Cyber App Solutions Corp., transitioning to Proton Green Corporation, has released its annual Form 10-K report, detailing significant financial and operational milestones, strategic initiatives, and the challenges it faces. The company is focused on the acquisition, exploration, development, and production of helium and beverage-grade carbon dioxide (CO2), with capabilities for carbon capture and storage. The report provides a comprehensive overview of the company's performance and future outlook.
Financial Highlights
- Helium revenue: $313,198, marking a 100% increase due to the completion and startup of the first helium plant in the St. Johns Field.
- Net loss: $(11,747,403), a 57% decrease compared to the previous year, primarily due to a gain on extinguishment of debt and a reduction in interest expense.
- Loss per common share: $(0.16), an improvement from the previous year's $(0.51) due to a decrease in net loss.
Business Highlights
- Company Overview: Cyber App Solutions Corp., now transitioning to Proton Green Corporation, focuses on the acquisition, exploration, development, and production of helium and beverage-grade carbon dioxide (CO2), with capabilities for carbon capture and storage. The company's assets are concentrated in the St. Johns Field located in Apache County, Arizona.
- New Production Launches: The company completed the installation of its first helium processing plant in the St. Johns Field and commenced production, generating its first helium revenues during the third quarter of 2023. The plant has a current processing capacity of approximately 4 million cubic feet per day of inlet gas, with plans to expand to 20 million cubic feet per day.
- Sales Units: During 2023, the company sold approximately 677 MCF of helium, marking its entry into the market following the startup of its first helium plant.
- Future Outlook: The company plans to expand its helium processing capacity and is focused on the commercialization of its CO2 reserves. Front-end engineering design studies are underway for beverage-grade CO2 plants, with plans to install multiple modular CO2 plants at the St. Johns Field, each capable of processing up to 500 tons per day of liquid CO2.
- Market Conditions: The global helium market is expected to grow at a compound annual growth rate of 6.7% from 2024 to 2030, driven by demand in medical technology, high-tech, space exploration, and national defense. The U.S. carbon dioxide market is also expected to expand at a CAGR of 8.4% from 2022 to 2030, with significant applications in the food and beverage industry.
- U.S. Department of Energy Program: In August 2023, the company received notice of a potential $11.6 million grant from the U.S. Department of Energy as part of a consortium to develop the Southwest Regional Direct Air Capture Hub, aimed at addressing legacy CO2 pollution.
Strategic Initiatives
- Strategic Focus: The company is focused on the acquisition, exploration, development, and production of helium and beverage-grade carbon dioxide (CO2), with capabilities for carbon capture and storage. It completed the installation of its first helium processing plant in the St. Johns Field and commenced production, generating its first helium revenues in the third quarter of 2023. The company plans to expand the capacity of this plant from 4 million cubic feet per day to 20 million cubic feet per day. Additionally, front-end engineering design studies are underway for beverage-grade CO2 plants, with plans to install multiple modular CO2 plants at the St. Johns Field.
- Capital Management: The company issued convertible promissory notes with an aggregate principal amount of $16 million, with interest at a rate of 5% per annum due monthly. The company has not made interest and principal payments and is in default on these notes. The company also engaged in equity financing activities, issuing common stock for cash and short-term loan repayment, and incurred costs related to these activities. The company has a working capital deficit primarily due to outstanding notes classified as current liabilities.
- Future Outlook: The company plans to focus on the development of its CO2 reserves over the next twelve to eighteen months, with current plans to install two CO2 plants capable of producing a combined 1,000 tons per day of liquid CO2. The estimated cost for each CO2 plant ranges from $11 million to $13 million. The company is evaluating debt and equity financing strategies to fund these initiatives and believes that cash flows generated from the addition of CO2 plants will be sufficient to address debt service costs and fund additional capital needed for drilling new wells. However, there is substantial doubt about the company's ability to continue as a going concern due to its current financial position.
Challenges and Risks
- Supply Chain Risks: The company's reliance on a single supplier for key raw materials presents a significant risk. This dependency could lead to supply chain disruptions, affecting production and financial performance.
- Developmental Risks: The company faces risks related to its early-stage development, including limited operating history and significant operating losses.
- Helium Supply Risks: The potential sale of U.S. government helium reserves introduces uncertainty in helium supply and pricing, which could adversely impact the company's business.
- Financial Risks: The company is significantly leveraged, with defaulted notes increasing financial risk and potential asset loss if creditors exercise secured rights.
- Operational Risks: Challenges include developing the St. Johns Field, which has limited infrastructure and requires significant capital investment. The company is exposed to risks associated with natural resource exploration, such as equipment failures and environmental hazards. The marketability of helium and CO2 production is dependent on third-party transportation facilities, which the company does not control, posing a risk of operational interruptions.
- Regulatory Risks: Potential changes in environmental laws and pipeline safety regulations could increase operational costs. The company must comply with complex federal, state, and local regulations, which could impact its ability to operate efficiently.
- Capital Needs: Management acknowledges the need for additional capital to develop operations and meet debt obligations. The company is actively seeking financing but faces uncertainty in securing funds on favorable terms. There is substantial doubt about the company's ability to continue as a going concern without additional financing.
SEC Filing: