Alaris Royalty Corp.  For the years ended December 31  Consolidated statement of cash flows Note 2011 2010 Cash flows from operating activities  Earnings from the year  $34,712,444  $7,401,216  Adjustments for:  Finance costs  1,235,348  1,707,713  Deferred income taxes  6  7,661,200  3,411,119  Depreciation and amortization  7  143,244  190,028  Gain on intangible asset sale and reduction of partnership  interest  (27,707,533) - Gain on foreign exchange forward contract  (21,864)  -  Unrealized foreign exchange loss  183,060  -  Non-cash stock based compensation 10 1,978,727 1,817,981 18,184,626 14,528,057 Change in:  -trade and other receivables  (2,755,165)  (686,044)  -prepayments 223,676 (239,712)  -trade and other payables  192,303  482,907  Cash generated from operating activities 15,845,440 14,085,208 Finance costs (1,235,348) (1,707,713) Net cash from operating activities 14,610,092 12,377,495 Cash flows from investing activities Acquisition of equipment  (12,979)  (11,989)  Acquisition of Preferred LP Units  (78,948,286) (46,239,320)  Proceeds from reduction in Preferred LP Units and Intangible  asset sale  65,000,000 - Net cash used in investing activities $(13,961,265) $(46,251,309) Cash flows from financing activities  New share capital, net of share issue costs  8  37,830,223  39,487,617  Proceeds from exercise of warrants 8 3,988,875 4,488,000 Proceeds from exercise of options  8  112,675  -  Repayment of debt  9  (66,700,000)  (9,350,000)  Proceeds from debt  9  44,000,000  9,500,000  Dividends paid  8  (17,560,350)  (12,034,829)  Payments in lieu of dividends on RSUs  10  (248,653)  (226,105)  Net cash used in financing activities $1,422,770 $31,864,683 Net increase in cash and cash equivalents  2,071,597 (2,009,132)  Cash and cash equivalents, Beginning of year 1,816,868 3,826,000 Cash and cash equivalents, End of year $3,888,465  $1,816,868 Alaris Royalty Corp. 2011 Annual Report  22 