Warnex

Warnex Reports First Quarter 2012 Results

2012-05-15 17:11:11

Laval, Quebec, May 15, 2012 - Warnex Inc. (TSXV: WNX) ("Warnex") announced today financial results for the first quarter ended March 31, 2012.

Operating Highlights

During the quarter ended March 31, 2012, Mr. François Jetté, Chief Financial Officer, left the Company in order to pursue other career opportunities. Upon his departure, his responsibilities were assumed on an interim basis by Jean Vézina, who has significant relevant experience, having previously served as the Chief Financial Officer of a publicly listed pharmaceutical company.

Subsequent to the quarter, the Company reached an agreement with PCP, the holder of the Debentures, regarding the conversion of a portion of the Debentures and the repayment of the remaining balance. The conversion of CDN$725,000 in principal amount of the Debentures into an aggregate of 46,178,344 Common Shares of Warnex pursuant to a notice of conversion received by Warnex on March 16, 2012, was effected on April 5, 2012. As a result, PCP owns approximately 51.56% of the outstanding Common Shares. Furthermore, PCP had agreed to allow Warnex until April 13, 2012, subsequently extended until April 19, 2012 to repay the remaining balance of the amount owing under the Debentures.

Subsequent to the quarter, the Company completed a new credit facility with Accord Financial Inc. pursuant to which Warnex was extended credit on the basis of its outstanding accounts receivable. Upon the closing of this credit facility, Warnex received initial funding in an amount which was sufficient to allow it to repay in their entirety the $975,947 ($887,402 at March 31, 2012) in principal amount of debentures held by PCP.

Subsequent to the quarter, the Company announced the sale of its Analytical Services division to NEOPHARM LABS Inc. ("NEOPHARM"), the previously announced purchaser. Under the terms of the transaction, which has an effective date of April 2, 2012, Warnex realized cash proceeds of $300,000, subject to normal working capital adjustments which are to be finalized and settled by the parties post-closing. In addition, NEOPHARM will assume certain specific liabilities related to the division. The terms of the transaction also provide the Company with the right, subject to certain conditions, to terminate the lease for its Laval, Quebec facilities, which are owned by an affiliate of the purchaser, prior to the current expiry date of such lease. In addition, the purchaser has also assumed all of the Company's lease obligations for its Blainville facility. Concurrent with the transaction, the parties have terminated all legal proceedings between them.

Subsequent to the quarter, the Company announced that its common shares would be delisted from Toronto Stock Exchange ("TSX") at the close of market on April 23, 2012. Effective April 24, 2012, the common shares have begun trading on the TSX Venture Exchange ("TSXV"). Further information can be found in the Company's Management Discussion and Analysis for the period ended March 31, 2012.

The Company continues its review of strategic alternatives with a view to recognizing the full value of Warnex and/or its assets, strengthening its balance sheet and generating positive cash flow.

Financial Results

Consolidated revenue for the three-month period ended March 31, 2012, amounted to $3.7 million compared to $5.8 million for the same period last year. Most of the decrease is explained by the sale of the Medical Laboratories division, on December 8, 2001, which generated $1.4 million in revenues for Q1 of 2011 and nil for 2012.

Net loss for the quarter amounted to $863,945 or $0.01 per share compared to net loss of $67,814 or $0.00 per share for the same quarter in 2011.

General and administrative expenses for the quarter amounted to $1.1 million compared to $1.3 million for the same period last year following the sale of the Medical Laboratories division, on December 8, 2011.

Financial expenses for the quarter remained similar to last year at $0.3 million.

About Warnex

Warnex (www.warnex.ca) is a life sciences company which, through its Bioanalytical Services operations, provides bioequivalence and bioavailability studies for clinical trials at its facility located in Laval, Quebec.

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, 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.

For more information, please contact:

Michael Singer
Chairman of the Board of Directors, Warnex Inc.
Tel: (514) 940-3610
msinger@thallion.com

Warnex Sells its Analytical Services Division

2012-04-24 16:00:39

Laval, Quebec, April 24, 2012 - Warnex Inc. (TSXV: WNX) ("Warnex") announces that it has successfully completed the sale of its Analytical Services division to NEOPHARM LABS Inc. ("NEOPHARM"), the previously announced purchaser who initially bound itself to such transaction in December, 2011. Concurrent with the transaction, the parties have terminated all legal proceedings between them.

The Transaction

Under the terms of the transaction, which has an effective date of April 2, 2012, Warnex will realize cash proceeds of $300,000, subject to normal working capital adjustments which are to be finalized and settled by the parties post-closing. In addition, NEOPHARM will assume certain specific liabilities related to the division. The terms of the transaction also provide Warnex with the right, subject to certain conditions, to terminate the lease for its Laval, Quebec facilities, which are owned by an affiliate of NEOPHARM, prior to the current expiry date of such lease.

In addition, NEOPHARM will provide employment to the approximately 90 employees specific to the division. NEOPHARM has advised that the directors, who come with valuable years of experience, will personally manage and administer the analytical operations including: Dr. Martin Nadeau, Ph.D, Senior, Director of Microbiology; Monique Baillet, M.Sc, Director of Quality Assurance; Abderrahim Mallah, Director of Validation; Serge Lacoursiere, Director of Chromatography; and Carl Larouche, Director of Chemistry, who will continue to provide their expertise to NEOPHARM's clients.

NEOPHARM will also assume all of Warnex's lease obligations for its Blainville facility and will consolidate the operations of the Analytical Services division at such location, except for the stability chambers and certain related activities, as well as some other special projects, which shall continue to be performed out of the Laval facility. Warnex has agreed to provide NEOPHARM with certain transitional services in order to ensure the orderly transfer of the division. For further information about NEOPHARM, please visit www.neopharm.ca.

Warnex intends to use the proceeds from this transaction to support its working capital requirements and to reduce outstanding debt.

"Warnex has been working diligently over the past several months to improve its balance sheet and strategic outlook," said Michael Singer, the Chairman of the Board of Directors of Warnex. "The sale of the Analytical Services division is a key step in this process. We would like to thank the employees of the Analytical Services division for their valuable contributions over the years and are confident that the customers of this business will continue to enjoy the same high quality and professional service that they are accustomed to receiving. This transaction permits us to concentrate on our core Bioanalytical Services business, which is now the sole focus of Warnex under the excellent leadership of Dr. Michael Mancini."

Strategic Review

Warnex continues to evaluate all of its options for maximizing the value of its remaining Bioanalytical Services division. In this regard, Warnex continues to pursue its previously announced discussions regarding potential transactions involving this division. However, Warnex cautions that there can be no assurance that any transaction will occur, or if a transaction is in fact undertaken, as to its terms or timing. Warnex's immediate priority continues to be to ensure that the Bioanalytical Services division continues to maintain the highest standards of service delivery for the benefit of its customers, its employees and its other stakeholders.

About Warnex

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, 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.

For more information, please contact:

Michael Singer
Chairman of the Board of Directors, Warnex Inc.
Tel: (514) 940-3610
msinger@thallion.com

Warnex Refinances its Operations and Lists on the TSX Venture Exchange

2012-04-20 15:33:38

Laval, Quebec, April 20, 2012 - Warnex Inc. (TSX:WNX) ("Warnex") is pleased to provide the following update regarding its operations.

Refinancing of Operations

Warnex has completed a new credit facility with Accord Financial Inc. pursuant to which Warnex is to be extended credit on the basis of its outstanding accounts receivable. Upon the closing of this credit facility, Warnex received initial funding in an amount which was sufficient to allow it to repay in their entirety the $975,947 in principal amount of debentures held by Persistence Capital Partners LP ("PCP").

"This credit facility allows Warnex to replace its convertible debentures with new non-dilutive financing and serves to demonstrate a continued commitment towards restructuring the company's balance sheet and providing the company with access to capital in order to pursue its objectives," remarked Michael Singer, the newly appointed Chairman of the Board of Directors of Warnex. "Warnex thanks PCP for their support and looks forward to their continued interest in the company as its majority shareholder."

Exchange Listing

As previously announced, the common shares of Warnex (the "Common Shares") will be delisted from TSX at the close of market on April 23, 2012. Effective April 24, 2012, the Common Shares will start trading on the TSX Venture Exchange ("TSXV"). In order to meet the listing requirements of the TSXV, certain modifications to the capital structure of Warnex as described below have been agreed to.

PCP has agreed to modify the terms of the Common Share purchase warrants expiring on November 25, 2012 (the "Purchase Warrants") held by it such that their exercise price has been increased to $0.10, after giving effect to the proposed Common Share consolidation referred to below. Further, PCP has agreed not to exercise any of the Purchase Warrants until such consolidation has been implemented.

In addition, Warnex has agreed to present to its shareholders for approval at its next shareholders' meeting a proposal for a one-for-four consolidation of its outstanding Common Shares. PCP has undertaken to support such proposal. Further information regarding this proposed share consolidation will be provided by Warnex at a later date.

As a result of the listing of the Common Shares on the TSXV, restrictions previously contained in the Purchase Warrants held by PCP pertaining to limitations on the amounts of certain specified payments that could be made to PCP and on the number of Common Shares that could be issued to PCP upon conversion without the prior consent of the shareholders of Warnex have been removed. The corresponding compensatory payments that were payable to PCP in the event that the requisite shareholder approval was not obtained have similarly been removed.

Changes to the Board of Directors

Having completed their oversight of the refinancing of the company, Richard Laferrière and Michel Lassonde have resigned as directors of Warnex. Richard Laferrière has served as the Chairman of the Board of Warnex since 1996. Michel Lassonde has served as a Board member since 2009. Warnex thanks them for their longstanding service.

In light of the vacancies created by these resignations, Warnex and PCP are in discussions regarding the nomination of two new directors to serve on the Board of Directors. All nominees will be subject to Warnex's normal governance review process.

Further, the Board of Directors has resolved to dissolve the Executive Committee of independent directors previously established to oversee and review strategic alternatives and has appointed Michael Singer to serve as the new Chairman of the Board.

Strategic Review

Warnex continues to evaluate all of its options for maximizing the value of both its Analytical Services division and its Bioanalytical Services division. In this regard, as previously announced, Warnex continues to pursue discussions regarding potential transactions involving each of these divisions. However, Warnex cautions that there can be no assurance that any transaction will occur, or if a transaction is in fact undertaken, as to its terms or timing. Warnex's immediate priority continues to be to ensure that each of these divisions continues to maintain the highest standards of service delivery for the benefit of its customers, its employees and its other stakeholders.

About Warnex

Warnex (www.warnex.ca) is a life sciences company devoted to protecting public health by providing laboratory services to the pharmaceutical sector. 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 has two facilities located in Laval and Blainville, Quebec.

For more information, please contact:

Michael Singer
Chairman of the Board of Directors, Warnex Inc.
Tel: (514) 940-3610
msinger@thallion.com

Warnex Obtains Extension for the Repayment of its Debentures

2012-04-16 18:16:47

Laval, Quebec, April 16, 2012 - Warnex Inc. (TSX: WNX) ("Warnex") announces that Persistence Capital Partners LP ("PCP"), the holder of its outstanding debentures (the "Debentures"), has agreed to extend until April 19, 2012, the date by which Warnex must repay the approximately $960,000 owing under the Debentures. PCP has granted this extension to Warnex in recognition of the fact that Warnex is well advanced in its process of securing a new credit facility which will provide it with the funds necessary to repay the Debentures and to support future working capital requirements. However, while Warnex is well advanced in this process, no assurances can be given that Warnex will be successful in this regard.

Exchange Listing

As previously announced, the Toronto Stock Exchange ("TSX") had advised Warnex that its common shares would be delisted on April 16, 2012 as a result of Warnex's failure to meet the continued listing requirements of the TSX. In light of the recent developments described above, the TSX has agreed to extend the date of such delisting to the close of business on April 23, 2012. In anticipation of such delisting, Warnex has been actively engaged with the TSX Venture Exchange (the "TSXV") in an effort to transfer the listing of its common shares to the TSXV or to the NEX trading board of the TSXV. Warnex expects to be able to provide further information in this regard in the upcoming days.

About Warnex

For more information, please contact:

Michael Singer
Chairman of the Executive Committee
of the Board of Directors, Warnex Inc.
Tel: (514) 940-3610
msinger@thallion.com

Warnex Reports Year End 2011 Results

2012-04-05 16:42:19

Laval, Quebec, April 5, 2012 - Warnex Inc. (TSX: WNX) ("Warnex") announced today financial results for the year ended December 31, 2011.

2011 Highlights

Sold the assets of its Medical Laboratories division to Gamma-Dynacare Medical Laboratories for gross proceeds of $7.5 million. A portion of these proceeds was used to reduce the Company's debt owing pursuant to its outstanding debentures, reducing their aggregate principal amount from US$4,590,277 and CDN$2,140,815 in December 2011, to approximately CDN$1,576,000.
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.
Mr. Mark Busgang resigned as President and Chief Executive Officer and as a director of Warnex. The former responsibilities of Mr. Busgang were assumed by the remaining senior officers of Warnex with oversight from the newly created Executive Committee of the Board of Directors of Warnex.
On December 20, 2011, the Company had announced that it had entered into a binding letter of intent for the sale of its Analytical Services division for a consideration comprising of, among other elements, $400,000 in cash, the refund of working capital in the amount of approximately $700,000 and a 15% passive equity interest in the purchaser. On February 14, 2012, the Company announced that this transaction would not proceed due to the failure of the prospective purchaser to perform its obligations. As a result, the Company has initiated certain legal measures with a view to obtaining appropriate compensation from the prospective purchaser. The prospective purchaser has responded with its own legal proceedings alleging certain defaults on the part of the Company and seeking redress from the court. The Company intends to vigorously defend against such proceedings; however, it is not possible to predict the outcome of these various legal proceedings at this time.
Subsequent to year end, Mr. François Jetté, Chief Financial Officer, left the Company effective March 23, 2012, in order to pursue other career opportunities. Upon his departure, his responsibilities were assumed on an interim basis by Jean Vézina, who has significant relevant experience, having previously served as the Chief Financial Officer of a publicly listed pharmaceutical company.
Subsequent to year end, the Company announced on April 4, 2012 that it has reached an agreement with Persistence Capital Partners LP (PCP), the holder of the Debentures, regarding the conversion of a portion of the Debentures and the repayment of the remaining balance. The conversion of CDN$725,000 in principal amount of the Debentures into an aggregate of 46,178,344 Common Shares of Warnex pursuant to a notice of conversion received by Warnex on March 16, 2012, will be effected on or about April 5, 2012. As a result, PCP will own approximately 51.56% of the outstanding Common Shares. Furthermore, PCP has agreed to allow Warnex until April 13, 2012 to repay the remaining balance of approximately $959,420 owing under the Debentures, with the expectation that by such time, Warnex will be able to put into place a one-year operating line of credit with a financial institution of up to CDN$2,000,000 in order to provide Warnex with the funds necessary to repay such outstanding balance and to support future working capital requirements. While Warnex is well advanced towards putting this credit facility into place, no assurances can be given that Warnex will be successful in this regard.
Subsequent to year end, Mr. Marc Lebel has been appointed as the Interim Chief Executive Officer of the Company. His primary role within Warnex will be to ensure the integrity of the Company's operations as the Board of Directors continues its assessment of the strategic alternatives available for the Company.
As a result of the Company's continuing developments, the Toronto Stock Exchange has agreed to further extend the deadline for the delisting of the Common Shares of Warnex to April 16, 2012. Warnex continues to explore its various options in light of this scheduled delisting.
The Company continues to evaluate all of its options for maximizing the value of both its Analytical Services division and its Bioanalytical Services division. In this regard and subsequent to year end, the Company has received a number of non-binding expressions of interest with respect to potential transactions involving each of these divisions. The prospective purchasers are currently in the process of conducting due diligence reviews of their target operations. However, the Company cautions that there can be no assurance that any transaction will occur, or if a transaction is in fact undertaken, as to its terms or timing.

Financial Results

Consolidated revenue for the twelve-month period ended December 31, 2011, amounted to $21.3 million compared to $22.3 million for the same period of last year, a decrease of 4%. Net earnings for the twelve-month period amounted to $0.5 million or $0.01 per share in 2011 compared to a net loss of $1.7 million or $0.03 per share in 2010.

For the twelve-month period ended December 31, 2011, earnings before interests, taxes, depreciation and amortization (EBITDA) amounted to $0.2 million compared to $1.0 million for the twelve-month period ended December 31, 2010.

Gross margins for the twelve-month period amounted to $5.3 million, representing 25% of revenue, in 2011 compared to $4.8 million and 22% of revenue in 2010.

For the twelve-month period ended December 31, 2011, selling expenses were $1.3 million compared to $1.4 million in 2010. As a percentage of revenue, selling expenses were similar to last year at 6%.

General and administrative expenses amounted to $5.7 million compared to $5.2 million last year. As a percentage of revenue, general and administrative expenses were higher than last year at 26% (23% in 2010).

Financial expenses increased to $1.2 million in 2011 from $1.1 million in 2010, mainly due to more interest paid on the line of credit.

Research and development tax credits amounted to $0.2 million for the year ended December 31, 2011, compared to $0.9 million in 2010.

Operating Highlights

The Analytical division's revenues decreased by 22% from $10.5 million in 2010 to $8.1 million in 2011. This decrease is mainly due to a decrease in volume from major customers during the year. The Company announced on July 15, 2011, that it would reorganize the operations of the Warnex Analytical Services Inc. subsidiary. As part of the restructuring, Warnex shut down the operations of its analytical laboratories located in Laval, and consolidated all of its analytical services at its Neopharm Laboratories facility located in Blainville. This reorganization reflected the Company's strategy to continually improve efficiency, reduce costs related to operations and provide better service to customers. This reorganization was completed in September 2011.

The Bioanalytical division's revenues increased by 25% from $6.4 million in 2010 to $8.0 million in 2011. This increase is mainly due to the execution of more complex projects with an average price per analysis higher than last year. The business development efforts in this division are ongoing to further increase the Company's business from new and existing customers.

The Medical division's revenue decreased by 5% from $5.2 million in 2010 (12 months) to $4.9 million in 2011 (11 months). This division was sold on December 8, 2011, to Gamma-Dynacare Medical Laboratories.

About Warnex

For more information, please contact:

Michael Singer
Chairman of the Executive Committee
of the Board of Directors, Warnex Inc.
Tel: (514) 940-3610
msinger@thallion.com

Warnex Provides an Update on its Operations

2012-04-04 18:05:22

Laval, Quebec, April 4, 2012 - Warnex Inc. (TSX:WNX) ("Warnex") wishes to provide the following update regarding its operations.

Financial Situation

Warnex announces that it has reached an agreement with Persistence Capital Partners LP ("PCP"), the holder of its outstanding debentures (the "Debentures"), regarding the conversion of a portion of the Debentures and the repayment of the remaining balance. The conversion of CDN$725,000 in principal amount of the Debentures into an aggregate of 46,178,344 common shares of Warnex ("Common Shares") pursuant to a notice of conversion received by Warnex on March 16, 2012, will be effected on or about April 5, 2012. As a result, PCP will own approximately 51.56% of the outstanding Common Shares of Warnex.

Furthermore, PCP has agreed to allow Warnex until April 13, 2012 to repay the remaining balance of approximately $959,420 owing under the Debentures, with the expectation that by such time, Warnex will be able to put into place an operating line of credit with a financial institution for up to CDN$2,000,000 in order to provide Warnex with the funds necessary to repay such outstanding balance and to support future working capital requirements. While Warnex is well advanced towards putting this credit facility into place, no assurances can be given that Warnex will be successful in this regard.

Appointment of Interim Chief Executive Officer

Warnex also announces that Marc Lebel has been appointed as the Interim Chief Executive Officer of the company. Mr. Lebel is the co-founder of Anapharm, a Phase I contract research organization that employed as many as 1,200 personnel. Mr. Lebel was Executive Vice-President of Pharmanet from 2005 to 2007, following its acquisition of Anapharm. Mr. Lebel is currently a director of Acasti Pharma Inc. and Nuchem Inc. His primary role within Warnex will be to ensure the integrity of the company's operations as the Board of Directors continues its assessment of the strategic alternatives available for the company.

Exchange Listing

As a result of the new developments described above, the Toronto Stock Exchange has agreed to extend the deadline for the delisting of the Common Shares to April 16, 2012. Warnex continues to explore its various options in light of this scheduled delisting.

About Warnex

For more information, please contact:

Michael Singer
Chairman of the Executive Committee
of the Board of Directors, Warnex Inc.
Tel: (514) 940-3610
msinger@thallion.com

Warnex Debentures in Default

2012-03-28 15:47:29

Laval, Quebec, March 28, 2012 - Warnex Inc. (TSX:WNX) ("Warnex") announces that it has received a formal notice of default from the holder of its outstanding debentures requiring that the full repayment of all amounts owing there under, being approximately CDN$882,095, be made by Warnex by no later than April 3, 2012. As previously announced, Warnex is in the process of setting up a one-year operating line of credit of up to CDN$2,000,000 with a financial institution which is to be used to repay its outstanding debentures and support working capital and general corporate purposes; however, no assurances can be given that Warnex will be successful in putting in place such operating line of credit. Warnex will continue to explore all of the options available to it in light of its receipt of such notice of default and its anticipated new credit facilities.

About Warnex

For more information, please contact:

Michael Singer
Chairman of the Executive Committee
of the Board of Directors, Warnex Inc.
Tel: (514) 940-3610
msinger@thallion.com

Warnex to Delay Release of its Financial Statements

2012-03-28 15:44:51

Laval, Quebec, March 28, 2012 - Warnex Inc. (TSX:WNX) ("Warnex") announces that the public filing of its audited consolidated financial statements for the financial year ended December 31, 2011 and the related Management's Discussion and Analysis, together with its 2012 Annual Information Form, originally scheduled to take place on March 30, 2012, will be delayed by approximately one week. This delay is attributable to the previously announced departure of Warnex's Chief Financial Officer and the time required for the orderly transition of his responsibilities so as to permit the proper completion of each of the foregoing.

About Warnex

For more information, please contact:

Michael Singer
Chairman of the Executive Committee
of the Board of Directors, Warnex Inc.
Tel: (514) 940-3610
msinger@thallion.com

Warnex Comments on Its Operations

2012-03-26 09:05:45

Laval, Quebec, March 26, 2012 -Warnex Inc. (TSX:WNX) ("Warnex") wishes to provide the following update regarding its operations.

Strategic Review and Valuation

As previously announced in November 2011, Warnex has undertaken a review of its strategic alternatives with a view to recognizing the full value of the company and its assets. The results of such review have led Warnex to believe that the combined value of its operating divisions could possibly materially exceed the market capitalization of Warnex, after accounting for all outstanding debt and other liabilities; however, there remains considerable risk in respect of Warnex's ability to realize that value.

In December 2011, Warnex announced the sale of its Medical Laboratories division for gross proceeds of $7.5 million, with the potential for additional proceeds of up to $2.6 million based upon the financial performance of the division during the twelve months following the closing of the transaction. Warnex has no assurances at this time as to whether any of such additional proceeds will in fact be received.

In December 2011, Warnex also announced that it had entered into a binding letter of intent for the sale of its Analytical Services division for a consideration comprising of, among other elements, $400,000 in cash, the refund of working capital in the amount of approximately $700,000 and a 15% passive equity interest in the purchaser. In February 2012, Warnex announced that this transaction would not proceed due to the failure of the prospective purchaser to perform its obligations. As a result, Warnex has initiated certain legal measures with a view to obtaining appropriate compensation from the prospective purchaser. The prospective purchaser has responded with its own legal proceedings alleging certain defaults on the part of Warnex and seeking redress from the court. Warnex intends to vigorously defend against such proceedings; however, it is not possible for Warnex to predict the outcome of these various legal proceedings at this time.

Warnex continues to evaluate all of its options for maximizing the value of both its Analytical Services division and its Bioanalytical Services division. In this regard, Warnex has received a number of non-binding expressions of interest with respect to potential transactions involving each of these divisions and proposing valuation ranges which, when combined, could materially exceed the current market capitalization of Warnex, after accounting for all outstanding debt and other liabilities. The prospective purchasers are currently in the process of conducting due diligence reviews of their target operations. However, Warnex cautions that there can be no assurance that any transaction will occur, or if a transaction is in fact undertaken, as to its terms or timing. Warnex's immediate priority continues to be to ensure that each of these divisions continues to maintain the highest standards of service delivery for the benefit of its customers, its employees and its other stakeholders.

Financial Situation

Warnex continues to work to strengthen its financial situation. As a result of the sale of its Medical Laboratories division and the implementation of certain operational reforms, Warnex has paid down debt owing pursuant to its outstanding debentures (the "Debentures"), reducing their aggregate principal amount from US$4,590,277 and CDN$2,140,815 in December 2011, to CDN$1,460,079 in March 2012.

On March 16, 2012, Warnex received a notice of conversion from the remaining holder of the Debentures to the effect that such holder intends to convert CDN$725,000 in principal amount of the Debentures into such number of common shares of Warnex ("Common Shares") as would result in such holder owning approximately 51.56% of the outstanding Common Shares (the "Conversion"). The price at which the Common Shares are to be issued pursuant to the Conversion is based upon the five-day volume weighted average trading price of the Common Shares (the "VWAP") at the time of sending of the notice of conversion.

The remaining balance of the Debentures matured on March 19, 2012, and Warnex is in default under their terms. As a consequence of such default, under the terms of the Debentures, the outstanding balance owing (CDN$735,079 after giving effect to the conversion of CDN$725,000) is automatically increased by 20% to CDN$882,095, and interest thereon will accrue at a rate of 24% per annum. Moreover, the holder of the Debentures has advised Warnex that it may avail itself of its rights under its security.

On February 28, 2012, Warnex was notified by its principal banker that its senior secured CDN$1,250,000 operating credit facility will be withdrawn in its entirety as at March 31, 2012. In order to permit it to repay the remaining outstanding Debentures and to replace the withdrawn operating credit facility, Warnex has negotiated a term sheet with a financial institution which contemplates granting to Warnex a one-year commercial operating line of up to CDN$2,000,000. Warnex is pursuing its discussions with such financial institution with a view towards putting such credit facilities into place promptly. However, Warnex cautions that there can be no assurance that such credit facilities will in fact be put into place on such terms, or at all.

After consultation with the Toronto Stock Exchange (the "TSX"), Warnex has delayed the issuance of the Common Shares issuable upon the Conversion. Warnex understands that the TSX is assessing whether the VWAP calculation for the current conversion price (the "Current VWAP") fully reflects all material information pertaining to Warnex. The holder of the Debentures has advised Warnex that it intends to enforce its conversion rights under the Debentures using the Current VWAP.

Management Change

Warnex announces that its Chief Financial Officer, François Jetté, will be leaving the company as of March 23, 2012, in order to pursue other career opportunities. Upon his departure, his responsibilities will be assumed on an interim basis by Jean Vézina, who has significant relevant experience, having previously served as the Chief Financial Officer of a publicly listed pharmaceutical company. The Board of Directors of Warnex would like to thank Mr. Jetté for his dedicated service to the company.

Exchange Listing

As previously announced, the TSX has advised Warnex that the Common Shares will be delisted as a result of Warnex's failure to meet the continued listing requirements of the TSX. As a result of the recent developments described above, the TSX has agreed to extend the date of such delisting to the close of business on April 2, 2012. Warnex continues to actively explore other means of maintaining the value and liquidity of its common shares; however, at this time, Warnex cannot ensure that the Common Shares will be listed on an exchange after April 2, 2012.

About Warnex

For more information, please contact:

Michael Singer
Chairman of the Executive Committee
of the Board of Directors, Warnex Inc.
Tel: (514) 940-3610
msinger@thallion.com

Warnex Extends Maturity Date of its Outstanding Debentures and Provides Update on its Listing Status

2012-03-02 10:58:09

Laval, Quebec, March 2, 2012 - Warnex Inc. (TSX: WNX) ("Warnex") is pleased to announce that Persistence Capital Partners LP ("PCP") has agreed to extend the maturity date of the two outstanding convertible debentures of Warnex that it holds in the aggregate principal amount of approximately $1,425,630 from February 29, 2012, to March 19, 2012.

In addition, Warnex announces that, as disclosed in a recent TSX Bulletin, the Toronto Stock Exchange (the "TSX") has agreed to extend the date of delisting of the Common Shares of Warnex from the TSX to the close of business on March 19, 2012. Warnex continues to explore its various options in light of this scheduled delisting.

About Warnex