Research and Development (“R&D”) Costs
The Company incurred $290,374 of R&D costs, net of government grants, on internal projects in Q3 2022, a decrease of 26% as compared with $393,756 in Q3 2021. The decrease in Q3 2022 is primarily related to the decrease in employee compensation, investment tax credits, subcontracting, materials and equipment, and government grants recognized and an increase in other expenses. During the first nine months of fiscal 2022, net spending on internal R&D was $1,577,370 as compared to $1,520,307 in 2021, primarily due to an increase in R&D activities performed.
In addition to internally funded R&D projects, the Company also incurred R&D expenditures during the execution of client funded projects. These expenses are eligible for Scientific Research and experimental Development (“SR&ED”) tax credits. SR&ED tax credits on client funded projects are applied against cost of sales and services (see “Cost of Sales” above).
Financial Expenses
Finance expenses for Q3 2022 totaled $183,694 as compared with $6,792 for Q3 2021, representing an increase of 2,605% year-over-year. The increase in finance expenses in Q3 2022, is primarily attributable to higher interest and accretion due on the business combination.
Strategic Investments
The adjustment to fair market value of strategic investments for Q3 2022 resulted in a loss of $1,802,477 compared to a gain in the amount of $1,868,862 in Q3 2021. The loss is attributable to the decreased market share value of common shares and warrants owned by the Company of HPQ Silicon Resources Inc.
Comprehensive (Loss) Income
The comprehensive loss for Q3 2022 of $4,053,706 compared to a gain of $623,664, in Q3 2021, represents a decrease of 750% year-over-year. The decrease of $4,677,370 in the comprehensive loss in Q3 2022 is primarily attributable to the factors described above, which have been summarized as follows:
| (i) | a decrease in product and service-related revenue of $3,660,143 arising in Q3 2022, | ||
| (ii) | a decrease in cost of sales and services of $3,720,788, primarily due to increase in foreign exchange and the decrease in direct materials and overhead & other, offset by the increase in employee compensation, subcontracting, investment tax credits, and amortization of intangible assets, | ||
| (iii) | an increase in SG&A expenses of $1,010,357 arising in Q3 2022 primarily due to an increase in employee compensation, professional fees, office and general, travel, depreciation of property and equipment, depreciation of right of use assets, government grants, and share-based expenses which is offset by a decrease in other expenses, | ||
| (iv) | a decrease in R&D expenses of $99,432 primarily due to a decrease in employee compensation, investment tax credits, subcontracting, material and equipment, government grants which is offset by an increase in other expenses, | ||
| (v) | an increase in financial expenses of $176,902 in Q3 2022 primarily due to interest on lease liabilities, interest accretion on balance due on business combination and other interest expenses, | ||
| (vi) | a decrease in fair value adjustment of strategic investments of $3,671,339 in Q3 2022. |
EBITDA
The EBITDA in Q3 2022 was a loss of $3,337,927 compared with an EBITDA gain of $968,667 for Q3 2021, representing a decrease of 445% year-over-year. The $4,306,594 decrease in the EBITDA loss in Q3 2022 compared with Q3 2021 is due to the decrease in comprehensive loss of $4,677,371, an increase in depreciation on property and equipment of $61,780, an increase in depreciation ROU assets of $4,667, an increase in amortization of intangible assets of $127,427, and an increase in financial expenses of $176,902.
Adjusted EBITDA loss in Q3 2022 was $2,406,355 compared with an Adjusted EBITDA gain of $1,641,861 for Q3 2021. The decrease of $4,048,216 in the Adjusted EBITDA loss in Q3 2022 is attributable to a decrease in EBITDA loss of $4,306,594, and by an increase of $258,377 in share-based payments.
The Modified EBITDA loss in Q3 2022 was $603,878 compared with a Modified EBITDA loss of $227,001 for Q3 2021, representing a decrease of 166%. The increase of $376,878 in the Modified EBITDA loss in Q3 2022 is attributable to the decrease as mentioned above in the Adjusted EBITDA of $4,048,216 and a decrease in the change of fair value of strategic investments of $3,671,339.
Liquidity
As at September 30, 2022, the Company has cash and cash equivalents of $2,364,861. In addition, the accounts payable and accrued liabilities of $12,655,409 are payable within 12 months.
About PyroGenesis Canada Inc.
PyroGenesis Canada Inc., a high-tech company, is a leader in the design, development, manufacture and commercialization of advanced plasma processes and sustainable solutions which reduce greenhouse gases (GHG), and are economically attractive alternatives to conventional “dirty” processes. PyroGenesis has created proprietary, patented and advanced plasma technologies that are being vetted and adopted by multiple multibillion dollar industry leaders in four massive markets: iron ore pelletization, aluminum, waste management, and additive manufacturing. With a team of experienced engineers, scientists and technicians working out of its Montreal office, and its 3,800 m² and 2,940 m² manufacturing facilities, PyroGenesis maintains its competitive advantage by remaining at the forefront of technology development and commercialization. The operations are ISO 9001:2015 and AS9100D certified, having been ISO certified since 1997. For more information, please visit: www.pyrogenesis.com.
This press release contains certain forward-looking statements, including, without limitation, statements containing the words "may", "plan", "will", "estimate", "continue", "anticipate", "intend", "expect", "in the process" and other similar expressions which constitute "forward- looking information" within the meaning of applicable securities laws. Forward-looking statements reflect the Company's current expectation and assumptions and are subject to a number of risks and uncertainties that could cause actual results to differ materially from those anticipated. These forward-looking statements involve risks and uncertainties including, but not limited to, our expectations regarding the acceptance of our products by the market, our strategy to develop new products and enhance the capabilities of existing products, our strategy with respect to research and development, the impact of competitive products and pricing, new product development, and uncertainties related to the regulatory approval process. Such statements reflect the current views of the Company with respect to future events and are subject to certain risks and uncertainties and other risks detailed from time-to-time in the Company's ongoing filings with the securities regulatory authorities, which filings can be found at www.sedar.com, or at www.sec.gov. Actual results, events, and performance may differ materially. Readers are cautioned not to place undue reliance on these forward-looking statements. The Company undertakes no obligation to publicly update or revise any forward- looking statements either as a result of new information, future events or otherwise, except as required by applicable securities laws. Neither the Toronto Stock Exchange, its Regulation Services Provider (as that term is defined in the policies of the Toronto Stock Exchange) nor the NASDAQ Stock Market, LLC accepts responsibility for the adequacy or accuracy of this press release.
SOURCE PyroGenesis Canada Inc.
For further information please contact:
Rodayna Kafal, Vice President, IR/Comms. and Strategic BD
Phone: (514) 937-0002, E-mail:
ir@pyrogenesis.com
