Forterra Environmental Reports Second-Quarter 2009 Results

    -   Financial results continue to be adversely affected by unseasonably
        cool and wet weather conditions resulting in deferred or lost sales
    -   Achieves significant reduction in expenses
    -   Informed in late July 2009, in writing that a new customer expects to
        place initial orders for deliveries beginning in September 2009 for
        between $375,000 and $500,000 of worm castings
    -   Trials with other potential regional and national customers continue
    -   Receives favorable indications from several institutional investors
        that they are prepared to participate in an equity-based financing to
        be completed in September

    PUSLINCH, ON, Aug. 31 /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 the 2009
second quarter and first six months ended June 30, 2009. Financial results
conform to Canadian generally accepted accounting principles (GAAP) and all
currency amounts are in Canadian dollars.
    "When we reported our 2009 first-quarter results on May 29, 2009, we
noted that our business was being adversely affected by the unseasonably cool
and wet weather conditions that were causing certain of our customers to delay
their blending operations and therefore their purchasing from Forterra," said
Rick Denyes, president and chief operating officer.
    "Unfortunately, those conditions persisted through the second quarter and
even into the summer months resulting in further deferrals and even the
outright loss of expected sales. As the result of the significantly
lower-than-budget sales and the company's larger-than-anticipated loss,
Forterra's cash flow and working capital were well below budget in the first
half of the year. As reported, we have taken steps to reduce our cash
requirements in the near term, including postponing certain planned capital
investments and reducing operating expenses. All of this is reflected in our
financial results for the second quarter and first half of this year," Mr.
Denyes said.
    "What is not reflected in the financial statements for the first half of
this year is the progress in building our business that Forterra made during
the second quarter and particularly in the first two months of the third
quarter. Working with our board of directors and a consultant, we further
developed business plans, including ideas to further strengthen our brand for
both wholesale and retail marketing and sales. We continue to be excited about
the longer-term opportunities for Forterra's growth and its ability to create
shareholder value," he continued.
    "Negotiations with major new customers have proceeded well and we expect
that we will be receiving significant purchase orders that will generate
additional sales and cash flow in 2009 and 2010. In particular, in late July
2009, one of these expected new customers informed Forterra in writing that it
expects to place initial orders for deliveries beginning in September 2009 for
between $375,000 and $500,000 of Forterra's worm castings. We expect to
receive the first purchase order from them within the next few weeks. Trials
with other potential regional and national customers are continuing and have
proceeded very well and we continue to expect that this will lead to
additional sales opportunities for Forterra in 2010 and future years.
    "We also have been exploring options to raise additional funds and have
met with various institutional investors and others. We have received
favorable indications from several of these institutional investors that they
are prepared to participate in an equity-based financing to be completed in
September 2009," Mr. Denyes said.

    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 sales and marketing expenses.
    Total sales were $77,771 for the 2009 second quarter versus $55,688 for
the 2008 second quarter. These sales have been applied to reduce General and
Administration (G&A) expenses. The company commenced production of
vermicompost during 2008. Six-month 2009 sales were $99,890, compared with
$66,541 in the first half of 2008. As a development-stage company, its
revenues are applied to reduce G&A expenses.
    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
    G&A expenses were $327,340 for the second quarter of 2009 versus $301,012
for the 2008 second quarter, and were down 26.1% from the 2009 first-quarter
level of $442,770. The increase is directly related to occupancy costs
relating to maintaining three facilities. First-half 2009 G&A expenses
amounted to $770,110, compared with $615,023 in the prior-year period.
    Salaries and wages totalled $115,310 in the 2009 second quarter and
$244,621 during the first six months of 2009, compared with $118,944 and
$265,217 incurred in the same periods a year ago. The slight decreases relate
capitalizing production salaries to inventory in 2009. Salaries directly
involved in the production of worm castings are being capitalized as part of
    Occupancy expenses, consisting of the Puslinch facility, which is our
active plant and head office, our vacated plant in Downsview, Ontario, and our
vacated office in Concord, Ontario, increased to $333,934 in the first six
months of 2009 from $191,951 in the same period of 2009. The increase for 2009
second quarter was to $164,381 versus $96,353 for the same period a year ago.
Management has reached an agreement on the termination of the Concord space
and is in negotiations to terminate the Downsview location.
    Marketing expenses amounted to $82,819 for the second quarter in 2009
versus $3,005 for the 2008 three-month period. Marketing expenses were
increased in early 2009 due 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. First-half 2009 sales and marketing
expenses were $99,815, compared with $37,358 a year earlier.
    Research and Development expenditures were $42,012 for the 2009 second
quarter and $52,479 for the first half of the year, compared with $36,367 and
$51,440 in the comparable 2008 periods. These amounts consist of researchers'
salaries and lab test fees. The company also paid $10,000 in the 2009 second
quarter to the University of Guelph for future studies on a specific basis.
    After certain other expenses, including interest, depreciation and
amortization, and stock-based compensation, the net loss was $561,618 ($0.01
per basic and diluted share) for the 2009 second quarter and $1,269,809 for
first six months ($0.02 per basic and diluted share) of 2009, compared with a
net loss of $434,794 ($0.01 per basic and diluted share) and $885,979 ($0.02
per basic and diluted share) incurred in the respective periods of 2008.
    Forterra continues to increase its population of red wiggler worms that
are at the core of its operations. The company estimates that the worm
population has grown to approximately more than 18,000 pounds of worms at
December 31, 2008 and approximately more than 24,000 pounds at July 31, 2009.
The current retail price for worms is US$30 per pound (resulting in an
estimated value of US$720,000 for Forterra's worms population). As there are
an estimated 1,000 worms per pound, this indicates a total population as at
July 31, 2009 of about 24 million worms.
    As at June 30, 2009, the company had negative working capital of $126,404
compared with December 31, 2008 when Forterra had positive working capital of
    As previously reported, Forterra does not currently have sufficient
resources to complete the commercialization of its products or to carry out
its entire business strategy. Therefore, the company needs to raise additional
capital to fund operations. Although Forterra believes that additional
financing can be sourced, the company cannot be certain that any financing
will be available when needed on acceptable terms or at all. Any additional
equity financings will be dilutive to existing shareholders, and debt
financing, if available, may require additional stock to be issued and/or
involve restrictive covenants on the business.
    As at the end of August 2009, the company believes that it will be able
to secure sufficient working capital to fund its operations through 2009 and
into 2010. It has received favorable indication from certain institutional
investors that they are prepared to participate in an equity-based financing
to be completed in September 2009. As well, several of the company's directors
have stated their willingness to participate in a bridge financing of up to
$160,000, if required.
    In addition, discussions with current and potential customers indicate
that they will be purchasing products during the balance of 2009 that will
result in significantly increased sales and cash flow for the company. In
particular, in late July 2009, one of its expected new customers informed the
company in writing that it expects to place initial orders for deliveries
beginning in September 2009 for between $375,000 and $500,000 of Forterra's
worm castings.
    "It has been a difficult and challenging time for Forterra and its
shareholders, however, we remain confident in the prospects for our business,"
said Don Green, the company's chairman and chief executive officer.
    "As we make progress in our effort to secure additional funds for working
capital and for financing the growth of our business, as well as in receiving
contracts and purchase orders, we look forward to issuing news releases
announcing these. In the first eight months of 2009, Forterra has successfully
moved into our new manufacturing plant in Puslinch and proven our production
process; substantially ramped up the output of our products and the population
of worms that are at the heart of our business; secured a number of
significant long-term customers and worked with several other major
organizations that should be major buyers of our products for many years to
come; and developed a more detailed business plan for growing our brand and
sales and profits in the future," Mr. Green said.

    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

    (Previously named "REWORKS Environmental Corp.")
    (A Development Stage Company)
    As at June 30,
                                                    Jun. 30,      Dec. 31,
                                                      2009          2008
                                                        $             $


      Cash and cash equivalents                        (14,097)      368,426
      Amounts receivable                                61,892       104,147
      Inventory (Note 10)                              478,483       312,982
      Prepaid expenses and deposits                     91,685        76,515
    TOTAL CURRENT ASSETS                               617,963       862,070
    PROPERTY AND EQUIPMENT (Note 5)                    499,854       432,686
    INTANGIBLE ASSETS (Note 6)                               1             1
    GOODWILL (Note 14)                                  30,000        30,000
    TOTAL ASSETS                                     1,147,818     1,324,757


      Amounts payable and accrued liabilities
       (Note 7)                                        744,367       559,744
      Current portion of capital lease payable
       (Note 9)                                              -         3,905
    TOTAL CURRENT LIABILITIES                          744,367       563,649
    LOANS PAYABLE (Note 8)                             618,000             -
    LEASEHOLD INDUCEMENT                                76,534        90,534
    TOTAL LIABILITIES                                1,438,901       654,183

                             SHAREHOLDERS' EQUITY

    CAPITAL STOCK (Note 11(b))                       9,782,954     8,668,601
    WARRANTS (Note 11(c))                              411,398     1,367,716
    CONTRIBUTED SURPLUS (Note 11(e))                 1,124,895       960,745
    SHARES TO BE ISSUED (Note 7)                             -        14,035
    (DEFICIT)                                      (11,610,330)  (10,340,523)
    TOTAL SHAREHOLDERS' EQUITY                        (291,083)      670,574
    TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY       1,147,818     1,324,757

    (Previously named "REWORKS Environmental Corp.")
    (A Development Stage Company)
    JUNE 30, 2009

                         3 Months     3 Months      6 Months      6 Months
                           ended        ended         ended         ended
                          June 30,     June 30,      June 30,      June 30,
                            2009         2008          2009          2008
                             $            $             $             $
      General and
       (Note 7)            327,240       301,012       770,010       615,023
      Sales and marketing   82,819         3,005        99,815        37,358
      Research and
       development (net)    42,012        36,467        52,479        51,440
      Loss before other
       expenses            452,072       340,484       922,305       703,821

       compensation         79,125        77,699       164,150       157,105
      Amortization of
       property and
       equipment            15,564         5,033        31,128        10,068
      Interest and
       accretion on
       long-term debt       18,000                     162,000             -
      Interest expense
       and foreign
       exchange gain        (3,143)       11,578        (9,774)       14,985

     QUARTER               561,618       434,794     1,269,809       885,979

    DEFICIT, beginning
     of year            11,048,712     8,550,231    10,340,523     8,099,046


    DEFICIT, end of
     quarter            11,610,330     8,985,025    11,610,330     8,985,025

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

                         3 Months     3 Months      6 Months      6 Months
                           ended        ended         ended         ended
                          June 30,     June 30,      June 30,      June 30,
                            2009         2008          2009          2008
                             $            $             $             $
    Net (loss) for the
     quarter              (561,618)     (434,794)   (1,269,809)     (885,979)
      Changes to income
       not involving cash:
      Amortization          15,564         5,033        31,128        10,068
      Accretion on
       long-term debt            -        15,038       144,000        15,038
       compensation         79,125        77,696       164,150       157,103
       inducement          (21,134)        6,513       (14,000)       13,026
                          (488,063)     (330,515)     (944,531)     (690,744)
    Changes in non-cash
     working capital
      (Increase) in
       prepaid expenses
       and deposits        (13,824)            -       (15,170)       12,681
      (Increase) in
       amounts receivable  (20,928)      (47,953)       42,255       (15,439)
      (Increase) in
       inventory          (101,713)      (19,574)     (165,156)      (38,135)
      Increase (decrease)
       in amounts
       payables            117,931       158,530       180,718       169,149
    Net Changes in
     Working Capital       (18,534)     (239,512)       42,647      (562,488)
      Repayment of
       loans payable             -       (12,500)            -       (25,000)
      Loan received         17,657       290,000       617,657       310,000
    Cash flow from
     financing activities   17,657       277,500       617,657       285,000
      Additions to property
       and equipment       (35,037)      (11,368)      (98,296)      (59,660)
    Increase in cash and
     cash equivalents     (523,977)       26,620      (382,523)     (337,148)
    Cash and cash
     equivalents, beginning
     of year               368,426       (22,576)      368,426       341,192
    Cash and cash
     equivalents, end of
     June                 (155,551)        4,044       (14,097)        4,044
      Cash                (155,551)        4,044       (14,097)        4,044
      Cash equivalents
                          (155,551)        4,044       (14,097)        4,044

    %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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