Critical Outcome Technologies Inc.
TSX VENTURE : COT

Critical Outcome Technologies Inc.

January 02, 2007 15:11 ET

Critical Outcome Technologies Inc. Reports Second Quarter 2007 Financial Results

LONDON, ONTARIO--(CCNMatthews - Jan. 2, 2007) - Critical Outcome Technologies Inc. (TSX VENTURE:COT) today announced its financial results for the second quarter ended October 31, 2006. The Company continued its development stage activities focused on developing its molecular libraries and building customer relationships for the sale or licence of its two lead molecule libraries; small cell lung cancer (10% ownership interest) and multiple sclerosis and did not generate any revenues from operations during the quarter. The Company reported a net loss for the period of $101,633 or $0.00 per share compared to a net loss of $56,066 or $0.01 per share for the three months ended October 31, 2005.

Revenues from operations for the first six months ending October 31, 2006 were $2,500 from screening services. A net loss of $264,721 or $0.01 per share was incurred for this period compared to a net loss of $93,521 or $0.01 per share in the comparable period in 2005. These results reflect the increased business activity of the company in fiscal 2007, as it advances its technology and molecular libraries forward to market. At October 31, 2006 the Company had $2,237,599 in cash and cash equivalents.

"On October 11, we successfully completed our first major financing, which raised net proceeds of $2,178,386. This provides us the opportunity to move some of our molecular libraries forward through our development cycle in a substantial way," stated Dr. Wayne Danter, President & CSO. "We believe the amalgamation completed on October 13, which led to our listing on the TSX Venture Exchange, provides the public forum and profile for our Company and its molecular libraries to meet our goal of bringing these exciting drug candidates forward to their ultimate goal of meeting major unmet medical needs. For example, by the end of October we had completed the discovery, optimization, patentability due diligence and final selection of our library of orally available inhibitors of VEGF and PDGF receptor kinases as potential therapies for acute multiple sclerosis."

About Critical Outcome Technologies Inc. (COTI)

COTI is formed around a unique computational platform technology called CHEMSAS®, which allows for the accelerated identification, profiling and optimization of targeted small molecules potentially effective in the treatment of human diseases for which current therapy is either lacking or ineffective. COTI's business is focused on the discovery and pre-clinical development of libraries of optimized lead molecules for the treatment of specific cancers, HIV and multiple sclerosis. Currently, five targeted libraries of lead compounds (small cell lung cancer, multiple sclerosis, HIV integrase inhibitors, colorectal cancer, and acute myelogenous leukemia in adults) are under active development. For more information on COTI, visit www.criticaloutcome.com.



Critical Outcome Technologies Inc.
(a development stage company)
Interim Balance Sheets
Unaudited
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October 31, April 30,
2006 2006
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Assets

Current assets:

Cash $ 2,237,599 $ 170,464
Other receivables 99,491 8,842
Prepaid expenses and deposits 8,722 5,241
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2,345,812 184,547

Equipment 19,432 33,766
Patents 87,687 68,727
Trademark 1,305 1,740
Investment in 6441513 Canada Inc 1 1
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$ 2,454,237 $ 288,781
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Liabilities and Shareholders' Deficiency

Current liabilities:

Accounts payable and accrued liabilities $ 441,673 $ 171,266
Due to shareholders 153,853 127,194
Notes payable and other advances 20,000 45,000
Current portion of capital lease obligation 8,173 16,128
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623,699 359,588
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Capital lease obligation 33,525 33,525

Shareholders' equity

Share capital and warrants 2,754,676 576,292
Contributed surplus 251,046 251,000
Deficit 1,208,709 931,624
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1,797,013 (104,332)
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$ 2,454,237 $ 288,781
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Critical Outcome Technologies Inc.
(a development stage company)
Interim Statements of Operation and Deficit
(Unaudited)
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Three Months Ended Six Months Ended
October 31, October 31,
2006 2005 2006 2005
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Revenues:

Contract services $ - $ 30,000 $ - $ 30,000

Screening services - - 2,500 -
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- 30,000 2,500 30,000
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Expenses:

Salaries and benefits 92,578 46,072 172,323 61,561
Professional fees 15,700 13,978 52,656 26,144
Marketing 30,321 1,659 51,056 2,360
Research and product
development 6,072 9,000 15,072 9,000
Amortization of furniture
& equipment 6,021 3,669 14,333 4,715
Office and general 6,119 2,021 10,752 2,548
Interest and bank charges 2,882 1,040 7,470 1,890
Rent 4,673 4,503 9,255 8,800
Computer expense 3,272 4,127 5,091 6,068
Amortization of trademark 217 217 435 435
Reorganization costs 11,040 - 6,040 -
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178,895 86,286 344,483 123,521
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Loss before other income
(expense) 178,895 56,286 341,983 93,521

Other income (expense)
Investment tax credit refund 75,050 - 75,050 -
Interest income 2,212 220 2,212 -
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77,262 220 77,262 -
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Loss 101,633 56,066 264,721 93,521

Deficit, beginning of the
period 1,094,712 378,150 931,624 340,695

Net book value of Aviator
Petroleum Corp on
amalgamation (12,364) - (12,364) -
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Deficit, end of the
period $ 1,208,709 $ 434,216 $ 1,208,709 $ 434,216
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Basic and diluted loss
per common share $ 0.00 $ 0.01 $ 0.01 $ 0.01

Weighted average number
of common shares
outstanding 24,970,560 9,280,000 23,671,946 8,508,261
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Critical Outcome Technologies Inc.
(a development stage company)
Interim Statements of Cash Flows
(Unaudited)
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Three Months Ended Six Months Ended
October 31, October 31,
2006 2005 2006 2005
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Cash provided by (used in):

Operating activities:
Loss $ 101,633 $ 56,066 $ 264,721 $ 93,521
Amortization of trademark 217 218 435 435
Amortization of equipment 6,021 3,669 14,333 4,715
Net cash acquired on
amalgamation with Aviator
Petroleum (12,364) - (12,364) -
Cash acquired on
amalgamation with
133564 Ontario Inc - - 46 -
Change in non-cash operating
working capital (54,707) (223) 176,276 (5,509)
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(162,466) (52,402) (85,995) (93,880)
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Investing activities:
Additions to patents (10,010) (3,347) (18,960) (16,950)
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(10,010) (3,347) (18,960) (16,950)

Financing activities:
Issue of common shares
& warrants (net) 2,400,886 - 2,178,386 99,999
Issue of preference shares - - - 1
Note payable and other
advances (25,000) - (25,000) -
Repayment of obligation
under capital lease (4,012) (1,540) (7,955) (1,540)
Due to shareholders 14,777 30,383 26,659 10,779
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2,386,651 28,843 2,172,090 109,239
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Increase (decrease) in
cash 2,214,175 (26,906) 2,067,135 (1,591)

Cash, beginning of the
period 23,424 27,135 170,464 1,820

Cash, end of the period $ 2,237,599 $ 229 $ 2,237,599 $ 229
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Supplemental cash flow
information:
Interest expense paid $ 2,044 $ - $ 2,343 $ -
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The TSX Venture Exchange has not reviewed and does not accept responsibility for the adequacy or accuracy of this news release.

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