The combination of net working capital of $3.4 million at January 31, 2011 and the balance of
funding awards which can be recognized in the future of up to $5.3 million brings the total of
current and potential resources available to the Company up to $8.7 million.
The Company presently believes that the combination of funding sources noted above should be
sufficient to continue funding its “Baseline Operations”, as described below, until September
2011. In the Company’s previous MD&A for the quarter ended October 31, 2010 it had at that
time expected that such funds would be sufficient to fund its “Baselline Operations” until August
2011.
In order to continue funding its Baseline Operations, Lignol is exploring a number of options
which include actively seeking additional funding from sources such as potential government
grants and contributions from potential corporate partnerships, and the possible sale of additional
equity. However, the Company may not be successful in receiving such government funding as
expected. It may also be unable to raise additional sources of funding, or in the event of
unforeseen circumstances or a change in the strategic direction of the Company, the Company’s
working capital may not be sufficient to meet its stated business objectives. As a result it may be
necessary to curtail expenditures and certain activities. There can be no assurance that the
Company will be able to obtain further financing on favourable terms, if at all (see “Risks and
Uncertainties”).