentially expose the Company to a concentration of credit risk are cash and cash equivalents, restricted cash, amounts receivable and short-term investments. The Company’s cash and cash equivalents and short-term investments may comprise banker’s acceptances, term deposits and other interest bearing savings instruments with Canadian chartered banks. The Company limits its exposure to credit loss by placing its cash and cash equivalents, restricted cash and short-term investments with various Canadian chartered banks.

Interest rate risk

All of the Company’s financial instruments are non-interest bearing except for cash and cash equivalents that earn interest at variable market rates and short-term investments that earn interest at a fixed interest rate. Burcon’s cash and cash equivalents and short-term investments are held at various Canadian chartered banks to maximize interest and to diversify risk. For the three months ended June 30, 2012, the weighted average interest rate earned on the Company’s cash and cash equivalents was 1.15% (2011 - 1.22%) and the weighted average interest rate earned on the short-term investments was 1.56% (2011 - 1.55%) per annum. The impact of a 1% strengthening or weakening of interest rate on the Company’s cash and cash equivalents at June 30, 2012 is estimated to be a $28,000 increase or decrease in interest income per year.

(10)



Burcon NutraScience Corporation
Notes to Condensed Consolidated Interim Financial Statements
(Unaudited)
Three months ended June 30, 2012 and 2011
(Prepared in Canadian dollars)


Liquidity risk

The Company manages liquidity risk through the management of its capital structure (note 12). It also manages liquidity risk by monitoring actual and forecasted cash flows taking into account current and planned operations. The Company’s estimated minimum contractual undiscounted cash flow requirements for its financial liabilities at June 30, 2012 was $514,898, all of which is due within the next 12 months. Additional information regarding liquidity risk is disclosed in note 1.

12 Capital disclosures

 

The Company considers its capital to be its shareholders’ equity.

The Company manages its capital structure to have sufficient resources available to meet day-to-day operating requirements, continue as a going concern and fund its research development program. The Company is dependent on non-operating sources of cash, primarily from issuing equity, to fund its operations and research development program. The Company monitors its capital and the expected cash flows required to achieve its business objectives to determine its future financing needs. It seeks additional equity capital when deemed appropriate, but there is no assurance that it will be able to secure the necessary capital when required. Additional information regarding capital management is disclosed in note 1.

The Company is not subject to externally imposed capital requirements and there has been no change with respect to the overall capital risk management strategy during the three months ended June 30, 2012.

13 Subsequent events

 

Subsequent to June 30, 2012, an employee exercised an option for 20,000 common shares at $3.30 per share.

(11)