InNexus Biotechnology Inc. | |||||||||
Analsysis of Working Capital and Burn Rate | |||||||||
Reviewing circumstances in the time frame of April 20, 2005 |
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Working Capital Analysis | (In $CDN) | ||||||||
Sale of | |||||||||
Working Capital | Protokinetix | ||||||||
Per Financial | Equity Raised | ||||||||
Quarter Ending | Statements | In Quarter | |||||||
Jun, 2004 | 351,518 | ||||||||
Sep, 2004 | 66,670 | 31,250 | |||||||
Dec, 2004 | 477,939 | 875,070 | |||||||
Mar, 2005 | 100,204 | 211,027 | |||||||
Jun, 2005 | (9,995) | 125,000 | 313,795 | per June 30, 2005 audited financial report, page 3 | |||||
1,242,347 | total per June 30, 2005 audited financial report, page 3 | ||||||||
Burn Rate Analysis | |||||||||
Burn rate being defined for this analysis as financial statement expenses (FS Exp) | |||||||||
less amortization (Amort), less stock based compensation (SBC) if any. | |||||||||
Burn Rate | Months | Burn Rate | |||||||
FS Exp | Amort | SBC | Period | in period | Avg Monthly | ||||
Year end Jun 30, 2005 | 2,231,120 | (122,800) | (351,754) | 1,756,566 | 12 | 146,381 | |||
Quarter end Mar 31, 2005 | 466,932 | (39,732) | 427,200 | 3 | 142,400 | ||||
Nine months end Mar 31, 05 | 1,344,821 | (91,874) | (138,407) | 1,114,540 | 9 | 123,838 | |||
SUMMARY: | |||||||||
1. Around the date of April 20, 2005 the Company was showing significant declines in working capital | |||||||||
2. For the fiscal year 2005 the Company's esitmated Burn Rate per month is in the range of $125,000 to $140,000 not | |||||||||
including any capital purchases (see definition above) | |||||||||
3. The Company raised equity during the year, however the amount does not appear to be sufficient to cover the ongoing burn rate and | |||||||||
to keep the working capital positive. | |||||||||
4. During the quarter ended June 30, 2005 (April 20, 2005) the sale of Protokinentix appears to have contributed to the Company's | |||||||||
working capital to a significant degree as, even with the sale, the Company still had a working capital deficancy of $9,995, and | |||||||||
without the sale (or some other cash injection) the Company would have ended the year with a much larger working capital deficiency | |||||||||
CONCLUSION | |||||||||
The financial statements before and after the April 20, 2005 date appear to support the conclusion by Company management that the | |||||||||
Company had considerable cash difficulties at that date and the sale of ProtoKinetix shares may have been important for continued | |||||||||
operation of the Company. | |||||||||
