Comparison of the nine months ended June 30, 2009 and June 30, 2008
For the nine month period ended June 30, 2009 compared to the nine month period ended June 30, 2008, the Company had a net loss of $16,947,619 versus a net loss of $2,191,001 respectively, equating to a 674% increase in net loss. Again the increased loss comparison between these periods does not yield any meaningful data since the Company was in its development stage one year prior to the current reporting period; however, the increased losses were due to higher operating expenses associated with the start-up of the Company’s Magog, Quebec, Canada facility. These increased costs included increased consulting fees, salary expense, higher general and administrative expenses, facility rent, depreciation allowances, increased interest expense, and loss due to currency fluctuations. For the purpose of comparison these costs are further delineated as follows:
For the nine month period ended June 30, 2009 compared to the nine month period ended June 30, 2008, the Company experienced the following changes respectively: officer compensation increased 426% from $128,997 to $678,024; consulting fees increased 750% from $1,704,100 to $14,483,773; legal and other professional fees increased 127% from $115,090 to $261,637; general and administrative expenses increased 24% from $175,343 to $217,155; rent expense increased from zero to $262,236; royalty costs increased from zero to $63,918; depreciation and amortization expense increased from zero to $72,185; and, interest expense increased 993% from $67,471 to $737,742.
During the nine month period ended June 30, 2009 the Company had a net loss of $0.40 per share compared to a net loss of $0.17 per share during the same period in 2008.
Liquidity and Capital Resources
At June 30, 2009, the Company had total assets of $9,741,780; consisting of $116,716 in cash, $32,166 in receivables, $102,841 in prepaid expenses, $1,473,888 in net equipment, $25,966 in utility deposits, $7,418,283 pending asset acquisition costs, and $571,920 in equipment deposits. In addition, the company has a working capital deficit of $6,431,932 and a negative $939,983 of cash flows from operating activities.
In contrast, the Company reported $1,364,941 in assets and a working capital surplus of $157,427 on September 30, 2008. The increase in assets is due primarily to the acquisition of equipment and the increase in the working capital deficit is due to debt financing activities.
The accompanying condensed consolidated financial statements have been prepared in conformity with generally accepted accounting principles which contemplate the continuation of the Company as a going concern. The Company’s operations are progressing forward and the Company has begun to generate income. It transitioned from a development stage company to an operating entity during the first fiscal quarter of 2009. As a development stage company it generated an accumulated deficit of $8,562,779 and a stockholders deficit of $212,454 as of September 30, 2008. As of June 30, 2009 the Company has a total accumulated deficit of $25,510,398 and total stockholders equity of $1,137,636. Furthermore, the Company has a working capital deficit of $6,431,932 and a negative cash flow from operations of $939,983 for the nine months ending June 30, 2009. These factors raise substantial doubt about the Company’s ability to continue as a going concern. The condensed consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty.
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