VANCOUVER and MONTREAL, July 29 /CNW/ -- VANCOUVER and MONTREAL,
July 29 /CNW Telbec/ - EACOM Timber Corporation (TSX VENTURE: ETR;
"EACOM" or the "Company") today reported its financial results for
the year ended March 31, 2010. On March 26, 2010, EACOM entered
into a definitive purchase agreement to acquire the forest products
business of Domtar Corporation ("Domtar"). The Company closed the
acquisition on June 30, 2010 and accordingly the acquisition is not
reflected in the operating results of the Company for the year
ended March 31, 2010. The Company paid approximately $102 million
in cash and issued 48,070,712 common shares (valued at
approximately $27 million) to Domtar upon closing the acquisition.
At March 31, 2010, the Company has $145 million recorded as
restricted cash which related to the acquisition of the Domtar
forest products business. The Company closed in escrow a $145
million brokered private placement financing for subscription
receipts on March 26, 2010. The financing was to fund the cash
portion of the acquisition purchase price for the Domtar forest
products business acquisition, as well as provide working capital
for the business. The financing was completed at $0.50 per
subscription receipt. On closing the acquisition on June 30, 2010,
the subscription receipts were converted into common shares on a
one for one basis for no additional consideration and the escrowed
proceeds were released to the Company. RESULTS OF OPERATIONS FOR
THE YEAR ENDED MARCH 31, 2010 The loss and comprehensive loss for
the year ended March 31, 2010 was $3,369,000 ($0.07 per common
share) compared to $1,870,000 ($0.05 per common share) for 2009, an
increase of $1,499,000. This increase was due mainly to higher
professional and due diligence fees, travel expenses and Big River
Sawmill holding costs for the year ended March 31, 2010 compared to
the same period in 2009. In addition, there was a higher gross
profit from sales in 2009 compared to 2010. Partially offsetting
these factors was a gain on investments of $231,000 in 2010
compared to a loss of $84,000 in 2009. SALES, COST OF SALES AND
GROSS MARGIN For the year ended March 31, 2010, the Company
recognized sales of $4,285,000 and cost of sales of $4,227,000 for
a gross profit of $58,000 and a gross profit margin of
approximately 1.4% of sales. North American customers accounted for
5% of the total sales, 2% of sales were to Middle East customers
and the balance of 93% of the sales were to other overseas
customers. The Company purchased 20% of the lumber from Canadian
vendors and 80% from US vendors. For the year ended March 31, 2009,
the Company recognized sales of $880,000 and cost of sales of
$783,000 for a gross profit of $97,000 and a gross profit margin of
approximately 11.0% of sales. GENERAL AND ADMINISTRATION Personnel
expenses Personnel expenses for the twelve months ended March 31,
2010 were $318,000 compared to $379,000 in 2009. The decrease of
$61,000 was due to lower salaries and benefits resulting from a
reduction in the number of employees for the year. Professional
fees Professional fees for the year ended March 31, 2010 were
$2,042,000 compared to $331,000 in 2009, an increase of $1,711,000.
The increase was due primarily to higher consulting and advisory
services related to the acquisition of the Big River sawmill assets
and the Domtar forest products business. In addition, the Company
incurred higher expenses in 2010 than in 2009 as a result of the
preparation of a filing statement required to seek graduation to
the TSX Venture exchange from the NEX. Shareholder and other
corporate expenses For the twelve months ended March 31, 2010,
shareholder and other corporate expenses were $155,000 compared to
$140,000 in the corresponding period last year. The increase of
$15,000 was also due to additional filing fees associated with the
Company's application to graduate to the TSX Venture exchange and
the associated sponsorship fee. Insurance and other office For the
twelve months ended March 31, 2010, insurance and other office
expenses were $512,000 compared to $286,000 in the corresponding
period last year. The increase of $226,000 was due primarily to the
Big River Sawmill insurance expense offset with a reduction of
office general expenses. Facilities For the twelve months ended
March 31, 2010, facility expenses were $199,000 compared to
$251,000 in the prior year. The decrease of $52,000 was due to
reduced facility maintenance expense and a sublease of part of the
facility. The decrease in facility maintenance expense was
partially offset by the recognition of the costs to return a
portion of the Company's laboratory space to warehouse space.
Travel For the twelve months ended March 31, 2010, travel expenses
were $352,000 compared to $130,000 in the corresponding period last
year. The increase of $222,000 due primarily to travel related to
the acquisition of the Big River sawmill assets and the Domtar
forest products business. STOCK-BASED COMPENSATION Stock-based
compensation for the twelve months ended March 31, 2010 were
$149,000 compared to $98,000 in 2009. This increase was due
primarily to a higher fair value of options granted during the
current fiscal year resulting in a higher amortized expense
recognized during the period. GAIN/LOSS ON INVESTMENTS HELD FOR
TRADING For the year ended March 31, 2010 the Company recognized a
gain of $231,000 compared to a loss of $84,000 in same period last
year. The gains recognized in the current year are due to gains
realized on equity investments and lumber future contracts whereas
the loss in the prior year was due primarily to losses on lumber
futures contracts. OTHER INCOME For the twelve months ended March
31, 2010, interest and other revenue were $83,000 compared to
$134,000 in the prior year. The decrease was due primarily to a
lower interest and dividend income on investments. In the current
year the Company received a $70,000 payment from a third party
pursuant to the Sell Option Agreement for the Big River sawmill.
The Sell Option Agreement was not exercised by the third party.
LIQUIDITY AND CAPITAL RESOURCES At March 31, 2010 the Company's
cash and cash equivalents totaled $2,244,000 compared to $1,234,000
at March 31, 2009. Working capital at March 31, 2010 was $637,000
compared to $1,517,000 at March 31, 2009. Accounts payable and
accrued liabilities at March 31, 2010 include accrued liabilities
of $1,530,000 related to the due diligence and purchase agreement
negotiations for the acquisition of the Domtar forest products
business. For the twelve months ended March 31, 2010, the Company
used $1,386,000 for operations compared to $2,171,000 for the
corresponding period of the prior year. The cash used in operations
decreased even though the net loss in 2010 increased to $3,369,000
from $1,858,000 in 2009 as the changes in non-cash working capital
increased to a $1,858,000 inflow in 2010 compared to a $325,000
outflow in 2009. Cash from financing activities for the twelve
months ended March 31, 2010, was $6,232,000 compared to $277,000
for the corresponding period of the prior year. During 2010 the
Company completed two private placements for gross proceeds of
$3,800,000 and received $2,875,000 from the exercise of warrants.
In 2009, the Company completed one private placement for gross
proceeds of $300,000. Cash consumed from investing activities for
the year ended March 31, 2010 was $3,836,000 compared to $119,000
in the corresponding period of the prior year. Cash used for
investing in 2010 was primarily related to $3,185,000 used for the
acquisition of the Big River sawmill. The Company has $145 million
included in restricted cash which relates to the acquisition of the
Domtar forest products business. On March 26, 2010, the Company
closed a $145 million brokered private placement of subscription
receipt financing in escrow. The financing is to fund the cash
portion (estimated to be $102 million) of the acquisition purchase
price of $129.4 million, as well as provide working capital for the
business. The financing was completed at $0.50 per subscription
receipt. On closing the acquisition on June 30, 2010, the
subscription receipts were converted into common shares on a one
for one basis for no additional consideration and the escrowed
proceeds were released to the Company. If the acquisition had not
closed, then the escrowed proceeds would have been returned to the
investors and the subscription receipts cancelled. At the closing
of the financing, the Company was obliged to pay a cash commission
of 6% of the proceeds on the completion of the Domtar forest
products business acquisition and agent's warrants to acquire
common shares equal to 6% of the common shares issued under the
subscription receipts at a price of $0.50 per share. The agent's
warrants expire two years from the date of grant. At March 31,
2010, the Company had paid $387,760 in deferred financing costs in
relation to this financing. About EACOM EACOM Timber Corporation is
a TSX-V listed company. EACOM owns seven sawmills and an equity
interest in an eighth sawmill, all located in Eastern Canada and
related tenures. The mills are Timmins, Nairn Centre, Gogama and
Ear Falls in Ontario and Val-d'Or, Ste-Marie and Matagami in
Quebec. The equity interest is in the Elk Lake sawmill located in
Ontario. The sawmills in Ear Falls, Ontario, and Ste-Marie, Quebec,
are currently idled. EACOM also owns one idle mill in Big River
Saskatchewan. The TSX Venture Exchange has neither approved nor
disapproved the contents of this press release. All directorships
are subject to TSX Venture Exchange approval. Forward-Looking
Statements All statements in this news release that are not based
on historical fact are "forward-looking statements." While
management has based any forward-looking statements contained
herein on its current expectations, the information on which such
expectations were based may change. These forward-looking
statements rely on a number of assumptions concerning future events
and are subject to a number of risks, uncertainties, and other
factors, many of which are outside of our control that could cause
actual results to materially differ from such statements. Such
risks, uncertainties, and other factors include, but are not
necessarily limited to, those set forth under the captions "Risk
Factors" of the Filing Statement dated January 8, 2010 and the
current MD&A for EACOM Timber Corporation on file with the
Canadian Securities Commissions. EACOM Timber Corporation
Consolidated Balance Sheets As at March 31, 2010 and 2009 2010 2009
--------------- --------------- Assets Current assets Cash and cash
equivalents $2,244,428 $1,233,513 Investments held for trading
56,630 89,467 Other receivables and deposits 98,806 101,097 Trade
accounts receivable 275,718 263,052 Inventory 37,396 74,469 Prepaid
expenses 89,388 99,686 --------------- --------------- 2,802,366
1,861,284 Property, plant and equipment 3,598,058 13,167 Restricted
cash 145,750,637 130,000 Deferred costs 487,760 - ---------------
--------------- $ 152,638,821 $ 2,004,451 ---------------
--------------- --------------- --------------- Liabilities Current
liabilities Accounts payable and accrued liabilities $ 2,165,424 $
344,715 --------------- --------------- 2,165,424 344,715 Asset
retirement obligation 413,000 - Subscription receipts helds in
trust 145,000,000 - --------------- --------------- 147,578,424
344,715 --------------- --------------- Shareholders' Equity
Capital stock 6,033,208 141,349,555 Contributed surplus 1,762,645
2,439,104 Deficit (2,735,456) (142,128,923) ---------------
--------------- 5,060,397 1,659,736 --------------- ---------------
$ 152,638,821 $ 2,004,451 --------------- ---------------
--------------- --------------- On behalf of the board Rick Doman
(signed) Terry Lyons (signed) -------------------
-------------------- President and CEO Director Director EACOM
Timber Corporation Consolidated Statements of Loss, Comprehensive
Loss and Deficit For the Three Months Ended For the Years Ended
------------------------------- -------------------------------
March 31, 2010 March 31, 2009 March 31, 2010 March 31, 2009
--------------- --------------- --------------- ---------------
Sales $ 920,880 $ 880,573 $ 4,284,923 $ 880,573 Cost of sales
(912,339) (783,286) (4,227,389) (783,286) ---------------
--------------- --------------- --------------- Gross margin 8,541
97,287 57,534 97,287 Expenses General and adminis- tration
1,972,305 287,995 3,577,641 1,516,974 Stock- based compen- sation
44,597 34,781 149,411 97,848 Amortiza- tion of property, equip-
ment, patents and licenses - 6,583 13,167 26,331 (Gain) loss on
invest- ments held for trading (135,071) 37,577 (230,970) 83,880
Employee termina- tions - - - 376,972 ---------------
--------------- --------------- --------------- 1,881,831 366,936
3,509,249 2,102,005 --------------- --------------- ---------------
--------------- Loss from opera- tions (1,873,290) (269,649)
(3,451,715) (2,004,718) Other income 2,274 8,763 83,115 134,400
--------------- --------------- --------------- ---------------
Loss and compre- hensive loss for the period (1,871,016) (260,886)
(3,368,600) (1,870,318) Deficit, beginning of period (864,440)
(141,868,037) (142,128,923) (140,258,605) Elimina- tion of deficit
- - 142,762,067 - --------------- --------------- ---------------
--------------- Deficit, end of period $ (2,735,456) $(142,128,923)
$ (2,735,456) $(142,128,923) --------------- ---------------
--------------- --------------- --------------- ---------------
--------------- --------------- Basic and diluted loss per common
share $ (0.03) $ (0.01) $ (0.07) $ (0.05) ---------------
--------------- --------------- --------------- ---------------
--------------- --------------- --------------- Weighted average
number of common shares outstan- ding 69,720,344 36,545,344
51,319,317 35,035,070 --------------- ---------------
--------------- --------------- --------------- ---------------
--------------- --------------- EACOM Timber Corporation
Consolidated Statements of Cash Flows For the Three Months Ended
For the Years Ended -------------------------------
------------------------------- March 31, 2010 March 31, 2009 March
31, 2010 March 31, 2009 -------------------------------
------------------------------- Cash flows from operating activi-
ties Loss for the period $ (1,871,016) $ (260,886) $ (3,368,600) $
(1,870,318) Items not affec- ting cash: Amorti- zation of pro-
perty, equip- ment, patents and licen- ses - 6,583 13,167 26,331
Other income - - (70,000) (74,813) (Gain)/ loss on sale of invest-
ments held for trading 845 (29,316) 32,837 (25,317) Stock- based
compen- sation 44,597 34,781 149,411 97,848
------------------------------- -------------------------------
(1,825,574) (248,838) (3,243,185) (1,846,269) Changes in non-cash
working capital 1,258,783 (193,000) 1,857,705 (324,603)
------------------------------- -------------------------------
(566,791) (441,838) (1,385,480) (2,170,872)
------------------------------- -------------------------------
Cash flows from financing activi- ties Proceeds from private place-
ments 3,000,000 - 3,800,000 300,000 Financing costs related to
private place- ments (37,305) - (55,150) (23,375) Proceeds from
exercise of Warrants 62,500 - 2,875,000 - Deferred financing
expenses (350,455) - (387,760) - -------------------------------
------------------------------- 2,674,740 - 6,232,090 276,625 Cash
flows from investing activi- ties Purchase of Big River assets
(3,185,058) - (3,185,058) - Purchase of invest- ments held-for-
trading - (20,950) - (87,050) Proceeds from sale of invest- ments
held for trading - 22,899 - 22,899 Purchase of restric- ted cash
(606,149) (130,000) (620,637) (130,000) Proceeds from sale of
biophar- maceuti- cal assets - 74,813 Option fee received for Big
River sawmill - - 70,000 - Deferred acquisi- tion costs (100,000) -
(100,000) - -------------------------------
------------------------------- (3,891,207) (128,051) (3,835,695)
(119,338) -------------------------------
------------------------------- Increase /(Decrea- se) in cash and
cash equiva- lents (1,783,258) (569,889) 1,010,915 (2,013,585) Cash
and cash equiva- lents, beginning of period 4,027,686 1,803,402
1,233,513 3,247,098 -------------------------------
------------------------------- Cash and cash equiva- lents, end of
period $ 2,244,428 $ 1,233,513 $ 2,244,428 $ 1,233,513
------------------------------- -------------------------------
------------------------------- -------------------------------
Supple- mental disclosu- re of cash flow informa- tion Interest
received 2,273 9,984 13,114 50,146 Restricted cash from the
issuance of subscrip- tion receipts 145,000,000 - 145,000,000 -
Sophie Merven, Media relations, (514) 917-1040
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