American Battery Technology Company — Form 10-Q Summary
Reporting period: Fiscal third quarter and nine months ended March 31, 2023. The filing is dated May 15, 2023. The company is an early-stage battery-materials and lithium-ion battery recycling business and reported no revenue.
Financial position and results
| Metric | Period/current value | Comparable/prior value |
|---|---|---|
| Revenue | No revenue generated | No revenue generated |
| Operating expenses | $14.4 million, nine months ended March 31, 2023 | $26.9 million, nine months ended March 31, 2022 |
| Net loss | $14.2 million; $0.02 per share, nine months | $26.7 million; $0.04 per share, nine months |
| Third-quarter net loss | $5.6 million; $0.01 per share | $2.6 million; reported as $0.00 per share |
| Cash | $12.6 million at March 31, 2023 | $29.0 million at June 30, 2022 |
| Cash used in operations | $10.8 million, nine months | $7.3 million, nine months |
| Cash used in investing | $18.0 million, nine months | $11.0 million, nine months |
| Cash from financing | $12.4 million, nine months | $41.7 million, nine months |
| Total assets / liabilities | $57.4 million / $3.4 million at March 31, 2023 | $52.9 million / $3.2 million at June 30, 2022 |
| Working capital | $11.1 million at March 31, 2023 | $26.8 million at June 30, 2022 |
Margins are not meaningful because the company has not generated revenue. The filing reports no material interest-bearing debt; long-term liabilities were $86,030, while lease liabilities were $204,081. Operating lease costs for the nine months were $172,331.
Material changes and business developments
- Nine-month operating expenses fell 47% year over year, primarily because prior-year expenses included substantially more shares issued for services and stock-based compensation. Research and development expense increased to $3.5 million from $0.6 million; exploration expense increased to $1.5 million from $0.5 million.
- Cash declined by $16.4 million from June 30, 2022, reflecting operating burn and investment in facilities and mineral properties, partly offset by $12.4 million of financing proceeds. The company spent approximately $8.0 million acquiring Tonopah mining claims and $3.9 million on property, construction, and equipment; investing cash flows also included a $6.1 million deposit related to a facility and equipment transaction.
- The company issued 14.3 million shares in a private placement for net proceeds of approximately $8.9 million and issued 6.0 million shares under its share purchase agreement for approximately $3.6 million. It granted 27.2 million restricted share units during the nine months; 22.98 million potential shares from outstanding RSUs and 69.64 million warrants remained outstanding at March 31, 2023.
- At quarter end, the company had $3.3 million in outstanding purchase-order commitments for capital equipment and related services.
Outlook, risks, and unusual items
- Management expected to begin battery-recycling operations in the quarter ending September 30, 2023. The company was constructing its first integrated recycling facility and developing lithium extraction and processing projects. It had been selected for additional federal grant awards, but was still negotiating the award contract terms; those awards should not be treated as finalized funding.
- The company disclosed substantial doubt about its ability to continue as a going concern for 12 months after issuance. It had limited operations, no revenue, negative operating cash flow, and an accumulated deficit of $152.9 million. Continued operation depends on profitable operations and obtaining future financing; there is no assurance financing will be available on favorable terms.
- Subsequent to quarter end, the company reported net proceeds of $3.425 million to date from a private placement intended to raise up to $5.0 million. It also reported paying $13.0 million and issuing 11.0 million shares toward the acquisition of a Nevada recycling facility and related equipment; a further $2.0 million cash payment was due May 26, 2023. Closing depended on conditions including the selling affiliate receiving at least $6.6 million net proceeds from resale of shares. A contingent sale-leaseback for $15.0 million was also agreed, subject to successful completion of the acquisition and transfer of title.
- Management said disclosure controls and internal control over financial reporting were not effective as of March 31, 2023, identifying weaknesses in control documentation, supervision and review of complex accounting, and segregation of duties. Remediation efforts include additional financial staff, ERP implementation, and improved policies and IT controls; management expected remediation during fiscal 2024 but gave no assurance of completion.
- The company reported no known legal proceedings expected to have a material adverse effect, and approximately $20,000 of mine reclamation and closure financial-assurance obligations.
Important facts for investors to verify
- Whether the recycling facility acquisition closed, whether its conditions were satisfied, and whether the contemplated sale-leaseback proceeded.
- Actual facility commissioning and operating start dates, and whether operations generate revenue and cash flow as planned.
- Cash use, remaining liquidity, capital commitments, and the availability and terms of additional financing.
- Final status and funding terms of the announced grant selections.
- Progress in remediating material weaknesses in internal controls and the potential dilution from warrants, RSUs, and future equity financing.