FAILED
BioExx loses $8.47-million in Q2
2013-08-16 17:35 ET - News Release
Mr. Chris Schnarr reports
BIOEXX ANNOUNCES Q2 2013 RESULTS
BioExx Specialty Proteins Ltd. has released its financial results for the three and six months ended June 30, 2013.
Financial results for the three and six months ended June 30, 2013
Subsequent to June 30, 2013, the company announced that it engaged a firm to undertake a process to explore a sale of the company and, if feasible and subject to shareholder approval, to sell the company. As a result of this and other related factors, the company has prepared its financial statements on the liquidation basis, rather than the going concern basis, as required by international accounting standard 1.
Revenues
During the quarter, the company generated $60,575 of revenue from canola oil and canola meal sales at its Saskatoon plant, versus revenue of $136,008 in second quarter 2012. As previously discussed, the company ran its crush operations only as required to support the development and piloting activity required for the completion of the company's detailed engineering scale-up and partner mandates. This resulted in low processing volumes and revenue earned during the quarter. On May 24, 2013, the company ceased production at the plant.
Gross profit (loss)
Cost of goods sold for the quarter was $108,346, compared with $602,611 in second quarter 2012. The decrease results from the low processing volumes and reduced scope of operations as discussed herein. As a result of development and piloting activity, a portion of continuing plant operations expenses have been included in plant commissioning and start-up expenses, as discussed herein, rather than in cost of goods sold. As a result of the foregoing factors, gross loss for the quarter was $47,771, versus $466,603 for the comparable prior-year period.
Other expenses
The company incurred other expenses during the quarter of $8,431,407, compared with $3,390,160 in second quarter 2012. The primary components of this variance were:
General and administrative expenses were $847,210 in second quarter 2013, versus $980,219 in second quarter 2012, as a result of the company's previously noted cost reduction efforts.
During second quarter 2013, the company conducted an evaluation of potential impairment of the carrying amount of the company's intangible assets. The evaluation of potential impairment was required as a result of the company announcing, subsequent to the period, that it had engaged a firm to undertake a process to explore a sale of the company and, if feasible and subject to shareholder approval, to sell the company. The company recognized an impairment charge on the entire carrying value of its intangible assets, in the amount of $5,087,519, as it is unable to quantitatively assess and support the value of the intangible assets. The impairment charge has been presented as a component of impairment and other income (expenses) for the three months ended June 30, 2013. In 2013, the company announced that it intended to discontinue operations at its facility in Saskatoon, Sask. As a result of the impending sale of the Saskatoon plant assets, the carrying amount of the assets held for sale has been estimated at their fair value less costs to sell. The company announced that it had signed binding purchase agreements for its Saskatoon land, building and equipment for gross proceeds of $11,113,000. As a result, the company recognized an impairment charge of $378,428, which has been presented as a component of impairment and other income (expenses) for the three months ended June 30, 2013. Impairment and other income (expenses) also include severance costs for employees that were terminated on or before June 30, 2013, in the amount of $271,332.
Plant commissioning and start-up (income) expenses were ($390,397) in second quarter 2013, versus $1,884,268 in second quarter 2012, with the lower amount resulting various factors. As a result of the previously noted reduction in crushing operations, and the fact that the company did not generate significant oil and meal revenue during the second quarter, the company presented a portion of fixed and variable crushing operational costs as a component of plant commissioning and start-up expenses. On May 24, 2013, the company ceased production at the plant. The company also accrued a SR&ED credit receivable in the amount of $772,091, which has been presented as a reduction of plant commissioning and start-up (income) expenses for the three months ended June 30, 2013.
Net finance costs in second quarter 2013 were $1,923,291 versus $232,878 in second quarter 2012. The higher amount versus the comparable prior periods is due primarily to the company's adoption of the liquidation basis of accounting, which requires that the company present the loans and borrowings at fair market value. As a result, the company recorded the full balance of the accretion relating to the outstanding debts to present them at their fair market value, as disclosed in Note 9 to the unaudited condensed interim consolidated financial statements for the three and six months ended June 30, 2013.
Net loss
The net loss for the quarter was $8,479,078, versus $3,856,763 in second quarter 2012. The significant variance in losses compared with second quarter 2012 reflects primarily the impairment provisions taken during the quarter, as well as the cumulative impact of the company's continuing cost reduction efforts and reduced scale of interim operations. Adjusting for the impairment and other (income) expenses and the net financing costs, the respective net losses are $759,219 versus $3,688,373 in second quarter 2012.
Working capital and liquidity
As at June 30, 2013, current assets were $12,519,472, including cash and cash equivalents of $515,644. Against current liabilities of $15,408,219, this results in negative net working capital of ($2,888,747), primarily due to the inclusion of the assets held for sale and the fair value of loans and borrowings as current assets and liabilities, respectively. This compares with current assets of $3,321,747 and negative net working capital of ($4,801,379) as at Dec. 31, 2012.
Changes to board of directors
William Ollerhead has resigned as chairman and a director of the company. John MacDonald, a board member since 2008, has been appointed chairman of the board of directors.
We seek Safe Harbor.