EXHIBIT 6
NOT FOR DISTRIBUTION IN THE UNITED STATES OR OVER U.S. WIRE SERVICES. ANY
FAILURE TO COMPLY WITH THIS RESTRICTION MAY CONSTITUTE A VIOLATION OF U.S.
SECURITIES LAWS.
ATTENTION BUSINESS/FINANCIAL EDITORS:
HAWKER RESOURCES INC. RELEASES FIRST QUARTER RESULTS
Calgary, May 30, 2003, Hawker Resources Inc. (formerly SYNSORB Biotech Inc.)
(HKR-TSE) announces its financial results for the first quarter 2003.
MANAGEMENT'S DISCUSSION AND ANALYSIS
Management's discussion and analysis (MD&A) should be read in conjunction with
the unaudited interim financial statements for the three months ended March 31,
2003 and the audited financial statements and MD&A for the year ended December
31, 2002.
Prior to 2002, SYNSORB Biotech Inc. ("SYNSORB") conducted pharmaceutical drug
development with respect to SYNSORB Cd(R) for the prevention of recurrent
C.difficile associated diarrhea. On December 10, 2001 SYNSORB terminated
development of SYNSORB Cd(R) including its phase III clinical trials. Subsequent
to December 10, 2001 SYNSORB had no drug in active development. At the Annual
and Special Meeting of SYNSORB shareholders held April 3, 2003, shareholders
approved the planned conversion of the company into an oil and gas enterprise
and changed the company's name to Hawker Resources Inc. ("Hawker" or "the
Company").
REVENUE
For the three months ended March 31, 2003, the Company recorded total revenue of
$378,000 compared to $132,000 for the three months ended March 31, 2002.
Interest income for the first quarter of 2003 was $3,000 as compared with
$25,000 for the first quarter of 2002. This decrease was a result of the lower
average cash on hand balances in the first quarter of 2003 compared to the same
period in 2002.
Other revenue received by the Company during the first quarter of 2003 related
to an exclusive license agreement of certain of its patents regarding toxin
binding sugars. Pursuant to this license agreement, the Company received net
proceeds of $375,000. Other revenue received during the first quarter of 2002 of
$107,000 related to a milestone payment received by the Company with respect to
the previous sale of its INH Technologies Inc. subsidiary. No milestone payments
were received in the first quarter of 2003.
OPERATING EXPENSES
Operating expenses totaled $476,000 for the three months ended March 31, 2003 as
compared with $191,000 for the three months ended March 31, 2002. The increase
in operating expenses for the first quarter of 2003 was due to increased
insurance costs for the Company and professional fees related to the conversion
of the Company into an oil and gas enterprise.
INTEREST EXPENSE
There was no interest paid on long-term debt for the quarter ended March 31,
2003 as compared with $71,000 for the quarter ended March 31, 2002. The decrease
in interest expense reflects the repayment in early 2002 of the Company's
outstanding debt.
MAINTENANCE OF PATENTS
Costs incurred to maintain existing patents of the Company are expensed as
incurred. For the three months ended March 31, 2003, $11,000 was incurred for
maintenance of patents, a decrease of 88% from the $95,000 incurred for the
three months ended March 31, 2002. This decrease was due to a reduction in the
number of patents maintained by the Company.
AMORTIZATION
Amortization for the quarter ended March 31, 2003 was $2,000 as compared with
$20,000 for the same period in 2002. This decrease is a result of the reduced
carrying value of the depreciable capital assets due to the asset disposals that
occurred during the year ended December 31, 2002.
CAPITAL EXPENDITURES AND CAPITAL ASSET DISPOSALS
There were no capital expenditures in the either the first quarter of 2003 or
the first quarter of 2002. During the three months ended March 31, 2003, the
Company sold most of its manufacturing equipment for net proceeds of $939,000.
During the three months ended March 31, 2002, the Company sold minor capital
assets for net proceeds of $4,000. The lack of capital expenditures and the sale
of capital assets in both 2003 and 2002 reflects the wind-down of the biotech
operations of the Company.
LIQUIDITY AND CAPITAL RESOURCES
As at March 31, 2003, the Company's cash position was $1,430,000 and its working
capital position was $1,365,000 compared to December 31, 2002 balances of
$289,000 and $412,000, respectively. As at March 31, 2003 and December 31, 2002,
the Company had no long-term or short-term debt.
The Company's primary source of liquidity during the first quarter of 2003 was
the liquidation of its assets and the license of certain of its patents. The
Company continues to market its building and related land as commercial
premises. The Company also holds miscellaneous intellectual property rights with
respect to certain drug technologies, which it may license, dispose of or
abandon. No assurance can be given as to whether any additional assets can be
disposed of or what, if any, proceeds can or will be received with respect
thereto.
On April 3, 2003, the Company closed financing agreements entered into effective
March 7, 2003 with unrelated parties. Under the agreements, the Company issued
by way of private placement the following: 75,000 common shares for $45,364;
430,493 Series A Debentures for $3,616,141; 430,493 Series A Warrants for
$11,873; 2,152,465 voting preferred shares for $6,196; 3,874,437 non-voting
preferred shares for $11,153. Each Series A Warrant will entitle the holder
thereof to purchase five common shares and nine Class A shares on the concurrent
surrender of the warrant, five voting preferred shares, nine non-voting
preferred shares and one Series A Debenture. The proceeds of the debentures
along with an additional $460,000 of the Company's cash have been pledged as
security for repayment of the debentures. Accordingly, the private placement
will not be a source of additional capital resources and liquidity to the
Company until the warrants issued in the private placement are exercised and the
proceeds received as additional equity capital.
Also on April 3, 2003, the board of directors of the Company ratified the
acquisition of all of the shares of 1022971 Alberta Ltd. ("1022971") for a
nominal amount and the Company was assigned an option to purchase up to 49% of
certain oil and gas properties for $67.1 million.
On April 30, 2003, 1022971 obtained a bank loan for $120,000,000 to acquire all
of the shares of Southward Energy Ltd. ("Southward"). Immediately thereafter on
April 30, 2003, Southward sold its oil and gas properties, excluding a 1%
undivided interest in certain properties and a 100% interest in related seismic,
to an independent third party for gross proceeds of $164,631,000. The gross
proceeds were used to repay the bank loan obtained to acquire the shares and
bank indebtedness of Southward.
On May 28, 2003, the Company obtained an extendable revolving term credit
facility amounting to $28,000,000 that bears interest at rates varying from
Canadian prime rate or U.S. base rate of such bank to the Canadian prime rate or
U.S. base rate plus 30 basis points, payable monthly in arrears.
Pursuant to an underwriting agreement dated May 29, 2003, the Company proposes
to raise net proceeds of $41.9 million through the issue and sale of 14,286,000
common shares. It is expected that the closing of the share offering will take
place on or about June 12, 2003, and in any event not later than July 10, 2003.
The Company will use $39.1 million of the net proceeds from the offering,
together with up to $28 million of debt financing, to exercise the purchase
option described above. The remainder of the net proceeds will be added to
working capital and used for general corporate purposes.
Immediately after the issuance of a receipt for the prospectus offering the
Company's common shares for sale and issue, the warrants described above are to
be exercised and the holder will be issued five common shares and nine Class A
shares upon the surrender of five voting preferred shares, nine non-voting
preferred shares and one Series A Debenture. Upon such an event $4,105,362
currently held as security on the Series A Debentures will be released and
available for general corporate purposes.
The oil and gas industry is capital intensive and the Company is likely to
require significant additional capital resources in order to succeed in the oil
and gas sector. At present, the Company has not identified any source of these
additional capital resources and it is unlikely that such resources would be
available to it unless particular oil and gas assets are identified to be
acquired.
The Company's ability to raise additional capital will depend upon a number of
factors, such as general economic conditions and conditions in the oil and gas
industry, that are beyond its control. If additional capital is required and is
not available to the Company on acceptable terms, the Company's financial
condition and prospects may be impaired.
HAWKER RESOURCES INC.
(Formerly SYNSORB Biotech Inc.)
BALANCE SHEETS
AS AT
- ------------------------------------------------------------------------------------------------
MARCH 31 December
(in thousands of dollars) 2003 2002
- ------------------------------------------------------------------------------------------------
(UNAUDITED) (audited)
ASSETS
CURRENT
Cash and cash equivalents $ 1,430 $ 289
Accounts receivable 29 27
Prepaids 50 176
- ------------------------------------------------------------------------------------------------
1,509 492
CAPITAL ASSETS 2,582 3,523
- ------------------------------------------------------------------------------------------------
$ 4,091 $ 4,015
================================================================================================
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT
Accounts payable and accrued liabilities $ 144 $ 80
ALBERTA HERITAGE FOUNDATION GRANT 387 387
SHAREHOLDERS' EQUITY (Note 4)
Share capital 12,864 12,741
Deficit (9,304) (9,193)
- ------------------------------------------------------------------------------------------------
3,560 3,548
- ------------------------------------------------------------------------------------------------
$ 4,091 $ 4,015
================================================================================================
See accompanying notes
HAWKER RESOURCES INC.
(Formerly SYNSORB Biotech Inc.)
STATEMENTS OF EARNINGS (LOSS) AND DEFICIT
THREE MONTHS ENDED MARCH 31
- ----------------------------------------------------------------------------------------------
(in thousands of dollars, except per share amounts) 2003 2002
- ----------------------------------------------------------------------------------------------
(UNAUDITED) (unaudited)
REVENUE
Interest income $ 3 $ 25
Other 375 107
- ---------------------------------------------------------------------------------------------
378 132
EXPENSES
Operating 476 191
Interest on long-term debt - 71
Maintenance of patents 11 95
Amortization 2 20
- ---------------------------------------------------------------------------------------------
489 377
- ---------------------------------------------------------------------------------------------
LOSS BEFORE THE FOLLOWING (111) (245)
GAIN ON SALE OF ONCOLYTICS SHARES (Note 3) - 4,077
SHARE OF LOSS FROM EQUITY INVESTMENT IN ONCOLYTICS - (314)
- ---------------------------------------------------------------------------------------------
NET EARNINGS (LOSS) FOR THE PERIOD (111) 3,518
DEFICIT, BEGINNING OF PERIOD (9,193) (72,855)
- ---------------------------------------------------------------------------------------------
DEFICIT, END OF PERIOD $ (9,304) $(69,337)
=============================================================================================
BASIC AND DILUTED NET EARNINGS (LOSS) PER COMMON SHARE (Note 4) $ (0.02) $ 0.71
=============================================================================================
See accompanying notes
HAWKER RESOURCES INC.
(Formerly SYNSORB Biotech Inc.)
STATEMENTS OF CASH FLOWS
THREE MONTHS ENDED MARCH 31
- ----------------------------------------------------------------------------------------------
(in thousands of dollars) 2003 2002
- ----------------------------------------------------------------------------------------------
(UNAUDITED) (unaudited)
OPERATING ACTIVITIES
Net earnings (loss) for the period $ (111) $ 3,518
Add non-cash items
Amortization 2 20
Gain on sale of Oncolytics shares (Note 3) - (4,077)
Share of loss from equity investment in Oncolytics - 314
- --------------------------------------------------------------------------------------------
(109) (225)
Increase in accounts receivable (2) (13)
Decrease in prepaid expenses 126 70
Increase (decrease) in accounts payable and accrued liabilities 64 (2,930)
- --------------------------------------------------------------------------------------------
79 (3,098)
- --------------------------------------------------------------------------------------------
INVESTING ACTIVITIES
Proceeds from sale of capital assets 939 4
Proceeds from sale of Oncolytics shares (Note 3) - 5,483
- --------------------------------------------------------------------------------------------
939 5,487
- --------------------------------------------------------------------------------------------
FINANCING ACTIVITIES
Common shares issued on exercise of options 123 -
Repayment of long-term debt - (5,910)
- --------------------------------------------------------------------------------------------
123 (5,910)
- --------------------------------------------------------------------------------------------
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS 1,141 (3,521)
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD 289 5,841
- --------------------------------------------------------------------------------------------
CASH AND CASH EQUIVALENTS, END OF PERIOD $ 1,430 $ 2,320
============================================================================================
Cash interest paid - 71
Cash interest received 2 24
Cash taxes paid - 10
See accompanying notes
HAWKER RESOURCES INC.
(Formerly SYNSORB Biotech Inc.)
NOTES TO FINANCIAL STATEMENTS
THREE MONTHS ENDED MARCH 31, 2003 AND 2002
1. NATURE OF OPERATIONS
Prior to 2002, SYNSORB Biotech Inc. ("SYNSORB") conducted pharmaceutical
drug development with respect to SYNSORB Cd(R) for the prevention of
recurrent C.difficile associated diarrhea. On December 10, 2001 SYNSORB
terminated development of SYNSORB Cd(R) including its phase III clinical
trials. Subsequent to December 10, 2001 SYNSORB had no drug in active
development. At the Annual and Special Meeting of SYNSORB shareholders
held April 3, 2003, shareholders approved the planned conversion of the
company into an oil and gas enterprise and changed the company's name to
Hawker Resources Inc.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The interim financial statements of Hawker Resources Inc. ("Hawker" or
"the Company") have been prepared following the same accounting policies
and methods of computation as the financial statements of the Company as
at December 31, 2002. The interim financial statements contain disclosures
which are supplemental to the Company's annual financial statements.
Certain disclosures, which are normally required to be included in the
notes to the annual financial statements, have been condensed or omitted.
The interim financial statements should be read in conjunction with the
Company's financial statements and notes thereto for the year ended
December 31, 2002.
3. INVESTMENTS
During the period ended March 31, 2002, the Company sold 1,530,800 common
shares in Oncolytics Biotech Inc. ("Oncolytics") for net proceeds of
$5,483,000 resulting in a gain on sale of $4,077,000. As at March 31, 2003
and December 31, 2002 the Company did not hold any common shares of
Oncolytics.
4. SHARE CAPITAL
COMMON SHARES
MARCH 31, 2003
- --------------------------------------------------------------------------------------------
NUMBER OF SHARES AMOUNT (IN 000's)
- --------------------------------------------------------------------------------------------
Balance at January 1, 2003 4,959,937 $ 12,741
Issued for cash on exercise of options and warrants 175,000 123
- ----------------------------------------------------------------------------------------
Balance at March 31, 2003 5,134,937 $ 12,864
========================================================================================
Reference is made to Note 5 with respect to the issue of common shares and
convertible warrants.
STOCK OPTIONS
MARCH 31, 2003
- --------------------------------------------------------------------------------------------
WEIGHTED AVERAGE
EXERCISE PRICE
SHARES $
- --------------------------------------------------------------------------------------------
Outstanding at January 1, 2003 330,565 9.80
Granted - -
Exercised (175,000) 0.70
Expired (12,500) 87.20
Forfeited - -
- --------------------------------------------------------------------------------------
Outstanding at March 31, 2003 143,065 14.16
======================================================================================
Options exercisable at March 31, 2003 141,565 14.21
======================================================================================
On April 3, 2003, stock options to acquire 100,000 shares were exercised
to reduce the number of options outstanding to 43,065.
PER SHARE AMOUNTS
Earnings (loss) per common share calculations are based on earnings (loss)
for the period as the numerator in the calculation and the weighted
average number of common shares outstanding during the period (March 31,
2003: 4,966,881; March 31, 2002: 4,959,937) as the denominator. For the
period ended March 31, 2003, options to purchase 143,065 common shares at
an average price of $14.16 and warrants for the purchase of 10,625 common
shares at a price of $36.00 were not included in the computation of
diluted earnings per share because the exercise price of the options and
warrants was greater than the average market price of the common shares.
For the period ended March 31, 2002, options to purchase 165,679 common
shares at an average price of $41.28 and warrants for the purchase of
15,625 common shares at a price of $42.40 were not included in the
computation of diluted earnings per share because the exercise price of
the options and warrants was greater than the average market price of the
common shares. Per share amounts for March 31, 2002 have been restated to
reflect the share consolidation that took place in May 2002.
5. SUBSEQUENT EVENTS
(a) On April 3, 2003, stock options to acquire 100,000 common shares at $0.70
were exercised.
(b) On April 3, 2003, the Company closed financing agreements entered into
effective March 7, 2003 with unrelated parties. Under the agreements, the
Company issued by way of private placement the following: 75,000 common
shares for $45,364; 430,493 Series A Debentures for $3,616,141; 430,493
Series A Warrants for $11,873; 2,152,465 voting preferred shares for $6,196;
3,874,437 non-voting preferred shares for $11,153. The proceeds of the
debentures along with an additional $460,000 of the Company's cash have been
pledged as security for repayment of the debentures.
Each Series A Warrant will entitle the holder thereof to purchase five
common shares and nine Class A shares on the concurrent surrender of
the warrant, five voting preferred shares, nine non-voting preferred
shares and one Series A Debenture.
Concurrent with the closing of the financing agreements, the Company
issued 148,798 common shares with an attributed value of $90,000 to an
unrelated party in payment of a success fee.
(c) Also on April 3, 2003, the board of directors of the Company ratified the
acquisition of all of the shares of 1022971 Alberta Ltd. ("1022971") for a
nominal amount and the Company was assigned an option to purchase up to 49%
of certain oil and gas properties for $67.1 million.
(d) On April 30, 2003, 1022971 obtained a bank loan for $120,000,000 to acquire
all of the shares of Southward Energy Ltd. ("Southward"). Immediately
thereafter on April 30, 2003, Southward sold its oil and gas properties,
excluding a 1% undivided interest in certain properties and a 100% interest
in related seismic, to an independent third party for gross proceeds of
$164,631,000. The gross proceeds were used to repay the bank loan obtained
to acquire the shares and bank indebtedness of Southward.
(e) On May 28, 2003, the Company obtained an extendable revolving term credit
facility amounting to $28,000,000 that bears interest at rates varying from
Canadian prime rate or U.S. base rate of such bank to the Canadian prime
rate or U.S. base rate plus 30 basis points, payable monthly in arrears.
(f) Pursuant to an underwriting agreement dated May 29, 2003, the Company
proposes to raise net proceeds of $41.9 million through the issue and sale
of 14,286,000 common shares. It is expected that the closing of the share
offering will take place on or about June 12, 2003, and in any event not
later than July 10, 2003. The Company will use $39.1 million of the net
proceeds from the offering, together with up to $28 million of debt
financing, to exercise the purchase option described in (c) above. The
remainder of the net proceeds will be added to working capital and used for
general corporate purposes.
Immediately after the issuance of a receipt for the prospectus offering the
Company's common shares for sale and issue, the warrants described in (b)
above are to be exercised and the holder will be issued five common shares
and nine Class A shares upon the surrender of five voting preferred shares,
nine non-voting preferred shares and one Series A Debenture.
Hawker is an Alberta-based corporation engaged in the business of exploring for
and developing oil and natural gas reserves in western Canada and acquiring oil
and natural gas properties. Hawker's common shares are listed on the Toronto
Stock Exchange under the symbol "HKR."
For further information please contact:
Mr. David Tuer, President & CEO
Phone: (403) 294-0067
or
Mr. Barry Herring, Vice President & CFO
Phone (403) 444-3330
ADVISORY: The Toronto Stock Exchange has neither approved nor disapproved of the
information contained herein. Certain information regarding the company,
including management's assessment of future plans and operations, may constitute
forward-looking statements under applicable securities law and necessarily
involve risks associated with oil and gas exploration, production, marketing and
transportation such as loss of market, volatility of prices, currency
fluctuations, imprecision of reserve estimates, environmental risks, competition
from other producers and ability to access sufficient capital from internal and
external sources; as a consequence, actual results may differ materially from
those anticipated. The company assumes no obligation to update the
forward-looking statements or to update the reasons why actual results could
differ from those contemplated by the forward-looking statements.