Medwell Capital Reports Third Quarter 2011 Results

EDMONTON, Nov. 21, 2011 /CNW/ - Medwell Capital Corp. (TSX-V: MWC) today announced financial and operational results for the three and nine months ended September 30, 2011.

  • Completed an arrangement agreement to invest an additional $10 million in Spectral Diagnostics Inc. ("Spectral") and distribute approximately 54.3 million common shares of Spectral to Medwell shareholders (see description below)
  • Mimetogen Pharmaceuticals Inc. ("Mimetogen"), Medwell completed its $2 million investment, as a result of the previously announced positive top line efficacy and safety data from its Phase II clinical trial of MIM-D3 for dry eye disease

"Medwell has completed a number of important initiatives in the past quarter that positions the company to realize significant value from its investments should they continue to develop as expected," said Kevin Giese, President and CEO of Medwell. "From an operational perspective, the third quarter financial results show a significant year over year reduction of approximately $1 million in operating, general and administration costs after normalizing for extraordinary expenditures related to reorganization and restructuring initiatives, the Spectral transaction and completion of the investment in Mimetogen."

Arrangement Agreement:
Pursuant to the Arrangement, Medwell acquired 33,333,333 common shares ("Spectral Shares") of Spectral at a subscription price of $0.30 per share for aggregate proceeds of $10 million and distributed 54,282,834 Spectral Shares to Medwell shareholders, on an approximately 0.6 of a Spectral Share for each Medwell Share owned (the "Arrangement"). Medwell retained 15,200,000 common shares of Spectral, or approximately 13 percent of the common shares outstanding (approximately 21 percent on a fully-diluted basis).

With all required shareholder, court and other regulatory approvals having been obtained, the Arrangement closed on September 9, 2011, which was also the record date for the Distribution.

Financial Results:
The consolidated net loss from continuing operations of the Corporation for the three months ended September 30, 2011, was $3.6 million or $0.04 per share compared with a consolidated net loss from continuing operations of $5.2 million or $0.05 per share for the same period in the previous year.

The consolidated net loss from continuing operations of the Corporation for the nine months ended September 30, 2011, was $13.2 million or $0.14 per share compared with a consolidated net loss from continuing operations of $7.6 million or $0.08 per share for the same period in the previous year.  The results for the nine months ended June 30, 2011, included the recognition of an unrealized loss of $2.4 million and a realized loss of $4.0 million on the Corporation's investments and $1.3 million in contract services revenue.  Expenditures increased by $0.6 million for the nine months ended September 30, 2011, compared to the same period in the previous year.

The Corporation recorded an unrealized gain of $1.9 million (2010 unrealized loss - $2.6 million) for the three months and an unrealized loss of $2.4 million (2010 - $1.1 million) for the nine months ended September 30, 2011.  The movement is due to changes in the fair value of the Corporation's investments.

A realized loss of $4.1 million was recognized for the three and nine months ended September 30, 2011 as a result of the distribution of 54,282,834 Spectral Shares to the Medwell shareholders.  The amount is the difference between the carrying amount of the investment in the distributed Spectral shares and the fair market value of those shares on September 9, 2011.

Revenue earned from services agreements in the amount of $0.4 million (2010 - $0.3 million; Spectral $0.3 million 2010 $0.3 million) for the three months and $1.3 million (2010 - $0.8 million) for the nine months ended September 30, 2011.  Included in contract services revenue is $1.1 million (2010 - $0.8 million) for the nine months ended September 30, 2011, representing the agreement with Spectral.

Total consolidated expenses from continuing operations for the three months ended September 30, 2011, were $1.9 million as compared with $2.9 million in the three months ended September 30, 2010. These expenses included costs associated with the Spectral plan of arrangement.  Total consolidated expenses from continuing operations for the nine months ended September 30, 2011, were $8.2 million as compared with $7.4 million in the nine months ended September 30, 2010.

At September 30, 2011, cash and cash equivalents, restricted cash and short-term investments totaled $7.6 million as compared to $27.5 million at December 31, 2010.  At September 30, 2011, the Corporation had working capital of $7.1 million as compared to $26.7 million at December 31, 2010.  The Corporation has sufficient working capital to meet its obligations as they come due.

As at September 30, 2011 there were 91,008,923 Common shares of the Company issued and outstanding.

About Medwell Capital Corp.

Medwell Capital Corp. is a Canadian-based merchant bank that provides of capital and advisory services to the healthcare industry. For further information please visit www.medwellcapital.com.

Neither TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in the policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release.  This press release may contain forward-looking statements, which reflect the Company's current expectation regarding future events.  These forward-looking statements involve risks and uncertainties that may cause actual results, events or developments to be materially different from any future results, events or developments expressed or implied by such forward-looking statements.  Such factors include, but are not limited to, changing market conditions, the successful and timely completion of clinical studies, the establishment of corporate alliances, the impact of competitive products and pricing, new product development, uncertainties related to the regulatory approval process and other risks detailed from time to time in the Corporation's ongoing quarterly and annual reporting.  We undertake no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.

Medwell Capital Corp.        
Interim Consolidated Statements of Financial Position        
         
(expressed in thousands of Canadian dollars)        
         
    September 30,
2011
$
  December 31,
2010
$
  January 1,
2010
$
             
Assets            
             
Cash and cash equivalents   5,352   24,841   48,656
Investments   6,123   12,507   -
Restricted cash   2,133   2,665   453
Short-term investments   153   5   2,327
Accounts receivable   225   377   775
Prepaid expenses   319   255   112
Property and equipment   58   84   350
             
    14,363   40,734   52,673
             
Liabilities            
             
Accounts payable and accrued liabilities   1,096   1,365   4,822
             
    1,096   1,365   4,822
             
             
Shareholders' Equity            
             
Share capital   162,144   175,714   175,714
             
Contributed surplus   12,964   12,319   10,937
             
Deficit   (161,841)   (148,664)   (138,800)
             
    13,267   39,369   47,851
             
    14,363   40,734   52,673
             

Medwell Capital Corp.        
Interim Consolidated Statements of Operations and Comprehensive Loss        
         
(expressed in thousands of Canadian dollars and shares, except per share amounts)        
         
    Nine-month period ended
September 30,
  Three-month period ended
September 30,
                 
    2011
$
  2010
$
  2011
$
  2010
$
                 
Revenue                
Contract services   1,302   750   420   250
                 
                 
Change in fair value of investments   6,401   1,053   2,178   2,633
Operating, general and administrative   7,665   5,656   1,780   2,521
Stock-based compensation   645   1,382   326   -
Depreciation of property and equipment   31   112   9   37
Loss on disposal of property and equipment   3   173   -   173
Foreign exchange (gain) loss   (132)   88   (236)   161
Interest earned   (134)   (153)   (28)   (68)
                 
    14,479   8,311   4,029   5,457
Loss from continuing operations   (13,177)   (7,561)   (3,609)   (5,207)
Loss from discontinued operation   -   (504)   -   (265)
Loss and comprehensive loss   (13,177)   (8,065)   (3,609)   (5,472)
                 
Basic and diluted loss per common
share - continuing operation
        (0.14)         (0.08)         (0.04)         (0.05)
Basic and diluted loss per common
share - discontinued operation
        -         (0.01)         -         (0.01)
Basic and diluted loss per common
share
        (0.14)         (0.09)         (0.04)         (0.06)
Basic weighted average number of
common shares outstanding
  91,009   91,009   91,009   91,009
Diluted weighted average number of
common shares outstanding
  91,009   91,009   91,009   91,009
                 

Medwell Capital Corp.                
Interim Consolidated Statements of Cash Flows                
                 
(expressed in thousands of Canadian dollars)                
                 
    Nine-month period ended
September 30,
  Three-month period ended
September 30,
                 
    2011
$
  2010
$
  2011
$
  2010
$
Cash provided by (used in)                
Operating activities                
Net loss from continuing operations   (13,177)   (7,561)   (3,609)   (5,207)
Purchase of investments   (13,741)   (12,504)   (10,880)   -
Proceeds from disposal of investments   152   -   -   -
Transfer from (to) restricted cash   532   (2,212)   (5)   (2)
Net proceeds from short-term investments   (148)   2,330   5   123
Items not involving cash                
  Unrealized loss (gain) on investments   2,355   1,065   (1,947)   2,645
  Realized (gain) loss on investments   4,046   (12)   4,126   (12)
  Stock-based compensation   645   1,382   326   -
  Depreciation of property and equipment   31   112   9   37
  Loss on disposal of property and equipment   3   173   -   173
  Unrealized foreign exchange gain (loss)   (77)   (87)   (177)   165
    (19,379)   (17,314)   (12,152)   (2,078)
Net change in non-cash working capital items   571   537   220   751
    (18,808)   (16,777)   (11,932)   (1,327)
Investing activities                
Purchase of property and equipment   (11)   (10)   (3)   (4)
    (11)   (10)   (3)   (4)
Foreign exchange gain (loss) on cash and
cash equivalents held in foreign currency
  77   83   177   (167)
                 
Cash used in continuing operations   (18,742)   (16,704)   (11,758)   (1,498)
Cash used in discontinued operation   (747)   (4,161)   (8)   353
Decrease in cash and cash equivalents   (19,489)   (20,865)   (11,766)   (1,145)
Cash and cash equivalents - Beginning of
period
  24,841   48,656   17,118   28,936
                 
Cash and cash equivalents - End of period   5,352   27,791   5,352   27,791
Cash and cash equivalents consists of                
Bank accounts   3,176   695   3,176   695
Interest bearing deposits and securities   2,176   27,096   2,176   27,096
    5,352   27,096   5,352   27,096
Supplemental cash flow information                
  Income taxes paid   $      -   $      -   $      -   $     -
  Interest paid   -   -   -   -

 

SOURCE Medwell Capital Corp.

For further information:

Tony Hesby
 






Ross Marshall
Investor Relations
Medwell Capital Corp.
780-413-7152
780-408-3040 Fax
E-mail: info@medwellcapital.com
Internet: http://www.medwellcapital.com
























416-815-0700 ext. 238
416-815-0080 Fax
E-mail: rmarshall@equicomgroup.com

 

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Medwell Capital Corp.

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