Financials NEWS!
Accomplishments include improved breeding methods and increase in
worm population to current level of approximately 20.4 million,
addition of automated blending equipment and commencement of
vermicompost production, successful move of manufacturing and head
office to new location resulting in significant cost savings and
improved operations
- After extensive evaluation, Forterra has reconfigured its plant for
more efficient production and is ramping up manufacturing
- Company has sold product in 2009 to a number of major national and
regional service companies and manufacturers of finished product who
are carrying out trials
>>
, /CNW/ - (TSX-V: FTE-V), an emerging leader in the production and sale ofpremium organic soil-enrichment products based on worm castings, todayannounced its financial results for the year ended .Financial results conform to Canadian generally accepted accountingprinciples (GAAP) and all currency amounts are in Canadian dollars.
"Lookingback at 2008, it was a year of considerable progress for Forterra,although this was not reflected in our financial performance," said,chairman and chief executive officer. "We have positioned Forterra forfurther progress in 2009 as we ramp up our production and add newsignificant customers."
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Mr. Green cited the following notable accomplishments in 2008.
- Forterra improved its worm breeding program as it refined its
methods. After it purchased a total of 11,000 pounds of red wiggler
worms in 2007 and 2008, it increased the total to more than 18,000
pounds at year-end 2008 (approximately 1,500 production beds,
referred to as trays) and an estimated more than 20,400 pounds as at
April 28, 2009 (more than 1,700 trays). The current retail price for
worms is about $30 per pound. As there are an estimated 1,000 worms
per pound, this indicates a total population of about 20.4 million
worms as at April 28, 2009.
- The company commenced the production of vermicompost during 2008. It
invested in automated blending equipment to ensure worm bedding
materials and food stocks are metered and measured to ensure
consistent quality. This in turn helps to ensure that Forterra's end
product is of consistent quality with respect to maintaining the same
nutrient values for each batch produced.
- In the 2008 third quarter, Forterra decided to vacate its only plant,
located at Downsview Park, Toronto, and to move to a new facility in
Puslinch, Ontario. The leasing cost for the Puslinch plant is 21
percent lower than the Downsview location, while offering 25 percent
more square feet of production and warehouse space, and, more
importantly, better air and water quality required to ensure the
health of the company's growing worm population.
- The new facility also enabled the company to leave its former head
office location in Concord, Ontario, for an additional annual savings
in rent of $56,000, consolidating these operations with the
manufacturing plant in Puslinch and bringing Forterra's management
closer to the daily operations. The company is currently in
negotiations to exit the existing leases at the former Downsview and
Concord locations. In all, Forterra expects that the move to the
Puslinch facility will result in annualized cost savings of nearly
$100,000.
- Forterra continues to test its products with various organizations
for numerous turf, plant, floriculture, and viticulture conditions,
including regeneration, disease control, and fertilization. The
company's goal is to produce the most-effective, consistent, high-
quality organic soil supplements similar or superior to chemical-
based products.
- Forterra strengthened its management team with the recruitment in
June of Rick Denyes as its president and chief operating officer and
the addition of a new plant manager in May 2008. In August,
agronomist Tom Ferencevic agreed to serve as a consultant to the
company. Mr. Ferencevic recently agreed to become a full-time
employee. Subsequent to the 2008 year-end, the company also
announced the appointment of Ron Reed as chief financial officer.
- Forterra succeeded in raising net proceeds of $2,241,129 during
2008 through the issuance of common shares in private placements.
The company used the proceeds to pay debts and for general working
capital.
>>
Financial Highlights
Forterra continues tobe considered a development-stage company for accounting purposes and,as such, the progress that the company is making is not fully reflectedin the financial statements. As a development-stage company, its salesare applied to reduce sales and marketing expenses.
Sales for 2008 increased to , compared with in 2007, as Forterra diversified its customer base.
After expenses, including general, and administrative (G&A) , sales and marketing (net of sales amounting to ), and research and development (R&D) , Forterra recorded a lower operating loss in 2008 of compared with the prior year. In 2007, the operating loss was (including G&A of sales and marketing expenses net of sales of , and R&D of ).
Theslight decline in G&A expense reflects, in part, vacancies in keymanagement positions for parts of the year, as well as thecapitalization of a portion of production labor as a component ofinventory cost. Occupancy expenses also declined about seven percent.Marketing expenses were higher in 2007 reflecting certain one-timeexpenses, including website development and market research.
Other notable expenses in 2008 included stock-based compensation of ( in 2007), amortization of property and equipment of ( in 2007), and interest and accretion on long-term debt of ( in 2007). In 2007, Forterra incurred a write-down of property and equipment of and a write-down of intangible assets of .
The net loss for 2008 amounted to (a loss of per basic and diluted shares outstanding, which amounted to a weightedaverage number of 70,026,117), compared with a net loss in 2007 of (a loss of per basic and diluted shares outstanding, which amounted to a weighted average number of 53,817,614).
At the 2008 year-end, Forterra had working capital of , compared with a deficiency at the end of 2007 of . Subsequent to the year-end, on , Forterra raised through the issuance of debentures together with 2,400,000 of bonusshares through a non-brokered private placement. While thisstrengthened the company's financial resources, Forterra will requireadditional capital to fund its operations and growth strategy.
Outlook
"Wehave completed an extensive evaluation of our manufacturing processrequired for the efficient production of commercial volumes of wormcastings and related products," said,president and chief operating officer. "Based on this evaluation, wehave reconfigured our production facilities and are ramping upmanufacturing in the plant.
"Wealso have sourced a more complimentary food stock and automatedproduction equipment which will decrease the production cycle andassociated costs. Equipment purchases and worm reproduction and relatedactivities will influence production volumes. We expect that the plant, which we only moved into late last year, will be operating at ornear full production capacity by mid-2009," he continued.
"Acolder than anticipated spring 2009 has affected certain of thecompany's customers, causing delays in their blending operations andthe potential loss or at least deferral of some sales. This has in turnadversely affected Forterra's sales expectations for the 2009 firstquarter. We expect that at least some of these sales will be realizedin the second quarter of 2009," he said.
"Forterra has soldproduct to a number of major national and regional service companiesand manufacturers of finished product who are carrying out trialsduring 2009. For competitive reasons, these customers are notpermitting us to disclose their names. We believe that at least some ofthese companies will become longer-term customers for our products.Supplying these and other potential customers will require Forterra toestablish additional manufacturing capacity by 2010," Mr. Denyes said.
About
Forterramanufactures and markets environmentally friendly soil enhancers, usingworm castings, which boost fertility while restoring the soil withorganic matter for sustainable, longer-term benefits, includingstronger root growth, and drought and pest resistance. Forterraproducts contain only organic material. They are ideal for golfcourses, sports fields, lawn care, parks, nurseries, orchards, andvineyards. Essentially, Forterra uses red wriggler worms to convertorganic material into vermicompost or worm castings. Worm castingscontain micronutrients, which are required for healthy plantdevelopment. Worm castings also contain microbes, which increase therate at which plants take up available macronutrients andmicronutrients. Further information is available on the company'swebsite at www.forterra.com.
Forward-Looking Statements
Thisnews release contains forward-looking statements based on currentexpectations. These forward-looking statements entail various risks anduncertainties that could cause actual results to differ materially fromthose reflected in these forward-looking statements. Such statementsare based on current expectations, are subject to a number ofuncertainties and risks, and actual results may differ materially fromthose contained in such statements. These uncertainties and risksinclude, but are not limited to, availability of resources, competitivepressures, changes in market activity, the ability to sign contractswith customers, the development of markets for worm castings, itsability to breed and maintain a sufficiently large worm population, andregulatory requirements. Risks and uncertainties about Forterra'sbusiness are more fully discussed in the company's disclosurematerials, including its annual information form and MD&A, filedwith the securities regulatory authorities in .Forterra assumes no obligation to update any forward-looking statementor to update the reasons why actual results could differ from suchstatements.
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Neither the TSX Venture Exchange Inc. 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.
FORTERRA ENVIRONMENTAL CORP.
(Previously named "REWORKS Environmental Corp.")
(A Development Stage Company)
CONSOLIDATED FINANCIAL STATEMENTS
Consolidated Balance Sheets
Year ended Year ended
December 31, December 31,
2008 2007
$ $
-------------------------------------------------------------------------
ASSETS
CURRENT ASSETS
Cash and cash equivalents 368,426 341,192
Amounts receivable 104,147 66,648
Inventory 312,982 12,263
Prepaid expenses and deposits 76,515 53,167
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TOTAL CURRENT ASSETS 862,070 473,270
PROPERTY AND EQUIPMENT 432,686 205,589
INTANGIBLE ASSETS 1 1
GOODWILL 30,000 -
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TOTAL ASSETS 1,324,757 678,860
---------------------------
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LIABILITIES
CURRENT LIABILITIES
Amounts payable and accrued liabilities 559,744 476,622
Current portion of loans payable - 50,000
Current portion of capital lease payable 3,905 3,080
---------------------------
TOTAL CURRENT LIABILITIES 563,649 529,702
LOANS PAYABLE - 83,333
CAPITAL LEASE PAYABLE - 4,155
LEASEHOLD INDUCEMENT 90,534 24,362
---------------------------
TOTAL LIABILITIES 654,183 641,552
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SHAREHOLDERS' EQUITY
CAPITAL STOCK 8,668,601 6,675,842
WARRANTS 1,367,716 965,850
CONTRIBUTED SURPLUS 960,745 494,662
SHARES TO BE ISSUED 14,035 -
(DEFICIT) (10,340,523) (8,099,046)
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TOTAL SHAREHOLDERS' EQUITY 670,574 37,308
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TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY 1,324,757 678,860
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Consolidated Statements of Operations and Deficit
Year ended Year ended
December 31, December 31,
2008 2007
$ $
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EXPENSES
General and administrative 1,557,730 1,564,805
Sales and marketing 111,321 173,154
Research and development (net) 5,954 94,983
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Loss before other expenses 1,675,005 1,832,942
OTHER EXPENSES
Stock-based compensation 456,551 382,556
Amortization of property and equipment 38,400 23,400
Amortization of intangible assets - 63,755
Write down of property and equipment - 1,631,786
Write down of intangible assets - 1,035,978
(Gain) on forgiveness of debt (35,877) (218,412)
Foreign exchange (gain) (2,592) (33,525)
Loss on asset disposal - 4,980
Interest and accretion on long-term debt 120,890 16,079
Interest on held for trading investments (14,351) (12,755)
Interest expense 3,451 49,359
---------------------------
NET LOSS FOR THE YEAR 2,241,477 4,776,143
DEFICIT, beginning of year 8,099,046 3,301,177
Working capital deficiency assumed
on reverse takeover - 21,726
---------------------------
DEFICIT, end of year 10,340,523 8,099,046
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Weighted average shares outstanding 70,026,117 53,817,614
Loss per share basic and diluted 0.03 0.09
Consolidated Statements of Cash Flows
Year ended Year ended
December 31, December 31,
2008 2007
$ $
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CASH FLOWS FROM OPERATING ACTIVITIES
Net (loss) for the year (2,241,477) (4,776,143)
Changes to income not involving cash:
Amortization 38,400 87,155
Write down of property and equipment - 1,631,786
Write down of intangible assets - 1,035,978
Accretion on long-term debt 86,835 -
Stock-based compensation 456,551 382,556
Leasehold inducement 66,172 (23,023)
Issuance of shares for settlement of interest 1,425 -
(Gain) on forgiveness of debt (35,877) (218,412)
Loss on asset disposal - 4,980
(Gain) on foreign exchange - (36,575)
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(1,627,971) (1,911,698)
Changes in non-cash working capital balances
(Increase) in prepaid expenses and deposits (23,348) (14,871)
(Increase) in amounts receivable (37,499) (16,948)
(Increase) in inventory (300,719) (12,263)
Increase (decrease) in amounts payable
and accrued liabilities 53,929 (222,829)
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Cash flows from operating activities (1,935,608) (2,178,609)
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CASH FLOWS FROM FINANCING ACTIVITIES
Repayment of loans payable (136,663) (190,986)
Shareholders' loan received 310,000 -
Shareholders' loan paid (260,000) (158,992)
Issuance of common shares (net) 2,249,932 2,999,823
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Cash flow from financing activities 2,163,269 2,649,845
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CASH FLOWS FROM INVESTING ACTIVITIES
Additions to property and equipment (200,427) (209,923)
---------------------------
Increase in cash and cash equivalents 27,234 261,313
Cash and cash equivalents, beginning of year 341,192 79,879
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Cash and cash equivalents, end of year 368,426 341,192
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CASH AND CASH EQUIVALENTS CONSIST OF:
Cash 68,426 91,192
Cash equivalents 300,000 250,000
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368,426 341,192
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SUPPLEMENTAL INFORMATION
Interest paid 34,055 65,437
Income taxes paid - -
Broker warrants issued for share issue costs 60,228 202,956
Issuance of shares for settlement
of shareholder loan 50,000 -
Issuance of shares for business acquisition 30,000