Forterra Environmental Reports 2009 Year-End Results

    -  Success in developing new customer relationships is slow to result in
       expected sales growth as financial constraints affect marketing and
       sales efforts
    -  Company remains optimistic about opportunities for growth as various
       directors and others provide financial support
    -  Further sales growth and improved financial performance expected for
       2010, subject to the company's ability to raise additional capital
    -  Plant open to accommodate retail and other buyers in May

PUSLINCH, ON, May 3 /CNW/ - Forterra Environmental Corp. (TSXV: FTE), a manufacturer, marketer, and seller of premium organic soil-enrichment products based on worm castings, today announced its financial results for year ended December 31, 2009. Financial results conform to Canadian generally accepted accounting principles (GAAP) and all currency amounts are in Canadian dollars.

"Forterra continued to make progress in key areas in 2009, including carrying out successful trials with potential customers and developing new relationships that we anticipate will result in increased sales in 2010, improving our manufacturing operations, and reducing expenses. Nevertheless, it was a frustrating year," said Rick Denyes, president and chief operating officer.

"We had expected that the success that we were having in attracting new customers would result in significant sales growth. That did not happen at nearly the rate that we anticipated. We found that the process of carrying out trials with potential new major customers and subsequently negotiating supply or sales agreements is considerably lengthier than we had anticipated.

"It also became evident that even after we have developed a new customer relationship, it takes longer to gain adoption for our products by their customers and it requires a more aggressive marketing and sales push supported by us," Mr. Denyes continued. "We have been unable to implement the marketing and sales programs that we have planned due to the financial constraints under which we have been operating for most of Forterra's history and particularly in 2009 and the first part of 2010.

"These factors contributed to the company recording only negligible sales in the 2009 fourth quarter. Other factors that adversely affected our sales in 2009 included the cooler, wetter weather conditions early in the year, as we have previously discussed," said Mr. Denyes. "The slower than expected development of sales for the year resulted in a significant shortfall in Forterra's revenues and working capital compared with the amounts projected by the company in its budget. The shortfall in anticipated sales has continued into the early part of 2010."

"While we are experiencing pressure on our financial liquidity, our management and the Board of Directors continue to be optimistic about the longer-term opportunities for Forterra's growth and its ability to create value for its shareholders," said Don Green, Chairman and Chief Executive Officer. "Based on this belief, as we announced on April 20, certain directors invested $214,000 through the non-brokered issue of a 12% Secured Debenture and certain holders of the company's Series A Secured Debentures, including myself, elected to reinvest $174,539.35 of payments that they had received back into Forterra to provide further financing intended to provide a bridge to see the company through the current critical seasonal selling period.

"Forterra's success is dependent on a number of factors," Mr. Green continued. "Obviously, we must increase our sales and improve our financial performance. We completed 2009 with a substantial working capital deficiency and payables. The company will need to rely, at least in the short term, on its lenders for financial assistance and is continuing to explore possible opportunities to raise additional capital. We cannot determine at this time whether these efforts will be successful.

"We do know, however, that Forterra has a very good product offering that has been enthusiastically reviewed by our current and potential customers. Through years of investment, trials, and errors, we have developed a reliable and efficient manufacturing process. Given these attributes, we believe that Forterra will be successful," Mr. Green said.

In response to inquiries from shareholders and others, Forterra said that its Puslinch facility will be open for retail and other buyers during the spring planting season in May. The hours for sales will be Monday to Friday from 10:00 a.m. until 4:00 p.m. and Saturdays from 9:00 a.m. until noon.

Financial Highlights

Forterra continues to be considered a development-stage company for accounting purposes and, as such, the progress that the company is making is not fully reflected in the financial statements. As a development-stage company, its revenues are applied to reduce general and administrative (G&A) expenses. Total sales were $142,284 for 2009 versus $110,508 in 2008.

G&A expenses consist primarily of costs related to modification, engineering and refinement of the manufacturing facilities, senior management salaries, occupancy costs, consulting, and professional legal and accounting services. The company's efforts to reduce and control expenses resulted in a decline in G&A in 2009 from the 2008 level as Forterra reduced its costs for sales, wages, and occupancy. G&A expenses were $1,372,790 for 2009, compared with $1,618,806 in 2008. G&A expenses for 2008 have been restated to reflect the company's change in its accounting policy to recognize its worm population as a biological asset. Accordingly, while the value of the worms as at December 31, 2008 based on the unamortized acquisition price was $131,765, the re-valuation to the market value based on market prices less selling costs as at December 31, 2008 resulted in a market valuation loss of $61,076.

Salaries and wages totaled $456,264 in 2009 and $598,214 in 2008. The decreases relate, in part, to capitalizing production salaries to inventory in 2009; salaries directly involved in the production of worm castings are being capitalized as part of inventory.

Occupancy expenses, consisting of the Puslinch facility, which is the company's active plant and head office, decreased to $365,246 in 2009, including expenses for former facilities in Downsview and Concord for the first half of the year. Including additional costs and accruals related to the Downsview and Concord locations, total occupancy costs for 2009 amounted to $591,443. Occupancy expenses in 2008 were $393,983, consisting of rents for the Downsview and Concord locations. Occupancy expense for the Puslinch facility will be approximately $196,000 in 2010. Management has reached an agreement on the termination of the Concord space and is in negotiations to terminate the Downsview location.

Sales and marketing expenses amounted to $148,731 for 2009 versus $111,321 for 2008. Marketing expenses were increased in early 2009 as the result of the addition of new sales representatives and to costs relating to the establishment of marketing strategies and market research and reflecting the fact that 2008 was considerably lower due to decreases resulting in adjustments of marketing consulting services and the completion of web page development.

R&D expenditures were $55,969 for 2009 and $5,954 for 2008. R&D expenditures relate primarily to the development of manufacturing equipment and research conducted in house in relation to the red wiggler worms required for the production process. The company also has funded studies at the University of Guelph that it believes will be contribute to the development and marketing of Forterra's products.

After certain other expenses, including interest, depreciation and amortization, and stock-based compensation, the consolidated net loss was $2,070,254 (a loss of $0.03 per share on a basic and diluted basis) for 2009, compared with a net loss of $2,302,553 (a loss of $0.03 per share on a basic and diluted basis) for 2008.

As at December 31, 2009, the company had negative working capital of ($851,575) compared with December 31, 2008, when the company had positive working capital of $298,421.

In November 2009, the company recovered Scientific Research and Experimental Development (SR&ED) Credits of $293,795 with respect to expenditures in 2006 and 2007. No recoveries were made in 2008. Certain debenture holders waived their right to receive their portion of the SR&ED credit refund and reinvested this amount ($85,832) back into Forterra. Subsequent to the 2009 year-end, certain debenture holders reinvested an additional $88,707 back into Forterra as loans made on the same terms as those of the 12% Secured Debenture Series B with the exception that no bonus shares were issued.

Subsequent to the 2009 year-end, Forterra raised $214,400 through the non-brokered issuance of a 12% Secured Debenture - Series B to three directors of the Company. The financing is intended to be a bridge loan with the debentures and interest due and payable on August 31, 2010, subject to earlier redemption without any penalty at the option of the Company. Subject to the approval of the TSX Venture Exchange, the three lenders will receive Bonus Shares at the rate of four common shares of Forterra for every $1.00 principal amount of the loan (a total of 857,600 shares to be issued). The deemed value of the common shares to be issued is $0.05 per share.

About Forterra Environmental Corp.

Forterra manufactures, markets, and sells 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 material 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

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.

Neither the TSX Venture Exchange Inc. 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.

    (A Development Stage Company)

                                                          2009          2008
                                                            $             $


      Cash and cash equivalents                          2,297       368,426
      Amounts receivable                                47,031       104,147
      Inventory                                        411,843       312,982
      Prepaid expenses and deposits                      7,732        76,515
    TOTAL CURRENT ASSETS                               468,903       862,070
    PROPERTY AND EQUIPMENT                             336,732       300,921
    BIOLOGICAL ASSETS                                  232,698        70,689
    INTANGIBLE ASSETS                                        1             1
    GOODWILL                                            30,000        30,000

    TOTAL ASSETS                                     1,068,334     1,263,681


      Amounts payable and accrued liabilities        1,160,478       299,744
      Current portion of capital lease payable               -         3,905
    TOTAL CURRENT LIABILITIES                        1,160,478       303,649
    DEBENTURE PAYABLE )                                409,630             -
    DUE TO SHAREHOLDERS                                160,000       260,000
    DEFERRED RENT                                       23,908        90,534
    TOTAL LIABILITIES                                1,754,016       654,183

                             SHAREHOLDERS' EQUITY

    CAPITAL STOCK                                    8,818,910     8,668,601
    WARRANTS                                           411,398     1,367,716
    CONTRIBUTED SURPLUS                              2,555,863       960,745
    SHARES TO BE ISSUED                                      -        14,035
    (DEFICIT)                                      (12,471,853)  (10,401,599)
    TOTAL SHAREHOLDERS' EQUITY (DEFICIENCY)           (685,682)      609,498
    TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY       1,068,334     1,263,681

    (A Development Stage Company)

                                                          2009          2008
                                                            $             $
      General and administrative                     1,372,790     1,618,806
      Sales and marketing                              148,731       111,321
      Research and development                          55,969         5,954
      Loss before other expenses                     1,577,490     1,736,081

      Stock-based compensation                         638,800       456,551
      Amortization of property and equipment            67,532        38,400
      Scientific Research and Experimental
       Development Credits                            (293,795)            -
      Gain on forgiveness of debt                            -       (35,877)
      Foreign exchange gain                             (3,565)       (2,592)
      Interest and accretion on long-term debt         104,206       120,890
      Interest on held for trading investments          (3,256)      (14,351)
      Interest income                                  (24,328)
      Interest expense                                   7,170         3,451
                                                       492,764       566,472

    NET LOSS AND COMPREHENSIVE LOSS FOR THE YEAR     2,070,254     2,302,553

    DEFICIT, beginning of year, as
     previously stated                              10,340,523     8,099,046

      Change in accounting policy                       61,076             0

    DEFICIT, beginning of year, as restated         10,401,599     8,099,046

    DEFICIT, end of year                            12,471,853    10,401,599

    Weighted average shares outstanding             81,399,269    70,026,117
    Loss per share basic and diluted                      0.03          0.03

    (Previously named "REWORKS Environmental Corp.")
    (A Development-Stage Company)

                                                          2009          2008
                                                            $             $
    Net loss for the year                           (2,070,254)   (2,302,553)
      Changes to deficit not involving cash:
      Amortization                                      67,533        38,400
      Market revaluation of biological assets         (162,009)       61,076
      Accretion on long-term debt                       53,905        86,835
      Stock-based compensation                         638,800       456,551
      Deferred rent                                    (66,626)       66,172
      Issuance of shares for settlement of interest          -         1,425
      Gain on forgiveness of debt                            -       (35,877)
                                                    (1,538,651)   (1,627,971)
    Changes in non-cash working capital balances
      Decrease (Increase)in prepaid expenses
       and deposits                                     68,784       (23,348)
      Decrease (Increase)in amounts receivable          57,115       (37,499)
      Increase in inventory                            (98,860)     (300,719)
      Increase in amounts payable and
       accrued liabilities                             860,744        53,929
    Cash flows from operating activities              (650,868)   (1,935,608)
      Repayment of loans payable                        (3,905)     (136,663)
      Advances (Repayment) from shareholders           255,714        50,000
      Issuance of common shares (net)                  136,274     2,249,932
    Cash flow from financing activities               (262,785)    2,163,269
      Additions to property and equipment             (103,343)     (200,427)
    Increase (decrease) in cash and cash
     equivalents                                      (366,128)       27,324
    Cash and cash equivalents, beginning of year       368,426       341,192
    Cash and cash equivalents, end of year               2,298       368,426
      Cash                                               2,298        68,426
      Cash equivalents                                               300,000
                                                         2,298       368,426

    Interest paid                                       53,698        34,055
    Income taxes paid                                        -             -
    Broker warrants issued for share issue costs             -        60,228
    Issuance of shares for settlement of
     shareholder loan                                        -        50,000
    Issuance of shares for business acquisition              -        30,000

%SEDAR: 00013128E


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

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