ViRexx Medical Corp.
TSX : VIR

ViRexx Medical Corp.

August 15, 2005 06:50 ET

Virexx Announces Restatement of First Quarter Financial Statements

EDMONTON, ALBERTA--(CCNMatthews - Aug. 15, 2005) - ViRexx Medical Corp. (TSX:VIR) a company focused on immunotherapy treatments for cancer, chronic hepatitis B & C and embolotherapy treatments for tumors, today announced that its interim financial statements for the first quarter period ended March 31, 2005 have been restated. The reason for this restatement is explained as follows.

The acquisition of AltaRex was originally treated as the acquisition of a business and accounted for in accordance with CICA 1581 Business Combinations. It was subsequently determined that AltaRex did not meet the definition of a business as described in EIC 124 and therefore should have been accounted for as a purchase of assets. This change in accounting was applied retroactively to the date of acquisition and resulted in a change in the allocation of the purchase price and a change in the calculation of future income taxes. The impact of this restatement on the balance sheet as at March 31, 2005 was: an increase in the amount allocated to acquired intellectual property of $6,618,338; a $6,065,718 decrease in goodwill; a $58,314 increase in future income taxes payable; a $568,859 increase in share capital; and, a $11,934 decrease in convertible debentures payable. The impact of the restatement on the income statement for the three months ended March 31, 2005 was: $664,494 increase in amortization expense, a $7,383 increase in debenture interest and a $625,915 increase in future income taxes recovered. In addition, the Company has now included stock based compensation expense in the expense category to which it relates.

About ViRexx Medical Corp.

ViRexx is an Edmonton, Alberta based biotechnology company focused on the development of novel therapeutic products for the treatment of certain cancers and specified chronic viral infections. ViRexx's most advanced programs include drug candidates for the treatment of ovarian cancer, chronic hepatitis B & C and solid tumors.

ViRexx's lead product, OvaRex® MAb, a therapy for the treatment of late-stage ovarian cancer, is currently the subject of two Phase III clinical trials being funded by ViRexx's licensing partner Unither Pharmaceuticals, Inc., a subsidiary of United Therapeutics Corporation. For additional information about ViRexx, please see www.virexx.com.

This news release contains certain forward-looking statements that reflect the current views and/or expectations of the Company with respect to its performance, business and future events. Such statements are subject to a number of risks, uncertainties and assumptions. Actual results and events may vary significantly.

Restated financial statements attached:



ViRexx Medical Corp.
(a development stage company)
Interim Consolidated Balance Sheet
---------------------------------------------------------------------

(expressed in Canadian dollars)

March 31, December 31,
2005 2004
$ $
(Unaudited)
(Restated) (Restated)

Assets

Current assets
Cash and cash equivalents 8,988,453 9,462,988
Restricted cash 659,931 659,000
Goods and services tax recoverable 41,476 94,903
Prepaid expenses and deposits 297,444 383,143
Other current assets 96 18,527
--------------------------

9,987,400 10,618,561

Property and equipment 525,866 533,202

Acquired intellectual property rights 33,905,668 34,570,682
--------------------------

44,418,934 45,722,445
--------------------------
--------------------------

Liabilities

Current liabilities
Accounts payable and accrued liabilities 615,363 744,805
Convertible debentures 1,047,089 1,037,106
--------------------------

1,662,452 1,781,911

Future income taxes 6,124,032 6,749,947
--------------------------

7,786,484 8,531,858
--------------------------

Shareholders' Equity

Share capital 43,489,343 42,371,313

Contributed surplus 3,115,986 3,010,575

Equity component of convertible debenture 59,118 59,118

Deficit accumulated during development
stage (10,031,997) (8,250,419)
--------------------------

36,632,450 37,190,587
--------------------------

44,418,934 45,722,445
--------------------------
--------------------------


ViRexx Medical Corp.
(a development stage company)
Interim Consolidated Statement of Loss
---------------------------------------------------------------------

(expressed in Canadian dollars)

Three-month period ended
--------------------------

March 31, March 31,
2005 2004
$ $
(Unaudited) (Unaudited)
(Restated) (Restated)

Revenue - -
--------------------------

Expenses
Research and development 912,984 192,663
Corporate administration 742,360 271,564
Depreciation and amortization 692,542 10,249
Debenture interest 15,353 15,341
Interest income (53,104) -
(Loss) gain on foreign exchange 18,613 (412)
--------------------------

2,328,748 489,405
--------------------------

Loss before income taxes (2,328,748) (489,405)

Income taxes (recovery) (625,915) -
--------------------------

Net loss for the period (1,702,833) (489,405)
--------------------------
--------------------------

$ $

Basic and diluted loss per share (0.03) (0.03)
--------------------------
--------------------------

# #

Weighted average number of common shares
outstanding 53,745,499 15,600,000
--------------------------
--------------------------


ViRexx Medical Corp.
(a development stage company)
Interim Consolidated Statement of Deficit
---------------------------------------------------------------------

(expressed in Canadian dollars)

Three-month period ended
--------------------------

March 31, March 31,
2005 2004
$ $
(Unaudited) (Unaudited)

Balance - Beginning of period

As previously reported (8,233,762) (3,857,886)
Accounting changes (16,657) (734,773)
--------------------------

As restated (8,250,419) (4,592,659)
Premium on repurchase of shares (78,745) -
--------------------------

Balance - End of period (10,031,997) (5,082,064)
--------------------------
--------------------------


ViRexx Medical Corp.
(a development stage company)
Interim Consolidated Statement of Cash Flows
---------------------------------------------------------------------

(expressed in Canadian dollars)

Three-month period ended
--------------------------

March 31, March 31,
2005 2004
$ $
(Unaudited) (Unaudited)
(Restated) (Restated)

Cash provided for (used in)

Operating activities
Net loss for the period (1,702,833) (489,405)
Items not affecting cash
Debenture interest 15,353 15,341
Depreciation and amortization 692,542 10,249
Future income taxes (625,915) -
Stock-based compensation 141,594 -
Unrealized foreign exchange loss 2,600 -
--------------------------

(1,476,659) (463,815)

Net change in non-cash working capital items
Accounts receivable 18,431 52,082
Goods and services tax recoverable 53,427 3,672
Prepaid expenses and deposits 85,699 2,125
Accounts payable and accrued liabilities (137,412) (914,408)
--------------------------

(1,456,514) (1,320,344)
--------------------------

Financing activities
Issuance of share capital 1,186,089 (52,923)
Amounts due to related parties - (35,341)
Restricted cash (931) -
Redemption of shares (182,987) -
--------------------------

1,002,171 (88,264)
--------------------------

Investment activities
Acquisition of property and equipment (20,192) (25,512)
--------------------------

Decrease in cash and cash equivalents (474,535) (1,434,120)

Cash and cash equivalents - Beginning of
period 9,462,988 2,708,599
--------------------------

Cash and cash equivalents - End of period 8,988,453 1,274,479
--------------------------
--------------------------

Cash and cash equivalents comprised of
Cash on deposit 418,577 1,274,479
Short-term investments and deposits 8,569,876 -
--------------------------

8,988,453 1,274,479
--------------------------
--------------------------


The TSX has not approved or disapproved of the information contained herein.

Contact Information

  • ViRexx Medical Corp.
    Rob Salmon
    Chief Financial Officer
    (780) 989-6708
    (780) 436-0068 (FAX)
    Email: rsalmon@virexx.com
    or
    The Equicom Group Inc.
    Ross Marshall
    Investor Relations
    (800) 385 5451 ext. 238
    (416) 815-0080 (FAX)
    Email: rmarshall@equicomgroup.com
    or
    Lippert/Heilshorn & Associates Inc.
    Kim Golodetz
    Investor Relations
    (212) 838 -3777
    (212) 838 -4568 (FAX)
    Email: kgolodetz@lhai.com