QUEBEC CITY, Oct. 20, 2015 /CNW/ – CO2 Solutions Inc. (the “Corporation” or “CO2 Solutions”) (TSX-V: CST) announced today its financial results for the
fourth quarter and financial year ended June 30, 2015. The
Corporation's detailed financial statements and management's discussion
and analysis (“MD&A”) will be filed on www.sedar.com.
Fourth quarter operational highlights
In April 2015, the Corporation announced the results of its testing
programme with the University of North Dakota's Energy & Environmental
Research Center (“EERC”). The results of the testing, at a scale of
1 ton per day (“tpd”) of CO2 captured, demonstrated that the Corporation's technology allows carbon
capture at lower costs. The results from the EERC testing programme
were independently verified.
Following on the EERC results, the Corporation, with approval from its
partners Husky Energy Inc. and ecoENERGY Innovation Initiative, decided
to move forward with the operation of its 10 tpd demonstration project.
In May 2015, the unit at Salaberry-de-Valleyfield was commissioned and
operations commenced. Significant cost and time savings were achieved
by running the project at Salaberry-de-Valleyfield in Quebec, where the
unit was constructed, instead of dismantling and shipping the unit to
A private placement for gross proceeds of $3.8 million was completed in
June 2015. Units in the offering were priced at $0.25 and were
comprised of one common share and one common share purchase warrant,
entitling its holder to acquire one common share at a price of $0.35
until June 5, 2018. More details on the private placement may be found
in the Corporation's MD&A which will be filed on SEDAR.
In June 2015, the Corporation announced the execution of a collaboration
agreement with GasTran Systems (“GTS”) for the use in carbon capture of
GTS's rotating packed bed technology. Initial testing combining both
companies' technology showed the potential for reducing the size of
certain capture equipment by a factor of 20. The Corporation believes
that this collaboration has the potential of resulting in the reduction
of capital costs, as well as increasing the applicability of CO2 capture at many emitter locations where space and footprint
considerations are as important as cost, such as power plants and
Subsequent material events
In September 2015, the Corporation provided an update on progress with
its 10 tpd demonstration project in Salaberry-de-Valleyfield.
Preliminary results, following 1,200 hours of operation using the
Corporation's proprietary 1T1 enzyme, showed:
CO2 capture consistently at design capacity, validating the core
proposition of the technology.
Purity of the CO2 produced meets the most stringent industry requirements for sectors
such as food and beverage, with no or only minor additional processing
or purification required.
Operation also confirmed the environmentally friendly aspects of the
Corporation's technology and the absence of harmful wastes.
The proven stability, robustness and consistency of the demonstration
project's operation allowed the Corporation to change from
round-the-clock operator monitoring to day-time operator presence only
with autonomous overnight operation.
The Corporation has continued to operate the demonstration project
beyond the 1,200-hour mark in order to conduct further fine tuning.
Additionally, tests are run to expose the system to shocks. To date,
the system has shown great robustness in this respect, which, combined
with the ability to run the demonstration project autonomously,
indicates stability of CO2 Solutions' carbon capture technology under industrial circumstances.
The full data from the tests will be submitted for independent review
with a third party prior to publication.
“Financial year 2015 was an important year for us in which we reached a
number of significant milestones in our progress towards
commercialization,” stated Evan Price, President & CEO of CO2 Solutions. “Following on the significant announcement of the EERC
project results, we managed to accelerate our commercialization
timeline by bringing forward our 10 tpd demonstration project. To date,
the project has confirmed our expectations of delivering the low cost,
robust and sustainable carbon capture technology. We are now in the
final stages of de-risking our existing technology, while we have a
great opportunity to open new markets through the development of a
next-generation set-up with our partner GTS. Focus going forward will
be on completing the de-risking phase and pursuing commercial
opportunities in a number of industries, such as greenhouses, food and
beverage, enhanced oil recovery and others.”
Summary of financial results
The Corporation recorded no revenue for the three-month period and the
financial year ended June 30, 2015. Revenues for 2014 ($0.4 million)
were primarily generated from research and development collaborations
with CO2 Capture Project and Statoil ASA. The decrease in revenue between the
financial years is the result of the completion of these projects in
the financial year ended June 30, 2014. There were no similar revenues
in the financial year ended June 30, 2015.
Research and development expenses
Research and development expenditures, before tax credits and government
assistance, increased by $3.5 million to $5.6 million for the year
ended June 30, 2015, compared with $2.1 million for the financial year
ended June 30, 2014, due primarily to the increased expenses associated
with the ecoENERGY project. For the quarter, research and development
expenditures increased from $0.6 million to $1.6 million. As for the
financial year, this increase was related to the Corporation's
expenditures on the ecoENERGY project.
Research and development tax credits accrued during the financial year
ended June 30, 2015, increased by $0.1 million, reflecting the level of
government assistance during the financial year and its effect on
expenses that are eligible for research and development tax credits.
Government assistance for the financial year ended June 30, 2015 was
$2.8 million, an increase over the financial year ended June 30, 2014
of $1.0 million.
General and administrative expenses
General and administrative expenses for the quarter came in at $0.5
million, up slightly ($0.1 million) from the same period in 2014.
Loss and comprehensive loss for the quarter
The Corporation recorded a loss of $2.3 million, or $0.02 per share, for
the three-month period ended June 30, 2015, an increase of $2.3 million
from $0.0 million, or $0.00 per share, for the same period in 2014. For
the financial year ended June 30, 2015, the Corporation recorded a loss
of $5.3 million, or $0.05 per share, an increase of $3.6 million from
$1.7 million, or $0.02 per share, for the same period in 2014. The
largest single factor in the increased loss between financial years was
related to the major spending (professional fees and subcontractors and
pilot construction – $3.9 million) on the demonstration project in
Salaberry-de-Valleyfield made in 2015, and certain non-cash expenses
for professional fees made in the form of warrants and shares for debt
transactions. No other significant factor, other than those described
above, contributed to the change in the loss for the period.
Liquidity and financial position
As at June 30, 2015, the Corporation had an aggregate cash balance of
$2.4 million, total liquid assets of $3.8 million and positive working
capital (current assets less current liabilities) of $2.3 million. The
Corporation had negative cash flows from operations of $4.2 million for
the financial year ended June 30, 2015, as compared to negative cash
flows of $0.9 million for the prior year. The increase in cash outflows
was caused primarily by activities related to the Corporation's
demonstration project in Salaberry-de-Valleyfield.
Cash flows generated from financing activities for the financial year
ended June 30, 2015, increased to $6.6 million, related to two private
placements completed during the financial year. The first private
placement, completed in July 2014, consisted of 20.2 million units
priced at $0.15, each comprising one common share and one common share
purchase warrant (with an exercise price of $0.25 per share), for gross
proceeds of $3.0 million. The second private placement, completed in
June 2015, consisted of 15.2 million units, priced at $0.25, each
comprising one common share and one common share purchase warrant (with
an exercise price of $0.35), for gross proceeds of $3.8 million.
With the receipt of the proceeds from these two private placements, the
announced government assistance, the bank line of credit of $150,000,
and the close monitoring of operating expenses, management believes the
Corporation has sufficient funds to meet its working capital
requirements for at least the foreseeable future.
A more comprehensive discussion of the Corporation's operations,
financing activities as well as CO2 Solutions' audited consolidated financial statements will be found on
the Corporation's website at www.co2solutions.com and in the Corporation's filings on www.sedar.com.
Board approval of changes to the number of shares available under the
Corporation's security-based compensation plans and the adoption of a
Deferred Share Unit Plan and a Restricted Share Unit Plan
On October 20, 2015, the Board of Directors adopted, subject to TSX
Venture Exchange's and shareholders' approval, a Deferred Share Unit
Plan (the “DSU Plan”) and a Restricted Share Unit Plan (the “RSU Plan”)
for the Corporation. The objective of the DSU Plan is to strengthen the
alignment of interests between the directors, officers, consultants and
employees of the Corporation and its affiliates and the shareholders of
the Corporation by linking a portion of annual compensation to the
future value of the common shares of the Corporation. Pursuant to the
DSU Plan, the Board of Directors may grant to participants deferred
share units of the Corporation, representing the right of such
participant to receive previously unissued common shares of the
Corporation or a cash equivalent.
The RSU Plan provides for incentive payments in the form of the issuance
of common shares or cash to officers, consultants and employees of the
Corporation and its affiliates for the purpose of advancing the
interest of the Corporation and its affiliates through the motivation,
attraction and retention of eligible employees and eligible consultants
and to secure for the Corporation and the shareholders of the
Corporation the benefits inherent in the ownership of common shares by
such individuals. Pursuant to the RSU Plan, the Board of Directors may
grant to participants restricted share unit awards as an incentive
payment for services rendered to the Corporation or an affiliate, as
the case may be.
Further details regarding the DSU Plan and the RSU Plan will be included
in the management information circular of the Corporation which will be
mailed to the shareholders and filed on SEDAR at www.sedar.com in connection with the annual and special meeting of shareholders of
the Corporation to be held on November 26, 2015.
On October 20, 2015, the Board of Directors also adopted amendments to
the stock option plan of the Corporation to increase the maximum number
of common shares reserved for issuance under the stock option plan from
7,918,783 to 12,633,532, which reflects the increased number of shares
outstanding, and to provide that this maximum also applies to all
grants or awards made under the DSU Plan and the RSU Plan.
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,
Sequestration and Utilization (CCSU), 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 or CO2 Solutions' future economic performance and reflect the current
assumptions and expectations of management. Certain unknown factors may
affect the events, economic performance and results of operation
described herein. 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
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.
SOURCE CO2 Solutions Inc.