5E Advanced Materials(US:FEAM)2024-11-13 21:30Financial Performance - For the three months ended September 30, 2024, total costs and expenses increased by $5.198 million, or 67%, to $12.911 million compared to $7.713 million in the same period of 2023[72]. - The company reported a net loss of $12.859 million for the three months ended September 30, 2024, compared to a net loss of $9.370 million in the same period of 2023, representing a 37% increase in losses[72]. - Interest income decreased by $109 thousand, or 83%, to $22 thousand, reflecting a decline in average cash and cash equivalent balances[79]. - Other income decreased by $2 thousand, or 67%, to $1 thousand, primarily due to reduced third-party use of hydrology wells[80]. - Interest expense increased by $0.4 million, or 21%, to $2.3 million, driven by a higher interest rate of 10% on the Convertible Notes and an increase in the principal balance[83]. - Net cash used in operating activities was $6.4 million, a decrease of approximately $0.5 million, or 7%, compared to the prior year[87]. Capital and Financing Activities - The company completed an equity offering in August 2024, raising approximately $3.0 million in net proceeds after deducting fees and expenses[65]. - In September 2024, the company issued new senior secured convertible notes totaling $6.0 million, resulting in approximately $5.5 million in net proceeds after costs[66]. - Cash flows from financing activities included approximately $3.1 million from the August 2024 Equity Offering and $5.7 million from the issuance of September 2024 Notes[89]. - The company entered into an equity distribution agreement allowing the sale of up to $15.0 million of common stock, but did not sell any shares during the three months ended September 30, 2024[92]. - The company needs to maintain a cash balance in excess of $7.5 million to avoid default under the Amended and Restated Note Purchase Agreement, with substantial doubt regarding its ability to continue as a going concern[96]. - The company is exploring various financing strategies, including equity or debt financing, government funding, and strategic alliances, but there is no assurance of securing additional financing[96]. Production and Operational Updates - The company maintained boric acid production at one short ton per day, with continuous improvements in production rates and product specifications[62]. - The company anticipates maintaining current production rates while refining the design of its commercial-scale facility[64]. - The company has begun to remove metal salts, with calcium levels exceeding 20,000 ppm, and is exploring calcium chloride as a potential byproduct[64]. - For the three months ended September 30, 2024, small-scale facility operating costs totaled $1.6 million, including $1.2 million in salaries and benefits, $0.2 million in raw materials, and $0.2 million in maintenance and upkeep[75]. - Project expenses for the three months ended September 30, 2024, decreased by $29 thousand, or 2%, primarily due to lower compliance and testing costs[73]. Administrative and Compliance Matters - General and administrative expenses decreased by $1.2 million, or 21%, to $4.5 million compared to the prior year, primarily due to the reclassification of salaries related to the small-scale facility[76]. - Depreciation and amortization expense increased by $4.9 million due to the commencement of commercial operations of the small-scale facility on April 1, 2024[78]. - There were no significant changes in critical accounting policies during the three months ended September 30, 2024[97]. - The company evaluated its disclosure controls and procedures and concluded they were effective as of September 30, 2024[101]. - No changes in internal control over financial reporting were identified that materially affected the company's internal control for the quarter ended September 30, 2024[102]. - The company is not currently involved in any material pending legal proceedings[102]. Future Plans and Commitments - As of September 30, 2024, the company had purchase order commitments of approximately $4.3 million primarily for engineering services and raw materials[94]. - The company plans to operate the small-scale facility (SSF) and progress customer qualification programs, which will require additional capital over the next 12 months[95]. - Future capital requirements include optimizing well-field design to reduce mining capital and operational expenditures through advanced drilling techniques[96]. - The company hired two strategic executives in October 2024 to enhance its commercial team and support market expansion initiatives[61].