Pond Technologies Holdings Inc. (TSXV: POND;FRA: 4OO) succeeded in increasing revenue by 70% in Q3 2021 compared to Q3 2020, reducing operating loss and improving margin. In addition, there were key licensing and supply agreements with well-known customers or partners, including the important third-party validation of the technology.

Pond President & CEO Grant Smith, speaking at the release of the Q3 2021 quarterly results, called it an inflection point, "The third quarter was the inflection point for Pond. We are in the early stages of proving the strength of our model. The recent validation of our technology by two multi-billion dollar international companies makes us very confident about the future. In addition, the redesigned and amended convertible note with Pond's Chairman is a significant step forward for our financial flexibility, and we look forward to realizing our growing sales pipeline."

Q3 2021 Highlights

Consolidated revenue for Q3 2021 was CAD 2,163,000 (Q3 2020: CAD 1,275,000), an increase of CAD 888,000 (70%). The increase was primarily due to license revenue recognized in the quarter. Calculated over the 9 months ended September 30, 2021, revenues increased by 30% to CAD 4,364,000 (2020: CAD 3,367,000). Management expects revenues in the Carbon and Biotech businesses to fluctuate significantly from quarter to quarter as the Company's commercialization efforts and the nature of signed contracts progress, as the Company works through its sales pipeline and meets milestones related to signed contracts.

Margin for Q3 2021 (revenue less direct costs and expenses) was CAD 903,000 (42%) compared to CAD 175,000 (13%) in Q3 2020. For the nine months ended September 30, 2021, margin was CAD 1,335,000 (30%) compared to CAD 648,000 (19%). The improvement in margin was primarily due to royalties recognized in the third quarter.

The operating loss in the third quarter of 2021 of CAD 557,000 was lower than the second quarter of CAD 733,000 and the first quarter of CAD 1,003,000.

Business Update

On November 15, 2021, Pond announced that the promissory bill for a company owned by Pond's Chairman Robert McLeese was restated with more favorable terms. A new promissory note in the amount of CAD 1,988,500 replaces the original promissory note in the amount of CAD 2,000,000 dated November 15, 2019. The interest rate has been reduced from 12% to 9.55% per annum and is payable quarterly with the first interest payment due on February 15, 2022. The new bill is due on November 15, 2024.

CONCLUSION: Pond landed two major deals with significant customers or partners during the past quarter. The cash flow from these deals is welcome, but by no means a resting place. The company rightly points out that revenue is not steady. Still, it's a success that Pond's technology has been validated by third parties and is deemed potent. That should attract other interested parties and, by all accounts, already is doing so. Due to past cost-cutting constraints, Pond's staffing is still very tight. CEO Smith is in the process of filling important positions in research and sales. Financially, the company is also still dragging some legacy costs from the past, although CEO Smith has already cleared a lot away. There is still a lot to do, but overall the signs are pointing upward. Chicago based Zacks Small-Cap Research has just yesterday initiated coverage of Pond and argues for a 1 CAD price target. The full research can be viewed here.

 

Risk notice: GOLDINVEST Consulting GmbH publishes comments, analyses and news on https://goldinvest.de. These contents serve exclusively the information of the readers and do not represent any kind of call to action, neither explicitly nor implicitly they are to be understood as an assurance of possible price developments. Furthermore, they do not in any way replace individual expert investment advice and do not constitute an offer to sell the stock(s) discussed or a solicitation to buy or sell securities. This is expressly not a financial analysis, but an advertising / journalistic text. Readers who make investment decisions or carry out transactions on the basis of the information provided here do so entirely at their own risk. There is no contractual relationship between the GOLDINVEST Consulting GmbH and its readers or the users of its offers, because our information refers only to the company, but not to the investment decision of the reader.

The acquisition of securities involves high risks, which can lead to a total loss of the invested capital. The information published by GOLDINVEST Consulting GmbH and its authors is based on careful research. Nevertheless, any liability for financial losses or the content guarantee for topicality, correctness, adequacy and completeness of the articles offered here is expressly excluded. Please also note our terms of use.

According to §34b WpHG and § 48f Abs. 5 BörseG (Austria) we would like to point out that GOLDINVEST Consulting GmbH and/or partners, principals or employees of GOLDINVEST Consulting GmbH hold or held shares of Pond Technologies Holdings and therefore a conflict of interest exists. GOLDINVEST Consulting GmbH also reserves the right to buy or sell shares of the company at any time. Furthermore, GOLDINVEST Consulting GmbH is remunerated by Pond Technologies Holdings for reporting on the company. This is another clear conflict of interest.

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