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."
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.
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.
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