American Battery Metals Corporation — Form 10-Q Summary
Reporting period: Quarter and nine months ended March 31, 2021; the company’s fiscal year ends June 30. The request metadata says “2020 Q3,” but the filing covers fiscal 2021 Q3. Financial statements are unaudited and in U.S. dollars.
Business context
The company is a pre-revenue battery-metals startup pursuing mineral exploration, extraction technology, and lithium-ion battery recycling. It reports no revenue and says revenue depends on future facility operations or successful exploration and commercialization. It acquired 12.44 acres in Fernley, Nevada, and water rights intended to support a planned recycling pilot-plant campus.
Key financial metrics
| Metric | Three months ended March 31, 2021 | Nine months ended March 31, 2021 |
|---|---|---|
| Revenue | $0 | $0 |
| Operating expenses | $6.81 million | $31.84 million |
| Net loss | $4.99 million | $36.19 million |
| Basic and diluted loss per share | $0.01 | $0.08 |
| Cash used in operating activities | Not separately presented | $5.16 million |
| Cash used in investing activities | Not separately presented | $1.72 million |
| Cash provided by financing activities | Not separately presented | $13.00 million |
At March 31, 2021, cash was $6.95 million, total assets $9.45 million, total liabilities $1.10 million, and stockholders’ equity $8.36 million. Current assets were $7.44 million and current liabilities $0.84 million; reported working capital was $6.60 million. The company reported no convertible debt or derivative liability at quarter-end; loans payable included $255,992, identified in the notes as a PPP loan due May 2022. No meaningful operating margin is available because the company had no revenue.
Changes versus comparable periods
- Quarterly net loss narrowed from $7.51 million to $4.99 million year over year, despite operating expenses rising from $2.02 million to $6.81 million. A $15.22 million debt-settlement gain was partly offset by a $12.64 million derivative fair-value loss.
- Nine-month net loss increased from $12.93 million to $36.19 million. Operating expenses rose from $4.49 million to $31.84 million, principally reflecting $27.07 million of stock-based service compensation and higher general and administrative costs.
- Nine-month operating cash use increased from $2.63 million to $5.16 million. Cash rose from $0.83 million at June 30, 2020, to $6.95 million at March 31, 2021, mainly due to equity-linked financing.
- Working capital improved from a $4.73 million deficit to positive $6.60 million, as convertible notes were repaid or converted and the related derivative liability was eliminated.
- Common shares outstanding increased from 365.2 million at June 30, 2020, to 544.9 million at March 31, 2021; the filing reports 564.9 million outstanding as of May 13, 2021.
Outlook, risks and unusual items
- Management provides no quantified revenue, earnings, or production guidance. It describes the pilot plant as a future operating opportunity, not an operating facility, and cautions that nine-month results are not necessarily indicative of the full fiscal year.
- The filing states that substantial doubt exists about the company’s ability to continue as a going concern. It has an accumulated deficit of $99.40 million and relies on management support and obtaining future debt or equity financing; favorable financing terms are not assured.
- Stock-based compensation and debt accounting materially affect reported results. The nine-month statements include a $19.66 million derivative fair-value loss and an $18.68 million gain on debt settlement; these items do not represent ordinary operating performance.
- Subsequent to quarter-end, the company entered a new Tysadco agreement for up to $75 million of common-stock purchases over 24 months, subject to conditions, and filed a prospectus for $15 million of gross proceeds from a share offering. These financing arrangements and share issuances may cause substantial dilution.
- The company agreed after quarter-end to purchase additional water rights for $2.17 million. The planned facility’s construction, financing, and commercial viability remain uncertain.
- A Nevada legal dispute involving a former CEO and shares remains ongoing; a related Utah complaint was filed in April 2021. The company says the litigation has been delayed by COVID-19 restrictions.
- A joint venture for lithium extraction had made no required equipment purchases, and neither party was pursuing it; the company considers future purchases unlikely and does not expect future liability. Failure to meet purchase thresholds could forfeit its exclusive marketing rights.
- Management said disclosure controls were effective as of March 31, 2021, and reported changes to payment authorization and accounts-payable controls during the quarter.
Important facts for investors to verify
- Whether the pilot plant is funded, built, and capable of reaching commercial operations, and the timing and cost of that work.
- Actual cash use and financing availability, including the conditions, pricing, and dilution associated with Tysadco and the post-quarter share offering.
- The company’s fully diluted share count, including preferred-stock conversion rights and outstanding warrants.
- The nature and sustainability of reported debt-settlement gains, derivative revaluations, and unusually large share-based compensation.
- The status and potential financial effects of the going-concern uncertainty, Nevada and Utah litigation, and water-rights transactions.
- The filing contains differing nine-month net-loss figures in the statements of operations and stockholders’ equity; reconcile the reported $36.19 million loss with the equity statement’s $36.13 million figure.