FlagshipPDG Announces Fourth Quarter Results & Annual Results for Period Ended January 31, 2009

PITTSBURGH, PA, May 15, 2009 – PDG Environmental, Inc. (dba FlagshipPDG) (OTC BB: PDGE), a leading provider of environmental remediation, disaster response and reconstruction services, today reported financial results for the fourth fiscal quarter and twelve months ended January 31, 2009.

Revenues for the fourth quarter of fiscal 2009 were $14.6 million, down 34.0% from the $22.1 million reported in the fourth quarter of fiscal 2008. The decrease was due to reduced discretionary customer spending resulting from the overall economic conditions. Revenues from asbestos and non-asbestos projects were down from prior year quarter levels by 21.7% and 33.3% respectively. In addition, $2.2 million in claim adjustments for contracts performed in prior years negatively impacted the revenues for the current fiscal quarter. Other direct and SG&A costs decreased $1.1 million from the fourth quarter of fiscal 2008 largely due to lower personnel and related costs as a result of cost cutting measures. The Company reported a net loss of $(3.6) million, or $(0.17) per diluted share in the fourth quarter of fiscal 2009, compared with a net loss of $(728,000), or $(0.04) per diluted share in the fourth quarter of fiscal 2008. The total negative impact on fourth quarter results from contract claims and contract adjustments was $3.0 million. EBITDA (earnings before interest, taxes, depreciation and amortization) was a negative $(2.6) million for the current quarter versus a positive EBITDA of $208,000 for the comparable period in fiscal 2008. In the fourth quarter of fiscal 2009, FlagshipPDG recorded non-cash accounting costs of $284,000 related to its July 2005 private placement as compared to $238,000 for the comparable period last year.

For the twelve months ended January 31, 2009 revenues were $83.7 million, a decrease of $13.4 million or 13.8% from the $97.1 million reported for the twelve months ended January 31, 2008 reflecting economic conditions in the last half of fiscal 2009. Other direct and SG&A costs decreased $1.2 million from the twelve months of fiscal 2008 due to lower personnel and related costs offset by increases in bad debt expense, marketing and re-branding costs, and non-cash stock option expense. The Company reported a net loss of $(5.2) million, or $(0.25) per diluted share for the twelve months ended January 31, 2009, compared with a net loss of $(909,000), or $(0.04) per diluted share for the twelve months ended January 31, 2008. Earnings for the current twelve-month period were adversely impacted by lower than anticipated revenues and the $3 million impact for contract claim adjustments and bad debts discussed above. EBITDA was a negative $(1.8) million for the twelve months of fiscal 2009 versus a positive EBITDA of $3.0 million for the comparable period in fiscal 2008. For the twelve months ended January 31, 2009, FlagshipPDG recorded non-cash accounting costs of $1.1 million related to its July 2005 private placement as compared to $896,000 for the comparable period last year.

On May 14, 2009, we entered into an amendment to our existing Loan Agreement that waived our non-compliance with certain financial covenants as of January 31, 2009 and made certain revisions to the financial covenants for the period ended January 31, 2010. The amendment also extended the maturity date of the underlying loan to August 3, 2010, and sets the interest rate at prime plus 0.75% with a floor from the prime rate at 4.25%.

On May 14, 2009, we and our sole remaining preferred shareholder entered into an exchange agreement pursuant to which the Series C Convertible Preferred Stock was surrendered and exchanged for a subordinated secured promissory note. The principal amount of the subordinated note is $4,993,226, bears interest at an annual rate of 8% and is due on August 31, 2010. A monthly payment of principal and interest of $50,000 will be made with the remainder of the amount due on August 31, 2010. Due to the execution of the exchange agreement, $4.4 million of the Series C Preferred Stock has been classified as a long-term liability and $0.1 million has been classified as a current liability as of January 31, 2009.

“We are obviously disappointed with the financial performance for the year but the economy has had a dramatic impact on our revenue levels. In addition, during the year a number of claims on contracts completed in prior years were settled or written down to clean-up the balance sheet, generate cash, and stop the legal expenses and management distraction. The combination of the claim write-down, settlement, and increased bad debt expense resulted in a negative impact of nearly $3 million to the bottom line. In light of the realties of the economic conditions we have taken the necessary steps to rationalize our fixed costs to achievable revenue levels, resulting in a reduction to our annual infrastructure costs of nearly $5 million. Most importantly, the amendments to our banking and preferred agreements will allow us additional time to execute on our business plans. While we continue to monitor customer spending levels, we anticipate that federal economic stimulus dollars will have a positive impact on our top line through increased spending on projects for schools, public housing, DOE site clean-up and federal buildings.” said John C. Regan, chairman and chief executive officer of FlagshipPDG.

The company makes use of EBITDA (earnings before interest, taxes, depreciation and amortization) as a financial measure which it believes is a useful performance indicator. EBITDA is not a recognized term under generally accepted accounting principles, or "GAAP," and should not be considered as an alternative to net income/(loss) or net cash provided by operating activities, which are GAAP measures. A reconciliation of EBITDA to net income/(loss) appears at the end of this release as actual results for the quarter.

About FlagshipPDG
FlagshipPDG, headquartered in Pittsburgh, PA, is a leading provider of specialty contracting services including asbestos abatement, mold remediation, emergency response, demolition and reconstruction to commercial, industrial and governmental clients nationwide. With over twenty years experience, FlagshipPDG has offices nationwide capable of responding to customer requirements coast to coast. For additional information, please visit http://www.FlagshipPDG.com.

Safe Harbor Statement under Private Securities Act of 1995: The statements contained in this release, which are not historical facts, may be deemed to contain forward-looking statements, including, but not limited to, deployment of new services, growth of customer base, and growth of service area, among other items. Actual results may differ materially from those anticipated in any forward-looking statement with regard to magnitude, timing or other factors. Deviation may result from risk and uncertainties, including, without limitation, the company's dependence on first parties, market conditions for the sale of services, availability of capital, operational risks on contracts, and other risks and uncertainties. The company disclaims any obligation to update information contained in any forward-looking statement.

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