Lignol Reports Fiscal 2012 Financial Results
VANCOUVER, Aug. 28, 2012 /CNW/ - Lignol Energy Corporation (TSXV: LEC) ("Lignol" or "the Company"), a leading technology company in the advanced biofuels and renewable chemicals sector, today announced its financial results for the year ended April 30, 2012 (all figures in Canadian dollars, unless otherwise noted).
Fiscal 2012 Highlights:
- Awarded up to $2.2 million in additional funding from Sustainable Development Technology Canada
- Lignol's intellectual property portfolio has grown today to more than 90 patent applications, comprising 24 families and 9 approved patents
- Lignol has continued to explore various strategic investor opportunities
- Announced promising test results that the Company's High Performance Lignin (HP-LTM lignin) may be used to produce thermoplastics
- Announced sale of tonnage quantities of HP-LTM lignin to global coatings manufacturer
- Joined Oak Ridge Carbon Fiber Composites Consortium
On August 27, 2012 the Company announced that it had completed a non-brokered private placement of 30,750,000 common shares of the Company at a price of CAD$0.08 per common share to raise gross proceeds of CAD$2.46 million (the "Private Placement"), and has acquired from Wasabi Energy Limited (ASX/AIM: WAS) ("Wasabi"), 275,000,000 ordinary shares of Australian Renewable Fuels Limited (ASX: ARW) ("ARW"), for a total purchase price of CAD$4,265,770. Consideration was comprised of CAD$500,000 in cash, 19 million Lignol common shares issued at CAD$0.08 per share for CAD$1,520,000 and a 10-month secured convertible debenture for CAD$2,245,770 convertible into Lignol common shares at CAD$0.15 per share.
"In Fiscal 2012 we operated with access to fewer financial resources and yet we made good progress over the course of the year to further our relationships with industrial partners and prepared the way for the development of markets for our proprietary HP-L lignin," said Ross MacLachlan, President and Chief Executive Officer.
"During the year we explored various strategic investor opportunities, as well as pursued a variety of other options to seek both non-dilutive financing and various transaction options which would take advantage of our key strengths; access to a world-class pilot plant and laboratories, access to an experienced management team and a strong intellectual property portfolio," said MacLachlan.
"Back in 2010 we reported that we anticipated having sufficient cash to fund baseline operations until May 2011. As a result of increased non-dilutive contributions received from government programs and from industry partners, combined with a reduction in headcount and effective fiscal management, we managed to extend the Company's cash runway into the second quarter of 2012," concluded MacLachlan.
The closing of the $2.46 million Private Placement together with the funds Lignol expects to be made available in the coming year from several government programs and from corporate partners is expected to position the Company to achieve several strategic milestones in Fiscal 2013, including:
- the development of lignin applications with industrial partners
- the development of high value cellulose applications, such as dissolving pulp
- joint partnerships with strategic partners to develop projects which utilize Lignol's unique pilot plant and laboratory facilities and intellectual property portfolio
Lignol is presently one of only a handful of companies with an operational, integrated pilot-scale biorefinery capable of producing a clean, reactive cellulose for both cellulosic ethanol and a range of high value cellulose applications such as dissolving pulp. The Company has completed an engineering design package for a commercial-scale biorefinery that would produce up to 80 million litres of cellulosic ethanol (approximately 20 million U.S. Gallons) and 55,000 tonnes of High Performance Lignin derivatives annually.
During the three month period ended April 30, 2012 ("Q4 FY12"), Lignol continued to operate its pilot plant to produce lignins, cellulose and cellulosic ethanol in order to supply materials for optimization to various partners and to expand the number of HP-L™ lignin application development relationships with major industrial and research partners.
The Company also continued to expand its intellectual property portfolio, which currently comprises more than 90 patent applications at various stages of development and prosecution. On January 24, 2012 Lignol announced that four new patent applications had been approved. The patents titled "Continuous counter-current organosolv processing of lignocellulosic feedstocks", "Concurrent Saccharification and fermentation of fibrous biomass" and "Derivatives of native lignins from hardwood feedstocks", were approved in the United States, while the patent titled "Concurrent anaerobic digestion and fermentation of lignocellulosic feedstocks" was approved in China. Lignol's patent portfolio covers not only its unique process and systems but also a wide range of lignins having specific compositions of matter and use.
For the three month period ended April 30, 2012 ("Q4 FY12"), the Company reported a net loss of $0.4 million, or $0.01 per share (basic and fully diluted) compared to a net loss of $0.8 million or $0.02 per share (basic and fully diluted) for the three month period ended April 30, 2011 ("Q4 FY11"). The $0.4 million decrease in the net loss for the current period arose from a $0.6 million reduction in government and corporate contributions, net of a $0.8 million reduction in research and development and a $0.2 million reduction in general and administrative expenses.
Total funding from government and corporate contributions amounted to $0.7 million in Q4 FY12, compared to $1.3 million in Q4 FY11. Certain grant programs that funded research in Q4 FY11 had been completed before the start of the current quarter. Research and development expenditures in Q4 FY12 were also $0.8 million lower in the current period.
Going Concern, Liquidity and Capital Resources
The Company's consolidated financial statements have been prepared on a going concern basis which assumes that the Company will continue its operations for the foreseeable future and contemplates the realization of assets and the settlement of liabilities in the normal course of business. On August 27, 2012 the Company completed a non-brokered Private Placement to raise gross proceeds of CAD$2.46 million and acquired an 11.2 percent equity interest in ARW from Wasabi. However, until such time as the Company has received confirmation of additional government funding awards currently being negotiated, and has had time to assess the impact of its recent acquisition of shares in ARW, the Company is unable to factor in additional funding from these sources in its projections. Accordingly, the Company currently forecasts that its working capital requirements for the next twelve months may exceed the combination of its current working capital and those funds which are expected to be received from its existing government grants and corporate relationships. The ability of the Company to continue as a going concern is dependent upon its ability to continue to fund its research and development programs. There can be no assurance that the Company will be able to obtain further financing and in such event, the Company's working capital may not be sufficient to meet its stated business objectives.
The Company's consolidated financial statements and the accompanying Management's Discussion and Analysis do not reflect adjustments to the amounts and classification of assets and liabilities that may be necessary if the going concern assumptions were not appropriate and such adjustments could be material should the Company be unable to continue as a going concern (see also "Risks and Uncertainties" in the Company's annual Management's Discussion and Analysis for the year ended April 30, 2012).
The Company historically has financed its research and development activities, capital expenditures and operations largely through public and private sales of equity securities, government and corporate contributions, and interest income.
At April 30, 2012, the Company had $1.3 million in cash and short-term investments currently available, and up to $2.8 million in future funding receivable from contracted government and corporate funding agreements, and $1.6 million in current liabilities.
Of the $2.8 million in funding receivable in the future from contracted government and corporate funding agreements, $0.6 million was accrued for as a receivable as of April 30, 2012, relating to eligible reimbursable expenses already incurred, and the remaining balance of $2.2 million has not yet been recognized. This remaining funding is available in the future subject to the satisfaction of certain conditions specified in the relevant agreements, which include the Company incurring sufficient, additional related project expenditures, and continuing to meet all of its reporting requirements. Receipt of this additional funding is also conditional in certain cases upon having sufficient matching funds and completion of the funding agreements. These funding awards are intended to be applied against future expenses incurred under various development programs.
The Company continues to manage and defer non-priority expenditures, while at the same leveraging all available funding sources to extend, as much as is possible, the overall availability of its resources.
Lignol's complete financial statements for the three months and fiscal year ended April 30, 2012 and the related Management's Discussion & Analysis of Financial Condition and Results of Operations are available at the Company's website, www.lignol.ca, or at www.sedar.com under the Company's profile. These financial statements were prepared in accordance with the required adoption of International Financial Reporting Standards.
Lignol (TSXV: LEC) is a Canadian company undertaking the development of biorefining technologies for the production of advanced biofuels, including fuel-grade ethanol, and other renewable chemicals from non-food cellulosic biomass feedstocks. Lignol's modified solvent based pre-treatment technology facilitates the rapid, high-yield conversion of cellulose to ethanol and the production of value-added biochemical co-products, including high purity HP-L™ lignins. HP-L™ lignin represents a new class of high purity lignin extractives (and their subsequent derivatives) which can be engineered to meet the chemical properties and functional requirements of a range of industrial applications that until now has not been possible with traditional lignin by-products generated from other processes. Lignol is executing on its development plan through strategic partnerships to further develop and integrate its 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 www.lignol.ca.
Neither TSX Venture Exchange 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.
Caution concerning forward-looking statements:
Certain statements contained in this document may constitute forward-looking information within the meaning of applicable securities laws. Such forward-looking statements or information include, without limitation, statements or information about our ability to continue as a going concern and to raise additional financing to fund operations, the development status of our fully integrated pilot-scale biorefinery in Burnaby, British Columbia, the planning and development of our proposed commercial plant, our ability to complete project deliverables which are funded in part by government agencies, obtaining strategic partnership investments and government funding for initial commercial projects. Often, but not always, forward-looking statements or information can be identified by the use of words such as "plans", "expects" or "does not expect", "is expected", "budget", "scheduled", "estimates", "forecasts", "intends", "anticipates" or "does not anticipate", or "believes" or variations of such words and phrases or words and phrases that state or indicate that certain actions, events or results "may", "could", "would", "might" or "will" be taken, occur or be achieved. Such statements or information reflect Lignol's current views with respect to future events and are subject to certain risks, uncertainties and assumptions including, without limitation, our ability to establish the validity of our technology at the fully integrated biorefinery pilot plant scale, our ability to satisfy the conditions of existing government grants and to obtain new additional grants, our ability to continue to finance our operations and to finance and complete the development of a commercial project, our ability to develop our products and to obtain off-take agreements, our ability to obtain requisite regulatory approvals and our ability to enter into agreements with strategic partners on terms acceptable to us, the inability to influence the strategy, operations and financial performance of ARW, the reliance on publically available information of ARW in LEC's evaluation of its acquisition of shares in ARW, the potential inability to divest the ARW ordinary shares due to modest trading volumes, the cost of future ARW capital investment, the fluctuation of biodiesel and feedstock on ARW, the effect on ARW of changes in government policy relating to the environment, and incentives for renewable fuels. 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, the technological challenges that remain to be surpassed in obtaining the necessary operating data from our fully integrated biorefinery pilot plant that is required prior to completing the next scale-up of the technology, financial market conditions which will impact our ability to finance our operations and to finance the construction and operation of a commercial plant, the price of gasoline and demand for ethanol, the market pricing and demand for renewable chemicals, risks relating to the protection of Lignol's core technology from infringement and 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. Except as required by law, 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.
SOURCE Lignol Energy Corporation