/C O R R E C T I O N From Source - NIR Diagnostics Inc./



    Please note that in c3561 sent August 29th at 16:15e, the fifth
    paragraph, second sentence, under the heading "Financial Results" should
    begin as follows: "The Company had cash and near cash of $1,546,000 as of
    June 30, 2007..." and not "The Company had cash and near cash of $1,546
    as of June 30, 2007..." as previously issued. Correct copy follows.

    NIR Diagnostics announces 2007 second quarter results

    TSX Venture: NID

    CAMPBELLVILLE, ON, Aug. 29 /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 2007
second quarter ended on June 30, 2007.

    
    Highlights:
    -   Completed internal patient testing using a contract research
        organization for the Shaklee in-vivo food supplement prototype
        device.
    -   Sent an in-vivo prototype device to Shaklee Corporation of
        Pleasanton, California in connection with the strategic alliance
        agreement announced on August 9, 2006, subsequent to the end of the
        quarter.
    -   Completed internal testing of patient blood samples of the Company's
        in-vitro glucose monitoring device. The testing used new NIR
        Diagnostics'-specified hardware components that provide advanced
        detection capability developed in co-operation with the Company's
        global hardware suppliers. The Company has recently shared these
        results with Lifescan, Inc., a Johnson & Johnson company.
    -   Completed a brokered private placement for total net proceeds to the
        Company of approximately $887,000.
    

    "Our progress on both in-vivo and in-vitro light monitoring technology
continues to advance our strategy to be the global development leader in
light-based medical and food supplement devices," said Duncan J. MacIntyre,
President, CEO and Executive Vice Chairman of NIR Diagnostics Inc. "The
significant investment we have made in our patent portfolio over the years has
yielded an important asset from which to develop products of the future."

    Financial Results

    For the three-month period ended June 30, 2007 the Company incurred a net
loss from operations of $783,000 or, $0.02 per share, compared with a net loss
of $681,000 or, $0.02 per share, for the three-month period ended June 30,
2006. For the six-month period ended June 30, 2007 the Company incurred a net
loss of $1,724,000, or $0.05 per share, compared with a net loss of $1,340,000
or, $0.05 per share, for the corresponding period last year.
    Revenue for the three-month and six-month periods ended June 30, 2007 was
$31,000 and $105,000 respectively, compared with $50,000 and $196,000 for the
corresponding periods in 2006. The change in revenue is primarily due to a
reduction in licensing revenue in each of the first and second quarters of
2007 compared with 2006.
    Research and development expenses for the three-month and six month
periods ended June 30, 2007 were $281,000 and $584,000 respectively, compared
with $149,000 and $282,000 for the corresponding periods in 2006. The change
in research and development expenses is principally due to design costs
related to the food supplement prototype device.
    General and administrative expenses for the three-month and six-month
periods ended June 30, 2007 were $475,000 and $1,131,000 respectively,
compared with $443,000 and $811,000 for the corresponding periods last year.
The difference in the six-month period ended June 30, 2007 compared with the
corresponding period in 2006 is primarily due to an increase in staffing costs
related to incentive compensation payments.
    The Company raised net proceeds of approximately $887,000 during the
second quarter in a private placement of 5,007,500 units, each unit consisting
of one common share and one common share purchase warrant, at a price of $0.20
per unit. The Company had cash and near cash of $1,546,000 as of June 30,
2007, and 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 fourth quarter of 2007
to raise additional capital to meet business objectives and existing debt
obligations.

    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)
                                                       June 30    December 31
    (in thousands of dollars)                            2007        2006
    -------------------------------------------------------------------------

    ASSETS
    Current
    Cash and cash equivalents                                101          41
    Short-term investments                                 1,445       1,575
    Accounts receivable                                      226         134
    Inventory                                                756         740
    Investment tax credits recoverable                        41          41
    Prepaid expenses                                          36          60
    -------------------------------------------------------------------------
    Total current assets                                   2,605       2,591
    Deferred debenture issuance costs                         38          59
    Capital assets                                            72          85
    -------------------------------------------------------------------------
    Total assets                                           2,715       2,735
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    LIABILITIES AND SHAREHOLDERS' (DEFICIENCY)
    Current
    Accounts payable and accrued liabilities                 572         469
    Current portion - deferred revenue                     1,839       1,839
    -------------------------------------------------------------------------
    Total current liabilities                              2,411       2,308
    Convertible debentures                                 1,191       1,184
    Deferred revenue                                         749         130
    -------------------------------------------------------------------------
    Total liabilities                                      4,351       3,622
    -------------------------------------------------------------------------
    Shareholders' (deficiency)
    Share capital                                         24,466      23,579
    Contributed surplus                                    1,035         947
    Conversion option of convertible debentures               63          63
    Compensation warrants                                     72          72
    (Deficit)                                            (27,272)    (25,548)
    -------------------------------------------------------------------------
    Total shareholders' (deficiency)                      (1,636)       (887)
    -------------------------------------------------------------------------
    Total liabilities and shareholders' (deficiency)       2,715       2,735
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------



    NIR Diagnostics Inc.

    CONSOLIDATED STATEMENTS OF OPERATIONS AND DEFICIT

    -------------------------------------------------------------------------
                              (Unaudited) (Unaudited) (Unaudited) (Unaudited)
                                 Three       Three        Six         Six
                                 Months      Months      Months      Months
                                 Ended       Ended       Ended       Ended
    (in thousands of            June 30     June 30     June 30     June 30
    dollars)                      2007        2006        2007        2006
    -------------------------------------------------------------------------

    -------------------------------------------------------------------------
    Revenue                           31          50         105         196
    -------------------------------------------------------------------------

    Expenses
    Research and development         281         149         584         282
    General and administration       475         443       1,131         811
    Contractual rights                 -          28           -         228
    Amortization                       7          12          14          24
    Interest                          36          36          72          69
    Accretion in carrying value
     of convertible debentures         4          15           7          29
    Amortization of deferred
     debenture issuance costs         11          48          21          93
    -------------------------------------------------------------------------
                                     814         731       1,829       1,536
    -------------------------------------------------------------------------
    Net loss                        (783)       (681)     (1,724)     (1,340)

    (Deficit), beginning of
     period                      (26,489)    (23,810)    (25,548)    (25,548)
    -------------------------------------------------------------------------
    (Deficit), end of period     (27,272)    (24,491)    (27,272)    (26,888)
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    Net loss per share             (0.02)      (0.02)      (0.05)      (0.05)
    -------------------------------------------------------------------------

    Weighted average number
     of common shares
     outstanding              33,057,736  27,340,440  31,388,670  26,124,785
    -------------------------------------------------------------------------



    NIR Diagnostics Inc.

    CONSOLIDATED STATEMENTS OF CASH FLOWS

    -------------------------------------------------------------------------
                              (Unaudited) (Unaudited) (Unaudited) (Unaudited)
                                 Three       Three        Six         Six
                                 Months      Months      Months      Months
                                 Ended       Ended       Ended       Ended
    (in thousands of            June 30     June 30     June 30     June 30
    dollars)                      2007        2006        2007        2006
    -------------------------------------------------------------------------
    OPERATING ACTIVITIES
    Net loss                        (783)       (681)     (1,724)     (1,340)
    Add (deduct) non-cash
     items:
      Stock-based compensation
       expense                        36          40          88         111
      Amortization of capital
       assets                          7          12          14          24
      Accretion in carrying
       value of convertible
       debentures                      4          15           7          29
      Amortization of deferred
       debenture issuance costs       11          48          21          93
    Net change in non-cash
     working capital                 150        (111)         19        (189)
    Net change in deferred
     revenue                         (13)        (13)        619         (26)
    -------------------------------------------------------------------------
    Cash (applied to)
     operations                     (588)       (690)       (956)     (1,298)
    -------------------------------------------------------------------------

    INVESTING ACTIVITIES
    (Increase) decrease in
     short-term investments         (298)         (9)        130         319
    Purchase of capital assets         -          (4)         (1)         (4)
    -------------------------------------------------------------------------
    Cash (applied to) provided
     by investing activities        (298)        (13)        129         315
    -------------------------------------------------------------------------

    FINANCING ACTIVITIES
    Issuance of convertible
     debentures                        -           -           -         372
    Debenture issuance costs           -           -           -         (42)
    Issuance of common shares      1,002         717       1,002         717
    Share issuance costs            (115)        (81)       (115)        (81)
    -------------------------------------------------------------------------
    Cash provided by financing
     activities                      887         636         887         966
    -------------------------------------------------------------------------

    Net cash provided during
     period                            1         (67)         60         (17)
    Cash and cash equivalents,
     beginning of period             100         109          41          59
    -------------------------------------------------------------------------
    Cash and cash equivalents,
     end of period                   101          42         101          42
    -------------------------------------------------------------------------
    





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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