kl01034.htm

MANAGEMENT’S RESPONSIBILITY FOR FINANCIAL INFORMATION

The accompanying consolidated financial statements of Helix BioPharma Corp. and other financial information contained in this registration statement are the responsibility of management. The consolidated financial statements have been prepared in conformity with Canadian generally accepted accounting principles, using management’s best estimates and judgments, where appropriate. In the opinion of management, these consolidated financial statements reflect fairly the financial position and the results of operations and cash flows of the Company within reasonable limits of materiality. The financial information contained elsewhere in this registration statement has been reviewed to ensure consistency with that in the consolidated financial statements.

To assist management in discharging these responsibilities, the Company maintains an effective system of procedures and internal control which is designed to provide reasonable assurance that its assets are safeguarded against loss from unauthorized use or disposition, that transactions are executed in accordance with management’s authorization and that the financial records form a reliable base for the preparation of accurate and reliable financial information.

The Board of Directors ensures that management fulfils its responsibilities for the financial reporting and internal control. The Board of Directors exercises this responsibility through its independent Audit Committee comprising a majority of unrelated and outside directors. The Audit Committee meets periodically with management and annually with the external auditors to review audit recommendations and any matters that the auditors believe should be brought to the attention of the Board of Directors. The Audit Committee also reviews the consolidated financial statements and recommends to the Board of Directors that the statements be approved for issuance to the shareholders.

The consolidated financial statements for the years ended July 31, 2008, 2002 and 2006 have been audited by KPMG LLP, Chartered Accountants, which has full and unrestricted access to the Audit Committee. KPMG’s report on the consolidated financial statements is presented herein.

/s/ Donald H. Segal /s/ Photios (Frank) Michalargias

Donald H. Segal Photios (Frank) Michalargias

Chief Executive Officer Chief Financial Officer

F-1

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Directors of

Helix BioPharma Corp.

We have audited the accompanying consolidate balance sheets of Helix BioPharma Corp. (the “Company”) as of July 31, 2008 and 2007 and the related consolidated statements of operations and comprehensive loss, deficit and cash flows for each of the years in the three-year period ended July 31, 2008. 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 Canadian generally accepted auditing standards. We also 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 financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes 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 the Company as of July 31, 2008 and 2007 and the results of its operations and its cash flows for each of the years in the three-year period ended July 31, 2008 in conformity with Canadian generally accepted accounting principles.

Canadian generally accepted accounting principles vary in certain significant respects from accounting principles generally accepted in the United States of America. Information relating to the nature and effect of such differences is presented in note 17 to the consolidated financial statements.

On August 1, 2007, the Company adopted retrospectively without restatement the new recommendations of CICA Handbook Section 1530 Comprehensive Income, Section 3855 Financial Instruments – Recognition and Measurement , Section 3861, Financial Instruments – Disclosure and Presentation, Section 3251 Equity and Section 3865 Hedges. The effect of these changes is described in note 4 to the consolidated financial statements.

/s/ KPMG LLP

Chartered Accountants, Licensed Public Accountants

Toronto, Canada

October 10, 2008

F-2

HELIX BIOPHARMA CORP.

Consolidated Balance Sheets

As at July 31, 2008 and 2007 (In thousands of Canadian dollars)

	2008		2007
Assets
Current assets:
Cash and cash equivalents	$	19,057	$	11,379
Accounts receivable		349		902
Inventory		458		539
Prepaid and other expenses		446		187
		20,310		13,007
Investment (notes 4 and 5)		95		1
Capital assets (note 6)		1,151		1,139
Intangible assets (note 7)		110		126
	$	21,666	$	14,273
Liabilities and Shareholders’ Equity
Current liabilities:
Accounts payable	$	598	$	565
Accrued liabilities		546		974
		1,144		1,539
Shareholders’ equity (note 8):		20,522		12,734
Future operations (note 1)
Commitments and contingencies (note 9)
Subsequent events (note 16)
	$	21,666	$	14,273
See accompanying notes to consolidated financial statements.

On behalf of the Board of Directors:

/s/ Donald H. Segal

Donald H. Segal,

Chair, Board of Directors

/s/ W. Thomas Hodgson

W. Thomas Hodgson,

Chair, Audit Committee

F-3

HELIX BIOPHARMA CORP.

Consolidated Statements of Operations and Comprehensive Loss

Years ended July 31, 2008, 2007 and 2006 (In thousands of Canadian dollars, except per share amounts)

	2008			2007			2006
Revenue:
Product revenue	$	2,952		$	2,764		$	3,012
License fees and royalties		639			512			773
Research and development contract		-			148			180
		3,591			3,424			3,965
Expenses:
Cost of sales		1,239			1,139			1,341
Research and development		5,064			4,116			3,368
Operating, general and administration		4,757			4,418			3,722
Amortization of intangible assets		16			159			594
Amortization of capital assets		254			287			315
Stock-based compensation		44			47			1,710
Interest income		(645	)		(496	)		(270	)
Foreign exchange loss (gain)		(327	)		(9	)		16
Impairment of intangible assets		-			1,332			-
		10,402			10,993			10,796
Loss before income taxes		(6,811	)		(7,569	)		(6,831	)
Income taxes (note 10)		153			105			108
Net loss for the year		(6,964	)		(7,674	)		(6,939	)
Other comprehensive loss, net of tax:
Decrease in fair value of available-for-sale investments (net of tax of $nil)		(54	)		–			–
Total comprehensive loss	$	(7,018	)	$	(7,674	)	$	(6,939	)
Loss per share (note 11):
Basic	$	(0.16	)	$	(0.22	)	$	(0.22	)
Diluted		(0.16	)		(0.22	)		(0.22	)
Weighted average number of common shares used in the calculation of basic and diluted loss per share		42,469,362			35,615,335			31,409,495

Consolidated Statements of Deficit
Years ended July 31, 2008, 2007 and 2006 (In thousands of Canadian dollars)
	2008			2007			2006
Net loss for the year	$	(6,964	)	$	(7,674	)	$	(6,939	)
Deficit, beginning of year		(51,728	)		(44,054	)		(37,115	)
Deficit, end of year	$	(58,692	)	$	(51,728	)	$	(44,054	)

See accompanying notes to consolidated financial statements.

F-4

HELIX BIOPHARMA CORP.

Consolidated Statements of Cash Flows

Years ended July 31, 2008, 2007 and 2006 (In thousands of Canadian dollars)


	2008			2007			2006
Cash provided by (used in):
Operating activities:
Loss for the year	$	(6,964	)	$	(7,674	)	$	(6,939	)
Items not involving cash:
Amortization of capital assets		254			287			315
Amortization of intangible assets		16			159			594
Stock-based compensation		44			47			1,710
Write-down of intangible assets		–			1,332			–
Foreign exchange loss (gain)		(327	)		(9	)		16
Change in non-cash working capital:
Accounts receivable		553			(24	)		(417	)
Inventory		81			(121	)		56
Prepaid and other expenses		(259	)		(27	)		123
Accounts payable and accrued liabilities		(395	)		(49	)		490
Deferred revenue		–			–			(50	)
		(6,997	)		(6,079	)		(4,102	)
Financing activities:
Proceeds from the exercise of options		–			–			12
Proceeds from the issue of warrants and common shares, net of issue costs		14,614			6,480			8,796
		14,614			6,480			8,808
Investing activities:
Redemption (purchase) of short-term investments, net		–			6,640			(4,170	)
Purchase of capital assets		(266	)		(63	)		(258	)
		(266	)		6,577			(4,428	)
Effect of exchange rate changes on cash and cash equivalents		327			9			(16	)
Increase in cash and cash equivalents		7,678			6,987			262
Cash and cash equivalents, beginning of year		11,379			4,392			4,130
Cash and cash equivalents, end of year	$	19,057		$	11,379		$	4,392
Supplemental cash flow information:
Interest received	$	652		$	496		$	198
Interest paid		1			2			10
Income taxes paid		4			–			224
See accompanying notes to consolidated financial statements.

F-5

HELIX BIOPHARMA CORP.

Notes to Consolidated Financial Statements

Years ended July 31 2008, 2007 and 2006

(Tabular dollar amounts in thousands of Canadian dollars, except per share amounts)

1.	Future operations

Helix’s principal business activities are focused on biopharmaceuticals, primarily in the areas of cancer prevention and treatment. In addition, the Company earns revenues from its drug distribution business in Canada and international licensing activities. The Company has funded its research and development activities through the issuance of common shares and warrants and limited commercial activities.

As the Company has several projects in the research and development stage, it expects to incur additional losses and require additional financial resources. The continuation of the Company’s research and development activities and the commercialization of its products are dependent upon the Company’s ability to successfully complete its research programs, protect its intellectual property and finance its cash requirements on an ongoing basis. It is not possible to predict the outcome of future research and development activities or the financing thereof.

2.	Basis of presentation

The consolidated financial statements presented have been prepared on a going-concern basis, which assumes that the Company will continue in operation for the foreseeable future and, accordingly, will be able to realize on its assets and discharge its liabilities in the normal course of operations. The Company’s ability to continue as a going concern is dependent on obtaining additional investment capital and the achievement of profitable operations. There can be no assurance that the Company will be successful in increasing revenue or raising additional investment capital to generate sufficient cash flows to continue as a going concern. These consolidated financial statements do not reflect the adjustments that might be necessary to the carrying amount of reported assets, liabilities, revenue and expenses and the balance sheet classification used if the Company were unable to continue operation in accordance with this assumption. While the Company believes it has sufficient capital and liquidity to finance current operations through the next twelve months, the Company’s long-term liquidity depends on its ability to access the capital markets, which depends substantially on the success of the Company’s ongoing research and development programs.

3.	Significant accounting policies

The consolidated financial statements are prepared in accordance with Canadian generally accepted accounting principles.

(a)	Principles of consolidation

The consolidated financial statements include the assets and liabilities and results of operations of all subsidiaries and variable interest entities (“VIEs”) where the Company is the primary beneficiary, after elimination of intercompany transactions and balances. VIEs are entities in which equity investors do not have controlling financial interest or the equity at risk is not sufficient to permit the entity to finance its activities without additional subordinated financial support by other parties. The Company does not have any VIEs.

(b)	Use of estimates

The preparation of financial statements requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the year. Actual results could differ from those estimates. Significant areas requiring the use of estimates relate to the assessment of impairment in the value of long-term investments, determination of useful lives and assessment of impairment of long-lived assets such as capital assets, acquired technology under development and patents, determination of fair value of stock options granted for estimating stock-based compensation expense, the allocation of proceeds to share purchase warrants and the determination of valuation allowance of future tax assets.

In determining these estimates, the Company relies on assumptions regarding applicable industry performance and prospects, as well as general business and economic conditions that prevail and are expected to prevail. These assumptions are limited by the availability of reliable comparable data and the uncertainty of predictions concerning future events.

(c)	Cash and cash equivalents

Cash and cash equivalents include unrestricted cash and treasury bills having maturities not exceeding 90 days from their respective acquisition dates.

(d)

Inventory

Inventory is valued at the lower of cost, determined on a first-in, first-out basis, and net realizable value.

(e)	Capital assets

Capital assets are recorded at cost less accumulated amortization. Amortization is provided using the following methods and annual rates:

F-6

Asset	Basis	Rate
Research equipment	Declining balance	20% - 30%
Computer equipment	Declining balance	20% - 30%
Furniture and fixtures	Declining balance	20% - 30%

(f)	Research and development

Internally generated research costs, including the costs of developing intellectual property and registering patents, are expensed as incurred. Internally generated development costs are expensed as incurred unless such costs meet the criteria for deferral and amortization under Canadian generally accepted accounting principles. To date, the Company has not deferred any internally generated development costs.

(g)	Revenue recognition

Product revenue from pharmaceutical sales is recognized when title has transferred to the customer and the customer has assumed the risk and rewards of ownership. Revenue from product sales is recorded net of estimated discounts, product returns and other charge-backs, if any.

Certain license fees are comprised of initial fees and milestone payments pursuant to collaborative agreements and other licensing arrangements. Initial fees are recognized over the estimated collaboration term on a straight-line basis. Milestone payments are recognized as revenue when the milestone (such as issuance of patents by regulatory authorities or achievement of commercial sales by the customer) is achieved and the customer is obligated to make the performance payment. Certain license arrangements require no continuing involvement by the Company. Non-refundable license fees are recognized as revenue, when the Company has no further involvement or obligation to perform under the arrangement, the fee is fixed or determinable and collection of the amount is reasonably assured.

Royalty revenue is recognized when the pharmaceutical product sales are shipped by a licensee to third parties and the royalty revenue can be determined and collection is reasonably assured.

Revenue for research and development service contracts consists of up-front fees and milestone payments. Non-refundable up-front fees are recognized over the estimated term of the service contract. Milestone payments are recognized as revenue when the milestone is achieved and customer acceptance is received.

(h)	Foreign currency translation

Foreign operations and foreign currency-denominated items are translated into Canadian dollars. Monetary assets and liabilities of the Company’s integrated foreign subsidiary are translated into Canadian dollars at the rates of exchange in effect at the balance sheet dates. Non-monetary items are translated at historical exchange rates. Revenue and expenses are translated at the exchange rates prevailing at their respective transaction dates. Exchange gains and losses arising on translation are included in operating results.

(i)	Income taxes

The Company accounts for income taxes using the asset and liability method. Future tax assets and liabilities are recognized for the future taxes attributable to the temporary differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax carrying values. Future tax assets and liabilities are measured using enacted or substantially enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. A valuation allowance against future tax assets is recognized when it is more likely than not that the Company will not generate sufficient income for tax purposes to utilize tax losses in the carry-forward period and other available tax deductions.

(j)	Loss per share

Basic loss per share is calculated by dividing the earnings available to common shareholders by the weighted average number of common shares outstanding during the year. Diluted loss per share is calculated using the treasury stock method, which assumes that all stock options and share purchase warrants with exercise prices below the market prices are exercised with the proceeds used to purchase common shares of the Company at the average market price during the year.

(k)	Intangible assets

Intangible assets consist of acquired technology under development and patents. Intangible assets are amortized at the shorter of their remaining legal or contractual life and their estimated useful life on a straight-line basis as follows:

Acquired technology under development	3 years
Patents	15 - 20 years

The amortization method and estimate of the useful life of intangible assets are reviewed annually.

F-7

Acquired technology under development and patents do not necessarily reflect the present or future value of the underlying science or technology. The amount recoverable is dependent upon the continuing advancement of the research through various phases of clinical trials and, ultimately, to commercialization or on the licensing of the research to third parties, for valuable consideration. It is not possible to predict the outcome of research and development programs or their potential to be licensed to third parties.

(l)	Stock-based compensation

The Company accounts for stock-based compensation and other stock-based payments made in exchange for goods and services provided by employees and non-employees in accordance with the recommendations of The Canadian Institute of Chartered Accountants’ (“CICA”) Handbook Section 3870, “Stock-based Compensation and Other Stock-based Payments” (“Section 3870”). Section 3870 established standards for recognition, measurement and disclosure of stock-based compensation and other stock-based payments made in exchange for goods and services provided by employees and non-employees. The standard requires that a fair value based method of accounting be applied to all stock-based payments to employees and non-employees and to employee awards that are direct awards of stock, which call for settlement in cash or other assets, or are appreciation rights that call for settlement by the issuance of equity instruments. The fair value of stock options is measured at the grant date using the Black-Scholes option pricing model and the compensation cost is amortized over the options’ vesting period for employee awards and the service period for non-employee awards. Forfeitures are accounted for as they occur.

(m)	Impairment of long-lived assets

The Company’s long-lived assets include capital assets and intangible assets with finite lives. The Company considers a two-step process to determine whether there is impairment of long-lived assets held for use. The first step determines when impairment is recognized while the second measures the amount of the impairment. An impairment loss is recognized when the carrying amount on a long-lived asset exceeds the sum of the undiscounted cash flows expected to result from its use and eventual disposition. An impairment loss is measured as the amount by which the long-lived asset’s carrying amount exceeds its fair value. To test for and measure impairment, long-lived assets are grouped at the lowest level for which identifiable cash flows are largely independent. Intangible asset write-downs in fiscal 2008 total $nil (2007 – $1,332,000; 2006 – $nil).

(n)	Recent Canadian accounting pronouncements not yet adopted

(i)	Financial Instruments – Disclosure

CICA Handbook Section 3862, Financial Instruments – Disclosure, increases the disclosure currently required that will enable users to evaluate the significance of financial instruments on an entity’s financial position and performance, including disclosures about fair value. In addition, disclosure is required of qualitative and quantitative information about exposure to risk arising from financial instruments, including specified minimum disclosures about liquidity risk and market risk. The quantitative disclosures must also include a sensitivity analysis for each type of market risk to which an entity is exposed, showing how net income and other comprehensive income would have been affected by reasonably possible changes in the relevant risk variable. This standard is effective for interim and annual financial statements relating to fiscal years beginning on or after October 1, 2007, specifically August 1, 2008 for the Company. The Company has not yet determined the impact of the adoption of this change on the disclosures in its consolidated financial statements.

(ii)	Financial Instruments – Presentation

CICA Handbook Section 3863, Financial Instruments – Presentation, replaces the existing requirements on presentation of financial instruments which have been carried forward unchanged to this section. This standard is effective for interim and annual financial statements relating to fiscal years beginning on or after October 1, 2007, specifically August 1, 2008 for the Company. The Company does not expect the adoption of this standard to have any impact on the consolidated financial statements.

(iii)

Capital Disclosures

CICA Handbook Section 1535, Capital Disclosures, requires disclosure of an entity’s objectives, policies and processes for managing capital, quantitative data about what the entity regards as capital and whether the entity has complied with any capital requirements and, if it has not complied, the consequences of such non-compliance. This standard is effective for interim and annual financial statements relating to fiscal years beginning on or after October 1, 2007, specifically August 1, 2008 for the Company. The Company has not yet determined the impact of the adoption of this change on the disclosure in its consolidated financial statements.

(iv)	Inventories

CICA Handbook Section 3031, Inventories, replaces Section 3030 and establishes new standards for the measurement and disclosure of inventories. This standard is effective for interim and annual financial statements relating to fiscal years beginning on or after January 1, 2008, specifically August 1, 2008 for the Company. The Company does not expect the adoption of these changes to have an impact on its consolidated financial statements.

F-8

(v)	General Standards on Financial Statement Presentation

CICA Handbook Section 1400, General Standards on Financial Statement Presentation, has been amended to include requirements to assess and disclose an entity’s ability to continue as a going concern. This standard is effective for interim and annual financial statements relating to fiscal years beginning on or after January 1, 2008, specifically August 1, 2008 for the Company. The Company does not expect the adoption of these changes to have an impact on its consolidated financial statements.

(vi)	International Financial Reporting Standards

The CICA plans to converge Canadian GAAP with International Financial Reporting Standards (“IFRS”) over a transition period expected to end in 2011. The impact of the transition to IFRS on the Company’s consolidated financial statements is not yet determinable.

4.	Change in accounting policies

Effective August 1, 2007, the Company adopted the new accounting standards that were issued by The Canadian Institute of Chartered Accountants (CICA): Handbook Section 1530 “Comprehensive Income”, Handbook Section 3251 “Equity”, Handbook Section 3855 “Financial Instruments – Recognition and Measurement”, Handbook Section 3861 “Financial Instruments – Disclosure and Presentation” and Handbook Section 3865, “Hedges”. The Company adopted these standards retroactively without restatement of prior periods.

(a)	Comprehensive Income

Section 1530 introduces comprehensive income, which consists of net income and other comprehensive income (‘OCI”). OCI represents changes in shareholders’ equity during a period arising from transactions and other events with non-owner sources and includes unrealized gains and losses on financial assets classified as available-for-sale, unrealized foreign currency translation gains or losses arising from self-sustaining foreign operations, and changes in the fair value of the effective portion of cash flow hedging instruments, if any. The Company has included in its consolidated financial statements a consolidated statement of operations and comprehensive loss for the fiscal year ended July 31, 2008. The cumulative changes in OCI are included in accumulated other comprehensive income (AOCI), which is presented as a new category of shareholders’ equity in Note 8.

(b)

Equity

Section 3251 establishes standards for the presentation of equity and changes in equity during the reporting period and requires the Company to present separately equity components and changes in equity arising from i) net earnings, ii) other comprehensive income, iii) other changes in retained earnings; iv) changes in contributed surplus; v) changes in share capital, and vi) changes in reserves. Consolidated statements of changes in shareholders’ equity are included in the consolidated financial statements for the period.

(c)	Financial Instruments – Recognition and Measurement

Section 3855 establishes standards for recognizing and measuring financial assets, financial liabilities and non-financial derivatives. It requires that financial assets and financial liabilities, including derivatives, be recognized on the consolidated balance sheet when the Company becomes a party to the contractual provisions of the financial instrument or non-financial derivative contract. Under this standard, all financial instruments are required to be measured at fair value on initial recognition except for certain related party transactions. Measurement in subsequent periods depends on whether the financial instrument has been classified as held-for-trading, available-for-sale, held-to-maturity, loans and receivables, or other financial liabilities. Transaction costs are expensed as incurred for financial instruments classified or designated as held-for-trading. For other financial instruments, transaction costs are capitalized on initial recognition. Financial assets and financial liabilities held-for-trading are measured at fair value with changes in those fair values recognized in other income. Financial assets held-to-maturity, loans and receivables, and other financial liabilities are measured at amortized cost using the effective interest method of amortization. Available-for-sale financial assets are measured at fair value with unrealized gains and losses, including changes in foreign exchange rates, being recognized in OCI.

Derivative instruments are recorded on the consolidated balance sheet at fair value, including those derivatives that are embedded in financial or non-financial contracts that are not closely related to the host contracts. Changes in the fair values of derivative instruments are recognized in net income with the exception of derivatives designated in effective cash flow hedges or hedges of foreign currency exposure of a net investment in a self-sustaining foreign operation. Section 3855 also provides an entity the option to designate a financial instrument as held-for-trading (the fair value option) on its initial recognition or upon adoption of the standard, even if the financial instrument, other than loans and receivables, was not acquired or incurred principally for the purpose of selling or repurchasing it in the near term. An instrument that is classified as held-for-trading by way of this fair value option must have reliable fair values.

(d)	Financial Instruments – Disclosure and Presentation

Section 3861 replaces Section 3860, of the same title and establishes standards for presentation of financial instruments and non-financial derivatives, and identifies the information that should be disclosed about them.

F-9

(e)

Hedges

Section 3865 specifies the criteria that must be satisfied in order for hedge accounting to be applied and the accounting for each of the permitted hedging strategies: fair value hedges, cash flow hedges and hedges of foreign currency exposures of net investments in self-sustaining foreign operations. Hedge accounting is discontinued prospectively when the derivative no longer qualifies as an effective hedge, or the derivative is terminated or sold, or upon the sale or early termination of the hedged item. In a fair value hedging relationship, the carrying value of the hedged item is adjusted for unrealized gains or losses attributable to the hedged risk and recognized in net earnings. Changes in the fair value of the hedged item, to the extent that the hedging relationship is effective, are offset by changes in the fair value of the hedging derivative, which is also recorded in net earnings. When hedge accounting is discontinued, the carrying value of the hedged item is no longer adjusted and the cumulative fair value adjustments to the carrying value of the hedged item are amortized to net earnings over the remaining term of the original hedging relationship. In a cash flow hedging relationship, the effective portion of the change in the fair value of the hedging derivative is recognized in OCI while the ineffective portion is recognized in net earnings. When hedge accounting is discontinued, the amounts previously recognized in AOCI are reclassified to net earnings during the periods when the variability in the cash flows of the hedged item affects net earnings. Gains and losses on derivatives are reclassified immediately to net earnings when the hedged item is sold or early terminated. In hedging a foreign currency exposure of a net investment in a self-sustaining foreign operation, the effective portion of foreign exchange gains and losses on the hedging instruments is recognized in OCI and the ineffective portion is recognized in net earnings. The amounts previously recognized in AOCI are recognized in net earnings when there is a reduction in the hedged net investment as a result of a dilution or sale of the net investment; or reduction in equity of the foreign operation as a result of dividend distributions. The Company did not have hedges at July 31, 2007 or in the year ended July 31, 2008.

(f)	Impact of Adoption of Handbook Sections 1530, 3251, 3855, 3865

(i)

Upon adoption of these new standards, the Company designated its cash as held-for-trading, which is measured at fair value. The Company’s cash equivalents consist of interest bearing deposits that were designated as held-to-maturity, and continue to be valued at amortized cost subsequent to August 1, 2007. Accounts receivable are classified as loans and receivables, which are measured at amortized cost. Accounts payable and accrued liabilities are classified as other financial liabilities, which are measured at amortized cost.

(ii)	The investment in shares of Orchid Cellmark Inc. (“Orchid”) was categorized as available-for-sale and recorded at fair value, with the resulting fair value transitional adjustment of $148,000 recorded in AOCI, net of tax of $nil at August 1, 2007. Previously, the investment was recorded at cost.

(iii)

All derivative instruments, including embedded derivatives, are recorded in the statement of operations at fair value unless exempted from derivative treatment as a normal purchase and sale. All changes in their fair value are recorded in net earnings unless cash flow hedge accounting is used, in which case changes in fair value are recorded in OCI. The Company has elected to apply this accounting treatment for all embedded derivatives in host contracts entered into on or after August 1, 2003. The Company did not have any material embedded derivatives in its host contracts the impact of which was material.

5.	Investment

The investment in shares of Orchid is categorized as available-for-sale. At July 31, 2008, the Company owns 29,678 common shares in Orchid (2007 – 29,678 common shares). Orchid’s common shares trade on the NASDAQ, under the ticker symbol ORCH. The closing trading price of Orchid’s common shares was US$3.19 per share at July 31, 2008 (2007 – US$5.00 per share).

6.	Capital assets

			2008						2007
	Cost		Accumulated amortization		Net book value		Cost		Accumulated amortization		Net book value
Research equipment	$	2,798	$	1,914	$	884	$	2,635	$	1,729	$	906
Computer equipment		721		504		217		628		445		183
Furniture and fixtures		144		94		50		134		84		50
	$	3,663	$	2,512	$	1,151	$	3,397	$	2,258	$	1,139

F-10

7.	Intangible assets

			2008						2007
	Cost		Accumulated amortization		Net book value		Cost		Accumulated amortization		Net book value
Acquired technology under development	$	3,141	$	3,141	$	-	$	3,141	$	3,141	$	-
Patents		911		801		110		911		785		126
	$	4,052	$	3,942	$	110	$	4,052	$	3,926	$	126

8.	Shareholders’ equity:

Share purchase

Accumulated

Common shares

warrants

other

comprehensive

Total

Contributed

income

shareholders

Amount

Number

Amount

Number

Options

surplus

Deficit

(loss)

equity

Balances, July 31, 2005

43,570

27,183,726

193

2,415,000

3,100

554

(37,115

)

–

10,302

Net loss for the year

–

(6,939

)

–

(6,939

)

Other comprehensive income (loss)

–

Common stock, issued

8,353

5,495,609

–

8,353

Warrants, issued

–

443

5,495,609

–

443

Warrants expired, unexercised

–

Stock-based compensation

–

1,710

–

1,710

Stock options, exercised

6,000

–

)

–

Stock options expired, unexercised

–

(1,199

)

1,199

–

Balances, July 31, 2006

51,944

32,685,335

636

7,910,609

3,602

1,753

(44,054

)

–

13,881

Net loss for the year

–

(7,674

)

–

(7,674

)

Other comprehensive income (loss)

–

Common stock, issued

5,406

3,650,000

–

5,406

Warrants, issued

–

1,074

3,650,000

–

1,074

Warrants expired, unexercised

–

(193

)

(2,415,000

)

–

193

–

Stock-based compensation

–

Stock options, exercised

–

Stock options expired, unexercised

–

(14

)

–

Balances, July 31, 2007:

As previously reported

57,350

36,335,335

1,517

9,145,609

3,635

1,960

(51,728

)

–

12,734

Changes in accounting policy related to financial instruments (note 4(f)(ii))

–

148

Balances, July 31, 2007:

As revised

57,350

36,335,335

1,517

9,145,609

3,635

1,960

(51,728

)

148

12,882

Net loss for the year

–

(6,964

)

–

(6,964

)

Other comprehensive income (loss)

–

(54

)

(54

)

Common stock, issued

14,614

10,040,000

–

14,614

Warrants, issued

–

Warrants expired, unexercised

–

(1,517

)

(9,145,609

)

1,517

–

Stock-based compensation

–

Options, exercised

–

Options expired, unexercised

–

(448

)

448

–

Balances, July 31, 2008

71,964

46,375,335

–

3,231

3,925

(58,692

)

20,522

F-11

(a)	Preferred shares

(i)	Authorized 10,000,000 preferred shares

(ii)	Nil preferred shares issued and outstanding

(b)	Common shares, share purchase warrants and contributed surplus

(i)	Authorized unlimited common shares without par value

(ii)	Issued and outstanding:

On October 11, 2006, the Company announced the completion of a private placement, issuing 3,650,000 units at $1.93 per unit, for gross proceeds of $7,044,500. Each unit consists of one common share and one common share purchase warrant. Each common share purchase warrant entitles the holder to purchase one common share at a price of $2.70 until March 31, 2008. Of the gross proceeds amount, $1,168,000 was allocated to the share purchase warrants based on fair value and the residual amount of $5,876,500 was allocated to common shares. Share issue costs totalling $565,000 were proportionately allocated to the share purchase warrants ($94,000) and common shares ($471,000) respectively.

In addition to the 225,000 warrants, which expired unexercised on September 22, 2006, an additional 2,190,000 warrants expired unexercised on March 1, 2007. The total number of share purchase warrants available for exercise as at July 31, 2007 totalled 9,145,609, with exercise prices ranging from $2.39 to $2.70 per share purchase warrant.

On December 19, 2007 the Company announced the completion of a private placement, issuing 10,040,000 common shares at $1.68 per common share, for gross proceeds of $16,867,200. The costs of issuance amounted to $2,253,200 and has been reduced from the gross proceeds and recorded in share capital.

Share purchase warrants totalling 9,145,609 expired unexercised on March 31, 2008 leaving no share purchase warrants available for exercise as at July 31, 2008.

(c)	Stock options

(i)

The Company maintains a stock option plan reserving up to 3,500,000 common shares for granting to directors, officers and employees of the Company or any person or company engaged to provide ongoing management or consulting services. Options are granted at the fair market value of the Company’s stock at the grant date, vesting at the discretion of the Board, and may have terms of up to 10 years.

(ii)	Issued and outstanding

	Number			Weighted average exercise price per share	Number			Weighted average exercise price per share
Outstanding, beginning of year	3,272,500		$	3.41	3,282,500		$	3.40
Granted	–			–	–			–
Exercised	–			–	–			–
Forfeited/expired	(1,242,000	)		5.01	(10,000	)		2.00
Outstanding, end of year	2,030,500		$	2.45	3,272,500		$	3.41
Exercisable, end of year	2,030,500		$	2.45	3,241,945		$	3.42

		Exercise Price
	$	2.00	$	3.00
Weighted average remaining contractual life (years)		1.9		3.0
Number of options:
- outstanding		1,122,000		908,500
- exercisable		1,122,000		908,500

(iii)

Stock-based compensation

For the year ended July 31, 2008, the Company granted nil stock options (2007 – nil; 2006 – 931,500), with a fair value of $nil (2007 – $nil; 2006 – $1,658,000) and 30,556 (2007 – 33,333; 2006 – 36,111) stock options vested with a fair value of $44,000 (2007 – $47,000; $2006 – $52,000). The result is a net stock-based compensation expense of $44,000 (2007 – $47,000; 2006 – $1,710,000). Stock options totalling 1,242,000 expired unexercised in fiscal 2008 leaving 2,030,500 stock options issued and outstanding at July 31, 2008.

F-12

The Black-Scholes option pricing model was used to estimate the fair value of the options at the grant date based on the following assumptions:

Volatility

Risk Free Interest Rate

Expected Life

Dividend Yield

2008

–%

– years

–%

2007

–%

– years

–%

2006

92.0%

4.16%

5 years

–%

9.	Commitments and contingencies

(a)	Royalty and in-licensing commitments

(i)

Pursuant to a Royalty Agreement dated March 27, 1997 with University of Saskatchewan Technologies Inc. (“UST”), the Company is required to pay UST a royalty of 2% of the net sales revenue generated from certain products containing prostaglandin E1, and in the case of sub-licenses of such products, 15% of the non-royalty considerations (up-front payments) received from the sub-licensee.

(ii)

Pursuant to an Amended Royalty Agreement, effective November 1, 1999, the Company is required to pay royalties of 2% of the Company’s net sales revenue received from the marketing, manufacture, distribution or sale of certain products, or in the case of sub-license revenue, 2% of license fees or other revenue received by the Company related to the marketing, manufacture, distribution or sale of certain products, which revenue is not allocated by the Company to the further development of the product. Any future revenue generated through the commercialization of Topical Interferon Alpha-2b is subject to this royalty agreement, which expires on March 27, 2017.

(iii)

Pursuant to an agreement dated April 28, 2005 with the NRC, the Company is required to pay a royalty of 3% of net sales, with a minimum royalty of $10,000 per annum generated from the use of a certain antibody to target cancerous tissues of the lung. In addition to the royalty payments, the Company is also required to make certain milestone payments: $25,000 upon successful completion of phase I clinical trials; $50,000 upon successful completion of phase IIb clinical trials; $125,000 upon successful completion of phase III clinical trials; and $200,000 upon receipt of market approval by regulatory authority. L-DOS47 is subject to this agreement.

(iv)

A Royalty Sharing Agreement dated September 24, 1998 with the Vaccine and Infectious Disease Organization (“VIDO”) applies to those patents and other intellectual properties, which the parties agree, may be made subject to the agreement from time to time. VIDO will have the right to exploit such property in the animal health care industry, and the Company will have the right to exploit such property in the human health care industry, with each party having the right to receive one-third of the license fees, royalties or other revenue generated from the area exploited by the other. In the case of direct product sales made by the Company or VIDO, the other party will be entitled to a royalty on the net sales revenue received by the selling party, at a royalty rate to be negotiated. As no intellectual property has been made subject to the agreement, Helix plans to review the status of this agreement.

(v)

Pursuant to a 20-year license agreement, expiring in 2017 (subject to earlier termination or extension in certain circumstances), to commercialize its proprietary Molecular Sensing Technology, the Company is committed to make a 5% royalty payment upon the commercial launch of the first product or on the net sales revenue of the products that employ or utilize the technology under the terms of the agreement and is subject to minimum royalties of $50,000 in the first and second year; $100,000 in the third and fourth year and $200,000 in the fifth and subsequent years. In a sub-license royalty arrangement, the Company is committed to make a payment of 35% on the total value of all consideration received and any non-cash components. The Company had previously sub-licensed this technology to a third party, however, subsequent to year-end, the sub-licensee gave notice of termination of the sub-license. Due to the Company’s current focus on its L-DOS47 and Topical Interferon Alpha-2b programs, the Company has determined not to further develop the Molecular Sensing Technology at this time and plans to review the status of this agreement.

(vi)

Pursuant to the Company’s research agreement with the National Research Council of Canada (“NRC”) for research and development pertaining to the Company’s Heterodimer technologies, the Company is committed to a 1% royalty on sales revenue from all licensed products and services to the NRC. Subsequent to the year-end, the Company has requested that this agreement be terminated.

(vii)

Pursuant to a 20-year license agreement, expiring in 2021 (subject to earlier termination or extension in certain circumstances), to commercialize its proprietary Heterodimer Protein Technology, the Company is committed to make a 5% royalty payment upon the commercial launch of the first product or on the net sales revenue of the products that employ or utilize the technology under the terms of the agreement. The Company is currently reviewing the status of this agreement.

As at July 31, 2008, the Company has $36,000 (2007 – $nil) in financial obligations outstanding related to royalty and in-licensing commitments. To date, the Company has paid $141,000 under these agreements.

(b)	Research commitments

(i)

The Company has two agreements with two Contract Research Organizations (“CRO”), whereby the CRO’s will provide collaborative services related to the management of a phase II clinical trial in Sweden and Germany for Topical Interferon Alpha-2b in patients with ano-genital warts, who are positive with HPV.

F-13

(ii)	The Company has a research agreement with another research organization to develop a process for preparing L-DOS47 in a lyophilized vial format.

As at July 31, 2008, the Company accrued $22,000 (2007 – $256,000) for research services it had received and is committed to pay $1.275,000 for additional research services to be received.

(c)	Manufacturing commitments

The Company currently has two agreements with two separate Contract Manufacturing Organizations (“CMO”), whereby the CMO’s will provide scale-up manufacturing related to the Company’s L-DOS47 and Topical Interferon Alpha-2b program.

As at July 31, 2008, the Company accrued $79,000 (2007 – $60,000) for Contract Manufacturing services it had received and is committed to pay $1,648,000 for additional research services to be received.

(d)	Purchase commitments

The Company has purchase commitments of $556,000 with one supplier through to April 2009.

(e)	Operating lease commitments

The Company owes $213,000 under various operating lease agreements with remaining terms of up to February 2010 for office and warehouse and research premises.

(f)	Consulting services commitments

The Company has entered into a consulting services arrangement for both research and development consulting services of $74,000 through fiscal 2009.

The Company’s commitments are summarized as follows:

		2009		2010		2011		2012		2013		2014 and beyond		Total
Purchases	$	556	$	–	$	–	$	–	$	–	$	–	$	556
Operating leases		177		36		–		–		–		–		213
Consulting services		74		–		–		–		–		–		74
Research and manufacturing services		2,503		10		10		10		10		110		2,653
	$	3,310	$	46	$	10	$	10	$	10	$	110	$	3,496

(g)	Contingencies

The Company indemnifies its directors and officers against any and all claims or losses reasonably incurred in the performance of their service to the Company to the extent permitted by law.

Given the nature of this indemnification, the Company is unable to reasonably estimate its maximum potential liability as this indemnification provision does not provide for a maximum potential amount and the amounts are dependent on the outcome of future contingent events, the nature and likelihood of which cannot be determined at this time. Consequently, no amounts have been accrued in these consolidated financial statements relating to this indemnification.

10.	Income taxes

Current income tax expense of $153,000 (2007 – $105,000; 2006 – $108,000) is attributable to the operations of the Company’s Irish subsidiary.

Under the Income Tax Act (Canada), certain expenditures are classified as SR & ED expenditures and are grouped into a pool for tax purposes, which is 100% deductible in the year incurred. This expenditure pool can also be carried forward indefinitely and deducted in full in any subsequent year. The SR & ED expenditure pool at July 31, 2008 is approximately $22,619,000 (2007 – $17,666,000; 2006 – $10,790,000).

The Company has also earned investment tax credits on SR & ED expenditures at July 31, 2008 of approximately $4,358,000 (2007 – $3,854,000; 2006 – $2,609,000), which can offset Canadian income taxes otherwise payable in future years up to 2028.

F-14

The tax effects of temporary differences of the Company and its subsidiaries that give rise to significant portions of the future tax assets and future tax liabilities are presented in the following table:

	2008			2007
Future tax assets:
Non-capital losses carried forward	$	3,872		$	5,826
Capital losses carried forward		21			24
Scientific Research & Experimental Development expenditure pool		6,188			5,316
Excess of tax basis over book basis of Orchid investment		147			181
Excess of tax basis over book basis of capital assets		664			551
Deductible share issue costs		708			295
Other		5			2
		11,605			12,195
Valuation allowance		(11,573	)		(12,154	)
Total future tax assets		32			41

Future tax liabilities:
Excess of book basis over tax basis of intangible assets		(32	)		(41	)
Total future tax liabilities		(32	)		(41	)
Net future tax liabilities	$	–		$	–

As at July 31, 2008, the Company has Canadian tax losses carried forward which approximate $13,584,000 (2007 - $18,489,000; 2006 - $20,241,000) and are available until 2028 as follows:

2009	$	1,985
2013		3,272
2014		2,440
2025		354
2026		2,521
2027		2,465
2028		547
	$	13,584

11.	Research and development projects

The Company incurs research and development expenditures primarily on two research and development projects: Topical Interferon Alpha-2b and DOS47.

(a)	Topical Interferon Alpha-2b

The Company is engaged in the clinical development of Topical Interferon Alpha-2b for the treatment of HPV-induced disease states. Topical Interferon Alpha-2b is currently being developed for the treatment of early-stage cervical dysplasia and ano-genital warts caused by HPV infections.

(b)

DOS47

The Company’s DOS47 technology employs a novel approach to the destruction of cancer cells which is based upon the theory that the urea cycle, a natural process in the body, can be modified to fight cancer. The Company intends to pursue the development of DOS47 both as a monotherapy and as an adjunct therapy in combination with certain chemotherapeutics, with a view to maximizing the commercialization potential of DOS47. The Company’s first DOS47 product candidate currently under development is L-DOS47.

Included in research and development expenditures are costs associated with salaries and fringe benefits, patents, consulting services, third party contract manufacturing, clinical research organization services, leases for research facilities, utilities, administrative expenses and allocations of corporate costs.

F-15

The following table outlines research and development costs expensed for the Company’s significant research and development projects for the fiscal years ended July 31, 2008, 2007 and 2006:

		2008		2007		2006
Topical Interferon Alpha-2b	$	2,188	$	1,814	$	1,881
DOS47		2,876		2,302		1,328
Other		–		–		159
	$	5,064	$	4,116	$	3,368

12.	Loss per share

The share purchase warrants and stock options outstanding for each of the periods reported were not included in the computation of diluted loss per share because the effect would be anti-dilutive.

13.	Related party transactions

Effective September 2006, the Company’s contractual arrangement to pay a former director of a subsidiary company for consulting services was terminated. Prior to September 2006, the Company paid the director $2,500 per month for consulting services.

For the fiscal year ended July 31, 2008, the Company paid $267,000 (2007 – $255,000; 2006 – $193,000) to Cawkell Brodie Glaister LLP, legal counsel to the Company, for legal services rendered. A director of the Company is a partner of Cawkell Brodie Glaister LLP.

For the fiscal year ended July 31, 2008, the Company received $nil (2007 – $148,000; 2006 – $180,000) for contracted research and development services provided to Apotex Inc. Apotex Inc. is considered a related party, as a director of the Company is also the President and Chief Operating Officer of Apotex Inc.

The Company had the following related party transactions for the fiscal years ended July31:

		2008		2007		2006
Research and development expense paid to a director of a subsidiary	$	–	$	3	$	30
Professional, legal and consulting fees to directors, partnerships and/or companies in which directors have a substantial interest		267		255		193
Contracted research and development revenue with Apotex Inc.		–		148		180

These transactions are measured at the exchange amount, which is the amount of consideration established and agreed to by the related parties.

14.	Financial instruments

The carrying amounts of cash and cash equivalents, accounts receivable, accounts payable and accrued liabilities approximate fair values due to their short-term maturities.

Financial instruments potentially exposing the Company to concentrations of credit risk consist of accounts receivable, which are limited to a large international pharmaceutical company and Canadian pharmaceutical wholesalers and pharmacies. The Company adopts credit policies and standards to monitor the evolving health care industry. Management is of the opinion that any risk of credit loss is significantly reduced due to the financial strength of the Company’s major customers.

Cash and cash equivalents and investments are invested in certain instruments of varying maturities. Consequently, the Company is exposed to interest rate risk as a result of holding investments of varying maturities.

The Company is exposed to foreign exchange risk as a result of transactions in currencies other than its functional currency, the Canadian dollar. The majority of the Company’s revenues in fiscal 2008 are transacted in Canadian dollars, with a portion denominated in Euros and to a lesser extent, in U.S. dollars. Purchases of inventory are primarily transacted in U.S. and Euro dollars while other expenses, consisting of the majority of salaries, operating costs and overhead are incurred primarily in Canadian dollars. Research and development expenditures are incurred in both Euros and Canadian dollars.

The Company maintains net monetary asset and/or liability balances in foreign currencies and does not engage in currency hedging activities using financial instruments.

F-16

15.	Segmented information

Management has determined that the Company has one operating segment, which is biopharmaceuticals.

		2008			2007			2006
Revenues originating outside of Canada	$	538		$	512		$	571
Percent of total revenue represented by one customer		15	%		15	%		15	%
Percent of total accounts receivable represented by one customer		28	%		24	%		23	%

Revenue originating outside of Canada represents royalty revenues earned by the Company’s Irish subsidiary. All of the Company’s capital assets are located in Canada.

16.	Subsequent events

On September 19, 2008, Helix received three months notice from Lumera Corporation to terminate a sub-license arrangement, effective December 19, 2008. A termination payment of US$75,000 was received and will be accounted for in the first quarter of fiscal 2009.

On October 2, 2008, the Company announced the completion of a private placement, issuing 6,800,000 units at $1.68 per unit, for gross proceeds of $11,424,000. Each unit consists of one common share and one common share purchase warrant. Each common share purchase warrant entitles the holder to purchase, subject to adjustment, one common share at a price of $2.36 until October 1, 2011. The issuance of common shares and share purchase warrants will be accounted for as a capital transaction in the Company’s first quarter of fiscal 2009.

17.	Differences between generally accepted accounting principles in Canada and the United States:

The consolidated financial statements as at July 31, 2008 and 2007 and for each of the years in the three-year period ended July 31, 2008 have been prepared in accordance with Canadian generally accepted accounting principles (“GAAP”) which differ in some respects from accounting principles generally accepted in the United States (“U.S. GAAP”). The following reconciliation identifies material differences in the Company’s consolidated statements of operations and comprehensive loss and consolidated balance sheets.

(a)	Consolidated statements of operations and deficit:

		2008			2007			2006
Loss per Canadian GAAP	$	(6,964	)	$	(7,674	)	$	(6,939	)
Amortization of intangible assets (b)(ii)		–			147			582
Impairment of intangible assets (b)(ii)		–			1,332			–
Research and development expense (b)(iii)		–			(244	)		(198	)
Income tax expense (b)(iii)		–			244			198
Loss per U.S. GAAP	$	(6,964	)	$	(6,195	)	$	(6,357	)
Other comprehensive income (loss):
Fair value adjustment of available-for-sale investments (b)(i)		(54	)		87			(192	)
Total comprehensive loss per U.S. GAAP	$	(7,018	)	$	(6,108	)	$	(6,549	)
Basic and diluted loss per common share under U.S. GAAP	$	(0.16	)	$	(0.17	)	$	(0.20	)
Weighted average number of common shares under U.S. GAAP		42,469,362			35,615,335			31,409,495

Under U.S. GAAP, the number of weighted average common shares outstanding for basic and diluted loss per share is the same as under Canadian GAAP.

F-17

(b)	Consolidated balance sheets:

	2008				2007
	Canada		United States		Canada		United States
Assets:
Investment (i)		95		95		1		149
Intangible assets (ii)		110		110		126		126
Shareholders’ equity:
Stock options (iv), (v)		3,231		1,761		3,635		2,165
Deficit, end of period (i), (ii), (iii), (iv), (v)		58,692		57,222		51,728		50,258
Accumulated other comprehensive income (i)		94		94		–		148

(i)	Comprehensive Income

Under Canadian GAAP, comprehensive income, which consists of net income and other comprehensive income (OCI) represents changes in shareholders’ equity during a period arising from transactions and other events with non-owner sources and includes unrealized gains and losses on financial assets classified as available-for-sale, unrealized foreign currency translation gains or losses arising from self-sustaining foreign operations, and changes in the fair value of the effective portion of cash flow hedging instruments, if any. Under Canadian GAAP this rule became effective August 1, 2007, for the Company’s fiscal year ending July 31, 2008, whereas under United States GAAP, this accounting principle has been in effect for fiscal years ending after December, 15, 1998. The Company, under Canadian GAAP recorded available-for-sale investments at cost, but under United States GAAP adjusted the available-for-sale investments at fair value with changes in fair value recorded as other comprehensive income, net of income taxes.

(ii)	Acquired technology:

Canadian GAAP requires the capitalization and amortization of acquired technology costs. Under United States GAAP, such acquired technology costs are charged to expense when incurred if, at the acquisition date, the technological feasibility of this technology has not yet been established and no future alternative uses existed. Accordingly, for United States GAAP purposes, the costs would have been expensed at the date of acquisition and the amortization and subsequent impairments recorded under Canadian GAAP would be reversed.

(iii)

Income taxes:

Under Canadian GAAP, investment tax credits and other research and development credits are deducted from research and development expense for items of a current nature, and deducted from property and equipment for items of a capital nature. Under U.S. GAAP, these tax credits would be reclassified as a reduction of income tax expense. The impact would be higher research and development expense and an income tax recovery of $nil for the year ended July 31, 2008 (2007 - $244,000; 2006 - $198,000) with no net impact to loss for the year or loss per share.

(iv)	Stock-based compensation to non-employees:

Under Canadian GAAP, the Company accounts for stock-based compensation granted to non-employees on or after August 1, 2003 at fair value. The fair value of any awards to non-employees granted prior to August 1, 2003 is not required to be recorded or presented under Canadian GAAP.

Under United States GAAP, the Company accounted for stock-based compensation, granted to non-employees on or after August 1, 2003 at fair value in accordance with FASB Statement of Financial Accounting Standards No. 123, Accounting for Stock-based Compensation. Effective August 1, 2005, the Company adopted FASB Statement of Financial Accounting Standards No. 123 (Revised 2004), Share-based Payments (“SFAS No. 123R”). There was no impact on the accounting for stock-based awards issued to non- employees in exchange for services as a result of this change.

The Company had not issued any options to non-employees as at August 1, 2003. There exists no difference between Canadian and United States GAAP for the fair value of options granted to non-employees after August 1, 2003.

(v)	Stock-based compensation to employees:

Under Canadian GAAP, effective August 1, 2003, the Company accounts for stock-based compensation granted to employees, officers and directors on or after August 1, 2003 at fair value which is measured using the Black-Scholes option pricing model. Compensation cost is recognized over the service period. Prior to August 1, 2003, the Company accounted for stock-based awards to employees, officers and directors using the settlement method.

F-18

The compensation cost for each award is recognized on a straight-line basis over the service period of the entire award. The Company’s estimate of forfeitures at the time of granting was nil under U.S. GAAP.

The following table represents the allocation of stock-based compensation expense.

		2008		2007		2006
Research and Development	$	–	$	–	$	626
Operating, general and administration		44		47		1,084
	$	44	$	47	$	1,710

(c)	Consolidated statements of cash flows:

Cash from operations under United States GAAP includes the adjustments to loss for the year outlined in note 17(a). There are no differences between United States and Canadian GAAP as it relates to cash provided (used in) financing and investing activities. The increase in cash and cash equivalents for the fiscal years 2008, 2007 and 2006 are the same for United States GAAP to that reported under Canadian GAAP.

(d)	Changes in accounting policy:

In May 2005, the FASB issued SFAS No. 154, Accounting Changes and Error Corrections (“SFAS No. 154”), which replaces Accounting Principles Board Opinion No. 20, Accounting Changes, and SFAS No. 3, Reporting Accounting Changes in Interim Financial Statements. SFAS No. 154 provides guidance on the accounting for, and reporting of, changes in accounting principles and error corrections. SFAS No. 154 requires retrospective application to prior period’s financial statements of voluntary changes in accounting principles and changes required by new accounting standards when the standard does not include specific transition provisions, unless it is impracticable to do so. Certain disclosures are also required for restatements due to correction of an error. SFAS No. 154 is effective for accounting changes and corrections of errors made in fiscal years beginning after December 15, 2005.

(e)	Accounting for uncertainty in income taxes:

In June 2006, the FASB issued FASB Interpretation No. 48, “Accounting for Uncertainty in Income Taxes, an Interpretation of FASB Statement No. 109” (FIN 48), which clarifies the accounting for uncertainty in income taxes recognized in a company’s financial statements and prescribes a recognition threshold and measurement attribute for the financial statement recognition and measurement of a tax position taken or expected to be taken in an income tax return. FIN 48 also provides guidance on derecognition, classification, interest and penalties, accounting in interim periods, disclosure and transition. FIN 48 is effective for the first interim or annual reporting period beginning after December 15, 2006, specifically August 1, 2007 for the Company. The implementation of FIN 48 had no impact on the Company’s opening deficit.

The Company has approximately $200,000 of total gross unrecognized benefits as of the adoption of FIN 48 on August 1, 2007 which if recognized would favorably affect the income tax rate in future periods. The Company recognizes accrued interest and penalties related to unrecognized tax benefit in tax expense. The Company does not have any interest and penalties accrued as of July 31, 2008 as the tax benefit relates entirely to refundable tax credits. The Company does not expect that any of the unrecognized tax benefit will decrease in the next twelve months. Generally, all tax years are open for examination by the major taxing jurisdictions to which the Company is subject including federal, provincial (Ontario and Quebec) and foreign (Ireland) jurisdictions.

(f)	Recent accounting pronouncements issued and not yet adopted:

(i)	Fair value measurements:

In September 2006, the FASB issued FASB Statement No. 157 (“SFAS 157”), Fair Value Measurements, which defines fair value, establishes a framework for measuring fair value under GAAP, and expands disclosures about fair value measurements. SFAS 157 applies to other accounting pronouncements that require or permit fair value measurements. The new statement is effective for financial statements issued for fiscal years beginning after November 15, 2007, and for interim periods within those fiscal years, specifically August 1, 2008 for the Company. The Company is currently evaluating the potential impact, if any, of the adoption of SFAS 157 on the consolidated financial position, results of operations and cash flows.

(ii)	Fair value options:

In February 2007, the FASB issued FASB Statement No. 159 (“SFAS 159”), The Fair Value Options for Financial Assets and Financial Liabilities, which permits entities to choose to measure many financial instruments and certain warranty and insurance contracts at fair value on a contract-by-contract basis. SFAS 159 applies to all reporting entities, including not-for-profit organizations, and contains financial statement presentation and disclosure requirements for assets and liabilities reported at fair value as a consequence of the election. SFAS 159 is effective as of the beginning of an entity’s first year that begins after November 15, 2007, specifically August 1, 2008 for the Company. Early adoption is permitted subject to certain conditions; however an early adopter must also adopt SFAS 157 at the same time. The Company does not expect the adoption of SFAS 159 to have an impact on its consolidated financial position, results of operations or cash flows.

F-19

(iii)

Accounting for advanced payments and development activities:

In June 2007, the EITF reached a consensus on EITF Issue No. 07-3, Accounting for Advance Payments for goods or Services to be Received for Use in Future Research and Development Activities (“EITF 07-3”). EITF07-3 provides clarification surrounding the accounting for non-refundable research and development advance payments, whereby such payments should be recorded as an asset when the advance payment is made and recognized as an expense when the research and development activities are performed. This issue will be effective for fiscal years beginning after December 15, 2007, specifically August 1, 2008 for the Company. The Company is currently assessing the impact of EITF 07-3 on its results of operations and financial condition.

(iv)	Collaborative arrangements:

In September 2007, the EITF reached a consensus on EITF Issue No. 07-1, Collaborative Arrangements (“EITF 07-1”). EITF 07-1 addresses the accounting for arrangements in which two companies work together to achieve a commercial objective, without forming a separate legal entity. The nature and purpose of a company’s collaborative arrangements are required to be disclosed, along with the accounting policies applied and the classification and amounts for significant financial activities related to the arrangements. This issue will be effective for fiscal years beginning after December 15, 2008, specifically August 1, 2009 for the Company. The Company is currently assessing the impact of EITF 07-1 on its results of operations and financial condition.

(g)	Consolidated statement of shareholders’ equity in accordance with U.S. GAAP:

Share purchase

Accumulated

Common shares

warrants

other

comprehensive

Total

Contributed

income

shareholders

Amount

Number

Amount

Number

Options

surplus

Deficit

(loss)

equity

Balances, July 31, 2005

43,570

27,183,726

193

2,415,000

1,630

554

(37,706

)

253

8,494

Net loss for the year

–

(6,357

)

–

(6,357

)

Other comprehensive income (loss)

–

(192

)

(192

)

Common stock, issued

8,353

5,495,609

–

8,353

Warrants, issued

–

443

5,495,609

–

443

Warrants expired, unexercised

–

Stock-based compensation

–

1,710

–

1,710

Stock options, exercised

6,000

–

)

–

Stock options expired, unexercised

–

(1,199

)

1,199

–

Balances, July 31, 2006

51,944

32,685,335

636

7,910,609

2,132

1,753

(44,063

)

12,463

Net loss for the year

–

(6,195

)

–

(6,195

)

Other comprehensive income (loss)

–

Common stock, issued

5,406

3,650,000

–

5,406

Warrants, issued

–

1,074

3,650,000

–

1,074

Warrants expired, unexercised

–

(193

)

(2,415,000

)

–

193

–

Stock-based compensation

–

Stock options, exercised

–

Stock options expired, unexercised

–

(14

)

–

Balances, July 31, 2007:

57,350

36,335,335

1,517

9,145,609

2,165

1,960

(50,258

)

148

12,882

Net loss for the year

–

(6,964

)

–

(6,964

)

Other comprehensive income (loss)

–

(54

)

(54

)

Common stock, issued

14,614

10,040,000

–

14,614

Warrants, issued

–

Warrants expired, unexercised

–

(1,517

)

(9,145,609

)

1,517

–

Stock-based compensation

–

Options, exercised

–

Options expired, unexercised

–

(448

)

448

–

Balances, July 31, 2008

71,964

46,375,335

–

1,761

3,925

(57,222

)

20,522

F-20

Helix BioPharma Corp. Interim Consolidated Balance Sheets (In thousands of Canadian dollars)


	October 31, 2008		July 31, 2008
	(unaudited)
Assets
Current assets
Cash and cash equivalents	$	26,911	$	19,057
Accounts receivable		500		349
Inventory		521		458
Prepaid and other expenses		222		446
		28,154		20,310

Investments		35		95
Capital assets		1,124		1,151
Intangible assets		107		110
	$	29,420	$	21,666
Liabilities and Shareholders’ Equity
Current liabilities
Accounts payable	$	972	$	598
Accrued liabilities		648		546
		1,620		1,144

Shareholders’ equity (note 4)		27,800		20,522

Contingent liability (note 8)
	$	29,420	$	21,666

See accompanying notes to unaudited interim consolidated financial statements.

F-21

Helix BioPharma Corp. Unaudited Interim Consolidated Statements of Operations (In thousands of Canadian dollars, except per share amounts)
	For the three months ended October 31

	2008			2007
Revenue
Product revenue	$	921		$	754
License fees and royalties		198			131
Research and development contracts		–			–
		1,119			885
Expenses
Cost of sales		447			313
Research and development		1,641			782
Operating, general and administration		1,310			1,313
Amortization of capital assets		64			66
Amortization of intangible assets		3			7
Stock-based compensation		–			12
Interest income, net		(205	)		(104	)
Foreign exchange (gain) / loss		150			108
		3,410			2,497

Loss before income taxes		(2,291	)		(1,612	)
Income taxes		30			32
Net loss for the period	$	(2,321	)	$	(1,644	)
Loss per share
Basic and diluted	$	(0.05	)	$	(0.05	)

Weighted average number of common shares used in the calculation of basic and diluted loss per share		48,518,813			36,335,335

See accompanying notes to unaudited interim consolidated financial statements.

F-22

Helix BioPharma Corp. Unaudited Interim Consolidated Statement of Comprehensive Income / (Loss) (In thousands of Canadian dollars)
	For the three months ended October 31

	2008			2007
Comprehensive income / (loss):
Net loss for the period	$	(2,321	)	$	(1,644	)

Other comprehensive income / (loss), net of income taxes:
Increase / (decrease) in fair value of available-for-sale investments		(60	)		16
Total comprehensive income / (loss)	$	(2,381	)	$	(1,628	)

See accompanying notes to an audited interim consolidated financial statements.

F-23

Helix BioPharma Corp. Unaudited Interim Consolidated Statements of Deficit (In thousands of Canadian dollars)
	For the three months ended October 31

	2008			2007

Deficit, beginning of period	$	(58,692	)	$	(51,728	)

Net loss for the period		(2,321	)		(1,644	)
Deficit, end of period	$	(61,013	)	$	(53,372	)

See accompanying notes to an audited interim consolidated financial statements.

F-24

Helix BioPharma Corp. Unaudited Interim Consolidated Statements of Cash Flows (In thousands of Canadian dollars)
	For the three months ended October 31

	2008			2007
Cash provided by (used in)
Operating activities
Net loss for the period	$	(2,321	)	$	(1,644	)
Items not involving cash
Amortization of capital assets		64			66
Amortization of intangible assets		3			7
Stock-based compensation		–			12
Foreign exchange loss / (gain)		150			108
Change in non-cash working capital
Accounts receivable		(151	)		123
Inventory		(63	)		(53	)
Prepaid and other expenses		224			57
Accounts payable		374			170
Accrued liabilities		102			(489	)
		(1,618	)		(1,643	)
Financing activities
Proceeds from issue of common shares and warrants, net of issue costs (note 5(b))		9,659			–
Investing activities		9,659			–
Purchase of capital assets		(37	)		(50	)
		(37	)		(50	)

Effect of exchange rate changes on cash and cash equivalents		(150	)		(108	)
Increase (decrease) in cash and cash equivalents		7,854			(1,801	)
Cash and cash equivalents, beginning of period		19,057			11,379
Cash and cash equivalents, end of period	$	26,911		$	9,578
Supplemental cash flow information
Interest received	$	207		$	105
Interest paid		–			–
Income taxes paid		14			2
Financing costs not paid in cash		–			124

See accompanying notes to unaudited interim consolidated financial statements.

F-25

Helix BioPharma Corp.

Notes to Unaudited Interim Consolidated Financial Statements

For the three month periods ended October 31, 2008 and 2007

(Tabular dollar amounts in thousands of Canadian dollars, except per share amounts)

1. Operations

Helix BioPharma Corp.’s (the Company”) principal business activities are focused on biopharmaceuticals, primarily in the areas of cancer prevention and treatment. In addition, the Company earns revenues from its drug distribution business in Canada and international licensing activities. The Company has funded its research and development activities through the issuance of common shares and warrants and limited commercial activities.

2. Basis of presentation

These unaudited interim consolidated financial statements of the Company have been prepared by management in accordance with Canadian generally accepted accounting principles (“Canadian GAAP”) for interim financial statements with a reconciliation to accounting principles generally accepted in the United States disclosed in note 17 to the annual audited consolidated financial statements for the year ended July 31, 2008, and do not include all the information required for complete financial statements. They are consistent with the accounting policies outlined in the Company’s audited consolidated financial statements for the year ended July 31, 2008, with the exception of the changes outlined in note 3. These unaudited interim consolidated financial statements and related notes should be read in conjunction with the Company’s audited consolidated financial statements for the year ended July 31, 2008. When necessary, these unaudited interim consolidated financial statements include amounts based on informed estimates and the best judgements of management. The results of operations for the interim periods reported are not necessarily indicative of results to be expected for the year.

These unaudited interim consolidated financial statements include the assets, liabilities and operating results of the Company and its wholly-owned subsidiaries and all inter-company transactions are eliminated upon consolidation.

These unaudited interim consolidated financial statements have been prepared on a going-concern basis, which assumes that the Company will continue in operation for the foreseeable future and, accordingly, will be able to realize assets and discharge its liabilities in the normal course of operations. Taking into consideration the cash and cash equivalents balance as at October 31, 2008 of these unaudited interim consolidated financial statements, management believes that the Company has sufficient cash resources to fund its future operations beyond the next 12 months.

3.	Changes in accounting policies

These interim consolidated financial statements have been prepared using the same accounting policies and methods as were used for the audited annual consolidated financial statements for the year ended July31, 2008, except for the following new accounting pronouncements, which have been adopted effective August 1, 2008.

F-26

Helix BioPharma Corp.

Notes to Unaudited Interim Consolidated Financial Statements

For the three month periods ended October 31, 2008 and 2007

(Tabular dollar amounts in thousands of Canadian dollars, except per share amounts)

General standards on financial statement presentation:

On August 1, 2008, the Company adopted the amendments of the Canadian Institute of Chartered Accountant’s Handbook Section 1400, which includes requirements to assess and disclose an entity’s ability to continue as going concern. The adoption of this change did not have an impact on the Company’s interim consolidated financial statements.

Capital Disclosure:

On August 1, 2008, the Company adopted the new recommendations of the Canadian Institute of Chartered Accountant’s Handbook Section 1535, Capital Disclosures. Section 1535 establishes standards for disclosing information about an entity’s capital and how it is managed. It requires the disclosure of information about: (i) an entity’s objectives, policies and processes for managing capital; complied with any capital requirements; and if it has not complied, the consequences of such non-compliance. This section did not have a material effect on the Company’s unaudited interim consolidated financial statements. The Company has included disclosures recommended by Section 1535 in note 9 of these unaudited consolidated financial statements.

Inventories:

On August 1, 2008, the Company adopted the Canadian Institute of Chartered Accountant’s Handbook Section 3031, Inventories. This standard introduces significant changes to measurement and disclosure of inventories, including the requirement to measure inventories at the lower of cost or net realizable value, the allocation of overhead based on normal capacity, the use of specific cost method for inventories that are not ordinarily interchangeable or goods and services produced for specific purposes, and the reversal of previous write-downs to net realizable value when there is subsequent increase in the value of inventories. Inventory carrying amounts, amounts recognized as an expense, write-downs and the reversals of write-downs are required to be disclosed. The Company’s cost of inventories is comprised of all laid down costs and are valued at the lower of cost, determined on a first-in, first-out basis, and net realizable value. This section did not have a material impact on the Company’s unaudited interim consolidated financial statements.

Financial Instruments:

On August 1, 2008, the Company adopted two new Canadian Institute of Chartered Accountant’s Handbook standards; Section 3863 on Financial Instruments – Disclosures; and Section 3863, Financial Instruments – Presentation. Section 3863 replaces Section 3861, Financial Instruments – Disclosure and Presentation. The new Disclosure standards increase the emphasis on risk associated with both recognized and unrecognized financial instruments and how these risks are managed. The adoption of these Sections did not have a material effect on the Company’s unaudited interim consolidated financial statements. The new disclosure requirements pertaining to these Sections are contained in note 10 of these unaudited consolidated financial statements.

F-27

Helix BioPharma Corp.

Notes to Unaudited Interim Consolidated Financial Statements

For the three month periods ended October 31, 2008 and 2007

(Tabular dollar amounts in thousands of Canadian dollars, except per share amounts)

4.	Shareholders' equity

	Common shares		Share purchase warrants					Accumulated other comprehensive income	Total shareholders’ equity
	Amount	Number of shares	Amount	Number of warrants	Stock options	Contributed surplus	Deficit	Accumulated other comprehensive income	Total shareholders’ equity
Balances, July 31, 2008	$ 71,964	46,375,335	$ –	–	$ 3,231	$ 3,925	$ (58,692)	$ 94	$ 20,522
Net loss for the period	–	–	–	–	–	–	(2,321)	–	(2,321)
Other comprehensive income (loss)	–	–	–	–	–	–	–	(60)	(60)
Common Stock, issued	9,612	6,800,000	–	–	–	–	–	–	9,612
Warrants, issued	–	–	47	3,400,000	–	–	–	–	47
Stock options expired, unexercised	–	–	–	–	(537)	537	–	–	–
Balances, October 31, 2008	$ 81,576	53,175,335	$ 47	3,400,000	$ 2,694	$ 4,462	$ (61,013)	$ 34	27,800
Balances, July 31, 2007:
As previously reported	$ 57,350	36,335,335	$ 1,517	9,145,609	$ 3,635	$ 1,960	$ (51,728)	$ –	$ 12,734
Change in accounting policy related to financial instruments	–	–	–	–	–	–	–	148	148
As revised	57,350	36,335,335	1,517	9,145,609	3,635	1,960	(51,728)	148	12,882
Net loss for the period	–	–	–	–	–	–	(1,644)	–	(1,644)
Other comprehensive income (loss)	–	–	–	–	–	–	–	16	16
Common Stock, issued	–	–	–	–	–	–	–	–	–
Warrants, issued	–	–	–	–	–	–	–	–	–
Stock-based compensation	–	–	–	–	12	–	–	–	12
Stock options expired, unexpired	–	–	–	–	–	–	–	–	–
Balances, October 31, 2007	$ 57,350	36,335,335	$ 1,517	9,145,609	$ 3,647	$ 1,960	$ (53,372)	$ 164	$ 11,266

F-28

Helix BioPharma Corp.

Notes to Unaudited Interim Consolidated Financial Statements

For the three month periods ended October 31, 2008 and 2007

(Tabular dollar amounts in thousands of Canadian dollars, except per share amounts)

5. Share capital

(a)	Preferred shares:

(i)	Authorized 10,000,000 preferred shares.

(ii)	Nil preferred shares issued and outstanding.

(b)	Common shares, share purchase warrants and contributed surplus

(i)	Authorized unlimited common shares without par value.

(ii)	Issued and outstanding:

On October 2, 2008, the Company completed a private placement, issuing 6,800,000 units at $1.68 per unit, for gross proceeds of $11,424,000. Each unit consists of one common share and one-half of one common share purchase warrant. Each whole common share purchase warrant entitles the holder to purchase one common share at a price of $2.36 until 5pm (Toronto time) on October 1, 2011. Of the gross proceeds amount, $68,000 was allocated to the share purchase warrants based on fair value and the residual amount of $11,356,000 was allocated to common stock. Share issue costs totalling $1,765,000 were proportionately allocated to the share purchase warrants ($21,000) and common stock ($1,744,000), respectively.

(c)	Stock options:

(i)

(ii)	Issued and outstanding:

	For the three months ended October 31, 2008		For the fiscal year ended July 31, 2008
	Number	Weighted average exercise price per share	Number	Weighted average exercise price per share
Outstanding, beginning of period	2,030,500	$ 2.45	3,272,500	$ 3.41
Outstanding, end of period	1,705,500	2.42	2,030,500	2.45
Exercisable, end of period	1,705,500	$ 2.42	2,030,500	$ 2.45

(iii)

Stock-based compensation:

No options were issued during the three month periods ended October 31, 2008 and 2007. Stock based compensation expense for the three month periods ended October 31, 2008 and 2007 totalled $nil and $12,000, respectively. The stock based compensation expense for the three month period ended October 31, 2007 relates to stock options granted on June 30, 2005 which were being expensed over their vesting period.

F-29

Helix BioPharma Corp.

Notes to Unaudited Interim Consolidated Financial Statements

For the three month periods ended October 31, 2008 and 2007

(Tabular dollar amounts in thousands of Canadian dollars, except per share amounts)

6. Related party transactions

Related party transactions are measured at the exchange amount, which is the amount of consideration established and agreed to by the related parties.

For the three month periods ended October 31, 2008 and 2007, the Company paid $100,000 and $61,000, respectively, to Cawkell Brodie Glaister LLP, legal counsel to the Company. A director of the Company is a partner of Cawkell Brodie Glaister LLP.

On October 8, 2008, the Company signed a manufacturing service agreement, to fill finish L-DOS47, with Chesapeake Biological Laboratories Inc. (“CBL”). CBL is a wholly owned subsidiary of Cangene Corporation. Cangene Corporate is controlled by the Apotex Group which includes Apotex Inc. A director of the Company is also a director of Cangene Corporation and President and COO of Apotex Inc.

The Company had the following related party transactions:

	For the three months ended October 31
	2008	2007
Professional, legal and consulting fees to directors, partnerships and/or companies in which directors have a substantial interest	$ 100	$ 61
Contracted fill finish services with Chesapeake Biological Laboratories Inc., a wholly owned subsidiary of Cangene Corporation	$ 36	$ –

7. Segmented information

Management has determined that the Company has one operating segment, which is biopharmaceuticals. Revenue originating outside of Canada represents royalty revenues earned by the Company’s Irish subsidiary. All of the Company’s capital assets are located in Canada.

The table below summarizes the Company’s segmented information:


	For the three months ended October 31
	2008	2007
Revenues originating outside of Canada	$ 109	$ 131
Percentage of total revenue represented by one customer	10%	15%
Percentage of total accounts receivable represented by one customer	10%	6%

8. Contingent liability

The Company indemnifies its directors and officers against any and all claims or losses reasonably incurred in the performance of their service to the Company to the extent permitted by law.

F-30

Helix BioPharma Corp.

Notes to Unaudited Interim Consolidated Financial Statements

For the three month periods ended October 31, 2008 and 2007

(Tabular dollar amounts in thousands of Canadian dollars, except per share amounts)

Given the nature of this indemnification, the Company is unable to reasonably estimate its maximum potential liability as this indemnification provision does not provide for a maximum potential amount and the amounts are dependent on the outcome of future contingent events, the nature and likelihood of which cannot be determined at this time. Consequently, no amounts have been accrued in these financial statements relating to this indemnification.

9. Capital risk management

The Company’s main objectives when managing capital are to ensure the Company has the ability to advance its research and development programs, complete it clinical trials and meet its ongoing operating expenditures while maintaining a flexible capital structure.

The Company does not have any credit facilities and is therefore not subject to any externally imposed capital requirements or covenants. The Company’s objectives in managing capital are to ensure sufficient liquidity to finance research and development activities, clinical trials, ongoing administrative costs, working capital and capital expenditures. The Company endeavours not to unnecessarily dilute shareholders when managing the liquidity of its capital structure.

In the management of capital, the Company includes cash and cash equivalents and components of shareholders’ equity, in the definition of capital.

Since inception, the Company has financed its operations from public and private sales of equity, the exercise of warrants and stock options, and, to a lesser extent, on interest income from funds available for investment, government grants, investment tax credits, and revenues from distribution, licensing and contract services. Since the Company does not have net earnings from its operations, the Company’s long-term liquidity depends on its ability to access the capital markets, which depends substantially on the success of the Company’s ongoing research and development programs.

Based on the Company’s currently planned expenditures and assuming no unanticipated expenses, cash reserves and expected cash from operations will be sufficient to meet anticipated cash needs for working capital and capital expenditures for the next twelve months.

10. Financial risk management

The Company is exposed to a variety of financial risks by virtue of its activities: market risk (including currency and interest rate risk), credit risk and liquidity risk. The overall risk management program focuses on the unpredictability of financial markets and seeks to minimize potential adverse effects on financial performance.

Risk management (the identification and evaluation of financial risk) is carried out by the finance department, in close cooperation with management. The finance department is charged with the responsibility of establishing controls and procedures to ensure that financial risks are mitigated in accordance with the approved policies.

(a)	Market risk:

(i)	Currency risk

The Company operates internationally and is exposed to foreign exchange risks from various currencies, primarily the Euro and US dollar. Foreign exchange risks arise from the foreign currency translation of the Company’s integrated foreign operation in Ireland.

F-31

Helix BioPharma Corp.

Notes to Unaudited Interim Consolidated Financial Statements

For the three month periods ended October 31, 2008 and 2007

(Tabular dollar amounts in thousands of Canadian dollars, except per share amounts)

The net assets in Ireland consist mainly of cash and cash equivalents, denominated in Euro dollars, which are currently used to fund clinical trials of Topical Interferon Alpha-2b in Europe. In addition, foreign exchange risks arise from purchase transactions, as well as recognized financial assets and liabilities denominated in foreign currencies. The Company also receives a revenues stream from royalties denominated in Euro dollars from the licence of the Company’s Klean-PrepTM to Helsinn-Birex Pharmaceuticals Ltd., a subsidiary of Helsinn Healthcare SA, a Swiss company.

The Company’s main objective in managing its foreign exchange risk has been to maintain sufficient Euro dollars on hand to support Euro forecasted cash flows in support of ongoing clinical trials of Topical Interferon Alpha-2b in Europe as well as a hedge against purchase transactions denominated in Euro dollars. The Company has generally maintained minimal cash balances denominated in U.S. dollars due to Canadian dollar’s rapid appreciation against the U.S. dollar and the small amount of purchase transactions denominated in U.S. dollars. As the Company expands its research and development programs, some of these contracted services are being denominated in U.S. dollars. The Company is currently assessing its objectives, as it relates to U.S. denominated foreign exchange transactions, in light of the recent and rapid appreciation of the U.S. dollar against the Canadian dollar and other world currencies.

Balances in foreign currencies at October 31, 2008 are as follows:

	Euro Dollars	U.S. Dollars	Pound Sterling	Swedish Kroner
Cash and cash equivalents	2,066	88	–	–
Accounts receivable	103	–	–	–
Accounts payable and accrued liabilities	192	301	18	14

Any fluctuation in the exchange rates of the foreign currencies listed above could have a significant impact on the Company’s results from operations; however, they would not impair or enhance the ability of the Company to pay its foreign-denominated expenses.

(ii)	Interest rate risk

Interest rate risk is the risk that future cash flows of a financial instrument will fluctuate because of changes in interest rates, which are affected by market conditions.

The Company is exposed to interest rate risk arising from fluctuations in interest rates received on its cash and cash equivalents. The impact of interest rate fluctuations will vary as the amount of cash and cash equivalents the Company holds, changes. The Company does not use derivative instruments to reduce it’s exposure to interest rate risk.

The Company manages its interest rate risk by maximizing the interest income earned on excess funds while maintaining the liquidity necessary to conduct its operations on a day-to-day basis. The Company limits its investing of excess funds to risk-free financial instruments, such as Bankers’ Acceptances.

Fluctuations in the market rates of interest do not have a significant impact on the Company’s results of operations due to the relatively short term maturity of any investments held by the Company at any given point in time.

F-32

Helix BioPharma Corp.

Notes to Unaudited Interim Consolidated Financial Statements

For the three month periods ended October 31, 2008 and 2007

(Tabular dollar amounts in thousands of Canadian dollars, except per share amounts)

(b)	Credit risk:

Credit risk is the risk of a financial loss to the Company if a customer or counterparty to a financial instrument fails to meet its contractual obligation. The carrying value amount of financial assets recorded in the Company’s unaudited interim consolidated financial statements, net of any allowances or reserves for losses, represents our estimate of maximum exposure to credit risk. Accounts receivable are net of allowance for doubtful accounts of $20,000 at October 31, 2008 (July 31, 2008 – $18,000).

(c)	Liquidity risk:

Liquidity risk is the risk is the risk that the Company will not be able to meet its obligations as they fall due.

The Company manages its liquidity by forecasting cash flow from operation and anticipated investing and financing activities. In addition, management actively reviews and approves planned expenditures.

The following are the contractual maturities of the undiscounted cash flows of financial liabilities as at October 31, 2008:
	Carrying Amount	Less than one year	Greater than one year
Accounts payable and accrued liabilities	$ 1,620	$ 1,596	$ 24

Since inception, the Company has financed its operations from public and private sales of equity proceeds received upon the exercise of warrants and stock options, and, to a lesser extent, on interest income from funds available for investment, government grants, investment tax credits, and revenues from distribution, licensing and contract services. While the Company believes it has sufficient capital and liquidity to finance current operations through the next twelve months, the Company’s long-term liquidity depends on its ability to access the capital markets, which depends substantially on the success of the Company’s ongoing research and development programs.

11. Differences between generally accepted accounting principles in Canada and the USA:

The unaudited interim consolidated financial statements as at and the three months ended October 31, 2008 and 2007 are prepared in accordance with Canadian GAAP for interim financial reporting, which differ in some respects from accounting principles generally accepted in the United States ("U.S. GAAP"). The following reconciliation identifies material differences in the Company's consolidated statements of operations and deficit and consolidated balance sheets.

(a)	Consolidated statements of operations, deficit and comprehensive income (loss):

	For the three months ended October 31
	2008	2007
Loss per Canadian GAAP	$ (2,321)	$ (1,644)
Loss per United States GAAP	$ (2,321)	$ (1,644)
Comprehensive income (loss) in accordance with US GAAP	$ (2,381)	$ (1,628)
Basic and diluted loss per common share under United States GAAP	(0.05)	(0.05)
Weighted average number of common shares under United States GAAP	48,518,813	36,335,335

F-33

Helix BioPharma Corp.

Notes to Unaudited Interim Consolidated Financial Statements

For the three month periods ended October 31, 2008 and 2007

(Tabular dollar amounts in thousands of Canadian dollars, except per share amounts)

Under U.S. GAAP, the number of weighted average common shares outstanding for basic and diluted loss per share is the same as under Canadian GAAP. There were no reconciling differences between Canadian GAAP and U.S. GAAP for the three month periods ended October 31, 2008 and 2007.

(b)	Consolidated balance sheets:

	As at October 31, 2008		As at July 31, 2008
	Canada	United States	Canada	United States
Shareholders’ equity: Stock options (ii), (iii)	2,954	1,484	3,231	1,761
Deficit, end of period (i), (ii), (iii)	61,013	59,543	58,692	57,222

(i)	Acquired technology:

Canadian GAAP requires the capitalization and amortization of acquired technology costs. Under United States GAAP, such acquired technology costs are charged to expense when incurred if, at the acquisition date, the technological feasibility of this technology has not yet been established and no future alternative uses existed. Accordingly, for United States GAAP purposes, the costs would have been expensed at the date of acquisition and the amortization recorded under Canadian GAAP would be reversed. As at July 31, 2008 the acquired technology was fully written down and therefore no differences exist between in Canadian and U.S. GAAP for the three month period ended October 31, 2008.

(ii)	Stock-based compensation to non-employees:

Under United States GAAP, the Company accounted for stock-based compensation, granted to non-employees on or after August 1, 2003 at fair value in accordance with FASB Statement of Financial Accounting Standards No. 123, Accounting for Stock-based Compensation. Effective August 1, 2005, the Company adopted FASB Statement of Financial Accounting Standards No. 123 (Revised 2004), Share-based Payments ("SFAS No. 123R"). There was no impact on the accounting for stock-based awards issued to non- employees in exchange for services as a result of this change.

F-34

Helix BioPharma Corp.

Notes to Unaudited Interim Consolidated Financial Statements

For the three month periods ended October 31, 2008 and 2007

(Tabular dollar amounts in thousands of Canadian dollars, except per share amounts)

(iii)

Stock-based compensation to employees:

Under United States GAAP, the Company accounted for stock-based compensation, including options and warrants granted to employees prior to August 1, 2005, using the intrinsic value method in accordance with Accounting Principles Board Opinion No. 25, Accounting for Stock Issued to Employees ("APB 25"). Effective August 1, 2005, the Company adopted SFAS No. 123R using the modified prospective transition approach whereby the fair value of awards granted or modified on or after August 1, 2005 are measured at fair value. Some of the Company's awards have vesting conditions. The compensation cost for each award is recognized on a straight-line basis over the service period of the entire award. There exists a difference between Canadian and United States GAAP for the intrinsic and variable plan measurement for employee and performance based options granted to employees prior to August 1, 2005 under United States GAAP and for the fair value measurement of such awards under Canadian GAAP. The Company’s estimate of forfeitures at the time of granting was nil under U.S. GAAP.

The following table represents the allocation of stock-based compensation expense:


	For the three months ended October 31
	2008	2007
Research and Development	$ –	$ –
Operating, general and administration	–	12
	$ –	$ 12

(c)	Income taxes:

Under Canadian GAAP, investment tax credits and other research and development credits are deducted from research and development expense for items of a current nature, and deducted from property and equipment for items of a capital nature. Under U.S. GAAP, these tax credits would be reclassified as a reduction of income tax expense. There were no differences between Canadian and U.S. GAAP, related to investment tax credits and other research and development credits, for the three month periods ended October 31, 2008 and 2007 and no investment tax credits were recorded.

F-35

Helix BioPharma Corp.

Notes to Unaudited Interim Consolidated Financial Statements

For the three month periods ended October 31, 2008 and 2007

(Tabular dollar amounts in thousands of Canadian dollars, except per share amounts)

(d)	Changes in accounting policy:

(i)	Fair value measurements:

In September 2006, the FASB issued FASB Statement No. 157 ("SFAS 157"), Fair Value Measurements, which defines fair value, establishes a framework for measuring fair value under GAAP, and expands disclosures about fair value measurements. SFAS 157 applies to other accounting pronouncements that require or permit fair value measurements. The new statement is effective for financial statements issued for fiscal years beginning after November 15, 2007, and for interim periods within those fiscal years, specifically August 1, 2008 for the Company. The adoption of SFAS 157 did not have any impact on the Company’s interim consolidated financial statements.

(ii)	Fair value options:

In February 2007, the FASB issued FASB Statement No. 159 ("SFAS 159"), The Fair Value Options for Financial Assets and Financial Liabilities, which permits entities to choose to measure many financial instruments and certain warranty and insurance contracts at fair value on a contract-by-contract basis. SFAS 159 applies to all reporting entities, including not-for-profit organizations, and contains financial statement presentation and disclosure requirements for assets and liabilities reported at fair value as a consequence of the election. SFAS 159 is effective as of the beginning of an entity's first year that begins after November 15, 2007, specifically August 1, 2008 for the Company. The adoption of SFAS 159 did not have any impact on the Company’s interim consolidated financial statements.

(iii)

Accounting for advanced payments and development activities:

In June 2007, the EITF reached a consensus on EITF Issue No. 07-3, Accounting for Advance Payments for goods or Services to be Received for Use in Future Research and Development Activities ("EITF 07-3"). EITF07-3 provides clarification surrounding the accounting for non-refundable research and development advance payments, whereby such payments should be recorded as an asset when the advance payment is made and recognized as an expense when the research and development activities are performed. This issue will be effective for fiscal years beginning after December 15, 2007, specifically August 1, 2008 for the Company. The adoption of EITF07-3 did not have any impact on the Company’s interim consolidated financial statements.

(e)	Recent accounting pronouncements issued and not yet adopted:

(i) In September 2007, the EITF reached a consensus on EITF Issue No. 07-1, Collaborative Arrangements ("EITF 07-1"). EITF 07-1 addresses the accounting for arrangements in which two companies work together to achieve a commercial objective, without forming a separate legal entity. The nature and purpose of a company's collaborative arrangements are required to be disclosed, along with the accounting policies applied and the classification and amounts for significant financial activities related to the arrangements. This issue will be effective for fiscal years beginning after December 15, 2008, specifically August 1, 2009 for the Company. The Company is currently evaluating the potential impact, if any, of EITF 07-1, on the Company’s consolidated financial position, results of operations and cash flows.

(ii) FASB statement No. 141, Business Combinations (revised 2007) (“SFAS 141”), requires the use of fair value accounting for business combinations. Equity securities issued as consideration in a business combination will re recorded at fair value as of the acquisition date as opposed to the date when the terms of the business combination has been agrees to an announces. In addition, transaction costs must be expensed under the new standard. The new statement is effective of financial statements issued for fiscal years beginning on or after December 15, 2008, and for interim periods within those fiscal years. Specifically August 1, 2009 for the Company. The Company is currently evaluating the potential impact, if any, of the adoption of SFAS 141, on the Company’s consolidated financial position, results of operations and cash flows.

(iii) FASB statement No. 160, Non controlling Interests in Consolidated Financial Statements - an Amendment of ACB No. 51 (“FASB 160”). The objective of this Statement is to improve the relevance, comparability, and transparency of the financial information that a reporting entity provides in its consolidated financial statements by establishing specific accounting and reporting standard requirements. The new statement is effective for financial statements issued for fiscal years beginning on or after December 15, 2008, and for interim periods within those fiscal years. Specifically August 1, 2009 for the Company. The Company is currently evaluating the potential impact, if any, of the adoption of SFAS 160, on the consolidated financial position, results of operations and cash flows.

F-36

Helix BioPharma Corp.

Notes to Unaudited Interim Consolidated Financial Statements

For the three month periods ended October 31, 2008 and 2007

(Tabular dollar amounts in thousands of Canadian dollars, except per share amounts)

(iv) FASB statement No. 161, Disclosure about Derivative Instruments and Hedging Activities (“SFAS 161”) amends and expands the disclosure requirements in SFAS 133, Accounting for Derivative Instruments and Hedging Activities. The intention is to provide an enhanced understanding of how and why an entity uses derivative instruments and related hedge items affect an entity’s financial position, financial performance and cash flows. The Company is required to adopt the provisions of SFAS 161 for fiscal years beginning after November 15, 2008, specifically August 1, 2009 for the Company. The Company is currently assessing the impact of SFAS 161, on the Company’s consolidated financial position, results of operations and cash flows.

F-37

SIGNATURES

The registrant hereby certifies that it meets all of the requirements for filing on Form 20-F and that it has duly caused and authorized the undersigned to sign this registration statement on its behalf.

HELIX BIOPHARMA CORP.

/s/ Donald H. Segal

Donald H. Segal

Chairman and Chief Executive Officer

Date: February 2, 2009

Title of Each Class	Name of Each Exchange On Which Registered
None	None

Name	Position
Donald H. Segal	Chief Executive Officer, Chairman and Director
Kenneth A. Cawkell	Director and Corporate Secretary
Jack M. Kay	Director
Gordon M. Lickrish	Director
Slawomir Majewski	Director
John M. Docherty	President, Chief Operating Officer and Director
W. Thomas Hodgson	Director

Name	Position
Donald H. Segal	Chief Executive Officer, Chairman and Director
John M. Docherty	President, Chief Operating Officer and Director
Heman Chao	Chief Scientific Officer
Photios (Frank) Michalargias	Chief Financial Officer

Average for the Period
Years Ended
2008	2007	2006	2005	2004
1.0389	1.0740	1.1342	1.2113	1.3006

	Jan. ‘09	Dec. ‘08	Nov. ‘08	Oct. ‘08	Sept. ‘08	Aug. ‘08
Low	1.1762	1.1872	1.1477	1.0607	1.0338	1.0251
High	1.2766	1.3008	1.2952	1.2942	1.0797	1.0677

	Three Months Ended October 31, 2008 (unaudited)			Three Months Ended October 31, 2007 (unaudited)			Year Ended July 31, 2008			Year Ended July 31, 2007			Year Ended July 31, 2006			Year Ended July 31, 2005			Year Ended July 31, 2004
Statement of Operations:
Revenue
Product Revenue	$	921		$	754		$	2,952		$	2,764		$	3,012		$	2,456		$	1,855
License Fees and Royalties		198			131			639			512			773			1,234			1,116
Research and Development Contracts		-			-			-			148			180			42			-
Total Revenues		1,119			885			3,591			3,424			3,965			3,732			2,971

Expenses
Cost of Sales		447			313			1,239			1,139			1,341			1,190			895
Research and Development		1,641			782			5,064			4,116			3,368			2,983			2,726
Operating, General and Administration		1,310			1,313			4,757			4,418			3,722			3,580			3,245
Amortization of Intangible Assets		3			7			16			159			594			1,244			1,244
Amortization of Capital Assets		64			66			254			287			315			330			291
Stock-Based Compensation		-			12			44			47			1,710			1,470			252
Interest Income, Net		(205	)		(104	)		(645	)		(496	)		(270	)		(137	)		(136	)
Foreign Exchange Loss (Gain)		150			108			(327	)		(9	)		16			78			10
Impairment of Intangible Assets		-			-			-			1,332			-			428			-
Total Expenses		3,410			2,497			10,402			10,993			10,796			11,166			8,527

Loss Before Income Taxes		(2,291	)		(1,612	)		(6,811	)		(7,569	)		(6,831	)		(7,434	)		(5,556	)
Income Taxes		30			32			(153	)		(105	)		(108	)		(191	)		(246	)
Net Loss for the Period		(2,321	)		(1,644	)		(6,964	)		(7,674	)		(6,939	)		(7,625	)		(5,802	)
Basic and Diluted Loss Per Share		(0.05	)		(0.05	)		(0.16	)		(0.22	)		(0.22	)		(0.28	)		(0.24	)
Weighted Average Number of Shares Outstanding		48,518,813			36,335,335			42,469,362			35,615,335			31,409,495			26,959,055			24,669,632

Balance Sheet:
Working Capital		26,534			9,859			19,166			11,468			10,900			6,688			6,027
Shareholders Equity		27,800			11,266			20,522			12,734			13,881			10,302			11,219
Capital Stock		81,576			57,350			71,964			57,350			51,944			43,570			38,525
Total Assets		29,420			12,610			21,666			14,273			15,469			11,450			12,510

	Three Months Ended October 31, 2008 (unaudited)			Three Months Ended October 31, 2007 (unaudited)			Year Ended July 31, 2008			Year Ended July 31, 2007			Year Ended July 31, 2006			Year Ended July 31, 2005			Year Ended July 31, 2004
Statement of Operations:
Revenue
Product Revenue	$	921		$	754		$	2,952		$	2,764		$	3,012		$	2,456		$	1,855
License Fees and Royalties		198			131			639			512			773			1,234			1,116
Research and Development Contracts		-			-			-			148			180			42			-
Total Revenues		1,119			885			3,591			3,424			3,965			3,732			2,971

Expenses
Cost of Sales		447			313			1,239			1,139			1,341			1,190			895
Research and Development		1,641			782			5,064			4,360			3,566			3,118			2,726
Operating, General and Administration		1,310			1,313			4,757			4,418			3,722			3,580			3,245
Amortization of Intangible Assets		3			7			16			12			12			12			12
Amortization of Capital Assets		64			66			254			287			315			330			291
Stock-Based Compensation		-			12			44			47			1,710			-			252
Interest Income, Net		(205	)		(104	)		(645	)		(496	)		(270	)		(137	)		(136	)
Foreign Exchange Loss (Gain)		150			108			(327	)		(9	)		16			78			10
Impairment of Intangible Assets		-			-			-			-			-			-			-
Total Expenses		3,410			2,497			10,402			9,758			10,412			8,171			7,295

Loss Before Income Taxes		(2,291	)		(1,612	)		(6,811	)		(6,334	)		(6,447	)		(4,439	)		(4,324	)
Income Taxes		30			32			(153	)		139			90			(56	)		(246	)
Net Loss for the Period		(2,321	)		(1,644	)		(6,964	)		(6,195	)		(6,357	)		(4,495	)		(4,570	)
Basic and Diluted Loss Per Share		(0.05	)		(0.05	)		(0.16	)		(0.17	)		(0.20	)		(0.17	)		(0.17	)
Weighted Average Number of SharesOutstanding		48,518,813			36,335,335			42,469,362			35,615,335			31,409,495			26,959,055			24,669,632

Balance Sheet:
Working Capital		26,534			9,859			19,166			11,468			10,900			6,688			6,027
Shareholders Equity		27,800			11,266			20,522			12,882			12,463			8,494			7,709
Capital Stock		81,576			57,350			71,964			57,350			51,944			43,570			38,525
Total Assets		29,420			12,610			21,666			14,421			14,051			9,642			9,000

	November 30, 2008


Total indebtedness (short term and long term).............................		0
Shareholders’ equity
Common shares, no par value
shares authorized; unlimited
shares issued and outstanding...............................................		53,175,335
Contributed surplus...................................................................		4,462,000
Retained earnings (deficit)........................................................		(61,517,000	)
Total shareholders’ equity............................................................	$	27,367,000
Total capitalization.......................................................................	$	27,367,000

Fiscal Year	Capital Expenditures	Purpose
Fiscal 2008	$266,000	Purchase of Capital Assets
Fiscal 2007	$63,000	Purchase of Capital Assets
Fiscal 2006	$258,000	Purchase of Capital Assets
Fiscal 2005	$405,000	Purchase of Capital Assets
Fiscal 2004	$392,000	Purchase of Capital Assets

Revenue (percentage of total revenues)	Three Months Ended October 31, 2008 (unaudited)			Three Months Ended October 31, 2007 (unaudited)			Fiscal 2008			Fiscal 2007			Fiscal 2006
Product Revenue	$	921,000		$	754,000		$	2,952,000		$	2,764,000		$	3,012,000
Canada		100	%		100	%		100	%		100	%		100	%

License Fees and Royalty Revenue	$	198,000		$	131,000		$	639,000		$	512,000		$	773,000
Canada		0	%		0	%		0	%		0	%		0	%
Europe		55	%		100	%		84	%		100	%		74	%
United States		45	%		0	%		16	%		0	%		26	%

Research and Development Contract Revenue	$	0		$	0		$	0		$	148,000		$	180,000
Canada		0	%		0	%		0	%		100	%		100	%

Total Revenue	$	1,119,000		$	885,000		$	3,591,000		$	3,424,000		$	3,965,000
Canada		81	%		85	%		82	%		85	%		81	%
Europe		10	%		15	%		15	%		15	%		14	%
United States		9	%		0	%		3	%		0	%		5	%

Product	Three Months Ended October 31, 2008			Three Months Ended October 31, 2007			Fiscal 2008			Fiscal 2007			Fiscal 2006
Orthovisc - $'s		502,000			397,000			1,373,000			1,521,000			2,072,000
Orthovisc - %		44.9	%		44.9	%		38.2	%		44.4	%		52.3	%
Klean-Prep - $'s		310,000			274,000			1,251,000			939,000			727,000
Klean-Prep - %		27.7	%		31.0	%		34.8	%		27.4	%		18.3	%
Immunovir - $'s		61,000			50,000			194,000			198,000			169,000
Immunovir - %		5.5	%		5.6	%		5.4	%		5.8	%		4.3	%
Normacol - $'s		56,000			41,000			158,000			132,000			99,000
Normacol - %		5.0	%		4.6	%		4.4	%		3.9	%		2.5	%
Returns, Discounts & Allowances - $'s		(8,000	)		(8,000	)		(24,000	)		(26,000	)		(55,000	)
Returns, Discounts & Allowances - %		-0.7	%		-0.9	%		-0.7	%		-0.8	%		-1.4	%
Total - $'s		921,000			754,000			2,952,000			2,764,000			3,012,000
Total - % of total revenue		82.3	%		85.2	%		82.2	%		80.7	%		76.0	%

Licensee Fees and Royalties
Klean-Prep - $'s		109,000			131,000			538,000			512,000			571,000
Klean-Prep - %		9.7	%		14.8	%		15.0	%		15.0	%		14.4	%
Biochip Technology - $'s		89,000			-			101,000			-			202,000
Biochip Technology - %		8.0	%		0.0	%		2.8	%		0.0	%		5.1	%
Total - $'s		198,000			131,000			639,000			512,000			773,000
Total - % of total revenue		17.7	%		14.8	%		17.8	%		15.0	%		19.5	%



Research and Development Contract
Revenue
Research and development - $'s	-		-		-		148,000		180,000
Research and development - %	0.0	%	0.0	%	0.0	%	4.3	%	4.5	%
Total - $'s	-		-		-		148,000		180,000
Total - % of total revenue	0.0	%	0.0	%	0.0	%	4.3	%	4.5	%

Total - $'s	1,119,000		885,000		3,591,000		3,424,000		3,965,000
Total - % of total revenue	100.0	%	100.0	%	100.0	%	100.0	%	100.0	%

Company	Date of Incorporation	Jurisdiction	Ownership
Intercon Pharma Limited	July 31, 1986	Ireland	100% by Helix BioPharma Corp.
Helix Product Development (Ireland) Limited	March 24, 2004	Ireland	100% by Intercon Pharma Limited
Helix BioPharma Inc.	December 4, 2000	Delaware	100% by Helix BioPharma Corp.

Annual Revenue (percentage of total revenues)	Three Months Ended October 31, 2008 (unaudited)		Three Months Ended October 31, 2007 (unaudited)		Fiscal 2008		Fiscal 2007		Fiscal 2006
Product Revenue	$	921,000	$	754,000	$	2,952,000	$	2,764,000	$	3,012,000
Canada		100%		100%		100%		100%		100%

License Fees and Royalty Revenue	$	198,000	$	131,000	$	639,000	$	512,000	$	773,000
Canada		0%		0%		0%		0%		0%
Europe		55%		100%		84%		100%		74%
United States		45%		0%		16%		0%		26%

Research and Development Contract Revenue	$	0	$	0	$	0	$	148,000	$	180,000
Canada		0%		0%		0%		100%		100%

Total Revenue	$	1,119,000	$	885,000	$	3,591,000	$	3,424,000	$	3,965,000
Canada		81%		85%		82%		85%		81%
Europe		10%		15%		15%		15%		14%
United States		9%		0%		3%		0%		5%

Revenue	First Quarter	Second Quarter	Third Quarter	Fourth Quarter
Fiscal 2009	$1,119	-	-	-
Fiscal 2008	$885,000	$791,000	$1,018,000	$897,000
Fiscal 2007	$826,000	$892,000	$864,000	$842,000
Fiscal 2006	$906,000	$1,105,000	$1,099,000	$855,000

Net (Loss)	First Quarter	Second Quarter	Third Quarter	Fourth Quarter
Fiscal 2009	($2,321)	-	-	-
Fiscal 2008	($1,644,000)	($1,526,000)	($1,139,000)	($2,655,000)
Fiscal 2007	($1,342,000)	($1,900,000)	($1,523,000)	($2,909,000)
Fiscal 2006	($1,451,000)	($1,311,000)	($1,360,000)	($2,817,000)

Earnings Per Share (Loss)	First Quarter	Second Quarter	Third Quarter	Fourth Quarter
Fiscal 2009	($0.05)	-	-	-
Fiscal 2008	($0.05)	($0.04)	($0.03)	($0.04)
Fiscal 2007	($0.04)	($0.05)	($0.04)	($0.09)
Fiscal 2006	($0.05)	($0.04)	($0.04)	($0.09)

Research/Development Expenditures	Fiscal 2008		Fiscal 2007
DOS47	$	2,876,000	$	2,302,000
Topical Interferon Alpha-2b	$	2,188,000	$	1,814,000
Total Research and Development Expenditures	$	5,064,000	$	4,116,000

Research/Development Costs	Fiscal 2007		Fiscal 2006
DOS47	$	2,302,000	$	1,328,000
Topical Interferon Alpha-2b	$	1,814,000	$	1,881,000
Other	$	0	$	159,000
Total Research and Development Costs	$	4,116,000	$	3,368,000

	Total		<1 year		1-3 Years		3-5 Years		>5 Years
Purchasing(2)	$	556,000	$	556,000	$	0	$	0	$	0
Operating Leases(3)	$	213,000	$	177,000	$	36,000	$	0	$	0
Consulting Services(4)	$	74,000	$	74,000	$	0	$	0	$	0
Research and Manufacturing Services(5)	$	2,653,000	$	2,503,000	$	30,000	$	10,000	$	110,000
TOTALS	$	3,496,000	$	3,310,000	$	66,000	$	10,000	$	110,000

National Research Council of Canada	Total		<1 year		1-3 Years		3-5 Years		>5 Years
Minimum Royalties	$	160,000	$	10,000	$	30,000	$	10,000	$	110,000
TOTALS	$	160,000	$	10,000	$	30,000	$	10,000	$	110,000

Encorium Group Inc.	Total		<1 year		1-3 Years		3-5 Years		>5 Years
Milestone payments	$	313,035	$	313,035	$	0	$	0	$	0
TOTALS	$	313,035	$	313,035	$	0	$	0	$	0

Medical Consulting	Total		<1 year		1-3 Years		3-5 Years		>5 Years
Milestone payments	$	725,220	$	725,220	$	0	$	0	$	0
TOTALS	$	725,220	$	725,220	$	0	$	0	$	0

Name	Positions	Age	Date First Elected or Appointed a Director or Officer
Donald H. Segal	Chief Executive Officer, Chairman of the Board and Director	61	July 1995
John M. Docherty	President, Chief Operating Officer and Director	39	June 2002
Kenneth A. Cawkell(2)(3)	Director and Corporate Secretary	57	July 1995
W. Thomas Hodgson(1)(3)	Director, Chair of Audit Committee	55	April 2008
Jack M. Kay(1)(2)	Director, Chair of Governance Committee	67	January 2005
Gordon M. Lickrish(1)(2)(3)	Director, Chair of Compensation Committee	71	January 2007
Slawomir Majewski(3)	Director	52	January 2008
Photios (Frank) Michalargias	Chief Financial Officer	45	June 2005
Heman Chao	Chief Scientific Officer	46	June 2002

Director	Positions	Number of Common Shares which may be purchased under Option
Donald H. Segal	Chief Executive Officer, Chairman of the Board, and Director	250,000
John M. Docherty	President, Chief Operating Officer and Director	250,000
Kenneth A. Cawkell	Director and Corporate Secretary	100,000
W. Thomas Hodgson	Director, Chair of Audit Committee	100,000
Jack M. Kay	Director, Chair of Governance Committee	100,000
Gordon M. Lickrish	Director, Chair of Compensation Committee	100,000
Slawomir Majewski	Director	100,000

		Annual Compensation			Long Term Compensation
					Awards		Payouts
Name and Principal Position	Fiscal Year	Salary	Bonus	Other Annual Comp.(1)	Securities Under Option/ Stock Appreciation Rights Granted(2)	Restricted Shares or Restricted Share Units	LTIP Payouts	All Other Comp(3)
Donald H. Segal Chairman, Director, Chief Executive Officer(4)	2008 2007 2006	$290,833 $271,667 $251,667	$50,000 Nil Nil	$6,000 $6,000 $6,000	Nil Nil 200,000	Nil Nil N/A	Nil Nil N/A	$83,511 $87,336 $92,579
Photios (Frank) Michalargias Chief Financial Officer(4)	2008 2007 2006	$215,833 $196,667 $180,333	$50,000 Nil Nil	$6,000 $6,000 $6,000	Nil Nil 50,000	Nil Nil N/A	Nil Nil N/A	$3,779 $3,622 $2,928
John M. Docherty President(4)	2008 2007 2006	$170,625 $156,250 $141,667	$50,000 Nil Nil	$6,000 $6,000 $6,000	Nil Nil 100,000	Nil Nil Nil	Nil Nil Nil	$987 $832 $825
Heman Chao Vice President of Research(4)	2008 2007 2006	$170,625 $156,250 $141,667	$50,000 Nil Nil	$6,000 $6,000 $6,000	Nil Nil 100,000	Nil Nil Nil	Nil Nil Nil	$4,061 $3,622 $3,514

Kenneth A. Cawkell Corporate Secretary	2008 2007 2006	Nil Nil Nil	Nil Nil Nil	$30,000 $36,000 $36,000	Nil Nil 25,000	Nil Nil Nil	Nil Nil Nil	Nil Nil Nil
Jack M. Kay Director	2008 2007 2006	Nil Nil Nil	Nil Nil Nil	$32,000 $24,000 $24,000	Nil Nil 25,000	Nil Nil Nil	Nil Nil Nil	Nil Nil Nil
Gordon M. Lickrish Director	2008 2007 2006	Nil Nil Nil	Nil Nil Nil	$30,000 $12,000 Nil	Nil Nil Nil	Nil Nil Nil	Nil Nil Nil	Nil Nil Nil
Slawomir Majewski Director(6)	2008 2007 2006	Nil Nil Nil	Nil Nil Nil	$13,000 Nil Nil	Nil Nil Nil	Nil Nil Nil	Nil Nil Nil	Nil Nil Nil
W. Thomas Hodgson Director(7)	2008 2007 2006	Nil Nil Nil	Nil Nil Nil	$12,000 Nil Nil	Nil Nil Nil	Nil Nil Nil	Nil Nil Nil	Nil Nil Nil
Jerome F. McElroy Former Chairman(5)	2008 2007 2006	$54,167 $260,001 $240,000	Nil Nil Nil	$390,250 $6,000 $6,000	Nil Nil 200,000	Nil Nil N/A	Nil Nil N/A	$18,908 $98,343 $96,141
Connor Gunne Director(6)	2008 2007 2006	Nil Nil Nil	Nil Nil Nil	$27,245 $39,418 $37,727	Nil Nil 25,000	Nil Nil Nil	Nil Nil Nil	Nil Nil Nil
Richard Rossman Director(6)	2008 2007 2006	Nil Nil Nil	Nil Nil Nil	$18,000 $36,000 $36,000	Nil Nil 25,000	Nil Nil Nil	Nil Nil Nil	Nil Nil Nil

Name	Number of Shares Acquired on Exercise	Aggregate Value Realized	Number of Unexercised Options at Fiscal Year-End Exercisable/ Unexercisable	Value of Unexercised In-the-Money Options at Fiscal Year-End Exercisable/ Unexercisable
Donald H. Segal	Nil	$0	325,000/nil	$0/$0
Photios (Frank) Michalargias	Nil	$0	150,000/nil	$0/$0
John M. Docherty	Nil	$0	200,000/nil	$0/$0
Heman Chao	Nil	$0	200,000/nil	$0/$0
Kenneth A. Cawkell	Nil	$0	100,000/nil	$0/$0
Jack M. Kay	Nil	$0	100,000/nil	$0/$0
Gordon M. Lickrish	Nil	$0	20,000/nil	$0/$0
Slawomir Majewski	Nil	$0	nil/nil	$0/$0
W. Thomas Hodgson	Nil	$0	nil/nil	$0/$0

Director	Board	Audit(1)	Compensation(2)	Governance(3)
Donald H. Segal	5 of 5	------	------	------
Jack M. Kay	5 of 5	2 of 4	------	1 of 1
Connor Gunne(4)	2 of 5	2 of 4	1 of 1	1 of 1
Kenneth A. Cawkell	5 of 5	------	1 of 1	1 of 1
Richard Rossman(5)	2 of 5	2 of 4	1 of 1	1 of 1
Gordon M. Lickrish(6)	5 of 5	2 of 4	0 of 1	0 of 1
Jerome F. McElroy(7)	0 of 5	------	------	------
Slawomir Majewski(8)	3 of 5	1 of 4	0 of 1	0 of 1
W. Thomas Hodgson(9)	1 of 5	1 of 4	------	------
John M. Docherty(10)	3 of 5	------	------	------

Name of Beneficial Owner	Number of shares Beneficially Owned		Percent of Class
Sylwester and Dorota Cacek (1)		9,710,000		17.39	%
Herald Janssen (2)		3,622,059		6.81	%
Wojciech Hajduk (3)		3,600,000		6.77	%
Isabela Flejseirowicz (4)		3,600,000		6.77	%
Donald H. Segal (5)		1,774,500		3.31	%
Jack M. Kay (6)		516,700		0.97	%
John M. Docherty (7)		262,600		0.49	%
Heman Chao (8)		262,500		0.49	%
Kenneth A. Cawkell (9)		222,100		0.42	%
Photios (Frank) Michalargias (10)		212,500		0.40	%
Gordon M. Lickrish (11)		45,000		0.08	%
Slawomir Majewski (12)		25,000		0.05	%
W. Thomas Hodgson (13)		25,000		0.05	%
Directors and Senior Management Subtotal		3,345,900		6.13	%

Name	Number of Options Granted or Remaining	Exercise Price per Share	Grant Date	Expiration Date
Senior Management
Donald H. Segal	125,000	$2.00	June 30, 2005	June 30, 2010
	200,000	$3.00	July 31, 2006	July 31, 2011
	250,000	$1.68	December 17, 2008	December 17, 2016

Photios (Frank) Michalargias	100,000	$2.00	June 30, 2005	June 30, 2010
	50,000	$3.00	July 31, 2006	July 31, 2011
	250,000	$1.68	December 17, 2008	December 17, 2016

John M. Docherty	100,000	$2.00	June 30, 2005	June 30, 2010
	100,000	$3.00	July 31, 2006	July 31, 2011
	250,000	$1.68	December 17, 2008	December 17, 2016

Heman Chao	100,000	$2.00	June 30, 2005	June 30, 2010
	100,000	$3.00	July 31, 2006	July 31, 2011
	250,000	$1.68	December 17, 2008	December 17, 2016

Kenneth A. Cawkell	75,000	$2.00	June 30, 2005	June 30, 2010
	25,000	$3.00	July 31, 2006	July 31, 2011
	100,000	$1.68	December 17, 2008	December 17, 2016

Jack M. Kay	75,000	$2.00	June 30, 2005	June 30, 2010
	25,000	$3.00	July 31, 2006	July 31, 2011
	100,000	$1.68	December 17, 2008	December 17, 2016

Gordon M. Lickrish	20,000	$2.00	June 30, 2005	June 30, 2010
	100,000	$1.68	December 17, 2008	December 17, 2016

Slawomir Majewski	100,000	$1.68	December 17, 2008	December 17, 2016

W. Thomas Hodgson	100,000	$1.68	December 17, 2008	December 17, 2016

Total Senior Management	2,595,000

Management Officers /Employees/Consultants/etc.	402,000	$2.00	June 30, 2005	June 30, 2010
	208,500	$3.00	July 31, 2006	July 31, 2011
	570,000	$1.68	December 17, 2008	December 17, 2016
Total Management Officers /Employees/Consultants	1,180,500
TOTAL	3,775,500

·	25% on the first anniversary of the day of grant;
·	25% on the second anniversary of the day of grant; and
·	25% on the third anniversary of the day of grant.

Period Ended	High	Low
Monthly
January 31, 2009	$1.92	$1.18
December 31, 2008	$1.90	$1.23
November 30, 2008	$1.48	$1.15
October 31, 2008	$1.49	$1.27
September 30, 2008	$1.63	$1.28
August 31, 2008	$1.52	$1.26
July 31, 2008	$1.60	$1.21


Quarterly
January 31, 2009	$1.92	$1.60
October 31, 2008	$1.63	$1.20
July 31, 2008	$1.60	$1.15
April 30, 2008	$1.95	$1.40
January 31, 2008	$2.22	$1.58
October 31, 2007	$1.85	$1.25
July 31, 2007	$1.75	$1.09
April 30, 2007	$1.97	$1.01
January 31, 2007	$2.75	$1.70

Yearly
July 31, 2008	$2.21	$1.20
July 31, 2007	$2.75	$1.01
July 31, 2006	$4.70	$1.65
July 31, 2005	$4.30	$1.79
July 31, 2004	$7.40	$2.00

Effective Date of Issuance	Security Issued	Number of Securities	Price	Gross Proceeds of Fair Value of Share Transaction	Process/ Consideration
October 4, 2005	Units	2,339,181	$1.71	$4,000,000	Private Placement
November 7, 2005	Units	3,156,428	$1.75	$5,523,000	Private Placement
Fiscal 2006	Common Shares	6,000	$2.00	$12,000	Option Exercise
October 11, 2006	Units	3,650,000	$1.93	$7,044,500	Private Placement
December 17, 2007	Common Shares	10,040,000	$1.68	$16,867,200	Private Placement
October 2, 2008	Units	6,800,000	$1.68	$11,424,000	Private Placement


1.1	Certificate and Articles of Amalgamation
1.2	Amended and Restated Bylaws
4.1	L-DOS47 cGMP Process Development, Scale Up and Clinical Supplies Manufacturing Agreement, between the Company and BioVectra, dated May 4, 2008*
4.2	Topical Interferon Alpha-2b GMP Process Development, Scale Up and Clinical Supplies Manufacturing Agreement, between the Company and CPL, dated April 3, 2008*
4.3	Technology License Agreement between the Company and NRC, dated April 28, 2005*
4.4	Material Transfer and License Option Agreement, between the Company and Schering Corporation, dated December 18, 2000*
4.5	Employment Agreement with Heman Chao, dated August 6, 2008
4.6	Employment Agreement with Photios (Frank) Michalargias, dated August 6, 2008
4.7	Employment Agreement with John M. Docherty, dated August 6, 2008
4.8	Employment Agreement with Donald H. Segal, dated August 6, 2008
4.9	Form of Indemnity Agreement
4.10	Form of Stock Option Agreement for December 17, 2008 Plan (Standard)
4.11	Form of Stock Option Agreement for December 17, 2008 Plan (Directors Only)
4.12	Stock Option Plan, implemented December 17, 2008
8.1	List of Subsidiaries: See ITEM 4.C
15.1	Consent of KPMG LLP