BASA.OTC.PinkBasanite, INC
10-Q: Basanite Inc. Reports Q1 2025 Results: Revenue Declines Amidst Ongoing Financial Challenges
Sentiment:
Quarterly Report
Basanite Inc.'s Q1 2025 results reveal a decrease in revenue and continued net losses, highlighting the company's struggle with manufacturing constraints and limited working capital.
Delay expectedThe company is in default of its obligations under the terms of the Companys private placement which closed in August 2021 to file a registration statement for an underwritten public offering and concurrently listing on a national stock exchange.The note was not paid by its due date.
Capital raiseThe company will attempt to raise capital through third party financing, including potential private or public offerings of our securities (including a potential underwritten offering and uplist to a national exchange) as well as bridge or other loan arrangements.The company has recently entered into several convertible promissory notes to help fund operations and will require additional working capital in the short term.
Worse than expectedRevenue decreased from $59,449 to $27,974.Net loss increased from $287,958 to $439,195.
Summary
- Basanite, Inc. reported its financial results for the quarter ended March 31, 2025.
- The company's revenue decreased to $27,974 from $59,449 in the same period last year.
- The cost of goods sold increased to $14,759 from $4,259 in the prior year.
- The company experienced a net loss of $439,195, compared to a net loss of $287,958 in the prior year.
- The basic and diluted net loss per share was $(0.02) compared to $(0.00) in the prior year.
- The company's accumulated deficit as of March 31, 2025, was $58.4 million.
- The company has a working capital deficiency of $9.2 million.
- The company's cash and cash equivalents at the end of the period were $6,946.
- The company's management has identified material weaknesses in internal controls related to U.S. GAAP expertise and segregation of duties.
- The company is actively searching for a suitable manufacturing facility after terminating a letter of intent for a facility in Twinsburg, Ohio.
- The company is in negotiations with noteholders to remedy past-due promissory notes.
- The company is pursuing additional product and facility qualifications and approvals.
- The company is in default of its obligations under the terms of the Companys private placement which closed in August 2021 to file a registration statement for an underwritten public offering and concurrently listing on a national stock exchange.
Sentiment
Score: 2
Explanation: The document paints a negative picture due to declining revenue, increasing losses, internal control weaknesses, and going concern doubts. The company's financial situation appears precarious.
Positives
- The company is pursuing additional product and facility qualifications and approvals, which are critical to market acceptance.
- The company is actively searching for a suitable manufacturing facility.
- The company is in negotiations with noteholders to remedy past-due promissory notes.
Negatives
- Basanite's revenue decreased significantly in Q1 2025 compared to the same period last year.
- The company's net loss increased, indicating worsening financial performance.
- The company's accumulated deficit continues to grow, reflecting ongoing losses.
- The company's cash position is very weak, raising concerns about its ability to meet short-term obligations.
- The company identified material weaknesses in internal controls, indicating potential risks in financial reporting.
- The company is in default of its obligations under the terms of the Companys private placement which closed in August 2021 to file a registration statement for an underwritten public offering and concurrently listing on a national stock exchange.
Risks
- The company's limited manufacturing capacity and working capital constraints may hinder its ability to fulfill orders.
- The company's ability to continue as a going concern is in substantial doubt due to its history of net operating losses and negative cash flow.
- The company may be unable to secure required capital at all or on terms acceptable to it.
- The company's internal control weaknesses could lead to misstatements in its financial reports.
- The company is subject to legal proceedings, including a lawsuit against Upstate Custom Products, LLC and a pending matter of litigation with GS Capital Partners of New York regarding the liquidated damages fees from the 2021 PIPE investment.
- The company is in default of its obligations under the terms of the Companys private placement which closed in August 2021 to file a registration statement for an underwritten public offering and concurrently listing on a national stock exchange.
Future Outlook
The company expects operating losses to continue in the short term and requires additional financing for expanding its manufacturing capability and generally scaling its business until it can generate sufficient revenues to achieve positive cash flow.
Industry Context
The document mentions macroeconomic factors pressuring the construction industry to consider alternative reinforcement materials, such as the increasing need for global infrastructure repair, design trends towards increasing the lifespan of projects and materials, the global interest in promoting the use of sustainable products, and increasing consideration of both the long-term costs and environmental impacts of material selections.
Management Changes
| Role | Previous Person | New Person | Effective Date | Reason |
|---|---|---|---|---|
| Chief Executive Officer | Ali Manav | Mike Nelson | 2025-03-18 | Appointment |
| Chief Executive Officer | Mike Nelson | Ronald LoRicco, Sr. (interim) | 2025-04-18 | Termination of appointment and reappointment of Ronald LoRicco, Sr. |
Legal Proceedings
- The Company has filed a lawsuit in the state of Florida against Upstate Custom Products, LLC regarding the manufacturing of protrusion machines.
- The Company was served notice of a pending matter of litigation with GS Capital Partners of New York regarding the liquidated damages fees from the 2021 PIPE investment.
- The company has received demand letters from a number of vendors seeking payment of past due amounts.
Related Party Transactions
- The company has entered into multiple promissory notes with board members and related parties.
- The Richard A. LoRicco Sr. and Lucille M. LoRicco Irrevocable Insurance Trust DTD 4/28/95, Louis Demaio as Trustee (the Trust) is the holder of $ 750,000 of the principal amount of this note.
Stakeholder Impact
- Shareholders face significant risk due to the company's financial instability and potential inability to continue as a going concern.
- Employees may be affected by potential reductions in operating activities or business failure.
- Customers may experience disruptions in product supply due to manufacturing constraints.
- Suppliers and creditors face the risk of non-payment due to the company's limited working capital.
Next Steps
- The company will continue its fundraising efforts until it has obtained positive cash flow to cover its expenses.
- The company is actively searching for a suitable manufacturing facility.
- The company will continue to pursue additional product and facility qualifications and approvals.
- The company is in negotiations with noteholders to remedy past-due promissory notes.
Key Dates
| Date | Description |
|---|---|
| 2019-01-18 | Company entered into an agreement to lease office and manufacturing space in Pompano Beach, Florida. |
| 2019-03-25 | Company entered into an amendment to the lease agreement to increase the square footage of leased premises. |
| 2020-01-16 | Company entered into a demand note agreement with Board Chairman, Michael V. Barbera. |
| 2020-04-13 | Addendum executed changing the terms of the note to a convertible note payable. |
| 2020-08-03 | Company issued a secured convertible promissory note to certain investors. |
| 2021-02-12 | Company exchanged the original debt for a newly issued amended and restated secured convertible promissory note. |
| 2021-04-02 | Company issued a promissory note with Paul Sallarulo, a member of the Board of Directors. |
| 2021-04-02 | Company issued a promissory note with Michael V. Barbera, Chairman of the Board. |
| 2021-08-17 | Company conducted the closing of a private placement offering to accredited investors. |
| 2022-03-31 | The Company is required to pay liquidated damages in the amount of $ 53,345 per month starting in March 2022, and the maximum amount of such liquidated damages could be approximately $ 480,000 if such filing is not made. |
| 2022-08-31 | Company issued a promissory note to a board member. |
| 2022-09-09 | Company issued multiple promissory notes to board members and strategic partners. |
| 2022-09-15 | Company extended the debt for a newly issued amended and restated secured convertible promissory note. |
| 2023-02-14 | Company issued a promissory note to a board member. |
| 2023-03-03 | Company issued a promissory note to a board member. |
| 2023-03-24 | Company issued a promissory note to a board member. |
| 2023-04-12 | Company issued a promissory note to a board member. |
| 2023-04-28 | Company issued a promissory note to a board member. |
| 2023-05-12 | Company issued a promissory note to a board member. |
| 2023-06-05 | Company issued a promissory note to a board member. |
| 2023-07-25 | Company issued a promissory note to a board member. |
| 2023-09-11 | Company issued multiple promissory notes to board members and an advisor. |
| 2023-11-02 | Company issued a promissory note to a board member. |
| 2023-12-12 | Company issued a promissory note to a board member. |
| 2024-01-09 | Company issued a promissory note to a board member. |
| 2024-03-06 | Company issued a promissory note to a board member. |
| 2024-03-21 | Company issued a promissory note to a board member. |
| 2024-05-12 | Company issued a promissory note to a board member. |
| 2024-06-26 | Company issued a promissory note to a board member. |
| 2024-08-13 | Company issued a promissory note to a board member. |
| 2024-09-06 | Company issued a promissory note to a board member. |
| 2024-10-02 | Company issued a promissory note to a board member. |
| 2024-12-13 | Company issued a promissory note to a board member. |
| 2025-03-31 | End of the quarterly period. |
| 2025-04-25 | Company determined the potential facility in Twinsburg Ohio was not sufficient for manufacturing activities. |
| 2025-04-28 | The Company by way of the Board of Directors voted to terminate the consulting agreement with Ali Manav. |
| 2025-05-15 | Date of the report. |
Keywords
Basanite, financial results, Q1 2025, revenue, net loss, BasaFlex, Basalt fiber, internal controls, promissory notes, manufacturing facility, going concern
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