Selling, general and administrative costs decreased by $1,727,000 for Q4 2012 and $1,852,000 for the year ended December 31, 2012 when compared to the corresponding periods of 2011. These decreases are mainly due to:
-- A decrease in professional fees in Q4 2012 compared to Q4 2011 of $348,000 being primarily lower audit and accounting fees of $142,000 and lower legal fees of $149,000. Professional fees for the year ended December 31, 2012 were $845,000 lower than the year ended December 31, 2011. Audit and accounting fees were $623,000 lower due primarily to additional costs in 2011 relating to the year-end audit, IFRS transition and work on the equity offering incurred during the year 2011. Further reductions also occurred in legal fees of $152,000 and recruitment fees of $74,000 compared to 2011.-- A decrease in share based payments of $171,000 in Q4 2012 compared to Q4 2011 and a decrease of $186,000 for the year ended 2012 compared to year ended 2011 due to the full vesting, during 2012 of options granted in September 2010.-- A decrease in other general payments of $698,000 in Q4 2012 compared to Q4 2011 and a decrease of $756,000 for the year ended 2012 compared to year ended 2011 due to audit adjustments including reversal of provision on sale of property amounting to $423,000.-- Salaries and wages reduced by $507,000 during Q4 2012 compared to Q4 2011 due to adjustment of PHC holiday pay accrual of $220,000 and decrease of $270,000 in salaries allocated to cost of sales in Q4 2012 compared to Q4 2011.
Cash Flows and Liquidity
The cash balance at December 31, 2012 was $1,260,000, compared to $13,521,000 as at December 31, 2011. The decrease in cash balance of $12,261,000 was a result of net loss (excluding non-cash items) of $9,900,000 and capital expenditures of $13,647,000 partially offset by an increase in working capital of $3,986,000 and the issue of shares for cash of $6,964,000.
For the year ended December 31, 2012, working capital movements resulted in cash inflows of $3,986,000 (cash outflows of $4,787,000 for the year ended December 31, 2011), driven by decreases in inventory of $4,522,000, receivables of $1,116,000 and prepaid expenses of $3,273,000 offset by decreases in payables of $138,000.
Investing activities resulted in cash outflows of $13,647,000 for the year ended December 31, 2012 (cash outflows of $9,601,000 in the year ended December 31, 2011).
Cash inflows from financing activities were $6,964,000 for the year ended December 31, 2012 (cash inflows of $27,566,000 in the year ended December 31, 2011).
Non-GAAP Financial Measures
Gross margin is not a financial measure recognized by IFRS and does not have a standardized meaning prescribed by IFRS. The Company's method of calculating gross margin may differ from other methods used. Gross margin is presented in this MD&A as additional information regarding the Company's financial performance. Gross margin has been calculated by deducting cost of sales from revenue.
Neither the TSX Venture Exchange nor its regulation services provider (as that term is defined in the policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release.
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