Warnex Inc.
NEX BOARD : WNX
TSX VENTURE : WNX.H

Warnex Inc.

November 27, 2013 17:01 ET

Warnex Reports Third Quarter 2013 Results

LAVAL, QUEBEC--(Marketwired - Nov. 27, 2013) - Warnex Inc. (TSX VENTURE:WNX.H) ("Warnex") announced today financial results for the third quarter ended September 30, 2013.

Following the repayment of the Company's debts accomplished primarily from the sale of all of the Company's operating business units, the Board has been focused on reducing expenses, has undertaken a strategic review of the Company's remaining assets and has initiated discussions with certain investment banking groups and other external parties. The Company has also entered into discussions with its landlord with a view to terminating the long-term operating lease for its Laval, Quebec facilities as soon as reasonably practicable. The outcome of this review remains uncertain at this time, and the Board will update shareholders if and when any progress is made.

"The Board continues to focus its efforts on reducing all operating costs, as evidenced by lower Q3-2013 general and administrative costs, and as such, the Company's financial position at September 30, 2013 and as of today continues to remain strong as the Board continues to evaluate all available strategic options," remarked Michael Singer, Chairman of Warnex. "We look forward in reaching a conclusion to this ongoing process and making a recommendation to all Warnex shareholders as soon as reasonably possible."

Financial results

Consolidated revenue for the three and nine month periods ended September 30, 2013, amounted to $nil compared to $2.5 million for the three-month period and $7.4 million for the nine-month period ended September 30, 2012. The Company did not generate any sales, nor related cost of goods sold in the nine month period ended September 30, 2013, as a result of the sale of all of its operating divisions in 2012.

Net loss for the quarter amounted to $216,881 or $0.01 per share compared to net income of $134,666 or $0.01 per share for the same quarter in 2012. For the nine-month period ended September 30, 2013, net loss amounted to $827,873 or $0.03 per share compared to a net loss of $2,333,035 or $0.09 per share for the same period in 2012.

Selling expenses amounted to $nil for the three and nine month periods ended September 30, 2013, compared to $45,673 in the three-month period and $219,062 for the nine-month period ended September 30, 2012.

General and administrative expenses amounted to $223,611 for the three-month period ended September 30, 2013 ($789,646 in 2012), including a reserve of $50,000 for ongoing sales tax audits pertaining to the 2009 to 2012 fiscal periods, and $915,826 for the nine-month period ended September 30, 2013 ($3,050,795 in 2012).

Research and development tax credits amounted to $nil for the three-month period and $81,267 for the nine-month period ended September 30, 2013 as a result of the reversal of prior period provisions following assessments by the taxation authorities (negative balance of $50,749 in the third quarter of 2012 and $18,251 in the nine-month period ended September 30, 2012).

Financial revenues amounted to $6,730 in the third quarter of 2013 (financial expenses of $50,419 in the third quarter of 2012). Financial revenues amounted to $6,686 in the nine month period ended September 30, 2013 (financial expenses of $452,059 in the nine-month period ended September 30, 2012). These decreases are due to the repayment in full of the Company's debts in 2012.

The Company ended the third quarter of 2013 with cash, cash equivalents and short-term investments of $3.2 million and working capital of $3.8 million, compared to $2.7 million in cash and a working capital of $4.7 million as at December 31, 2012.

CAUTION REGARDING FORWARD-LOOKING STATEMENTS

Certain statements contained in this news release are forward-looking and are subject to numerous risks and uncertainties, known and unknown. For further information identifying known risks and uncertainties, relating to financial resources, liquidity risk, volatility of share price and other important factors that could cause actual results to differ materially from those anticipated in the forward-looking statements, please refer to the heading Risks and Uncertainties in Warnex's most recent annual Management's Discussion and Analysis, which can be found at www.sedar.com. Consequently, actual results may differ materially from the anticipated results expressed in these forward-looking statements.

Neither NEX nor its Regulation Services Provider (as that term is defined in policies of the NEX) accepts responsibility for the adequacy or accuracy of this release.

Financial statements to follow.

Interim Consolidated Statements of Financial Position
(Unaudited)
September 30
2013
$
December 31
2012
$
Assets
Current assets
Cash and cash equivalents 225,274 2,742,114
Short-term investments 3,000,000 -
Trade and other receivables 686,751 1,804,421
Prepaid expenses 148,854 70,779
4,060,879 4,617,314
Non-current assets
Amount receivable held in trust - 600,000
4,060,879 5,217,314
Liabilities
Current liabilities
Trade and other payables 169,685 457,317
Provisions 50,000 90,930
219,685 548,247
Shareholders' equity
Capital stock 41,706,049 41,706,049
Other reserves 2,803,559 2,803,559
Deficit (40,668,414 ) (39,840,541 )
3,841,194 4,669,067
4,060,879 5,217,314
Interim Consolidated Statements of Changes in Shareholders' Equity
(Unaudited)
Other reserves
Capital
stock
$
Equity components of debentures
$
Share-based compensation
$
Other
$
Total other reserves
$
Deficit
$
Total
$
Balance, December 31, 2012 41,706,049 1,734,404 1,028,149 41,006 2,803,559 (39,840,541 ) 4,669,067
Net and comprehensive loss - - - - - (827,873 ) (827,873 )
Balance, September 30, 2013 41,706,049 1,734,404 1,028,149 41,006 2,803,559 (40,668,414 ) 3,841,194
Balance, December 31, 2011 40,981,049 1,734,404 1,028,149 41,006 2,803,559 (40,863,719 ) 2,920,889
Issuance of common shares 725,000 - - - - - 725,000
Net and comprehensive loss - - - - - (2,333,035 ) (2,333,035 )
Balance, September 30, 2012 41,706,049 1,734,404 1,028,149 41,006 2,803,559 (43,196,754 ) 1,312,854
Interim Consolidated Statements of Operations and Comprehensive Loss
(Unaudited)
Three months ended September 30 Nine months ended September 30
2013
$
2012
$
2013
$
2012
$
Revenue - 2,491,124 - 7,360,711
Cost of goods sold - 1,419,971 - 5,989,051
Gross margin - 1,071,153 - 1,371,660
Operating expenses
Selling - 45,673 - 219,062
General and administrative 223,611 789,646 915,826 3,050,795
Finance (6,730 ) 50,419 (6,686 ) 452,059
Research and development tax credits - 50,749 (81,267 ) (18,251 )
216,881 936,487 827,873 3,703,665
Earnings (loss) before undernoted items (216,881 ) 134,666 (827,873 ) (2,332,005 )
Loss on disposal of assets - - (1,030 )
Net and comprehensive earnings (loss) (216,881 ) 134,666 (827,873 ) (2,333,035 )
Basic earnings (loss) per share ($0.01 ) $0.00 ($0.03 ) ($0.09 )
Diluted earnings (loss) per share ($0.01 ) $0.00 ($0.03 ) ($0.09 )
Weighted average number of shares outstanding 28,323,884 28,323,884 28,323,884 25,163,869
Weighted average number of diluted shares outstanding 28,323,884 28,323,884 28,323,884 25,163,869
Interim Consolidated Statements of Cash Flow
(Unaudited)
Three months ended September 30, Nine months ended September 30,
2013
$
2012
$
2013
$
2012
$
Operations
Net earnings (loss) (216,881 ) 134,666 (827,873 ) (2,333,035 )
Items not affecting cash:
Depreciation of property, plant and equipment - 167,247 - 582,178
Amortization of intangibles - 8,327 - 24,983
Loss on disposal of assets - - - 1,030
(216,881 ) 310,240 (827,873 ) (1,724,844 )
Net change in non-cash working capital items (2,869 ) (1,528,166 ) 1,311,033 1,099,139
Net cash provided by (used in) operations (219,750 ) (1,217,926 ) 483,160 (625,705 )
Investing activities
Acquisition of short-term investments (1,000,000 ) - (3,000,000 ) -
Acquisition of property, plant and equipment - (36,642 ) - (77,281 )
Disposal of property, plant and equipment - - - 251,712
Net cash provided by (used in) investing activities (1,000,000 ) (36,642 ) (3,000,000 ) 174,431
Financing activities
Increase in bank loan - - - 210,000
Repayment of bank loan - - - (950,000 )
Increase in loan payable, corporate shareholder - 925,000 - 925,000
Repayment of long term debt - - - (42,840 )
Repayment of debentures - - - (910,400 )
Net cash provided by (used in) financing activities - 925,000 - (768,240 )
Decrease in cash and cash equivalents (1,219,750 ) (329,568 ) (2,516,840 ) (1,219,514 )
Cash and cash equivalents, beginning of period 1,445,024 395,290 2,742,114 1,285,236
Cash and cash equivalents, end of period 225,274 65,722 225,274 65,722

Contact Information

  • Michael Singer
    Chairman of the Board of Directors, Warnex Inc.
    (450) 663-6724 (ext. 311)
    info@warnex.ca