Forterra Environmental Reports Second-Quarter 2008 Results



    
    -   Company reports solid progress in second quarter in growing its
        operations
    -   Proven the efficiency and cost-effectiveness of its manufacturing
        process for mass production of worm castings
    -   Negotiating with several potential significant new customers
    

    TORONTO, Aug. 26 /CNW/ - Forterra Environmental Corp. (TSX-V: FTE-V), an
emerging leader in the production and sale of premium organic soil-enrichment
products based on worm castings, today announced its financial results for the
2008 second quarter and first half ended June 30, 2008. Financial results
conform to Canadian generally accepted accounting principles (GAAP) and all
currency amounts are in Canadian dollars.
    "Our 2008 second-quarter and first-half results are those of a developing
company and don't truly illustrate the extent of the progress that Forterra is
making in building our business," said Donald Green, Chairman and Chief
Executive Officer.
    "We now have clearly demonstrated the efficiency and cost-effectiveness
of our manufacturing process for mass producing worm castings and continue to
ramp up our production. We have ongoing negotiations with several potential
very significant new customers in Canada and the United States. We believe
that we now have satisfied the concerns of these potential customers that we
could meet their requirements for large-volume shipments of our
soil-enrichment products," he continued
    "We are pursuing the development of new markets, including green-house
growers, that we expect will lessen or eliminate the seasonality of our
business in Canada, and, of course, will continue to seek additional customers
in the United States.
    "With the additions during the second quarter of Richard Denyes as
president and chief operating officer, Bruce Bent as chief financial officer,
and Stanley Sajnovic as our plant manager, we have strengthened our management
team and believe that we now have the people we need to drive our growth in
sales and toward future profitability. We also were pleased to announce last
week that we have retained agronomist Tom Ferencevic as a consultant to the
company. We expect that he will play an important role in helping us to build
our business," he continued.
    "Subsequent to the end of the second quarter, in July, we completed a
private placement that raised gross proceeds of $2.5 million through the issue
of 16,680,000 units (16,680,000 common shares and 8,340,000 common share
purchase warrants). Our current view is that with these funds and the
increasing cash flow that our sales are generating, Forterra is adequately
funded to support our plans for increasing production, the expansion into new
manufacturing facilities, our R&D programs, and marketing and sales programs,"
he said.

    Financial Highlights

    Sales for the 2008 second quarter were $48,012, compared with $14,832 in
the 2007 period, and up from only $4,196 in the first quarter of this year.
One customer, Shenandoah Growers, accounted for most of the 2008
second-quarter sales ($41,225). Sales for the first six months of 2008 were
$52,208, compared with $17,107 in the first half of 2007.
    Gross margin for the 2008 second quarter and first half was 71.7 percent
and 72.1 percent, respectively.
    After expenses for the 2008 second quarter, including Sales and
marketing, general, and administrative (SG&A) and research and development
($36,367), Forterra recorded an operating loss of $340,484, compared with an
operating loss of $394,677 in the 2007 period (including R&D of $14,408). For
the first half of 2008, the loss amounted to $703,821 (R&D of $51,400),
compared with a loss of $753,123 (R&D of $49,786) in the 2007 period.
    The net loss for the 2008 second quarter, including other expenses,
amounted to $434,794 (loss of $0.007 per basic and $0.005 diluted share),
compared with a loss of $659,627 (a loss of $0.01 per basic and diluted share)
in the 2007 period. For the first six months of 2008, the company recorded a
net loss of $885,979 (loss of $0.014 per basic and $0.010 diluted share),
compared with a net loss in the first half of 2007 of $1,146,969 ($0.02 per
basic and diluted share).

    About Forterra Environmental Corp.

    Forterra manufactures and markets environmentally friendly soil
enhancers, using worm castings, which boost fertility while restoring the soil
with organic matter for sustainable, longer-term benefits, including stronger
root growth, and drought and pest resistance. Forterra products contain only
organic material. They are ideal for golf courses, sports fields, lawn care,
parks, nurseries, orchards, and vineyards. Essentially, Forterra uses red
wriggler worms to convert organic waste into vermicompost or worm castings.
Worm castings contain micronutrients, which are required for healthy plant
development. Worm castings also contain microbes, which increase the rate at
which plants take up available macronutrients and micronutrients. Further
information is available on the company's website at www.forterra.com.

    Forward-Looking Statements

    This news release contains forward-looking statements based on current
expectations. These forward-looking statements entail various risks and
uncertainties that could cause actual results to differ materially from those
reflected in these forward-looking statements. Such statements are based on
current expectations, are subject to a number of uncertainties and risks, and
actual results may differ materially from those contained in such statements.
These uncertainties and risks include, but are not limited to, availability of
resources, competitive pressures, changes in market activity, the ability to
sign contracts with customers, the development of markets for worm castings,
its ability to breed and maintain a sufficiently large worm population, and
regulatory requirements. Risks and uncertainties about Forterra's business are
more fully discussed in the company's disclosure materials, including its
annual information form and MD&A, filed with the securities regulatory
authorities in Canada. Forterra assumes no obligation to update any
forward-looking statement or to update the reasons why actual results could
differ from such statements.

    
    The TSX Venture Exchange Inc. has neither approved nor disapproved of the
    contents of this news release.



    CONSOLIDATED BALANCE SHEETS
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
                                                      30-Jun-08    31-Dec-07
                                                      $            $
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
                                   ASSETS
    CURRENT ASSETS
    Cash and cash equivalents                             4,044      341,192
    Amounts receivable                                   82,087       66,648
    Inventory                                            50,398       12,263
    Prepaid expenses and deposits                        40,486       53,167
                                                    ------------ ------------
    TOTAL CURRENT ASSETS                                177,015      473,270
    PROPERTY AND EQUIPMENT (Note 3)                     248,208      205,589
    INTANGIBLE ASSETS (Note 4)                                1            1
                                                    ------------ ------------
    TOTAL ASSETS                                        425,224      678,860
                                                    ------------ ------------
                                                    ------------ ------------


                                 LIABILITIES
    CURRENT LIABILITIES
    Amounts payable and accrued liabilities
     (Note 8)                                           646,398      476,622
    Related party advances (Note 5)                     319,038            -
    Current portion of loans payable (Note 6)            50,000       50,000
    Current portion of capital lease
     payable (Note 7)                                     3,080        3,080
                                                    ------------ ------------
    TOTAL CURRENT LIABILITIES                         1,018,516      529,702
    LOANS PAYABLE (Note 6)                               58,333       83,333
    CAPITAL LEASE PAYABLE (Note 7)                        2,555        4,155
    LEASEHOLD INDUCEMENT                                 37,388       24,362
                                                    ------------ ------------
    TOTAL LIABILITIES                                 1,116,792      641,552
                                                    ------------ ------------
    CONTINGENCIES (Note 10)

                             SHAREHOLDERS' EQUITY
    CAPITAL STOCK (Note 9)                            6,675,842    6,675,842
    WARRANTS (Note 9)                                   956,318      965,850
    CONTRIBUTED SURPLUS (Note 9)                        661,297      494,662
    (DEFICIT)                                        (8,985,025)  (8,099,046)
                                                    ------------ ------------
    TOTAL SHAREHOLDERS' EQUITY                         (691,568)      37,308
                                                    ------------ ------------

    TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY          425,224      678,860
                                                    ------------ ------------
                                                    ------------ ------------


    APPROVED ON BEHALF OF THE BOARD:

    Signed  "Don Green"                           Signed "John Gamble"
    --------------------                          ---------------------
    Don Green, Director                           John Gamble, Director



    CONSOLIDATED STATEMENTS OF OPERATIONS AND DEFICIT
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
                             3 Months     3 Months     6 Months     6 Months
                                ended        ended        ended        ended
                              June 30,     June 30,     June 30,     June 30,
                                 2008         2007         2008         2007
                            $            $            $            $
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    SALES                      48,012       14,832       52,208       17,107
    COST OF GOODS SOLD         13,599        6,346       14,560        7,210
                          ------------ ------------ ------------ ------------
    GROSS PROFIT               34,413        8,486       37,648        9,897

    EXPENSES
      General and
       administrative         335,525      321,304      652,671      628,684
      Sales and marketing       3,005       67,451       37,358       84,550
      Research and
       development             36,367       14,408       51,440       49,786
                          ------------ ------------ ------------ ------------

    (LOSS) before other
     expenses                (340,484)    (394,677)    (703,821)    (753,123)

    OTHER EXPENSES
      Stock compensation       77,699      117,000      157,105      117,000
      Amortization
       equipment                5,033       83,835       10,068      167,669
      Amortization
       intangibles                  -       21,252            -       42,504
      Interest                 11,578       42,863       14,985       66,673
                          ------------ ------------ ------------ ------------

    NET (LOSS) FOR THE
     PERIOD                  (434,794)    (659,627)    (885,979)  (1,146,969)

    DEFICIT, beginning of
     period                (8,550,231)  (3,788,519)  (8,099,046)  (3,301,177)

    DEFICIT pickup
     resulting from RTO             -      (21,726)           -      (21,726)

                          ------------ ------------ ------------ ------------
    DEFICIT, end of
     period                (8,985,025)  (4,469,872)  (8,985,025)  (4,469,872)
                          ------------ ------------ ------------ ------------
                          ------------ ------------ ------------ ------------



    See accompanying notes to the unaudited interim consolidated financial
statements



    CONSOLIDATED STATEMENTS OF CASH FLOWS
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

                             3 Months     3 Months     6 Months     6 Months
                                ended        ended        ended        ended
                              June 30,     June 30,     June 30,     June 30,
                                 2008         2007         2008         2007
                            $            $            $            $
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    CASH FLOWS FROM
     OPERATING ACTIVITIES
      Net loss for the
       period                (434,794)    (659,627)    (885,979)  (1,146,969)
        Changes to income
         not involving cash
          Amortization          5,032      105,087       10,068      210,173
          Shares issued for
           services                 -            -                         -
          Stock-based
           compensation        77,696      117,000      157,103      117,000
          Leasehold
           inducment            6,513        8,010       13,026       16,020
          Accrued interest
           on debt             15,038      (45,256)      15,038      (28,500)
          Loss (gain) on
           foreign
           exchange                 -            -                         -
                          ------------ ------------ ------------ ------------
                             (330,515)    (474,786)    (690,744)    (832,276)

      Changes in non-cash
       working capital
       balances

        (Increase) decrease
         in prepaid expenses        -                    12,681            -
        (Increase) decrease
         in amounts
         receivable           (47,953)     (20,182)     (15,439)     (21,347)
        (Increase) decrease
         in inventory         (19,574)         357      (38,135)      (2,401)
        Increase (decrease)
         in amounts payable   158,530     (341,808)     169,149     (281,766)
                          ------------ ------------ ------------ ------------
        Cash flows from
         operating
         activities          (239,512)    (836,419)    (562,488)  (1,137,790)
                          ------------ ------------ ------------ ------------

    CASH FLOWS FROM
     FINANCING ACTIVITIES
      Loans payable           (12,500)    (127,501)     (25,000)    (140,001)
      Shareholders' loans
       payable                290,000     (207,517)     310,000     (153,992)
      Issuance of common
       shares                       -    3,675,546                 3,951,546
      Share issue costs             -     (930,671)           -     (930,671)
                          ------------ ------------ ------------ ------------
      Cash flow from
       financing
       activities             277,500    2,409,857      285,000    2,726,882
                          ------------ ------------ ------------ ------------

    CASH FLOWS FROM
     INVESTING ACTIVITIES
      Additions to
       equipment              (11,368)     (54,402)     (59,660)     (81,774)
      Additions to
       intangible assets            -            -                         -
      Deferred public
       offering costs               -            -            -            -
                          ------------ ------------ ------------ ------------

      Cash flows from
       investing
       activities             (11,368)     (54,402)     (59,660)     (81,774)
                          ------------ ------------ ------------ ------------

     (Decrease) increase
      in cash                  26,620    1,519,036     (337,148)   1,507,318

     Cash, Beginning of
      period                  (22,576)      68,161      341,192       79,879
                          ------------ ------------ ------------ ------------

     Cash, End of period        4,044    1,587,197        4,044    1,587,197
                          ------------ ------------ ------------ ------------
                          ------------ ------------ ------------ ------------


    SUPPLEMENTAL INFORMATION
    Interest paid               3,091       65,119        6,498       72,173
    Income taxes paid                            -            -            -



    See accompanying notes to the unaudited interim consolidated financial
statements
    

    %SEDAR: 00013128E




For further information:

For further information: Investor and Media Relations, Richard W.
Wertheim, Wertheim + Company Inc., Email: wertheim@wertheim.ca, (416)
594-1600, (416) 518-8479 (cell)

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FORTERRA ENVIRONMENTAL CORP.

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