BioExx Announces Q1 2012 Results

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Source: Marketwire

Conference Call: Tuesday, May 15, 9:00 a.m. ET
Dial-in Numbers: 416-695-6616 / 800-355-4959 / 800-6578-9898

TORONTO, ONTARIO -- (Marketwire) -- 05/14/12 -- BioExx Specialty Proteins Ltd. (TSX: BXI), announced today its financial results for the three month period ended March 31, 2012. Complete Financial Statements and Management Discussion & Analysis have been filed for public review at www.sedar.com and will be posted on the Company's website at www.bioexx.com.

'We are on course in the execution of our strategy, highly concentrated on key activities and priorities, including scale-up engineering and our strategic partner process', said BioExx CEO, Chris Schnarr. 'While these will take time to complete, we are focussed on their delivery as the core requirements which form the foundation for our next stages of growth. We are making progress on these each and every day, and we will continue to press forward through completion.'

Financial Results for the Three Months Ended March 31, 2012

Revenues

During the quarter, the Company generated $483,024 of revenue from canola oil and canola meal sales at its Saskatoon plant, versus revenue of $1,249,601 in Q1 2011 (including a gain on derivative instruments of $7,266; Q1 2012 - $Nil). This revenue was based on approximately 1,100 Mt seed processed in the quarter, as compared to approximately 2,707 Mt in the comparable 2011 quarter. Given the economic challenges in the operation of a small canola crushing facility, the Company has moved to a program of running its crush operations only as required to support downstream protein operations, with limited additional production, resulting in lower processing volumes versus the comparable prior year period. Further, as previously discussed, to conserve capital and exercise appropriate fiscal discipline, the Company also scaled back operations from five days per week to two days per week in March 2012.

Gross Profit (Loss)

Cost of Goods Sold for the quarter was $1,220,370, compared to $2,205,971 for Q1 2011. The decrease results primarily from the lower processing volumes discussed above. As a result, Gross Loss for the quarter was $737,346, compared with $956,370 for the comparable prior year period. The Q1 2012 Gross Loss has also been significantly reduced from a Gross Loss of $1,196,726 in the prior quarter (Q4 2011), as a result of the Company's operational changes to reduce losses and operating cash consumption, as discussed above.

Other Expenses

The Company incurred other expenses during the quarter of $6,991,438, compared to $2,907,397 in Q1 2011 and $14,230,821 in Q4 2011. The primary components of this were:

General and administrative expenses were $940,061 in Q1 2012, comparable to the $906,755 in Q1 2011, and down significantly from $1,302,126 in the prior quarter (Q4 2011) as a result of the Company's previously noted cost reduction efforts.

Research and development expenses were $55,501 in Q1 2012, down from $138,167 in Q1 2011, and also down significantly from $149,187 in the prior quarter (Q4 2011), again as a result of the Company's previously noted cost reduction efforts.

Plant start-up and commissioning expenses were $2,877,741 in Q1 2012, versus $606,915 in Q1 2011, which was a more developmental period with much lower activity in protein operations. The current quarter is also down very slightly from $2,918,046 in the prior quarter. The Company expects larger reductions in this category in Q2 2012, reflecting its operational scale-back and expenditure reduction efforts.

Sales and marketing expenses were $98,431 in Q1 2012, down slightly from $101,218 in Q1 2011, and down significantly from $139,170 in the prior quarter (Q4 2011), again as a result of the Company's previously noted cost reduction efforts.

As discussed in the Company's Q3 2011 and annual 2011 filings, as a result of the migration in 2011 from a solvent-based to a solvent-free production process, certain assets were no longer in use and were made available for sale, resulting in an impairment charge in Q4 2011 of $9,548,653. As a result of additional scale-up engineering in Q1 2012, the Company identified certain additional production assets which it determined would no longer be required in the context of the planned production environment. As a result, inclusive of the asset purchase prices, engineering fees, and installation fees, and net of expected proceeds of sale, the Company has recognized an additional impairment expense of $2,524,534.

Net Loss

The Net Loss for the quarter was $7,728,784, compared to $3,863,767 for Q1 2011 and $15,427,547 for Q4 2011. This change in Net Loss comprises the cumulative result of the various items discussed above. On a per share basis, the Net Loss is $0.04 for the quarter, versus $0.02 in Q1 2011 and $0.07 in Q4 2011.

Working Capital and Liquidity

As at March 31, 2012, current assets were $5,834,947, including cash and cash equivalents of $3,212,596. Against current liabilities of $3,368,656, this results in net working capital of $2,466,291. This compares to current assets of $12,393,905 and net working capital of $6,537,704 as at December 31, 2011.

Subsequent to March 31, 2012, the Company received a full refund of the investment tax credits accrued during 2011 in the amount of $923,526. In addition, the Company disposed of a portion of its assets held for sale and received net proceeds on disposal of approximately $990,000.

Cash Flows

BioExx Net Cash Flow Used in Operating Activities during the quarter was ($4,107,692), compared to ($2,861,158) in Q1 2011 and ($4,784,654) in Q4 2011. The differences primarily reflect the different operating environments in the respective quarters, as discussed above.

BioExx Net Cash Flow Used in Investing Activities during the quarter was ($2,536,788) compared to Q1 2011 of ($5,449,208) and ($3,400,826) in Q4 2011. This is based primarily on significant slowing in capital expenditures related to the Saskatoon plant as it has evolved through the various phases of its business plan and progress against that plan. The majority of Q1 2012 cash usage related to Q4 2011 capital expenditure activities.

BioExx Net Cash Flow Used in Financing Activities during the quarter was ($151,548), compared to ($556,296) in Q1 2011 and ($150,015) in Q4 2011. The amounts reflect periods during which no additional debt or equity capital was raised, but during which existing debt was serviced as to interest and principal repayments.

About BioExx Specialty Proteins Ltd.

Headquartered in Toronto, Canada, BioExx is focused on the separation of oil and high-value proteins from oilseeds for global food, beverage, nutrition, and other markets. BioExx employs trade secret, patented and patent-pending technologies that utilize significantly lower temperatures than conventional oilseed processing, in order to enable the improved separation of proteins from oilseeds. BioExx believes that these processes cumulatively have the potential to make a valuable contribution to global food and protein supply while maintaining an environmentally sustainable footprint.

To find out more about BioExx Specialty Proteins Ltd. (TSX: BXI), please visit www.bioexx.com.

The statements made in this press release include forward-looking statements that involve a number of risks and uncertainties. These statements relate to future events or future performance and reflect management's current expectations and assumptions. A number of factors could cause actual events, performance or results to differ materially from the events, performance and results discussed in the forward-looking statements, such as the economy, generally, competition in its target markets, the demand for BioExx's products, the availability of funding, the efficacy of its technology, and the anticipated costs of BioExx's plant construction and operation. These forward-looking statements are made as of the date hereof and BioExx does not assume any obligation to update or revise them to reflect new events or circumstances. Actual events or results could differ materially from BioExx's expectations and projections.

Contacts:
BioExx Specialty Proteins Ltd.:
Chris Schnarr
Chief Executive Officer
(416) 588-4442 x111
cschnarr@bioexx.com
www.bioexx.com

Investor Relations:
Brisco Capital Partners
Scott Koyich
President
(403) 262-9888
scott@briscocapital.com

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