Alter NRG reports first quarter 2009 activities and financial results



    
    TSX - NRG
    OTCQX - ANRGF
    

    CALGARY, May 13 /CNW/ - (TSX - NRG; OTCQX - ANRGF) - Alter NRG Corp.,
("Alter NRG" or the "Company") is pleased to report on its corporate
activities and financial results for the three month period ended March 31,
2009. The following are the highlights for the first quarter of 2009 and the
period up to May 11, 2009:

    
    Q1 HIGHLIGHTS

    -   Announced strategic alliance with Air Products for the development of
        renewable energy facilities in North America and Europe. Air Products
        is a recognized global leader in industrial gases and a Fortune 500
        company.

    -   Advanced construction of Project Lighthouse, a commercial
        demonstration facility developed by Coskata Inc. (Coskata) that uses
        the WPC gasification solution to turn biomass into ethanol. Coskata,
        a leading second generation ethanol company, was recently named one
        of the "50 Hottest Companies in Bioenergy".

    -   Advanced discussions in Europe with companies progressing with waste
        and renewable energy projects. The response was very positive and
        resulted in commercial discussions with several different companies.
        This includes two developers entering proposals for waste projects,
        providing a commercial proposal for a waste-to-energy facility in
        Turkey, entering final round technology discussions for a project in
        Spain, as well as other commercial discussions.

    -   Management travelled to China for the first time and received very
        positive interest and is currently advancing commercial discussions
        with strategic partners advancing waste and biomass clean energy
        projects including the signing of a memorandum of understanding. The
        Chinese have current plans to focus on cleaner energy and waste to
        energy solutions for which the Westinghouse brand is well recognized.

    -   Operations underway at the first of two commercial hazardous waste to
        energy facilities in India being operated by SMS Infrastructures, one
        of India's leading engineering companies. The facility is operational
        and is expected to be running at capacity during the third quarter of
        this year.

    -   Increased plasma technology sales and service revenue for the quarter
        to $1.1 million from $0.7 million in the first quarter of 2008, a 57%
        increase. The current sales are primarily for engineering services to
        advance commercial projects with technology equipment sale generally
        ranging from $10 to $50 million upon successful development.

    -   The Company continued to advance 12 projects to the engineering
        stage. Nine opportunities are located in the United States, one in
        Europe and two in Southeast Asia.
    

    For more information on the Company's activities please visit
www.alternrg.com or www.sedar.com to view Alter NRG's 2009 First Quarter
Report.

    PRESIDENT'S MESSAGE

    The development of renewable and alternative energy projects will
continue to move forward despite the current economic challenges as
governments from around the world have committed more than $200 billion toward
technologies that cut the dependence on fossil fuels.
    We are seeing utilities look to not only reduce their emissions but
increase their use of renewables. With the United States, Europe and Asia
having developed more than 250 policies since July 2008 that support
alternative energy, the strongest governments in the world are creating an
ideal landscape for our commercially proven, clean energy solutions. There
will be an end to this current financial down turn and those of us coming out
of the other side will be better and more resilient than before.
    A significant opportunity for Alter NRG is underway at our Waltz Mill, PA
site as Coskata moves forward with their first commercial demonstration scale
cellulosic ethanol plant. The project is projected to initiate operations this
summer. Syngas converted from biomass in our gasifier provides a key component
to Coskata's ethanol conversion process. The success of this project is
expected to create significant visibility and lead the way to numerous
commercial installations across North America.
    We are strategically expanding our efforts in Europe, an area that
considers our technology to be advanced. Europe offers a very favourable
environment as it focuses, through incentives, on the removal of market
barriers, changing behavior, creating a more favorable business environment
for increasing energy efficiency and renewable energy technologies markets.
There are numerous developers active in the United Kingdom, Italy and Spain
with submissions and projects advancing.
    Strategic partnership development progressed with our recent management
trip to China, which had a waste-to-energy (WTE) focus. The Westinghouse brand
is well recognized and has opened the door to some very promising leads which
leaves us optimistic and focused on this fast-moving market.
    Despite providing a more difficult regulatory regime to navigate,
projects also continue to progress in North America with NRG Energy, along
with numerous other developers, advancing both coal retrofit and WTE projects.
    Throughout 2009 we will remain focused on creating revenue from
technology sales and licenses, as well as furthering our strategic
partnerships and international opportunities.

    
    FINANCIAL RESULTS ($)
                                          March 31, 2009       March 31,2008
    -------------------------------------------------------------------------

    Total assets                          $  120,665,217       $  79,719,168
    Total liabilities                         26,738,385          22,902,072
    Total equity                          $   93,926,832       $  56,817,096
    -------------------------------------------------------------------------


                                      Three months ended  Three months ended
                                          March 31, 2009      March 31, 2008
    -------------------------------------------------------------------------

    Revenue, interest and other income    $    1,250,464      $    1,063,849
    Loss                                      (2,945,549)         (1,809,133)
    Loss per share - basic and diluted    $        (0.05)     $        (0.04)
    -------------------------------------------------------------------------
    

    For the complete consolidated financial statements please visit
www.alternrg.com or www.sedar.com to view Alter NRG's 2009 First Quarter
Report.

    MANAGEMENT'S DISCUSSION AND ANALYSIS EXCERPTS

    Corporate overview

    Alter NRG provides and pursues alternative energy solutions through
gasification to meet the growing demand for clean energy in world markets. The
Company's vision is to become a leader in the development of economically
viable and environmentally sustainable gasification projects for the
commercial production of energy. Alter NRG creates revenues by selling plasma
gasification technology and through participation in gasification projects
that fit its strategic growth plan.
    Alter NRG's mission is to participate in financially accretive projects
in the emerging alternative energy market, through technology sales and
project interests, to maximize returns for its investors. Alter NRG endeavors
to be a leader in innovative gasification related technologies applied to
produce profitable and clean alternative energy solutions. The Company invests
in the skills of its people who will provide the creativity, determination and
passion to generate growth in stakeholder value. The Company continues to
strive to be transparent and fair in its activities and work to form positive
relationships with the communities in which it operates and with all of its
stakeholders.
    Given the current unfavourable market conditions, the Company is focusing
its efforts on technology sales and developing a strategic portfolio of
customers that have the capability to advance projects from internally
generated cash flow. The focus will be to increase near term cash inflows by
generating operational revenues and reducing capital expenditures by limiting
the working interest we hold in projects and slowing project timelines.
    The Company owns Westinghouse Plasma Corporation (WPC). WPC has
proprietary technology, which the Company believes is an industry leading
technology and has the following broad advantages:

    
    -   Commercially proven - the technology has been commercially applied
        for six years in facilities in Japan for gasification of waste. The
        plasma torches, which are core to the overall technology, have been
        commercially used for over 20 years.

    -   Environmentally responsible - the technology has the capability to
        reduce emissions significantly as compared to other conventional
        fossil fuel technologies.

    -   Flexible Technology - the technology can handle a wide range of
        feedstocks, including many types of waste (municipal, commercial,
        industrial and hazardous), biomass, and coal and petroleum coke. The
        flexibility to accept a variety of feedstocks gives the technology a
        range of uses and markets to which it can be applied.

    -   Scalable Technology - the technology is ideal for projects with total
        capital between $50 million and $500 million. The technology is
        larger scale than most other plasma gasification technologies and has
        a longer commercial operating history.
    

    The current economic and capital market conditions provide a challenging
environment to navigate. To mitigate the challenges, Alter NRG is focusing on
technology sales to parties that bring the capital, skill and expertise to
develop energy projects. A core part of the corporate strategy is the use of
strategic alliances and partnerships to commercialize the technology into
different geographic regions and markets.

    HIGHLIGHTS

    Technology sales

    Alter NRG repositioned its strategic focus on technology sales to large
waste and energy companies with the ability to advance plasma gasification
projects in this challenging market environment. The Company is initially
focusing on opportunities in North America, the European Union and Southeast
Asia. Discussions have advanced with numerous companies with strong balance
sheets and a focus on renewable energy solutions.
    In the first quarter of 2009, the Company announced the signing of a
Joint Development Agreement with Air Products to pursue renewable energy
opportunities in North America and Europe. Air Products is a leading
industrial gas provider and a Fortune 500 Company with annual revenues of over
$10 billion, operations in more than 40 countries and 21,000 employees. The
non-exclusive agreement allows Air Products to license and incorporate Alter
NRG's proprietary Westinghouse Plasma Gasification technology in renewable
energy projects. Air Products will initially focus on developing energy
facilities using renewable feedstock to generate synthesis gas (syngas) - a
mixture of hydrogen and carbon monoxide - for power, heat or steam generation.
    Alter NRG continued to advance Project Lighthouse, a commercial
demonstration facility developed by Coskata that uses the WPC gasification
solution to turn biomass into ethanol. This breakthrough technology will use
non-food biomass (waste biomass) to create ethanol at a market leading low
cost, which is expected to be under $1.25 per gallon. Coskata, a leading
second generation ethanol company, was recently named number one in the "50
Hottest Companies in Bioenergy".
    NRG Energy, another strategic partner, continues work on multiple
projects using plasma gasification. The Somerset project operated by NRG
Energy will convert coal and biomass into 120 MW of power. This project
received regulatory approval from the Department of Environmental Protection
of Massachusetts on January 25, 2008, but was subject to various regulatory
appeals including a subsequent appeal filed in the first quarter of 2009.
Management understands that NRG Energy anticipates to commence construction
during 2010. The Company also supports NRG Energy's project development
efforts on other WTE projects and coal retrofit opportunities.
    During the quarter, management travelled to Europe and China for
discussions with companies advancing renewable energy projects. The response
was very positive and resulted in commercial discussions with several
different companies. This includes two developers entering proposals for a
waste project, providing a commercial proposal for a WTE facility in Turkey,
entering final round technology discussions for a project in Spain and signing
an initial MOU with a company in China. Further details will be available when
binding contracts are executed.
    The Company continued to advance 12 projects to the engineering stage.
Nine opportunities are located in the United States, one in Europe and two in
Southeast Asia. An average plasma gasification equipment sale would result in
approximately $10 to $50 million of revenues upon successful development.

    Customer projects under construction

    Continuing projects that align with Alter NRG's strategic focus include
the following:

    Project Lighthouse is a 40,000 gallon per year ethanol commercial
demonstration project developed by Coskata. Coskata expects to complete the
project, located at the Alter NRG pilot facility in Madison, Pennsylvania, on
schedule in the summer of 2009. The existing plasma gasifier provides the
syngas that will then be converted to ethanol through the Coskata's
proprietary conversion process. The Company expects this ethanol commercial
demonstration project to result in $2.5 million in total revenues in 2009 and
2010. Further, the Company expects a successful demonstration will attract key
customers with a focus on renewable energy to the Alter NRG pilot facility in
2009.

    SMS Infrastructure Limited (SMSIL) consists of two hazardous WTE
facilities under construction in India. The first facility in Pune has
undergone initial commissioning and is resolving several integration
challenges. The first facility is anticipated to be operational in the second
quarter of 2009 and the second facility in 2010. Both facilities will use
Alter NRG plasma gasification technology to convert approximately 68 tonnes
per day of hazardous waste into power. The facilities are owned and operated
by SMSIL, Central India's largest civil engineering and infrastructure
development company. These facilities will increase the number of commercial
facilities processing waste, using Alter NRG's technology, from two to four
and provide commercial experience for smaller scale industrial waste solutions
that can be replicated.

    Alter NRG project development

    As a means to reduce Alter NRG's capital requirements the Company has
adopted a staged approach for internally led projects under development as
described below:

    Fox Creek, Alberta is a coal-to-liquids project expected to produce up to
40,000 barrels per day of diesel fuel and naphtha from Alter NRG's existing
coal reserves. Alter NRG is reducing project development expenditures to less
than $0.8 million in 2009 on work defining the project scope. The delayed
timeline will postpone completion of the development until late 2015, subject
to successful partner selection by the end of 2009.

    
    Plasma technology sales and services

                                      Three months ended  Three months ended
                                          March 31, 2009      March 31, 2008
    -------------------------------------------------------------------------
    Sales revenue
      Engineering and testing services    $    1,043,518      $      604,332
      Parts and other sales                       70,624             107,255
    -------------------------------------------------------------------------
                                               1,114,142             711,587
    -------------------------------------------------------------------------
    Direct cost of sales
      Engineering and testing services           400,961             366,724
      Parts and other sales                       62,414              78,174
    -------------------------------------------------------------------------
                                                 463,375             444,898
    -------------------------------------------------------------------------
    Gross margin                          $      650,767      $      266,689
    -------------------------------------------------------------------------
    

    Plasma technology sales and service revenues are from engineering
services provided for reactor design and process engineering, replacement
parts for existing gasification customers and plasma gasification testing
services provided at the Company's testing centre pilot facility located in
the United States (US).
    Direct costs of sales relate to direct materials and expenditures for
products and services and reflect standard rates. Margins in 2009 are higher
than 2008 due to the reduced amount of direct labour spent on engineering
products and as a result of the favourable US dollar foreign exchange rate.
    Sales increased by 57% in the first quarter of 2009 compared to the first
quarter of 2008 as the Company has added new customers and customer projects
continue to advance.
    Alter NRG's key revenue stream going forward is expected to be from
equipment sales in the form of either a plasma torch sale or the sale of a
plasma gasification island. Plasma torches are one component of the plasma
gasification island. The sale of the plasma torches used in a small scale
gasification facility generates approximately $1.5 to $3.0 million in revenue.
The Company plans to sell a full scope gasification solution - the plasma
gasification island - to third party project developers. The sale of a single
plasma gasification island would generate revenues from $10 to $50 million.
The Company has spent much of its efforts to date expanding the product
offering and completing the engineering studies and product design
enhancements required to construct the plasma gasification island.
    These sales have a long lead-time as engineering services are required in
the preliminary planning phase and equipment is ordered after a project has
received regulatory approval and project financing. The Company works with
project developers worldwide in the early stages of planning and developing
plasma gasification projects.
    Since the Company purchased WPC, its US subsidiary, the Company has
tripled its number of customers. Key customers advancing commercial projects
include SMSIL, Coskata, NRG Energy and Air Products. These companies have
indicated they expect to order equipment in 2009 or 2010 to support their
development activities. Alter NRG also has 12 engineering sales for customer
projects in various stages of development.

    
    Interest and other income
    -------------------------------------------------------------------------
                                      Three months ended  Three months ended
                                          March 31, 2009      March 31, 2008
    -------------------------------------------------------------------------
    Interest income                       $      135,916      $      277,801
    Other income                                     406              74,461
    -------------------------------------------------------------------------
    Total interest and other income       $      136,322      $      352,262
    -------------------------------------------------------------------------
    

    Interest income relates to funds invested in short-term, interest-bearing
investments with a Canadian chartered bank. Interest income decreased by 51%
for the quarter ended March 31, 2009 versus the quarter ending March 31, 2008.
The decrease reflects the average interest earned on investments of
approximately 1% for the current quarter versus the average of 4% earned on
investments in the first quarter of 2008. Higher levels of investments on hand
in the current quarter offset the decrease in interest rates.

    
    General and administrative expenses

                                      Three months ended  Three months ended
                                          March 31, 2009      March 31, 2008
    -------------------------------------------------------------------------
    Employee costs, net of recoveries     $    1,338,856      $      904,599

    Professional and consulting fees             549,420             453,241

    Office costs                                 521,736             262,615

    Public reporting costs                       178,003              34,064

    Travel costs                                 175,866             129,857

    Other costs                                  161,228             124,517

    Business development costs                    92,674              46,672

    Board of directors fees                       20,000                   -

    Foreign exchange                            (159,107)             (1,982)
    -------------------------------------------------------------------------
    General and administrative expenses   $    2,878,676      $    1,953,583
    -------------------------------------------------------------------------
    

    Employee costs increased due to the increased number of staff required to
enact the Company's corporate growth strategy. At March 31, 2009, the team
included 44 full time employees - 27 in the Calgary office and 17 in the US -
compared to 29 employees at March 31, 2008. The Company expects to keep its
staff count relatively consistent for 2009 at this time.
    Professional and consulting fees consist primarily of external recruiting
fees and consulting and legal fees for business development. A majority of
these fees are paid in US dollars, resulting in an increase in costs for the
first quarter of 2009 due to the strengthened US dollar compared with the same
quarter in 2008.
    Office costs reflect the additional space acquired in the second quarter
of 2008 to accommodate expected growth.
    Public reporting costs reflect increased filing and registration fees
incurred for the Company's move from the TSX-V to the TSX and listing on the
OTCQX to allow potential US investors access to Alter NRG's capital market.
    Business development costs reflect the Company's business development
efforts, including costs of acquiring and developing strategic partnerships
for project development efforts. Travel costs increased in the current year
mainly due to an increased focus on business development and networking with
potential customers.
    Other costs include IT-related costs, advertising, promotion and banking
charges and are consistent with the increase in personnel.
    The large increase in the foreign exchange recovery reflects the effect
of the drop of the Canadian dollar versus the US dollar over the period
attributed to US dollar amounts loaned to the US subsidiary.
    Total general and administrative costs for 2009 are expected to be
approximately $12 million, which reflects projected staffing at current levels
for a full year and associated costs to support the current activity levels.
The Company has taken measures to reduce general and administrative costs
which were offset by an approximate 25% increase in the US/Canadian exchange
rate. Should prolonged negative market conditions persist or customer activity
decline in a significant way, general and administrative costs will be
evaluated and reduced.

    
    Depreciation and amortization

                                      Three months ended  Three months ended
                                          March 31, 2009      March 31, 2008
    -------------------------------------------------------------------------
    Depreciation                          $       85,590      $       31,843

    Amortization                                 456,021             367,732
    -------------------------------------------------------------------------
    Total depreciation and amortization   $      541,611      $      399,575
    -------------------------------------------------------------------------
    

    The increase in depreciation for the quarter ended March 31, 2009
reflects three months of depreciation on the US facility upgrade. This was
completed at the end of the first quarter of 2008 and therefore no
depreciation was recognized in the first quarter of 2008.
    Amortization relates to the intangible assets acquired on the purchase of
the US subsidiary on April 17, 2007.

    
    Loss
                                      Three months ended  Three months ended
                                          March 31, 2009      March 31, 2008
    -------------------------------------------------------------------------
    Loss                                  $   (2,945,549)     $   (1,809,133)
    -------------------------------------------------------------------------
    

    The increased loss for the quarter ended March 31, 2009 related primarily
to increases in depreciation and amortization, general and administrative
costs and stock based compensation, plus a decrease in interest and other
income. Profitability is a function of sales timing, type and margin as
described in the "Plasma Technology Sales and Services" section and can be
affected by various operating issues.

    Credit facility

    The Company's US subsidiary has a line of credit agreement with a major
bank in the US for $500,000 USD (March 31, 2008 - $700,000 USD). The line of
credit is due on demand and secured by the subsidiary's assets. The credit
facility bears interest at a rate that is equal to the US prime rate. No
amounts have been drawn on the credit facility as at March 31, 2009.

    Liquidity and capital resources

    The Company's working capital balance was approximately $45.8 million at
March 31, 2009, a decrease of $3.6 million from the year ended December 31,
2008 ($49.4 million). Working capital provides funds for the Company to meet
its operational and capital requirements. These funds will allow Alter NRG to
focus on increasing its operational cash flows through sales revenues and
prevail through the current economic downturn without relying on raising
additional debt or equity financing in a volatile market.

    
    Cash flow used in operations

                                      Three months ended  Three months ended
                                          March 31, 2009      March 31, 2008
    -------------------------------------------------------------------------
    Cash used in operations               $    3,240,764      $    1,196,284
    -------------------------------------------------------------------------
    

    The increase in cash used in operations reflects the increase in staff,
related office operating expenses, costs for public reporting and business
development activities. These costs are offset by increased sales revenue and
foreign exchange gains.
    Cash flow used in operations is expected to decrease as Alter NRG secures
equipment sales contracts and license revenue. The timing of these cash flows
is a function of sales timing, type and margin and can be affected by various
operating issues.

    
    Capital expenditures
                                      Three months ended  Three months ended
                                          March 31, 2009      March 31, 2008
    -------------------------------------------------------------------------
    Deferred costs                        $            -      $      671,449
    Resource properties                           60,346             367,192
    Property, plant and equipment                701,917             625,195
    Internally generated intangible
     assets                                      646,176             304,764
    -------------------------------------------------------------------------
    Total capital expenditures            $    1,408,439      $    1,968,600
    -------------------------------------------------------------------------
    

    Internally generated intangible assets consist of internal project
development work on the Company's plasma gasification island. These costs are
not currently amortized, as the related projects have not reached commercial
operation. These costs will be amortized when a project begins commercial
construction, which management expects to be in 2009.
    Resource property expenditures in the period ended March 31, 2008 include
costs incurred for the Fox Creek core hole program. Resource property costs
for the three month period ended March 31, 2009 are lower than the prior
period ended 2008 as Fox Creek activity has been reduced to conserve cash and
focus on technology sales. Property, plant and equipment costs relate
primarily to the facility upgrades for the Coskata Lighthouse project ($0.7
million).
    Alter NRG expects to continue to advance its overall product offering
during 2009 and expects to incur costs in 2009 on the Fox Creek resource of
approximately $0.7 million (reduced from $1.5 million at year end). The actual
expenditures that will be incurred in 2009 may significantly vary from this
estimate as the Company regularly reviews its spending in light of current
market conditions, opportunities and the estimated timing and cost of
development projects. In addition, new projects may arise during the year that
will require capital expenditures.

    Equity

    As at March 31, 2009 and May 11, 2009, the Company had 56,185,551 common
shares and 5,106,434 options outstanding.
    At March 31, 2009 the Company had 5,106,434 stock options outstanding, of
which 362,500 were granted at a weighted average exercise price of $0.91, in
the three month period ended March 31, 2009.
    The authorized share capital of the Company consists of an unlimited
number of common shares.
    For the complete management's discussion and analysis please visit
www.alternrg.com or www.sedar.com to view Alter NRG's 2009 First Quarter
Report.

    
    The TSX Exchange does not accept responsibility for the adequacy or
    accuracy of this release.
    

    Advisory Respecting Forward-Looking Statements:

    This news release contains certain forward-looking information and
statements within the meaning of applicable securities laws. The use of any of
the words "expect", "anticipate", "continue", "estimate", "objective",
"ongoing", "may", "will", "project", "should", "believe", "plans", "intends",
"confident", "might" and similar expressions are intended to identify
forward-looking information or statements. In particular, but without limiting
the foregoing, this news release contains forward-looking information and
statements pertaining to the following: currency exchange rate fluctuations;
environmental risks; unanticipated reclamation expenses; ability to finance;
risk of obtaining regulatory approvals; ability to find joint venture
partners; engineering and design risk; fluctuation in commodity prices and
other expectations, beliefs, plans, goals, objectives, assumptions,
information and statements about possible future events, conditions, results
of operations or performance. Various assumptions were used in drawing the
conclusions or making the projections contained in the forward-looking
statements throughout this news release.
    The forward-looking information and statements included in this news
release are not guarantees of future performance and should not be unduly
relied upon. Forward-looking statements are based on current expectations,
estimates and projections that involve a number of risks and uncertainties
including but not limited to:, unexpected events during construction, and
start-up; variations in feedstock grade,; delay or failure to receive board or
government approvals; timing and availability of external financing on
acceptable terms; conclusions of economic evaluations; changes in project
parameters as plans continue to be refined; future prices of commodities;
failure of plant, equipment or processes to operate as anticipated; delays in
the completion of development or construction activities, as well as those
factors discussed in or referred to under the heading "Risk Factors" in the
Company's Annual Information Form dated July 8, 2008 available at
www.sedar.com which could cause actual results to differ materially from those
anticipated and described in the forward-looking statements. Such information
and statements involve known and unknown risks, uncertainties and other
factors that may cause actual results or events to differ materially from
those anticipated in such forward-looking information or statements.
    The Company cautions that the foregoing list of assumptions, risks and
uncertainties is not exhaustive. The forward-looking information and
statements contained in this news release speak only as of the date of this
news release, and the Company assumes no obligation to publicly update or
revise them to reflect new events or circumstances, except as may be required
pursuant to applicable securities laws.





For further information:

For further information: Mark Montemurro, President and Chief Executive
Officer, (403) 806-3877, mmontemurro@alternrg.ca; Daniel Hay, Chief Financial
Officer, (403) 806-3881, dhay@alternrg.ca

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Alter NRG Corp.

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