10-Q: American Battery Materials Inc. Reports Q3 2024 Results Amidst Financial Challenges

Sentiment:

Quarterly Report 14 November 2024 4:05 PM

📋All filings for American Battery Materials, INC

American Battery Materials Inc. reported a net loss of $2.04 million for the nine months ended September 30, 2024, alongside ongoing concerns about its ability to continue as a going concern.

Delay expectedThe maturity dates of several promissory and convertible notes were extended, indicating potential delays in repayment.

Capital raiseThe company's ability to continue as a going concern is dependent on obtaining additional financing.The company hopes to raise additional financing, potentially through the sale of debt or equity instruments, or a combination, to fund its operations for the next 12 months.The company may need to finance operations by offering any combination of equity offerings, debt financing, collaborations, strategic alliances or other licensing arrangements.

Worse than expectedThe company's net loss, working capital deficit, and accumulated losses indicate worse than expected financial performance.The going concern warning raises significant doubts about the company's ability to continue operations.

Summary

American Battery Materials Inc. reported a net loss of $627,264 for the three months ended September 30, 2024, compared to a net loss of $943,024 for the same period in 2023.
The company's net loss for the nine months ended September 30, 2024, was $2,041,882, compared to a net loss of $2,462,799 for the same period in 2023.
General and administrative expenses decreased to $1,215,845 for the nine months ended September 30, 2024, from $2,165,494 in the same period of 2023, primarily due to lower professional fees.
The company's operating loss for the nine months ended September 30, 2024, was $1,215,845.
Interest expense increased to $295,572 for the nine months ended September 30, 2024, from $94,771 in the same period of 2023.
As of September 30, 2024, the company had a working capital deficit of $5,236,132 and accumulated losses of $22,281,521.
The company's ability to continue as a going concern is dependent on obtaining additional financing.
The company has been focused on the extraction, refinement, and distribution of technical minerals, particularly lithium, from its mining claims in Utah.
The company owns 743 placer claims over 14,320 acres in the Lisbon Valley of Utah.
The company is exploring advanced brine extractive technology methodologies for mineral extraction.

Sentiment

Score: 3

Explanation: The document indicates significant financial challenges, including a going concern warning, substantial losses, and a working capital deficit. While there are some positive aspects, such as reduced operating expenses, the overall sentiment is negative due to the company's precarious financial situation.

Positives

The company's net loss decreased for both the three and nine month periods ended September 30, 2024, compared to the same periods in 2023.
General and administrative expenses decreased significantly, indicating cost-cutting measures.
The company has expanded its mining claims to 743 placer claims over 14,320 acres.

Negatives

The company has a significant working capital deficit of $5,236,132.
The company has accumulated losses totaling $22,281,521.
The company's ability to continue as a going concern is dependent on obtaining additional financing.
Interest expense increased significantly for the nine months ended September 30, 2024.
The company recorded a loss on settlement of liabilities of $516,083 during the nine months ended September 30, 2024.

Risks

The company's ability to continue as a going concern is dependent on obtaining additional financing, which is not guaranteed.
The company may be unable to successfully restructure its debt obligations if it fails to obtain additional financing.
The company faces an increasingly challenging liquidity situation that has limited its ability to execute its operating plan.
The company has material weaknesses in its internal control over financial reporting.
The company has no mineral reserves as defined by Regulation S-K Item 1300 and has had no mining revenue to date.
The company's results of operations may be adversely affected by various factors, including economic uncertainty, inflation, and geopolitical instability.

Future Outlook

The company will need funding to support continuing operations and its growth strategy, and there is no assurance that it will be able to raise sufficient capital.

Management Comments

Management believes the consolidated financial statements fairly represent the company's financial condition, results of operations, and cash flows despite material weaknesses in internal controls.
Management is seeking to improve controls and procedures to remediate the identified deficiencies.

Industry Context

The company is operating in the renewable energy sector, specifically focused on lithium extraction, which is a critical component for batteries used in many technology products and markets. The company's focus on environmentally responsible extraction methods aligns with current industry trends.

Comparison to Industry Standards

The company's financial performance is weak compared to established mining companies, as it is still in the exploration stage and has not generated any revenue.
The company's reliance on debt financing and the issuance of equity for debt settlements is not uncommon for early-stage mining companies, but the level of debt and the going concern warning are concerning.
The company's focus on advanced brine extraction technology is in line with industry trends towards more sustainable and cost-effective mining practices, but the company has not yet demonstrated the viability of this technology.
The company's lack of proven reserves and the going concern warning are significant risks that are not typical of more established mining companies.

Related Party Transactions

The company issued promissory notes and convertible notes to related parties.
The company forgave promissory notes and accrued interest from related parties in exchange for new convertible notes.
The company issued short-term promissory notes to a related party.
The company increased the principal of a related party convertible note under the Most Favored Nation (MFN) provision.

Stakeholder Impact

Shareholders face significant risk due to the company's financial instability and potential dilution from future equity offerings.
Employees may be impacted by the company's financial challenges and potential restructuring.
Creditors face the risk of non-payment or restructuring of debt obligations.
Customers and suppliers are not directly impacted at this stage as the company is still in the exploration phase.

Next Steps

The company needs to secure additional financing to continue operations.
The company needs to continue the development of its business plans.
The company needs to satisfy its obligations on a timely basis.
The company needs to improve its internal controls over financial reporting.

Key Dates

Date	Description
2011-07-26	Stockholders approved the 2011 Equity Incentive Plan.
2014-12-19	The company issued a $40,000 promissory note.
2016-03-29	The company issued a $30,000 promissory note.
2016-09-23	The company issued a $30,000 unsecured promissory note.
2016-11-20	The company issued a $50,000 unsecured promissory note.
2017-11-16	The Board of Directors approved an increase of 33,333 shares to be made available for issuance under the 2011 Equity Incentive Plan.
2021-11-05	The company acquired the rights to 102 Federal Mining Claims in Utah.
2022-10-20	The company filed an amendment to its Certificate of Incorporation to change its name and increase the number of authorized shares.
2023-01-01	Start of the period for financial comparisons.
2023-02-01	The company entered into a convertible promissory note agreement with a related party.
2023-04-25	The company formed Mountain Sage Minerals, LLC.
2023-05-01	The company's name was officially changed to American Battery Materials, Inc. and the trading symbol changed to BLTH.
2023-06-01	The company entered into a Merger Agreement with Seaport Global Acquisition II Corp.
2023-08-04	The company filed an Amendment to the Certificate of Incorporation to effect a reverse stock split.
2023-12-08	The company effectuated a reverse stock split of the common stock by a ratio of one-for-300.
2023-12-29	A short-term promissory note was bought by another holder.
2023-12-31	End of the fiscal year for financial comparisons.
2024-01-01	Start of the period for financial comparisons.
2024-03-21	Two promissory note agreements with a related party were forgiven.
2024-03-22	One promissory note was forgiven by noteholder.
2024-03-28	One promissory note agreement was amended.
2024-05-16	Start date of issuance of five short-term promissory notes to a related party.
2024-08-28	End date of issuance of five short-term promissory notes to a related party.
2024-09-30	End of the quarterly period for this report.
2024-10-07	The company issued a convertible promissory note for $50,000.
2024-10-16	The non-binding letter of intent with a SPAC expired without a completed agreement.
2024-10-21	The company issued a convertible promissory note to a related party for $25,000.
2024-10-23	Multiple convertible and promissory notes were amended and extended.
2024-11-14	Date of the report.

Keywords

lithium, mining, brine extraction, mineral claims, financial results, going concern, debt, convertible notes, promissory notes, working capital, net loss

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