Quadrise’s business development activity has intensified in the last nine months, with progress on opportunities in Morocco, South America, Saudi Arabia (KSA) and the marine sector. COVID-19 will potentially extend the length of time taken to complete trials. However, management notes that the current low oil prices are not likely to have a material impact on interest in using its innovative MSAR fuel as a heavy fuel oil substitute.
Quadrise has manufactured and shipped the equipment and fuel for the pilot trial in Morocco for an industrial application, but cannot access the site until local COVID19 lockdowns are lifted. Meanwhile, it is working on the engineering studies for the associated larger scale trial so the delay on the project overall is minimised. Management has recently held meetings with a major KSA utility on a power project, with a national oil company in South America regarding MSAR opportunities for refinery refuelling, domestic power generation and export, and with two major shipping companies.
Quadrise is still pre-revenue. Stripping out share option and warrant charges, losses before tax widened by £0.3m y-o-y in H120 to £2.0m, reflecting higher administrative expenses (largely associated with fundraising) and a £140k commencement fee paid to Bergen. Free cash outflow increased by £0.2m to £1.5m. During the period, Quadrise raised £4.5m (gross) in total through the issue of convertible securities to Bergen, an open offer and a subscription, giving £3.8m cash at end December 2019.
Given the initial delay to the first phase of the Morocco trial, management is implementing various cost-savings measures including its current lease at its London office. Together with the reduction in travel costs necessitated by COVID19, management estimates that these actions will extend the cash runway to the end of calendar Q121. This excludes the potential to raise a further £2.0m through the issue of the second tranche of convertible securities to Bergen in FY20.