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LanzaTech annual loss widens to $40.5m

LanzaTech New Zealand, which counts US billionaire clean-tech investor Vinod Khosla as its biggest shareholder, posted a wider full-year loss as the company scales up technology that uses microbes to convert industrial waste gases into fuel-grade ethanol and other useful chemicals.

The Chicago-based biotech firm reported a loss of $40.5 million in calender 2013, from a loss of $35.1 million a year earlier, according to its annual report. Sales rose 21 percent to $5.7 million, with US customers making the biggest contribution. It cited five customers that each accounted for more than 10 percent of revenue, up from two a year earlier.

LanzaTech uses a proprietary, gas-fermenting microbe of a type found naturally around hydrothermal vents, giving heavy industry a way to mitigate output of waste gases blamed for contributing to global warming. Carbon-rich emissions from industrial plants such as steel mills are very similar to that produced by such vents, which the microbes, called acetogens, grow on, according to the company's website. Last year the company was ranked No. 2 in the Biofuels Digest annual list of "the 50 Hottest Companies in Bioenergy ."

Cash on the balance sheet fell to about $14.4 million as at Dec. 31, from $41 million a year earlier. Wages and salaries rose 38 percent to $18.9 million, while operating expenses related to research and development fell about 20 percent to $14 million. LanzaTech won't run short of cash any time soon as its parent raised US$60 million in March. Its net operating cash outflow was $25.4 million last year.

"As a pre-revenue company, we are very conscious about our cash burn and have taken measures to maximise our resources on our road to commercialisation," chief executive Jennifer Holmgren said in an emailed statement.

LanzaTech is moving some of its core technical team to Chicago from New Zealand "and through this period of transition we are recruiting new members to the team," she said. "We are also very much focussed on scaling our technology to commercial levels with a first commercial plant targeted for operation in 2015 in China, with Baosteel."

The company's capital raising rounds have attracted investors including Japan's Mitsui & Co, German industrial giant Siemens's venture capital unit CICC Growth Capital, several of Khosla's funding vehicles, Warehouse Group founder Stephen Tindall's K1W1 fund, Qiming Venture Partners, Petronas Technology Ventures and the Malaysian Life Sciences Capital Fund.

LanzaTech said it was appropriate to report on a going concern basis, given its working capital requirements and the expectation it can generate sufficient funds from capital raisings, government grants, sales and debt facilities.

"The group is in the early stages of taking its products and services to the global market place, and as a consequence has a higher degree of business and continuity risk than other more established businesses," the company says in notes to its accounts.

For a second year, the company noted that it hadn't met an agreed timetable to provide monthly management accounts and covenant certificates required under the terms of its loan facility, and wouldn't get its audited financial statements in by the agreed date. As a result, the loan balance of $16.1 million, as at Dec. 31, was classified as a current liability, the notes say.

The company first raised seed capital in New Zealand in 2005/06, followed by a US$3.5 million injection from Khosla Ventures in 2007 in its A Series funding round. The B round in 2010 raised a further US$18 million, led by Qiming Ventures, and the 2012 C Series raised a further US$55.8 million, led by the Malaysian Life Sciences Capital Fund.

(BusinessDesk)

Comments and questions
9

What internal charges are going on here?

Could it be high return loans from big shareholders, channelled through the Canary Islands?

This isn't really New Zealand story anymore is it? This lot have upped sticks to the US. Definitely not for widows and orphans judging by how long it is taking to get meaningful revenue streams going.

Suspect the biggest customer is NZ taxpayer in the form of grants. So still an NZ story to that degree.

Yes probably true - and then the NZ taxpayer wont get a penny in return as they will be US domiciled (should there ever be a return)

I was wrong they look like they are off the taxpayer gravy train. Still got some government contracts, but suspect they are US government.

I wonder what the total investment from NZ taxpayer has been to date?

What happened to the grant to Bio Discovery also backed vy Kohsla and relocated to the US?

See? All of These cloud-based SaaS startups continue to turn to vapour. It's about time we got back to real industry, real business problems, with real technology - like something in the biotech or cleantech sector.

Shock, horror another "green" technology start-up losing money hand over fist.

I wouldn't give any of the pikers on the board a cent ...