Viridis Energy Inc.

August 30, 2011 09:31 ET

Viridis Energy Inc. Reports Second Quarter 2011 Financial Results

Viridis achieves 135 percent year-over-year second quarter revenue increase

VANCOUVER, BRITISH COLUMBIA--(Marketwire - Aug. 30, 2011) - Viridis Energy Inc. ("Viridis" or the "Company") (TSX VENTURE:VRD) (OTCQX:VRDSF), a "Cleantech" manufacturer and distributor of alternative energy providing biomass fuel to global residential and industrial markets, today reported financial results for its second quarter ended June 30, 2011. During the quarter the Company strengthened its management team and board of directors and launched its international strategy, entering into two significant multi-year, off-take agreements to supply pellets into Asia and Europe. Subsequent to the end of the second quarter, Viridis secured financing totaling $7 million and entered into a strategic alliance with India-based Abellon CleanEnergy ("Abellon").

Viridis generated revenue for the second quarter 2011 of $2.9 million, a 135 percent increase over the second quarter 2010 revenue of $1.2 million, during which the Company completed its acquisition of the Okanagan Pellet Company Inc, and a 8 percent increase over the first quarter 2011 revenue of $2.7 million. The increase in revenues during the second quarter 2011 reflects its shipments into Europe. Viridis anticipates sequential revenue growth acceleration during 2011 as it experiences increased shipment into Europe and as it begins to execute on its procurement and supply agreement with Abellon.

The Company reported a comprehensive loss of $990,000 or $(0.03) per basic share for the second quarter of 2011. This compares to comprehensive income of $1.9 million or $0.13 per basic share for second quarter of 2010, which included a gain on the acquisition of business operations of $2.8 million as a result of the discount purchase of Okanagan Pellet Company. This compares to a comprehensive net loss of $1.2 million or $(0.04) for the prior first quarter 2011. Viridis reported a loss from operations of $813,000 during second quarter 2011 versus a loss of $794,000 during the prior year and a loss of $573,000 for the sequential prior first quarter 2011. The Company expects to achieve profitability during 2011, its first full year of operations with the acquired wood pellet companies, as its revenues continue to increase and its expenses as a percentage of revenues continue to fall.

For the three months ended June 30, 2011, Viridis' gross profit on revenue totaled $365,000, yielding a gross margin of 13 percent. This gross margin level takes into account freight costs which totaled $432,000 during the quarter. During the third quarter of 2011 Viridis expects gross margin to increase to 15-18% as the higher margin domestic home heating season begins.

Operating expenses during second quarter 2011 totaled $1.2 million, an increase of approximately $249,000 from the prior year's second quarter and an increase of $90,000 from the sequential first quarter 2011. The quarter-over-quarter increase in expenses is attributed to an increase in employee costs due to the acquisition of Okanagan Pellet Company during second quarter 2010, offset by a continued reduction in selling and marketing expenses. While Viridis could experience some increase in operating expenses going forward as its business grows, the Company believes it will be able to leverage its general and administrative expenses to deliver increased operating margins as its revenues rise.

Interest expense (inclusive of bank charges) for the second quarter was approximately $119,000, which compares to interest expense of approximately $89,000 during second quarter 2010 and interest expense of $110,000 during the first quarter 2011.

For the six months ended June 30, 2011, Viridis reported revenues of $5.5 million, a 303 percent increase compared to the same period in 2010. Net comprehensive loss totaled $(2.5) million or $ (0.08) per basic share, compared to a net comprehensive income of $1.4 million or $0.10 per basic share for the same period in 2010, which included the $2.8 million gain on acquisition of business operations. The Company's year over year operating loss for the six month period increased $575,000 predominately due to the increased workforce given the two acquisitions during the first half of 2010, as well as an increase in material costs.

At June 30, 2011, the Company had accounts receivable of approximately $800,000, representing a DSO of 25 days, inventory of $2.3 million and total assets of $15.6 million. At the end of the second quarter 2011, Viridis total debt stood at $6.3 million of which $38,000 was long term debt. Subsequent to the second quarter and concurrent with the Company's recent financings during July and August of 2011, Viridis has reduced its debt by approximately $1.1 million. Viridis closed on 2 separate funding sources during the current third quarter which totaled $7 million. The first private placement for approximately $3.1 million resulted in the issuance of approximately 12.3 million units. Each unit was issued at $0.25 and consisted of one share of common stock and one half of a non-transferable share purchase warrant exercisable at $0.40 per share. The second private placement was a secured 6% per annum convertible note to an institutional investor totaling approximately $3.9 million, which received TSX Venture Exchange approval on August 25, 2011. 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.

On June 30, 2011, shareholder equity totaled $5.6 million. The weighted average number of common shares at June 30, 2011 totaled 30.3 million shares, consistent with first quarter 2011 and an increase of 16.2 million shares over the prior year's second quarter due largely to a private placement totaling 9.1 million shares during second quarter 2010 and the acquisition of Cypress Pacific Marketing, which added 5.6 million shares, and the completion of $6.0 million in private placements of the Company's common shares during the year. As of June 30, 2011, Viridis had approximately 44.3 million fully diluted shares, which if all options and warrants exercised would generate an additional $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. We are experiencing a considerable demand for our products, particularly overseas. Now, with a streamlined management team, strengthened balance sheet, and strong, growing global product demand, we are focused on maintaining operational efficiencies, while planning to achieve capacity levels that will support our growing customer base, worldwide," commented Christopher Robertson, Viridis' chief executive officer. "As demand for clean, inexpensive alternative fuel continues to be at the forefront of global public policy, we are receiving bids for long term contracts well beyond our current capacity. Our strategic production expansion will, therefore, go hand in hand with future long term contracts commitments."

The Company also reported that on August 23, 2011 the Viridis Board of Directors accepted the resignation of fellow board member Isaac Moss. Mr. Moss and the Company had no disagreements. The resignation was Mr. Moss' personal decision to create opportunity for industry experts to join the Board. John Campbell, Chairman of Viridis Board of Directors commented, "We thank Isaac for being an important contributor to our company and Board during this pivotal period of our company's first year as a public entity. We wish him continued success in the future."

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

Forward-looking Statements

Certain statements in this release are forward-looking statements, which reflect the expectations of management regarding the Company's future operations. Forward-looking statements consist of statements that are not purely historical, including any statements regarding beliefs, plans, expectations or intentions regarding the future. 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) 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 intends to update such forward looking information in the Company's MD&A in the event that actual results differ materially from such forward-looking statements contained herein. 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.

                                                     June 30,   December 31,
                                                        2011           2010
ASSETS                                            (Unaudited)
Current Assets:
 Cash and cash equivalents                   $             - $            -
 Accounts receivable                                 800,285        836,090
 Inventory                                         2,257,873      2,404,622
 Other receivable                                    140,523        171,299
 Prepaid expenses                                    155,065        142,531
 Due from related parties                             74,488         58,448
 Total Current Assets                              3,428,234      3,612,990
 Property, plant and equipment                     6,373,768      6,683,983
 Intangible assets                                 3,482,000      3,482,000
 Goodwill                                          2,355,411      2,355,411
 Total Assets                                $    15,639,413 $   16,134,384
Current Liabilities:
 Bank overdraft                                    2,815,294      2,601,464
 Accounts payable and accrued liabilities          2,181,101      1,675,752
 Short term loan payable                           2,242,822         10,700
 Due to related parties                              839,796        707,771
 Current portion of loans payable                  1,040,200      2,542,424
 Total Current Liabilities                         9,119,213      7,538,111
Long-term Liabilities:
 Loan payables                                        37,725        556,355
 Future tax liability                                870,500        870,500
 Total Liabilities                                10,027,438      8,964,966
Stockholders' Equity (deficit)
 Share capital                                    16,668,309     16,233,172
 Contributed surplus                               1,942,020      1,727,713
 Deficit                                         (12,998,354)   (10,791,467)
 Total Stockholders' Equity                        5,611,975      7,169,418
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY   $    15,639,413 $   16,134,384


                                Three Months Ended         Six Months Ended 
                                           June 30,                 June 30,
                                2011          2010         2011        2010

Sales                    $ 2,870,052   $ 1,220,940  $ 5,539,659 $ 1,374,201
Cost of Sales              2,504,557     1,085,181    5,152,729   1,250,083
Gross profit                 365,495       135,759      386,930     124,118
Operating expenses:
 Selling and marketing        52,048        67,199      137,654      78,566
 General and 
  administrative           1,126,848       862,972    2,130,115   1,350,987
 Total operating expenses  1,178,896       930,171    2,267,769   1,429,553
 Loss before other items    (813,401)     (794,412)  (1,880,839) (1,305,435)
 Other items:
  Foreign exchange loss        4,355        (2,349)     (27,500)     (2,349)
  Disposal of plant, property
   and equipment             (29,028)            -      (29,028)          -
  Gain on acquisition of
   business operations             -     2,774,394            -   2,774,394
  Interest and bank charges  (12,879)      (88,656)     (17,270)    (94,142)
  Imputed interest on
   convertible note          (33,041)            -      (40,751)          -
  Interest expense          (105,791)            -     (211,499)          -
                            (176,384)    2,685,099     (326,048)  2,677,903
 Comprehensive income
  (loss)                 $  (989,785) $  1,890,687 $ (2,206,887) $1,372,468
 Net income (loss) 
  per share
  basic and diluted      $     (0.03) $       0.13 $      (0.07) $     0.10
 Shares outstanding
  basic and diluted       30,279,398    14,110,105    30,279,398 14,110,105

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.

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