Revenue Increases 70%, Operating Loss Narrows and Margin Improves as Pond Technologies See Significant Validation of Technology with Major Licensing and Supply Agreements Executed
MARKHAM, ON, Nov. 17, 2021 /CNW/ – Pond Technologies Holdings Inc. (the “Company” or “Pond“) (TSXV: POND) (OTCQB: PNDHF) (FSE: 4OO), an ESG company addressing global sustainability challenges of protein shortages and climate change, announces that the unaudited interim condensed consolidated financial statements of the Company for the three months ended September 30, 2021 and the related management’s discussion and analysis have been filed and are available for review on the SEDAR website at www.sedar.com or on the Company’s website at www.pondtech.com. Q3 2021 Highlights and a brief business update follow below:
Q3 2021 Highlights
- Commercial Validation of Pond’s Carbon and Biotech Technology – Q3 2021 was a turning point for Pond as it signed significant licensing and supply agreements to adopt and deploy its technology. The first was a technology access agreement signed with a North American Fortune 500 Company to collect up to $1 million in milestone payments to grow Covid-19 antigens. The second was with UK based Livalta, an AB Agri Company, a subsidiary of Associated British Foods, for the world’s first scalable production of algae from carbon emissions aimed to revolutionize protein in animal feed. The supply and licensing agreements with Livalta are valued at over $5 million.
- Q3 Revenue Increased by 70% – Group revenue for Q3 2021 totaled $2,163,000 (Q3 2020: $1,275,000), an increase of $888,000 (70%). The increase is primarily a result of licensing revenue recognized in the quarter. For the 9 months ended September 30, 2021, revenue increased by 30% $4,364,000 (2020: $3,367,000). Management anticipates as the Company progresses its commercialization efforts, and the nature of the contracts signed, revenue in its Carbon and Biotech divisions will significantly vary quarter to quarter as the Company works through its sales pipeline, and fulfills milestones related to signed contracts.
- Improvement in Margin – Q3 2021 margin (revenue less direct costs and expenses) was $903,000 (42%) vs. $175,000 (13%) in Q3 2020. For the nine months ended September 30, 2021, a margin of $1,335,000 (30%) vs. $648,000 (19%) was achieved. The improvement in margin is primarily attributable to licensing fees recognized in Q3.
- Quarterly Decreases in Operating Loss in 2021 – The Q3 2021 operating loss of $557,000 was lower than Q2 $733,000 and Q1 $1,003,000.
On October 27, 2021, Pond announced its subsidiary, Pond Naturals Inc., has been certified GMP compliant by an independent third-party auditor, SCS Global Services (SCS), under the HACCP-based Good Manufacturing Practices (GMPs) Food Safety Program standard. The certification audit included inspection of the facility and management system against the site’s Food Safety Program based on 21 CFR Part 111 (cGMPs for Dietary Supplements).
On November 1, 2021, Pond announced it has agreed to a non-exclusive collaboration arrangement with project delivery firm Malone Group. A pioneering global arrangement between Malone Group and Pond will provide Pond the added infrastructure to support the scaling up process through its ongoing commercialization efforts. Malone Group provides Pond access to process and safety engineering expertise as well as a wealth of experience in delivering projects in operational and regulated environments.
On November 15, 2021, Pond announced it has issued an amended and restated promissory note in the principal amount of CAD$1,988,500 (the “Promissory Note“) to Georgian Villas Inc. (the “Lender“), an entity controlled by the Chairman of Pond, Mr. Robert McLeese. The Promissory Note replaces and supersedes the original promissory note in the principal amount of CAD$2,000,000 issued by Pond to the Lender on November 15, 2019. The new Promissory Note has the following material attributes:
- Reduction of interest rate from 12% to 9.55% per annum, payable quarterly, with the first interest payment due on February 15, 2022;
- Promissory Note maturing on November 15, 2024;
- Is convertible by the Lender into common shares in the capital of the Company (“Common Shares”) at a conversion price equal to greater of (i) $0.39 per Common Share and (ii) the average closing price of a Common Share for the 30 trading days on the TSX Venture Exchange (“TSXV”) immediately preceding November 15, 2021; and
- Secured by a security interest over all present and after-acquired undertaking, property and assets of Pond (excluding its equity interest in its subsidiary, Paige Growth Technologies Inc.) pursuant to an amended and restated security agreement granted by Pond in favour of the Lender.
Grant Smith, President & CEO of Pond, said “The third quarter was the inflection point for Pond, with record revenue growth, improving margins, and a narrowing operating loss. We are in the early stages of proving the strength of our model. Highlighted by the significant recent validation of our technology by two multi-billion-dollar international companies, we are extremely excited for what the future holds. Moreover, the restated and amended convertible note with Pond’s Chairman is a significant step forward for our financial flexibility, and we look forward to executing on our growing sales pipeline.”
On November 15, 2021, Pond granted an aggregate of 1,275,000, stock options (“the Options”) to eligible executives, employees and consultants under the Company’s existing stock option plan. Each option is exercisable for one common share of the Company at an exercise price of $0.40 per share. The closing price of the common shares of the Company on the TSX Venture Exchange on November 12, 2021, was $0.40. The Options have a term of 5 years and vest as to one-third on the date of grant, one-third on the first anniversary of the date of grant, and the balance on the second anniversary of the date of grant.
About Pond Technologies Holdings Inc.:
Located in Markham, Ontario, Pond is a technology company that provides profitable solutions to the global health and wellness challenges of climate change and nutrition. Pond’s proprietary growth platform, including patented advanced photonics, optimizes key growth inputs in order to provide a controlled environment that maximizes the growth of algae and other organisms. This enables industrial emitters to generate new revenue streams from the transformation of underutilized CO2 to valuable algae-based products, such as protein for animal feed and nutraceutical products like Chlorella, Spirulina, and Astaxanthin for human consumption. For more information visit https://www.pondtech.com/.
Forward Looking Statements
This press release contains forward–looking statements within the meaning of applicable securities laws, including statements regarding anticipated growth and related revenue generation, development of strategic business relationships, and anticipated development and commercialization of technological advances. Such forward–looking statements are based on certain key expectations and assumptions made by Pond, including, among others, assumptions regarding the anticipated benefits of its collaboration arrangement with the Malone Group, anticipated completion of the Livalta project and revenue generated therefrom, continued legislative (including tax) regime in which Pond operates, the successful negotiation of binding agreements to give effect to future licensing arrangements, availability of cost–effective labour and supplies, the proper functioning of Pond’s technology, the quality of the algae produced, the demand for Pond’s technology, the ability of Pond to successfully compete, cash flow and expenses, and obtaining and maintaining intellectual property protection. Although Pond believes that the expectations and assumptions on which such forward–looking statements are based are reasonable, undue reliance should not be placed thereon and Pond can give no assurance that they will prove to be correct. By its nature, such forward–looking statements are subject to various risks and uncertainties, which could cause the actual results and expectations to differ materially from the anticipated results or expectations expressed, including the risks set forth in Pond’s management’s discussion and analysis of financial condition and results of operations for its year ended December 30, 2020 and in its unaudited interim condensed consolidated financial statements for the three months ended September 30, 2021, available on Pond’s profile on SEDAR at www.sedar.com. Readers are cautioned not to place undue reliance on this forward–looking information, which is given as of the date hereof, and to not use such forward–looking information for anything other than its intended purpose. Pond does not undertake any obligation to update publicly or revise any forward–looking information, whether as a result of new information, future events or otherwise, except as required by law.
Neither the TSXV nor its Regulation Services Provider (as that term is defined in the policies of the TSXV) accepts responsibility for the adequacy or accuracy of this release.
SOURCE Pond Technologies Holdings Inc.
For further information: Grant Smith, Chief Executive Officer, at email@example.com, 416-287-3835 ext. 201; or Cole Stevens at firstname.lastname@example.org