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Carbon recycler LanzaTech widens annual loss to US$38 mln as revenue falls

Wednesday 13th July 2016

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LanzaTech, the New Zealand-founded carbon recycling company, has widened its annual loss on falling revenue as it gears up for full commercialisation of its innovative technology.

The US-based company reported a group after-tax loss of US$38.3 million for the year ended Dec. 31, 2015, a bigger loss than US$27.8 million the year prior, taking its accumulated losses to date to US$166.8 million.

Financial accounts lodged with the Companies Office show revenue dropped to US$3.95 million from US$6.8 million in the 2014 financial year, with US$1.2 million derived from government contracts and US$2.75 million from commercial ones.

LanzaTech turns waste gas from steels mills into ethanol and other high-value fuels and chemicals and was last month named on the fourth annual CNBC Disruptor 50, which includes the likes of Uber and Airbnb. The company was founded in New Zealand 11 years ago and the parent company remains New Zealand-registered while headquarters have shifted to Illinois and it now reports in US dollars.

Directors said the continued net losses from the research and development-heavy operations in the near term, other uncertainties around raising additional funds if needed, and the timing of customer contracts, could cast doubt on the company’s ability to trade on as a going concern. But after reviewing existing working capital against the group’s operating requirements, they said they have a “reasonable expectation” there'll be sufficient funds and current and projected customer contracts to continue at present activity levels for at least the next financial year.

The company accounts show the group had net operating cash outflows for the year of US$31.3 million and by year’s end had total cash and cash equivalents and investments of US$56.4 million, just under US$30 million less than at the same time the prior year.  Research and development expenses for the group rose to US$18.2 million from US$13.6 million the prior year while the parent expenditure on R&D leapt to US$22 million from just US$4.4 million in 2014.

No tax was paid and cashflow included US$19 million for an income tax refund. The group and parent had US$89 million and US$11.2 million of unrealised tax losses respectively.

LanzaTech has raised more than US$200 million from investors including Silicon Valley-based Khosla Ventures and the NZ Superannuation Fund, which invested US$60 million in late 2014. Notes to the 2015 accounts show the Series D round the Super Fund participated in raised a total US$112 million at US$19.93 per preferred share and in June 2015 the company raised a further US$15 million at the same price.

Share-based payments to employees, directors, and others were US$1.3 million during the year. The board approved a new stock option plan during the year from a previously unallocated pool of share options already approved by shareholders. Granted share options were priced at US$6.61 per ordinary share.

Earlier this year LanzaTech announced the production of IPA, a chemical precursor to plastics manufacture, from recycled emissions. In March it also signed its first North American deal, giving US biofuels and biochemical maker Aemetis exclusive rights for 12 years to its patented technology to convert various types of waste gas to ethanol in California. The first phase of adoption of LanzaTech’s technology by Aemetis will be at a plant that’s expected to be built by the end of next year.

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