manufacturing validation for the new cordless reader, as this
project nears completion;
- an increase of $42,000 in legal fees on intellectual property;
- a decrease of $104,000 in salaries and benefits for research
personnel due to reduction in staff;
- an increase in recovery of research costs of $33,000 related to a
special contract to develop a test for use in the cosmetics
General and administration expenses amounted to $503,000 for Q2 2008 compared with $911,000 in Q2 2007, a decrease of $408,000. Significant causes of the variance include:
- a decrease of $230,000 in professional fees for legal, audit and
human resources; the 2007 amount included expenses of a business
- a decrease of $81,000 in salaries and benefits due to reductions in
- a reduction in annual meeting and annual report costs of $61,000 due
to cost containment activities; and
Interest on convertible debentures (issued on August 30, 2005) amounted to $165,000 in Q2 2008 compared with $164,000 in Q2 2007. These debentures bear interest at an annual rate of 7%, payable quarterly in either cash or stock. The amount accrued for Q2 2008 was subsequently paid in common shares, whereas the amount for Q2 2007 was paid partly in shares ($134,000) and partly in cash. Imputed interest on convertible debentures of $370,000 and $231,000 in Q2 2008 and 2007, respectively, represents the expense related to the accretion of the liability component at an effective interest rate of approximately 15%.
The gain on foreign exchange was $54,000 for Q2 2008, compared with a gain of $671,000 for Q2 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.
|SOURCE PreMD Inc.|
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