REG - MyCelx Tech. Corp. MyCelx Tech. Cp-MYXR - Half Year Results Statement
20/09/2023 07:00
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RNS Number : 9758M MyCelx Technologies Corporation 20 September 2023
20 September 2023
MYCELX TECHNOLOGIES CORPORATION (AIM: MYX)
Half Year Results Statement
MYCELX Technologies Corporation ("MYCELX" or the "Company"), the clean water
and clean air technology company transforming the environmental impact of
industry, is pleased to announce its unaudited interim results for the six
months ended 30 June 2023.
Highlights
Financial
· Revenue up 51% to $5.6 million (2022 H1: $3.7 million)
· Gross profit margin of 45.2% (2022 H1: 37.5%)
· EBITDA loss $900,000 (2022 H1: loss $2.1 million)
· Net loss of $1.5 million (2022 H1: $2.9 million)
· Cash and cash equivalents $1.4 million at end of period
Operational
· United States PFAS: signed three pilot testing agreements for PFAS
remediation in drinking water and landfill leachate sites
· REGEN: secured second REGEN sale to National Oil Company for water
treatment during Enhanced Oil Recovery ('EOR') in the Middle East
· Middle East Downstream: converted an existing emergency response
project into a longer-term contract
· Middle East Downstream: signed fourth project with existing customer
to provide clean water at a fertilizer production facility
Post Period Update
· PFAS: Company's Performer media received NSF 61 certification for
drinking water
· PFAS: trials continue, gathering critical longer run-time data
· REGEN: trial of REGEN media in EOR production with strategic partner
expected to start up in Q4 2023
· Middle East Downstream: secured project to treat complex wastewater
with minimum revenue of $1.0 million in 2023 meeting strict discharge
standards
· Middle East Downstream: several contract renewals including an
operating contract to treat MTBE (methyl tert-butyl ether) plant wastewater
now entering its twelfth year
Outlook
MYCELX operates in three core markets, PFAS remediation, REGEN and Middle East
Downstream, that are poised for continued robust growth into 2024 and beyond.
The burgeoning PFAS remediation market is in its infancy in the U.S. and
around the world but there is mounting evidence of large-scale toxic
contamination of groundwater and drinking water with more compromised
industrial sites identified every day. In the U.S., several global
PFAS-producing companies have settled lawsuits in the billions of dollars,
such as 3M's $10.3 billion claim resolution, that will fund remediation
projects for years while the U.S. Department of Defense has set aside $2
billion dollars to remediate groundwater around their bases that have been
contaminated for a significant period. The PFAS remediation market is large,
high margin and is expected to be long-lasting with potential to provide
sustainable and stable revenues for the Company far into the future. The
Company is engaged in several ongoing pilot trials in different PFAS sectors
which satisfy the end users and engineering consultants' expectations of
significant data gathering. With multiple project proposals submitted to end
users and strategic partners, we expect project bidding activity to be robust
in our focus areas and expect to move to commercial discussions later this
year and in early 2024.
The oil and gas markets have been robust through H1 and are forecasted to
continue to be so into 2024 and beyond. In the current oil price range,
producers are expending resources to upgrade or expand production and are
investing in cleaner production solutions. The Company anticipates the
start-up of a pilot system in Q4 for water treatment during EOR production
working in cooperation with a global strategic partner. The EOR market is the
most lucrative market for our REGEN media and this pilot comes on the heels of
the upgrade contract we were awarded in competition earlier this year for use
of REGEN in existing equipment with a Middle East EOR producer.
Adding to our success in the downstream market this year, the Company recently
secured a project for complex wastewater treatment leveraging our REGEN
product in the process system that has a minimum value of $1.0 million in
2023. This market continues to grow as we have broadened and enhanced our
offerings. Our position as the best available technology for these complex
wastewater streams has been confirmed by our successful treatment where all
other competitors have failed. In one of our latest projects, our technology
has been so effective that the wastewater treated can then be discharged to
irrigation systems. This positions us well as regulations become stricter and
markets look for more sustainable reuse options for industrial water. We are
now poised to garner higher quality projects where our technology and
experience are significant differentiators.
The Company is very upbeat about its prospects for the remainder of 2023 and
going into 2024. We have a solid foundation of operating contracts, the
adoption of our REGEN media for EOR production by a major Middle Eastern
producer, which is a major step forward, and significant data-gathering pilots
in the PFAS market with potential strategic partners as well as direct
customer engagement. The pipeline in each of the core markets is strong and
growing and the Company is optimistic that it can continue to convert bids to
projects during the remainder of this year and into 2024 and 2025 in support
of market expectations.
Commenting on these results, Connie Mixon, CEO, said:
"Today's Half Year results show solid improvement of MYCELX's performance in
comparison to the same period last year. A number of significant contract
awards with both existing and new customers were secured during the first six
months of the year and after period end demonstrating our focus markets are
robust and our proprietary products meet the performance and environmental
challenges our customers face.
With our proven and patented technologies, we are uniquely well placed to play
a leading role in PFAS remediation, as well as to continue servicing
industrial clients, in particular in the oil and gas sector where our REGEN
media is in increasing demand for enhanced oil recovery. We continue to offer
innovative solutions in the downstream wastewater market that allow our
customers to reach their stated goals of maximising operational performance
while minimising their environmental footprint.
We have much cause for optimism and look forward to updating shareholders on
these exciting developments over the remainder of the year and beyond."
For further information, please contact:
MYCELX Technologies Corporation
Connie Mixon, CEO Tel: +1 888 306 6843
Kim Slayton, CFO
Canaccord Genuity Limited (Nomad and Sole Broker)
Henry Fitzgerald-O'Connor Tel: +44 20 7523 8000
Gordon Hamilton
Celicourt Communications (Financial PR)
Mark Antelme Tel: +44 20 7770 6424
Jimmy Lea
Chairman's and Chief Executive Officer's Statement
We are pleased to publish MYCELX's H1 2023 results today, alongside a wider
business update on the corporate activity we have been working on since the
start of the year.
Operational Review
We delivered a number of important operational objectives during H1, including
securing multiple PFAS trials that were installed post period and are ongoing,
converting an emergency response contract to longer term deployment, along
with renewing several contracts in the wastewater market in the Middle East. A
competitive contract award for sale of REGEN and retrofit package to an EOR
producer in the Middle East was secured confirming our REGEN media is the most
efficient and effective at treating water for the expansive and lucrative EOR
market.
A key focus for the Company in the first half of 2023 was enhancing the
applicability and credibility of our PFAS technology offering. We achieved
this goal by securing National Sanitation Foundation NSF 61 certification
which is required for use of our proprietary PFAS media in drinking water
applications. Our media also tested favorably for the Toxicity Characteristic
Leaching Procedure (TCLP) that confirms our spent media does not leach
hazardous materials into the environment, a key factor in the cost-effective
removal of PFAS. Achieving both of these goals helps open the door for our
media to be deployed in specific, large PFAS applications. Another key focus
was growing our relationships with strategic partners with active operating
projects as well as building strong client relationships. Two of the trials
currently operating are with potential partners who want effective, cost
competitive, reliable technology that is energy efficient, which our solution
achieves.
During the period the Company secured a sale to a Middle Eastern National Oil
Company (NOC) using an EOR production process that will deploy our proprietary
Retrofit package and REGEN media to replace underperforming Nutshell media. We
expect the sale to lead to more projects with this producer who is upgrading
and expanding field operations over the next several years. The Company is
also working with a strategic partner in the EOR market with a pilot expected
to start up in Q4 that will showcase REGEN media to global EOR producers. We
expect to be able to leverage their sales platform to accelerate uptake given
our award of the NOC contract in the Middle East.
We continue to have success in the downstream market in the Middle East and in
Saudi Arabia in particular. The Company has focused on carving out business
that competitors do not have the capability or experience to address. As a
technology company, MYCELX has built on its proprietary technology to leverage
other protocols to successful projects that have direct impact on the
environmental goals of Saudi Arabia. An emergency response system was
converted to a longer-term deployment that allowed the customer to continue
operations prior to a scheduled maintenance program. The Company renewed
contracts with two other operating installations with ongoing demand for our
systems.
Financial Review
Due to increased demand in the Middle East and growth in long-term legacy
media sales, revenue increased by 51% to $5.6 million compared to $3.7 million
in the first half of 2022. Revenue from equipment sales and leases increased
by 100% to $2.0 million in the first half of 2022 (2022 H1: $1.0 million).
Revenue from consumable filtration media and service increased by 33% to $3.6
million (2022 H1: $2.7 million). Whilst the equipment sales are one off by
nature, there is longevity to the media sales and on-going lease and service
revenues.
Gross profit increased by 79% to $2.5 million in the first half of 2023,
compared to $1.4 million in the first half of 2022, and gross profit margin
increased to 45% in the first half of 2023 (2022 H1: 38%) due to the Company's
focus on higher-quality, higher-margin projects.
Total operating expenses for the first half of 2023, including depreciation
and amortisation, decreased by 7% to $3.8 million (2022 H1: $4.1 million). The
largest component of operating expenses was selling, general and
administrative expenses, which decreased by approximately 8% to $3.6 million
in the first half of 2023 (2022 H1: $3.9 million) due to moving expenses for
relocating the Company's office in Georgia in H1 2022. Depreciation and
amortisation within operating expenses increased by 26% to $116,000 (2022 H1:
$92,000).
EBITDA was negative $900,000 for the first half of 2023, compared to negative
$2.1 million for the first half of 2022. EBITDA is a non-U.S. GAAP measure
that the Company uses to measure and monitor performance and liquidity and is
calculated as net profit before interest expense, provision for income taxes,
and depreciation and amortisation of fixed and intangible assets, including
depreciation of leased equipment which is included in cost of goods sold. This
non-U.S. GAAP measure may not be directly comparable to other similarly titled
measures used by other companies and may have limited use as an analytical
tool.
The Company recorded a loss before tax of $1.3 million for the first half of
2023, compared to loss before tax of $2.7 million for the first half of 2022.
Basic loss per share was 7 cents for the first half of 2023, compared to basic
loss per share of 13 cents for the first half of 2022.
As of 30 June 2023, total assets were $12.2 million with the largest assets
being inventory of $3.8 million, property and equipment of $3.0 million, $1.7
million of accounts receivable and $1.4 million of cash and cash equivalents
including restricted cash.
Total liabilities as of 30 June 2023 were $2.8 million and stockholders'
equity was $9.4 million, resulting in a debt-to-equity ratio of 30%.
The Company ended the period with $1.4 million of cash and cash equivalents,
including restricted cash, compared to $1.7 million in total at 31 December
2022. The Company used approximately $100,000 cash in operations in the first
half of 2023, compared to $2.0 million used in operations in the first half of
2022. The Company used $172,000 in investment activities in the first half of
2023 (H122: $373,000 used in investing) and there were no financing activities
in the first half of 2023 (H122: $2.0 million from the sale of Common Shares
of stock).
Outlook
The momentum shown in the first half from each of our three core markets has
been maintained into the current period and we are confident that this will
continue for the forseeable future. The PFAS remediation market is large and
will continue for years to come. Regulations continue to get more stringent,
and more sites will be identified over time. In the short and medium term our
goal is to both win new contracts and to acquire solid data through trials
with significant longevity, building relationships with strategic partners and
direct customers that will accelerate uptake of our PFAS solution. The EOR oil
producers we have targeted are upgrading and expanding their fields and, with
the widening scope of Environmental, Social and Governance ('ESG')
requirements, are looking for water treatment solutions that provide cleaner
production and use less water, which is solved with our technology. We have
made significant inroads with the adoption of our REGEN product and look to
leverage strategic partners to scale faster. In the downstream market we
continue to successfully focus on lower risk, better margin projects as we
grow our application and installation base. With the oil price in the range
that is widely forecasted we expect the oil and gas market to continue to be
robust and seek the best technology that provides elevated performance and
addresses the environmental goals of the customer. We will continue to grow
our current customer and application base where bidding contracts will be
active. Collaborating with strategic partners remains an important part of our
path to market and we will continue to vigorously pursue the best
partnerships. Overall, the Company is rigorously focused on growing our
revenue base, on maintaining a strict control over expenditure and maximising
shareholder returns. We believe we have a company that is at the forefront of
an ever-growing ESG compliant market with technology that is market leading as
proven by our list of blue-chip customers.
Tom
Lamb
Connie Mixon
Chairman
Chief Executive Officer
20 September 2023
MYCELX TECHNOLOGIES CORPORATION
Statements of Operations
(USD, in thousands, except share data)
Six Months Six Months Year
Ended Ended Ended
30 June 30 June 31 December
2023 2022 2022
(unaudited) (unaudited)
Revenue 5,568 3,699 10,026
Cost of goods sold 3,051 2,311 5,584
Gross profit 2,517 1,388 4,442
Operating expenses:
Research and development 107 101 218
Selling, general and administrative 3,608 3,898 7,589
Depreciation and amortisation 116 92 210
Gain on sale of property and equipment - (2) (2)
Total operating expenses 3,831 4,089 8,015
Operating loss (1,314) (2,701) (3,573)
Other income (expense)
Interest expense (4) - -
Loss before income taxes (1,318) (2,701) (3,573)
Provision for income taxes (187) (180) (418)
Net loss (1,505) (2,881) (3,991)
Loss per share-basic (0.07) (0.13) (0.18)
Loss per share-diluted (0.07) (0.13) (0.18)
Shares used to compute basic loss per share 22,983,023 21,429,675 22,214,884
Shares used to compute diluted loss per share 22,983,023 21,429,675 22,214,884
The accompanying notes are an integral part of the financial statements.
MYCELX TECHNOLOGIES CORPORATION
Balance Sheets
(USD, in thousands, except share data) As of 30 June 2023 (unaudited) As of 30 June 2022 (unaudited) As of 31 December 2022
ASSETS
Current Assets
Cash and cash equivalents 1,394 2,765 1,645
Restricted cash 50 84 84
Accounts receivable - net 1,675 1,226 2,778
Unbilled accounts receivable - 200 -
Inventory 3,826 4,182 3,737
Prepaid expenses 272 464 99
Other assets 138 233 138
Total Current Assets 7,355 9,154 8,481
Property and equipment - net 3,007 3,101 3,229
Intangible assets - net 784 744 733
Operating lease asset - net 1,011 1,334 1,176
Total Assets 12,157 14,333 13,619
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities
Accounts payable 703 402 795
Payroll and accrued expenses 865 624 758
Customer deposits 176 72 18
Operating lease obligations - current 331 311 326
Total Current Liabilities 2,075 1,409 1,897
Operating lease obligations - long-term 725 1,055 890
Total Liabilities 2,800 2,464 2,787
Stockholders' Equity
Common stock, $0.025 par value, 100,000,000 shares authorised, 22,983,023 574 574 574
shares issued and outstanding at 30 June 2023 and 2022 and 31 December 2022
Additional paid-in capital 44,798 44,695 44,768
Accumulated deficit (36,015) (33,400) (34,510)
Total Stockholders' Equity 9,357 11,869 10,832
Total Liabilities and Stockholders' Equity 12,157 14,333 13,619
The accompanying notes are an integral part of the financial statements.
MYCELX TECHNOLOGIES CORPORATION
Statements of Stockholders' Equity
(USD, in thousands)
Additional
Common Stock Paid-in Accumulated
Capital Deficit Total
Shares $ $ $ $
Balances at 31 December 2021 19,443,750 486 42,655 (30,519) 12,622
Issuance of common stock, net of offering costs 3,539,273 88 1,957 - 2,045
Stock-based compensation expense - - 83 - 83
Net profit for the period - - - (2,881) (2,881)
Balances at 30 June 2022 (unaudited) 22,983,023 574 44,695 (33,400) 11,869
Stock-based compensation expense - - 73 - 73
Net loss for the period - - - (1,110) (1,110)
Balances at 31 December 2022 22,983,023 574 44,768 (34,510) 10,832
Stock-based compensation expense - - 30 - 30
Net loss for the period - - - (1,505) (1,505)
Balances at 30 June 2023 (unaudited) 22,983,023 574 44,798 (36,015) 9,357
The accompanying notes are an integral part of the financial statements.
MYCELX TECHNOLOGIES CORPORATION
Statements of Cash Flows
(USD, in thousands)
Six Months Six Months Year
Ended Ended Ended
30 June 30 June 31 December
2023 2022 2022
(unaudited) (unaudited)
Cash flow from operating activities
Net loss (1,505) (2,881) (3,991)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortisation 441 552 1,091
Gain on sale of property and equipment - (2) (2)
Inventory reserve adjustment - - (5)
Stock compensation 30 83 156
Change in operating assets and liabilities:
Accounts receivable - net 1,103 641 (911)
Unbilled accounts receivable - (25) 175
Inventory (187) 138 402
Prepaid expenses (173) (261) 104
Prepaid operating leases 5 25 32
Other assets - 166 261
Accounts payable (92) (281) 112
Payroll and accrued expenses 107 (134) -
Contract liability - (54) (54)
Customer deposits 158 (2) (56)
Net cash used in operating activities (113) (2,035) (2,686)
Cash flow from investing activities
Payments for purchases of property and equipment (89) (364) (814)
Payments for internally developed patents (83) (9) (28)
Net cash used in investing activities (172) (373) (842)
Cash flow from financing activities
Net proceeds from stock issuance - 2,045 2,045
Net cash provided by financing activities - 2,045 2,045
Net decrease in cash, cash equivalents and restricted cash (285) (1,483)
(363)
Cash, cash equivalents and restricted cash, beginning of period 1,729 3,212
3,212
Cash, cash equivalents and restricted cash, end of period 1,444 1,729
2,849
Supplemental disclosures of cash flow information:
Cash payments for interest 4 - -
Cash payments for income taxes 244 188 390
Non-cash movements of inventory and fixed assets 98 - 186
Non-cash operating ROU assets 906 1,120 1,014
Non-cash operating lease obligations 946 1,147 1,049
The accompanying notes are an integral part of the financial statements.
NOTES TO THE FINANCIAL STATEMENTS
1. Nature of business and basis of presentation
Basis of presentation - These interim financial statements have been prepared
using recognition and measurement principles of Generally Accepted Accounting
Principles in the United States of America ('U.S. GAAP').
The interim financial statements for the six months ended 30 June 2022 and
2021 have not been audited.
Nature of business - MYCELX Technologies Corporation ('MYCELX' or the 'Company') was incorporated in the State of Georgia on 24 March 1994. The Company is headquartered in Norcross, Georgia with operations in Houston, Texas, Saudi Arabia and the United Kingdom. The Company provides clean water technology equipment and related services to the oil and gas, power, marine and heavy manufacturing sectors and the majority of its revenue is derived from the Middle East and the United States.
Liquidity - The Company meets its day-to-day working capital and other cash
flow requirements through cash flow from operations. In March 2022, the
Company completed the closing of a placing raising gross proceeds of
approximately $2.3 million before expenses. The proceeds from the transaction
are being used to accelerate the commercialisation of the Company's PFAS
remediation system in the U.S., and in order to support working capital across
the Company's core markets. The Company actively manages its financial risk by
operating Board-approved financial policies that are designed to ensure that
the Company maintains an adequate level of liquidity and effectively mitigates
financial risks.
Whilst macro events continue to create uncertainty within world markets and
volatility in oil prices, today's high oil price bodes well for the completion
of new commercial agreements with both existing and new international
customers. On the basis of current financial projections, including a downside
scenario sensitivity analysis considering only revenues that are contracted or
that the Company considers probably and adjusting for direct cost of goods
sold within the analysis, the Company believes that it has adequate resources
to continue in operational existence for the foreseeable future of at least 12
months from the date of the issuance of these interim financial statements
and, accordingly, consider it appropriate to adopt the going concern basis in
preparing these interim Financial Statements. Should the projected cash flow
not materialise under certain scenarios, alternative actions to increase
liquidity may need to be considered.
2. Summary of significant accounting policies
Use of estimates - The preparation of financial statements in conformity with
U.S. GAAP requires management to make judgements, estimates and assumptions
that affect the application of accounting policies and the amounts reported in
the financial statements and accompanying notes. Estimates and underlying
assumptions are reviewed on an ongoing basis. Revisions to accounting
estimates are recognised in the period in which the estimate is revised. The
primary estimates and assumptions made by management relate to the inventory
valuation, accounts receivable valuation, useful lives of property and
equipment, volatility used in the valuation of the Company's share-based
compensation and the valuation allowance on deferred tax assets. Although
these estimates are based on management's best knowledge of current events and
actions the Company may undertake in the future, actual results ultimately may
differ from the estimates and the differences may be material to the financial
statements.
Revenue recognition - The Company's revenue consists of filtration media
product, equipment leases, professional services to operate the leased assets,
turnkey operations and equipment sales. These sales are based on mutually
agreed upon pricing with the customer prior to the delivery of the media
product and equipment. The Company recognises revenue when it satisfies a
performance obligation by transferring control over a product or service to a
customer.
Revenue from filtration media sales and spare parts is billed and recognised
when products are shipped to the customer. Revenue from equipment leases is
recognised over time as the equipment is available for customer use and is
typically billed monthly. Revenue from professional services provided to
monitor and operate the equipment is recognised over time when the service is
provided and is typically billed monthly. Revenue from turnkey projects
whereby the Company is asked to manage the water filtration process end to end
is recognised on a straight-line basis over time as the performance
obligation, in the context of the contract, is a stand ready obligation to
filter all water provided. Revenue from contracts related to construction of
equipment is recognised upon shipment of the equipment to the customer because
the contractual terms state that control transfers at the point of shipment
and there is no enforceable right to payments made as customer deposits prior
to that date. Customer deposits for equipment sales represent payments made
prior to transferring control at the point of shipment that can be refunded at
any time when requested by the customer.
Sales tax charged to customers is presented on a net basis within the
Statements of Operations and therefore recorded as a reduction of net
revenues. Shipping and handling costs associated with outbound freight after
control over a product has transferred to a customer are accounted for as a
fulfilment cost and are included in cost of goods sold.
The Company's contracts with the customers state the final terms of the sales,
including the description, quantity, and price of media product, equipment
(sale or lease) and the associated services to be provided. The Company's
contracts are generally short-term in nature and in most situations, the
Company provides products and services ahead of payment and has fulfilled the
performance obligation prior to billing.
The Company believes the output method is a reasonable measure of progress for
the satisfaction of its performance obligations that are satisfied over time,
as it provides a faithful depiction of (1) performance toward complete
satisfaction of the performance obligation under the contract and (2) the
value transferred to the customer of the services performed under the
contract. All other performance obligations are satisfied at a point in time
upon transfer of control to the customer.
The Company's contracts with customers often include promises to transfer
multiple products and services. Determining whether products and services are
considered distinct performance obligations that should be accounted for
separately versus together may require significant judgment. Judgment is
required to determine stand-alone selling price ('SSP') for each distinct
performance obligation. The Company develops observable SSP by reference to
stand-alone sales for identical or similar items to similarly situated clients
at prices within a sufficiently narrow range.
All equipment sold by the Company is covered by the original manufacturer's
warranty. The Company does not offer an additional warranty and has no related
obligations.
Unbilled accounts receivable represents revenue recognised in excess of
amounts billed. Contract liability represents billings in excess of revenue
recognised. Unbilled accounts receivable at 30 June 2023 and 2022, 31 December
2022 and 1 January 2022 was $nil, $200,000, $nil and $175,000, respectively.
Contract liability at 30 June 2023 and 2022, 31 December 2022 and 1 January
2022 was $nil, $nil, $nil and $54,000, respectively.
Timing of revenue recognition for each of the periods and geographic regions
presented is shown below:
Equipment Leases, Turnkey Arrangements, and Services Recognised Over Time Consumable Filtration Media, Equipment Sales and Service Recognised at a Point
in Time
30 June 2023 30 June 2022 31 December 2022 30 June 2023 30 June 2022 31 December 2022
(USD, in thousands)
Middle East 3,885 2,479 6,453 6 136 573
United States - - - 1,338 741 2,094
Australia - - - 184 260 558
Other - - - 148 83 349
Total revenue recognised under ASC 606 3,885 2,479 6,543 1,676 1,220 3,573
Total revenue recognised under ASC 842 7 - - - - -
Total revenue 3,892 2,479 6,543 1,676 1,220 3,573
Contract costs - The Company capitalises certain contract costs such as costs
to obtain contracts (direct sales commissions) and costs to fulfil contracts
(upfront costs where the Company does not identify the set-up fees as a
performance obligation). These contract assets are amortised over the period
of benefit, which the Company has determined is customer life and averages one
year.
During the six months ended 30 June 2023 and 2022, and the year ended 31
December 2022, the Company did not have any costs to obtain a contract and any
costs to fulfil a contract were inconsequential.
Cash, cash equivalents and restricted cash - Cash and cash equivalents consist
of short-term, highly liquid investments which are readily convertible into
cash within ninety (90) days of purchase. At 30 June 2023, all of the
Company's cash, cash equivalent and restricted cash balances were held in
checking and money market accounts. The Company maintains its cash in bank
deposit accounts which, at times, may exceed federally insured limits. At 30
June 2023 and 2022, and 31 December 2022, cash in non-U.S. institutions was
$106,000, $124,000 and $159,000, respectively. The Company has not experienced
any losses in such accounts. The Company classifies as restricted cash all
cash whose use is limited by contractual provisions. At 30 June 2022,
restricted cash included $50,000 in a money market account to secure the
Company's corporate credit card. At 30 June 2022 and 31 December 2022,
restricted cash included $84,000 in a money market account to secure the
Company's corporate credit card and a stand-by letter of credit.
Reconciliation of cash, cash equivalents and restricted cash at 30 June 2023
and 2022, and 31 December 2022:
30 June 30 June 31 December
2023 2022 2022
US$000 US$000 US$000
Cash and cash equivalents 1,394 2,765 1,645
Restricted cash 50 84 84
Total cash, cash equivalents and restricted cash 1,444 2,849 1,729
Accounts receivable - Trade accounts receivable are stated at the amount
management expects to collect from outstanding balances. The Company provides
credit in the normal course of business to its customers and performs ongoing
credit evaluations of those customers and maintains allowances for doubtful
accounts, as necessary. Accounts are considered past due based on the
contractual terms of the transaction. Credit losses, when realised, have been
within the range of the Company's expectations and, historically, have not
been significant. The allowance for doubtful accounts at 30 June 2023 and
2022, and 31 December 2022 was $168,000, $90,000 and $168,000, respectively.
Inventories - Inventories consist primarily of raw materials and filter media
finished goods as well as equipment to house the filter media and are stated
at the lower of cost or net realisable value. Equipment that is in the process
of being constructed for sale or lease to customers is also included in
inventory (work-in-progress). The Company applies the Average Cost method to
account for its inventory. Manufacturing work-in-progress and finished
products inventory include all direct costs, such as labour and materials, and
those indirect costs which are related to production, such as indirect labour,
rents, supplies, repairs and depreciation costs. A valuation reserve is
recorded for slow moving or obsolete inventory items to reduce the cost of
inventory to its net realisable value. The Company determines the valuation by
evaluating expected future usage as compared to its past history of
utilisation and future expectations of usage. At 30 June 2023 and 2022, and 31
December 2022, the Company had REGEN-related inventory of 41 percent, 39
percent and 41 percent of the total inventory balance, respectively, which is
in excess of the Company's current requirements based on the recent level of
sales. The inventory is associated with efforts to expand into the Enhanced
Oil Recovery and Beneficial Reuse markets that the Company has identified as
large global markets. These efforts should reduce this inventory to desired
levels over the near term and management believes no loss will be incurred on
its disposition. However, there is a risk that management will sustain a loss
on the value of the inventory before it is sold. No estimate can be made of a
range of amounts of loss that are reasonably possible should the efforts not
be successful.
Prepaid expenses and other current assets - Prepaid expenses and other current
assets include non-trade receivables that are collectible in less than 12
months, security deposits on leased space and various prepaid amounts that
will be charged to expenses within 12 months. Non-trade receivables that are
collectible in 12 months or more are included in long-term assets.
Property and equipment - All property and equipment are valued at cost.
Depreciation is computed using the straight-line method for reporting over the
following useful lives:
Leasehold improvements Lease period or 1-5 years (whichever is shorter)
Office equipment 3-10 years
Manufacturing equipment 5-15 years
Research and development equipment 5-10 years
Purchased software Licensing period or 5 years (whichever is shorter)
Equipment leased to customers 5-10 years
Expenditures for major renewals and betterments that extend the useful lives
of property and equipment are capitalised. Expenditures for maintenance and
repairs are charged to expense as incurred. Depreciation expense includes
depreciation on equipment leased to customers and is included in cost of goods
sold.
Intangible assets - Intangible assets consist of the costs incurred to
purchase patent rights and legal and registration costs incurred to internally
develop patents. Intangible assets are reported net of accumulated
amortisation. Patents are amortised using the straight-line method over a
period based on their contractual lives which approximates their estimated
useful lives.
Impairment of long-lived assets - Long-lived assets to be held and used,
including property and equipment and intangible assets with definite useful
lives, are assessed for impairment whenever events or changes in circumstances
indicate that the carrying amount of an asset may not be recoverable. If the
total of the expected undiscounted future cash flows is less than the carrying
amount of the asset, a loss, if any, is recognised for the difference between
the fair value and carrying value of the assets. Impairment analyses, when
performed, are based on the Company's business and technology strategy,
management's views of growth rates for the Company's business, anticipated
future economic and regulatory conditions, and expected technological
availability. For purposes of recognition and measurement, the Company groups
its long-lived assets at the lowest level for which there are identifiable
cash flows, which are largely independent of the cash flows of other assets
and liabilities. No impairment charges were recorded in the six months ended
30 June 2023 and 2022, and the year ended 31 December 2022.
Research and development costs - Research and development costs are expensed
as incurred. Research and development expense for the six months ended 30 June
2023 and 2022, and the year ended 31 December 2022 was approximately $107,000,
$101,000 and $218,000, respectively.
Advertising costs - The Company expenses advertising costs as incurred.
Advertising expense for the six months ended 30 June 2023 and 2022, and the
year ended 31 December 2022 was $7,000, $nil and $nil, respectively, and is
recorded in selling, general and administrative expenses.
Income taxes - The provision for income taxes for interim and annual periods
is determined using the asset and liability method, under which deferred tax
assets and liabilities are calculated based on the temporary differences
between the financial statement carrying amounts and income tax bases of
assets and liabilities using currently enacted tax rates. The deferred tax
assets are recorded net of a valuation allowance when, based on the weight of
available evidence, it is more likely than not that some portion or all of the
recorded deferred tax assets will not be realised in future periods. Decreases
to the valuation allowance are recorded as reductions to the provision for
income taxes and increases to the valuation allowance result in additional
provision for income taxes. The realisation of the deferred tax assets, net of
a valuation allowance, is primarily dependent on the ability to generate
taxable income. A change in the Company's estimate of future taxable income
may require an addition or reduction to the valuation allowance.
The benefit from an uncertain income tax position is not recognised if it has
less than a 50 percent likelihood of being sustained upon audit by the
relevant authority. For positions that are more than 50 percent likely to be
sustained, the benefit is recognised at the largest amount that is
more-likely-than-not to be sustained. Where a net operating loss carried
forward, a similar tax loss or a tax credit carry forward exists, an
unrecognised tax benefit is presented as a reduction to a deferred tax asset.
Otherwise, the Company classifies its obligations for uncertain tax positions
as other non-current liabilities unless expected to be paid within one year.
Liabilities expected to be paid within one year are included in the accrued
expenses account.
The Company recognises interest accrued related to tax in interest expense and
penalties in selling, general and administrative expenses. During the six
months ending 30 June 2023 and 2022, and the year ended 31 December 2022 the
Company recognised no interest or penalties.
Earnings per share - Basic earnings per share is computed using the weighted
average number of common shares outstanding during the period. Diluted
earnings per share is computed using the weighted average number of common and
potentially dilutive shares outstanding during the period. Potentially
dilutive shares consist of the incremental common shares issuable upon
conversion of the exercise of common stock options. Potentially dilutive
shares are excluded from the computation if their effect is anti-dilutive.
Total common stock equivalents consisting of unexercised stock options that
were excluded from computing diluted net loss per share were approximately
2,021,707 for the six months ended 30 June 2023 and there were no adjustments
to net income available to stockholders as recorded on the Statement of
Operations.
The following table sets forth the components used in the computation of basic
and diluted net (loss) profit per share for the periods indicated:
30 June 30 June 31 December
2023 2022 2022
US$000 US$000 US$000
Basic weighted average outstanding shares of common stock
22,983,023 21,429,675 22,214,884
Effect of potentially dilutive stock options - - -
Diluted weighted average outstanding shares of common stock
22,983,023 21,429,675 22,214,884
Anti-dilutive shares of common stock excluded from diluted weighted average
shares of common stock
2,021,707 2,297,505 2,019,118
Fair value of financial instruments - The Company uses the framework in ASC
820, Fair Value Measurements, to determine the fair value of its financial
assets. ASC 820 establishes a fair value hierarchy that prioritises the inputs
to valuation techniques used to measure fair value and expands financial
statement disclosures about fair value measurements.
The hierarchy established by ASC 820 gives the highest priority to unadjusted
quoted prices in active markets for identical assets or liabilities (Level 1
measurements) and the lowest priority to unobservable inputs (Level 3
measurements).
The three levels of the fair value hierarchy under ASC 820 are described
below:
· Level 1: Unadjusted quoted prices in active markets for identical
assets or liabilities that the Company has the ability to access at the
measurement date.
· Level 2: Inputs other than quoted prices included within Level 1 that
are observable for the asset or liability, either directly or indirectly.
· Level 3: Unobservable inputs for the asset or liability.
There were no transfers into or out of each level of the fair value hierarchy
for assets measured at the fair value for the six months ended 30 June 2023
and 2022, and the year ended 31 December 2022.
All transfers are recognised by the Company at the end of each reporting
period.
Transfers between Levels 1 and 2 generally relate to whether a market becomes
active or inactive. Transfers between Levels 2 and 3 generally relate to
whether significant relevant observable inputs are available for the fair
value measurement in their entirety.
The Company's financial instruments as of 30 June 2023 and 2022, and 31
December 2022 include cash and cash equivalents, restricted cash, accounts
receivable and accounts payable. The carrying values of cash and cash
equivalents, restricted cash, accounts receivable and accounts payable
approximate fair value due to the short-term nature of those assets and
liabilities.
Foreign currency transactions - From time to time the Company transacts
business in foreign currencies (currencies other than the United States
Dollar). These transactions are recorded at the rates of exchange prevailing
on the dates of the transactions. Foreign currency transaction gains or losses
are included in selling, general and administrative expenses.
Stock compensation - The Company issues equity-settled share-based awards to
certain employees, which are measured at fair value at the date of grant. The
fair value determined at the grant date is expensed, based on the Company's
estimate of shares that will eventually vest, on a straight-line basis over
the vesting period. Fair value for the share awards representing equity
interests identical to those associated with shares traded in the open market
is determined using the market price at the date of grant. Fair value is
measured by use of the Black Scholes valuation model (see Note 8).
Recently issued accounting standards - In June 2016, the FASB issued ASU
2016-13, Financial Instruments - Credit Losses (Topic 326), which requires
measurement and recognition of expected credit losses for financial assets
held. The standard is to be applied through a cumulative-effect adjustment to
retained earnings as of the beginning of the first reporting period in which
the guidance is effective. The Company adopted this guidance effective 1
January 2023. The adoption of this new guidance did not have a material impact
on the financial statements.
Recent accounting pronouncements pending adoption not discussed above are
either not applicable or are not expected to have a material impact on the
Company.
3. Accounts receivable
Accounts receivable and their respective allowance amounts at 30 June 2023 and
2022, and 31 December 2022:
30 June 30 June 31 December
2023 2022 2022
US$000 US$000 US$000
Accounts receivable 1,843 1,317 2,946
Less: allowance for doubtful accounts (168) (90) (168)
Total receivable - net 1,675 1,226 2,778
4. Inventories
Inventories consist of the following at 30 June 2023 and 2022, and 31 December
2022:
30 June 30 June 31 December
2023 2022 2022
US$000 US$000 US$000
Raw materials 2,066 1,928 1,957
Work-in-progress - 12 -
Finished goods 1,760 2,242 1,780
Total inventory 3,826 4,182 3,737
5. Property and equipment
Property and equipment consist of the following at 30 June 2023 and 2022, and
31 December 2022:
30 June 30 June 31 December
2023 2022 2022
US$000 US$000 US$000
Leasehold improvements 617 292 617
Office equipment 636 636 636
Manufacturing equipment 976 937 943
Research and development equipment 545 545 545
Purchased software 222 222 222
Equipment leased to customers 10,307 10,643 10,221
Equipment available for lease to customers - - -
13,303 13,275 13,184
Less: accumulated depreciation (10,296) (10,174) (9,955)
Property and equipment - net 3,007 3,101 3,229
During the six months ended 30 June 2023 and 2022, and the year ended 31
December 2022, the Company removed property, plant and equipment and the
associated accumulated depreciation of approximately $68,000, $14,000 and
$742,000, respectively, to reflect the disposal of property, plant and
equipment.
Depreciation expense for the six months ended 30 June 2023 and 2022, and the
year ended 31 December 2022 was approximately $409,000, $513,000 and
$1,022,000, respectively, and includes depreciation on equipment leased to
customers. Depreciation expense on equipment leased to customers included in
cost of goods sold for the six months ended 30 June 2023 and 2022, and the
year ended 31 December 2022 was $325,000, $460,000 and $881,000, respectively.
6. Intangible assets
During 2009, the Company entered into a patent rights purchase agreement. The
patent is amortised utilising the straight-line method over a useful life of
17 years which represents the legal life of the patent from inception.
Accumulated amortisation on the patent was approximately $80,000, $74,000 and
$77,000 as of 30 June 2023 and 2022, and 31 December 2022, respectively.
In January 2023, the Company entered into a patent rights purchase agreement.
The patents are amortised utilizing the straight-line method over useful lives
of 13 and 14.75 years which represent the remaining legal life of the patents
on the date of purchase. Accumulated amortisation on the patents was
approximately $2,000 at 30 June 2023.
In addition to the purchased patents, the Company has internally developed
patents. Internally developed patents include legal and registration costs
incurred to obtain the respective patents. The Company currently holds various
patents and numerous pending patent applications in the United States, as well
as numerous foreign jurisdictions outside of the United States. In the six
months ended 30 June 2023, there was $33,000 of new internally developed
patents and fees on patents in progress.
Intangible assets as of 30 June 2023 and 2022, and 31 December 2022 consist of
the following:
Weighted Average 30 June 30 June 31 December
Useful lives 2023 2022 2022
US$000 US$000 US$000
Internally developed patents 15 years 1,508 1,456 1,475
Purchased patents 13-17 years 150 100 100
1,658 1,556 1,575
Less accumulated amortisation - internally developed patents (792) (739) (765)
Less accumulated amortisation - purchased patents (82) (74) (77)
Intangible assets - net 784 744 733
At 30 June 2023, internally developed patents include approximately $228,000
for costs accumulated for patents that have not yet been issued and are not
depreciating.
Approximate aggregate future amortisation expense is as follows:
Year ending 31 December (USD, in thousands)
2023 37
2024 67
2025 66
2026 60
2027 58
Thereafter 268
Amortisation expense for the six months ended 30 June 2023 and 2022, and the
year ended 31 December 2022 was approximately $32,000, $39,000 and $69,000,
respectively.
7. Income taxes
The components of income taxes shown in the statements of operations are as
follows:
30 June 30 June 31 December
2023 2022 2022
US$000 US$000 US$000
Current:
Federal - - -
Foreign 186 177 415
State 1 3 3
Total current provision 187 180 418
Deferred:
Federal - - -
Foreign - - -
State - - -
Total deferred provision - - -
Total provision for income taxes 187 180 418
The provision for income tax varies from the amount computed by applying the
statutory corporate federal tax rate of 21 percent, primarily due to the
effect of certain non-deductible expenses, foreign withholding tax, and
changes in valuation allowances.
A reconciliation of the differences between the effective tax rate and the
federal statutory tax rate is as follows:
30 June 30 June 31 December
2023 2022 2022
Federal statutory income tax rate 21.0% 21.0% 21.0%
State tax rate, net of federal benefit 2.4% 0.6% 0.8%
Valuation allowance (26.5%) (23.0%) (18.8%)
Other 0.0% (0.1%) (5.6%)
Foreign withholding tax (11.1%) (5.2%) (9.1%)
Effective income tax rate (14.2%) (6.7%) (11.7%)
The significant components of deferred income taxes included in the balance
sheets are as follows:
30 June 30 June 31 December
2023 2022 2022
US$000 US$000 US$000
Deferred tax assets
Net operating loss 6,940 6,406 6,598
Equity compensation 233 290 227
Research and development credits 159 159 159
Right of use liability 228 304 263
Inventory valuation reserve 349 349 350
Other 145 102 145
Total gross deferred tax asset 8,054 7,610 7,742
Deferred tax liabilities
Property and equipment (710) (578) (708)
Right of use asset (218) (303) (254)
Total gross deferred tax liability (928) (881) (962)
Net deferred tax asset before valuation allowance 7,126 6,729 6,780
Valuation allowance (7,126) (6,729) (6,780)
Net deferred tax asset (liability) - - -
Deferred tax assets and liabilities are recorded based on the difference
between an asset or liability's financial statement value and its tax
reporting value using enacted rates in effect for the year in which the
differences are expected to reverse, and for other temporary differences as
defined by ASC-740, Income Taxes. At 30 June 2023 and 2022 and 31 December
2022, the Company has recorded a valuation allowance of $7.1 million, $6.7
million and $6.8 million, respectively, a change of $346,000, $600,000 and
$670,000 for each period, which it is more likely than not that the Company
will not receive future tax benefits due to the uncertainty regarding the
realisation of such deferred tax assets.
As of 30 June 2023, the Company has approximately $31.6 million of gross U.S.
federal net operating loss carry forwards and $3.7 million of gross state net
operating loss carry forwards that will begin to expire in the 2024 tax year
and will continue through 2042 when the current year net operating losses will
expire. As of 30 June 2022, the Company had approximately $29.3 million of
gross U.S. federal net operating loss carry forwards and $3.9 million of gross
state net operating loss carry forwards and at 31 December 2022, the Company
had approximately $30.2 million of gross U.S. federal net operating loss carry
forwards and $3.7 million of gross state net operating loss carry forwards.
On 27 March 2020, the U.S. Government enacted the Coronavirus Aid, Relief, and
Economic Security Act (the 'CARES Act'). The CARES Act includes, but is not
limited to, tax law changes related to (1) accelerated depreciation deductions
for qualified improvement property placed in service after 27 September 2017,
(2) reduced limitation of interest deductions, and (3) temporary changes to
the use and limitation of NOLs. There was no material impact of the CARES Act
to the Company's income tax provision for the six months ended 30 June 2022
and 2022 or for the year ended 31 December 2022.
The Company's tax years 2019 through 2022 remain subject to examination by
federal, state and foreign income tax jurisdictions.
8. Stock compensation
In July 2011, the Company's shareholders approved the Conversion Shares and
the Directors' Shares, as well as the Plan Shares and Omnibus Performance
Incentive Plan ('Plan'). This included the termination of all outstanding
stock incentive plans, cancellation of all outstanding stock incentive
agreements, and the awarding of stock incentives to Directors and certain
employees and consultants. The Company established the Plan to attract and
retain Directors, officers, employees and consultants. The Company reserved an
amount equal to 10 percent of the Common Shares issued and outstanding
immediately following the Public Offering.
Upon the issuance of these shares, an award of share options was made to the
Directors and certain employees and consultants, and a single award of
restricted shares was made to a former Chief Financial Officer. In addition,
additional stock options were awarded in each year subsequent. The awards of
stock options and restricted shares made upon issuance were in respect of 85
percent of the Common Shares available under the Plan, equivalent to 8.5
percent of the Public Offering.
In July 2019, the Company's shareholders approved the extension of the Plan to
2029 and the increase in the possible number of shares to be awarded pursuant
to the Plan to 15 percent of the Company's issued capital at the date of any
award. The total number of shares reserved for stock options under this Plan
is 3,447,453 with 2,020,040 shares allocated as of 30 June 2023. The shares
are all allocated to employees, executives and consultants.
Any options granted to Non-Executive Directors, unless otherwise agreed, vest
contingent on continuing service with the Company at the vesting date and
compliance with the covenants applicable to such service.
Employee options vest over three years with a third vesting ratably each year,
partially on issuance and partially over the following 24-month period, or if
there is a change in control, and expire on the tenth anniversary date the
option vests. Vesting accelerates in the event of a change of control. Options
granted to Non-Executive Directors, Consultants and one Executive vest
partially on issuance and will vest partially one to two years later. The
remaining Non-Executive Director options expired at the end of 2016 on the
five-year anniversary date of the grant.
As discussed in Note 2, the Company uses the Black Scholes valuation model to
measure the fair value of options granted. The Company's expected volatility
is calculated as the historical volatility of the Company's stock over a
period equal to the expected term of the awards. The expected terms of options
are calculated using the weighted average vesting period and the contractual
term of the options. The risk-free interest rate is based on a blended average
yield of two- and five-year United States Treasury Bills at the time of grant.
The assumptions used in the Black Scholes option pricing model for options
granted in 2023 and 2022 were as follows:
Number of Options Granted Grant Date Risk-Free Interest Rate Expected Term Volatility Exercise Price Fair Value Per Option
2022 250,000 27/06/2022 3.25% 6.0 years 279% $0.55 $0.54
25,000 28/09/2022 4.18% 6.0 years 279% $0.33 $0.33
The Company assumes a dividend yield of 0.0%.
The following table summarises the Company's stock option activity for the six
months ended 30 June 2023:
Stock Options Shares Weighted-Average Exercise Price Weighted-Average Remaining Contractual Term (in years) Average Grant Date Fair Value
Outstanding at 31 December 2022 2,105,080 $1.22 5.8 $0.68
Forfeited (85,040) $3.41
Outstanding at 30 June 2023 2,020,040 $1.12 5.8 $0.67
Exercisable at 30 June 2023 1,277,040 $1.45 5.4
The total intrinsic value of the stock options exercised during the six months
ended 30 June 2023 and 2022, and 31 December 2022 was $nil.
A summary of the status of unvested options as of 30 June 2023 and changes
during the six months ended 30 June 2023 is presented below:
Unvested Options Shares Weighted-Average Fair Value at Grant Date
Unvested at 31 December 2022 743,000 $0.43
Vested (293,000) $0.42
Unvested at 30 June 2023 450,000 $0.43
As of 30 June 2023, total unrecognised compensation cost of $114,000 was
related to unvested share-based compensation arrangements awarded under the
Plan.
Total stock compensation expense for the six months ended 30 June 2023 and
2022, and 31 December 2022 was approximately $30,000, $83,000 and $156,000,
respectively.
9. Commitments and contingencies
Operating leases - As of 30 June 2023, the Operating Lease ROU Asset has a
balance of $1,011,000, net of accumulated amortisation of $492,000 and an
Operating Lease Liability of $1,056,000, which are included in the
accompanying balance sheet. The weighted-average discount rate used for leases
is 5.25 percent, which is based on the Company's secured incremental borrowing
rate.
The Company's leases do not include any options to renew that are reasonably
certain to be exercised. The Company's leases mature at various dates through
March 2027 and have a weighted average remaining life of 3.4 years.
Future maturities under the Operating Lease Liability are as follows for the
years ended 31 December:
(USD, in thousands) Future Lease Payments
2023 192
2024 321
2025 280
2026 290
2027 74
Total future maturities 1,157
Portion representing interest (101)
1,056
Total lease expense for the six months ended 30 June 2023 and 2022, and the
year ended 31 December 2022 was approximately $193,000, $148,000 and $341,000,
respectively.
Total cash paid for leases for the six months ended 30 June 2023 and 2022, and
the year ended 31 December 2022 was $189,000, $122,000 and $307,000,
respectively, and is part of prepaid operating leases on the Statements of
Cash Flows.
The Company has elected to apply the short-term lease exception to all leases
of one year or less and is not separating lease and non-lease components when
evaluating leases. Total costs associated with short-term leases was $120,000,
$196,000 and $322,000 for the six months ended 30 June 2023 and 2022, and 31
December 2022, respectively.
Legal - From time to time, the Company is a party to certain legal proceedings
arising in the ordinary course of business. In the opinion of management,
there are no current legal proceedings or other claims outstanding which could
have a material adverse effect on the results of operations or financial
position of the Company.
10. Related party transactions
The Company has held a patent rights purchase agreement since 2009 with a
Director, who is also a shareholder, as described in Note 6.
11. Segment and geographic information
ASC 280-10, Disclosures About Segments of an Enterprise and Related
Information, establishes standards for reporting information about operating
segments. ASC 280-10 requires that the Company report financial and
descriptive information about its reportable operating segments. Operating
segments are components of an enterprise for which separate financial
information is available that is evaluated regularly by the chief operating
decision maker ('CODM') in deciding how to allocate resources and in assessing
performance. The Company's CODM is the Chief Executive Officer ('CEO'). While
the CEO is apprised of a variety of financial metrics and information, the
business is principally managed on an aggregate basis as of 30 June 2023. For
the six months ended 30 June 2023, the Company's revenues were generated
primarily in the Middle East and the United States ('U.S.'). Additionally, the
majority of the Company's expenditures and personnel either directly supported
its efforts in the Middle East and the U.S., or cannot be specifically
attributed to a geography. Therefore, the Company has only one reportable
operating segment.
Revenue from customers by geography is as follows:
(USD, in thousands) Six months ended 30 June Six months ended 30 June Year ended 31 December
2023 2022 2022
Middle East 3,891 2,615 7,025
United States 1,345 741 2,094
Australia 184 260 558
Other 148 83 349
Total 5,568 3,699 10,026
Long lived assets, net of depreciation, by geography is as follows:
(USD, in thousands) Six months ended 30 June Six months ended 30 June Year ended 31 December
2023 2022 2022
Middle East 1,743 2,361 2,016
United States 1,264 2,074 2,389
Total 3,007 4,435 4,405
12. Concentrations
At 30 June 2023, two customers, one with three contracts with three separate
plants, represented 84 percent of accounts receivable. During the six months
ended 30 June 2023, the Company received 85 percent of its gross revenue from
four customers, one with three contracts with three separate plants.
At 30 June 2022, two customers, one with three contracts with three separate
plants, represented 84 percent of accounts receivable. During the six months
ended 30 June 2022, the Company received 84 percent of its gross revenue from
two customers, one with four contracts with four separate plants.
At 31 December 2021, two customers, one with four contracts with four separate
plants, represented 88 percent of accounts receivable. During the year ended
31 December 2022, the Company received 85 percent of its gross revenue from
five customers, one with four contracts with four separate plants.
13. Subsequent events
The Company discloses material events that occur after the balance sheet date
but before the financials are issued. In general, these events are recognised
in the financial statements if the conditions existed at the date of the
balance sheet, but are not recognised if the conditions did not exist at the
balance sheet date. Management has evaluated subsequent events through 20
September 2023, the date the interim results were available to be issued, and
no events have occurred which require further disclosure.
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