Viridis Energy Inc. ("Viridis" or the "Company") (TSX VENTURE:VRD)
(OTCQX:VRDSF), a "cleantech" manufacturer and distributor of
alternative energy providing waste biomass fuel to global
residential and industrial markets, today reported financial
results for its third quarter and nine month period ended September
30, 2011. During the quarter the Company secured financing totaling
$7 million in gross proceeds, entered into a strategic alliance
with India-based Abellon Clean Energy ("Abellon") and shipped its
first order to Europe within five weeks of the Abellon
engagement.
Viridis generated revenue for the third quarter 2011 of $3.3
million, a 25 percent increase over the third quarter 2010 revenue
of $2.7 million (the Company's first full quarter since its
acquisition of the Okanagan Pellet Company Inc ("Okanagan") on
April 30, 2010), and a 15 percent increase over the second quarter
2011 revenue of $2.9 million. The increase in revenues during the
current third quarter reflects shipments into Europe related to the
Abellon joint venture and an increase in seasonal pricing of the
residential heating market. Viridis anticipates sequential revenue
growth going forward as it increases shipment into Europe on its
two export agreements and industry-wide contract pricing terms
continue to improve.
The Company reported a comprehensive loss of $1.4 million or
$0.04 per basic share for the third quarter of 2011. This compares
to comprehensive loss of $900,000 or $0.03 per basic share for
third quarter of 2010 and a comprehensive net loss of $990,000 or
$0.03 for the second quarter of 2011. Viridis reported a loss from
operations of $1.3 million during third quarter 2011 versus a loss
of $794,000 during the prior year and a loss of $813,000 for the
second quarter of 2011. The Company anticipates achieving
profitability in 2012 as demand has significantly increased from
international industrial entities and biomass pricing industry-wide
has materially improved.
Cost of sales was $3.4 million for the three month period ended
September 30, 2011, which includes material costs of $1.4 million
and freight costs of $921,000. This compares to cost of sales of
$2.3 million and $2.5 million for the three month periods ended,
September 30 2010 and June 30, 2011, respectively, which include
material costs of $244,000 and $1.3 million, as well as freight
costs of $538,000 and $432,000 for the three month periods ending
September 30, 2010 and June 30, 2011 respectively.
Under IFRS, cost of sale also includes employee benefits,
depreciation and other costs. Gross profit contribution net of
depreciation for the three month period ended September 30, 2011
was $97,000. Applying IFRS standards, negative gross profit totaled
$42,900 during the quarter due to pre-paid off season pricing
arrangements from prior quarters that shipped during the third
quarter 2011, the sale of old inventory, as well as purchases from
third party pellets producers as demand quickly accelerated during
the quarter.
Material costs as a percent of revenue was 44% during the three
month period ended September 30, 2011, within the range of its
average of 45% for the first nine months of 2011. Freight costs as
a percent of revenue, however, was 28%, nearly twice the average of
the two previous three month periods. The increased freight costs
are associated, in part, with the use of an off-site storage
facility temporarily used by the Company. The Company has taken
steps to reduce freight costs, which include arranging the bagging
of pellets by a third party located closer to customer destination
points, enabling the Company to more cost efficiently ship bulk
loads by rail. Moreover, the Company has expanded its target
markets to include commercial sales to power plants, industrial
boilers and cogeneration plants, which will reduce seasonal sales
fluctuations as well as the need for off-site storage. The Company
also anticipates a further reduction in the cost of sales as a
percentage of revenue as plant is now running at full capacity and
capable of running at higher efficiency due to more effective
maintenance procedures.
Operating expenses during third quarter 2011 totaled $1.2
million, an increase of approximately $62,000 from the prior year's
third quarter and an increase of $28,000 from the sequential second
quarter 2011. The increase in expenses is attributed to an increase
in general and administrative costs due to non- recurring costs
associated with legal fees and facility costs associated with
setting up new offices for Viridis and Cypress Pacific. While
general & administrative expenses increased, Viridis production
costs declined overall despite increased production output.
Going forward, Viridis expects production costs to increase as
it expands capacity to accommodate increased demand in the US and
overseas, but does not expect general and administrative costs to
grow materially from current levels as the Company continues its
focus on controlling expenses and delivering increased operating
margins as its revenues rise.
Interest expense (inclusive of bank charges) for the third
quarter was approximately $140,000, which compares to interest
expense of approximately $106,000 during third quarter 2010 and
interest expense of $119,000 during the second quarter 2011.
For the nine months ended September 30, 2011, Viridis reported
revenues of $8.9 million, a 120 percent increase compared to the
same period in 2010. Net comprehensive loss totaled $3.6 million or
$0.11 per basic share, compared to a net comprehensive income of
$472,000 or $0.02 per diluted share for the same period in 2010,
which included the $2.8 million gain on acquisition of Okanagan.
The Company's year over year operating loss for the nine month
period increased $1.0 million, of which $907,000 was attributed to
the increased workforce given the two acquisitions completed during
the first half of 2010. The remainder of the increase is attributed
to an increase in material and shipping costs.
At September 30, 2011, the Company had cash and cash equivalents
of $1.6 million and accounts receivable of approximately $1.0
million (representing a DSO of 28 days), inventory of $1.3 million
and total assets of $16.7 million. During the third quarter,
Viridis raised additional capital totaling $7 million in two
tranches. The Company raised $3.1 million in gross proceeds from
the sale of approximately 11 million units, each unit consisting of
one share of the Company's common stock and one-half of a common
share purchase warrant, each whole warrant exercisable at $0.40 per
share for a period of 24 months. The Company also raised
approximately $3.9 million from the sale of a 6% secured
convertible note (the "Note"). The Note has a conversion rate of
one unit for each $0.25 of indebtedness owing, each unit consisting
of one share of the Company's common stock and one-half
transferable share purchase warrant exercisable at $0.40 per share.
At quarter end, the Company's short term debt decreased by $1.1
million with total liabilities at $10.6 million, which includes
long term debt of $4.0 million and a future tax liability of
$870,500.
On September 30, 2011, shareholder equity totaled $6.1 million.
The weighted average number of common shares at September 30, 2011
totaled 38.3 million shares, an increase of 8 million shares from
the second quarter 2011 due to the closing of the financing during
the third quarter. As of September 30, 2011, Viridis had
approximately 41.3 million shares outstanding and 60.5 million
fully diluted shares (including 12 million deep out of the money
warrants that expire May and July 2012, but excluding conversion of
the convertible debt). If all options and warrants are exercised,
it would inject an additional $11.9 million of capital into the
Company.
"During the first half of 2011, we completed our structural
transition to become a clean-tech, biomass company and entered into
the international and industrial markets. During the third quarter
we signed a joint venture agreement with a large private industrial
company for the purposes of accelerating sales in Europe,
increasing production capacity and diversifying potential
feedstock. We were also successful in securing $7 million in
additional capital. Over the past year we have strategically
focused on adding capacity and accessing as well as diversifying
our fiber source to accommodate demand for biofuel that greatly
exceeds our present capacity. We have identified and are pursuing
acquisition opportunities that would greatly increase Viridis'
share of this rapidly growing market. The sudden high demand levels
that have developed are resulting in improved contract pricing and
are providing our company with tremendous opportunity to expand
quickly with future long term contract commitments in hand,"
commented Christopher Robertson, Viridis' chief executive
officer.
Mr. Robertson continued, "As one of the few public bio-waste
companies, we are witnessing immediate and significant demand by
international utilities primarily as a result of global public
policy mandates. At Okanagan, our flagship production facility,
during this first full year since acquisition, we have reduced
production costs, while increasing production capacity by 44%. As
of fourth quarter 2011, we are running this facility at 100%
capacity and are now actively planning to increase capacity
three-fold during 2012 through a build-out in Monte Lake, British
Columbia and reviewing other potential, non- dilutive
opportunities. We continue to concentrate efforts to secure fiber
supply from multiple sources and expect to be able to support
significant production increases. To further our diversification
into other renewable biofuels, we began marketing palm kernel
shells (PKS), which has the potential to increase our revenues
significantly in 2012. We expect our first PKS shipments to be
delivered into Europe."
About Viridis Energy Inc.
Viridis Energy Inc. (TSX VENTURE:VRD) is a publicly traded,
"Cleantech" alternative energy company specializing in the
agricultural and wood waste biomass. Located in Vancouver, B.C.,
Viridis Energy operates Cypress Pacific Marketing and Okanagan
Pellet Company, two acquisitions in the wood pellet sector, thus
providing the Company with vertical integration for distribution
and manufacturing. For more information on Viridis Energy Inc.
please refer to the Company website at www.viridisenergy.ca.
Forward-looking Statements
Certain of the statements made in this news release may contain
forward-looking statements within the meaning of the United States
Securities Exchange Act of 1934 and forward-looking information
within the meaning of applicable Canadian securities law.
Forward-looking statements and forward-looking information include,
but are not limited to, statements or information with respect to
anticipated future revenue growth, the expected timing for
achieving profitabilit, anticipated pricing changes and expected
timing for other business opportunities, including new product
lines. Such statements are subject to risks and uncertainties that
may cause actual results, performance or developments to differ
materially from those contained in the statements. No assurance can
be given that any of the events anticipated by the forward-looking
statements will occur or, if they do occur, what benefits the
Company will obtain from them. These forward-looking statements
reflect management's current views and are based on certain
expectations, estimates and assumptions which may prove to be
incorrect. These assumption include, but are not limited to, the
Company's ability to procure necessary raw material to produce its
products, the continuation of governments to adopt and enforce
policies that promote the use of renewable biomass energy sources,
economics that support the use of wood pellets and other biofuels
as an energy and heating source, and other business risks. A number
of risks and uncertainties could cause our actual results to differ
materially from those expressed or implied by the forward-looking
statements, including: (1) a continued downturn in general economic
conditions in North America and internationally, (2) the inherent
uncertainties associated with the demand for biofuels, (3) the risk
that the Company does not execute its business plan,
(4)interruptions in timely product shipments, particularly into
international markets, (5) inability to finance operations and
growth, (6) inability to retain key management and employees, (7)
an increase in the number of competitors with larger resources, and
(8) other factors beyond the Company's control. These
forward-looking statements are made as of the date of this news
release and the Company does not intend to update such forward
looking information unless required to do so by applicable laws.
Additional information about these and other assumptions, risks and
uncertainties are set out in the "Risks and Uncertainties" section
in the Company's MD&A filed with Canadian security
regulators.
Financial Statements Follow
VIRIDIS ENERGY INC.
CONSOLIDATED BALANCE SHEETS
September 30, December 31,
2011 2010
--------------------------------
ASSETS (Unaudited)
Current Assets:
Cash and cash equivalents $ 1,561,182 -
Accounts receivable 982,245 836,090
Inventory 1,250,889 2,404,622
Other receivable 169,879 171,299
Prepaid expenses 215,093 142,531
Due from related parties 78,160 58,448
---------------- -------------
Total Current Assets 4,257,448 3,612,990
Property, plant and equipment 6,369,595 6,683,983
Option to acquire property 250,000 -
Intangible assets 3,482,000 3,482,000
Goodwill 2,355,411 2,355,411
---------------- -------------
Total Assets $ 16,714,454 $ 16,134,384
---------------- -------------
LIABILITIES & STOCKHOLDERS' EQUITY
Current Liabilities:
Bank line of credit 2,987,081 2,601,464
Accounts payable and accrued liabilities 1,696,216 1,675,752
Short term loan payable - 10,700
Due to related parties 24,002 707,771
Current portion of loans payable 1,052,966 2,542,424
---------------- -------------
Total Current Liabilities 5,760,265 7,538,111
---------------- -------------
Long-term Liabilities:
Loan payables 3,959,725 556,355
Future tax liability 870,500 870,500
---------------- -------------
Total Liabilities 10,590,490 8,964,966
---------------- -------------
Stockholders' Equity (deficit)
Share capital 18,236,436 16,233,172
Contributed surplus 2,282,562 1,727,713
Deficit (14,395,034) (10,791,467)
---------------- -------------
Total Stockholders' Equity 6,123,964 7,169,418
---------------- -------------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 16,714,454 $ 16,134,384
---------------- ------------
VIRIDIS ENERGY INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
Three Months Ended Nine Months Ended
September 30, September 30,
------------------------ ------------------------
2011 2010 2011 2010
----------- ----------- ----------- -----------
Sales $ 3,314,530 $ 2,659,153 $ 8,854,189 $ 4,033,354
Cost of Sales 3,357,432 2,307,707 8,510,161 3,616,685
----------- ----------- ----------- -----------
Gross profit (42,902) 351,446 344,028 416,669
----------- ----------- ----------- -----------
Operating expenses:
Selling and marketing 31,135 51,728 168,789 116,681
General and
administrative 1,175,971 1,093,441 3,306,086 2,399,146
----------- ----------- ----------- -----------
Total operating
expenses 1,207,106 1,145,169 3,474,875 2,515,827
----------- ----------- ----------- -----------
Loss before other items (1,250,008) (793,723) (3,130,847) (2,099,158)
Other items:
Foreign exchange loss (6,454) (809) (33,954) (3,158)
Disposal of plant,
property and
equipment - - (29,028) -
Gain on acquisition of
business operations - - - 2,774,394
Interest and bank
charges (3,474) (105,768) (20,744) (199,910)
Imputed interest on
convertible note - - (40,751) -
Interest expense (136,744) - (348,243) -
----------- ----------- ----------- -----------
(146,672) (106,577) (472,720) 2,571,326
----------- ----------- ----------- -----------
Comprehensive income
(loss) $(1,396,680) $ (900,300) $(3,603,567) $ 472,168
----------- ----------- ----------- -----------
Net income (loss) per
share basic and diluted $ (0.04) $ (0.03) $ (0.11) $ 0.02
----------- ----------- ----------- -----------
Weighted average number
of common basic and
diluted 38,330,093 29,557,898 33,017,756 22,274,731
----------- ----------- ----------- -----------
Neither the 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.
Contacts: Grannus Financial Advisors, Inc. Yvonne L. Zappulla
Managing Director 212-681-4108Yvonne@GrannusFinancial.com Viridis
Energy Inc Michele Rebiere Chief Financial Officer
905-847-5226investorinfo@viridisenergy.ca
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