TORONTO, ONTARIO--(Marketwired - Aug. 16, 2013) - BioExx Specialty Proteins Ltd. (TSX:BXI) today announced its financial results for the three and six months ended June 30, 2013.
Financial Results for the Three and Six Months Ended June 30, 2013
Subsequent to June 30, 2013, the Company announced that it engaged a firm to undertake a process to explore a sale of the Company, and if feasible and subject to shareholder approval, to sell the Company. As a result of this and other related factors, the Company has prepared its financial statements on the liquidation basis, rather than the going concern basis, as required by International Accounting Standard 1.
During the quarter, the Company generated $60,575 of revenue from canola oil and canola meal sales at its Saskatoon plant, versus revenue of $136,008 in Q2 2012. As previously discussed, the Company ran its crush operations only as required to support the development and piloting activity required for the completion of the Company's detailed engineering scale-up and strategic partner mandates. This resulted in low processing volumes and revenue earned during the quarter. On May 24, 2013, the Company ceased production at the plant.
Gross Profit (Loss)
Cost of Goods Sold for the quarter was $108,346, compared to $602,611 in Q2 2012. The decrease results from the low processing volumes and reduced scope of operations as discussed above. As a result of development and piloting activity, a portion of on-going plant operations expenses have been included in Plant commissioning and start-up expenses, as discussed below, rather than in Cost of Goods Sold. As a result of the foregoing factors, Gross Loss for the quarter was $47,771, versus $466,603 for the comparable prior year period.
The Company incurred other expenses during the quarter of $8,431,407, compared to $3,390,160 in Q2 2012. The primary components of this variance were:
General and administrative expenses were $847,210 in Q2 2013, versus $980,219 in Q2 2012, as a result of the Company's previously noted cost reduction efforts.
During Q2 2013, the Company conducted an evaluation of potential impairment of the carrying amount of the Company's intangible assets. The evaluation of potential impairment was required as a result of the Company announcing, subsequent to the period, that it had engaged a firm to undertake a process to explore a sale of the Company, and if feasible and subject to shareholder approval, to sell the Company. The Company recognized an impairment charge on the entire carrying value of its intangible assets, in the amount of $5,087,519, as it is unable to quantitatively assess and support the value of the intangible assets. The impairment charge has been presented as a component of Impairment and other income (expenses) for the three months ended June 30, 2013. In 2013, the Company announced that it intended to discontinue operations at its facility in Saskatoon, Saskatchewan. As a result of the impending sale of the Saskatoon plant assets, the carrying amount of the assets held for sale has been estimated at their fair value less costs to sell. The Company announced that it had signed binding purchase agreements for its Saskatoon land, building and equipment for gross proceeds of $11,113,000. As a result, the Company recognized an impairment charge of $378,428 which has been presented as a component of Impairment and other income (expenses) for the three months ended June 30, 2013. Impairment and other income (expenses) also includes severance costs for employees that were terminated on or before June 30, 2013, in the amount of $271,332.
Plant commissioning and start-up (income) expenses were ($390,397) in Q2 2013, versus $1,884,268 in Q2 2012, with the lower amount resulting various factors. As a result of the previously noted reduction in crushing operations, and the fact that the Company did not generate significant oil and meal revenue during the second quarter, the Company presented a portion of fixed and variable crushing operational costs as a component of plant commissioning and start-up expenses. On May 24, 2013, the Company ceased production at the plant. The Company also accrued a SR&ED credit receivable in the amount of $772,091 which has been presented as a reduction of plant commissioning and start-up (income) expenses for the three months ended June 30, 2013.
Net Finance Costs in Q2 2013 were $1,923,291 versus $232,878 in Q2 2012. The higher amount versus the comparable prior periods is due primarily to the Company's adoption of the liquidation basis of accounting which requires that the Company present the loans and borrowings at fair market value. As a result, the Company recorded the full balance of the accretion relating to the outstanding debts to present them at their fair market value, as disclosed in Note 9 to the Unaudited Condensed Interim Consolidated Financial Statements for the three and six months ended June 30, 2013.
The Net Loss for the quarter was $8,479,078, versus $3,856,763 in Q2 2012. The significant variance in losses compared to Q2 2012 reflects primarily the impairment provisions taken during the quarter, as well as the cumulative impact of the Company's ongoing cost reduction efforts and reduced scale of interim operations. Adjusting for the Impairment and other (income) expenses and the net financing costs, the respective net losses are $759,219 versus $3,688,373 in Q2 2012.
Working Capital and Liquidity
As at June 30, 2013, current assets were $12,519,472, including cash and cash equivalents of $515,644. Against current liabilities of $15,408,219, this results in negative net working capital of ($2,888,747), primarily due to the inclusion of the assets held for sale and the fair value of loans and borrowings as current assets and liabilities, respectively. This compares to current assets of $3,321,747 and negative net working capital of ($4,801,379) as at December 31, 2012.
Changes to Board of Directors
William Ollerhead has resigned as Chairman and a Director of the Company. John MacDonald, a Board member since 2008, has been appointed Chairman of the Board of Directors.
About BioExx Specialty Proteins Ltd.
Headquartered in Toronto, Canada, BioExx is focused on the separation of oil and high-value proteins from oilseeds for global food, beverage, nutrition, and other markets. BioExx employs trade secret, patented and patent-pending technologies to enable the improved separation of proteins from oilseeds. BioExx believes that these processes cumulatively have the potential to make a valuable contribution to global food and protein supply while maintaining an environmentally sustainable footprint.
To find out more about BioExx Specialty Proteins Ltd. (TSX:BXI), please visit www.bioexx.com.
The statements made in this press release include forward-looking statements that involve a number of risks and uncertainties. These statements relate to future events or future performance and reflect management's current expectations and assumptions. A number of factors could cause actual events, performance or results to differ materially from the events, performance and results discussed in the forward-looking statements, such as the economy, generally, competition in its target markets, the demand for BioExx's products, the availability of funding, the efficacy of its technology, and the anticipated costs of BioExx's plant construction and operation. Furthermore, there can be no guarantees that any agreement will be signed with a strategic partner. These forward-looking statements are made as of the date hereof and BioExx does not assume any obligation to update or revise them to reflect new events or circumstances. Actual events or results could differ materially from BioExx's expectations and projections.