Arqit Quantum (US:ARQQ)2024-12-05 13:11Financial Performance - Arqit generated revenue from its principal business operations in the fiscal year ended September 30, 2021, but continues to incur net losses, with a net loss of $23.977 million for the year ended September 30, 2024 [362][372]. - Cash used in operating activities was $34.126 million for the year ended September 30, 2024, compared to $32.825 million in 2023 and $26.720 million in 2022, indicating an increasing trend in operational cash outflows [370][372]. - Net cash generated from financing activities was $11.188 million for the year ended September 30, 2024, a significant decrease from $44.853 million in 2023 and $22.176 million in 2022 [370][375]. Capital Raising Activities - Arqit issued 48,803 shares under its ATM Program in the year ended September 30, 2024, generating approximately $0.467 million, while in 2023, it issued 312,579 shares for approximately $11.5 million [364]. - In February 2023, Arqit completed a registered direct offering, selling 400,000 ordinary shares and generating proceeds of approximately $20.0 million [365]. - The company has established an ATM Program with an aggregate offering price of up to $30.0 million, allowing for future capital raises depending on market conditions [364]. Risk Management - Arqit is exposed to foreign exchange risk primarily with respect to British pounds sterling and Euro, managing this risk by holding bank accounts in these currencies [356]. - The company has no significant concentration of credit risk, as it places surplus cash with banks that have a minimum credit rating of A3/A- [355]. - Arqit has been managing liquidity risk by continuously monitoring cash flows and maintaining funding headroom above forecast peak requirements [357]. Regulatory and Reporting Considerations - The company is evaluating the benefits of relying on reduced reporting requirements under the JOBS Act, which may exempt it from certain obligations until September 3, 2026 [359]. Development Costs and Valuation - As of September 30, 2024, the carrying amount of capitalized development costs was $1.939 million, down from $3.414 million at September 30, 2023, and significantly lower than $40.291 million at September 30, 2022 [383]. - Arqit uses a Binomial Option Pricing Model for the fair value measurement of warrants, with assumptions disclosed in the audited consolidated financial statements [382]. - The fair value of share-based compensation is estimated using a Black Scholes valuation model, with inputs including expected life, volatility, and dividend yield [384]. - Compensation expense for RSUs is based on the market price of shares on the grant date and is expensed over a vesting period of one to five years [386]. - Deferred tax assets are recognized based on the likelihood of generating sufficient taxable earnings in future periods, impacting the realization of net deferred tax assets [387]. Discontinuation of Operations - The decision to discontinue the satellite division involves increased judgment and estimation uncertainties regarding recognized provisions [388]. - Judgments are required to estimate the expected fair value of assets held for sale until a sale is contractually concluded, with potential material changes due to economic conditions [389].