LOREX ANNOUNCES YEAR END RESULTS

TORONTO, Jan. 26 /CNW/ - LOREX Technology Inc. ("LOREX" or the "Company") [NEX: LOX.H] announces results* for the three and twelve months ended September 30, 2010. 

Highlights of the three and twelve month operating results are as follows:

(Thousands of US $, unless otherwise noted)

  Three months ended Twelve months ended
September 30 September 30
2010 2009 2010 2009
       
Revenue 13,265 11,798 46,767 46,810
Earnings before interest, taxes, amortization ** 1,948 710 4,026 1,720
Earnings before income taxes 1,863 205 3,430 406
Net earnings 2,661 440 3,976 580
Earnings per common share, basic $0.09 $0.02 $0.13 $0.02
Earnings per common share, diluted $0.06 $0.01 $0.09 $0.02
Weighted average number of shares - basic 31,290,278 26,954,083 31,207,118 26,954,083
Weighted average number of shares - diluted 43,790,278 31,030,170 43,707,118 27,981,480

*Audited financial information is available at:  www.sedar.com.

**EBITDA is not a measure of performance under Canadian GAAP. EBITDA should not be considered in isolation or as a substitute for Net Earnings nor as a measure of operating performance or profitability.

Commenting on the results for the three and twelve months ended September 30th, Chariman and CEO Reuben Klein stated, "In 2010, the typical video security equipment consumer expected a lower priced product compared to prior periods and we responded to this market trend by offering both more competitively priced do-it-yourself solutions as well as a line of lower priced plug & play products. This resulted in lower average selling prices and while unit sales volume increased, revenue dollars remained flat. More importantly though, with a turnaround fully behind us, in 2010 we generated significantly improved gross profit, net earnings, EPS and working capital in the midst of a challenging economic environment with increasing competition. Despite the economic challenges, our basic EPS grew to $0.13 for the year and $0.09 for the quarter from $0.02 and $0.01 respectively, while working capital nearly doubled from $4.4 million at September 30, 2009 to $8.6 million at September 30, 2010. The increase in working capital of $4.2 million leaves us well positioned to take advantage of opportunities to broaden our customer and product base as these opportunities arise."

In addition to the improved gross profit and a reduction in operating expenses, the fourth quarter results include an income tax recovery of approximately $798,000. As a result of strong fourth quarter earnings, the Company re-evaluated its valuation allowances related to the future benefit of noncapital loss carryforwards and differences between accounting and tax values. Management concluded that there was a likelihood that additional tax benefits would be realized in the future and, accordingly, reduced the valuation allowances by approximately $1,030,000 in the fourth quarter. As at September 30, 2010 there were valuation allowances of approximately $990,000 remaining.

"In the fourth quarter of 2010 we had our strongest earnings yet as a Company and our outlook for 2011 continues to be positive as we continue to expand our product offerings."

"LOREX aims to be the best of breed in the do-it-yourself video security category and we will continue to introduce products with innovative features such as our touchscreen compatible DVRs, high performance wireless cameras and simply connected internet capable monitors. In early January, LOREX was honoured with yet another International CES engineering and design award for a new product called the LOREX LIVE connect!. This product allows users to connect to their video monitors using SkypeTM and we are working to bring this series to the market later this year. In addition, we will continue to enhance our professional grade product offerings including DVRs and cameras to meet the needs of small and medium sized commercial installations."

About LOREX Technology Inc.:
LOREX Technology Inc. ('LOREX') (NEX:LOX.H) provides businesses and consumers with leading edge video surveillance security solutions and sells its products under the LOREX and Digimerge brands. The LOREX brand, which caters to both small business and consumer markets, is available in thousands of retail locations across North America and in the United Kingdom. The Digimerge division distributes its products through major distributors in North America. Both brands concentrate on the sale of wired, wireless and IP security surveillance equipment including cameras, digital video recorders and all-in-one systems.

LOREX subsidiaries include; LOREX Canada Inc., LOREX Corporation and Strategic Vista Corporation Limited, Hong Kong.

The TSX has not reviewed and does not accept responsibility for the adequacy or accuracy of this release.

Certain information included in this news release contains statements that are forward-looking, such as statements relating to anticipated future revenues of the Company and the success of product offerings. Such forward-looking information involves important risks and uncertainties that could significantly affect anticipated results in the future, and, accordingly, such results may differ materially from those expressed in any forward-looking statements made by or on behalf of the Company.

LOREX TECHNOLOGY INC.
CONSOLIDATED BALANCE SHEETS
(Expressed in U.S. dollars - unaudited)
       
         
    September 30
2010
  September 30
2009
        (note 1)
Assets        
         
Current assets:        
Cash $ 192,216 $ 315,293
Accounts receivable   6,652,722   6,752,783
Inventory   10,499,617   8,454,047
Prepaid expenses and deposits   1,769,379   823,485
Future income taxes   376,269   94,709
    19,490,203   16,440,317
         
Capital assets   191,163   365,924
Intangible assets   1,667   8,152
Future income taxes   813,995   436,456
Goodwill   739,305   710,069
  $ 21,236,333 $ 17,960,918
         
         
         
Liabilities and Shareholders' Equity        
         
Current liabilities:        
Bank indebtedness $ 2,515,193 $ 6,162,184
Accounts payable and accrued liabilities   8,411,906   5,849,203
    10,927,099   12,011,387
         
Future income taxes   -   10,709
         
Shareholders' Equity        
         
Capital stock   11,272,446   10,865,397
Contributed surplus   1,222,693   1,328,941
Accumulated other comprehensive income   1,592,748   1,498,883
Deficit   (3,778,653)   (7,754,399)
    10,309,234   5,938,822
         
  $ 21,236,333 $ 17,960,918
         
Note 1 - Certain 2009 figures have been reclassified to conform with the financial statement presentation adopted in 2010

LOREX TECHNOLOGY INC. 
CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME 
(Expressed in U.S. dollars - unaudited)
                 
   Three Months
Ended
September 30
 Twelve Months
Ended
September 30
   2010  2009  2010  2009
                 
Revenue $ 13,264,581 $ 11,797,932 $ 46,766,782 $ 46,810,408
                 
Cost of sales   8,326,014   7,933,729   29,927,969   31,235,958
                 
Gross profit   4,938,567   3,864,203   16,838,813   15,574,450
                 
Expenses:                
Marketing, selling and operations   2,209,385   1,963,651   9,144,778   9,351,222
Administration   507,536   1,166,017   2,601,414   3,517,046
Research and development   242,724   269,501   1,068,178   912,015
Interest   47,525   447,683   389,265   1,036,365
Amortization   37,530   57,102   206,666   277,957
Loss (gain) on foreign exchange   30,959   (245,007)   (1,359)   73,794
    3,075,659   3,658,947   13,408,942   15,168,399
                 
Earnings before income taxes   1,862,908   205,256   3,429,871   406,051
                 
Income taxes (recovery)   (798,059)   (234,528)   (545,875)   (173,528)
                 
Net earnings   2,660,967   439,784   3,975,746   579,579
                 
Other comprehensive earnings (loss)   84,267   (21,910)   93,865   3,397
                 
Comprehensive income $ 2,745,234 $ 417,874 $ 4,069,611 $ 582,976
                 
Earnings per
common share - basic
$ 0.09 $ 0.02 $ 0.13 $ 0.02
                 
Earnings per
common share - diluted
$ 0.06 $ 0.01 $ 0.09 $ 0.02
                 
Number of common shares                
Weighted average basic   31,290,278   26,954,083   31,207,118   26,954,083
Weighted average diluted   43,790,278   31,030,170   43,707,118   27,981,480
Total outstanding   31,290,278   26,954,083   31,290,278   26,954,083

LOREX TECHNOLOGY INC.
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
(Expressed in U.S. dollars - unaudited)

 
  Common shares Class B preferred shares Convertible preferred shares (i) Total capital stock Contributed surplus Accumulated other comprehensive income (loss) Deficit Total
  $ $ $ $ $ $ $ $
                 
Three months ended September 30
                 
Balance, June 30, 2009 9,641,415 104,895 - 9,746,310 1,336,364 1,520,793 (8,194,183) 4,409,284
                 
Net earnings for the period - - - - - - 439,784 439,784
Unrealized losses on foreign currency translation of self-sustaining operations - - - - - (21,910) - (21,910)
Comprehensive income (loss) - - - - - (21,910) 439,784 417,874
                 
Stock-based compensation expense - - - - (7,423) - - (7,423)
Receipts issued for convertible preferred shares subscriptions - - 1,119,087 1,119,087 - - - 1,119,087
                 
Balance, September 30, 2009 9,641,415 104,895 1,119,087 10,865,397 1,328,941 1,498,883 (7,754,399) 5,938,822
                 
Balance, June 30, 2010 10,048,464 104,895 1,119,087 11,272,446 1,220,918 1,508,481 (6,439,620) 7,562,225
                 
Net earnings for the period - - - - - - 2,660,967 2,660,967
                 
Unrealized gains on foreign currency translation of self-sustaining operations - - - - - 8 4,267 - 84,267
Comprehensive Income - - - - - 84,267 2,660,967 2,745,234
                 
Stock-based compensation expense - - - - 1,775 - - 1,775
                 
Balance, September 30, 2010 10,048,464 104,895 1,119,087 11,272,446 1,222,693 1,592,748 (3,778,653) 10,309,234

Twelve months ended September 30
                 
Balance, September 30, 2008 9,641,415 104,895 - 9,746,310 1,223,227 1,495,486 (8,333,978) 4,131,045
                 
Net earnings for the period - - - - - - 579,579 579,579
                 
Unrealized gains on foreign currency translation of self-sustaining operations - - - - - 3,397 - 3 ,397
Comprehensive Income - - - - - 3,397 579,579 582,976
                 
Stock-based compensation expense - - - - 115,606 - - 115,606
Options forfeited       - (9,892)     (9,892)
Receipts issued for convertible preferred shares subscriptions - - 1,119,087 1,119,087 - - - 1,119,087
                 
Balance, September 30, 2009 9,641,415 104,895 1,119,087 10,865,397 1,328,941 1,498,883 (7,754,399) 5,938,822
                 
Net earnings for the period - - - - - - 3,975,746 3,975,746
                 
Unrealized gains on foreign currency translation of self-sustaining operations - - - - - 93,865 - 93,865
Comprehensive income - - - - - 93,865 3,975,746 4,069,611
                 
Stock-based compensation expense - - - - 9,733 - - 9,733
Options forfeited       - (115,981)     (115,981)
Common shares issued 407,049 - - 407,049 - - - 407,049
                 
Balance, September 30, 2010 10,048,464 104,895 1,119,087 11,272,446 1,222,693 1,592,748 (3,778,653) 10,309,234

(i) Subscription receipts were issued on August 20, 2009 and the related shares were issued on October 27, 2009.

LOREX TECHNOLOGY INC.
CONSOLIDATED STATEMENTS OF CASH FLOW
(Expressed in U.S. dollars - unaudited)

     

Three Months Ended
September 30
Twelve Months Ended
September 30
  2010 2009 2010 2009
Cash provided by (used in):  
   
Operating activities  
Net earnings $ 2 ,660,967 $ 4 39,784 $ 3 ,975,746 $ 5 79,579
   
Items not involving cash:  
Amortization of capital and intangible assets 37,530 57,102 206,666 277,957
Stock-based compensation expense (recovery) 2,017 (3,765) (106,248) 112,928
Future income taxes (677,427) (301,067) (658,744) (301,067)
   
Change in non-cash operating working capital:  
Accounts receivable 540,689 (1,807,885) 137,643 (1,340,291)
Inventory (2,876,803) 318,134 (1,992,347) (114,951)
Prepaid expenses and deposits 365,362 644,378 (941,636) 39,244
Accounts payable and accrued liabilities 298,924 (577,412) 2,488,971 673,016
  351,259 (1,230,731) 3,110,051 (73,585)
   
Financing activities:  
Net increase (decrease) in bank indebtedness (692,341) 364,350 (3,646,991) (744,597)
Common shares issued - - 407,049 -
Preferred share subscription - 1,016,432 - 1,016,432
  (692,341) 1,380,782 (3,239,942) 271,835
   
Investing activities:  
Purchase of capital assets - (154,869) (18,010) (229,162)
  - (154,869) ( 18,010) ( 229,162)
         
Effect of foreign currency translation on cash balances ( 1,527) 120 24,824 ( 1,262)
         
Increase (decrease) in cash ( 342,609) ( 4,698) ( 123,077) ( 32,174)
         
Cash, beginning of period 5 34,825 3 19,991 3 15,293 3 47,467
         
Cash, end of period $ 1 92,216 $ 3 15,293 $ 1 92,216 $ 3 15,293
   
Supplemental cash flow information:  
Interest paid $ 32,747 $ 157,325 $ 219,880 $ 642,464
Income taxes paid $ 88,187 $ 20,000 $ 249,778 $ 160,359

SOURCE LOREX Technology Inc.

For further information:

Jordan Schwartz
Chief Financial Officer
LOREX Technology Inc.
Phone: (905) 946-8589 ext 168
jordan.schwartz@lorexcorp.com
www.lorextechnology.com

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LOREX Technology Inc.

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