Comstock(LODE) - 2022 Q1 - Quarterly Report

PART I – FINANCIAL INFORMATION Financial Statements The company reported a $6.5 million net loss for Q1 2022, a significant decline from prior year's net income, driven by increased expenses and impairment charges as it pivots to decarbonization technologies Condensed Consolidated Balance Sheets Total assets decreased to $115.1 million by March 31, 2022, primarily due to reduced cash and investments, leading to a decline in stockholders' equity Condensed Consolidated Balance Sheet Highlights (Unaudited) | Balance Sheet Item | March 31, 2022 | December 31, 2021 | | :--- | :--- | :--- | | Cash and cash equivalents | $2,249,007 | $5,912,188 | | Total current assets | $10,184,360 | $13,828,989 | | Total Assets | $115,119,393 | $126,954,632 | | Total current liabilities | $22,088,196 | $23,909,510 | | Total Liabilities | $33,264,574 | $33,984,110 | | Total Stockholders' Equity | $81,854,819 | $92,970,522 | Condensed Consolidated Statements of Operations The company reported a $6.5 million net loss for Q1 2022, a reversal from prior year's net income, primarily due to increased operating expenses and significant impairment charges Statement of Operations Summary (Unaudited) | Metric | Three Months Ended 03/31/22 | Three Months Ended 03/31/21 | | :--- | :--- | :--- | | Revenue | $54,625 | $48,500 | | Total operating expenses | $4,442,713 | $(349,258) | | Income (loss) from operations | $(4,388,088) | $397,758 | | Impairment of investments and intangible assets | $(4,476,889) | $— | | Net income (loss) | $(6,547,023) | $8,188,231 | | Net income (loss) per share - diluted | $(0.09) | $0.22 | Condensed Consolidated Statements of Changes in Stockholders' Equity Stockholders' equity decreased to $81.9 million by March 31, 2022, primarily due to the $6.5 million net loss and the cancellation of 3.5 million common shares - A significant event during the quarter was the rescission of the LP Biosciences (LPB) transaction, which resulted in 3,500,000 shares of common stock being returned to the company and cancelled[16] - The net loss for the quarter of $6.5 million directly reduced the accumulated deficit and total stockholders' equity[16] Condensed Consolidated Statements of Cash Flows The company experienced a $3.7 million net decrease in cash during Q1 2022, ending with $2.2 million cash, primarily due to cash used in operating activities Cash Flow Summary (Unaudited) | Cash Flow Activity | Three Months Ended 03/31/22 | Three Months Ended 03/31/21 | | :--- | :--- | :--- | | Net cash used in operating activities | $(3,861,238) | $(2,207,298) | | Net cash used in investing activities | $(226,275) | $(3,245,343) | | Net cash provided by financing activities | $424,332 | $13,315,506 | | Net increase (decrease) in cash | $(3,663,181) | $7,862,865 | | Cash at end of period | $2,249,007 | $10,294,809 | Notes to Condensed Consolidated Financial Statements The notes detail the company's strategic pivot to decarbonization technologies, significant investment impairments, the rescission of the LP Biosciences transaction, and the reacquisition of Comstock Mining LLC - The company has transformed its business to focus on technologies for decarbonization and circularity, converting waste and renewable resources into fuels and electrification products[22][25] - Management noted that recurring net losses and a decrease in cash raise substantial doubt about the company's ability to continue as a going concern, though they believe they have sufficient funds for the next 12 months through planned asset sales and equity offerings[29] - During Q1 2022, the company fully impaired its investments in Mercury Clean Up LLC ($1.96 million) and MCU Philippines, Inc. ($0.49 million), along with a related note receivable ($1.63 million), after determining future cash flows were not recoverable[73][76] - On March 31, 2022, the company reacquired Comstock Mining LLC from Tonogold by extinguishing a $6.65 million note receivable, with Tonogold retaining an option to repurchase the entity[69][71] Management's Discussion and Analysis of Financial Condition and Results of Operations Management discusses the company's strategic pivot to renewable energy, attributing the $6.5 million net loss in Q1 2022 to increased expenses, impairments, and changes in derivative values, while outlining plans to address liquidity - The company has transformed its business to focus on commercializing technologies that convert under-utilized natural resources into renewable fuels and electrification products, with a goal of generating over $16 billion in annualized revenue by 2030[158][166][167] Key Operational Changes (Q1 2022 vs Q1 2021) | Item | Q1 2022 | Q1 2021 | Change Explanation | | :--- | :--- | :--- | :--- | | Net Income (Loss) | ($6.5M) | $8.2M | Driven by higher expenses, impairments, and lower derivative gains | | SG&A Expense | $2.4M | ($0.5M) | Increase from new employee costs from acquisitions and absence of prior year positive adjustments | | R&D Expense | $1.2M | $0 | New costs related to developing pilot systems for biomass and battery recycling | | Impairment Losses | $4.5M | $0 | Impairment of MCU, MCU-P, and FPC investments | - The company ended Q1 2022 with a working capital deficit of $14.2 million (net of cash) and plans to fund operations through existing cash, technology sales, asset sales, and a new $10 million equity purchase agreement with Leviston Resources LLC[188][190][192] Quantitative and Qualitative Disclosures About Market Risk No material changes in market risks were reported since the 2021 Annual Report, with interest rate risk considered limited due to the repayment of all long-term debt - The company's risk from fluctuating interest rates is limited because it repaid all outstanding long-term debt in March 2021[198] Controls and Procedures Management concluded that disclosure controls and procedures were effective as of March 31, 2022, with no material changes to internal control over financial reporting during the quarter - The CEO and CFO concluded that the company's disclosure controls and procedures were effective as of March 31, 2022[199] - No changes occurred during the quarter that materially affected, or are reasonably likely to materially affect, the company's internal control over financial reporting[200] PART II – OTHER INFORMATION Legal Proceedings The company is subject to environmental laws and regulations, with other legal proceedings detailed in Note 10 to the financial statements - Details on legal proceedings, including the settlement of a wrongful termination lawsuit, are disclosed in Note 10 of the financial statements[117][204] Risk Factors No new risk factors were identified beyond those disclosed in the company's 2021 Annual Report on Form 10-K - There are no new risk factors reported for the quarter[205] Unregistered Sales of Equity Securities and Use of Proceeds The company reported no unregistered sales of equity securities during the period - None[206] Defaults Upon Senior Securities The company reported no defaults upon senior securities - None[207] Mine Safety Disclosures Required mine safety disclosures, as per the Dodd-Frank Act, are included in Exhibit 95 of this report - Required mine safety disclosures are provided in Exhibit 95[208] Other Information The company reported no other information for this item - None[209] Exhibits This section lists the exhibits filed with the Form 10-Q, including officer certifications, mine safety disclosures, and the interactive data file - The report includes required exhibits such as CEO/CFO certifications (Exhibits 31.1, 31.2, 32.1, 32.2), Mine Safety Disclosures (Exhibit 95), and the Interactive Data File (Exhibit 101)[210][212]