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PreMD Inc. Reports Third Quarter Results and Appoints New Chief Financial Officer
Date:11/13/2008

TORONTO, Nov. 13 /PRNewswire-FirstCall/ - Predictive medicine company PreMD Inc. (TSX: PMD; PREMF.pk) ("PreMD" or the "Company") today announced unaudited financial results for the third quarter of fiscal 2008 ended September 30, 2008 ("Q3 2008").

During the third quarter, PreMD announced that:

- the PREVU* appeal is being reviewed by the FDA Commissioner's

Office;

- the agreement with AstraZeneca has been terminated;

- the Company's shares have been delisted from AMEX; and

- the Company has begun trading on the Pink Sheets.

Subsequent to quarter end:

- the Company completed a secured debenture financing for gross

proceeds of $500,000;

- the Company's breast cancer clinical data was accepted for

presentation at the 4th Annual Academic Surgical Congress; and

- a listing review was initiated by the Toronto Stock Exchange.

"We are working hard to create opportunities for PreMD. We are looking at revenue generation strategies for PREVU* with companies like Medivon, LLC as well as others in Canada, Europe and Asia and we are also pursuing opportunities in the cosmetics field," stated Dr. Brent Norton, President and CEO of PreMD. "We are also looking at strategies to monetize various tangible and intangible assets and raise short-term capital to fund operations. There are no guarantees that we will be able to achieve these plans, but we are working towards improving the future of PreMD."

The Company is also pleased to announce the appointment of Catherine Auld, C.A., as Chief Financial Officer. Ms. Auld will be responsible for PreMD's financial matters as well as assist in strategic and investor relations activities. Ms. Auld brings a breadth of knowledge in both the biotechnology and financial industries and is currently working as a financial consultant within the biotechnology industry. Previously, Ms. Auld was Chief Financial Officer of NeuroMedix Inc. and Interim Chief Financial Officer of ARIUS Research Inc., and prior thereto, Chief Financial Officer of Transition Therapeutics Inc.

Mr. Ron Hosking, who has been with PreMD over 11 years is retiring as Chief Financial Officer, but will continue to act as a consultant to the Company. "Ron has been a significant asset to PreMD and we are very grateful for his years of dedication and contribution," said Dr. Brent Norton. "He will really be missed, so we are pleased that he has agreed to continue as a consultant."

Financial Review (All amounts are in Canadian dollars)

The consolidated net loss for the three months ended September 30, 2008 (Q3 2008) was $1,879,000 or $(0.07) per share compared with a loss of $1,635,000 or $(0.07) per share for the quarter ended September 30, 2007 (Q3 2007).

Total product sales were $7,000 for both Q3 2008 and Q3 2007. Similarly, license revenue was $27,000 for Q3 2008 and Q3 2007. Product sales reflect direct sales to customers. The license revenue consisted of the upfront cash payment received in accordance with the 2007 licensing agreement with AstraZeneca Pharmaceuticals LP ("AstraZeneca") which was deferred and recognized into income on a straight-line basis over five years. This agreement was terminated subsequent to September 30, 2008.

Research and development expenditures for the quarter decreased by $122,000 to $615,000 from $737,000 in Q3 2007. Significant causes of the variance include:

- a decrease of $13,000 in spending on clinical trials for cancer;

- a decrease of $17,000 in R&D related travel;

- an increase of $22,000 in legal fees on intellectual property;

- a decrease of $37,000 on product development related to manufacturing

validation for the new cordless reader, as this project nears

completion;

- a decrease of $69,000 in stock compensation costs;

- a decrease of $218,000 in salaries and benefits for research

personnel due to reduction in staff; and

- a provision for obsolescence of $221,000 for components of the

PREVU* reader.

General and administration expenses amounted to $367,000 for Q3 2008 compared with $995,000 in Q3 2007, a decrease of $628,000. Significant causes of the variance include:

- a reduction in annual meeting and annual report costs of $16,000 due

to cost containment activities;

- a decrease of $18,000 in directors fees;

- a decrease of $29,000 in travel costs;

- a decrease of $110,000 in stock compensation costs;

- a decrease of $178,000 in professional fees for legal, audit and

human resources; the 2007 amount included expenses of a business

development consultant; and

- a decrease of $235,000 in salaries and benefits due to reductions in

administrative staff;

Interest on convertible debentures (issued on August 30, 2005) amounted to $167,000 in both Q3 2008 and Q3 2007. The debentures bear interest at an annual rate of 7%, payable quarterly in either cash or stock. The amount accrued for Q3 2008 was subsequently paid in common shares, whereas the amount for Q3 2007 was paid partly in shares ($135,000) and partly in cash. Imputed interest on convertible debentures of $296,000 and $253,000 in Q3 2008 and 2007, respectively, represents the expense related to the accretion of the liability component at an effective interest rate of approximately 15%.

Interest on senior unsecured debentures, issued on March 12, 2008, amounted to $35,000 for Q3 2008. Imputed interest on the liability component of the 2008 senior unsecured debentures amounted to $103,000 in Q3 2008, at an effective interest rate of 10.9%.

Amortization expenses for capital assets and intangible assets for Q3 2008 amounted to $30,000 compared with $42,000 for Q3 2007.

The loss on foreign exchange was $348,000 for Q3 2008, compared with a gain of $533,000 for Q3 2007. The major contributing factor for the change was the impact of foreign exchange rates on the convertible debentures which are repayable in US dollars.

Refundable scientific investment tax credits ("ITCs") accrued for Q3 2008 amounted to $49,000 versus $54,000 for Q3 2007.

As at September 30, 2008, PreMD had cash, cash equivalents and short-term investments totaling $35,000 ($1,190,000 as at December 31, 2007). Cash used to fund operating activities during Q3 2008 amounted to $409,000 compared with $1,116,000 in Q3 2007. Subsequent to September 30, 2008, on October 7, 2008, the Company issued secured debentures for gross proceeds of $500,000. To date, the Company has financed its activities through product sales, license revenues, the issuance of shares and debentures and the recovery of provincial ITCs. The Company reported a loss of $1,879,000 for the three months ended September 30, 2008, has a shareholders' deficiency of $7,701,000 as at September 30, 2008 and has experienced significant operating losses and cash outflows from operations since inception. The Company has operating and liquidity concerns due to its significant net losses and negative cash flows from operations.

Financial statements are attached to this press release and are available at http://www.sedar.com.

About PreMD Inc.

PreMD Inc. is a leader in predictive medicine, dedicated to developing rapid, non-invasive tests for the early detection of life-threatening diseases. PreMD's cardiovascular products include PREVU* POC and PREVU* LT, both non-invasive skin cholesterol tests. The Company's cancer tests include ColorectAlert(TM), LungAlert(TM) and a breast cancer test. PreMD's head office is located in Toronto, Ontario and its research and product development facility is at McMaster University in Hamilton, Ontario. For more information about PreMD, please visit http://www.premdinc.com.

This press release contains forward-looking statements. These statements involve known and unknown risks and uncertainties, which could cause the Company's actual results to differ materially from those in the forward-looking statements. Such risks and uncertainties include, among others, the successful development or marketing of the Company's products, the competitiveness of the Company's products if successfully commercialized, the lack of operating profit and availability of funds and resources to pursue R&D projects, the successful and timely completion of clinical studies, product liability, reliance on third-party manufacturers, the ability of the Company to take advantage of business opportunities, uncertainties related to the regulatory process, and general changes in economic conditions. In addition, while the Company routinely obtains patents for its products and technology, the protection offered by the Company's patents and patent applications may be challenged, invalidated or circumvented by our competitors and there can be no guarantee of our ability to obtain or maintain patent protection for our products or product candidates.

Investors should consult the Company's quarterly and annual filings with the Canadian and U.S. securities commissions for additional information on risks and uncertainties relating to the forward-looking statements. Investors are cautioned not to rely on these forward-looking statements. PreMD is providing this information as of the date of this press release and does not undertake any obligation to update any forward-looking statements contained in this press release as a result of new information, future events or otherwise.

PreMD Inc.

Incorporated under the laws of Canada

CONSOLIDATED BALANCE SHEETS

(In Canadian dollars)

(See note 1 - Nature of Operations and Going Concern Uncertainty)

Unaudited

As at As at

September 30, December 31,

2008 2007

$ $

-------------------------------------------------------------------------

ASSETS

Current

Cash and cash equivalents 34,918 282,200

Short-term investments - 907,768

Accounts receivable 1,246 8,292

Inventory 23,661 61,177

Prepaid expenses and other receivables 718,767 758,715

Investment tax credits receivable 234,000 340,000

-------------------------------------------------------------------------

Total current assets 1,012,592 2,358,152

-------------------------------------------------------------------------

Capital assets, net of accumulated

amortization of $284,333 (2007 - $267,458) 69,235 93,867

Intangible assets, net of accumulated

amortization of $1,037,340 (2007 - $991,473) 259,916 305,783

-------------------------------------------------------------------------

1,341,743 2,757,802

-------------------------------------------------------------------------

-------------------------------------------------------------------------

LIABILITIES AND SHAREHOLDERS' DEFICIENCY

Current

Accounts payable 312,109 305,333

Accrued liabilities 621,516 765,312

Current portion of deferred revenue 400,050 106,680

-------------------------------------------------------------------------

Total current liabilities 1,333,675 1,177,325

-------------------------------------------------------------------------

Long-term debt

Debentures 658,964 -

Convertible debentures 7,049,694 5,626,987

-------------------------------------------------------------------------

7,708,658 5,626,987

Deferred revenue - 373,380

-------------------------------------------------------------------------

Total liabilities 9,042,333 7,177,692

-------------------------------------------------------------------------

Shareholders' deficiency

Capital stock 29,617,770 29,120,655

Contributed surplus 3,443,288 3,098,928

Equity component of convertible debentures 2,239,385 2,239,385

Warrants 2,314,356 1,557,296

Deficit (45,315,389) (40,436,154)

-------------------------------------------------------------------------

Total shareholders' deficiency (7,700,590) (4,419,890)

-------------------------------------------------------------------------

1,341,743 2,757,802

-------------------------------------------------------------------------

-------------------------------------------------------------------------

See accompanying note

PreMD Inc.

CONSOLIDATED STATEMENTS OF LOSS, COMPREHENSIVE LOSS AND DEFICIT

(In Canadian dollars)

Unaudited

(note 1)

Three months ended Nine months ended

September 30 September 30

-------------------------- --------------------------

2008 2007 2008 2007

$ $ $ $

-------------------------------------------------------------------------

REVENUE

Product sales 7,150 7,150 21,900 33,484

License revenue 26,670 26,670 80,010 26,670

-------------------------------------------------------------------------

33,820 33,820 101,910 60,154

Cost of product sales 4,406 93,057 31,085 101,623

-------------------------------------------------------------------------

Gross profit 29,414 (59,237) 70,825 (41,469)

-------------------------------------------------------------------------

EXPENSES

Research and

development 614,501 736,855 1,470,235 2,108,491

General and

administration 367,052 995,433 1,314,130 2,547,538

Interest on

long-term debt 201,357 167,217 571,703 496,200

Imputed interest

on long-term debt 398,787 253,093 1,058,989 732,667

Amortization 30,059 42,046 74,422 124,744

Loss (gain) on

foreign exchange 347,760 (533,217) 574,743 (1,287,658)

-------------------------------------------------------------------------

1,959,516 1,661,427 5,064,222 4,721,982

-------------------------------------------------------------------------

RECOVERIES AND

OTHER INCOME

Investment tax

credits 49,000 54,000 94,000 102,000

Interest 2,599 31,531 20,162 95,760

-------------------------------------------------------------------------

51,599 85,531 114,162 197,760

-------------------------------------------------------------------------

Net loss and

comprehensive loss

for the period (1,878,503) (1,635,133) (4,879,235) (4,565,691)

Deficit, beginning

of period (43,436,886) (37,050,900) (40,436,154) (34,162,342)

Adjustment to

opening deficit - - - 42,000

-------------------------------------------------------------------------

Deficit, end of

period (45,315,389) (38,686,033) (45,315,389) (38,686,033)

-------------------------------------------------------------------------

-------------------------------------------------------------------------

Basic and diluted

loss per share $(0.07) $(0.07) $(0.19) $(0.19)

-------------------------------------------------------------------------

-------------------------------------------------------------------------

Weighted average

number of

common shares

outstanding 26,660,746 25,080,610 26,033,574 24,036,431

-------------------------------------------------------------------------

-------------------------------------------------------------------------

See accompanying note

PreMD Inc.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(In Canadian dollars)

Unaudited

(note 1)

Three months ended Nine months ended

September 30 September 30

------------------------ -------------------------

2008 2007 2008 2007

$ $ $ $

-------------------------------------------------------------------------

OPERATING ACTIVITIES

Net loss and

comprehensive loss

for the period (1,878,503) (1,635,133) (4,879,235) (4,565,691)

Add (deduct) items

not involving

cash

Amortization 30,059 42,046 74,422 124,744

Stock compensation

costs included in:

Research and

development

expense 15,557 84,261 92,832 151,644

General and

administration

expense 43,914 154,803 251,528 335,408

Loss on sale of

capital assets 3,938 - 3,938 143

Imputed interest

on long-term debt 398,787 253,093 1,058,989 732,667

Capitalized interest

on debenture 34,595 - 75,045 -

Interest on

convertible

debentures paid in

common shares 164,949 135,457 497,115 406,368

Add loss (deduct

gain) on foreign

exchange 347,760 (533,217) 574,743 (1,287,658)

Net change in non-cash

working capital

balances related to

operations 456,496 (123,726) 55,160 (962,444)

Increase (decrease)

in deferred revenue (26,670) 506,730 (80,010) 506,730

-------------------------------------------------------------------------

Cash used in operating

activities (409,118) (1,115,686) (2,275,473) (4,558,089)

-------------------------------------------------------------------------

INVESTING ACTIVITIES

Short-term investments 416,616 15,521 907,768 2,124,980

Proceeds from sale of

capital assets 1,300 - 1,300 1,435

Purchase of capital

assets - (7,845) (9,161) (10,078)

-------------------------------------------------------------------------

Cash provided by

investing activities 417,916 7,676 899,907 2,116,337

-------------------------------------------------------------------------

FINANCING ACTIVITIES

Issuance of debentures,

net of issue costs - - 1,137,534 -

Issuance of capital

stock, net of issue

costs - (46,153) - 3,683,804

-------------------------------------------------------------------------

Cash provided by

(used in) financing

activities - (46,153) 1,137,534 3,683,804

-------------------------------------------------------------------------

Effect of exchange rate

changes on cash and

cash equivalents (349) (20,665) (9,250) (14,019)

-------------------------------------------------------------------------

Net increase (decrease)

in cash and cash

equivalents during

the period 8,449 (1,174,828) (247,282) 1,228,033

Cash and cash

equivalents

Beginning of period 26,469 2,515,438 282,200 112,577

End of period 34,918 1,340,610 34,918 1,340,610

-------------------------------------------------------------------------

-------------------------------------------------------------------------

Represented by

Cash 34,918 294,138 34,918 294,138

Cash equivalents - 1,046,472 - 1,046,472

-------------------------------------------------------------------------

34,918 1,340,610 34,918 1,340,610

-------------------------------------------------------------------------

-------------------------------------------------------------------------

See accompanying note

NOTE TO CONSOLIDATED FINANCIAL STATEMENTS

(In Canadian dollars unless otherwise noted)

September 30, 2008

Unaudited

1. GOING CONCERN UNCERTAINTY

The Company's consolidated financial statements have been prepared on

a going-concern basis which presumes the realization of assets and

discharge of liabilities in the normal course of business for the

foreseeable future. The Company reported a loss of $4,879,235 for the

nine months ended September 30, 2008, has a shareholders' deficiency

of $7,700,590 as at September 30, 2008 and has experienced

significant operating losses and cash outflows from operations since

its inception. The Company has operating and liquidity concerns due

to its significant net losses and negative cash flows from

operations.

The Company's ability to continue as a going-concern is uncertain and

is dependent upon its ability to raise additional capital to

successfully complete its research and development programs,

commercialize its technologies, obtain regulatory approvals for its

products and ultimately, generate profitable operations and positive

operating cash flows. It is not possible at this time to predict the

outcome of these matters. It will be necessary for the Company to

raise additional funds for the continuing development and marketing

of its technologies. These consolidated financial statements do not

include any adjustments and classifications to the carrying values of

assets and liabilities that may be required should the Company be

unable to continue as a going concern.


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SOURCE PreMD Inc.
Copyright©2008 PR Newswire.
All rights reserved


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