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HTC Purenergy Inc
Symbol HTC
Shares Issued 206,983,741
Close 2021-07-29 C$ 0.075
Recent Sedar Documents

HTC Purenergy loses $34.4-million in 2020

2021-07-30 22:48 ET - News Release

Mr. Jeff Allison reports

HTC PURENERGY INC. ("HTC EXTRACTION SYSTEMS") ANNOUNCES FINANCIAL RESULTS FOR FISCAL YEAR ENDING DECEMBER 31, 2020

HTC Purenergy Inc. (HTC Extraction Systems) has released its audited financial results for the fiscal year ended Dec. 31, 2020.

HTC Extraction Systems and its subsidiaries have developed proprietary extraction and purification systems that have been designed to extract from biomass, liquids and gas, as well as for the distillation and purification of ethanol, ethanol and hydrocarbon-based solvents, used for this extraction in the hemp-cannabidiol/biofibre/protein business sector and also used for carbon dioxide extraction and solvent and glycol purification in the Delta cleantech energy business sector.

HTC's hemp-cannabinoid/biofibre/protein business strategy includes the production contracting of broad acre industrial hemp for: cannabinoid extraction and biofibre for bioplastics, biochar and cellulose, as well as hemp seeds for protein and hemp seed oil.

By implementing its historical skill sets, process design and standard operating procedures, HTC will aim to become one of Canada's largest hemp biofibre suppliers, hemp seed sellers and oil processors, and cannabinoid extractors and refiners. To accomplish its objectives, the corporation intends to leverage its relationships with successful farming leaders and draw on SOPs, best practices in genetics, fertility, fibre processing, seed cleaning and processing, including experience required in ingredient sales with multiyear contracts.

Effective June 30, 2020, HTC acquired KF Hemp Corp. (HempCo), a company that is qualified to cultivate, process, dry, store and sell hemp under the Industrial Hemp Regulations of the Cannabis Act (Canada).

HempCo owns hemp shredding, handling, drying, sizing and sorting equipment, which has been installed in its hemp processing facility, located in Lajord, Sask., and boasts agreements with local growers pursuant to which these growers will produce IPGrow (identity preserved) industrial hemp. The growers will select ideal ground for hemp production and implement the optimal fertility package and crop protection program for high-yielding biofibre, hemp seeds and high-cannabinoid hemp flower biomass.

HTC has completed the construction of its approximately 27,000-square-foot hemp biofibre processing and storage facility, which will be utilized for the processing of biofibre into bioplastic pellets and biochar/hemp soil fertility pellets, as well as the storing and packaging of extraction-ready biomass.

HTC is currently engaged in tolling contracts with United States-based hemp biomass producers and providers. Extraction, at its wholly owned subsidiary Kase Farma Inc., located in Ceres, Calif., has moved into commercial production. HTC will look to ensure tolling and processing volumes by selecting qualified harvest contractors, by utilizing diversified growing locations and high performance regulated genetics, and through irrigation that can provide growing locations with an opportunity for two to three annual crop rotations with new cannabidiol, cannabigerol, cannabinol and other cannabinoid genetic varieties.

Kase Farma has received and commissioned equipment that is capable of processing and distilling 10,000 pounds per day of dried biomass at its extraction operation in California. Kase Farma's extraction operations are part of the Starling-owned 22,000-square-foot overall facility. Kase Farma has launched its identity preserved, or IPGrow, initiative, for the wholesale and retail markets, under the brand of Kase One -- one life; one plant. In addition, Kase Farma has aligned itself with highly regarded hemp growers in California's Central Valley which, will provide high performance, IPGrow, superior, genetic specific production for its custom designed cannabinoid formulations.

Starling-owned Kase Manufacturing Inc. is one of the first volatile and non-volatile cannabinoid extraction manufacturing labs approved in the state of California. As part of the acquisition, Kase Farma has entered into an intellectual property licensing agreement with Starling that allows for a technology transfer whereby Starling's intellectual property and technology licensed under this agreement can be utilized and deployed at the HTC facilities in Saskatchewan.

On Jan. 27, 2021, HTC sold its Delta cleantech division, comprising its Delta clean energy assets to Delta CleanTech Inc. for the purchase price of $4-million. The Delta clean energy assets consist of all of the intellectual property and certain contractual agreements for the operation of HTC's carbon dioxide capture systems and reclaimer systems. The purchase price was paid by Delta by the issuance of 20 million common shares to HTC at a stated price of 20 cents per common share. These shares are subject to a pooling arrangement with a release schedule over a period of 24 months whereby 10 per cent of the shares will be released upon the listing of the common shares of Delta on a recognized stock exchange in Canada, 10 per cent of the shares are released every three months following the date of the liquidity event and the final 20 per cent of the shares are released 24 months following the date of the liquidity event.

Financial results

Selected financial information of HTC is summarized herein. Financial results for HTC have been prepared in accordance with international financial reporting standards.

                                     FINANCIAL RESULTS

                                                        Fiscal year ended       Fiscal year ended
                                                            Dec. 31, 2020           Dec. 31, 2019

Revenue                                                           $24,983                     Nil
General and administrative expenses                            $1,240,376              $1,860,491
Amortization                                                   $1,035,359                 $42,959
Operational (loss) before amortization,
finance and impairment                                        ($1,256,388)            ($1,887,565)
(Loss) from continuing operations                            ($31,013,982)            ($3,741,126)
(Loss) from discontinued operations, net of tax               ($3,391,474)            ($1,776,912)
Gain (loss) from asset disposition, valuation
and impairment adjustments                                   ($31,119,951)               $372,878
Net (loss)                                                   ($34,405,456)            ($5,518,038)
Profit (loss) per common share (weighted
average)                                                           ($0.22)                 ($0.08)

(Loss) per common share is not presented, on a fully diluted basis, as the effect of 
common share options would be anti-dilutive.
Two thousand nineteen comparative amounts reflect reclassifications for discontinued 
operations to consider the impact of the same of Maxx Group of Companies Corp. and 
Delta.

Total assets for the year were $11,135,149 compared with $46,739,123 as at Dec. 31, 2019. The decrease is primarily attributable to funds utilized in the year, decreases in accounts receivables and other receivables, and the acquisitions of HempCo and Kase Farma.

Current liabilities are $1,251,897 for the year as compared with $5,042,569 as at Dec. 31, 2019. The decrease is a result of the disposition of Maxx Group of Companies' related liabilities, net of the assumption of HempCo's liabilities.

HTC reported long-term liabilities for the year of $5,594,108 (Dec. 31, 2019: 12,312,926). The corporation eliminated $11,893,486 in debt through the disposition of the Maxx Group. These transactions combined have put HTC in an improved overall debt position.

Revenue for the year was $24,983 (Dec. 31, 2019: nil), and is a reflection of CBD product sales which was not active in 2019.

The corporation had a net loss at Dec. 31, 2020, of ($34,405,456) as compared with ($5,518,038) for the year ended Dec. 31, 2019. The overall loss is attributable to the loss recorded on inventory impairment of $15,553,795, the resulting loss on fair value impairment of intangibles of $2,514,485, loss on fair value impairment of goodwill of $13,040,221 caused by the impairment on inventory and increased depreciation expense of $1,035,359. Early in 2020, the Canadian hemp market lacked data and transparency as the market in Canada is in its infancy. As time passed, the market evolved and large price adjustments were made once supply data became known. The oversupplied market only started to become apparent as data were released on how many acres were planted and harvested. The price compression has been exacerbated by the collapse of prices for CBD isolate and CBD distillate, which has led buyers to push down on the cost of the input biomass.

HTC Purenergy trades on the OTCQB Venture Market for early-stage and developing U.S. and international companies. Companies are current in their reporting and undergo an annual verification and management certification process.

We seek Safe Harbor.

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