NIR Diagnostics announces 2008 second quarter results



    TSX Venture: NID

    CAMPBELLVILLE, ON, Aug. 29 /CNW/ - NIR Diagnostics Inc. (TSX Venture:
NID), an innovator in the development of handheld medical diagnostic devices
today announced its operational and financial results for the six-month period
ended on June 30, 2008.

    
    Highlights:

    -  Completed internal testing of OmegaNIR(TM), an in-vivo (non-invasive)
       light-based platform capable of monitoring omega-6 and omega-3 fatty
       acid levels non-invasively.
    -  Launched HemoNIR(TM), a portable reagentless CO-oximeter device that
       monitors Met-hemoglobin, Carboxy-hemoglobin and Total Hemoglobin, in
       Europe and generated initial revenue from its distribution partner's
       activities.
    -  Reached consensus with Lifescan regarding terms of a development
       agreement for an in-vitro glucose prototype and, subject to due
       diligence, NIR Diagnostics is awaiting a formal agreement from
       Lifescan.
    -  NIR Diagnostics entered into a settlement agreement to dismiss its
       remaining claims in the patent infringement action against Masimo
       Corporation, subsequent to the end of the quarter.
    -  Completed a $550,000 private placement convertible redeemable
       debenture financing with a private company, Ventabren Holdings
       Limited. Announced a US$250,000 loan financing from NIR Diagnostics'
       development partner, Clear Light Ventures, Inc., subsequent to the end
       of the quarter.
    -  Announced changes to the Company's Board of Directors - John Anderson
       and Clifford Evans have been appointed to the Board, and Theo
       Warkentin will not be joining the Board due to other existing
       commitments.
    

    Financial Results

    For the three-month period ended June 30, 2008 the Company incurred a net
loss from operations of $899,000 or, $0.03 per share, compared with a net loss
of $783,000 or, $0.02 per share, for the three-month period ended June 30,
2007. For the six-month period ended June 30, 2008 the Company incurred a net
loss of $1,667,000 or $0.05 per share, compared with a net loss of $1,724,000
or, $0.05 per share, for the corresponding period last year.
    Revenue for the three-month and six-month periods ended June 30, 2008 was
$49,000 and $73,000 respectively, compared with $31,000 and $105,000 for the
corresponding periods in 2007. During the second quarter, NIR Diagnostics
generated 30,000 in revenue from initial product sales of HemoNIR(TM) in
Europe by its distribution partner.
    Research and development expenses for the three-month and six month
periods ended June 30, 2008 were $91,000 and $192,000 respectively, compared
with $281,000 and $584,000 for the corresponding periods in 2007. During both
the three-month and six-month periods in 2008, most all design and regulatory
costs incurred by the Company relate to the Clear Light project and such costs
have been recovered from Clear Light. During the comparable periods in 2007,
costs related to the food supplement prototype device and were absorbed by the
Company.
    General and administrative expenses for the three-month and six-month
periods ended June 30, 2008 were $394,000 and $728,000 respectively, compared
with $475,000 and $1,131,000 for the corresponding periods last year. The
difference is primarily due to a decrease in staffing costs as a result of
$nil incentive compensation payments for the six-month period ended June 30,
2008 compared with $201,000 in incentive compensation payments for the
corresponding period last year.
    As of June 30, 2008 the Company had cash and cash equivalents totaling
$294,000 to fund ongoing cash requirements of the business. Subsequent to the
end of the quarter the Company completed a loan financing which provided new
capital of $256,000. The Company will require additional funds during the
third quarter 2008 to continue operations.

    About NIR Diagnostics

    NIR Diagnostics is an innovator 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,
the potential efficacy of such devices, the expected timing of product sales
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,
2007 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
             (in thousands except for shares, warrants and units)
                                  Unaudited

                                                        June 30  December 31
                                                           2008         2007
                                                              $            $
                                                       ----------------------
    ASSETS
    Current
    Cash and cash equivalents                                24           22
    Short-term investments                                  270          915
    Accounts receivable                                      40           19
    Inventory                                                93          106
    Investment tax credits recoverable                      104           86
    Prepaid expenses                                          9           68
                                                       ----------------------
    Total current assets                                    540        1,216
    Capital assets, net                                      48           57
                                                       ----------------------
    Total assets                                            588        1,273
                                                       ----------------------
                                                       ----------------------

    LIABILITIES AND SHAREHOLDERS' DEFICIENCY
    Current
    Accounts payable and accrued liabilities                572          447
    Current portion of deferred revenue                      52           52
                                                       ----------------------
    Total current liabilities                               624          499
    Convertible debenture                                 1,611        1,046
    Deferred revenue                                        697          723
                                                       ----------------------
    Total liabilities                                     2,932        2,268
                                                       ----------------------

    Shareholders' deficiency
    Share capital                                        24,612       24,709
    Contributed surplus                                   1,624        1,331
    Conversion option of convertible debenture              747          603
    Compensation warrants                                     -           22
    Deficit                                             (29,327)     (27,660)
                                                       ----------------------
    Total shareholders' deficiency                       (2,344)        (995)
                                                       ----------------------
    Total liabilities and shareholders' deficiency          588        1,273
                                                       ----------------------
                                                       ----------------------


    NIR Diagnostics Inc.

                         CONSOLIDATED STATEMENTS OF
                 OPERATIONS, COMPREHENSIVE LOSS AND DEFICIT
             (in thousands except for shares, warrants and units)
                                  Unaudited

                             Three Months Ended         Six Months Ended
                                   June 30                   June 30
                              2008         2007         2008         2007
                                    $            $            $            $
                          ---------------------------------------------------

    Revenue                        49           31           73          105
                          ---------------------------------------------------
    Expenses
    Cost of product sales          19            -           19            -
    Research
     and development               91          281          192          584
    General
     and administration           394          475          728        1,131
    Reimbursable costs
     related to patent
     prosecution                   69            -          114            -
    Reimbursable costs
     related to patent
     defense                      105            -          196            -
    Amortization                    6            7           12           14
    Interest                       80           36          146           72
    Accretion in carrying
     value of convertible
     debentures                   184            4          333            7
    Amortization of
     deferred debenture
     issuance costs                 -           11            -           21
                          ---------------------------------------------------
                                  948          814        1,740        1,829
                          ---------------------------------------------------
    Net loss                     (899)        (783)      (1,667)      (1,724)
    Comprehensive loss              -            -            -            -
                          ---------------------------------------------------
    Total comprehensive
     loss                        (899)        (783)      (1,667)      (1,724)
    Deficit, beginning
     of period                (28,428)     (26,489)     (27,660)     (25,548)
                          ---------------------------------------------------
    Deficit,
     end of period            (29,327)     (27,272)     (29,327)     (27,272)
                          ---------------------------------------------------
                          ---------------------------------------------------

    Basic and diluted
     loss per share             (0.03)       (0.02)       (0.05)       (0.05)
                          ---------------------------------------------------
                          ---------------------------------------------------

    Weighted average
     number of common
     shares outstanding    34,708,560   33,057,736   34,708,560   31,388,670
                          ---------------------------------------------------
                          ---------------------------------------------------


    NIR Diagnostics Inc.

                    CONSOLIDATED STATEMENTS OF CASH FLOWS
             (in thousands except for shares, warrants and units)
                                  Unaudited

                             Three Months Ended         Six Months Ended
                                   June 30                   June 30
                              2008         2007         2008         2007
                                    $            $            $            $
                          ---------------------------------------------------

    OPERATING ACTIVITIES
    Net loss                     (899)        (783)      (1,667)      (1,724)
    Add (deduct) non-cash
     items
      Stock-based
      compensation expense         13           36           25           88
      Amortization of
      capital assets                6            7           12           14
      Accretion in carrying
      value of convertible
      debentures                  184            4          333            7
      Amortization of
      deferred debenture
      issuance costs                -           11            -           21
    Net change in
     non-cash working
     capital                      180          150          158           19
    Net change in
     deferred revenue             (13)         (13)         (26)         619
                          ---------------------------------------------------
    Cash (applied to)
     operating activities        (529)        (588)      (1,165)        (956)
                          ---------------------------------------------------

    INVESTING ACTIVITIES
    Decrease in short-term
     investments                  (10)        (298)         645          130
    Purchase of capital
     assets                        (3)           -           (3)          (1)
                          ---------------------------------------------------
    Cash (applied to)
     provided by investing
     activities                   (13)        (298)         642          129
                          ---------------------------------------------------

    FINANCING ACTIVITIES
    Issuance of
     convertible debenture        550            -          550            -
    Debenture issuance
     costs                        (25)           -          (25)           -
    Issuance of common
     shares                         -        1,002            -        1,002
    Share issuance costs            -         (115)           -         (115)
                          ---------------------------------------------------
    Cash provided by
     financing activities         525          887          525          887
                          ---------------------------------------------------

    Net (decrease)
     increase in cash
     during the period            (17)           1            2           60
    Cash and cash
     equivalents,
     beginning of period           41          100           22           41
                          ---------------------------------------------------
    Cash and cash
     equivalents, end of
     period                        24          101           24          101
                          ---------------------------------------------------
                          ---------------------------------------------------
    





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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