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

Warnex Inc.

April 29, 2013 17:02 ET

Warnex Reports Year End 2012 Results

LAVAL, QUEBEC--(Marketwired - April 29, 2013) - Warnex Inc. (TSX VENTURE:WNX.H) ("Warnex") announced today financial results for the year ended December 31, 2012.

2012 Highlights

  • Eliminated the Company's long term debt and reduced total liabilities by approximately $6 million in 2012. This was achieved through the sale of the Company's Analytical Services and Bioanalytical Services Divisions.

  • On December 10, 2012, sold the assets related to its Bioanalytical Services Division for a total purchase price consideration of $7,100,220 consisting of $5,400,000 paid in cash at closing, $600,000 held in escrow until March 10, 2014 and an additional payment of $1,100,220 received subsequent to year end that related to the adjusted revenues of the Bioanalytical Division that exceeded $6,000,000 during the calendar year ending December 31, 2012.

  • Following the repayment of the Company's debts and the sale of the Company's operating business units; the Board of Directors ("Board") is undertaking a strategic review of the company's remaining assets. In conjunction with this review, the Board has initiated discussions with investment banking groups and other external parties. The outcome of this review remains uncertain at this time, and the Board will update shareholders if and when any progress is made.

  • On April 23, 2012, sold the assets related to its Analytical Services Division for total consideration of $300,000. The terms of the transaction also provide Warnex with the right, subject to certain conditions, to terminate the lease for its Laval, Quebec facilities, which are owned by an affiliate of NEOPHARM, prior to the current expiry date of such lease.

  • On December 27, 2012, the Company announced that its common shares began trading on the NEX on a post one-for-four share consolidation basis under the symbol WNX.H.

  • Subsequent to year end, the Company announced that Mr. Marc Lebel, Mr. Louis Lacasse and Mr. Patrice Hugo have agreed to resign as Directors of Warnex. Furthermore, Mr. Sean Karamchandani has been appointed as Director and will replace Mr. Lebel as the Company's interim Chief Executive Officer until further notice.

"On behalf of the Warnex Board, I would like to sincerely thank Marc, Louis and Patrice for their longstanding commitment to the Company, and for their guidance and many contributions over the years. We wish them continued success for the future," remarked Michael Singer, Chairman of Warnex. "Furthermore and subsequent to the sale of the Bioanalytical Services Division, the Board has undertaken specific measures aimed at preserving shareholder capital including the transfer of all administrative employees to the purchaser thereby resulting in a material reduction in operating expenditures going forward, pending a final outcome related to the ongoing strategic review."

Financial Results

Consolidated revenue for the twelve-month period ended December 31, 2012, amounted to $9.0 million compared to $21.3 million in 2011. Subsequent to the sale of assets related to its Bioanalytical Division on December 10, 2012, Warnex no longer had any operating business units.

Net earnings for the twelve-month period amounted to $1.0 million or $0.04 per share in 2012 compared to $0.5 million or $0.03 per share in 2011.

For the twelve-month period ended December 31, 2012, selling expenses were $0.3 million compared to $1.3 million in 2011.

General and administrative expenses amounted to $3.9 million compared to $5.7 million last year.

Financial expenses decreased to $0.7 million in 2012 from $1.2 million in 2011, mainly due to the repayment and partial conversion of the debentures in April 2012.

Research and development tax credits amounted to $139,998 for the year ended December 31, 2012, compared to $204,422 in 2011.

The Company ended fiscal 2012 with cash of approximately $2.7 million and net assets of approximately $4.7 million, compared to $1.3 million in cash and a working capital deficiency of approximately $0.6 million in 2011. The Company did not have any long-term debt 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 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.

Financial statements to follow.

Consolidated Statements of Financial Position

December 31
2012
$
December 31
2011
$
Assets
Current assets
Cash and cash equivalents 2,742,114 1,285,236
Trade and other receivables 1,804,421 3,482,427
Work-in-progress - 510,171
Inventory - 273,564
Prepaid expenses 70,779 276,337
4,617,314 5,827,735
Non-current assets
Amount receivable held in trust 600,000 -
Property, plant and equipment - 3,333,740
Intangibles - 166,552
5,217,314 9,328,027
Liabilities
Current liabilities
Bank loan - 740,000
Trade and other payables 457,317 3,335,549
Provisions 90,930 90,278
Deferred revenue - 563,071
Current portion of long-term debt - 42,840
Liability component of debentures - 1,635,400
548,247 6,407,138
Shareholders' equity
Capital stock 41,706,049 40,981,049
Other reserves 2,803,559 2,803,559
Deficit (39,840,541 ) (40,863,719 )
4,669,067 2,920,889
5,217,314 9,328,027

Consolidated Statements of Changes in Shareholders' Equity

Other reserves
Capital
stock
$
Equity components of debentures
$
Share-based compensation
$
Other
$
Total other reserves
$
Deficit
$
Total
$
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 earnings and comprehensive income - - - - - 1,023,178 1,023,178
Balance,December 31, 2012 41,706,049 1,734,404 1,028,149 41,006 2,803,559 (39,840,541 ) 4,669,067
Balance, December 31, 2010 40,981,049 1,734,404 1,028,149 41,006 2,803,559 (41,350,965 ) 2,433,643
Net earnings and comprehensive income - - - - - 487,246 487,246
Balance, December 31, 2011 40,981,049 1,734,404 1,028,149 41,006 2,803,559 (40,863,719 ) 2,920,889

Consolidated Statements of Operations and Comprehensive Income

For the years ended December 31 2012
$
2011
$
Revenue 8,964,219 21,258,262
Cost of goods sold 7,049,073 15,959,523
Gross margin 1,915,146 5,298,739
Operating expenses
Selling 266,567 1,261,168
General and administrative 3,986,584 5,720,081
Finance 651,493 1,178,969
Research and development tax credits (139,998 ) (204,422 )
4,764,646 7,955,796
Loss before under noted items and income taxes (2,849,500 ) (2,657,057 )
Gain on disposal of assets 4,261,178 5,896,240
Impairment of assets (388,500 ) (1,825,000 )
Gain on extinguishment of debt - 420,727
Unrealized foreign exchange loss on debentures - (126,664 )
Earnings before income taxes 1,023,178 1,708,246
Deferred income taxes - 1,221,000
Net earnings and comprehensive income 1,023,178 487,246
Basic earnings per share $0.04 $0.03
Diluted earnings per share $0.04 $0.02
Weighted average number of shares outstanding 25,958,190 16,779,298
Weighted average number of diluted shares outstanding 27,891,802 26,831,298

Consolidated Statements of Cash Flow

For the years ended December 31 2012
$
2011
$
Operations
Net earnings 1,023,178 487,246
Items not affecting cash:
Depreciation of property, plant and equipment 707,352 1,250,562
Amortization of intangibles 32,117 93,591
Impairment of assets 388,500 1,825,000
Gain on disposal of assets (4,261,178 ) (5,896,240 )
Accretion of interest on debentures - 71,114
Capitalized fees and interest on debentures - 578,282
Gain on extinguishment of debt - (420,727 )
Unrealized foreign exchange loss on debentures - 126,664
Deferred income taxes - 1,221,000
Foreign currency fluctuation - (15,408 )
(2,110,031 ) (678,916 )
Net change in non-cash working capital items (773,352 ) 92,446
Net cash used in operations (2,883,383 ) (586,470 )
Investing activities
Acquisition of property, plant and equipment (85,181 ) (211,486 )
Proceeds of disposal of property, plant and equipment 6,060,205 408,891
Acquisition of intangibles - (17,642 )
Proceeds of disposal of intangibles 58,477 127,194
Proceeds of disposal of goodwill - 6,833,935
Net cash provided by investing activities 6,033,501 7,140,892
Financing activities
Increase (decrease) in bank loan (740,000 ) 160,000
Proceeds from debentures - 600,000
Repayment of long term debt (42,840 ) (857,598 )
Repayment of debentures (910,400 ) (5,420,114 )
Net cash used in financing activities (1,693,240 ) (5,517,712 )
Foreign exchange gain on cash held in foreign currencies - 4,070
Increase in cash and cash equivalents 1,456,878 1,040,780
Cash and cash equivalents, beginning of year 1,285,236 244,456
Cash and cash equivalents, end of year 2,742,114 1,285,236

Contact Information

  • Michael Singer
    Chairman of the Board of Directors, Warnex Inc.
    Tel: (514) 940-3610
    msinger@thallion.com