Neptune Wellness Solutions (NEPTF) 6-K Quarterly Report

Bilan

Neptune Technologies & Bioressources inc.
Consolidated Balance Sheet
				Unaudited		Audited
August 31, 2007 and May 31, 2007				August 31,		May 31,
				2007		2007
ASSETS
Current assets
	Cash and cash equivalents		$	686,664	$	659,354
	Short term deposits (3.55%)			2,348,524		2,750,323
	Accounts receivable			3,774,404		3,067,381
	Tax credits receivable			138,704		100,858
	Inventories			2,948,556		2,115,652
	Prepaid expenses			63,712		53,039
				9,960,564		8,746,607
Property, plant and equipment				4,222,747		4,310,360
Intangible assets				581,731		560,620
Other assets				14,229		18,385
			$	14,779,271	$	13,635,972
LIABILITIES
Current liabilities
	Bank loan		$	-	$	210,000
	Accounts payable and accrued liabilities
		Company controlled by an officer and director		30,225		46,134
		Other		2,075,405		1,432,785
	Current portion of long-term debt			946,140		942,969
				3,051,770		2,631,888
Advance Payments (note 4)				718,350		-
Long-term debt (note 6)				3,078,296		3,295,312
				6,848,416		5,927,200
SHAREHOLDERS EQUITY
Capital stock and warrants (Note 7)				23,537,578		23,182,472
Contributed surplus				3,892,877		2,974,533
Deficit				(19,499,600)		(18,448,233)
				7,930,855		7,708,772
			$	14,779,271	$	13,635,972
See acompanying notes to unaudited consolidated financial statements

Déficit – Surplus

Neptune Technologies & Bioressources inc.
(unaudited)
Consolidated deficit
Periods ended August 31, 2007 and 2006
		2007		2006
		(3 months)		(3 months)
Balance, beginning of year	$	(18,448,233)	$	(15,237,262)
Net loss		(1,051,367)		(286,107)
Balance, end of year	$	(19,499,600)	$	(15,523,369)
Consolidated contributed surplus
Periods ended August 31, 2007 and 2006
		2007		2006
		(3 months)		(3 months)
Balance, beginning of year	$	2,974,533	$	1,172,116
Exercised options		(155,169)		-
Stock-based compensation – employees		999,801		306,528
Stock-based compensation – non-employees		73,712		27,613
Balance, end of year	$	3,892,877	$	1,506,257
See acompanying notes to unaudited consolidated financial statements

Résultats

Neptune Technologies & Bioressources inc.
Consolidated Earnings
(unaudited)
Periods ended August 31, 2007 and 2006
			2007		2006
			(3 months)		(3 months)
Sales		$	2,085,336	$	1,551,489
Cost of sales and operating expenses (excluding amortization
	and stock options related compensation)		1,673,837		1,141,556
Stock options related compensation			1,073,513		334,141
Research and development expenses			104,685		109,569
Financial expenses			133,886		129,752
Amortization			145,685		151,795
			3,131,606		1,866,813
Loss before the undernoted			(1,046,270)		(315,324)
Interest income			25,109		2,227
Foreign exchange gain (loss)			(30,206)		26,990
Net loss		$	(1,051,367)	$	(286,107)
Basic and diluted loss per share		$	(0.029)	$	(0.008)
Weighted average number of shares outstanding			36,870,922		34,481,903
See acompanying notes to unaudited consolidated financial statements

Flux Trésorerie

Neptune Technologies & Bioressources inc.
Consolidated cash flows
(unaudited)
Periods ended August 31, 2007 and 2006
			2007		2006
			(3 months)		(3 months)
OPERATING ACTIVITIES
Net loss		$	(1,051,367)	$	(286,107)
Non-cash items
	Property, plant and equipment amortization		142,757		149,740
	Intangible assets amortization		2,928		2,055
	Deferred financing cost amortization		4,156		4,156
	Deferred financing costs write-off		-		(11,552)
	Stock-based compensation - employees		999,801		306,528
	Stock-based compensation - non-employees		73,712		27,613
Changes in working capital items (Note 5)			(961,735)		(985,537)
Cash flow from operating activities			(789,748)		(793,104)
INVESTING ACTIVITIES
Addition to property, plant and equipment			(40,864)		(8,055)
Addition to intangible assets			(24,039)		(2,917)
Decrease in short term deposits			477,680		-
Increase in other assets			(75,881)		-
Cash flows from investing activities			336,896		(10,972)
FINANCING ACTIVITIES
Increase (decrease) in bank loan			(210,000)		70,000
Repayment of long-term debt			(228,125)		-
Advanced payments			718,350		-
Issue of share capital on exercice of options and warrants			199,937		148,393
Cash flows from financing activities			480,162		218,393
Net increase (decrease) in cash and cash equivalents			27,310		(585,683)
Cash and cash equivalents, at the beginning			659,354		875,901
Cash and cash equivalents, at the end		$	686,664	$	290,218
See acompanying notes to unaudited consolidated financial statements

Notes

Neptune Technologies & Bioressources inc.
Notes to consolidated financial statements
(unaudited)
Periods ended August 31, 2007 and 2006
1 - BASIS OF PRESENTATION
The interim consolidated financial statements have not been reviewed by the auditors and reflect normal and recurring adjustments which are, in the opinion of Neptune Technologies & Bioressources Inc. (the “Company”), considered necessary for a fair presentation. These interim unaudited consolidated financial statements have been prepared in conformity with Canadian generally accepted accounting principles. However, they do not include all disclosures required under generally accepted accounting principles and accordingly should be read in conjunction with the consolidated financial statements and the notes thereto included in the Company’s latest Annual Report. The interim unaudited consolidated financial statements have been prepared using the same accounting policies as described in the latest Annual Report.
2 - CHANGES TO ACCOUNTING POLICIES
Effective June 1, 2007, the Company adopted the Canadian Institute of Chartered Accountants (CICA) Handbook Section 1530,Comprehensive Income, Section 3855,Financial Instruments – Recognition and Measurement and Section 3865,Hedges. The significant changes related to these new accounting standards are as follows:
a) Comprehensive income:
CICA Handbook Section 1530, Comprehensive Income, introduces a new financial statement which shows the change in equity of an enterprise during a period from transactions and other events arising from non-owner sources. No adjustments were required as a result of the application of this section for the three month period ended August 31, 2007.
b) Financial assets and financial liabilities, and Hedges:
CICA Handbook Section 3855 establishes standards for recognizing and measuring financial assets, financial liabilities and non-financial derivatives. Under this standard, financial instruments are now classified as held-for-trading, available-for-sale, held-to-maturity, loans and receivables, or other financial liabilities and measurement in subsequent periods depends on their classification. Transaction costs are expensed as incurred for financial instruments classified as held-for-trading. For other financial instruments, transaction costs are capitalized on initial recognition and must be classified against the underlying financial instruments.
Financial assets and financial liabilities held-for-trading are measured at fair value with changes in those fair values recognized in financial expenses. Financial assets held-to-maturity, loans and receivables, and other financial liabilities are measured at amortized cost using the effective interest method of amortization. Available-for-sale financial assets are measured at fair value or at cost in the case of financial assets that do not have a quoted market price in an active market and changes in fair value are recorded in comprehensive income.
The Company classified its cash and cash equivalents and its short terms deposits as financial assets held-for-trading. Accounts receivable and the subordinated loan to an affiliated company and interest receivable are classified as loans and receivables. Accounts payable and accrued liabilities and tax credits receivable are classified as other financial liabilities.
CICA Handbook Section 3865, Hedges, specifies the criteria under which hedge accounting may be applied, how hedges accounting sould be performed under permitted hedging strategies and required disclosures.
The adoption of these new sections had no impact on the consolidated financial statements for the three month period ended August 31, 2007.
3 - RELATED PARTY TRANSACTION
The Company entered into an agreement with a shareholder, (a company controlled by an officer and director), as of June 1, 2002, calling for royalties to be paid in semi-annual instalments equal to 1% of net annual sales, for an unlimited period. The amount paid cannot exceed net earnings before interest, taxes and amortization. For the current period, total royalties amount to $20,853 ($81,206 in 2007). As at August 31, 2007, the balance due to this shareholder under this agreement amounts to $30,225 ($46,134 as at May 31, 2007). This amount is shown on the balance sheet under accounts payable and accrued liabilities.
These transactions occurred in the normal course of operations and are measured at the exchange amount, which is the amount of consideration determined and accepted by the parties involved.
4 - PARTNERSHIP AGREEMENT
The Company recorded, under the terms of a partnership agreement entered into in June 2007, an advance payment as a long-term liability of $718,350. Scheduled likewise in the agreement, the Company is committed to develop a clinical research and products developing programs incorporating Neptune krill oil (‘‘NKOTM’’) in a dietary matrix. The advance payment may potentially be reimbursable in function of the failure to reach certain common research objectives and milestones to develop new products.
5 - INFORMATION INCLUDED IN THE STATEMENT OF CASH FLOWS
Net changes in working capital items are detailed as fllows:
									Three month ended
									August 31
							2007		2006
Trade accounts receivable						$	(707,023)	$	(349,975)
Tax credits receivable							(37,846)		(20,587)
Inventories							(832,904)		(509,326)
Prepaid expenses							(10,673)		22,766
Accounts payable and accrued liabilities							626,711		(128,415)
						$	(961,735)	$	(985,537)
6 - LONG-TERM DEBT
							August 31		May 31
							2007		2007
Mortgage loan, $1,200,000 par value, secured by processing and laboratory equipment having an amortized cost of $2,376,802 as at August 31, 2007, prime rate plus 6.75% (14.75% as at August 31, and May 31, 2007), payable in monthly capital instalments of $26,650, maturing in February 2010						$	800,200	$	880,150
Mortgage loan, $980,000 par value less the net value of series "E" warrants, secured by the universality of property, weekly variable interest rate determined by the lender plus 5% (effective rate 13.61% as at August 31, 2007, 13.55% as at May 31, 2007), payable in 60 monthly capital instalments of $16,333, maturing in September 2011							770,961		818,298
Mortgage loan, $1,500,000 par value less the net value of the issued shares, secured by the universality of property, weekly variable interest rate determined by the lender plus 3% (effective rate 12.34% as at August 31 and 11.92% as at May 31, 2007), payable in 60 monthly capital instalments of $25,000, maturing in September 2011							1,167,191		1,238,006
Mortgage loan, $855,000 par value, secured by the plant, payable in 10 years, fixed  interest rate of 7.77% (on 10 yrs), payable in the first 10 years in monthly instalments of $8,058.  Balance to be renegociated in 10 yrs							828,967		836,813
Secondary mortgage loan, $399,750 par value, representing the balance of sale, secured by the plant, fixed interest rate of 10.25%, payable in 60 monthly capital instalments of $8,501.							346,194		357,265
Obligations under capital leases, interest rates varying from 0.00% to 15.46%, payable in monthly instalments of $1,981 ($2,261 in 2007), maturing at different dates until November 2010							58,423		55,249
Refundable contribution obtained from a Federal subsidy program available for small and medium enterprises, without pledge or interest, payable in 8 consecutive biannual instalments 2 years after the project ends.							52,500		52,500
							4,024,436		4,238,281
Current portion of long-term debt							946,140		942,969
						$	3,078,296	$	3,295,312
Under these mortgage loans, the company is required to maintain certain financial ratios.
7 -  CAPITAL STOCK AND WARRANTS
							August 31		May 31
							2007		2007
Issued and fully paid
37,012,297		common shares (36 729 547 in mai 2007)				$	23,474,753	$	23,119,647
31,618		warrants					62,825		62,825
						$	23,537,578	$	23,182,472
							Number of
							shares		Consideration
Common Shares
Balance as at May 31, 2005							25,594,805	$	10,656,737
Issued following the conversion of debentures							3,800,000		3,881,512
Issued for cash							600,000		600,000
Issued as settlement of expenses							288,188		288,188
Issued following the exercise of stock options							733,375		416,499
Issued following the exercise of  warrants							3,275,922		1,159,073
Balance as at May 31, 2006							34,292,290		17,002,009
Issued following private placement							1,500,000		4,500,000
Issued following the exercise of stock options							881,875		1,313,757
Issued following the exercise of  warrants							55,382		303,881
Balance as at May 31, 2007							36,729,547		23,119,647
Issued following the exercise of stock options							282,750		355,106
Balance as at August 31, 2007							37,012,297	$	23,474,753
8 - STOCK-BASED COMPENSATION PLAN
The Company has initiated a stock-based compensation plan for administrators, officers, employees and consultants.
Activities within the plan are detailed as follows:
				August 31, 2007		May 31, 2007
					Weighted				Weighted
					average				average
				Number of	exercise		Number of		exercise
				options	price		options		price
					$				$
Options outstanding, beginning of year				4,970,000	2,58		3,703,875		0,45
Granted				305,000	7,88		2,597,500		4,89
Exercised				(282,750)	0,71		(881,875)		0,32
Cancelled				(15,000)	7,25		(449,500)		2,84
Options oustanding, 3 months period
	ended August 31, 2007			4,977,250	3,00		4,970,000		2,58
Exercisable options, 3 months period
	ended August 31, 2007			2,221,000	1,56		1,618,375		0,84
									August 31, 2007
			Options outstanding				Exercisable options
			Weighted	Weighted	Number		Number		Weighted
			average	remaining	of options		of options		average
			exercise	contractual	outstanding		exercisable		exercise
			price	life					price
				outstanding
			$						$
0,25			0,25	2,32	1,698,000		1,003,750		0,25
0,75 à 1,00			0,99	3,38	467,000		343,500		0,99
1,15 à 1,75			1,27	1,86	286,000		216,000		1,15
2,60 à 3,00			2,63	3,78	906,250		402,000		2,61
3,50			3,50	4,13	40,000		40,000		3,50
4,25			4,25	4,37	20,000		3,000		4,25
5,75			5,75	4,47	350,000		87,500		5,75
7,25 à 7,50			7,28	4,69	1,085,000		125,250		7,25
8,50			8,50	4,83	125,000		-		-
			2,96	3,54	4,977,250		2,221,000		2,73
9 - SEGMENT DISCLOSURES
Descriptive information on the Company's reportable segments
The Company has only one reportable operating segment: processing and commercializing products derived from marine biomasses.
Geographic information
All the Company's assets are located in Canada.
The Company sales are attributed based on the customer's area of residency:									Three month ended
									August 31,
							2007		2006
Canada						$	29,560	$	19,367
United States							1,138,055		964,187
Europe							452,113		490,979
Asia / Oceania							465,608		76,956
						$	2,085,336	$	1,551,489
Information about major customers
During the three month period ended August 31 2007, the Company realiazed sales to two costumers amounting $714,860 ($806,707 to three costumers in 2007).
10 - CORRESPONDING CONSOLIDATED FINANCIAL STATEMENTS
Some comparative figures have been reclassified to conform with the presentation adopted in this period.