Moolec Science SA — Form 20-F Summary
Reporting period: The provided filing is an annual report for the fiscal year ended June 30, 2023, not a 2022 Q4 filing. Financial statements are prepared under IFRS as issued by the IASB and audited by Price Waterhouse & Co. S.R.L.
Business context
Moolec is an early-stage science-based food-ingredients company developing molecular-farming, plant-based and fermentation technologies intended to produce animal proteins and functional ingredients within plants or microorganisms. Its pipeline includes safflower-based chymosin and GLA oil, yeast-based ingredients, and soy- and pea-based meat-replacement products.
The December 30, 2022 business combination with LightJump Acquisition Corporation made Moolec a Nasdaq-listed public company. On April 24, 2023, Moolec acquired ValoraSoy Food Ingredients, an Argentine producer of textured soy proteins, for aggregate consideration of approximately $2.6 million in cash and equity.
Key financial metrics
| Metric | FY2023 | FY2022 |
|---|---|---|
| Revenue | $905,049 | $0 |
| Cost of sales | $1,048,354 | $0 |
| Gross profit/(loss) | $(143,305) | $0 |
| Research and development expense | $1,351,217 | $985,158 |
| Administrative expense | $4,808,655 | $2,523,230 |
| Loss from operations | $6,653,805 | $3,652,433 |
| Net loss | $51,788,880 | $4,526,905 |
| Basic and diluted loss per share | $1.50 | $0.15 |
| Operating cash flow | $(7,511,353) | $(1,885,979) |
| Investing cash flow | $(2,336,820) | $0 |
| Financing cash flow | $11,281,661 | $2,000,000 |
| Cash and cash equivalents | $2,527,673 | $1,081,808 |
| Total borrowings | $2,645,289 | $0 |
| Total assets | $24,051,289 | $5,691,717 |
| Total liabilities | $13,945,356 | $4,087,384 |
| Total equity | $10,105,933 | $1,604,333 |
FY2023 gross margin was approximately negative 15.8%, and the operating margin was approximately negative 735%. These margins are not representative of a mature commercial operation because revenue began only after the ValoraSoy acquisition and the period included substantial transaction and listing-related charges.
Material changes versus the prior comparable period
- Revenue increased from zero to $905,049 following the ValoraSoy acquisition; management stated that ValoraSoy supplied the reported customer contracts and sales.
- R&D expense increased 37.2% to $1.35 million, primarily from higher professional fees.
- Administrative expense increased 90.6% to $4.81 million, reflecting higher audit, legal, accounting, payroll, insurance and share-based compensation costs.
- Operating loss increased 82.2% to $6.65 million.
- Net loss increased by $47.26 million, largely because FY2023 included a non-cash $42.71 million IFRS 2 share-based payment charge related to the business combination listing, plus $3.54 million of transaction expenses.
- Operating cash use increased by $5.63 million, while financing inflows increased primarily from the backstop financing, SPAC trust proceeds and borrowings.
- Total assets increased to $24.05 million, including $8.52 million of intangible assets, $8.76 million of receivables from shareholders, fixed assets associated with ValoraSoy, and $251,440 of goodwill.
Liquidity, debt and capital resources
Moolec reported negative working capital of $7.43 million at June 30, 2023. Current financial assets were approximately $4.52 million compared with current financial liabilities of approximately $11.99 million, creating material near-term liquidity pressure despite management’s conclusion that the company could continue as a going concern.
Total borrowings were $2.65 million, including $2.55 million current and $99,046 non-current. Borrowings were unsecured; U.S.-dollar borrowings totaled approximately $2.03 million and Argentine-peso borrowings totaled approximately $616,654. The company also had $7.48 million of accounts payable, including $3.58 million of transaction expenses payable.
Moolec entered into a three-year equity purchase facility with Nomura for up to $50 million of gross share sales at the company’s option. Only approximately $10,647 had been issued under the facility by June 30, 2023. Further equity issuance could dilute existing shareholders.
Guidance, outlook and management commentary
- Management expects continued dependence on external financing until product commercialization and revenue scale improve.
- Planned commercial launches include SPC2 and GLASO in 2025, YEEA1 in 2025, PEEA1 in 2028, SOOY1 in 2027, and SOOY2 and SOOY3 in 2029. These dates remain subject to development success, regulatory approvals, financing and market acceptance.
- SPC2 and GLASO were at the scale-up stage; the meat-replacement projects remained in discovery, transformation or development stages.
- USDA-APHIS determined in 2023 that the company’s GLA safflower plants posed no greater plant-pest risk than conventional safflower. GLASO also had FDA approvals for specified dietary supplement, beverage, medical-food and animal-feed uses.
- After year-end, Moolec agreed to issue an Insud convertible note with approximately $21 million of principal, supported by $10 million of cash and in-kind contributions. The note carries an initial 10% annual interest rate, matures in 36 months, and may be settled in shares, cash or a combination.
- Moolec also announced a planned Bioceres supply arrangement for approximately 15,000 tons of HB4 soybeans, potentially upsized by a similar volume and financed through a convertible note. The filing states that the two convertible notes together represent approximately $30 million of cash and in-kind contributions.
Principal risks and unusual items
- The company has a limited operating history, recurring losses and an accumulated deficit of $58.62 million.
- Commercialization depends on successful R&D, adequate protein yields, scale-up, customer adoption, intellectual-property protection and regulatory approvals.
- Raw-material availability and prices, agricultural conditions, climate events, commodity prices, supply-chain disruptions and high Argentine inflation could adversely affect costs, margins and liquidity.
- Convertible notes may require cash repayment or conversion into ordinary shares, creating refinancing risk and potential dilution.
- There were 11.11 million warrants outstanding at June 30, 2023, exercisable at $11.50 per share, which could dilute shareholders if exercised.
- The company believes it likely was a passive foreign investment company for U.S. tax purposes for fiscal 2023, potentially creating adverse tax consequences for U.S. holders.
- The filing identifies no pending legal proceedings as of its date. Disclosure controls were considered effective, but the company did not yet provide management’s assessment of internal control over financial reporting or an auditor attestation because of applicable transition provisions and emerging-growth-company status.
Facts investors should verify
- Reconcile the filing’s annual reporting period with the requested 2022 Q4 period; the supplied document does not report a standalone 2022 Q4.
- Review the audited notes supporting the $42.71 million non-cash listing charge and the $3.54 million transaction expense.
- Assess the company’s ability to fund operations given $2.53 million of cash, negative working capital and $7.51 million of annual operating cash burn.
- Confirm the final terms, issuance and accounting treatment of the Insud and Bioceres convertible notes announced after June 30, 2023.
- Monitor ValoraSoy revenue, gross margins, customer concentration, integration progress and the contingent earn-out of up to 384,558 shares tied to EBITDA targets.
- Evaluate dilution from the Nomura equity facility, warrants, employee options, restricted stock units and convertible instruments.
- Verify regulatory milestones and whether the stated 2025–2029 commercial launch targets remain achievable.