News

Laval, Quebec, August 29, 2012 - Warnex Inc. (TSXV: WNX) ("Warnex") announced today financial results for the second quarter ended June 30, 2012 and provided an update on its operations.

Second Quarter Highlights

• On April 24, 2012, the Company announced the sale of its Analytical Services division to NEOPHARM LABS Inc. With the sale of our Analytical Services division and last year's sale of our Medical division, the Company's only remaining operating business unit is its Bioanalytical Services division.
• On April 4, 2012, Mr. Marc Lebel, an experienced pharmaceutical services executive, was appointed as Interim Chief Executive Officer of the Company.
• During the quarter Persistence Capital Partners LP ("PCP") converted a portion of its debentures and Warnex repaid the remaining balance, resulting in no long term debt outstanding as of the end of the quarter. PCPs conversion of $725,000 in principal amount of debentures resulted in the issuance of 46,178,344 shares, resulting in PCP owning approximately 51.56% of the Company's shares outstanding. 
• During the quarter the Company completed a credit facility with Accord Financial Inc. which allowed Warnex to repay its debentures and close out its outstanding line of credit. Subsequent to the quarter, the Company entered into an agreement with PCP in order to replace its credit facility with Accord. This new facility provides Warnex with substantially greater operational flexibility than was available under the Accord facility.
• On April 20, 2012, the Company announced that it continues to evaluate its strategic options for maximizing the value of its remaining Bioanalytical Services division. The Company continues to pursue its previously announced discussions regarding potential transactions involving this division.
• Subsequent to the quarter, the Company announced that Mattie Chinks stepped down as a director of Warnex.

Financial Results

Consolidated revenue for the three-month period ended June 30, 2012, amounted to $1.1 million compared to $4.8 million during the same period last year, and for the six-month period ended June 30, 2012, revenue was $4.9 million compared to $10.6 million for the same period in 2011. Revenues for the prior year included revenues from our Medical Laboratories and Analytical Services divisions, both of which have been sold and for which no revenues were reported for these business units during the second quarter. For the six-month period ended June 30, 2012, revenue for our remaining Bioanalytical Services division was $2.7 million, versus $3.3 million in the first half of 2011.

Gross margins for the three-month period ended June 30, 2012, amounted to negative $0.2 million compared to $0.8 million or 17% of revenue for the same quarter last year. The decrease of $1.0 million in gross margin is mainly explained by decreased revenues following the sale of the Medical and Analytical divisions.

For the three-month period ended June 30, 2012, selling expenses amounted to $0.1 million compared to $0.3 million for the same period last year. For the six-month period ended June 30, 2012, selling expenses amounted to $0.2 million compared to $0.6 million for the same period last year.

General and administrative expenses for the quarter were similar to last year at $1.2 million. In proportion of revenue, general and administrative expenses were higher than last year at 103% (24% in 2011) due to significant and one-time charges of professional fees for the sale of the Analytical division, transferring from the TSX to the TSX Venture, and refinancing of the debentures and credit facility. For the six-month period ended June 30, 2012, general and administrative expenses amounted to $2.3 million compared to $2.5 million for the same period last year.

Financial expenses for the quarter decreased to $0.1 million from $0.3 million for the same quarter in 2011. For the six-month period ended June 30, 2012, financial expenses amounted to $0.4 million compared to $0.6 million for the same period last year.

Research and development tax credits for the quarter amounted to negative $6,000 compared to $124,500 for the same quarter last year. For the six-month period ended June 30, 2012, research and development tax credits amounted to $69,000 compared to $249,000 for the same period in 2011.

Earnings before interest, taxes, depreciation and amortization (EBITDA) for the quarter amounted to negative $1.3 million versus negative $0.2 million for the same quarter last year. For the six-month period ended June 30, 2012, EBITDA amounted to negative $1.6 million compared to $0.2 million for the same period in 2011.

The consolidated net loss for the quarter amounted to $1.6 million or $0.01 per share compared to a net loss of $0.8 million or $0.01 per share for the same quarter in 2011. For the six-month period ended June 30, 2012, net loss amounted to $2.5 million or $0.03 per share compared to net loss of $0.9 million or $0.01 per share for the same period in 2011.

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