TORONTO, ONTARIO--(Marketwired - April 2, 2013) - BioExx Specialty Proteins Ltd. (TSX:BXI) today announced its financial results for the three and twelve months ended December 31, 2012.
"Our strategic review process has resulted in advanced stage negotiations to establish a joint venture for the commercial scale deployment of our canola protein production technology in Europe, beginning with the construction of a 75,000 MT rapeseed (canola) processing facility. Given the status of our strategic process and the limited capital available, we have made the difficult but responsible decision close our facility in Saskatoon, in order to improve our cost structure and monetize the value of those physical assets to address outstanding debts," said Chris Schnarr, Chief Executive Officer of BioExx. "We are working with our proposed partners to finalize a definitive and binding term sheet for a joint venture on or about April 30, 2013. The proposed joint venture would allow us to maximize the value of our protein technology by combining it with a complementary technology from a leading specialty oil processor with commercial operations and relationships in the European market."
A definitive and binding term sheet for the proposed joint venture is subject to final agreement on various terms between the parties. In the interim, there can be no assurance that the definitive and binding term sheet, or the proposed joint venture, will be completed as proposed, or at all.
Financial Results for the Year Ended December 31, 2012
Revenues for the year were $648,255, versus $5,348,230 in the prior year. As previously disclosed, the Company scaled back plant operations earlier in the year to conserve capital and exercise appropriate fiscal discipline. As a result of this decision, the Company ran its crush operations only as required to support the extensive piloting and development activity required for the completion of the its detailed engineering scale-up mandate. This resulted in lower processing volumes and lower revenue compared to the prior period.
Gross Profit (Loss)
Cost of Goods Sold ("COGS") for the year was $1,948,900 versus $10,101,239 in the prior year. Processing volumes were lower in 2012 versus 2011, driving a significantly lower Cost of Goods Sold. Other plant expenses included in COGS, which include maintenance expenses, QA/QC expenses, production supervision and plant supplies, were $408,656 for the year versus $1,898,042 in 2011. The change is a result of the aforementioned lower processing volumes and issues discussed below.
As a result of extensive development and piloting activity to support the completion of the engineering scale-up and the absence of revenue from commercial operations for much of the third and fourth quarters, a portion of on-going plant operations expenses (including depreciation) during those periods have been included in plant commissioning and start-up expenses, as discussed below, rather than in COGS. Depreciation of plant and equipment was $555,324 versus $985,969 in 2011, reflective primarily of the classification of expenses as a component of Plant commissioning and start-up expenses. As a result of the foregoing factors, Gross Loss for the year was ($1,300,645), versus ($4,753,009) for the comparable prior year.
The Company incurred Operating expenses during the year of $62,416,710, compared to $25,358,651 in the prior year. Exclusive of the Impairment and other expenses, operating expenses were $12,290,694 in 2012 versus $15,737,679 in 2011.The primary components of this variance on a year-over-year basis were:
General & administrative expenses were reduced during the year as a result of the Company's previously noted cost reduction efforts.
During the year-ended December 31, 2011, the Company recognized impairment and other expenses in the amount of $9,620,672. As a result of additional scale-up engineering completed during the year-ended December 31, 2012 and the Company's aforementioned announcement that it intends to discontinue operations at its existing facility in Saskatoon, the Company recognized Impairment and other expenses in the amount of $50,126,016.
Plant commissioning and start-up expenses were $6,641,068 in 2012, versus $7,430,881 in 2011, with the lower amount resulting from several offsetting factors. As a result of the previously noted reduction in crushing operations, and the fact the Company did not generate significant oil and meal revenue during the third and fourth quarters, the Company presented fixed and variable crushing operational costs, including depreciation on crush PP&E assets, as a component of Plant commissioning and start-up expenses. The increase, as a result of including crush related costs, is offset by the Company's cost reduction efforts and reduced scope of plant operations.
Research and development expenses were $189,923 in 2012, down from $660,185 in 2011, as a result of the Company's previously noted cost reduction efforts.
Sales and marketing expenses were $266,921 in 2012 versus $490,368 in 2011, again as a result of on-going cost reduction efforts.
Net Loss for the year was $63,279,855, or 0.29 per share, versus $30,111,660, or $0.15 per share, in the prior year, primarily as a result of the various factors discussed above. Excluding impairment and other expenses, Net Loss for the year was $13,591,339 in 2012 versus $20,490,688 in 2011.
Financial Results for the Three Months Ended December 31, 2012
During the quarter, the Company generated $29,223 of revenue from canola oil and canola meal sales at its Saskatoon plant, versus revenue of $1,217,403 in Q4 2011. As previously discussed, during Q4 2012 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 mandate. This resulted in low processing volumes and revenue earned during the quarter. Further, as previously discussed, to conserve capital and exercise appropriate fiscal discipline, the Company had scaled back plant operations generally, earlier in the year.
Gross Profit (Loss)
COGS for the quarter was $125,919, compared to $2,414,129 in Q4 of the prior year, with the decrease resulting from the aforementioned lower processing volumes and reduced scope of operations as discussed above. Gross Loss for the quarter was $96,696, compared with a loss of $1,196,726 for Q4 2011. The Gross Loss increased as a cumulative result of the above noted factors.
The Company incurred operating expenses during the quarter of $48,421,753, compared to $14,230,821 in Q4 2011. Exclusive of the Impairment and other expenses, the comparable periods are $1,593,204 in Q4 2012 versus $4,682,168 in Q4 2011. The basis for the quarterly changes other expenses follows the explanations and rationale discussed in the annual review section.
The Net Loss for the quarter was $47,605,949, or $0.22 per share, compared to $15,427,547, or $0.07 per share, for the comparable prior year quarter. This increase in net loss is of course the cumulative result of the various items discussed above.
Working Capital and Liquidity
As at December 31, 2012, current assets were $3,321,747, including cash and cash equivalents of $2,885,444. Against current liabilities of $8,123,123, this results in negative net working capital of ($4,801,379), primarily due to the inclusion of the $6.8 million Romspen loan, including accrued interest, due in July 2013 as a current liability, as its maturity falls within one year. This compares to current assets of $12,393,905 and net working capital of $6,537,704 as at December 31, 2011.
BioExx's Net Cash Flow From (Used In) Operating Activities during the year was ($8,829,434), compared to ($12,934,177) in 2011. The change primarily reflects the different operating environments and cost reduction efforts in the respective years, as discussed above.
BioExx's Net Cash Flow From (Used In) Investing Activities during the year was ($2,742,719). The balance results from significant reductions in capital spending, at $2,952,762 in the year, offset by proceeds received from the disposal of certain assets held for sale. The capital spending in 2012 is mainly a result of property, plant and equipment expenditures from 2011 and Q1 2012, which were paid during the year. In addition, capital spending on intangible assets was $1,321,005, as a result of the aforementioned capitalization of plant expenditures, which directly related to the piloting activity as a component of Development Costs, in the amount of $751,317. This compares to 2011 at ($14,345,128), with capital spending much higher at $17,318,199.
BioExx's Net Cash Flow From (Used In) Financing Activities during the year was $4,448,973, resulting primarily from the Romspen debt financing, net of the repayment of the prior Farm Credit Canada mortgage as well as proceeds from the issuance of Convertible debentures. This compares to $20,659,204 in 2011, largely due to the completion of the bought deal equity financing for gross proceeds of $23,000,000.
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.