Genesis Worldwide Inc. Announces First Quarter 2010 Financial Results

    
             Continues Joint Venture and Divestiture Strategies
                       Shareholder Purchases Term Loan
    

VAUGHAN, ON, May 14 /CNW/ - Genesis Worldwide Inc. ("Genesis" or the "Company"), (TSX: GWI), today announces its financial results for the first quarter ended March 31, 2010. All dollar amounts are in Canadian dollars unless otherwise stated.

    
    Business Update
    ---------------
    

The following is an update of the transactions discussed in the Company's press release dated April 28, 2010 -

    
    -   As part of the Company's new business strategy, the joint venture
        negotiations with Alexandria Steel Forming Co. ("Alexandria") in
        Egypt, and Manazil Steel Framing Co. ("Manazil") in Abu Dhabi, are
        nearing completion. Both of these markets are showing buoyancy and
        continued economic improvement. As part of the Manazil joint venture,
        the Company recently transferred four employees to Abu Dhabi. This
        included the transfer of Maged Mostafa; the former Chief Operating
        Officer of the Company's licensing division.

    -   The special committees that were formed to negotiate a joint venture
        with Codding Enterprises L.P., the Company's largest shareholder, as
        well as the divestiture of KML Engineered Homes Ltd., a subsidiary of
        the Company, are continuing their negotiations. These two initiatives
        further demonstrate the Company's commitment to pursue its new
        strategic direction. Although the Company believes it is likely that
        it will consummate the contemplated joint venture and divestiture
        transactions, there can be no assurance that any or all of the
        transactions will ultimately be finalized, or that, if finalized,
        they will be under the same terms and conditions as currently
        contemplated.

    -   The Company recently received a demand letter from its lender
        requesting payment of all amounts owing as of the date of the demand
        letter. Subsequent to receiving the demand letter, and prior to the
        expiration of the ten day cure period, Codding Enterprises L.P., a
        current shareholder of the Company (the "Potential Buyer"), initiated
        discussions with the lender to potentially purchase the term loan. As
        a result, the Potential Buyer has agreed, subject to customary
        closing conditions, to purchase the term loan. The parties are in the
        process of completing final documentation. The Potential Buyer has
        expressed its desire to modify the term loan in several ways,
        including a reduction in the monthly loan payments, and removal of
        certain restrictive covenants.

    Financial Highlights
    --------------------

    -   Total revenue for the first quarter ended March 31, 2010 decreased
        80.2% to $965,085, compared to $4,878,637 for the same period in
        2009. Revenue for the licensing division for the first quarter of
        2010 decreased 91.4% to $191,097, compared to $2,225,533 for the
        first quarter in 2009. Revenue for the structural products division
        for the first quarter of 2010 decreased 70.8% to $773,988, compared
        to $2,653,104 for the same quarter in 2009. Revenue for the first
        quarter of 2010 was impacted by the Company's inability to maintain
        consistent sustained production from manufacturing as it continued to
        manage working capital.

    -   Operating expenses for the first quarter of 2010 decreased 4.6% to
        $1,677,267, compared to $1,758,425 for the same period in 2009. On
        November 16, 2009, each of the Company's operating divisions
        implemented short-term layoffs of personnel in order to preserve
        cash. A total of 47 personnel were laid-off (36 in the structural
        products division, 9 in the licensing division and 2 in the
        corporate head office). During the quarter ended March 31, 2010, the
        Company recalled 2 employees (1 in the structural products division
        and 1 in the licensing division), and the Company continued with
        intermittent short-term layoffs of 17 employees (in the structural
        products division). All remaining employees that were not recalled,
        or not part of the current short-term layoffs, have either resigned
        from the Company, or their employment with the Company was terminated
        during the quarter ended March 31, 2010. The Company continues to
        evaluate operating costs in an effort to reduce costs.

    -   Net loss for the first quarter of 2010 was $1,798,402, or ($0.03) per
        common share, compared to a net loss of $944,925, or ($0.03) per
        common share, for the first quarter of 2009.
    

Further information regarding the Company, and its business and operations, may be obtained from the Company's continuous disclosure documents filed from time-to-time with the Canadian securities regulatory authorities. These continuous disclosure documents are available through the Company's web site at www.genesisworldwide.com, or through the SEDAR website maintained by the Canadian securities regulatory authorities, which can be accessed at www.sedar.com.

About Genesis Worldwide Inc.

Genesis is a provider of green light steel building systems and solutions targeted at the global commercial, residential and institutional building sectors. Genesis delivers customized turnkey structural solutions including innovative light steel products, and provides software packages, industrial equipment, training programs, professional services and support ("Genesis Solution") to its customers and partners globally. Headquartered in the Greater Toronto Area in Ontario, Canada, Genesis has established a network of partners with engineering, manufacturing and distribution operations in Canada, the United States, the Middle East, Eastern Europe and Russia. For additional information about the Company, visit www.genesisworldwide.com.

Caution Regarding Forward-Looking Information

Certain statements in this press release which are not historical facts constitute forward-looking statements or forward-looking information within the meaning of applicable securities laws ("forward-looking statements") and are made pursuant to the "safe harbour" provisions of such laws. Statements related to the Company's projected revenues, earnings, growth rates, performance, business prospects and opportunities are forward-looking statements, as are any statements relating to future events, conditions or circumstances. The use of terms such as "may", "will", "should", "plan", "believes", "predict", "potential", "anticipate", "expect", "project", "target", "estimate", "continue", and similar terms are intended to assist in identification of these forward-looking statements. These statements are based on certain factors and assumptions including expected growth, results of operations, performance and business prospects, and opportunities. These assumptions, although considered reasonable by the Company at the time of preparation, may prove to be incorrect.

Readers are cautioned not to place undue reliance upon any such forward-looking statements. Such forward-looking statements are not promises or guarantees of future performance and involve both known and unknown risks and uncertainties that may cause the actual results, performance or achievements of the Company to differ materially from the results, performance, achievements or developments expressed or implied by such forward-looking statements.

Many factors could cause the actual results of the Company to differ materially from the results, performance, achievements or developments expressed or implied by such forward-looking statements, including, without limitation, those factors discussed under the heading "Risk Factors" in the Company's most recent Annual Information Form ("AIF"), a copy of each of which is available on SEDAR at www.sedar.com. Forward-looking statements are based on management's current plans, estimates, projections, beliefs and opinions, and, except required by law, the Company does not undertake any obligation to update forward-looking statements should assumptions related to these plans, estimates, projections, beliefs and opinions change.

    
    Genesis Worldwide Inc.

                         CONSOLIDATED BALANCE SHEET
                                 (unaudited)

                                                         As at         As at
                                                      March 31   December 31
                                                          2010          2009
                                                             $             $
                                                 ----------------------------

    ASSETS
    Current
    Cash                                                24,126        72,247
    Cash held in trust                                       -       100,000
    Restricted cash                                    500,000       500,000
    Accounts receivable                              1,734,761     2,818,204
    Inventory                                          277,834       346,219
    Prepaid expenses                                   206,080       255,719
                                                 ----------------------------
    Total current assets                             2,742,801     4,092,389
    Mortgage receivable                                432,908       432,908
    Property, plant and equipment                    2,060,936     2,232,604
    Intangible assets                                   19,133     1,015,101
                                                 ----------------------------
                                                     5,255,778     7,773,002
                                                 ----------------------------
                                                 ----------------------------

    LIABILITIES AND SHAREHOLDERS' EQUITY
    Current
    Accounts payable and accrued liabilities         6,338,109     6,505,840
    Term loan - current portion                        894,177       991,587
    Deferred revenue                                   840,594       847,964
    Minimum royalty payment obligations                266,190       682,548
                                                 ----------------------------
    Total current liabilities                        8,339,070     9,027,939
                                                 ----------------------------

    Long-term
    Minimum royalty payment obligations                      -       578,058
                                                 ----------------------------
    Total long-term liabilities                              -       578,058
                                                 ----------------------------


    Shareholders' equity
    Capital stock                                   61,690,108    61,114,911
    Contributed surplus                              1,815,400     1,842,492
    Deficit                                        (66,588,800)  (64,790,398)
                                                 ----------------------------
    Total shareholders' equity                      (3,083,292)   (1,832,995)
                                                 ----------------------------
                                                     5,255,778     7,773,002
                                                 ----------------------------
                                                 ----------------------------


    Genesis Worldwide Inc.

                       CONSOLIDATED STATEMENTS OF LOSS,
                       COMPREHENSIVE LOSS AND DEFICIT
                                 (unaudited)


                                                        Three months ended
                                                 ----------------------------
                                                      March 31      March 31
                                                          2010          2009
                                                             $             $
                                                 ----------------------------

    Revenues
    Licensing                                          191,097     2,225,533
    Structural products                                773,988     2,653,104
                                                 ----------------------------
    Total revenues                                     965,085     4,878,637
                                                 ----------------------------

    Direct cost of revenues
    Licensing                                           14,418     1,475,668
    Structural products                                872,066     2,098,291
                                                 ----------------------------
    Total direct cost of revenues                      886,484     3,573,959
                                                 ----------------------------
                                                        78,601     1,304,678
                                                 ----------------------------

    Expenses (other income)
    Research and development                            62,718       199,544
    SR&ED tax credit                                         -       (50,000)
    Selling and marketing                              291,548       301,554
    Engineering and project management                 220,060       263,427
    General and administrative                         782,169       693,206
    Occupancy                                          320,772       350,694
                                                 ----------------------------
                                                     1,677,267     1,758,425
                                                 ----------------------------
    Loss before other expenses                      (1,598,666)     (453,747)
                                                 ----------------------------
    Amortization of property, plant and equipment      171,668       233,106
    Amortization of intangible assets                    1,551        69,956
    Foreign exchange gain                              (26,738)       27,591
    Loss on disposal of property,
     plant and equipment                                     -         4,543
    Bank interest expense and penalty charges           37,845        32,731
    Minimum royalty accretion                                -        66,141
    Term loan and debenture interest expense            15,410        57,110
                                                 ----------------------------
                                                       199,736       491,178
                                                 ----------------------------
    Net loss and comprehensive loss for the period  (1,798,402)     (944,925)

    Deficit, beginning of period                   (64,790,398)  (53,271,129)
                                                 ----------------------------

    Deficit, end of period                         (66,588,800)  (54,216,054)
                                                 ----------------------------
                                                 ----------------------------

    Loss per share
    Basic and diluted                             $      (0.03) $      (0.03)
                                                 ----------------------------
                                                 ----------------------------
    Weighted average number of shares
     outstanding                                    51,575,009    30,982,858
                                                 ----------------------------
                                                 ----------------------------


    Genesis Worldwide Inc.

                    CONSOLIDATED STATEMENTS OF CASH FLOWS
                                 (unaudited)

                                                        Three months ended
                                                 ----------------------------
                                                      March 31      March 31
                                                          2010          2009
                                                             $             $
                                                 ----------------------------
    OPERATING ACTIVITIES
    Net loss for the year                           (1,798,402)     (944,925)
    Adjustments for non-cash items
      Amortization of property,
       plant and equipment and intangible
       assets                                          173,219       303,062
      Loss on disposal of property,
       plant and equipment                                   -         4,543
      Stock-based compensation expense (recovery)      (27,092)       36,423
      Unrealized foreign exchange loss                       -           742
      Minimum royalty accretion                              -        66,141
                                                 ----------------------------
                                                    (1,652,275)     (534,014)
    Changes in non-cash working capital
     balances related to operations
      Accounts receivable                            1,083,443       502,579
      Inventory                                         68,385       649,975
      Prepaid expenses                                  49,639        15,455
      Accounts payable and accrued liabilities        (167,730)       31,970
      Deferred revenue                                  (7,370)   (1,676,770)
      Cash held in trust                               100,000             -
                                                 ----------------------------
    Cash used in operating activities                 (525,908)   (1,010,805)
                                                 ----------------------------

    FINANCING ACTIVITIES
    Debenture proceeds                                       -     1,497,165
    Repayment on term loan                             (97,410)     (136,726)
    Changes in long-term liability                           -        76,937
    Common stock issued                                575,197             -
                                                 ----------------------------
    Cash provided by financing activities              477,787     1,437,376
                                                 ----------------------------

    INVESTING ACTIVITIES
    Additions to property, plant and equipment               -       (34,491)
    Disposals of property, plant and equipment               -        33,515
    Additions to intangible assets                           -       (19,866)
    Minimum royalties paid                                   -      (150,000)
                                                 ----------------------------
    Cash used in investing activities                        -      (170,842)
                                                 ----------------------------

    Net increase (decrease) in cash
     during the period                                 (48,121)      255,729
    Cash, beginning of period                           72,247       167,064
                                                 ----------------------------
    Cash, end of period                                 24,126       422,793
                                                 ----------------------------
                                                 ----------------------------

    Supplemental cash flow information
    Interest paid                                       15,410        28,853
                                                 ----------------------------
                                                 ----------------------------
    

SOURCE GENESIS WORLDWIDE INC.

For further information: For further information: Genesis Worldwide Inc., Catherine Smyth, Manager, Investor Relations, Tel: (905) 832-9286

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GENESIS WORLDWIDE INC.

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