Lignol Reports Fiscal 2008 Financial Results



    VANCOUVER, Aug. 28 /CNW/ - Lignol Energy Corporation (TSX-V: LEC)
("Lignol" or "the Company"), a leading technology company in the cellulosic
ethanol and biorefining sector, today announced its financial results for the
twelve-month period ended April 30, 2008 ("fiscal 2008").

    
    Fiscal 2008 Highlights:

    -   Selected by the U.S. Department of Energy ("DOE") for an award of up
        to US$30 million to build a commercial demonstration cellulosic
        ethanol and biorefinery plant in Colorado, under the DOE's cellulosic
        ethanol and biofuels funding program;
    -   Opened new head office and Biorefining Technology Development Centre;
    -   Established U.S. operations, including Specialty Chemicals business
        unit, in Pennsylvania following the recruitment of a number of key
        scientific and engineering professionals;
    -   Signed Memorandum of Understanding with Huntsman International LLC,
        to develop commercial applications utilizing Lignol's proprietary
        High-Purity Lignin HP-L(TM) ("HP-L(TM)");
    -   Awarded approximately $3.0 million in further funding from
        Sustainable Development Technology Canada ("SDTC");
    -   Awarded $4.8 million from the Alberta Government to support ongoing
        development and commercialization of process technology;
    -   Closed private placement resulting in gross proceeds to the Company
        of $14.4 million.

    Additional Subsequent Event Highlights:

    -   Commenced construction of industrial-scale biorefinery pilot plant;
    -   Strengthened senior management team;
    -   Awarded $1.96 million from British Columbia's Innovative Clean Energy
        Fund;
    -   Named "Early Stage Company of the Year - Industrial and
        Agricultural" at BIOTECanada Gold Leaf Awards;
    -   Received "Most Promising Pre-Commercial Technology" award from the
        British Columbia Technology Industry Association;
    -   Presented "Emerging Life Sciences Company of the Year" award from
        LifeSciences British Columbia;
    -   Appointment of Stephen H. White, President and Chief Executive
        Officer of Fort Chicago Energy Partners, to Lignol Board of
        Directors.
    

    "We have made great progress in building the necessary infrastructure,
internal expertise and business relationships to support the continued
advancement of our technology commercialization plan. We have been successful
in accessing capital to fund our growth, both through the public markets and
government funding programs. The announcement earlier this year that Lignol
was selected by the U.S. DOE for an award of up to US$30 million to build a
commercial demonstration cellulosic ethanol and biorefinery plant was a major
milestone for our company. We continue to work through the formal negotiations
of the funding award with the DOE and related party agreements with a view to
commencing this project in earnest in the coming months," said Ross
MacLachlan, President and Chief Executive Officer of Lignol.
    "During 2007, we established our U.S. operations base including our
U.S.-based Specialty Chemicals business unit. The talented individuals
recruited to lead this division bring with them a wealth of expertise that
will help us to optimize the development of large-market applications for
biochemical co-products, including our proprietary HP-L(TM)."
    "Soon to be complete in September 2008, our new state-of-the-art facility
will showcase our new industrial-scale biorefinery pilot plant and advanced
scientific capabilities. Once complete, it will be one of only a few fully
integrated cellulosic ethanol biorefinery facilities operating in the world,"
continued Mr. MacLachlan. "We believe our biorefining process technology
represents a viable solution to help meet government mandated renewable fuel
standards, using non-food plant biomass feedstock to produce ethanol. Further,
with the unique biochemical co-products we produce through our conversion
process, we have a compelling opportunity to generate significant co-product
revenues and drive improved plant operating margins."
    "Looking ahead, we will remain focused on: completing our
industrial-scale biorefinery pilot plant on time and on budget; advancing the
development of our commercial demonstration plant in Colorado, with support
from our industry partners; and pursuing additional commercial development
opportunities for our HP-L(TM) and other biochemicals."

    Financial Results

    Pursuant to the reverse takeover completed in January 2007, the Company's
fiscal year end changed from November 30 to April 30. As a result, there is a
transitional fiscal reporting period for the period ended April 30, 2007 which
covers only a five-month period from December 1, 2006 through April 30, 2007
("fiscal 2007"). Accordingly, it is important to consider this difference in
reporting period length when making comparisons between fiscal 2007 and fiscal
2008.
    Research and Development expenses in the consolidated statement of income
for the twelve-month period ended April 30, 2008 were $3.54 million compared
to $0.62 million for the five-month period ended April 30, 2007. When amounts
which are capitalized on the consolidated balance sheet and amortized over
their estimated useful lives (such as the costs for plant and equipment under
development and research laboratory equipment) are added to Research and
Development expenses, total Research and Development costs were $6.42 million
for the twelve-month period ended April 30, 2008 as compared to $0.70 million
in fiscal 2007. The increase in total Research and Development costs is
primarily the result of capital investments in the Company's research facility
and the construction of the new industrial-scale biorefinery pilot plant, as
well as the hiring of additional professional engineering staff, scientists
and research technicians. In addition, stock-based compensation included in
Research and Development expenses increased to $0.50 million in fiscal 2008
from $0.04 million in fiscal 2007. The net increase in stock-based
compensation was primarily due to additional stock options which were granted
during the year to personnel, which are being expensed on a straight line
basis over their vesting period.
    General and Administrative expenses for the year-ended April 30, 2008
totaled $3.14 million compared to $1.05 million for the five-month period
ended April 30, 2007. The net increase in fiscal 2008 was primarily due to
additional costs to support the Company's growth, including staffing, legal
and other professional fees. In addition, stock-based compensation included in
General and Administrative expenses increased to $0.79 million in fiscal 2008
from $0.16 million in fiscal 2007. As was the case with Research and
Development expenses, the net increase in stock-based compensation was
primarily due to additional stock options which were granted during the year
to personnel, which are being expensed on a straight line basis over their
vesting period.
    Government grants and research funding reflected on the Company's
statement of operations for the year-ended April 30, 2008 totaled
$1.66 million, compared to $0.43 million for the five-month period ended April
30, 2007. The Company accrues funding credits on the statement of operations
based on eligible expenses, in compliance with the terms and conditions of the
various funding agreements. The relative amount of increased funding from
government grants and research contracts is directly related to the associated
increase in eligible research expenditures which occurred during 2008 over
2007.
    Net loss for the year ended April 30, 2008 was $4.64 million (basic and
fully diluted net loss per share of $0.12) compared to $1.22 million (basic
and fully diluted net loss per share of $0.09) for the five-month period ended
April 30, 2007. As well as being impacted by the longer twelve-month reporting
period for fiscal 2008 versus five-month period for fiscal 2007, the increase
in net loss was largely due to increased research and development activities
and a $1.1 million increase in non-cash stock-based compensation charges in
fiscal 2008 as compared to fiscal 2007.
    As at April 30, 2008, the Company had cash, cash equivalents and
short-term investments of $15.2 million and a working capital surplus of
$14.5 million. These balances represent a significant increase over the cash,
cash equivalents and short-term investments of $5.5 million and a working
capital surplus of $5.1 million as at April 30, 2007. The increases reflect
the cash proceeds from the $14.4 million private placement completed in August
2007 net of cash used in operations and for capital additions in fiscal 2008.
    The complete financial statements for the year ended April 30, 2008 and
the related Management' Discussion & Analysis of Financial Condition and
Results of Operations is available at the Company's website, www.lignol.ca, or
at www.sedar.com.

    About Lignol

    Lignol (TSX-V: LEC) is a Canadian company undertaking the development of
biorefining technologies for the production of fuel-grade ethanol and other
biochemical co-products from non-food cellulosic biomass feedstocks. Lignol's
modified solvent based pre-treatment technology, originally developed by a
former affiliate of General Electric, and then further developed and
commercialized for wood-pulp applications by a subsidiary of Repap Enterprises
Inc., facilitates the rapid, high-yield conversion of cellulose to ethanol and
the production of value-added biochemical co-products, including High Purity
Lignin HP-L(TM). Lignol is executing on its development plan through strategic
partnerships to further develop and integrate the core technologies on a
commercial scale. Lignol also intends to invest in, or otherwise obtain,
equity interests in energy related projects which have synergies with its
biorefining technology. For more information about Lignol, please visit our
website at www.lignol.ca.

    Caution concerning forward-looking statements:

    Certain statements contained in this document may constitute
"forward-looking statements". When used in this document, the words "may",
"would", "could", "will", "intend", "plan", "anticipate", "believe",
"estimate", "expect", "investigate", "looking at" as they relate to Lignol or
its management, are intended to identify forward-looking statements or
information. Such statements or information reflect Lignol's current views
with respect to future events and are subject to certain risks, uncertainties
and assumptions. Forward-looking statements and information are necessarily
based upon a number of estimates and assumptions that, while considered
reasonable by management, are inherently subject to significant business,
economic and competitive uncertainties and contingencies. Many factors could
cause Lignol's actual results, performance or achievements to be materially
different from any future results, performance or achievements that may be
expressed or implied by such forward-looking statements or information,
including among other things, those risk factors which are discussed elsewhere
in documents that Lignol files from time to time with securities regulatory
authorities. Should one or more of these risks or uncertainties materialize,
or should assumptions underlying the forward-looking statements or information
prove incorrect, actual results may vary materially from those described
herein as intended, planned, anticipated, believed, estimated or expected. The
Company expressly disclaims any intention or obligation to update or revise
any forward looking statements and information whether as a result of new
information, future events or otherwise. All written and oral forward-looking
statements and information attributable to us or persons acting on our behalf
are expressly qualified in their entirety by the foregoing cautionary
statements.

    
    The TSX Venture Exchange Inc. has not reviewed and does not accept
    responsibility for the adequacy or accuracy of this release.
    

    %SEDAR: 00004360E




For further information:

For further information: Lignol Energy Corporation, Ross MacLachlan,
President, Tel: (604) 222-9800 ext. 107, Email: info@lignol.ca; The Equicom
Group, Bruce Wigle, Investor Relations, Tel: (416) 815-0700 ext. 228,
Email:bwigle@equicomgroup.com

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Lignol Energy Corporation

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