LAVAL, QUEBEC--(Marketwire - Nov. 14, 2011) - Warnex Inc. (TSX:WNX) announced today financial results for the third quarter ended September 30, 2011.

Operating Highlights

Restructured its outstanding debentures, which included extending the maturity dates to November 8, 2011, and modifying various other terms. Subsequent to the quarter, the Company announced that it is currently in advanced negotiations to extend the maturity dates of all of its outstanding convertible debentures that have become due, to modify various other terms and conditions of the debentures and to obtain additional financing to cover current operating expenses as well as certain disbursements.
Reorganized the operations of its subsidiary Warnex Analytical Services Inc., including the shutdown of its analytical laboratories located in Laval and consolidation all of its analytical services at its Neopharm Laboratories facility located in Blainville
Obtained funding from the federal government for forensic mitochondrial DNA testing
Launched PRO-DNA^® Lead, a new forensic DNA testing service
Received DEQAS certification for vitamin D analysis
Launched new website – [ www.pca3.ca ]– for its PCA3 test for prostate cancer detection
Subsequent to the quarter, signed an exclusive agreement with deCODE Genetics to distribute in Canada 10 of deCODE Genetics' DNA-based tests for assessing the risk of developing certain common diseases

"The restructuring of our Analytical Services subsidiary is now complete and our efforts are ongoing to improve the efficiency of our operations and to increase our business development efforts," said Mark Busgang, President and CEO of Warnex. "At the same time, we have had achievements across all of our divisions with the vitamin D certification in Bioanalytical, the launch of the PCA3 website and the agreement with deCODE in Medical, and the launch of PRO-DNA^® Lead and the government grant in our PRO-DNA Services division."

Financial Results

Consolidated revenue for the three-month period ended September 30, 2011, amounted to $5.0 million compared to $5.5 million during the same quarter a year ago, a decrease of 10%. For the nine-month period ended September 30, 2011, revenue amounted to $15.6 million compared to $17.0 million for the same period in 2010.

Net loss for the quarter amounted to $0.7 million or $0.01 per share compared to $28,436 or $0.00 per share for the same quarter in 2010. For the nine-month period ended June 30, 2011, net loss totalled $1.6 million or $0.02 per share compared to $0.9 million or $0.01 per share in 2010.

For the three-month period ended September 30, 2011, the Company had earnings before interest, taxes, depreciation and amortization (EBITDA) of $0.3 million compared to $0.6 million for the same quarter last year. For the nine-month period ended September 30, 2011, EBITDA amounted to $0.5 million compared to $1.1 million in 2010.

Gross margin for the three-month period ended September 30, 2011, amounted to $1.2 million or 23% of revenues compared to $1.3 million or 23% of revenues for the same quarter last year. Gross margin for the nine-month period ended September 30, 2011, amounted to $3.6 million or 23% of revenues compared to $3.8 million or 23% of revenues in 2010.

For the three-month period ended September 30, 2011, selling expenses remained similar to last year at $0.3 million. In proportion of revenue, selling expenses were similar to last year at 6%. For the nine-month period ended September 30, 2011, selling expenses were $0.9 million compared to $1.0 million last year.

General and administrative expenses for the quarter were $1.1 million compared to $1.3 million last year. In proportion of revenue, general and administrative expenses were lower than last year at 21% (23% in 2010). For the nine-month period ended September 30, 2011, general and administrative expenses amounted to $3.6 million compared to $3.8 million last year.

Financial expenses for the quarter remained similar to last year at $0.3 million. For the nine-month period ended September 30, 2011, financial expenses were similar to last year at $0.9 million.

Research and development tax credits for the quarter decreased to $0.2 million in 2011 from $0.5 million in 2010. For the nine-month period ended September 30, 2011, research and development tax credits amounted to $0.4 million compared to $0.8 million in 2010.

About Warnex

Warnex ([ www.warnex.ca ]) is a life sciences company devoted to protecting public health by providing laboratory services to the pharmaceutical and healthcare sectors. Warnex Analytical Services provides pharmaceutical and biotechnology companies with a variety of quality control services, including chemistry, chromatography, microbiology, method development and validation, and stability studies. Warnex Bioanalytical Services specializes in bioequivalence and bioavailability studies for clinical trials. Warnex Medical Laboratories provides specialized testing for the healthcare industry as well as pharmaceutical and central laboratory services. Warnex PRO-DNA Services offers DNA identification tests for paternity, maternity and other family relationships, as well as for immigration and forensic testing purposes. Warnex has three facilities located in Laval and Blainville, Quebec, and Thunder Bay, Ontario.

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 information identifying known risks and uncertainties, relating to financial resources, liquidity risk, key customers and business partners, credit risk, foreign currency risk, government regulations, laboratory facilities, volatility of share price, employees, suppliers, 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.

Interim Consolidated Balance Sheets

(Unaudited)

	September 30 2011 $		December 31 2010 $		January 1 2010 $
Assets
Current assets
Cash and cash equivalents	227,853		244,456		894,031
Trade and other receivables	3,345,666		3,478,299		3,593,390
Work-in-progress	459,326		328,289		531,142
Inventory	419,162		355,132		177,027
Prepaid expenses	439,389		293,636		388,502
	4,891,396		4,699,812		5,584,092

Non-current assets
Deferred income taxes	1,221,000		1,221,000		1,221,000
Property, plant and equipment	5,741,414		6,569,217		7,868,974
Intangibles	351,490		407,185		382,145
Goodwill	937,695		937,695		937,695
	13,142,995		13,834,909		15,993,906

Liabilities
Current liabilities
Bank loan	1,080,000		580,000		-
Trade and other payables	3,309,956		2,899,115		3,008,594
Provisions	110,853		-		-
Deferred revenue	1,074,005		921,532		411,599
Current portion of long-term debt	153,470		894,716		1,800,372
Liability component of debentures	6,603,485		6,100,181		-
	12,331,769		11,395,544		5,220,565

Long-term liabilities
Long-term debt	-		5,722		447,661
Liability component of debentures	-		-		6,187,516
	12,331,769		11,401,266		11,855,742

Shareholders' equity
Capital stock	40,981,049		40,981,049		40,981,049
Other reserves	2,803,559		2,803,559		2,772,306
Deficit	(42,973,382	)	(41,350,965	)	(39,615,191	)
	811,226		2,433,643		4,138,164
	13,142,995		13,834,909		15,993,906

Interim Consolidated Statements of Changes in Equity

(Unaudited)

		Other reserves
	Capital stock $	Equity components of debentures $	Share-based compensation $	Other $	Total other reserves $	Deficit $		Total $
Balance, December 31, 2010	40,981,049	1,734,404	1,028,149	41,006	2,803,559	(41,350,965	)	2,433,643
Share-based compensation	-	-	-	-	-	-		-
Net and comprehensive loss	-	-	-	-	-	(1,622,417	)	(1,622,417	)
Balance, September 30, 2011	40,981,049	1,734,404	1,028,149	41,006	2,803,559	(42,973,382	)	811,226


Balance, January 1, 2010	40,981,049	1,734,404	996,896	41,006	2,772,306	(39,615,191	)	4,138,164
Share-based compensation	-	-	31,253	-	31,253	-		31,253
Net and comprehensive loss	-	-	-	-	-	(922,188	)	(922,188	)
Balance, September 30, 2010	40,981,049	1,734,404	1,028,149	41,006	2,803,559	(40,537,379	)	(3,247,229	)

Interim Consolidated Statements of Operations and Comprehensive Income (Loss)

(Unaudited)

		Three months ended September 30				Nine months ended September 30
		2011 $		2010 $		2011 $		2010 $
Revenue		4,978,609		5,538,122		15,557,992		17,001,218
Cost of goods sold		3,815,508		4,265,174		11,985,102		13,181,422
Gross margin		1,163,101		1,272,948		3,572,890		3,819,796

Operating expenses
	Selling	310,041		321,003		938,094		950,513
	General and administrative	1,084,272		1,294,744		3,557,265		3,803,665
	Finance	291,233		287,697		864,916		859,623
	Research and development tax credits	(162,422	)	(473,235	)	(411,422	)	(799,235	)
		1,523,124		1,430,209		4,948,853		4,814,566

Loss before under noted item and income taxes		(360,023	)	(157,261	)	(1,375,963	)	(994,770	)
Unrealized foreign exchange gain (loss) on debentures		(360,732	)	128,825		(246,454	)	72,582

Loss before income taxes		(720,755	)	(28,436	)	(1,622,417	)	(922,188	)
Income taxes		-		-		-		-
Net loss and comprehensive loss		(720,755	)	(28,436	)	(1,622,417	)	(922,188	)

Basic loss per share		(0.01	)	(0.00	)	(0.02	)	(0.01	)
Diluted loss per share		0.00		0.00		(0.01	)	(0.01	)
Weighted average number of shares outstanding		67,117,191		67,117,191		67,117,191		67,117,191
Weighted average number of diluted shares outstanding		255,788,191		67,117,191		255,788,191		67,117,191

Interim Consolidated Statements of Cash Flow

(Unaudited)

	Three months ended September 30				Nine months ended September 30
	2011 $		2010 $		2011 $		2010 $
Operations
Net loss	(720,755	)	(28,436	)	(1,622,417	)	(922,188	)
Items not affecting cash:
Depreciation of property, plant and equipment	320,898		372,660		955,799		1,113,123
Amortization of intangibles	24,625		26,822		73,337		74,111
Accretion of interest on debentures	-		37,401		71,114		107,341
Capitalized interest on debentures	185,736		-		185,736		-
Unrealized foreign exchange loss (gain) on debentures	360,732		(128,825	)	246,454		(72,582	)
Share-based compensation	-		41		-		31,253
Foreign currency fluctuation	(35,384	)	211,095		(31,142	)	188,989
	135,852		490,758		(121,119	)	520,047
Net change in non-cash working capital items	241,156		(258,681	)	491,380		(414,057	)
Net cash provided by operations	377,008		232,077		370,261		105,990

Investing activities
Acquisition of property, plant and equipment	(24,131	)	(32,821	)	(127,996	)	(109,462	)
Acquisition of intangibles	-		(10,708	)	(17,642	)	(113,642	)
Net cash used in investing activities	(24,131	)	(43,529	)	(145,638	)	(223,104	)

Financing activities
Increase (decrease) in bank loan	(60,000	)	20,000		500,000		340,000
Repayment of long term debt	(115,569	)	(347,611	)	(746,968	)	(1,016,716	)
Net cash used in financing activities	(175,569	)	(327,611	)	(246,968	)	(676,716	)

Foreign exchange gain (loss) on cash held in foreign currencies	13,712		(65,352	)	5,742		(55,342	)

Increase (decrease) in cash and cash equivalents	191,020		(204,415	)	(16,603	)	(849,172	)
Cash and cash equivalents, beginning of period	36,833		249,274		244,456		894,031
Cash and cash equivalents, end of period	227,853		44,859		227,853		44,859

Contributing Sources

Market Wire

N@N

Warnex Reports Third Quarter 2011 Results

Warnex Reports Third Quarter 2011 Results