TIDMIX.
RNS Number : 1464O
i(x) Net Zero PLC
29 September 2023
29 September 2023
i(x) Net Zero PLC
("i(x) Net Zero" or the "Company")
Half Year Results for the Six Months Ended 30 June 2023
i(x) Net Zero PLC (AIM: IX.), the investing company which
focuses on the Energy Transition, is pleased to announce its half
year results for the six months ended 30 June 2023 ("HY 2023", "H1
2023" ). All amounts are in USD unless otherwise stated.
Financial and Investment Highlights
-- Fair value of investments in i(x)'s portfolio companies
("Portfolio NAV") as at 30 June 2023 increased by 133.56% to
$149.11 million ( 31 December 2022: $63.84 million), largely driven
by WasteFuel Global Inc. ("WasteFuel") investment from bp;
-- Portfolio NAV per share at 30 June 2023, including cash of
$4.35 million (GBP3.43 million), of $1.79 per share ( GBP1.41 per
share) ( 31 December 2022: $0.90 per share ( GBP0.75 per
share);
-- $81.05 million profit before non-cash deferred tax provision
and share-based compensation (H1 2022: $0.50 million) ;
-- As at 30 June 2023, the Company had $0.8 million borrowings
and cash of $4.35 million ( 31 December 2022: no borrowings and
cash of $7.48 million); and
-- In the first six months of the year, i(x) made portfolio
investments of $0.55 million (H1 2022: $0.50 million).
Corporate and Portfolio Highlights
-- Pär Lindström, the Company's Chief Investment Officer,
appointed as CEO; Jonathan Carpenter Stearns appointed as CFO
-- Strategic refresh to focus firmly on growing the Net Asset
Value ("NAV") of the Company's investments, by sourcing high growth
investment opportunities and identifying and executing profitable
investment realisations from the existing investment companies in
the short term and
-- Set near term target of reducing operating expenditure to 2%
of NAV, down more than 50% from the 2022 operating expenditure
-- Entered into new secured $7.5 million 2 year term loan
facility with European Depositary Bank S.A.
-- WasteFuel secured a $10 million investment from bp, to
further assist WasteFuel's plans to develop a global network of
plants to convert municipal and agricultural waste into
bio-methanol, a biofuel which could play a significant role in
decarbonising hard-to-abate sectors like shipping . Pre money
valuation was $400 million and conservatively valued through i(x)
Net Zero's third party valuation group at $387 million which
increased the NAV of the Company's holding in WasteFuel by $84.78
million
-- Sustainable Living Innovations, Inc. ("SLI"), the building
technology and product development company, entered into a
non-binding letter of intent in relation to a proposed business
combination with NYSE listed Churchill Capital Corp V, in a
potentially transformative combination for SLI that, if completed,
will provide the ideal platform to execute the next stage of SLI's
growth strategy and significantly improve access to capital
-- Made $0.55 million follow on i nvestments, including $0.4
million into EMC and an additional $0.15 million into SLI via an
Unsecured Convertible Promissory Note
Events subsequent to HY 2023
The following are key developments subsequent to the six-month
period end:
-- Commitment to invest an additional US$2.5 million into Enphys
Management Company ("EMC"), for budgeted working capital, certain
other approved costs and investments into new assets as it
initially progresses towards a merger opportunity for its SPAC,
Enphys Acquisition Corp, with the intention of forming a major
renewables energy group that can be a regional champion for
sustainability
-- Conditional agreement reached for the sale of Carbon
Engineering Ltd. ("Carbon Engineering"), to Occidental Petroleum
Corporation ("Occidental"), the international energy company
-- Enphys signed a non-binding letter of intent for a business combination with a leading and well-established advanced biofuels company in Latin America
-- The Company added an additional company to its portfolio via
a $0.6 million investment into Citron Energy Inc ("Citron Energy"),
a US based alternative fuels business. This investment will result
in i(x) Net Zero owning approximately 34% of Citron Energy
Pär Lindström, CEO, commented:
"The first six months of the year have seen us make significant
progress towards our aim of growing our NAV and creating a more
streamlined business. In the six months to June 2023 and in the
months since, we have seen exciting developments in our portfolio
companies, with WasteFuel securing a meaningful investment from bp
and Enphys signing a letter of intent ("LoI") for a business
combination with a leading and well-established advanced biofuels
company in Latin America. SLI has signed a LoI for a business
combination and we have reached a conditional agreement for the
sale of Carbon Engineering and we recently made an investment in a
new company, Citron, that continues our focus on opportunities in
energy transition.
"As policy-makers in the US and the Americas advance their plans
for achieving net zero, i(x) is perfectly positioned to grant
shareholders exposure to the exciting and growing companies which
are engaged in the journey towards a more sustainable future. We
continue to streamline and sharpen the business, and we look
forward to reporting further progress for the year as a whole."
For further information visit https://ixnetzero.com/ or contact:
i(x) Net Zero Via Buchanan below
Pär Lindström - Chief Executive
Officer
Canaccord Genuity Limited
Nominated Adviser & Broker +44 20 7523 8000
Max Hartley
Harry Pardoe
Buchanan
Helen Tarbet +44 7872 604 453
Simon Compton +44 7979 497 324
Notes to Editors
About i(x) Net Zero PLC
i(x) Net Zero PLC is an AIM quoted investing company that seeks
to provide its shareholders with the opportunity to create long-
term capital growth with positive, scalable, measurable and
sustainable impact on the environment and on the communities it
serves.
In accordance with its belief that the world's biggest problems
are also the biggest market opportunities, i(x) Net Zero focuses on
two critical areas in which it aims to make a positive impact: (i)
Energy Transition and (ii) Sustainability in the Built
Environment.
The Company uses a multi-strategy investment approach, providing
the companies in which it invests with the expertise and catalytic
capital to help them grow. To date, i(x) Net Zero has invested in
biofuels, direct air capture (carbon removal), renewable energy,
sustainable workforce housing and net zero construction technology
.
i(x) Net Zero is a signatory to the UN Principles for
Responsible Investing.
The Company has received the London Stock Exchange's Green
Economy Mark.
Operational Review
NAV Update
$m $m $m
Equity Unaudited Audited Increase/
interest Portfolio Portfolio (Decrease)
( 30/6/2023 NAV as NAV as at during H1
Investee Company ) at (30/6/2023) (31/12/2022) 2023
WasteFuel Global, Inc. 34.8% 131.69 46.91 84.78
Enphys Management Company,
LLC 14.5% 10.92 10.34 0.58
MultiGreen Properties, LLC 10.0% 2.19 2.26 -0.07
Sustainable Living Innovations
("SLI") 0.1% 0.77 0.74 0.03
Carbon Engineering Ltd 0.5% 2.64 2.58 0.06
Context Labs B.V. 0.5% 0.50 0.51 -0.01
Simple Agreement For Future
Equity (SAFE) with WasteFuel
Global, Inc. - 0.25 -0.25
Convertible note of MultiGreen
Properties, LLC 0.25 0.25 -
Unsecured Convertible Promissory
Note of SLI 0.15 - 0.15
Total 149.11 63.84 85.26
Portfolio Review
WasteFuel Global, Inc. ("WasteFuel") is focused on developing
renewable, non-fossil fuels to help reduce the carbon emissions of
the transportation sector with a particular focus on waste to
energy for trucks, planes and ships.
In July 2023, WasteFuel announced that it had secured a $10
million investment from bp, the multi-national energy company, as
part of the first close of a Series B fundraise. The investment
will further assist WasteFuel's plans to develop a global network
of plants to convert municipal and agricultural waste into
bio-methanol, a biofuel which could play a significant role in
decarbonizing hard-to-abate sectors like shipping.
bp's $10 million investment, leading the Series B investment
round, resulted in a material uplift in the NAV attributable to the
Company's holding in WasteFuel. Following bp's investment, the
unaudited NAV of the Company's equity interest in WasteFuel is
$131.69 million, a 181% uplift from the last reported audited NAV
($46.91 million as at 31 December 2022). This NAV uplift is
included in the Company's H1 2023 results.
Also, WasteFuel announced that it entered a partnership
including a memorandum of understanding with bp for the offtake of
WasteFuel's bio-methanol and a technical collaboration to improve
bio-methanol production efficiency, yields and economics. As part
of this agreement, the business will be able to leverage bp's
proprietary technology to help optimise and improve its low-carbon,
bio-methanol production.
In August 2023, WastFuel announced the strengthening of its
management team with the appointment of Peter Votkjaer Jorgensen,
former Partner in Maersk Growth, the venture arm of the A.P. Moller
- Maersk Group, as Chief Financial Officer (CFO) effective October
1, 2023.
Enphys Management Company, LLC ("EMC") is i(x) Net Zero's
partnership with the Latin America Investment Group, a business
development and investment group. EMC pursues private and public
opportunities focused on renewables and energy transition in Latin
America and has a direct ownership in Enphys Acquisition Sponsor,
LLC ("EAS"), the sponsor company of Enphys Acquisition Corp.
("EAC"), a NYSE-listed SPAC targeting renewable energy businesses
in Latin America, in which EMC also has an ownership. Its strategy
is to create a regional champion in the Americas for alternative
energy through the aggregation of existing, cash-flow positive wind
and solar assets. Latin America provides a rapidly growing energy
market where alternative energy production is often the lowest cost
source. This provides Enphys the opportunity to execute at scale
and become a significant publicly traded leader in energy
transition.
In August 2023, the Company announced that it had committed to
invest an additional $2.5 million into EMC and that its wholly
owned subsidiary i(x) Investments LLC had entered into a revised
EMC LLC Agreement with LAIG Investments.
The investment, the cost of which will be spread over the next
four years and immediately took the Company's ownership in Enphys
from its previous level of 14.5% to 30.0%. The additional cash
investment, together with the increased valuation at which the
investment was agreed generated an uplift in the Net Asset Value of
the Company's total holding in EMC from $10.3 million to $16.7
million, based on the valuation as at 31 December 2022.
The new funding will provide additional support to EMC for
budgeted working capital, certain other approved costs and
investments into new assets as it initially progresses towards a
merger opportunity for its SPAC, Enphys Acquisition Corp, with the
intention of forming a major renewables energy group that can be a
regional champion for sustainability in the Americas and later
expanding its assets under management with new assets and new
investment structures.
Enphys Acquisition Corp. (NYSE: NFYS, "EAS", EMC is the sponsor
of EAS and has a direct ownership in EAS) filed its intial
preliminary proxy statement in August 2023 in connection with an
extraordinary general meeting of shareholders of EAS for the
purpose of, among other things, extending the time by which it has
to consummate an initial business combination from October 8, 2023
to February 8, 2024 (the "Extension"), as well as other documents
filed by EAS with the U.S. Securities and Exchange Commission. The
Extension is subject to approval by EAS shareholders and a further
announcement will be made in due course.
EAS has also signed a non-binding letter of intent for a
business combination with a leading and well-established advanced
biofuels company in Latin America.
Carbon Engineering Ltd. ("Carbon Engineering") has developed a
proprietary Direct Air Capture ("DAC") technology that removes
carbon dioxide directly from the atmosphere for sequestration and
storage. With its DAC and carbon-to-value proposition, it
represents the next generation of industrial scale decarbonisation.
The company has a clear path to global growth and is focused on
licensing its technology to industrial partners to build and
operate.
In August 2023, the Company announced that a conditional
agreement had been reached for the sale of Carbon Engineering, to
Occidental Petroleum Corporation ("Occidental"), the international
energy company.
Occidental is an existing strategic partner of Carbon
Engineering. The acquisition would see Occidental acquire the
outstanding shares in Carbon Engineering for a total cash
consideration of $1.1 billion, payable in three approximately equal
annual payments with the first to be made at closing.
i(x) Net Zero holds an indirect circa 0.45% interest in Carbon
Engineering through two special purpose vehicles. If the sale
completes on the agreed terms, the Company's indirect interest
would equate to approximately $7.2 million, and subject to the
distribution of the proceeds over the three years following
completion by those SPVs, this would generate a 7.2x return on the
Company's initial investment of $1 million before any costs of the
SPVs. On this basis the sale price would also represent a 2.8x
multiple on the current holding value of the Company's investment
in Carbon Engineering, of $2.6 million.
Context Labs B.V. ("Context Labs") is an impact software company
whose blockchain technology platform enables the harvesting and
processing of data to help businesses track their carbon emissions
and their compliance with regulatory frameworks.
In April 2023, Context Labs and EQT Corporation ("EQT")
announced the establishment of a strategic partnership to advance
the commercialisation of verified low carbon intensity natural gas
products and carbon credits. The partnership will bring together
EQT, the largest natural gas producer in the U.S., and Context
Labs, an expert in distributed ledger technology, advanced climate
data and analytics, machine learning and AI-capabilities. EQT is a
leading independent natural gas production company with operations
focused in the cores of the Marcellus and Utica Shales in the
Appalachian Basin.
Through tracking, reporting and verification of critical
emissions data, the strategic partnership will support EQT in
achieving its industry-leading emissions reduction targets, which
include a commitment to reach net-zero greenhouse gas (GHG)
emissions by 2025. With a focus on emissions quantification,
operational analysis, and the certification of natural gas
production, the companies will work to scale emissions mitigation
across the full energy value chain.
Context Labs' enterprise data fabric platform, DaaS(TM),will
enable certification and verification of the carbon intensity of
EQT's operating assets, with certificates registered in Context
Labs' CLEAR Path(TM) Repository. Additionally, the relationship
will afford EQT the opportunity to integrate carbon credit projects
into CLEAR Path(TM) in support of generating asset-grade
data-backed carbon credits.
In September 2023, Context Labs and Viridios AI announced a
strategic partnership to de-risk and re-build carbon markets.
Viridios AI, a Viridios Group company and leader in global carbon
market analytics through data and technology, to create the safest,
most trusted platform for environmental attribute discovery,
evaluation, and pricing.
Context Labs joins Viridios AI's solutions development and
deployment ecosystem as a key strategic partner focusing on data
integrity, transparency, and scalability. Sharing a vision for how
to re-build and de-risk the emerging and ongoing needs of the
global carbon markets, the companies will help organizations meet
their climate and net-zero targets with the world's safest carbon
credits available to offset residual emissions. Each company will
collaborate with a select group of partners from their respective
networks to identify specific opportunities to provide data-driven,
more effective decarbonisation and monetisation methods.
Sustainable Living Innovations ("SLI") is a construction
technology and product development company producing panelised
buildings to address housing affordability, while delivering a new
standard in sustainable living. SLI continues to capture market
share as a leader in delivering net zero buildings at scale. Its
factory-assembled and cost-effective steel panel technology
addresses both the inflationary pressure on material costs and
supply chain issues.
In March 2023, SLI signed a non-binding letter of Intent in
relation to a proposed business combination with NYSE listed
Churchill Capital Corp V ("Churchill V"). With the signing of this
LOI, i(x) made a follow on investment of $0.15 million that will
allow SLI to complete the combination and cover the costs
associated with its underlying projects development.
MultiGreen Properties, LLC ("MultiGreen") is a developer of
sustainable, multi-family properties that aims to supply affordable
workforce rental housing by reducing construction costs and
duration. MultiGreen intends to become the first net zero energy
operator of multi-family projects in the US by 2025. The company is
delivering on its mission to provide attainable, tech-enabled
rental apartments in supply-constrained US markets. We will
continue to monitor this investment closely as it weathers these
turbulent real estate markets.
Citron Energy Inc ("Citron Energy")
In September 2023, the Company added an additional company to
its portfolio via a $0.6 million investment into Citron Energy Inc
("Citron Energy"), a US based alternative fuels business.
Citron Energy aims to replace the use of fossil fuels by
processing non-recyclable municipal and commercial waste into a
combustible fuel. The use of CitronFuel will allow the replacement
of coal as well as helping to reduce landfill usage and
significantly lower CO2 emissions. The $0.6 million investment will
be in the form of a subscription for new shares in Citron Energy
and will result in i(x) Net Zero owning approximately 34% of Citron
Energy. Jonathan Stearns, the Company's Chief Financial Officer,
has a non-controlling holding in Citron Energy and is the chairman
of Citron Energy.
Financial Review
The Company continued delivering an improvement in the fair
value of investments in its portfolio companies ("Portfolio NAV")
which increased by 133.55 % or, $85.26 million to $ 149.11 million
as at 30 June 2023 (31 December 2022: $63.84 million).
The increase in Portfolio NAV over the period of $85.26 million
( H1 2022: $ 5.20 million) comprises unrealised gains of $84.72
million ( H1 2022: $ 4.70 million) due to the change in fair value
of portfolio investments and $0.55 million of additions to
investments ( H1 2022: $0.50 million) . The majority of unrealised
gains relates to an increase in fair value of WasteFuel as a result
of bp's investment entered into on 30 June 2023. A s at 30 June
2023, Portfolio NAV per share, including cash of $4.35 million
(GBP3.43 million), was $1.79 per share ( GBP1.41 per share) based
on the issued number of shares at 30 June 2023 (31 December 2022:
$0.90 per share ( GBP0.75 per share) based on the issued number of
shares at 31 December 2022 ).
Profit before non-cash deferred tax provision and share-based
compensation was $81.05 million in H1 2023 (H1 2022: $0.50 million)
( $81.05 million is derived as profit before tax of $82.09 million
(H1 2022: loss $0.28 million) minus share-based compensation credit
of $1.04 million (H1 2022: expense $0.78 million)).
During H1 2023, stock options were granted to management
employees under the Company's Equity Incentive Plan while stock
options issued in 2022 were forfeited and surrendered resulting in
non-cash share-based compensation credit of $1.04 million being
recognised (H1 2022: share-based compensation expense $0.78
million).
General and administrative costs decreased by $2.36 million to
$2.61 million (H1 2022: $4.96 million), largely due to non-cash
share-based compensation credit, lower compensation costs as a
result of a smaller team and cost reductions.
As a result of the corporate inversion and resulting IPO
transaction, i(x) Net Zero PLC is being treated as a U.S. domestic
corporation for all purposes of the U.S. tax code as of the date of
the transaction and there will be non-cash deferred tax
implications related to the Company's temporary difference in the
book and tax basis of its assets, the most material of which is the
difference between the tax basis and the fair value of the
Company's investments. For the period ended June 30, 2023, non-cash
deferred tax expense of $20.64 million (H1 2022: $12.69 million)
was recognised in the consolidated statement of comprehensive
income.
Profit after tax amounted to $61.45 million in H1 2023 (H1 2022:
loss after tax of $12.97 million) primarily as a result of
unrealised gains due to the change in fair value of portfolio
investments and lower general and administrative costs offset by
non-cash deferred tax provision .
In April 2023, the Company issued of 6,820,618 new ordinary
shares to Mr. Lindström in lieu of cash payment of his CEO and
incentive bonuses payable of $0.7 million. Following this
transaction the Company has 85,877,429 Ordinary Shares in issue
.
The Company continues to be in a strong financial position and
as at 30 June 2023 had cash of $4.35 million and new $7.5 million
2-year term loans facility ($0.8 million loan was drawn) (31
December 2022: no borrowings and cash of $7.48 million) and net
current assets of $3.98 million (31 December 2022: $6.68
million).
Outlook
With the achievement of a significant increase in NAV and
rationalisation of its operating expenses by new management, i(x)
Net Zero is now well positioned to selectively add to its
investment portfolio.
In order to achieve this stated ambition, the Company has
identified a number of accretive opportunities for its existing
portfolio. These may include near-term opportunities to participate
in capital raises or add-on investments. In addition, building on
its successes to date, i(x) will look to replicate its strategy of
using its operational expertise and catalytic capital via new
platforms in the energy transition and built environment to scale
proven technology and accelerate new and existing market
penetration.
The Company also remains open to exploring an investment in, or
other potential alliance with, a renewables and circular economy
platform that has a mission and purpose that is similar to the
Company's; namely to build profitable businesses that support the
achievement of the UN Sustainable Development Goals.
At the beginning of 2023 the Board of Directors set ambitious
NAV and profitability targets for the executive management team,
including a near term target of reducing operating expenditure to
2% of NAV and growing NAV by more than 50% over the course of 2023.
The business has already started to make good progress towards
achieving these challenging targets and is confident of delivering
further tangible results in the second half in support of enhancing
shareholder value over the near and longer term.
Pär Lindström
Chief Executive Officer and Chief Investment Officer
29 September 2023
(x) Net Zero Plc
Consolidated Statement of Comprehensive Income
For the Six Months Ended 30 June 2023
(Expressed in US dollars)
(Unaudited) (Audited)
----------------------------- --------------
For the Six Months Year Ended
Ended
30 June 31 December
----------------------------- --------------
Notes 2023 2022 2022
------ ------------- -------------- --------------
Net changes in fair value
on financial assets 3 $84,717,302 $4,695,431 $1,413,805
at fair value through profit
or loss
Divided, interest and other
income 24,145 156 2,645
General and administrative
expenses (2,606,696) (4,964,208) (8,246,839)
------------- -------------- --------------
OPERATING PROFIT/(LOSS)
BEFORE
FINANCING ACTIVITIES 82,134,751 (268,621) (6,830,389)
Finance cost (41,327) (15,839) (27,495)
------------- -------------- --------------
PROFIT/(LOSS) BEFORE TAX 82,093,424 (284,460) (6,857,884)
Tax provision - deferred
tax expenses (20,639,572) (12,685,897) (11,271,318)
------------- -------------- --------------
PROFIT/(LOSS) AFTER TAX $61,453,852 $(12,970,357) $(18,129,202)
============= ============== ==============
Earnings/(loss) per share:
Basic and diluted 5 $0.76 $(0.16) $(0.23)
Notes:
a) There is no comprehensive income or loss for the periods
ended 30 June 2023 and 2022 and the year ended 31 December
2022.
b) As a result of the corporate inversion and resulting IPO on
AIM, i(x) Net Zero PLC is being treated as a U.S. domestic
corporation for all purposes of the U.S. tax code as of the date of
the IPO and there will be non-cash deferred tax implications
related to the Company's temporary difference in the book and tax
basis of its assets, the most material of which is the difference
between the tax basis and the fair value of the Company's
investments. For the period ended 30 June 2023, deferred tax
expense of $20,639,572 was recognised in the consolidated statement
of comprehensive income.
i(x) Net Zero Plc
Consolidated Statement of Financial Position
30 June 2023
(Expressed in US dollars)
(Unaudited) (Audited)
---------------------------- -------------
ASSETS Notes 30 June 30 June 31 December
2023 2022 2022
------ ------------- ------------- -------------
Non-Current assets
Investments, at fair value 3 $149,108,024 $65,936,183 $63,840,722
Right-of-use asset 190,727 503,443 349,277
Furniture and equipment, net
of accumulated depreciation - 8,567 1,839
Loan origination costs, net 148,500 - -
Security deposit 82,942 82,942 82,942
Member tax advance - 11,500 -
------------- ------------- -------------
Total Non-Current Assets 149,530,193 66,542,635 64,274,780
------------- ------------- -------------
Current assets
Cash and cash equivalents 7 4,349,236 11,178,604 7,479,832
Accounts receivable 26,585 - 66,838
Interest receivable 24,145 - -
Prepaid expenses and other
current assets 107,356 225,620 135,806
Cash advances for future investments - 86,165 -
------------- ------------- -------------
Total Current Assets 4,507,322 11,490,389 7,682,476
------------- ------------- -------------
Total Assets $154,037,515 $78,033,024 $71,957,256
============= ============= =============
LIABILITIES
Current liabilities
Accounts payable and accrued
expenses $283,545 $890,348 $612,788
Lease liability 184,902 349,950 364,336
Interest payable 34,055 - -
Security deposit payable 24,601 49,202 24,601
------------- ------------- -------------
Total Current Liabilities 527,103 1,289,500 1,001,725
------------- ------------- -------------
Non-current liabilities
Deferred tax liability 31,910,889 12,685,897 11,271,318
Loan payable 7 800,000 - -
Lease liability 32,051 216,954 32,051
------------- ------------- -------------
Total Non-Current Liabilities 32,742,940 12,902,851 11,303,369
------------- ------------- -------------
Total Liabilities 33,270,043 14,192,351 12,305,094
------------- ------------- -------------
EQUITY
Share Capital, no par value
(authorized,
issued and outstanding - 85,877,429
as of 30 June 2023 and 79,056,811
as of 30 June 2022 and 31 December
2022
ordinary shares 4 77,333,361 76,701,569 77,671,903
Retained earnings 43,434,111 (12,860,896) (18,019,741)
------------- ------------- -------------
Total Equity 120,767,472 63,840,673 59,652,162
------------- ------------- -------------
Total Liabilities and Equity $154,037,515 $78,033,024 $71,957,256
============= ============= =============
The financial statements were authorised for issue by the board
of directors on 29 September 2023 and were
signed on its behalf by:
Pat Lindstrom Jonathan Stearns
Chief Executive Officer Chief Financial Officer
Company number - 138730
i(x) Net Zero Plc
Consolidated Statement of Changes in Shareholders' Equity
Page 1 of 2
For the Six Months Ended 30 June 2023
(Expressed in US dollars)
Share Capital
Number Members' and Other Retained
of Shares Capital Reserves Earnings Total
----------- ------------- -------------- -------------- --------------
At 1 January
2023 79,056,811 $- $77,671,903 (18,019,741) $59,652,162
Net income for
the period - - - 61,453,852 61,453,852
(1 January 2023
- 30 June 2023)
Share bonus
(Note 4) 6,820,618 - 700,000 - 700,000
Share option
credit (Note
6) - (1,038,542) - (1,038,542)
-
----------- ------------- -------------- -------------- --------------
At 30 June
2023 85,877,429 $- $ 77,333,361 $ 43,434,111 $ 120,767,472
----------- ------------- -------------- -------------- --------------
At 1 January
2022 - $63,877,744 $- $- $ 63,877,744
Capital contributions - 1,644,981 - - 1,644,981
Distributions
of assets held
for - (1,216,841) - - (1,216,841)
disposal to
i(x) Sustainable
Holdings, LLC
Distribution
cash to i(x) - (400,000) (400,000)
Sustainable - -
Holdings, LLC
Net loss for
the period (1
January 2022- - (109,461) - - (109,461)
8 February 2022)
At 9 February
2022 - 63,796,423 - - 63,796,423
----------- ------------- -------------- -------------- --------------
Conversion from
members' capital
to
shareholders'
equity 65,000,000 (63,796,423) 63,796,423 - -
Subscription
for i(x) Net
Zero shares
net of expenses 14,056,811 - 12,125,421 - 12,125,421
Net loss for
the period (9
February 2022
- - - - (12,860,896) (12,860,896)
30 June 2022)
Share option
expenses - - 779,725 - 779,725
----------- ------------- -------------- -------------- --------------
At 30 June
2022 79,056,811 $- $76,701,569 $(12,860,896) $63,840,673
=========== ============= ============== ============== ==============
i(x) Net Zero Plc
Consolidated Statement of Changes in Shareholders' Equity
Page 2 of 2
For the Year Ended December 31, 2022
(Expressed in US dollars)
Share Capital
Number Members' and Other Retained
of Shares Capital Reserves Earnings Total
----------- ------------- -------------- -------------- -------------
At 1 January
2022 - $63,877,744 $- $- $63,877,744
Capital contributions - 1,644,981 - - 1,644,981
Distribution
of assets held
for disposal
to i(x)
Sustainable Holdings
LLC - (1,216,841) - - (1,216,841)
Distribution
of cash to i(x)
Sustainable Holdings,
LLC - (400,000) - - (400,000)
Net loss for
the period
(1 January 2022
-
8 February 2022) - (109,461) - - (109,461)
----------- ------------- -------------- -------------- -------------
At 9 February
2022 - 63,796,423 - - 63,796,423
----------- ------------- -------------- -------------- -------------
Conversion from
members' capital
to
shareholders'
equity 65,000,000 (63,796,423) 63,796,423 - -
Subscription
for i(x) Net
Zero share, net
of
expenses 14,056,811 - 12,125,421 - 12,125,421
Net loss for
the period
(9 February 2022
-
31 December 2022) - - - (18,019,741) (18,019,741)
Share option
expense - - 1,750,059 - 1,750,059
----------- ------------- -------------- -------------- -------------
At 31 December
2022 79,056,811 $- $77,671,903 $(18,019,741) $59,652,162
=========== ============= ============== ============== =============
The consolidated statement of changes in shareholders' equity is
presented as changes in members' capital up to the date of the
acquisition of i(x) investments, LLC, accounted for under merger
principles.
.
i(x) Net Zero Plc
Consolidated Statements of Cash Flows
For the Six Months Ended 30 June 2023
Expressed in US dollars)
(Unaudited) (Audited)
----------------------------- --------------
For the Six Months Year Ended
Ended
30 June 31 December
----------------------------- --------------
Notes 2023 2022 2022
------ ------------- -------------- --------------
CASH FLOWS FROM OPERATING ACTIVITIES
Profit/(loss) attributable to
shareholders/members $61,453,852 $(12,970,357) $(18,129,202)
Adjustments for:
Depreciation expense 1,839 6,774 13,472
Amortisation of right-of-use
asset 158,550 149,983 304,149
Amortisation of loan facility 16,500 - -
fees
Loss on cash advances for future
investments - - 86,165
Net changes in fair value on
financial
assets at fair value through
profit or loss 3 (84,717,302) (4,695,431) (1,499,970)
Bonus expense paid in shares 4 700,000 1,000,000 1,000,000
Incentive stock option grant
expense 6 (1,038,542) 779,725 1,750,059
Increase in deferred tax liability 20,639,571 12,685,897 11,271,318
Changes in operating assets and
liabilities
Decrease/(increase) in accounts
receivable 40,253 40,374 (26,464)
Increase in interest receivable (24,145) - -
Decrease in prepaid expenses
and other current assets 28,450 1,324,096 1,413,910
Decrease in security deposit
payable - - (24,601)
Increase in member tax advance - - 11,500
Decrease in accounts payable
and accrued expenses (329,243) (982,165) (1,259,725)
------------- -------------- --------------
Net Cash Used in Operating Activities (3,070,217) (2,661,134) (5,089,389)
------------- -------------- --------------
CASH FLOWS FROM INVESTING ACTIVITIES
Purchases of investments (550,000) (500,000) (1,600,000)
------------- -------------- --------------
Net Cash Used in Investing Activities (550,000) (500,000) (1,600,000)
------------- -------------- --------------
CASH FLOWS FROM FINANCING ACTIVITIES
IPO Proceeds, net of expenses - 12,125,421 12,125,421
Distribution to i(x) Sustainable
Holdings, LLC - (400,000) (400,000)
Purchase of i(x) Net Zero shares - (1,000,000) (1,000,000)
Capital contributions - 1,644,981) 1,644,981)
Proceeds from loan facility borrowings 7 800,000 - -
Payment of loan facility fees (165,000) - -
Increase in interest payable 34,055 - -
Decrease in lease liability (179,434) (165,428) (335,945)
------------- -------------- --------------
Net Cash Provided by Financing
activities 489,621 12,204,974 12,034,457
------------- -------------- --------------
Net Increase (Decrease) in Cash
and
Cash Equivalents (3,130,596) 9,043,840 5,345,068
------------- -------------- --------------
CASH AND CASH EQUIVALENTS
Beginning of period 7,479,832 2,134,764 2,134,764
------------- -------------- --------------
End of period $4,349,236 $11,178,604 $7,479,832
============= ============== ==============
SUPPLEMENTAL DISCLOSURE OF CASH
FLOW INFORMATION:
Non-cash financing activity
Share-based compensation 6 $(1,038,542) $779,725 $1,750,059
Distribution of assets held for
disposal - 1,216,841 1,216,841
Bonus expense paid in shares 4 700,000 1,000,000 1,000,000
------------- -------------- --------------
$(338,542) $2,996,566 $3,996,900
============= ============== ==============
i(x) Net Zero Plc
Notes to Consolidated Financial Statements
30 June 2023
1. Organisation and Nature of Business
i(x) Net Zero, PLC (the "Company") is a company incorporated and
domiciled in Jersey, British Isles with Company Number 138730. The
Company's shares are admitted to trading on the AIM market of the
London Stock Exchange (ticker: IX). The Company is an investment
company that provides its shareholders with an opportunity to
create long-term capital growth with sustainable impact on the
environment and communities it serves. The registered address of
the Company is 3(rd) Floor, 44 Esplanade Street, Helier, Jersey JE4
9WG. The Company is governed in accordance with Companies (Jersey)
Law 1991.
2. Basis of Preparation and Going Concern
The Company's financial statements have been prepared in
accordance with International Financial Reporting Standards
("IFRS") and IFRIC interpretations issued by the International
Accounting Standards Board ("IASB") and with those parts of the
Companies (Jersey) Law 1991 applicable to companies preparing their
financial statements under IFRS. The financial statements have been
prepared on the historical cost basis, as modified by the
revaluation of financial assets and financial liabilities at fair
value through profit or loss. The Company reports cash flows from
operating activities using the indirect method.
These half-year abbreviated financial statements are unaudited
and do not constitute statutory accounts within the meaning of
Section 435 of the Companies Act 2006. The results for the year
ended 31 December 2022 set out above are abridged. Full accounts
for that year reported under IFRS, on which the auditors of the
Company made an unqualified report have been delivered to the
Registrar of Companies.
The Company's interim condensed consolidated financial
statements are presented in accordance with IAS 34, Interim
Financial Reporting, and should be read in conjunction with the
Company's annual financial statements as of 31 December 2022. The
presentation of these interim condensed consolidated financial
statements is consistent with the 2022 financial statements and its
accounting policies, but where necessary comparative information
has been reclassified or expanded from the 2022 interim financial
statements to take into account any presentational changes made in
the 2022 financial statements or in these interim financial
statements.
Going Concern
The Company's financial statements have been prepared on a going
concern basis. The financial position of the Company, its cash
flows, liquidity position and borrowing facilities are described in
these financial statements and related notes.
In order to assess the going concern of the Company, the
Directors have prepared cash flow forecasts for the Company. These
cash flow forecasts show the Company expects to have sufficient
headroom over available banking facilities. The Company has
obtained banking facilities sufficient to facilitate the growth
forecast in future periods. No matters have come to the attention
of the Directors to suggest that future renewals may not be
forthcoming on acceptable terms.
After making enquiries, the Directors have a reasonable
expectation that the Company has adequate resources to continue in
operational existence for the foreseeable future. Accordingly, they
continue to adopt the going concern basis in preparing the
financial statements.
The financial statements do not include any adjustments that
would result if the forecast were not achieved.
3. Investments in Private Operating Companies
Following are the schedules of investments as of 30 June 2023,
30 June 2022 and 31 December 2022:
30 June 2023
Principal Percent
of
Amounts/Shares/ Shareholders'
Units Description Equity Fair Value
---------------- ------------------------------------- -------------- -------------
Private Operating Companies
United States
Common Shares
Biofuel Developer
10,404,587 Wastefuel Global, Inc. 109.1% $131,687,361
-------------
Total Common Shares 109.1% 131,687,361
-------------
Limited Liability Company Interests
Real estate development
1,228,063 MultiGreen Properties, LLC 1.8% 2,190,000
-------------
Total Limited Liability Company
Interests
1.8% 2,190,000
-------------
Limited Partnership Interest
Building technology
Sustainable Living Innovations
(FKA Multigreen SLI Partners,
LP) 0.7% 771,000
-------------
Total Limited Partnership Interests 0.7% 771,000
-------------
Convertible
Note
Building technology
Sustainable Living Innovations
(FKA Multigreen SLI Partners,
150,000 LP) 0.1% 150,000
Real estate development
250,000 MultiGreen Properties, LLC 0.2% 250,000
-------------
Total Convertible Note 0.3% 400,000
-------------
Total United States 111.9% $135,048,361
=============
Canada
Common Shares
Carbon Capture Technology
21,763 Carbon Engineering, Ltd. (1) 2.2% 2,637,710
-------------
Total Common Shares - Canada 2.2% 2,637,710
-------------
Cayman Islands
Limited Liability Company Interest
Renewable Energy
Enphys Management Company 9.0% 10,919,953
-------------
Total Limited Liability Company
Interests - 9.0%
Cayman Islands 10,919,953
-------------
Netherlands
Preferred Class B1 Shares
499,955 Software/Information Technology
Context Labs, BV 0.4% 502,000
-------------
Total Convertible Note - Netherlands 0.4% 502,000
-------------
Total Investments 123.5% $149,108,024
=============
(1) Shares of Carbon Engineering, Ltd. are held indirectly
through investments in RCM Carbon Engineering Partners, LLC (12,490
common shares) and C12 Equity Ltd. (9,273 common shares).
30 June 2022
Principal Percentage
of
Amounts/Shares/ Shareholders'
Units Description Equity Fair Value
---------------- ------------------------------------- -------------- ------------
Private Operating Companies
United States
Limited Liability Company Interests
Biofuel Developer
10,380,581 Wastefuel Global, LLC 73.5% $46,902,564
Real estate development
1,228,063 MultiGreen Properties, LLC 7.8% 5,000,000
------------
Total Limited Liability Company
Interests
81.3% 51,902,564
------------
Limited Partnership Interest
Building technology
Sustainable Living Innovations
(FKA Multigreen SLI Partners,
LP) 1.2% 742,000
------------
Total Limited Partnership Interests 1.2% 742,000
------------
Total United States 82.5% $52,644,564
============
Canada
Common Shares
Carbon Capture Technology
21,763 Carbon Engineering, Ltd. (1) 3.7% 2,383,698
------------
Total Common Shares - Canada 3.7% 2,383,698
------------
Cayman Islands
Limited Liability Company Interest
Renewable Energy
Enphys Management Company 16.3% 10,396,921
------------
Total Limited Liability Company
Interests -
Cayman Islands 16.3% 10,396,921
------------
Netherlands
Preferred Class B1 Shares
499,955 Software/Information Technology
Context Labs, BV 0.8% 511,000
------------
Total Convertible Note - Netherlands 0.8% 511,000
------------
Total Investments 103.3% $65,936,183
============
(1) Shares of Carbon Engineering, Ltd. are held indirectly
through investments in RCM Carbon Engineering Partners, LLC (12,490
common shares) and C12 Equity Ltd. (9,273 common shares).
31 December 2022
Principal Percent
of
Amount/Shares/ Shareholders'
Units Description Equity Fair Value
----------------- ------------------------------------- -------------- ------------
Private Operating Companies
United States
Limited Liability Company Interests
Biofuel Developer
10,380,581 Wastefuel Global, LLC 78.7% $46,908,475
Real estate development
1,228,063 MultiGreen Properties, LLC 3.8% 2,260,000
------------
Total Limited Liability Company
Interests
82.5% 49,168,475
------------
Limited Partnership Interest
Building technology
Sustainable Living Innovations
(FKA Multigreen SLI Partners,
LP) 1.2% 742,000
------------
Total Limited Partnership Interests 1.2% 742,000
------------
Simple Agreement
for Future
Equity (SAFE)
Biofuel Developer
Wastefuel Global, LLC 0.4% 250,000
------------
Total SAFE 0.4% 250,000
------------
Convertible
Note
Real estate development
MultiGreen Properties, LLC 0.4% 250,000
------------
Total Convertible Note 0.4% 250,000
------------
Total United States 84.5% $50,410,475
============
Canada
Common Shares
Carbon Capture Technology
21,763 Carbon Engineering, Ltd. (1) 4.3% 2,579,223
------------
Total Common Shares - Canada 4.3% 2,579,223
------------
Cayman Islands
Limited Liability Company Interest
Renewable Energy
Enphys Management Company 17.3% 10,340,024
------------
Total Limited Liability Company
Interests - 17.3% 10,340,024
------------
Cayman Islands
Netherlands
Preferred Class B1 Shares
499,955 Software/Information Technology
Context Labs, BV 0.9% 511,000
------------
Total Convertible Note - Netherlands 0.9% 511,000
------------
Total Investments 107.0% $63,840,722
============
(1) Shares of Carbon Engineering, Ltd. are held indirectly
through investments in RCM Carbon Engineering Partners, LLC (12,490
common shares) and C12 Equity Ltd. (9,273 common shares).
The following tables present the changes in assets classified in
Level 3 of the fair value hierarchy for the periods ended 30 June
2023 and 2022 and the year ended 31 December 2022:
30 June 2023
Limited Simple
Liability Agreement
Common Preferred Convertible Company Limited For
Future
Stock Stock Note Interests Partnerships Equity Totals
(SAFE)
------------- ---------- ------------- -------------- ------------- ----------------
Balance at
31 December
2022 $2,579,223 $511,000 $250,000 $59,508,499 $742,000 $250,000 $63,840,722
Purchases
of
investments - - 150,000 400,000 - - 550,000
Unrealised
gain/(loss) 58,487 (9,000) - 84,638,815 29,000 - 84,717,302
Conversion
to shares 131,687,361 - - (131,437,361) - (250,000) -
------------- ---------- ------------- -------------- ------------- ---------- ----------------
Balance at
30 June
2023 $134,325,071 $502,000 $400,000 $13,109,953 $771,000 $- $149,108,024
============= ========== ============= ============== ============= ========== ================
30 June 2022
Limited
Liability
Common Preferred Company Limited
Stock Stock Interests Partnerships Totals
----------- ---------- ------------ ------------- ------------
Balance at 31 December
2021 $2,383,698 $499,955 $57,357,099 $500,000 $60,640,752
Purchases of investments - - 500,000 - 500,000
Unrealised gain - 11,045 4,442,386 242,000 4,695,431
----------- ---------- ------------ ------------- ------------
Balance at 30 June
2022 $2,383,698 $511,000 $62,299,485 $742,000 $65,936,183
=========== ========== ============ ============= ============
31 December 2022
Limited Simple
Liability Agreement
Common Preferred Convertible Company Limited For
Future
Stock Stock Note Interests Partnerships Equity Totals
(SAFE)
----------- ---------- ------------- ------------ ------------- ------------
Balance at
31
December
2021 $2,383,698 $499,955 $- $57,357,099 $500,000 $- $60,740,752
Purchases of
investments - - 250,000 1,100,000 - 250,000 1,600,000
Unrealised
gain 195,525 11,045 - 1,051,400 242,000 - 1,499,970
----------- ---------- ------------- ------------ ------------- ---------- ------------
Balance at
31
December
2022 $2,579,223 $511,000 $250,000 $59,508,499 $742,000 $250,000 $63,840,722
=========== ========== ============= ============ ============= ========== ============
The following tables summarize the methods and significant
assumptions used to measure investments categorized in Level 3 of
the fair value hierarchy and whose values were determined by
management as of 30 June 2023 and 2022, and 31 December 2022:
Fair Value
at
30 June Valuation Unobservable
2023
(in thousands) Technique Input Average
----------------- ------------------- ---------------------- ------------------
Investments
Common Stock
Biofuel Developer $131,687 Market Approach Recent transaction $12.66/unit
(1) - capital
raise (90%
weight)
Option pricing Risk free
method (backsolve) rate - 4.1%,
volatility
- 120.4%;
time to
liquidly
event -
5 years
(10% weight)
Carbon Capture 2,638 Equity Roll N/A $121.20/share
Technology Forward
-----------------
Total Common
Stock 134,325
Limited Liability
Company Interests
Real Estate 2,190 Income Approach Discount $1.78 unit
Development - Discounted rate - 85%
Cash flow
Renewable Energy 10,920 Options Risk free N/A
Pricing rate - 4.1%,
Method (Management volatility
Company) - 4.2%;
time to
liquidity
event -
5 years
-----------------
Monte Carlo Risk free
Simulation rate - 4.68%,
(Founders' volatility
shares owned - 4.24%;
indirectly term to
by management maturity
company) - 1.3 years
(lockup
period)
Total Limited
Liability
-----------------
Company Interests 13,110
-----------------
Preferred Stock
Software/Information 502 Equity Roll N/A $45.80/share
Technology Forward
-----------------
Total Preferred
Stock 502
-----------------
Limited Partnership
Interest
Building technology 771 Equity Roll N/A $241.39/unit
Forward
-----------------
Convertible
Notes
Real Estate 250 Transaction Transaction N/A
Development cost cost
Building technology 150 Transaction Transaction N/A
cost cost
-----------------
Total Convertible
Notes 400
-----------------
Total $149,108
=================
Fair Value
at
30 June Valuation Unobservable
2022
(in thousands) Technique Input Average
----------------- ------------------- ---------------------- ------------------
Investments
Common Stock
Carbon Capture $2,384 Market Implied $109.53/share
Technology Approach value of
equity
financing
-----------------
Total Common
Stock 2,384
-----------------
Limited Liability
Company Interests
Biofuel Developer 46,902 Market Recent $4.52/unit
(1) Approach transaction
- capital
raise (90%
weight)
-----------------
Option Risk free
pricing rate -
method 3%, volatility
(backsolve) - 138.8%;
time to
liquidly
event -
5 years
(10% weight)
Real Estate 5,000 Income Discount $3.92 unit
Development Approach rate -
- Discounted 55%
Cash flow
-----------------
Renewable Energy 9,697 Options Risk free N/A
Pricing rate -
Method 3%, volatility
(Management - 4%; time
Company) to liquidity
event -
5 years
Monte Carlo Risk free
Simulation rate -
(Founders' 2.9%, volatility
shares - 4%; term
owned indirectly to maturity
by management - 1.8 years
company) (lockup
period)
700 Transaction Transaction N/A
cost cost
-----------------
Total Renewable
Energy 10,397
-----------------
Total Limited
Liability Company
Interests 62,299
Preferred Stock
Software/Information 511 Market Recent $46.56/share
Technology approach transaction
cost -
capital
raise (50%
weight)
Option Risk free
Pricing rate -
Method 3%, volatility
(backsolve) - 180.0%;time
to liquidity
event -
5 years
(50% weight)
Total Preferred
Stock 511
-----------------
Limited Partnership
Interest
Building technology 742 Transaction Transaction $225/unit
cost cost
-----------------
Total $65,936
=================
Fair Value
at
31 December Valuation Unobservable
2022
(in thousands) Technique Input Average
----------------- ------------------- ---------------------- ------------------
Investments
Common Stock
Carbon Capture $2,579 Equity N/A $118.51/share
Technology Roll Forward
-----------------
Total Common
Stock 2,579
Limited Liability
Company Interests
Biofuel Developer 46,909 Market Recent $4.52/unit
(1) Approach transaction
- capital
raise (90%
weight)
-----------------
Option Risk free
pricing rate -
method 3.9%, volatility
(backsolve) - 139.2%;
time to
liquidly
event -
5 years
(10% weight)
Real Estate 2,260 Income Discount $1.84 /unit
Development Approach rate -
- Discounted 75%
Cash flow
Renewable Energy 9,640 Options Risk free N/A
Pricing rate -
Method 4%, volatility
(Management - 4.4%;
Company) time to
liquidity
event -
5 years
Monte Carlo Risk free
Simulation rate -
(Founders' 4.32%,
shares volatility
owned indirectly - 4.44%;
by management term to
company) maturity
- 1.3 years
(lockup
period)
700 Transaction Transaction N/A
cost cost
-----------------
Total Renewable
Energy 10,340
-----------------
Total Limited
Liability Company
Interests 59,509
-----------------
Preferred Stock
Software/Information 511 Market Recent $46.56/share
Technology approach transaction
cost -
capital
raise (50%
weight)
-----------------
Option Risk free
Pricing rate -
Method 4%, volatility
(backsolve) - 202.1%
;time to
liquidity
event -
5 years
(50% weight)
Total Preferred
Stock 511
-----------------
Limited Partnership
Interest
Building technology 742 Transaction Transaction $225/unit
cost cost
-----------------
Simple Agreement
For Future Equity
(SAFE)
Biofuel Developer 250 Transaction Transaction N/A
cost cost
-----------------
Convertible
Note
Real Estate 250 Transaction Transaction N/A
Development cost cost
-----------------
Total $63,841
=================
Note:
The per unit price of WasteFuel Global in the most recent
capital raise was given a 90% weight in the 30 June 2023 and 2022
valuations and the 31 December 2022 valuation. A 10% weight was
ascribed to the backsolve method, which is a method that derives
the equity value for a company from a transaction involving the
company's own securities. The rights and preferences of each class
of equity, market interest rates, industry sector volatility data,
and an estimated time period to a liquidity event are all
considered and included in an option pricing model under the
backsolve method. The weighting of these two valuation methods and
the unobservable inputs used in the valuation were based on
management judgment. The unobservable inputs are presented in the
Level 3 valuation table as of 30 June 2023 and 2022 and 31 December
2022.
WasteFuel Global, Inc. ("WasteFuel")
Effective 30 June 2023, WasteFuel finalised an agreement with
bp, the multi-national energy company, to secure a $10 million
investment in WasteFuel. The $10 million investment, which was the
lead investment in WasteFuel's Series B investment round, resulted
in a material increase in the fair value attributable to the
Company's holding in WasteFuel. Following bp's investment, the
unaudited fair value of the Company's equity interest in WasteFuel
was $131.69 million, an increase of 181% from the last reported
audited fair value ($46.91 million as at 31 December 2022). This
increase in the fair value of WasteFuel was included in the
Company's H1 2023 results. In addition, effective 30 June 2023,
WasteFuel was reorganized from a limited liability company to a
corporation.
On a semi-annual basis, the Company's management reviews the
fair value calculation for each Level 3 security and assesses,
among other things, the reasonableness of the pricing models, the
inputs to the pricing models and the significant assumptions
developed internally or by independent valuation experts.
4. Share Capital
The Company has 85,877,429 ordinary shares, at no par value,
authorised, issued and outstanding as of 30 June 2023.
Ordinary shares were issued upon completion of the Company's IPO
on 9 February 2022, as disclosed in Note 1, Organisation and Nature
of Business.
Following is the equity roll forward schedule for the periods
ended 30 June 2023 and 2022 and the year ended 31 December
2022:
1 January to 30 1 January to 30 1 January to 31
June 2023 June 2022 December 2022
-------------------------- -------------------------- --------------------------
Shares Amount Shares Amount Shares Amount
Equity, beginning
of period 79,056,811 $59,652,162 - $63,877,744 - $63,877,744
Conversion
of
members' capital
to shares - - 65,000,000 - 65,000,000 -
Subscriptions/
contributions - - 14,056,811 13,770,402 14,056,811 13,770,402
Net income/(loss) - 61,453,852 - (12,970,357) - (18,129,202)
Share bonus 6,820,618 700,000 - - - -
Share option - - - - - -
expense (credit) - (1,038,542) - 779,725 - 1,750,059
Distribution
of
assets - - - (1,616,841) - (1,616,841)
----------- ------------- ----------- ------------- ----------- -------------
Equity, end
of
period 85,877,429 $120,767,472 79,056,811 $63,840,673 79,058,811 $59,652,162
=========== ============= =========== ============= =========== =============
Total Voting Rights
Following the issuance of 2022 Bonus Shares and CEO Bonus Shares
in April 2023, the Company has 85,877,429 Ordinary Shares in issue,
each carrying the right to one vote. No Ordinary Shares are held by
the Company in treasury. The total number of voting rights in the
Company is therefore 85,877,429.
CEO Bonuses
In December 2022, the Company agreed to pay to Pär Lindström an
incentive bonus of $200,000 (GBP160,772) in respect of the year
ended 31 December 2022 and, as part of his promotion to CEO in
January 2023, the Company agreed to pay Mr. Lindström a promotion
bonus based on increased responsibilities as CEO of $500,000
(GBP401,929). In total, these bonuses represent approximately 170%
of Mr. Lindström's 2023 annual compensation. In order to preserve
the Company's cash resources and to demonstrate his commitment to
the Company, Mr. Lindström agreed to apply both of these bonuses to
subscriptions of new ordinary shares at the previous day's closing
price of 8.25 pence per share. This resulted in the issuance of
6,820,618 new ordinary shares to Mr. Lindström ("Bonus Shares").
The Bonus Shares represent 8.7% of the issued share capital prior
to the issuance of these shares. Both of these bonuses were
recorded in 2023 and are included in general and administrative
expenses for the period from 1 January to 30 June 2023. The shares
subscribed for by Mr. Lindström pursuant to each of these bonus
schemes were subject to a risk of forfeiture if the Company's Net
Asset Value ("NAV") did not meet the hurdle of $120 million within
the 24-month period following their issue ("NAV Hurdle"). The
forfeiture risk expired when the Company's Net Asset Value ("NAV")
exceeded $120 million during the period from 1 January to 30 June
2023. The Bonus Shares were admitted to trading on AIM London Stock
Exchange on 26 April 2023.
5. Earnings per Share
Basic earnings per share is calculated by dividing the earnings
attributable to shareholders by the weighted average number of
ordinary shares outstanding during the period. The stock options
granted to management employees in 2023 have an exercise price
which is less than the average market price of the Company's shares
during H1 and therefore do not have a dilutive effect on earnings
per share.
30 June 2023 30 June 2022 31 December
2022
Basic and Basic and Basic and
Diluted Diluted Diluted
------------- -------------- --------------
Earnings attributable
to the
ordinary Shareholders
of
the Company $61,453,852 $(12,860,896) $(18,019,741)
Weighted average
number
of shares 80,879,324 79,056,811 79,056,811
------------- -------------- --------------
Earnings/(loss)
per share $0.76 $(0.16) $(0.23)
============= ============== ==============
6. Share Based Compensation
Pursuant to the Company's Equity Incentive Plan for 2022 (the
"Incentive Plan"), stock options ("Options") were granted to
management employees during 2022. Each management employee was
granted the option to purchase shares of the Company's stock in
accordance with each employee's Stock Option Grant.
In February 2023, 2,703,967 Options were forfeited, resulting in
a reversal of expense previously recorded by the Company for these
Options of $1,145,141. Also, effective 22 April 2023, 2,166,157
Options were surrendered and replaced with new options (the "New
Options") and 4,158,388 additional New Options were granted to
management employees. The total number of New Options granted
during the period from 1 January to 30 June 2023 was 6,324,545. The
New Options have an exercise price of 20 pence, being a 142.4 per
cent premium to the previous day's closing share price on AIM of
8.25 pence. The New Options vest over a period of three years, with
a third vesting on each of the three successive anniversaries of
the date of grant. The New Options granted on 22 April 2023 are
expected to be fully vested as of 22 April 2026.
The aggregate fair value of the options granted on 22 April 2023
was $293,360, which was determined using the Black Scholes options
pricing model. The expected volatility used to determine the fair
values of the options was 60% and the annual risk-free rate used in
the determination of the fair values of the options was 3.57%.
Details of the stock options outstanding during the periods from
1 January to 30 June 2023 and 2022, and the year ended 2022 are as
follows:
Period Period Period Period Period Period
from from from from from from
1 January 1 January 1 January 1 January 1 January 1 January
2023 to 2023 to 2022 to 2022 to 2022 to 2022 to
30 June 30 June 30 June 30 June 31 December 31 December
2023 2023 2022 2022 2022 2022
------------ ------------- ---------- ----------- ------------ ------------
Expense/ Expense/ Expense/
Credit Credit Credit
Recognised Recognised Recognised
Number During Number During Number During
of the of the of the
Options Period Options Period Options Period
------------ ------------- ---------- ----------- ------------ ------------
Beginning
of
period 4,870,124 $- - $- - $-
2022 Option
Granted
during
the period - - 5,779,277 906,915 5,779,227 2,091,220
Forfeited (2,703,967) (1,145,141) (909,153) (127,190) (909,153) (341,161)
Surrendered (2,166,157) (604,918) - - - -
------------ ------------- ---------- ----------- ------------ ------------
2023 Options
Granted
during
the period 6,324,545 711,571 - - - -
------------ ------------- ---------- ----------- ------------ ------------
End of period 6,324,545 $(1,038,542) 4,870,124 $779,725 4,870,124 $1,750,059
============ ============= ========== =========== ============ ============
The (credit)/expense recognised for the periods 1 January to 30
June 2023 and 2022, and the year ended 31 December 2022 was
$(1,038,542), $779,725 and $1,750,059, respectively. These amounts
are included in general and administrative expenses on the
accompanying consolidated statement of comprehensive income.
The unvested amount of the Company's stock options as of 30 June
2023 was $1,225,000.
7. Loan Facility
In April 2023, the Company's wholly owned subsidiary, i(X)
investments, LLC entered into a secured $7.5 million 2-year term
loan facility with European Depositary Bank S.A. ("EDB") ("Loan").
Amounts drawn down on the loan facility bear interest at 10.5%
(subject to periodic change in line with EDB's USD Base rate) which
is payable quarterly. The Loan can be utilised for the purposes of
the financing of investments and general working capital purposes.
The Loan is guaranteed by the Company.
i(x) investments, LLC has agreed to pay an arrangement fee equal
to 2% of the amount of the facility and a commitment fee of 1.75%
per annum on any undrawn funds, payable quarterly in arrears.
Drawdown of the Loan is conditional upon there being no event of
default and other customary provisions including delivery of
documents. The Loan is repayable together with default interest in
the event of default which, inter alia, includes a change of
control and a reduction of aggregate NAV of the Company below $50
million.
The Loan is secured by a pledge granted by the Company and its
nominee of the shares held by it including those in i(x)
investments, LLC and all other proceeds and property and assets
owned by it. In addition, as part of the Facility Agreement, i(x)
investments, LLC has pledged $4.0 million as security in a deposit
account with EDB. The Company will be able to invest this security
deposit in certain money market funds and other financial
instruments and generate a return on deposited funds (currently
expected to be approximately 4-5% per annum) thereby mitigating the
interest payable. In addition, i(x) investments, LLC has undertaken
to maintain a minimum cash balance in an operating account at EDB
with an amount varying depending on the remaining time to facility
maturity but being zero if drawdowns are below $4 million.
In connection with the facility, i(x) investments, LLC has also
agreed to give customary undertakings, warranties and indemnities
to the Lender, the Agent and Security Agent including as to tax and
undertakings not to undertake certain corporate transactions
without consent.
The amount of the loan drawn down as of 30 June 2023 was
$800,000. This amount is recorded on the consolidated statement of
financial condition as Loan Payable. Interest accrued on the amount
drawn down was $34,055 during the period from 1 January to 30 June
2023.
8. Commitments and Contingencies
In January 2022, Lion Point Capital, LP, on behalf of funds
managed by it, ("Lion Point") and the Company entered into a
strategic relationship to identify and pursue certain transactions
together, with an initial focus on opportunities in Energy
Transition. At the time of the Company's IPO, Lion Point Master, LP
("Lion Point Master") entered into a subscription agreement and
subscribed for $6.8 million (approximately GBP5.0 million) in
ordinary shares of the Company at the placing price as part of the
fundraising. Lion Point Master was granted a put option and
pursuant to the put option, the Company is obliged to repurchase
6,672,161 Ordinary Shares of Lion Point Master's Ordinary Shares at
the Placing Price (GBP0.76 per share ($1.02 per share)) amounting
up to $6.8 million at any time during the three-year term following
the Company's admission to trading on AIM. Lion Point has also
granted to the Company a call option to purchase $6.8 million of
common shares of Suniva, Inc. Further details are set out in
paragraph 5.6 of Part 1 and paragraphs 18.1(j), (k) and (l) of Part
7 of the Company's Admission document dated 4 February 2022, which
is available on the Company's website https://ixnetzero.com/.
9. Subsequent Events
Enphys
In August 2023, the Company announced that it has committed to
invest an additional $2.5 million into Enphys Management Company
("EMC") and that its wholly owned subsidiary i(x) Investments LLC
has entered into a revised EMC LLC Agreement with LAIG
Investments.
The investment, the cost of which will be spread over the next
four years and will immediately take the Company's ownership in
Enphys from its current level of 14.5% to 30.0%. The additional
cash investment, together with the increased valuation at which the
investment was agreed generates an uplift in the Net Asset Value of
the Company's total holding in EMC from $10.3 million to $16.7
million, based on the valuation as at 31 December 2022. 10% of the
issued capital in EMC is subject to pro-rata clawback if payments
by the Company are either stopped or not made when due in
accordance with the revised terms and a further portion subject to
additional clawback if a minimum of US $1 million is not funded in
full, provided that the Company will retain at least a 20% interest
in EMC. In addition, if before 5 August 2025 EMC's fair market
value falls below $25 million and EMC issues additional equity
securities, the Company will benefit from anti dilution provisions
to ensure that that the value of its equity interest does not fall
below the amount contributed.
The new funding, being made from the Company's existing cash
resources, will provide additional support to EMC for budgeted
working capital, certain other approved costs and investments into
new assets as it initially progresses towards a merger opportunity
for its SPAC, Enphys Acquisition Corp, with the intention of
forming a major renewables energy group that can be a regional
champion for sustainability in the Americas and later expanding its
assets under management with new assets and new investment
structures.
Following this announcement Enphys Acquisition Corp. (NYSE:
NFYS, "EAS", EMC is the sponsor of EAS and has a direct ownership
in EAS) has filed a preliminary proxy statement in connection with
an extraordinary general meeting of shareholders of EAS for the
purpose of, among other things, extending the time by which it has
to consummate an initial business combination from 8 October 2023
to 8 July 2024 (the "Extension"), as well as other documents filed
by EAS with the U.S. Securities and Exchange Commission. The
Extension is subject to approval by EAS shareholders and a further
announcement will be made in due course.
EAS has also signed a non-binding letter of intent for a
business combination with a leading and well-established advanced
biofuels company in Latin America
Carbon Engineering
In August 2023, the Company announced that a conditional
agreement has been reached for the sale of Carbon Engineering Ltd.
("Carbon Engineering"), to Occidental Petroleum Corporation
("Occidental"), the international energy company.
Occidental is an existing strategic partner of Carbon
Engineering. The acquisition would see Occidental acquire the
outstanding shares in Carbon Engineering for a total cash
consideration of $1.1 billion, payable in three approximately equal
annual payments with the first to be made at closing.
i(x) Net Zero holds an indirect circa 0.45% interest in Carbon
Engineering through two special purpose vehicles. If the sale
completes on the agreed terms, the Company's indirect interest
would equate to approximately $7.2 million, and subject to the
distribution of the proceeds over the three years following
completion by those SPVs, this would generate a 7.2x return on the
Company's initial investment of $1 million before any costs of the
SPVs. On this basis the sale price would also represent a 2.8x
multiple on the current holding value of the Company's investment
in Carbon Engineering, of $2.6 million.
The sale, which remains subject to certain US and Canadian
regulatory approvals and Canadian Court reviews along with other
customary closing conditions is expected to complete before the end
of 2023 at which point Carbon Engineering will become a wholly
owned subsidiary of Occidental.
Citron Energy Inc.
In September 2023, the Company announced that it has added an
additional company to its portfolio via a $600,000 investment into
Citron Energy Inc. ("Citron Energy"), a U.S. based alternative
fuels business.
Citron Energy aims to replace the use of fossil fuels by
processing non-recyclable municipal and commercial waste into a
combustible fuel. The use of CitronFuel will allow the replacement
of coal as well as helping to reduce landfill usage and
significantly lower CO2 emissions. The Company's $600,000
investment will be in the form of a subscription for new shares in
Citron Energy and will result in i(x) Net Zero owning approximately
34% of Citron Energy. Jonathan Stearns, the Company's Chief
Financial Officer, has a non-controlling holding in Citron Energy
and is the chairman of Citron Energy.
There were no other subsequent events identified by the
Company's management which would require adjustment to, or
disclosure in, the financial statements.
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END
IR SEDSIUEDSEIU
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September 29, 2023 02:02 ET (06:02 GMT)
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