Quarterly Activities Report
Perth, July 13, 2023 AEST (ABN Newswire) - On 2 August 2022 BPH Energy Limited (ASX:BPH) announced that, following its shareholders' meeting on 21 June 2022 at which shareholders voted unanimously to approve an investment in hydrogen technology company Clean Hydrogen Technologies Corporation ("Clean Hydrogen" or "Vendor" or "Borrower"), BPH and its investee Advent Energy Ltd ("Advent" or "Lender") settled for the acquisition of a 10% interest in Clean Hydrogen for US$1,000,000 ("Cash Consideration") (8% BPH and 2 % Advent) under a Loan Conversion Agreement dated 25 July 2022 following the payment of US$535,996 by BPH and Advent (together the "Purchasers"), which was net of loans, accrued interest and deposits owed to the Purchasers by Clean Hydrogen.
The Purchasers had a further right of first refusal ("ROFR") to invest in Clean Hydrogen to a maximum of a further US$1,000,000 for a further 10%, on or before 31 December 2022. The ROFR conditions were subsequently amended such that it exists when (i) the Vendor does not seek a Series A investment in its equity securities comprising a minimum investment of US$3,000,000 by 30 April 2023, where such investment values the Vendor in excess of US$20,000,000 (such investment, a "Qualified Financing"), and (ii) the Vendor determines, in its sole and absolute discretion, that it requires at least a further US$1,000,000 investment for continued development and operations. Subject to the above, should BPH and Advent (the "Purchaser") exercise the ROFR, it must do so within 1 month of the Vendors request for the additional funding. The consideration payable is an aggregate of US$1,000,000, comprising of $US800,000 by BPH and US$200,000 by Advent ("Additional Cash Consideration") subsequent to which BPH shall hold a total 16% interest in Clean Hydrogen and Advent shall hold a total 4% interest in Clean Hydrogen (based on the assumption that Clean Hydrogen has not issued any additional Clean Hydrogen Shares prior to the ROFR being exercised).
Clean Hydrogen has not sought a Series A Investment in its equity securities comprising a minimum investment of US$3,000,000, and made a request for additional funding from BPH. Advent has lent Clean Hydrogen US$500,000 in accordance with unsecured loan agreements on normal commercial terms. The loans have been funded by monies loaned by BPH to Advent. The loan agreements provide for a further unsecured loan of US$500,000 to be made to the Borrower, of which US$250,000 is subject always to the Lender's absolute discretion. Clean Hydrogen will allocate and issue up to 1,000 Options to Advent, with an exercise price of USD$3,000 each, and exercisable immediately, with the option for conversion into shares in Clean Hydrogen expiring ten years from the date of issue (Clean Hydrogen Options). An advance of every US$250,000 of the US$1,000,000 loan facility will equate to 250 Clean Hydrogen Options allocated to Advent or, from time to time, BPH. The Purchasers and Clean Hydrogen have agreed to enter into a separate loan conversion agreement which will enable the conversion of the loan amount into the Subscription Shares Tranche 2, representing the Purchasers further 10% interest in Clean Hydrogen.
The parties acknowledge and agree that the Cash Consideration and Additional Cash Consideration, shall be used by Clean Hydrogen to design, build, produce and test a reactor that can produce a minimum of 3.2kgs and as high as 15kgs of hydrogen per hour and to submit at least 2 new patents in an agreed geography, relevant to the production of hydrogen from proprietary technology.
The Company lodged a prospectus with ASX and ASIC on 24 March 2023 for the offer of Loyalty Options to give investors the same rights and entitlement to Loyalty Options as under a Loyalty Options Prospectus dated 25 November 2022 ("November Prospectus"), under which the Company could not meet the ASX quotation conditions and no Loyalty Options were issued. The offer was fully subscribed and raised $438,623 (including the set-off of $35,259 from amounts owed to directors and Grandbridge Limited) from the issue of 109,655,865 Loyalty Options with a subscription price of $0.04 and an exercise price of $0.03 per Loyalty Option, and an expiry date of 30 September 2024.
On 17 April 2023 the Company announced that it had received binding commitments to raise $1 million (before costs) ("Placement") comprising the issue of 52,631,578 shares in the Company at an issue price of $0.019 per share. The Placement was undertaken pursuant to the Company's existing placement capacity under ASX Listing Rule 7.1 and subsequent to the issue of a Prospectus in compliance with the Corporations Act. Placement participants received one (1) free listed option ("Placement Option") for every two (2) shares subscribed for under the Placement, exercisable at $0.03 each with an expiry date of 30 September 2024 ("Attaching Options"). Everblu Capital Corporate Pty Ltd ("Everblu") acted as Lead Manager for the Placement, with 62 Capital Pty Ltd ("62 Capital") acting as Co-Lead. Everblu and 62 Capital were paid a cash fee of 6% on funds raised under the Placement and 1 listed Broker Option per 2 Placement Options issued exercisable at $0.03 per share, expiring 30 September 2024.
The intended use of Placement funds is as follows:
- $0.2 million - Further Investment in Clean Hydrogen Technology
- $0.7million - Funding for exploration and development of oil and gas investments
- $0.1 million - For working capital including costs of the offer
5,000 Cleansing Shares and 5,000 Cleansing Options were also issued during the quarter.
Significant activities by the Company's investees' during the June 2023 quarter were as follows: Advent Energy Limited ("Advent") Clean Hydrogen (BPH has an 8% direct interest) and Onshore Energy Pty Ltd ("Onshore") (a 100% owned subsidiary of Advent Energy Limited which BPH has a 35.8% direct interest) have entered into a hydrocarbon process agreement ("Agreement"). Onshore has rights to gas fields including the Weaber gas field at the Onshore Bonaparte Basin in the Northern Territory, Australia, Retention Lease RL1 ("Rights").
Clean Hydrogen has capabilities at processing hydrocarbons from natural gas and producing two products, hydrogen (sometimes referred to as turquoise hydrogen) and carbon black and carbon nanotube products where such products are produced with no CO2 emissions in the core process.
Carbon black is composed of fine particles of carbon produced by pyrolysis of natural gas at high temperatures which in pure form is a fine black powder. It is widely used in various applications for tyres, black colouring pigment of newspaper inks, resin colouring, paints, and toners, antistatic films, fibres, and floppy disks and as an electric conductive agent of high-technology materials.
By the Agreement, Onshore and Clean Hydrogen propose to develop plans whereby Clean Hydrogen processes the hydrocarbons from Onshore's Rights and produces hydrogen and carbon black products ("Clean Hydrogen Products").
Clean Hydrogen is developing its "Commercial System" where it will satisfy scale and commercial objectives resulting in the development of income from sale of Clean Hydrogen Products. Clean Hydrogen's Commercial System means an end-to-end system which consumes and processes hydrocarbons, using Clean Hydrogen's own thermocatalytic reactor process and Clean Hydrogen's catalysts to produce hydrogen at commercial scale, enabling the sale of the Clean Hydrogen Products.
Under the material terms of the Agreement, Onshore will review the Commercial System once ready, conditional on the following.
i. Clean Hydrogen will keep Onshore informed of progress and timing for completion of the Commercial System which is planned to be completed in 2023 in India.
ii. Clean Hydrogen will share details on design and capabilities to assist Onshore in understanding how its systems will integrate with Onshore's supply of hydrocarbons.
iii. The parties will work together to develop a plan to include timelines and needs for production of Clean Hydrogen Products from Onshore's hydrocarbons.
iv. Once Onshore has a clear date for hydrocarbon production, both parties will endeavour to finalise the planning to produce Clean Hydrogen Products.
v. When Clean Hydrogen and Onshore have agreed to a time for the production of Clean Hydrogen Products, Clean Hydrogen will be responsible for due diligence relating to the compliance with the local regulatory requirements for the operation of the systems to produce the Clean Hydrogen Products.
The Agreement is non-binding and binding material contractual terms have yet to be agreed.
Clean Hydrogen will make itself available to answer all technical and business model queries as required and provide a dedicated point of contact to manage all Onshore queries. Onshore will use best endeavours to develop the plan with Clean Hydrogen. Onshore will provide Clean Hydrogen with detail on its Rights and the timing to assist with planning.
Onshore and Clean Hydrogen shall define and agree as part of the plan on the markets for the sale of the Clean Hydrogen Products.
Onshore accepts no liability for the design and operation of the systems to produce the Clean Hydrogen Products. The Agreement does not preclude Onshore's right to look at other plans for use of their hydrocarbons associated with their Rights.
Cortical Dynamics Limited ("Cortical")
Investee Cortical Dynamics Limited is an Australian based medical device neurotechnology company that is developing BARM(TM), an industry leading EEG (electrical activity) brain function monitor. BARM(TM) is being developed to better detect the effect of anaesthetic agents on brain activity under a general operation, aiding anaesthetists in keeping patients optimally anaesthetised, and complemented by CORDYAN(TM) (Cortical Dynamics Analytics), a proprietary deep learning system/App focusing on anaesthesiology.
The Australian manufactured and designed, electroencephalographically based (EEG-based), BARM(TM) system is configured to efficiently image and display complex information related to the clinically relevant state of the brain. When commercialized the BARM(TM) system will be offered on a stand-alone basis or integrated into leading brand operating room monitors as "plug and play" option.
On 15 May 2023 the Company announced Philips Electronics North America Corp. had confirmed that Cortical had, with successful testing and provision of documentation, met the necessary prerequisites of the Philips License and Cooperation Agreement to claim the BARM-PEC as a compatible and "supported device" for Philips Patient Monitoring Systems IntelliVue MP40-90 and MX400-850 using the Philips IntelliBridge EC10 Interface Module or IntelliBridge EC10 integral Interface Board, as well as Philips IntelliBridge System Release C.0 and Patient Information Center iX using the EC40/80 Hub with Open Interface driver (ED/BD101) and EC5 ID Module #106.
Philips confirms that Cortical may now claim compatibility of the BARM-PEC with the abovementioned Philips IntelliVue Patient Monitoring Systems. Philips will include Cortical's BARMPEC in the list of Open Interface supported medical devices that is communicated to the Philips sales force and published on related Philips webpages.
Cortical continues the FDA 510K filing process for BARM(TM) in the USA assisted by Washington based technical advisors MCRA. The Food and Drug Administration ("FDA") is the federal agency of the United States Department of Health and Human Services which regulates the sale of medical device products (including diagnostic tests) in the U.S. and monitors the safety of all regulated medical products. FDA approval is a necessary precursor for sales of BARM(TM) to commence in the USA.
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About BPH Energy Limited
The company provides early stage funding, project management and commercialisation strategies for a direct collaboration, a spin out company or to secure a license.
BPH provides funding for commercial strategies for proof of concept, research and product development, whilst the institutional partner provides infrastructure and the core scientific expertise.
BPH currently partners with several academic institutions including The Harry Perkins Institute for Medical Research and Swinburne University of Technology (SUT).