News Column

Warnex Reports Year End 2012 Results

Apr 29 2013 12:00AM



LAVAL, QUEBEC -- (Marketwired) -- 04/29/13 -- 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.


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 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 December 31 2012 2011 $ $--------------------------------------------------------------------------------------------------------------------------------------------------------AssetsCurrent assetsCash and cash equivalents 2,742,114 1,285,236Trade and other receivables 1,804,421 3,482,427Work-in-progress - 510,171Inventory - 273,564Prepaid expenses 70,779 276,337---------------------------------------------------------------------------- 4,617,314 5,827,735Non-current assetsAmount receivable held in trust 600,000 -Property, plant and equipment - 3,333,740Intangibles - 166,552---------------------------------------------------------------------------- 5,217,314 9,328,027--------------------------------------------------------------------------------------------------------------------------------------------------------LiabilitiesCurrent liabilitiesBank loan - 740,000Trade and other payables 457,317 3,335,549Provisions 90,930 90,278Deferred revenue - 563,071Current portion of long-term debt - 42,840Liability component of debentures - 1,635,400---------------------------------------------------------------------------- 548,247 6,407,138--------------------------------------------------------------------------------------------------------------------------------------------------------Shareholders' equityCapital stock 41,706,049 40,981,049Other reserves 2,803,559 2,803,559Deficit (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 ---------------------------------------------- ---------------------------------------------- Equity components Capital of Share-based Total other stock debentures compensation Other reserves $ $ $ $ $--------------------------------------------------------------------------------------------------------------------------------------------------------Balance, December 31, 2011 40,981,049 1,734,404 1,028,149 41,006 2,803,559Issuance of common shares 725,000 - - - -Net earnings and comprehensive income - - - - -----------------------------------------------------------------------------Balance,December 31, 2012 41,706,049 1,734,404 1,028,149 41,006 2,803,559--------------------------------------------------------------------------------------------------------------------------------------------------------Balance, December 31, 2010 40,981,049 1,734,404 1,028,149 41,006 2,803,559Net earnings and comprehensive income - - - - -----------------------------------------------------------------------------Balance, December 31, 2011 40,981,049 1,734,404 1,028,149 41,006 2,803,559-------------------------------------------------------------------------------------------------------------------------------------------------------- Deficit Total $ $----------------------------------------------------------------------------------------------------Balance, December 31, 2011 (40,863,719) 2,920,889Issuance of common shares - 725,000Net earnings and comprehensive income 1,023,178 1,023,178--------------------------------------------------Balance,December 31, 2012 (39,840,541) 4,669,067----------------------------------------------------------------------------------------------------Balance, December 31, 2010 (41,350,965) 2,433,643Net earnings and comprehensive income 487,246 487,246--------------------------------------------------Balance, December 31, 2011 (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 21,258,262Cost 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 5,896,240Impairment of assets (388,500) (1,825,000)Gain on extinguishment of debt - 420,727Unrealized foreign exchange loss on debentures - (126,664)----------------------------------------------------------------------------Earnings before income taxes 1,023,178 1,708,246Deferred income taxes - 1,221,000----------------------------------------------------------------------------Net earnings and comprehensive income 1,023,178 487,246--------------------------------------------------------------------------------------------------------------------------------------------------------Basic earnings per share $0.04 $0.03Diluted earnings per share $0.04 $0.02Weighted average number of shares outstanding 25,958,190 16,779,298Weighted 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 $ $--------------------------------------------------------------------------------------------------------------------------------------------------------OperationsNet earnings 1,023,178 487,246Items not affecting cash:Depreciation of property, plant and equipment 707,352 1,250,562Amortization of intangibles 32,117 93,591Impairment of assets 388,500 1,825,000Gain on disposal of assets (4,261,178) (5,896,240)Accretion of interest on debentures - 71,114Capitalized fees and interest on debentures - 578,282Gain on extinguishment of debt - (420,727)Unrealized foreign exchange loss on debentures - 126,664Deferred income taxes - 1,221,000Foreign 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 activitiesAcquisition of property, plant and equipment (85,181) (211,486)Proceeds of disposal of property, plant and equipment 6,060,205 408,891Acquisition of intangibles - (17,642)Proceeds of disposal of intangibles 58,477 127,194Proceeds of disposal of goodwill - 6,833,935----------------------------------------------------------------------------Net cash provided by investing activities 6,033,501 7,140,892----------------------------------------------------------------------------Financing activitiesIncrease (decrease) in bank loan (740,000) 160,000Proceeds from debentures - 600,000Repayment 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 1,040,780Cash and cash equivalents, beginning of year 1,285,236 244,456----------------------------------------------------------------------------Cash and cash equivalents, end of year 2,742,114 1,285,236--------------------------------------------------------------------------------------------------------------------------------------------------------

Michael Singer
Chairman of the Board of Directors, Warnex Inc.
Tel: (514) 940-3610

Source: Marketwire

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