TSX-V: CST
QUEBEC CITY, Feb. 28, 2019 /CNW Telbec/ - CO2
Solutions Inc. (the "Corporation" or "CO2
Solutions") (TSXV: CST) today announced its financial results for
the three-month period ended December 31,
2018. The Corporation's detailed financial statements and
management's discussion and analysis ("MD&A") will be filed and
available on www.sedar.com.
Three-month Period ended December 31,
2018 and Subsequent Operational Highlights
Update on the Saint-Félicien Project
The Corporation announces that the commissioning of the
CO2 capture unit at Saint-Félicien will begin shortly.
This milestone is occurring later than originally planned
given the late delivery of certain components and the difficult
weather conditions experienced during equipment installation this
fall and winter. Currently, the Corporation estimates that, due to
such delays, unforeseen equipment costs, and exchange rate
variations, the total cost of the CO2 capture unit and
ancillary equipment could attain $11M, approximately $2.5M higher than the October 2017 estimate provided by the
Corporation's consulting engineers. Therefore, the Corporation is
evaluating financing options given its current cash situation.
The CO2 capture unit is currently
undergoing pre-operation verifications of each of the unit's
systems, after which the unit is expected to begin
its operation and the first tonnes of CO2 are
expected to be captured. Shortly thereafter, the
Corporation expects to ramp up the overall capture rate to reach
the unit's nominal capacity of 30 tonnes of CO2 per day.
Once the capture unit reaches its nominal capacity, a six-month
demonstration period is expected to begin, after which the
Corporation would begin generating revenues from the sale of
the CO2 to Serres Toundra. This unit will be the
Corporation's second operating CO2 capture unit and its
first commercial unit. It is expected to provide several benefits
to its stakeholders, from generating revenues for CO2
Solutions, to reducing the CO2 emissions of Resolute
pulp mill and enhancing the growth of Serres Toundra's greenhouse
production. The Corporation continues to attract strong interest
from corporations worldwide seeking a cost effective and
environmentally friendly CO2 capture technology.
Update on the VCQ Project
The Corporation continues to lead the world's most comprehensive
CO2 capture and utilization demonstration project,
Valorisation Carbone Québec (VCQ). Launched in February 2017, the objectives of this project are
to develop and demonstrate commercially viable end-to-end solutions
to capture and utilize CO2 in various applications while
reducing greenhouse gas ("GHG") emissions. The first CO2
conversion technology, the conversion of captured CO2
into methanol and then dimethyl ether, is expected to be deployed
in mid-2019.
CO₂Solutions Welcomes Suncor as Industrial
Partner in the VCQ Project
On November 28, 2018,
CO2 Solutions announced that Suncor (TSX: SU) joined the
VCQ project as its second Industrial Partner. The Industrial
Partner category is one of five partnership types in the VCQ
project along with the Founder, Supplier, Utilization Technology
and End-Use categories. Industrial partners make financial
contributions to the VCQ budget in exchange for access to the
techno-economic reports covering the capture and utilization
technologies and generated throughout the project. Continuous
collaboration with partners is intended to ensure the success
of the VCQ project and enable significant progress in the
development of utilization technologies for captured
CO2.
CO₂Solutions Enters into a Research Agreement
with CNETE
In December 12, 2018, the
Corporation announced that it had entered into a research agreement
with the Collège de Shawinigan's Centre National en Électrochimie
et en Technologies environnementales ("CNETE"). CNETE's
expertise lies in the areas of bioprocess, membrane separation
technology and electrochemistry. Under the terms of the agreement,
CNETE assists the Corporation in enhancing and managing key
components of its enzyme production process. The expected result is
a further decrease in the Corporation's enzymatic carbon capture
technology's operating costs.
Financial Update
Revenues
The Corporation recorded no revenues for the three-month periods
ended December 31, 2018 and
2017. For the six-month periods ended December 31, 2018, and 2017, the corporation
recorded $0 and $0.02 million respectively. For the same
period in 2017, the Corporation recorded $0.02 million. Funds received from subsidy or
grant agreements signed with federal or provincial government
agencies are not treated as revenue. Rather, these amounts are
accounted for as a deduction from research and development expenses
in the period the contribution is claimed and accrued (see
Research and development expenses below).
Research and Development Expenses
Research and development expenses, before tax credits and
government assistance, increased by $4.43 million to $6.40 million for the three-month period
ended December 31, 2018, compared to
$1.97 million for the same
period in 2017. Increases in the three-month period from that of
the prior year reflect the significant increase of work associated
with the VCQ and Saint-Félicien projects. These expenses will vary
based upon the development phase and activity levels of ongoing
projects undertaken by the Corporation.
For the six-month period ended December
31, 2018, research and development expenditures, before tax
credits and government assistance, increased by $5.65 million to $11.24 million from $5.59 million for the same period last year.
As was the case above, this increase reflects the higher volume of
research and development activities associated with the VCQ and
Saint-Félicien projects.
Quebec provincial research and
development tax credits accrued during the quarter were
$3.55 million and $7.4 million for the 6-month period ended
December 31, 2018.
General and Administrative Expenses
General and administrative expenses totalled $0.93 million for the three-month
period ended December 31, 2018, compared to $0.74 million for the same period in 2017,
representing an increase of $0.2 million. This net increase is
predominantly related to an increase in compensation-related
expenses (cash-based salaries and benefits and non-cash stock-based
compensation) of $0.05 million,
an increase of $0.15 million in
advertising, travel and other general office expenses.
General and administrative expenses totalled $1.39 million for the six-month period ended
December 31, 2018, compared to
$1.18 million for the same
period in 2017. This net decrease of $0.21 million is predominantly related to a
net increase in travel expenses for the six month-month period of
$0.15 million and $0.06 million in professional fees primarily
related to legal and professional fees associated with public
relations, investor relations and communications.
Loss and Comprehensive Loss for the Quarter
The Corporation recorded a loss of $3,77
million, or $0.02 per share,
for the three-month period ended December
31, 2018, an increase of $2,67
million from the loss of $1,10
million or $0.01 per share,
for the same period in 2017. For the six-month period ended
December 31, 2018, the Corporation
recorded a loss of $5,34 million or
$0.03 per share, an increase of
$3.50 million from the loss of
$1,84, or $0.01 per share, for the same period in 2017. No
significant factors, other than those described above, contributed
to the change in the loss for the three-month or the six-month
periods.
Liquidity and Financial Position
As at December 31, 2018, the
Corporation had an aggregate balance of cash and cash equivalents
of $1.17 million and negative
working capital (current assets less current liabilities) of
$8.09 million.
The unaudited condensed interim consolidated financial
statements for the six-month period ended December 31, 2018 and 2017, and related notes
included therein and the Management's Discussion and Analysis for
the period ended December 31, 2018,
and additional information regarding the Corporation, are available
on SEDAR at www.sedar.com.
Going Concern
To date, the Corporation has financed its operations mainly
through cash flow obtained from technology development
collaborations, the issuance of common shares or convertible
securities and government assistance.
As at December 31, 2018, the
Corporation had an accumulated deficit of $45,296,161 compared to $39,858,682 as at December
31, 2017. In addition to ongoing working capital
requirements, the Corporation must secure sufficient funding to
meet its capital and operational expense commitments related to its
research and development projects as well as its general and
administration expenses. As at December 31,
2018, the Corporation showed a working capital deficiency of
$8,095,548 compared to $3,631,747 at the same time last year. The
working capital deficiency includes cash and cash equivalents of
$1,162,821 ($2,101,425 in 2017) and deferred grant of
$6,017,380 ($3,553,770 in 2017). As at December 31, 2018 and currently, management
estimates that these current funds alone would not be sufficient to
allow the Corporation to continue its operations over the next
twelve (12) months especially given the cost increase related to
the Saint-Félicien project.
Through current and ongoing negotiations with potential funding
partners and provincial and federal government agencies, the
Corporation's management is actively seeking to raise the necessary
capital to meet its funding requirements. However, there can be no
assurance that management's plans or current negotiations will be
successful. Until such time as financing at terms acceptable to the
Corporation can be confirmed or negotiations with potential funding
partners are successfully concluded, the Corporation may have to
act to limit the ongoing project and development work and reduce
its operating costs.
Accordingly, these conditions have resulted in an uncertainty
that may cast significant doubt about the Corporation's ability to
continue as a going concern and accordingly, the appropriateness of
the use of IFRS applicable to a going concern as described in the
following paragraph.
If management is unable to obtain new funding, the Corporation
may have to act to limit ongoing projects and development work and
reduce its operating costs or take other measures as deemed
necessary. In the case that the Corporation is unable to continue
its operations, amounts realized for assets might be less than
amounts reflected in the Corporation's consolidated financial
statements.
The consolidated financial statements of the Corporation do not
reflect the adjustment to the carrying values of assets and
liabilities, expenses and consolidated balance sheet
classifications that would be necessary were the going concern
assumption inappropriate. These adjustments could be material.
About CO2 Solutions Inc.
CO2 Solutions is an innovator in the field of
enzyme-enabled carbon capture and has been actively working to
develop and commercialize the technology for stationary sources of
carbon pollution. CO2 Solutions' technology lowers the
cost barrier to Carbon Capture, Utilization and Sequestration
(CCUS), positioning it as a viable CO2 mitigation tool,
as well as enabling industry to derive profitable new products from
these emissions. CO2 Solutions has built an extensive
patent portfolio covering the use of carbonic anhydrase, or
analogues thereof, for the efficient post-combustion capture of
carbon dioxide with low‐energy aqueous solvents. Further
information can be found at www.co2solutions.com.
CO2 Solutions Forward-looking Statements
Certain statements in this news release may be forward-looking.
These statements relate to future events such as (i) the
Corporation's projects, including their costs, progression and
benefits, (ii) the Corporation's expected activities, expenditures
and capital requirements, (iii) the Corporation's ability to
continue as a going concern, (iv) anticipated developments in the
Corporation's operations foreseeable future, (v) the adequacy of
the Corporation's financial resources and (vi) other events or
conditions that may occur in the future, and reflect the current
assumptions and expectations of management. Forward-looking
statements are frequently, but not always, identified by words such
as "expects", "anticipates", "believes", "intends", "estimates",
"predicts", "potential", "targeted", "plans", "possible" and
similar expressions, or statements that events, conditions or
results "will", "may", "could" or "should" occur or be
achieved.
Factors that could cause actual results to differ materially
from such forward-looking statements include, but are not limited
to, (i) availability of funding, (ii) general business and economic
uncertainties, (iii) third party events and adverse market
conditions, as well as those risks set out in the Corporation's
public documents filed on SEDAR and (iv) the adequacy of the
Corporation's available cash resources. The Corporation's
forward-looking statements are based on the beliefs, expectations
and opinions of management on the date the statements are made.
Consequently, all forward-looking statements made in this news
release involve known and unknown risks and uncertainties that
could cause actual results to differ materially from those
expressed or implied in these forward-looking statements.
Readers are cautioned not to place undue reliance on such
forward-looking statements. CO2 Solutions undertakes no
obligation to update or revise any forward-looking statements,
whether as a result of new information, future events or otherwise,
except as may be required under applicable law.
Neither the 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.
www.co2solutions.com
SOURCE CO2 Solutions Inc.