American Battery Technology Company — Form 10-Q Summary
Reporting period: Three months ended September 30, 2021, the company’s fiscal 2022 first quarter (unaudited). The filing describes a pre-revenue startup developing domestic battery-metal resources and extraction technologies, and a lithium-ion battery recycling business. It reports no revenue in either the current or comparable quarter.
Financial results and position
| Metric | Three months ended September 30, 2021 | Comparable 2020 period |
|---|---|---|
| Revenue | $0 | $0 |
| Operating expenses | $19.99 million | $2.41 million |
| Net loss | $19.97 million | $3.15 million |
| Basic and diluted loss per share | $0.03 | $0.01 |
| Net cash used in operations | $2.60 million | $1.07 million |
| Net cash used in investing | $5.58 million | $0.002 million |
| Net cash provided by financing | $41.25 million | $1.54 million |
- Liquidity: Cash was $45.91 million at September 30, up from $12.84 million at June 30, 2021. Working capital was $45.25 million, versus $12.31 million. Current liabilities were $2.45 million; total assets were $60.21 million.
- Capital structure and debt: The balance sheet reports current liabilities, including $2.24 million of accounts payable and accrued liabilities and $0.21 million due to related parties; it shows no separate debt balance. Management says convertible debentures were settled or converted. Common shares outstanding were 629.8 million at quarter-end and 631.8 million as of November 12, 2021.
- Cash uses and investment: Investing outflows included $3.41 million for equipment and $2.17 million for water rights. Property and equipment totaled $8.70 million and water-rights intangible assets $3.82 million at quarter-end.
Material changes and financing
- Operating expenses rose substantially year over year, mainly due to share-based compensation and shares issued for services, higher payroll, and increased overhead and legal costs as operations and plant development expanded. The company reported $9.48 million in shares issued to officers and directors for services and accrued $3.05 million of board compensation in shares.
- On September 27, the company completed a registered direct offering of 25.39 million common shares with warrants, reporting net proceeds of $36.94 million. It also reported $3.99 million net proceeds from a separate share-purchase arrangement and $0.32 million from warrant exercises. Financing proceeds supported the pilot plant, operations, and research and development.
- Quarter-end warrants outstanding totaled 49.96 million, with a weighted-average exercise price of $0.99, representing potential future dilution.
- The company purchased 173.8 acres of water rights in Fernley, Nevada for $2.17 million, intended to support the planned recycling plant. It also recorded a $0.19 million impairment on land.
Outlook, risks, and unusual items
- Management expects revenue only after recycling-facility operations begin or mineral resources and extraction technology are sufficiently validated and commercialized. No revenue or production timetable is quantified in the filing.
- Management believes available cash and recent financing will fund working-capital needs for at least one year from the financial statements’ issuance date. It cautions that cash consumption may continue and future financing may be needed, with no assurance of raising it on acceptable terms or at all.
- Disclosure controls and internal control over financial reporting were deemed ineffective at September 30, 2021, due to material weaknesses in control documentation, review of complex accounting, and segregation of duties. Management expected remediation during fiscal 2022, including additional personnel, ERP investment, training, and documented procedures.
- Litigation includes a continuing Nevada dispute involving shares and a former CEO, plus a Utah complaint concerning restricted shares; the Utah case was stayed while the Nevada matter proceeds. Management says it is unaware of other claims expected to have a material adverse effect.
- Subsequent events included 1.0 million shares issued for services to a board member and conversions of Series C preferred shares into common shares. The filing also notes COVID-19 effects were not currently determinable.
Important facts for investors to verify
- Progress, cost, and timing for construction and commissioning of the pilot plant and recycling facility, and when revenue-generating operations may begin.
- Cash burn, remaining runway, and whether additional financing will be required; also review the terms and potential dilution from warrants and other equity awards.
- Remediation of the disclosed material weaknesses and whether financial reporting controls become effective.
- Status and potential financial exposure from the disclosed litigation.
- Share-based compensation figures: the filing reports differing values for services shares in different sections, including $14.22 million in the financial discussion and $14.02 million in the unregistered-sales disclosure. Reconcile these amounts and related share counts.