American Battery Technology Company (ABTC) — Form 10-Q
Reporting period: Quarter ended March 31, 2024, and nine months ended March 31, 2024. Although the request labels the period “2023 Q3,” this filing covers fiscal third quarter 2024. Financial statements are unaudited.
Business context
ABTC is developing U.S. battery-material supply through lithium-ion battery recycling, lithium extraction and refining, and mineral exploration. It began operating its first battery-recycling facility in October 2023. The company reported no revenue from its activities as of March 31, 2024.
Key financial metrics
| Metric | Three months ended March 31, 2024 | Nine months ended March 31, 2024 | Comparable 2023 period |
|---|---|---|---|
| Revenue | None reported | None reported | None reported |
| Operating expenses | $8.61 million | $25.43 million | $5.63 million and $14.39 million, respectively |
| Net loss | $10.00 million | $29.06 million | $5.61 million and $14.24 million, respectively |
| Loss per share, basic and diluted | $0.19 | $0.59 | $0.13 and $0.33, respectively |
| Cash used in operating activities | $12.43 million for nine months | $10.82 million for nine months | |
| Cash used in investing activities | $11.36 million for nine months | $18.01 million for nine months | |
| Cash provided by financing activities | $27.47 million for nine months | $12.42 million for nine months |
With no reported revenue, operating and profit margins are not meaningful. Nine-month research and development expense was $11.14 million, up from $3.46 million; general and administrative expense was $10.70 million, up from $9.45 million; exploration expense was $3.60 million, up from $1.48 million. The company attributed increases mainly to expanded staffing and increased exploration work. Government grants offset $2.2 million of R&D costs in the nine-month period, compared with $0.7 million a year earlier.
At March 31, 2024, cash was $6.00 million, total assets $89.26 million, current liabilities $17.01 million, and total liabilities $19.19 million. Working capital was negative $6.66 million, compared with negative $8.98 million at June 30, 2023. Current notes payable had a reported carrying value of $10.75 million; disclosed principal outstanding was $12.48 million. The notes are zero-coupon, secured, mature September 2025, and require at least $5 million in cash and cash equivalents. The company reported an accumulated deficit of $189.89 million.
Changes and financing
- Nine-month net loss roughly doubled year over year, while operating cash use rose to $12.43 million from $10.82 million.
- Investing cash use decreased to $11.36 million from $18.01 million, as prior-year spending included substantial mineral-rights and equipment purchases. Property, plant and equipment, net, increased to $65.59 million from $29.95 million.
- Financing included $25.74 million net proceeds from share purchase agreements and $20.29 million net proceeds from convertible notes, partly offset by $18.60 million of principal repayments. The company issued 8.21 million shares under its Tysadco agreement; $2.45 million remained recorded as a subscription receivable at quarter-end. Common shares outstanding were 55.06 million at March 31, versus 45.89 million at June 30, 2023.
- On April 3, 2024, after quarter-end, ABTC entered an at-the-market agreement allowing up to $50 million of common-stock sales. Future equity issuance could dilute shareholders.
Outlook, risks and unusual items
- Management stated that continued operations depend on generating operating profits or obtaining additional debt or equity financing. The filing says substantial doubt exists about the company’s ability to continue as a going concern for 12 months after issuance of the financial statements.
- Management warned that, without operating income, grant support or additional capital, covenant compliance under the note agreement could be at risk; an unwaived breach could accelerate outstanding debt. The company also said it may be unable to obtain financing on favorable terms.
- The recycling facility is described as having capacity to process approximately 20,000 metric tons annually when fully ramped. The company also reported completing construction and commissioning of a lithium hydroxide pilot plant. These are development milestones, not reported revenue or proof of commercial-scale performance.
- DOE grant awards include up to $57.7 million toward eligible costs for a proposed lithium hydroxide refinery and up to $10 million toward eligible costs for battery-recycling technology work. The company was also selected for 48C tax credits of up to $19.5 million for its existing recycling facility and up to $40.5 million for a prospective U.S. facility. These are conditional support mechanisms, not equivalent to cash received; the filing does not provide a clear schedule for realizing the full amounts.
- The quarter includes $3.02 million of amortization and accretion of financing costs for the nine-month period and a $0.45 million nine-month loss from changes in fair value of the debt-related derivative liability.
- The company disclosed immaterial corrections to previously issued financial statements involving compensation recognition and accounting for the convertible-note conversion feature. It concluded the corrections were immaterial, but reported material weaknesses in internal controls, including insufficient technical accounting expertise and inadequate segregation of duties. Disclosure controls and internal control over financial reporting were deemed ineffective as of March 31, 2024.
- A former CFO filed a discrimination charge with the Nevada Equal Rights Commission in January 2024. The company reported no other newly disclosed material legal developments in the filing.
- No specific financial guidance was provided. Forward-looking plans and facility ramp-up expectations are subject to operational, financing, grant, market and execution risks.
Investor verification priorities
- Confirm the facility’s production ramp, customer qualification progress, realized sales and expected timing of revenue; the filing reports no revenue to date.
- Assess liquidity against the $5 million minimum cash covenant, debt repayment terms, working-capital deficit and going-concern warning.
- Verify the conditions, eligible spending, reimbursement timing and availability of the DOE grants and 48C tax credits.
- Review potential dilution from the Tysadco arrangements, outstanding convertible notes and the $50 million ATM program.
- Monitor remediation of material weaknesses and any subsequent corrections, covenant issues or developments in the former CFO’s charge.