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 December 31
2013 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
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4,060,879 4,617,314
Non-current assets
Amount receivable held in trust - 600,000
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4,060,879 5,217,314
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----------------------------------------------------------------------------
Liabilities
Current liabilities
Trade and other payables 169,685 457,317
Provisions 50,000 90,930
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219,685 548,247
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----------------------------------------------------------------------------
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)
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3,841,194 4,669,067
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----------------------------------------------------------------------------
4,060,879 5,217,314
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Interim Consolidated Statements of Changes in Shareholders' Equity
(Unaudited)
Other reserves
----------------------------------------------
----------------------------------------------
Equity
components
Capital of Share-based Total other
stock debentures compensation Other reserves
$ $ $ $ $
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Balance, December
31, 2012 41,706,049 1,734,404 1,028,149 41,006 2,803,559
Net and
comprehensive
loss - - - - -
----------------------------------------------------------------------------
Balance,
September 30,
2013 41,706,049 1,734,404 1,028,149 41,006 2,803,559
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Balance, December
31, 2011 40,981,049 1,734,404 1,028,149 41,006 2,803,559
Issuance of
common shares 725,000 - - - -
Net and
comprehensive
loss - - - - -
----------------------------------------------------------------------------
Balance,
September 30,
2012 41,706,049 1,734,404 1,028,149 41,006 2,803,559
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Deficit Total
$ $
-------------------------------------------------
-------------------------------------------------
Balance, December
31, 2012 (39,840,541) 4,669,067
Net and
comprehensive
loss (827,873) (827,873)
-------------------------------------------------
Balance,
September 30,
2013 (40,668,414) 3,841,194
-------------------------------------------------
-------------------------------------------------
Balance, December
31, 2011 (40,863,719) 2,920,889
Issuance of
common shares - 725,000
Net and
comprehensive
loss (2,333,035) (2,333,035)
-------------------------------------------------
Balance,
September 30,
2012 (43,196,754) 1,312,854
-------------------------------------------------
-------------------------------------------------
Interim Consolidated Statements of Operations and Comprehensive Loss
(Unaudited)
Three months ended Nine months ended
September 30 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 Nine months ended
September 30, 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
----------------------------------------------------------------------------
----------------------------------------------------------------------------
FOR FURTHER INFORMATION PLEASE CONTACT:
Michael Singer
Chairman of the Board of Directors, Warnex Inc.
(450) 663-6724 (ext. 311)
info@warnex.ca
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