NIR Diagnostics announces 2007 third quarter results



    TSX Venture: NID

    CAMPBELLVILLE, ON, Nov. 28 /CNW/ - NIR Diagnostics Inc. (TSX Venture:
NID), an innovator in the development of handheld healthcare diagnostic
devices, today announced its operational and financial results for the third
quarter ended on September 30, 2007.

    
    Highlights:

    -   Delivered five in-vivo food supplement prototype devices to Shaklee
        Corporation of Pleasanton, California, in connection with the
        strategic alliance agreement announced on August 9, 2006. The Company
        and Shaklee are in discussions regarding entitlement to a $1,000,000
        success fee in connection with the delivery of the device.
    -   NIR Diagnostics agreed to act as co-plaintiff with Shaklee in a
        patent infringement action against Masimo Corporation.
    -   Announced a subscription agreement with Ventabren Holdings Limited
        outlining the intention to complete a non-brokered private placement
        for the issuance of $2,200,000 principal amount of secured
        convertible redeemable debenture and 11,000,000 common share purchase
        warrants. The Company will hold a Special Meeting of Shareholders on
        November 29, 2007 at 10:00 am to consider the agreement.
    

    "The completion of the in-vivo food supplement prototype device was a
critical milestone for us during the third quarter. Discussions continue with
Shaklee on our entitlement to the $1,000,000 success fee for the completion of
the prototype. We disagree with Shaklee's position and believe we fulfilled
the conditions of the agreement related to the prototype. However, we hope to
resolve this matter to our mutual satisfaction through our continuing
discussions," said Duncan J. MacIntyre, President, CEO and Executive Vice
Chairman of NIR Diagnostics Inc. "In parallel to this matter with Shaklee, we
have joined them as a co-plaintiff in a patent infringement suit filed in U.S.
Federal Court against Masimo. We have also negotiated an agreement to
strengthen our cash position through a subscription agreement with Ventabren
Holdings in order to fund the ongoing development of our in-vivo and in-vitro
light monitoring technology."

    Financial Results

    For the three-month period ended September 30, 2007 the Company reported
net income from operations of $1,026,000 or, $0.03 per share, compared with a
net loss of $464,000 or, $0.02 per share, for the three-month period ended
September 30, 2006. For the nine-month period ended September 30, 2007 the
Company incurred a net loss of $698,000, or $0.02 per share, compared with a
net loss of $1,804,000, or $0.07 per share, for the corresponding period last
year.
    Revenue for the three-month and nine-month periods ended September 30,
2007 was $1,814,000 and $1,919,000 respectively, compared with $325,000 and
$521,000 for the corresponding periods in 2006. The increase in revenue is
principally due to the licensing arrangement with Shaklee Corporation entered
into during the third quarter of 2006. The initial proceeds from this
arrangement were allocated between proceeds from licensing ($1,787,000) and
proceeds from issuance of the warrants ($213,000) and the proceeds of
licensing were initially deferred and have now been recognized as revenue in
the third quarter of 2007, to correspond with the one year development period
of the prototype device.
    Research and development expenses for the three-month and nine-month
periods ended September 30, 2007 were $269,000 and $853,000 respectively,
compared with $117,000 and $399,000 for the corresponding periods in 2006. The
increase in research and development expenses is principally due to design and
testing costs related to the food supplement prototype device.
    General and administrative expenses for the three-month and nine-month
periods ended September 30, 2007 were $387,000 and $1,518,000 respectively,
compared with $512,000 and $1,323,000 for the corresponding periods last year.
The difference in the nine-month period is primarily due to an increase in
staffing costs related to incentive compensation payments.
    As at September 30, 2007, the Company had cash and near cash of $598,000.
On November 7, 2007 the Company entered into a binding definitive subscription
agreement for the issuance of $2,200,000 principal amount of a secured
convertible redeemable debenture and 11,000,000 common share purchase
warrants. Completion of the financing is subject to the satisfaction of
certain customary conditions, including being conditional upon the Company
redeeming all pre-existing convertible debt in the amount of $1,205,900. The
new debenture financing that is expected to close on or about December 3, 2007
will provide net new capital of approximately $1,000,000 after redemption of
the existing debentures. The Company continues to seek other sources of
capital that may include equity financings, license fees, arrangements with
strategic partners, or other sources. It may be necessary as early as the
second quarter of 2008 to raise additional capital to meet business
objectives.

    About NIR Diagnostics

    NIR Diagnostics is a leader in the development of near-infrared
spectroscopic medical diagnostics. The Company has an extensive portfolio of
optical, electronic and algorithm related patents in the field of in-vitro and
in-vivo blood analysis.

    Forward-looking Statements

    This press release contains information that is forward-looking
information within the meaning of applicable securities laws. In some cases,
forward-looking information can be identified by the use of terms such as
"may", "will", "should", "expect", "plan", "anticipate", "believe", "intend",
"estimate", "predict", "potential", "continue" or the negative of these terms
or other similar expressions concerning matters that are not historical facts.
Particularly, statements about the planned development of diagnostic devices
and the sufficiency of funds available to finance ongoing operations are
forward-looking information.
    Forward-looking information, by its nature necessarily involves risks and
uncertainties including, without limitation, the difficulty of predicting
regulatory approvals, market acceptance and demand for new products, the
protection of intellectual property connected with devices, the impact of
competitive products, and other similar or related risks and uncertainties.
Additional risks and uncertainties affecting the Company are discussed in the
Risks and Uncertainties section of the MD&A for the year ended December 31,
2006 available on SEDAR at www.sedar.com. If any of these risks or
uncertainties were to materialize or if the factors and assumptions underlying
the forward-looking information were to prove incorrect, actual results could
vary materially from those that are expressed or implied by the
forward-looking information contained herein. The Company disclaims any
intention or obligation to update or revise any forward-looking statements,
whether as a result of new information, future events or otherwise.

    The TSX Venture Exchange does not accept responsibility for the adequacy
    or accuracy of this release.


    
    NIR Diagnostics Inc.

    CONSOLIDATED BALANCE SHEETS

    -------------------------------------------------------------------------
                                                     (Unaudited)  (Audited)
                                                    September 30  December 31
    (in thousands of dollars)                            2007        2006
    -------------------------------------------------------------------------

    ASSETS
    Current
    Cash and cash equivalents                                 23          41
    Short-term investments                                   575       1,575
    Accounts receivable                                      346         134
    Inventory                                                756         740
    Investment tax credits recoverable                        41          41
    Prepaid expenses                                          21          60
    -------------------------------------------------------------------------
    Total current assets                                   1,762       2,591
    Deferred debenture issuance costs                         28          59
    Capital assets                                            64          85
    -------------------------------------------------------------------------
    Total assets                                           1,854       2,735
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    LIABILITIES AND SHAREHOLDERS' (DEFICIENCY)
    Current
    Accounts payable and accrued liabilities                 385         469
    Current portion - deferred revenue                       129       1,839
    Convertible debentures                                 1,195           -
    -------------------------------------------------------------------------
    Total current liabilities                              1,709       2,308
    Convertible debentures                                     -       1,184
    Deferred revenue                                         736         130
    -------------------------------------------------------------------------
    Total liabilities                                      2,445       3,622
    -------------------------------------------------------------------------
    Shareholders' (deficiency)
    Share capital                                         24,253      23,579
    Contributed surplus                                    1,267         947
    Conversion option of convertible debentures               63          63
    Compensation warrants                                     72          72
    (Deficit)                                            (26,246)    (25,548)
    -------------------------------------------------------------------------
    Total shareholders' (deficiency)                        (591)       (887)
    -------------------------------------------------------------------------
    Total liabilities and shareholders' (deficiency)       1,854       2,735
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------



    NIR Diagnostics Inc.

    CONSOLIDATED STATEMENTS OF OPERATIONS AND DEFICIT

    -------------------------------------------------------------------------
                              (Unaudited) (Unaudited) (Unaudited) (Unaudited)
                                 Three       Three       Nine        Nine
                                 Months      Months      Months      Months
                                 Ended       Ended       Ended       Ended
                                Sept. 30    Sept. 30    Sept. 30    Sept. 30
    (in thousands of dollars)     2007        2006        2007        2006
    -------------------------------------------------------------------------

    Revenue                        1,814         325       1,919         521
    -------------------------------------------------------------------------

    Expenses
    Research and development         269         117         853         399
    General and administration       387         512       1,518       1,323
    Contractual rights                74           -          74         228
    Royalties                          -          50           -          50
    Amortization                       8          11          22          35
    Interest                          36          36         108         105
    Accretion in carrying
     value of convertible
     debentures                        4          15          11          44
    Amortization of deferred
     debenture issuance costs         10          48          31         141
    -------------------------------------------------------------------------
                                     788         789       2,617       2,325
    -------------------------------------------------------------------------
    Net income (loss)              1,026        (464)       (698)     (1,804)

    (Deficit), beginning
     of period                   (27,272)    (24,491)    (25,548)    (23,151)
    -------------------------------------------------------------------------
    (Deficit), end of period     (26,246)    (24,955)    (26,246)    (24,955)
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------


    Net income (loss) per share     0.03       (0.02)      (0.02)      (0.07)
    -------------------------------------------------------------------------

    Weighted average number
     of common shares
     outstanding              34,708,560  29,701,060  32,507,461  27,329,977
    -------------------------------------------------------------------------



    NIR Diagnostics Inc.

    CONSOLIDATED STATEMENTS OF CASH FLOWS

    -------------------------------------------------------------------------
                              (Unaudited) (Unaudited) (Unaudited) (Unaudited)
                                 Three       Three       Nine        Nine
                                 Months      Months      Months      Months
                                 Ended       Ended       Ended       Ended
                                Sept. 30    Sept. 30    Sept. 30    Sept. 30
    (in thousands of dollars)     2007        2006        2007        2006
    -------------------------------------------------------------------------
    OPERATING ACTIVITIES
    Net income (loss)              1,026        (464)       (698)     (1,804)
    Add (deduct) non-cash items:
      Stock-based compensation
       expense                        19          30         107         141
      Amortization of
       capital assets                  8          11          22          35
      Accretion in carrying
       value of convertible
       debentures                      4          15          11          44
      Amortization of deferred
       debenture issuance costs       10          48          31         141
    Net change in non-cash
     working capital                (292)        (91)       (273)       (380)
    Net change in
     deferred revenue             (1,723)      1,774      (1,104)      1,848
    -------------------------------------------------------------------------
    Cash (applied to) provided
     by operations                  (948)      1,323      (1,904)         25
    -------------------------------------------------------------------------

    INVESTING ACTIVITIES
    Decrease (increase) in
     short-term investments          870      (1,515)      1,000      (1,196)
    Purchase of capital assets         -           -          (1)         (4)
    -------------------------------------------------------------------------
    Cash provided by (applied to)
     investing activities            870      (1,515)        999      (1,200)
    -------------------------------------------------------------------------

    FINANCING ACTIVITIES
    Issuance of common share
     purchase warrants                 -         213           -         213
    Issuance of convertible
     debentures                        -           -           -         372
    Debenture issuance costs           -           -           -         (42)
    Issuance of common shares          -           -       1,002         717
    Share issuance costs               -          (5)       (115)        (86)
    -------------------------------------------------------------------------
    Cash provided by
     financing activities              -         208         887       1,174
    -------------------------------------------------------------------------


    Net cash (applied) provided
     during period                   (78)         16         (18)         (1)
    Cash and cash equivalents,
     beginning of period             101          42          41          59
    -------------------------------------------------------------------------
    Cash and cash equivalents,
     end of period                    23          58          23          58
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    





For further information:

For further information: Duncan MacIntyre, President, CEO and Executive
Vice Chairman, NIR Diagnostics Inc., (905) 854-5727, (905) 854-5729 Fax,
E-mail: info@nirdiagnostics.com, Internet: www.nirdiagnostics.com; Ross
Marshall, Investor Relations, (416) 815-0700 ext. 238, (416) 815-0080 Fax,
E-mail: rmarshall@equicomgroup.com, Internet: www.equicomgroup.com

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NIR DIAGNOSTICS INC.

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