The following is a discussion of our financial condition and results of
operations and is intended to assist in the understanding and assessment of
significant changes and trends related to our results of operations and
financial position. This discussion should be read in conjunction with our
audited consolidated financial statements as of and for the years ended
Overview
We are a pure-play lithium company focused on supplying high performance lithium compounds to the fast-growing EV and broader battery markets. We have developed a proprietary technology to extract lithium from oilfield wastewater, which we believe will enable us to manufacture lithium compounds quickly, at an attractive cost, and with a minimal environmental footprint, which we expect to provide us with a competitive advantage over other lithium manufacturers. We believe this competitive advantage will enable us to capitalize on the acceleration of vehicle electrification and renewable energy adoption.
On
Prior to the Exchange Transaction, we were a business development company
engaged in project development and holdings through value-based investments and
collaborative partnerships, including a joint venture relationship with
We plan to establish our first lithium carbonate manufacturing facility in 2023, which will be capable of manufacturing up to 1,000 metric tons of LCE, and we plan to begin manufacturing battery-grade lithium compounds at such facility in the first half of 2024.
In order to meet our targets, management will focus on the achievement of several critical missions over the next year:
Site Selection. Our proprietary technology operates on a vastly smaller footprint compared to traditional lithium production. While conventional production facilities require up to 65 acres for solar evaporation brine extraction and 115 acres for hard rock mining per 1,000 metric tons of LCE production, our production facilities require only 1.4 acres and can be located in remote areas or co-located with existing oil mining operation sites.
In order to achieve the planned start of production in the first half of 2024, we will need to locate a suitable manufacturing site. To this end, we are currently in discussions with oil and gas producers and service providers.
Lithium feedstock. We are dependent on a continued supply of produced water. Currently, the disposal of produced water is a costly undertaking for oil well operators and carries a large environmental footprint. We believe our proprietary technology offers significant cost savings for oil well operators as water is cleaned and used for re-injection or other purposes.
The current
Sourcing of Components. We source the major components for our proprietary lithium extraction process from blue-chip international suppliers. Management currently anticipates timely access to all major components. However, supply chain difficulties as seen during late 2021 and early 2022 could delay production start dates. We have identified our major vendors and are currently in contract discussions.
Hiring of Key Personnel. While our production process is largely automated, we will require significant additions to our personnel to achieve production start targets. Key areas of expansion are anticipated to include management, research and development, sales, project management and administration. We currently have eight full-time employees and are in the process of hiring additional key personnel.
COVID-19
In
Results of Operation Year Ended Year Ended Dec 31,2022 Dec 31, 2021 Revenues Gross Revenues Cost of Goods Sold $ - $ 233 Gross Margin - (74 ) - 159 Operating Expenses Administrative and other operating expenses$ 16,703 $ 14,198 Depreciation 28,667 29,348 Management fees 160,690 36,000 Professional fees 145,626 49,609 Travel Expenses 9,785 - 361,471 129,155 Operating loss before other items (361,471 ) (128,996 ) Financing fees - restated (Note 8) (692,977 ) (2,771,908 ) Interest expense (1,750 ) (1,964 ) Loss from continuing operations (1,056,198 ) (2,902,868 ) Loss from discontinued operations (Note 14) (57,136 ) (16,251 ) Gain on deconsolidation 50,106 - Net loss (1,063,228 ) (2,919,119 )
Net loss attributed to non-controlling interest on discontinued operations
25,711 7,313 Net loss on continuing operations, attributed to shareholders (1,037,517 ) (2,911,806 Comprehensive loss - translation (2,715 ) (583 ) Net loss and comprehensive loss attributed to shareholders (1,040,232 ) (2,912,389 ) Loss per share of common stock -Basic and diluted$ (0.004 ) $ (0.012 ) Weighted average no. of shares of common stock -Basic and diluted 272,701,519 240,404,286
During the year ended
Operating expenses for the year ended
The increase in expenses during the year 2022 resulted in an operating loss of
We incurred financing costs of
Loss from discontinued operations for the year ended
Net loss for the year ended
Financial Condition
As of
Based on the nature of our business, management anticipates incurring operating losses for the foreseeable future. Management bases this expectation, in part, on the fact that the year 2023 and into early 2024 will be focused on the development of our first lithium production site. Our future financial results are also uncertain due to a number of factors, some of which are outside our control. These factors include, but are not limited to:
? The ability to raise additional funding; ? Inflation on equipment and raw materials; ? The development of lithium prices; ? The availability of produced water; ? The global demand for lithium; and ? The cost of maintaining or developing future lithium projects.
Due to our lack of operating history and present inability to generate revenues, our auditors have stated their opinion that substantial doubt currently exists about our ability to continue as a going concern. We will need to raise additional cash in order to fund ongoing operations over the next 12 months. However, there is no assurance that such funds will be available on acceptable terms, or at all.
Liquidity and Capital Resources
As of
During the year ended
During the year ended
Net Cash Generated from Financing Activities
During the year ended
Significant Accounting Estimates
The preparation of the consolidated financial statements in conformity with US GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of expenses during the reporting period. Management makes its best estimate of the ultimate outcome for these items based on historical trends and other information available when the financial statements are prepared. Changes in estimates are recognized in accordance with the accounting rules for the estimate, which is typically in the period when new information becomes available to management. Actual results could differ from those estimates.
A critical accounting estimate is defined as a financial statement item where significant judgment is required in the selection of accounting policies and the determination of estimates. The accounting estimates that require more significant judgment are included below:
1. Revenue recognition: We use judgment in determining the timing of revenue recognition and the amount of revenue to be recognized. This judgment is based on the timing of delivery, customer acceptance and other factors. Our revenue recognition policies are subject to periodic review and changes, and any changes could have a material impact on our financial statements. 2. Allowance for doubtful accounts: We estimate the allowance for doubtful accounts based on historical data, current economic conditions and other factors. The actual amount of uncollectible accounts may differ from our estimates, and any significant changes could impact our financial statements. 3. Inventory valuation: We estimate the value of inventory based on historical cost, estimated future demand and other factors. We regularly review our inventory and may write down the value if it is deemed to be obsolete or overvalued. Any significant changes to our inventory valuation could impact our financial statements. 4. Depreciation and amortization: We estimate the useful lives of our property, plant and equipment and intangible assets, and the residual values used in our depreciation and amortization calculations. Our estimates are subject to change based on economic conditions, technological advancements and other factors, and any changes could have a material impact on our financial statements. 5. Impairment of long-lived assets: We periodically review our long-lived assets for impairment and estimate the fair value of those assets. Our estimates are based on a variety of factors, including market conditions and future plans for the assets. If the estimated fair value of the assets is lower than the carrying value, we recognize an impairment charge. Any changes to our estimates could result in impairment charges and have a material impact on our financial statements. 6. Exchange rates and translational risks: We are exposed to exchange rate fluctuations and translational risks, particularly with respect to the Danish Krone. We estimate the impact of these fluctuations on our financial statements and make adjustments as necessary. The fluctuations in exchange rates could have a significant impact on the value of our assets and liabilities denominated in foreign currencies, and on our results of operations when translating these amounts into our functional currency. Any material changes in exchange rates could have a significant impact on our financial statements.
Going Concern
We have limited operations and have sustained operating losses resulting in a
deficit. In view of these matters, realization values may be substantially
different from carrying values as shown. We have accumulated a deficit of
Consolidation
The accompanying consolidated financial statements include the accounts of the
Company, its wholly owned subsidiaries
Equity Investments
We invest in equity securities of public and non-public companies for business and strategic purposes. Investments in public companies are carried at fair value based on quoted market prices. Investments in equity securities without readily determinable fair values are carried at cost, minus impairment, if any. We review our equity securities without readily determinable fair values on a regular basis to determine if the investment is impaired. For purposes of this assessment, we consider the investee's cash position, earnings and revenue outlook, liquidity and management ownership, among other factors in our review. If management's assessment indicates that an impairment exists, we estimate the fair value of the equity investment and recognize in current earnings an impairment loss that is equal to the difference between the fair value of the equity investment and its carrying amount.
Revenue Recognition
In
Recently issued accounting pronouncements
In
We adopt new pronouncements relating to US GAAP applicable to us as they are issued, which may be in advance of their effective date. Management does not believe that any pronouncement not yet effective but recently issued would, if adopted, have a material effect on the accompanying consolidated financial statements.
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