Taronis Technologies (NASDAQ: TRNX) today announced sales results for October and November of 2019. October sales were $2.0 million, representing an 87% increase as compared to the $1.1 million in revenues reported in same period in the prior year. In November, the Company generated $2.4 million in sales, representing a 122% increase as compared to the same period in the prior year. Factors for the growth are as follows:
In Texas, sales were $0.93 million in October, representing a 234% increase from the same period in 2018. October is typically one of the strongest retail months in the industrial gas industry, with 23 sales days. In November, sales were $0.62 million, representing a 53% increase over the prior year. November and December are normally slower months in the industry, with a seasonal decrease in retail demand during the holiday season. There were only 19 retail sales days in November, which heavily impacts sales figures from month to month.
In California, October sales were $0.75 million, representing a 50% increase as compared to the prior year. In November, sales were $0.61 million, representing a 43% increase versus November 2018. In Florida, sales rebounded sharply to $0.32 million, representing the first time sales were over $0.3 million since April of 2019. The newly launched fill plant in Clearwater has contributed to season strength in sales. November sales were $0.27 million slightly above the same period in 2018.
In November, the Company also recognized $0.92 million from a consulting agreement with a hydrogen fuels company based in northern Germany. This contract is now complete. The Company has entered into additional dialogue to determine if there are further opportunities to leverage its hydrogen production from the patented submerged plasma arc gasification technology to expand the commercial relationship beyond this initial contract.
“We are off to a very solid start to the fourth quarter,” commented Scott Mahoney, CEO of Taronis. “The consulting contract had a significant impact on both top line growth and our overall profitability for November. With margins well in excess of 50%, the consulting agreement put the Company at near break even.”
“We now project that once the initial 5 unit order from Turkey is executed, December revenues should exceed $6 million and make the fourth quarter our first profitable period in Company history. This is a major accomplishment for the entire team, and we are looking forward to accelerating our business model as we enter 2020,” concluded Mr. Mahoney.
On December 16, 2019, Taronis Technologies (NASDAQ: TRNX) announced its key business development goals for its medical waste disposal technology business in 2020.
Initially, the Company will look to launch a pilot commercialization project to serve the European Union hospital market. The primary purpose of this program will be twofold. First, the project will leverage data sourced from Taronis’ recently completed 18 month USDA grant funded agricultural waste sterilization project. The new project is intended to validate the Company’s ability to effectively sterilize biological waste streams, commonly referred to as “black water,” generated by large scale medical facilities within the EU.
Second, the project is intended to demonstrate the clear commercial viability of an EU-wide launch of black water treatment within the EU. This would be accomplished through a three part jointly managed project led by Taronis. The proposed partners would include the Center of Expertise in Water Technology (“CEW”), a leading research and engineering organization based in Leeuwarden, Netherlands, and HM Hospitales (“HMH”), a leading medical research and hospital facility operator based in Madrid, Spain.
Taronis, CEW and HMH have previously announced the application for a €3.0 million Horizon 2020 grant to pursue this opportunity. Based on the initial findings, CEW and HMH approached Taronis and proposed pursuing a separate €2.0 million grant for the same project to be funded from a locally funded grant issuing body in Spain.
The Company believes there is a clear path to a substantial near-term business opportunity developing within the EU. In the past year, the European Commission has authorized and funded multiple white papers researching the dangers of black water, which is currently disposed of as an untreated waste stream directly into EU waterways. The European Commission typically requires these white papers as the basis for legislative or regulatory actions. The Company believes that black water disposal may be a heavily regulated practice in as little as two years.
There are over 5,500 medical facilities, including hospitals, surgical centers and emergency rooms across Europe that generate meaningful quantities of black water. The Company intends to demonstrate the efficacy of destroying harmful pharmaceuticals and eliminating pathogens and viruses that could otherwise contaminate water supplies. The Company also intends to demonstrate the ease of use and commercial viability of the business model through the proposed pilot with CEW and HMH.
“This is a highly scalable business opportunity,” commented Scott Mahoney, CEO of Taronis. “We believe that there is a very high probability that the EU will enact significant regulations regarding the disposal of black water in the near future. We want to be well out ahead of all other possible solutions with a clearly demonstrated solution using our plasma arc sterilization technology.”
“We have proposed to CEW and HMH that we immediately deploy our existing 50 KW mobile sterilization unit at an HMH facility in Madrid in the first quarter of 2020. We would then train their team to operate the unit independently for the purposes of conducting efficacy studies compliant with EU standards for up to 12 months.”
“Upon completion, CEW and HMH will produce a white paper documenting the results, which would be presented to the European Commission. These results could position our Company to be the technology leaders in very large market. We believe that we could sell our sterilization units for $1.5 million each with possible EU subsidies to 5,500 facilities across the EU. This represents upwards of an $8 billion addressable market for Taronis.”
“To unlock this opportunity, we may be asked to fund the €2 million project with CEW and HMH if the grant application is not immediately approved. We believe this opportunity more than justifies the investment on our part, and we intend to aggressively pursue this project in January,” concluded Mr. Mahoney.
On December 12, 2019, Taronis Technologies announced its key business development goals for its agricultural waste sterilization business in 2020. In addition, the Company provided management’s view on recent capital market activities in relation to these objectives.
First, the Company will look to complete a joint venture for the sterilization of animal waste early in 2020. Specifically, the Company is focused on a joint venture in North Carolina to address the issues related to animal waste produced by the hog industry. North Carolina is the third largest hog producing state in the US today, and this herd generates over 15 million tons of animal waste every year. In fact, under the Smithfield Agreement in 2000, animal waste is the primary limiting factor for the growth and size of the hog industry in North Carolina.
In 2018, Duke University published a report titled “Mortality and Health Outcomes in North Carolina Communities Located in Close Proximity to Hog Concentrated Animal Feeding Operations.” In this report, Duke clearly linked living in close proximity to large scale hog farms with a wide range of health risks, including infant mortality, anemia, kidney disease, tuberculosis, and septicemia. The report further documented that life expectancy within the area of North Carolina that contains the majority of the state’s 2,500+ hog farms is measurably lower than the rest of the state.
Taronis recently completed an 18 month USDA grant funded project that produced clear and compelling validation of its ability to solve several of the critical dangers associated with untreated animal waste. A comprehensive white paper has been submitted to the USDA for technical review. The report documents a number of critical benefits from our technology on animal waste.
First, Taronis has clearly demonstrated the ability to eradicate pathogens, including E coli and fecal coliform. Second, the Company has demonstrated that once sterilized, there is no recurrence in pathogen growth within the sterilized materials. Third, Taronis breaks down complex compounds, including pharmaceuticals commonly dissolved in animal urine. Lastly, the Company documented our ability to measurably reduce harmful metals commonly found in animal waste.
The Company is actively engaged in dialogue with one of the largest hog producers in the US. The Company has proposed a multi-faceted project that would validate the commercialization at scale of its animal waste sterilization technology. This would be accomplished through the deployment of plasma arc sterilization units at scale across North Carolina.
At least two leading universities within North Carolina have been prioritized and have been invited to participate in the project to further validate the health benefits of Taronis’ sterilization process. Lastly, these same universities would independently validate the ability to safely utilize the animal waste streams post-treatment for multiple end agricultural applications, including hydroponic agriculture and fertilizer feedstocks.
“Our team has placed a top priority on launching the highest possible quality joint venture in North Carolina,” commented Scott Mahoney, CEO of Taronis. “We have already had positive and meaningful discussions with one of the leaders in the global hog industry. With the recent epidemic of African swine fever killing almost 6 million hogs worldwide, there is a real need for US hog production to safely fill the demand gap. Our technology can solve the critical gating issue to production growth in North Carolina. We can help the entire state reduce the health and environmental issues related to the disposal of animal waste. In addition, we can help the industry grow safely, providing lasting economic benefits in North Carolina, and eventually everywhere hogs are produced.”
“We recently announced a $25 million convertible preferred offering. We have received many inquiries from shareholders as to why we would contemplate this transaction. First, we believe we can capitalize on a very large economic opportunity solving this waste issue across the global hog industry. We believe this technology is very close to commercial viability, and we want to ensure the Company is financially prepared to support a full scale launch if our prospective industry partner wants to rapidly expand the project.”
“Lastly, we want to take this opportunity to remind all investors that the recently announced offering is deliberately structured so that the Company can service all amortization with cash payments. In addition, the Company has recently provided a series of updates on a $165 million contract under a previously owned subsidiary, Taronis Fuels, which has been successfully spun off and is expected to begin trading in the near term. Management has concluded that the royalties due back to Taronis from the $165 million contract should be able to adequately service the periodic payments for the proposed convertible preferred, thus minimizing any potential dilution.”