Vancouver, BC - November 27, 2013
- Viridis Energy
Inc. ("Viridis" or the "Company")
(TSXV: VRD), a "Cleantech" manufacturer and
distributor of renewable 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, 2013.
Third Quarter 2013
highlights:
- The Company commenced wood pellet
production at its 120,000 tonne capacity, Nova Scotia
facility, Scotia Atlantic Biomass Company
Limited ("Scotia") acquired in 2012, and
entered into a worldwide marketing agreement with Ekman & Co
AB., one of the world's oldest trading houses and wholesalers of
forest products, for Scotia's entire wood pellet production over
the next 24 months;
- Subsequent to the third quarter, the Company formed a wholly
owned dealer subsidiary, Viridis Merchants Inc., to arrange
transactions between buyer and sellers of alternative energy
products, including wood pellets and hired a commodities trading
specialist with over 25 years of experience in the carbon, power
and biomass sectors to manage its wholesale division. Viridis
Merchants supports the Company's objective of securing a position
as a leading source of wood pellets and other renewable energy
sources to address growing demand from industrial users as
legislation mandating progressive use of renewable energy products
goes into effect.
- Subsequent to the third quarter, Viridis strengthened its board
of directors with the appointment of commodity and financial
specialist Robert Aaron as chairman. Mr. Aaron has 30 years of
experience in the energy and forest products industries, as well as
international commodities trading.
During the third
quarter 2013, Viridis generated revenue of $3.0 million, an
increase of 36% compared to $2.2 million in the third quarter 2012
and 19% improvement over the second quarter of 2013. The
year-over-year improvement reflects strengthened market dynamics,
coupled with the addition of production from the Company's new
Scotia facilities that began operations in the latter part of the
third quarter.
The Company reported
a comprehensive loss of $(712,000) or $(0.01) per basic share for
the third quarter of 2013, which includes final start-up costs of
$520,000 associated with Scotia and approximately $100,000 of
start-up costs associated with Viridis Merchants. This compares to
a comprehensive loss of $(598,000) or $(0.01) per basic share
during the same period in 2012 and a loss of $(491,000) or (0.01)
per share in second quarter of 2013, which included $189,000 and
$251,000 of Scotia start-up costs, respectively. As the Company
noted, Scotia renewed production operation in late August 2013,
which contributed $525,000 of revenue during the period, but also
incurred two months of full operating costs as the Company trained
personnel. With a production capacity in excess of 120,000 tonnes
per year, Viridis expects Scotia will be operating at full capacity
and become financially independent shortly.
The Company reported
a gross profit (sales less cost of sales) of $595,000 for the third
quarter of 2013 compared to $367,000 for the same period in 2012
and $465,000 for second quarter of this year. Improvements in
capacity utilization and the shift from industrial (power) to
residential (heat) market at the Okanagan Pellet Company supported
the continued increase of the Company's gross margin to 19.7% in
the third quarter 2013 from 18.8% in the second quarter 2013 and
16.5% in the prior year second quarter. Management expects its
gross margin from its mature operations to continue to trend up as
its revenue mix shifts towards the higher margin residential market
during the home heating season; however, Scotia's gross margin is
projected to lag until its operation reaches higher production
levels and volume efficiencies are realized.
Operating expenses
for the three month period ended September 30, 2013 were
$1,200,000, an increase of $389,000 or 45%
over the third quarter of 2012 and an increase of $408,000 or 49%
from the second quarter of 2013. The year-over-year and
quarter-over-quarter increases in operating expenses were
primarily attributed to the completion of the
restart of Scotia's production operations, which totaled $520,000
over the three month period and included full staffing costs while
employees were trained in preparation for production resumption and
certain costs to replace and upgrade electrical control equipment.
Management believes Scotia's fixed production and overhead costs
reached normal operating levels in the third quarter and expects
Scotia to reach positive cash flow in the first quarter of 2014.
Costs associated with Scotia totaled $189,000 in third quarter 2012
and $251,000 during second quarter 2013.
Financing and
accretion costs incurred during the three months ended September
30, 2013 totaled $116,000 compared to $114,000 during the third
quarter of 2013, which had no accretion expense and $125,000 in the
second quarter of 2013. The Company completed a debt restructuring
during the first quarter 2013 under more favorable terms than the
prior facility, significantly reducing its financing
expense.
For the nine month
period ended September 30, 2013, Viridis reported revenues were
$7.8 million compared to $7.1 million for the same period in
2012. The Company reported a comprehensive
loss of $(2.0) million or $ (0.02) per basic and diluted share,
compared to a comprehensive loss of $(2.8) million or $(0.06) per
basic and diluted share for the same period in 2012. Included in
the comprehensive loss was $1 million and $890,000 of Scotia
related start-up costs for the respective periods in 2013 and
2012. The Company's gross margin
on sales increased from 10% for the nine months ended September 30,
2012 to 18% for the same period of 2013. Operating loss for the first nine months of 2013 totaled $(1.6)
million versus $(2.0) million for the first nine months of
2012.
At
September 30, 2013, the Company reported cash and cash equivalents
of $1.6 million, accounts receivable of $1.1 million, representing
a DSO of approximately 33 days, and inventory of $1.7 million. The
Company's current ratio stood was 1.6 at the end of the third
quarter, a significant increase over the prior year level. The
Company had negligible short-term debt of $46,000 and long term
debt of $5.9 million as a result of the debt restructuring
completed during the first quarter of 2013 eliminating $5.7 million
of short term liabilities. The Company's
shareholder equity totaled $4.6 million on September 30, 2013, an
increase of $3.4 million since the beginning of the
year.
On
September 30, 2013, Viridis common stock
outstanding totaled 114.3 million shares, compared to 59.8 million
at year-end 2012. The Company's
options, warrants, and convertible debt outstanding, which if
converted and/or exercised were create an additional 36.1 million
shares to the current outstanding and generate $8.0 million
of additional capital for the Company
"The third quarter
was an incredibly productive period for Viridis," commented
Christopher Robertson, Viridis' CEO. "Despite a few unexpected
delays, production was renewed at our Scotia plant and we secured
the marketing expertise of one of the premiere forest product
wholesalers in the world for Scotia's entire wood pellet production
over the next two years. The increasing market activity in the wood
pellet industry prompted us to expand our access to product beyond
our production capacity. Viridis Merchants will enable us to
accommodate commercial orders that exceed our own production
capacity, while also positioning us to profit from arbitrage
opportunities that arise. Our management team's vast network of
product sources, coupled with our developing network of commercial
and industrial buyers, will serve our ultimate objective to gain
recognition as the 'go to' supplier of wood pellets and other
renewable energy materials."
Robert Aaron, Viridis
recently appointed chairman, added, "I have been involved with
Viridis for several years on an independent basis, and now as
chairman of the board I look forward to supporting its management
team in this phase of its growth. Viridis has managed through
critical periods, especially over the last two years, to surface
financially stronger and operationally skilled to address the
worldwide drive for renewable energy source use. Through 25 plus
years of industry experience, our management team recognized the
disconnect between the impetus driving the growth of renewable
energy and sources of product and material. The implementation of a
strategy that aggregates sources to accommodate demand positions
Viridis as an integral partner."
----------------------------------------------------------------
|Investor Contact: Yvonne L. |Company Contact: Michele |
|Zappulla Managing Director |Rebiere Chief Financial |
|Grannus Financial Advisors, Inc.|Officer Viridis Energy Inc |
|212-681-4108 |905-847-5226 |
|Yvonne@GrannusFinancial.com |investorinfo@viridisenergy.ca|
----------------------------------------------------------------
About Viridis Energy
Inc.
Viridis Energy Inc. (TSXV: VRD) is a
publicly traded, "Cleantech" alternative energy company
specializing in the agricultural and wood waste biomass. Located in
Vancouver, B.C., Viridis Energy Inc. operates Cypress Pacific
Marketing Inc., Okanagan Pellet Company Inc. and Scotia Atlantic
Biomass Company Limited, thus providing the Company with vertical
integration for distribution and manufacturing as well as coast to
coast national presence. For more information on Viridis Energy
Inc. please refer to the company website at
www.viridisenergy.ca.
Except for "per
share" amounts, monetary and share information contained in this
news release is rounded to the nearest
thousandth.
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 and gross margin increases, the expected
timing for achieving profitability, anticipated future production
levels and the projected production capabilities of the recently
acquired manufacturing capacity in Nova Scotia. 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. 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) a change in the European
mandate for renewable energy, (3) a revision to the UK's DECC
renewable obligation, (4) a sharp increase in ocean freight costs,
(5) the inherent uncertainties associated with the demand for
biofuels, (6) the risk that the Company does not execute its
business plan, (7) inability to finance operations and growth (8)
inability to finance the start-up operations in Nova Scotia in a
timely manner (9) inability to retain key management and employees,
(10) an increase in the number of competitors with larger
resources, and (11) 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 securities
regulators.
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.
###
-- Financial Statements Follow --
-------------------------------------------------
|Viridis Energy Inc. |
|-----------------------------------------------|
|Consolidated statements of financial position |
|-----------------------------------------------|
|(Expressed in Canadian dollars) |
|-----------------------------------------------|
|As at September 30, 2013 and December 31, 2012 |
| |
-------------------------------------------------
-------------------------------------------------------------------
| | |September 30, 2013| |December 31,| |
| | | (unaudited) | |2012 | |
| | | | |(audited) | |
|-----------------------------------------------------------------|
| | | | | | |
|-----------------------------------------------------------------|
|ASSETS | | | | | |
|-----------------------------------------------------------------|
| | | | | | |
|-----------------------------------------------------------------|
|Current | | | | | |
|-----------------------------------------------------------------|
| Cash and cash | | $ | | $ | |
|equivalents | |1,625,844 | | | |
| | | | | 413,570 | |
|-----------------------------------------------------------------|
| Accounts | | | | | |
|receivable | | 1,069,115 | | 753,208 | |
|-----------------------------------------------------------------|
| Inventory | | | | | |
| | | 1,665,635 | | | |
| | | | | 594,012 | |
|-----------------------------------------------------------------|
| Prepaid | | | | | |
|expenses | | 590,380 | | 225,761 | |
|-----------------------------------------------------------------|
| Due from | | | | | |
|related parties | | - | | 54,000 | |
|-----------------------------------------------------------------|
| | | | | | |
| | | 4,950,974 | | | |
| | | | |2,040,551 | |
|-----------------------------------------------------------------|
| | | | | | |
|-----------------------------------------------------------------|
|Property, plant | | | | | |
|and equipment | |8,868,175 | |8,264,488 | |
|-----------------------------------------------------------------|
| | | | | | |
|-----------------------------------------------------------------|
| | | $ | | $ | |
| | |13,819,149 | |10,305,039 | |
|-----------------------------------------------------------------|
| | | | | | |
|-----------------------------------------------------------------|
|LIABILITIES and SHAREHOLDERS' EQUITY | | |
|-----------------------------------------------------------------|
| | | | | | |
|-----------------------------------------------------------------|
| | | | | | |
|-----------------------------------------------------------------|
| Bank line of | | $ | | $ | |
|credit | | | | 2,992,832 | |
| | | - | | | |
| | | | | | |
|-----------------------------------------------------------------|
| Accounts | | | | | |
|payable and | |3,012,247 | | 2,294,127 | |
|accrued | | | | | |
|liabilities | | | | | |
|-----------------------------------------------------------------|
| Deferred | | | | | |
|income | | - | | | |
| | | | |157,058 | |
|-----------------------------------------------------------------|
| Short term | | | | | |
|loan payable | | | | | |
| | | - | | | |
| | | | | 2,606,875 | |
|-----------------------------------------------------------------|
| Due to related| | | | | |
|parties | | | | | |
| | | 37,315 | | | |
| | | | |164,670 | |
|-----------------------------------------------------------------|
| Current | | | | | |
|portion of loans| | 8,631 | | 19,646 | |
|payable | | | | | |
|-----------------------------------------------------------------|
| | | | | | |
|-----------------------------------------------------------------|
| | |3,058,193 | |8,865,208 | |
|-----------------------------------------------------------------|
| | | | | | |
|-----------------------------------------------------------------|
| Loans payable | | | | | |
| | |5,906,692 | | - | |
|-----------------------------------------------------------------|
| | | | | | |
|-----------------------------------------------------------------|
| | |8,964,885 | |8,865,208 | |
|-----------------------------------------------------------------|
| | | | | | |
|-----------------------------------------------------------------|
| | | | | | |
|-----------------------------------------------------------------|
|Shareholders' | | | | | |
|equity | | | | | |
|-----------------------------------------------------------------|
| | | | | | |
|-----------------------------------------------------------------|
| Share capital | | $ | | $ | |
| | | 27,322,578 | | 22,537,578 | |
|-----------------------------------------------------------------|
| Contributed | | | | | |
|surplus | | 3,446,376 | | 2,861,376 | |
|-----------------------------------------------------------------|
| Accumulated | | | | | |
|deficit | |(25,914,690) | |(23,959,123)| |
|-----------------------------------------------------------------|
| | | | | | |
|-----------------------------------------------------------------|
| | | | | | |
| | |4,854,264 | | 1,439,831 | |
|-----------------------------------------------------------------|
| | | | | | |
|-----------------------------------------------------------------|
| | | $ | | $ | |
| | | 13,819,149 | | 10,305,039 | |
-------------------------------------------------------------------
Viridis Energy
Inc.
Consolidated statements
of loss and total comprehensive loss
(Expressed in Canadian
dollars, except number of shares and per share amounts)
For the nine months
ended September 30, 2013 and 2012
(Unaudited)
-----------------------------------------------------------------------------------------
| | | | | | | | | |
|---------------------------------------------------------------------------------------|
| | | | | Three months ended |Nine months ended |
| | | | |September 30, | |
| | | | | | September 30, |
|---------------------------------------------------------------------------------------|
| | | | | | | | | |
| | | | | 2013 | | | | 2012 |
| | | | | | | | 2013 | |
| | | | | |2012 | | | |
|---------------------------------------------------------------------------------------|
| | | | | | | | | |
|---------------------------------------------------------------------------------------|
|Sales | | | $ | | $ | $ | $ |
| | | |3,022,581 | |2,226,358 |7,815,729 |7,068,766 |
|---------------------------------------------------------------------------------------|
|Costs of sales | | | | | | | |
| | | |2,427,404 | |1,858,914 |6,419,587 |6,364,555 |
|---------------------------------------------------------------------------------------|
|Gross | | | | | | | | |
|profit | | | | 595,177 | | 367,444 | 1,396,142 | |
| | | | | | | | | 704,211 |
|---------------------------------------------------------------------------------------|
| | | | | | | | | |
|---------------------------------------------------------------------------------------|
|Operating expenses | | | | | | | |
|---------------------------------------------------------------------------------------|
| |Selling and | | | | | | | 117,481 |
| |marketing | | | | | | | |
| | | | |57,892 | |20,914 |143,134 | |
|---------------------------------------------------------------------------------------|
| |Freight-out | | | | | | | 126,026 |
| | | | | | | | | |
| | | | |45,609 | |3,811 |58,254 | |
|---------------------------------------------------------------------------------------|
| |General and | | | | | | | |
| |administrative| | | | | 823,830 | 2,722,051 |2,490,099 |
| | | | |1,093,800 | | | | |
|---------------------------------------------------------------------------------------|
| | | | | | | | | |
| | | | | | | 848,555 | 2,923,439 |2,733,606 |
| | | | |1,197,301 | | | | |
|---------------------------------------------------------------------------------------|
|Loss before other | | | | | | | |
|items | | | (602,124) | | (481,111) | (1,527,297) | (2,029,395)|
|---------------------------------------------------------------------------------------|
| | | | | | | | | |
|---------------------------------------------------------------------------------------|
|Other items | | | | | | | |
|---------------------------------------------------------------------------------------|
| |Foreign | | | | | | | (8,394) |
| |exchange | | | | | | | |
| |gain/(loss) | | |5,890 | |(2,344) |(798) | |
|---------------------------------------------------------------------------------------|
| |Disposal of | | |- | |- |2,821 | - |
| |property plant| | | | | | | |
| | and | | | | | | | |
| |equipment | | | | | | | |
|---------------------------------------------------------------------------------------|
| |Finance | | | (77,898) | | | | |
| |expense | | | | | | |(644,626) |
| | | | | | |(114,262) |(332,981) | |
|---------------------------------------------------------------------------------------|
| |Accretion | | |(37,637) | |- |(97,312) | (86,668) |
| |expense | | | | | | | |
|---------------------------------------------------------------------------------------|
| | | | | | | | | |
| | | | | | | | |(739,688) |
| | | | |(109,645) | |(116,606) |(428,270) | |
|---------------------------------------------------------------------------------------|
|Loss before income | | |(711,769) | |(597,717) |(1,955,567) |(2,769,083) |
|taxes recovery | | | | | | | |
|---------------------------------------------------------------------------------------|
|Income tax recovered | | |- | |- -- -- |
|---------------------------------------------------------------------------------------|
|Net loss and total | | | $ | | $ | $ | $ |
|comprehensive loss | | |(711,769) | |(597,717) |(1,955,567) |(2,769,083) |
|---------------------------------------------------------------------------------------|
| | | | | | | | | |
|---------------------------------------------------------------------------------------|
|Net loss per share | | | | | | | |
|---------------------------------------------------------------------------------------|
| |Basic and | | | $ | | $ | $ | |
| |diluted | | | | | | |$ |
| | | | |(0.01) | | (0.01) | (0.02) | (0.06) |
|---------------------------------------------------------------------------------------|
| | | | | | | | | |
|---------------------------------------------------------------------------------------|
|Weighted average | | | | | | | |
|number of common | | | | | | | |
|shares outstanding | | | | | | | |
|---------------------------------------------------------------------------------------|
| |Basic and | | |114,298,883| |56,746,095 | | |
| |diluted | | | | | |91,987,528 |46,512,610 |
-----------------------------------------------------------------------------------------
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