American Battery Technology Company — Form 10-Q Summary
Reporting period: Three months ended September 30, 2022, the first quarter of the company’s fiscal year ending June 30, 2023. The request metadata says “2022 Q1,” but the filing covers the quarter ended September 30, 2022. Financial statements are unaudited.
Business context
ABTC is a pre-revenue startup pursuing domestic battery-material production through mineral exploration, extraction technology development, and lithium-ion battery recycling. It was constructing its first integrated battery-recycling facility and developing a demonstration system for producing battery-grade lithium hydroxide. The company said it had not generated revenue from its activities and had not established commercial feasibility for its exploration prospects.
Financial performance and position
| Metric | Quarter ended Sep. 30, 2022 | Comparable period |
|---|---|---|
| Revenue | None reported | None reported |
| Operating expenses | $2.58 million | $19.99 million |
| Net loss | $2.43 million | $19.97 million |
| Basic and diluted loss per share | $0.00 (rounded) | $0.03 |
| Cash used in operating activities | $4.04 million | $2.60 million |
| Cash used in investing activities | $4.08 million | $5.58 million |
| Cash provided by financing activities | None | $41.25 million |
Cash was $20.87 million at quarter-end, down from $28.99 million at June 30, 2022. Working capital was $15.4 million, versus $26.8 million at fiscal year-end. Total assets were $53.80 million; total liabilities were $6.48 million, including $6.33 million of current liabilities. The balance sheet reports no conventional borrowings; operating lease liabilities totaled $254,616. No revenue-based margins are meaningful given the company’s pre-revenue status.
Stockholders’ equity was $47.32 million and accumulated deficit was $141.07 million. Common shares outstanding were 644.14 million at September 30, 2022; the cover page reports 648.55 million outstanding as of November 14, 2022.
Changes versus the prior year and quarter
- Operating expenses fell 87% year over year, mainly because the prior-year quarter included $17.1 million of shares issued or issuable for professional services; the current-quarter amount was approximately $120,000. The filing attributes the lower net loss primarily to this noncash expense difference, so the comparison does not by itself indicate improved operating economics.
- Cash used in operations increased 55% year over year, which management attributed to increased staffing and research and development activity.
- Quarter-end cash declined by $8.12 million from June 30, 2022. There were no financing cash inflows in the quarter, unlike the prior-year period, which included substantial equity financing.
- ABTC recorded an $8.0 million Tonopah mining-claims asset. It paid $4.0 million in the quarter and accrued the remaining $4.0 million, paid in October.
Outlook, risks and unusual items
- Management said current cash should fund working-capital needs and that it believed the company had sufficient liquidity for at least one year from the financial statements’ issuance. It also cautioned that cash needs may rise, additional capital may be needed, and financing may not be available on acceptable terms or at all. The company expected significant further investment in its mineral projects and recycling pilot plant; no numerical earnings or revenue guidance was provided.
- Research and development expense on the income statement was $219,816. Management separately described approximately $0.5 million of R&D investment, offset by approximately $0.3 million in government grant funds expected under award conditions. Grant receivable at quarter-end was $74,190.
- After quarter-end, ABTC completed the Tonopah claims acquisition on October 13, paying the second $4.0 million installment in cash. On October 18, it granted 26.5 million RSUs valued at $13.3 million, generally vesting over four years. In October and November it issued put notices for 2.5 million shares under its Tysadco purchase agreement; proceeds were not yet determined in the filing.
- Disclosure controls and internal control over financial reporting were deemed ineffective as of September 30, 2022. Reported material weaknesses involved control documentation, supervision and review of complex accounting, and segregation of duties. Management expected remediation during fiscal 2023 but gave no assurance of completion.
- A former chief of staff filed a breach-of-contract complaint in August 2022; the company said it believed the claims were without merit and had moved the case to federal court. Management reported no other known legal matter expected to have a material adverse effect.
- The company stated that financial statements do not include adjustments that might be necessary if it were unable to continue as a going concern. Its liquidity assessment is therefore important to monitor alongside its operating cash use and planned capital spending.
Investor facts to verify
- Whether the company can commercialize its recycling and lithium-extraction technologies, complete construction, and begin generating revenue.
- Actual cash burn, remaining construction and project commitments, and whether additional equity financing will be required.
- Receipt and conditions of government grant funding, and the relationship between reported R&D expense and management’s stated R&D investment.
- Completion of the internal-control remediation plan and any subsequent changes in identified weaknesses.
- Final proceeds from the Tysadco put notices, share dilution from financing and the 26.5 million RSU grant, and developments in the former employee lawsuit.