10:07:59 EDT Wed 08 Jul 2020
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HTC Purenergy Inc
Symbol HTC
Shares Issued 132,833,741
Close 2020-06-30 C$ 0.095
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HTC Purenergy loses $1.26-million in Q1

2020-06-30 19:51 ET - News Release

Mr. Jeff Allison reports


HTC Purenergy Inc., doing business as HTC Extraction Systems, has released its unaudited interim condensed consolidated financial results for the first quarter ending March 31, 2020.

HTC Extraction Systems and its subsidiaries have developed proprietary extraction and purification systems that have been designed to extract liquids and gas from biomass, and for the distillation and purification of ethanol, ethanol-based solvents and hydrocarbon-based solvents, used for this extraction in the hemp/CBD (cannabidiol) biomass and clean energy industries.

HTC's hemp/CBD biomass business strategy includes sourcing industrial hemp cultivated in compliance with applicable laws for the extraction and purification of hemp biomass. This business strategy is based on, in addition to other things, establishing infrastructure, acquiring equipment for the extraction of CBD and other phytocannabinoids from industrial hemp, and obtaining all necessary regulatory approvals and licensing related to the extraction and processing of CBD, CBG (cannabigerol) and CBN (cannabinol).

By implementing its historical skill sets, process design and standard operating procedures (SOPs), and upon receipt of required licensing, HTC aims to become a North American leader in hemp cannabinoid extracting and refining for the emerging ingredient and wellness market. HTC will use its intellectual property and experience gained as a recognized industry leader in ethanol-based extraction and purification. In order to accomplish its objectives, the corporation intends to leverage its relationships with successful farming leaders and draw on SOPs, best practices in genetics, fertility and crop protection, and experience in ingredient sales with multiyear contracts.

HTC has purchased extraction and formulation equipment for hemp biomass processing, extraction, formulation and refining, for utilization in Regina.

HTC has completed the phase 1 construction of its 27,000-square-foot hemp biomass processing and storage facility adjacent to the 19,000-square-foot laboratory and extraction facility, to be used for the storing, processing and preparation of extraction-ready biomass and the processing of hemp fibre and hurd, as an ingredient for the materials construction industry, and as a substrate for the plant nutrition industry.

Kase Farma Inc., HTC's wholly owned subsidiary, located in Ceres, Calif., has received and commissioned, in part, equipment that in total is capable of processing and distilling 12,000 pounds per day of dried biomass at its IPElite extraction operation in California. Kase Farma's IPElite extraction operations are part of the Starling Brands Inc.-owned 22,000-square-foot overall facility.

Kase Farma has launched Kase One for the wholesale and retail markets under the theme of "One Life; One Plant," with the intention of providing consumers with full transparency as to where their products have come from and how they were produced, bringing accountability and verified quality to the cannabinoid industry.

HTC's clean energy business strategy is centred on advanced extraction and purification technologies with a focus on environmental sustainability. The acceptance of climate change and the social licence that corporations are moving toward are upon the world in force. A reduced environmental footprint, through the use of "Reclaim, Recycle and Reuse" extraction and purification systems, has become effectively a currency of business, a vehicle for penalty and taxation, and a statement to shareholders who expect environmental responsibility from the companies they invest in. The natural gas industry has taken on a new challenge of gas cleanup of carbon dioxide, sulphur dioxide and other contaminants, while ensuring that the ethanol-based solvents and the glycols that are used in the cleanup process are purified, reclaimed, recycled and reused, while at the same time providing a significant cost reduction to the customer.

HTC's Delta Purification technology allows the customer to recycle and reuse the existing ethanol used in the CBD extraction process as well as ethanol, glycol and other solvents used for clean energy processing, while managing and reducing waste losses, reducing costs, and shrinking the environmental footprint.

HTC's Delta Purification division is delivering results, as the energy industry, the biomass hemp/CBD extraction industry and other specialty industries have joined the "RE3 revolution" -- reclaim, recycle, reuse.

"Reclaim, recycle, reuse" is more than a tag line for the company. It is a recognized leader in delivering advanced extraction and purification technologies.

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

                                                            Three-month period        Three-month period
                                                         ending March 31, 2020     ending March 31, 2019

Revenue                                                               $707,615                  $768,880
Expenses (before amortization)                                      $1,219,779                  $741,031
Operational loss (profit) before amortization                        ($512,164)                  $27,849
Amortization                                                          $600,884                  $586,123
(Loss) from operations                                             ($1,113,048)                ($558,274)
Net (loss)                                                         ($1,265,498)              ($2,002,254)
Basic (loss) per common share (weighted average) (1)                    ($0.01)                   ($0.05)

(1) Net income (loss) per common share for the periods has been calculated using the weighted average 
    number of common shares outstanding during the respective periods.

Total assets for the period were $50,059,030, compared with $46,739,123 as at Dec. 31, 2019. The increase is primarily attributable to increases in cash, prepaid expenses, accounts receivables and other receivables, and deposits, as well as an increase in property, plant and equipment.

Current liabilities were $6,203,530 for the period, compared with $5,042,569 as at Dec. 31, 2019. The increase is due to draws on the operating line of credit in order to support capital expenditures net of settlement of other current obligations.

The corporation reported long-term liabilities for the period of $13,153,023 (Dec. 31, 2019 -- $12,312,926). Long-term liabilities increased due to increases in long-term debt in connection with capital expenditures.

Revenue for the period was $707,615, compared with $768,880 for the period ending March 31, 2019. The decrease in revenue for the period is primarily due to reduces sales in the CO2 extraction clean energy division.

The majority of the expenses during the period comprised the following: commercialization, product development and administration expenses of $1,096,409 (March 31, 2019 -- $659,152), reflecting expenses incurred from expanded operations at Port LaJord Terminal Corp. and the acquisition and development of Kase Farma; amortization of $600,884 (March 31, 2019 -- $586,123); and finance expenses realized of $69,846 (March 31, 2019 -- $80,426).

The net loss for the period is $1,265,498, compared with $2,002,254 as at March 31, 2019. The loss includes amortization of $600,884 (2019 -- $586,123); non-cash stock compensation to an arm's-length party of $105,521 (2019 -- $149,777); and non-cash share issuance costs of $148,800 (2019 -- nil) in connection with the issuance of shares relating to the Kase Farma acquisition. These three non-cash expenses total $855,205 (2019 -- $735,900).

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