American Battery Technology Company (ABTC) — Form 10-Q
Reporting period: Quarter and six months ended December 31, 2022 (fiscal Q2 and first half of fiscal 2023). The filing is unaudited. ABTC is a pre-revenue startup developing domestic battery-metal resources, extraction technologies, and lithium-ion battery recycling.
Financial performance and position
- Revenue and margins: No revenue was reported; the company says it has not generated revenue. Profit margins are therefore not meaningful.
- Net loss: Q2 net loss was $6.20 million, versus $4.09 million a year earlier; loss per share was $0.01 in both periods. First-half net loss was $8.63 million, versus $24.06 million; loss per share was $0.01 versus $0.04.
- Expenses: Q2 operating expenses were $6.18 million, up from $4.11 million. First-half operating expenses were $8.76 million, down from $24.09 million, largely reflecting lower expenses for shares issued for services and stock-based compensation compared with the prior year. First-half R&D expense was $1.96 million, up from $0.48 million; about $0.4 million of government grant funding offset R&D costs.
- Cash flow: First-half cash used in operations was $7.37 million, versus $4.34 million in the prior year. Investing activities used $10.18 million, including $8.0 million for Tonopah mineral claims and spending on plant construction and equipment. Financing provided no cash, versus $41.25 million in the prior-year period.
- Liquidity: Cash was $11.44 million at December 31, down from $28.99 million at June 30, 2022. Working capital was $12.1 million, versus $26.8 million. A $2.0 million subscription receivable was recorded; management says $1.4 million was received in January 2023, with $0.6 million remaining as a stockholders’ equity component.
- Assets and liabilities: Total assets were $47.63 million and total liabilities were $1.71 million, compared with $52.86 million and $3.23 million at June 30. Liabilities primarily include payables/accruals and lease obligations; the filing reports no significant off-balance-sheet arrangements. Cash is not equivalent to available working capital, given planned operating and investment needs.
- Capital and dilution: ABTC acquired Tonopah mining claims for total costs of $8.2 million and had $21.73 million in net property and equipment, much of it under construction and not yet commissioned. It granted 27.2 million RSUs in the first half; 25.6 million awards remained unvested at December 31. There were 40.2 million warrants outstanding. Common shares outstanding were 651.6 million on February 14, 2023.
Changes, outlook, and risks
- The first-half loss declined substantially year over year, but operating cash use rose 70% per management, driven by payroll and R&D, greater exploration activity, and other operating costs. Capital investment and the mineral-claim acquisition contributed to the sharp decrease in cash and working capital.
- Management stated that cash was expected to fund operations for at least one year from issuance of the statements, but cautioned that future capital may be needed and cannot be assured on acceptable terms or at all. Results to date are not necessarily indicative of the full fiscal year.
- ABTC was selected for two DOE grant awards, each subject to contract negotiations at the filing date: up to $57 million over five years for a commercial-scale lithium-hydroxide facility, and up to $10 million over three years for battery-recycling processing technologies. The company expected contracts to be finalized in fiscal Q3 2023 and projects to begin in fiscal Q4; the amounts are reimbursement ceilings, not reported revenue or guaranteed cash proceeds.
- Controls: Management concluded disclosure controls and internal control over financial reporting were not effective at December 31, citing inadequate documentation and review of controls and insufficient segregation of duties. Remediation was ongoing, with completion targeted for fiscal 2023; no assurance was given that it would be completed on schedule.
- Contingencies: Two lawsuits were disclosed. A former employee alleges compensation and labor-law violations; ABTC denies the claims. A separate shareholder-related case seeks damages and other relief; ABTC denies the allegations and filed counterclaims. For the latter, the company gave no assessment of outcome or potential loss amount. ABTC also disclosed approximately $20,000 of mine closure and reclamation financial-assurance obligations.
- Subsequent items: January 2023 employment agreements for two executives include base salaries, potential bonuses, and milestone-conditioned equity awards. The company also issued 1.48 million shares on vesting of RSUs in January.
Key facts for investors to verify
- Progress, commissioning schedule, and remaining costs for the recycling facility and other construction, including whether assets are ready for use.
- Cash runway and actual receipt and use of the subscription proceeds and DOE grant reimbursements; confirm whether grant contracts were finalized as expected.
- Future operating cash burn, capital needs, and potential financing or dilution from outstanding RSUs and warrants.
- Remediation of the disclosed material weaknesses and any subsequent changes to financial controls.
- Developments and potential financial exposure in both lawsuits, particularly the matter for which no loss range was disclosed.