American Battery Technology Company — Form 10-Q Summary
Reporting period: Three months ended September 30, 2023, the company’s fiscal 2024 first quarter. The request metadata labels this “2023 Q1,” but the filing reports the quarter ended September 30, 2023. Amounts are in U.S. dollars.
Business context
The company is developing domestic battery-material supply through mineral exploration, lithium extraction technology, and lithium-ion battery recycling. It describes itself as a new entrant with a limited operating history and states that it has not yet generated revenue. During the quarter it completed the purchase of its commercial-scale recycling facility at the Tahoe-Reno Industrial Center and continued facility equipment and development work.
Financial results and liquidity
| Metric | Three months ended Sep. 30, 2023 | Comparable 2022 period |
|---|---|---|
| Revenue | None reported | None reported |
| Operating expenses | $6.38 million | $2.58 million |
| Net loss | $7.23 million | $2.43 million |
| Basic and diluted loss per share | $0.16 | $0.06 |
| Cash used in operating activities | $4.76 million | $4.04 million |
| Cash used in investing activities | $7.27 million | $4.08 million |
| Cash provided by financing activities | $15.09 million | None |
- Operating expenses rose about $3.81 million year over year. R&D expense increased to $2.16 million from $0.22 million, and exploration expense increased to $1.28 million from $0.35 million. G&A was $2.95 million versus $2.01 million.
- Other expense was $0.85 million, including $0.71 million of financing-cost amortization and $0.13 million of accretion and interest expense. The prior-year period had $0.14 million of other income.
- At September 30, cash was $5.38 million, current assets $8.41 million, total assets $83.95 million, and stockholders’ equity $59.20 million. Working capital was negative $14.64 million, versus negative $8.64 million at June 30, 2023.
- Total liabilities were $24.75 million, including $23.04 million current liabilities. The notes disclose $23.28 million of convertible-note principal outstanding and a net carrying value of $18.93 million after unamortized discounts and issuance costs. The balance-sheet current notes-payable figure is $17.25 million; the filing’s different presentations reflect debt discounts/classification, and investors should reconcile them against the notes.
- Gross margin and other operating margins are not meaningful because no revenue was reported.
Material changes, outlook, and risks
- Property and equipment, net, increased to $61.02 million from $29.95 million, principally reflecting facility acquisition and equipment additions. Investing cash outflow included $6.48 million for property and equipment.
- Operating costs increased with hiring and activity in R&D, exploration, and facility development. The company recognized $0.5 million of federal grant offsets to R&D costs, versus $0.3 million in the prior-year quarter.
- The company reported DOE grant agreements for projects with budgets of $115.5 million and $20.0 million, each eligible for reimbursement of up to 50% of eligible costs, subject to grant terms. It expects to begin work and request funds during the current fiscal year; these awards are not equivalent to unrestricted cash or assured revenue.
- On August 29, the company agreed to sell up to $51.0 million of senior secured convertible notes to High Trail and reported receiving $25.0 million to date. The notes carry no coupon, mature September 1, 2025, and are secured by certain real property, cash, and investment accounts. They require at least $5.0 million in cash and cash equivalents; quarter-end cash of $5.38 million was only modestly above that minimum. Buyers may request monthly partial redemptions or convert under the agreement’s terms. The company also repaid and terminated its prior Mercuria credit agreement.
- Management says cash holdings and subsequent available financing should meet current working-capital needs, but also says the company expects to rely on equity, debt, or other financing and gives no assurance that financing will be available. Further share issuance may dilute existing holders.
- After quarter-end, the company issued 756,789 shares under the Tysadco agreement for $4.5 million in proceeds. At September 30, $1.0 million of the $3.0 million due from quarter-period share sales was recorded as a receivable.
- Management reported disclosure controls and internal control over financial reporting were not effective at quarter-end because of a material weakness in segregation of accounting duties. It expected remediation during the quarter ending December 31, 2023, but cautioned there was no guarantee. Management also noted that procedures were in place but needed to operate effectively for an adequate period.
- The company stated that no new material legal proceedings or material developments in previously disclosed proceedings occurred, and that risk factors were not materially changed from its latest Form 10-K. Its mining properties remain in exploration; commercial feasibility and proven and probable reserves have not been established.
Important facts for investors to verify
- Progress, commissioning timeline, and commercial readiness of the recycling facility, including when revenue-generating operations may begin.
- Cash runway and compliance with the convertible notes’ $5.0 million minimum-cash requirement, alongside the reported working-capital deficit.
- Debt terms, collateral, conversion and redemption mechanics, available undrawn financing, and reconciliation of gross principal with balance-sheet carrying amounts.
- Grant agreement conditions, eligible-cost reimbursement timing, and the company’s ability to fund its share of project costs.
- Remediation and sustained effectiveness of internal controls, particularly segregation of duties.
- Potential dilution from the convertible notes, warrants, share awards, and further equity financing.