Italy-based bioplastics maker Bio-on says its sales took a nosedive in the first half of 2019, reaching only 917,000 euros ($1 million), compared to 6.1 million euros ($6.7 million) a year earlier.
The beleaguered manufacturer of PHA bioplastic posted losses of 4.9 million euros ($5.3 million), double the loss of 2.3 million euros ($2.5 million) posted in June 2018. The final result amounted to a loss of 10 million euros ($10.9 million) against a loss of 2.9 million euros ($3.2 million) as of June 30, 2018.
The bio-technology group's net assets stood at 47.5 million euros ($52 million) at the end of June, 10.3 million euros ($11.2 million) under the 57.8 million ($63.3 million) reported at the end of December 2018.
The total net financial position on June 30 was negative 41 million euros, ($43.8 million) against a negative net financial position at on Dec. 31, 2018 of 22.5 million euros ($24.6 million). During this period, construction of the Castel San Pietro production plant was completed, adding an extra cost of 18 million euros, ($19.7 million) the company said.
The Reuters news agency reported Oct. 2 that founding shareholders had committed to providing 10 million euros ($10.9 million) for 12 months to keep the company in business.
After the end of the first half of its 2019 fiscal year, on Sept. 30, Bio-on entered into an exclusive license agreement for the production and commercial exploitation rights of its PHA technology in the beverage sector, for a period of 30 years, against a consideration of 10 million euros ($10.9 million), which will be paid in two tranches. The contract also provides for a running royalty of 2 percent of the net sales of the products made with Bio-on's technology that are sold worldwide.
According to the company, talks with other customers have been stalled by the negative impact of U.S.-based Quintessential Capital Management's (QCM) attack on its integrity and on the quality of its technology.
Gabriel Grego of QCM noted that Bio-On's announcement of its catastrophic fall in sales and profit for the first-half of 2019 was "not surprising to us and it further validates the in-depth research we did."
Bio-on is listed in the AIM segment on the Italian Stock Exchange. The allegations have hit hard: the company's share prices have fallen steeply since the publication of the QCM report and are now down 79 percent year to date. Bio-on closed Oct. 1 at a record low of just under 10 euros ($10.94).
Despite the "slowdown in the business," as Bio-on describes it, the company expects to close 2019 with at least 20 million euros ($21.9 million) from external customers.
The Bologna-based company has started a legal battle with QCM,seeking legal remedy for the injury to its reputation brought about by the "false and misleading" news spread by the U.S. asset management firm.
The New York-based company published a report on July 19, stating that Bio-On was "a house of cards, a scheme conceived by management to enrich themselves on at the expense of shareholders."