2012 Annual Report - Prometic - Life Science, Inc.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Years ended December 31, 2012 and 2011
(in thousands of Canadian dollars, except share and per share amounts or as otherwise specified)
1. GOVERNING STATUTES, NATURE OF OPERATIONS AND GOING CONCERN UNCERTAINTY
ProMetic Life Sciences Inc. (“ProMetic” or the “Company”), incorporated under the Canada Business Corporations Act, is an international
biopharmaceutical company engaged in the research, development, manufacturing and marketing of a variety of applications developed from its
own exclusive technology platform. The Company owns proprietary technology essential for use in the large-scale purification of drugs, genomics
and proteomics products as well as medical and therapeutic applications. The Company’s head office is located in Laval, Québec, Canada.
These consolidated financial statements have been prepared on the basis of the going concern assumption, which assumes that the Company
will realize its assets and discharge its liabilities in the normal course of business. The use of these principles may not be appropriate because,
as at December 31, 2012, there is significant doubt that the Company will be able to continue as a going concern without achieving profitable
operations or raising additional financial resources. Since inception, the Company has incurred losses and has an accumulated deficit of $246,470
as at December 31, 2012. To date, the Company has financed its activities through collaboration and licensing agreements, bank loans, government
financial support, investment tax credits and the issuance of debt and equity. Subsequent to December 31, 2012, the Company received the
share subscription receivable of $9,822 from a strategic equity investment with Shenzhen Hepalink Pharmaceuticals Co. Ltd. (see note 20) and
completed the renegotiation of the repayment terms of $4,000 of the long-term debt provided by shareholders (note 15). While this provides
improvement in the Company’s near-term liquidity, the Company’s committed cash obligations and expected level of expenditures for the next 12
months exceed its committed sources of funds.
The Company’s ability to continue as a going concern is dependent upon its ability to obtain the ongoing support of its lenders and the continued
activity of its core business including the advancement of collaboration and licensing agreements for pipeline projects, and raising additional
financing either from the issuance of shares or long-term debt on acceptable commercial terms. There can be no assurance of the success of the
Company’s operations, on its plans to achieve profitability, nor on its access to further financing which may be required to execute these plans.
These consolidated financial statements do not reflect the adjustments that might be necessary to the carrying amount of reported assets, liabilities
and revenues and expenses and the consolidated statement of financial position classification used if the Company were unable to continue
operations in accordance with the going concern assumption. Such adjustments could be material.
2. SIGNIFICANT ACCOUNTING POLICIES
a) Statement of compliance
The consolidated financial statements have been prepared in accordance with International Financial Reporting Standards (“IFRS”) as issued
by the International Accounting Standards Board (“IASB”) and were authorized for issue by the Board of Directors on March 25, 2013.
b) Basis of measurement
The consolidated financial statements have been prepared on a historical cost basis, except for cash and restricted cash, which have been
measured at fair value.
c) Functional and presentation currency
The consolidated financial statements are presented in Canadian dollars, which is also the parent Company’s functional currency.
d) Basis of consolidation
The consolidated financial statements include the accounts of ProMetic Life Sciences Inc., and those of its subsidiaries ProMetic BioSciences
Inc., ProMetic BioProduction Inc. (also referred to as “Newco”), ProMetic BioSciences (USA), Inc., ProMetic BioSciences Ltd., ProMetic
BioTherapeutics Inc., ProMetic BioTherapeutics Ltd., ProMetic Manufacturing Inc., BSafE Inc. and Pathogen Removal and Diagnostic
Technologies Inc. (hereinafter referred to as “PRDT”). The financial statements of the subsidiaries are prepared for the same reporting period
as the parent company, using consistent accounting policies. All intra-group transactions, balances, income and expenses are eliminated in full
upon consolidation.
e) Investment in an associated company
The Company’s investment in its associate, NantPro BioSciences, LLC (“NantPro”) is accounted for using the equity method. An associate is an
entity in which the Company has significant influence. Under the equity method, the investment in the associate is carried on the consolidated
statement of financial position at cost plus post acquisition changes in the Company’s share of net assets of the associate.
The consolidated statement of operations and comprehensive loss reflects the Company’s share of the results of operations of the associate.
When there has been a change recognised directly in the equity of the associate, the Company recognises its share of any changes and
discloses this, when applicable, in the consolidated statement of changes in shareholder’s equity (deficiency). Profits and losses resulting
from transactions between the Company and the associate are recognized in the Company’s consolidated financial statements only to
the extent of unrelated investors’ interests in the associate.
PROMETIC LIFE SCIENCES INC.
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