Canadian Biomass Magazine

Viridis Energy reports loss in Q1 2012

June 4, 2012
By Marketwire

June 4, 2012, Vancouver, BC - Viridis Energy Inc., a "Cleantech" manufacturer and distributor of alternative energy providing waste biomass fuel to global residential and industrial markets, has reported financial results for its first quarter ended March 31, 2012.

June 4, 2012, Vancouver, BC – Viridis Energy Inc. ("Viridis" or the "Company"), a "Cleantech" manufacturer and distributor of
alternative energy providing waste biomass fuel to global residential
and industrial markets, reported financial results for its
first quarter ended March 31, 2012. During the quarter, Viridis
increased its production capacity by over 150 percent through its
acquisition of the largest wood pellet manufacturing plant in
Atlantic Canada. On February 6, 2012, Viridis acquired the assets of
Enligna Canada, a 110,000 ton capacity plant in Nova Scotia, and
renamed this facility Scotia Atlantic Biomass Company Limited
("Scotia Atlantic"). Viridis expects to resume production during the
second quarter of this year. To accomplish the acquisition in light
of the short time to closing, the Company, through its Subsidiary,
obtained a $2.4 million short-term bridge loan.

During the first quarter of 2012, Viridis generated revenue of $2.4
million. Sales of the home heating business in North America were
slow due to the abnormally warm winter. In comparison, Viridis
generated revenue of $2.7 million during the same period of 2011, and
$3.5 million during the fourth quarter of 2011. The domestic home
heating business, which is generally higher margin business,
represented 26% of total revenue, down from 52% during the same
period last year. Also impacting the year-to-year comparison is a
shift in contract arrangements with certain customers in which the
cost of freight, usually borne by the Company and recovered in the
sales price, was paid directly by the customer, distorting the
year-to-year sales comparison. As the Company further diversifies its
revenue base with commercial energy generators and other industrial
users, it expects to continue to see a reduction in the seasonal
revenue fluctuations. The Company also anticipates sequential revenue
growth acceleration as its recently acquired manufacturing capacity
in Nova Scotia begins production in preparation for the fall/winter

The Company reported a comprehensive net loss of $(1.2) million or
$(0.03) per basic share for the first quarter 2012 compared to a
comprehensive net loss of $(714,000) or $(0.02) per basic share for
the comparable 2011 period and a comprehensive net loss of $(989,000)
or $(0.03) per basic share for the prior fourth quarter 2011. The
increased loss during the current first quarter reflects financing
costs and other start-up costs associated with Scotia Atlantic,
offset by 24 percent decrease in operating expenses.

The Company's gross profit during first quarter 2012 of $151,000 or
6.2 percent of total revenue, compared to $113,000 or 3.2 percent
during the fourth quarter of 2011. The increase in gross margin from
the prior quarter reflects the shift in contract arrangements with
certain customers to a Freight on Board (FOB) mill price. The
Company's gross profit during the first quarter of 2011 was $613,000
or 23 percent of revenue. The Company is working on securing long
term fibre source contracts that will ensure a sufficient supply and
stabilize pricing. The current quarter was also adversely impacted by
the inclusion of costs associated with the production staff of
recently acquired Scotia Atlantic, which is scheduled to begin
production late in the second quarter 2012.

Operating expenses during first quarter 2012 totaled $969,000, a
decrease of approximately $217,000 or 24 percent from the prior
year's first quarter and a decrease of $35,000 or 3 percent from the
fourth quarter of 2011. Viridis management has been closely managing
its operational costs and succeeded in reducing aggregate
compensation costs and associated employee benefits, in addition to
achieving lower freight costs through bulk shipping, a more efficient
on-site bagging at the destination. Viridis expects to achieve
further costs efficiencies as it achieves economies of scale with its
increased production capacity to accommodate growing industrial
demand, especially overseas.

Interest expense (inclusive of bank charges) for the first quarter
was approximately $337,000, which compares to interest expense of
approximately $118,000 during first quarter 2011 and interest expense
of $238,000 during the prior fourth quarter 2011. The increase in
interest expense in the current quarter was primarily due to the
bridge loan needed to complete the acquisition of Scotia Atlantic
Biomass assets.

At March 31, 2012, the Company had accounts receivable of
approximately $966,000, representing a DSO of 36 days, well within
manageable levels, inventory of $729,000 and total assets of $17.4
million, an increase of approximately $2.0 million from the beginning
of the quarter. The increase in assets is primarily due the inclusion
of acquired assets of Scotia Atlantic. At the end of the first
quarter 2012, Viridis had current liabilities of $8.2 million, an
increase of $3.1 million from year-end 2011 primarily reflecting the
bridge loan of $2.4 million required to complete the acquisition of
Scotia Atlantic. Long term debt was unchanged at $3.8 million and
shareholder equity ended the quarter at $5.3 million, a decrease of
approximately $1.2 million from year-end 2011.

The number of common shares at March 31, 2012 and March 31, 2011 were
41.3 million and 30.3 million, respectively. The year-over-year
increase in the shares outstanding was due to the private placements
conducted by the Company during the second and third quarters of
2011. As of March 31, 2011, Viridis had approximately 17.8 million
warrants, of which 5.5 million expired on May 20, 2012, and 1.1
million options. The exercise of all warrants and options outstanding
as of the date of this announcement would generate approximately $7.2
million of additional capital to the Company.

"We have been working on many fronts to position Viridis' role in
the growing alternative energy industry. As commercial demands
mounts, especially overseas, industrial users will seek long term
off-take commitments to ensure sufficient supply of wood pellets.
While this development improves long-term planning, it also requires
initiative to elevate production capacity and secure raw material
sources to participate in the growth," commented Christopher
Robertson, Viridis' chief executive officer. "Excluding acquisition
costs, we have already begun investment in restoring Scotia Atlantic
Biomass to operating condition. We have also begun staffing the
facility, which we expect will initially have a team of 24. We are on
schedule to start operations late in the second quarter and plan to
be in full scale production by year-end."

Mr. Robertson added, "Viridis' position in the industry has afforded
it access to wood pellet demand, worldwide. As we develop our
production capacity to effectively address the demand for a renewable
energy source, we recognize an immediate opportunity to augment our
revenue through wholesale dealing. This activity serves to solidify
our position as a 'go to' source for wood pellets, further develops
our relationships with existing and new customers, and, importantly,
augments our P&L with high margin revenue. We look forward to
nurturing this business as we work to expand our production capacity
in strategic locations, worldwide."

About Viridis Energy Inc.

Viridis Energy Inc.

is a publicly traded,
"Cleantech" alternative energy company specializing in wood biomass.
Headquartered in Vancouver, B.C., Viridis Energy operates Cypress
Pacific Marketing, Okanagan Pellet Company and Scotia Atlantic
Biomass, 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

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