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LIQUIDITY AND GOING CONCERN | 12 Months Ended
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Dec. 31, 2024
LIQUIDITY AND GOING CONCERN |
LIQUIDITY AND GOING CONCERN |
2. | LIQUIDITY AND GOING CONCERN
The consolidated financial statements of the Company have been prepared on a “going concern” basis, which means that the continuation of the Company is presumed even though events and conditions exist that, when considered in the aggregate, raise substantial doubt about the Company’s ability to continue as a going concern because it is possible that the Company will be required to adversely change its current business plan or may be unable to meet its obligations as they become due within one year after the date that these consolidated financial statements are issued. The Company last recorded revenue from operations in 2009, and as such, Westwater is subject to all the risks associated with a development stage company. Management considered the following events and conditions in its going concern analysis. As of December 31, 2024, current liabilities exceeded current assets. Further, the Company last recorded revenue from operations in 2009. The Company expects to continue to incur cash losses as a result of construction activity at the Kellyton Graphite Plant and general and administrative expenses until operations commence at the Kellyton Graphite Plant. If financing is not available to fund the construction of Phase I of the Kellyton Graphite Plant through equity and debt capital markets or alternative financing sources, the Company may be required to reduce or severely curtail operations, change its planned business development strategies related to the Coosa Graphite Deposit and Phase I of the Kellyton Graphite Plant, alter the construction and commissioning timeline of Phase I of the Kellyton Graphite Plant, put the construction of Phase I of the Kellyton Graphite Plant on hold until additional funding is obtained, or seek strategic alternatives. If the Company is required to abandon construction and development or alter its intended long-term plans related to the Kellyton Graphite Plant, the Company could be required to evaluate the recoverability of its long-lived assets. Since 2009, the Company has relied on equity financings, debt financings and asset sales to fund its operations. During the year ended December 31, 2024, and through the date the consolidated financial statements are issued, the Company continued certain construction activities related to the Kellyton Graphite Plant. However, those certain construction activities have been significantly reduced from anticipated levels until the additional funding needed to complete Phase I of the Kellyton Graphite Plant is in place. The Company’s construction related contracts include termination provisions at the Company’s election that do not obligate the Company to make payments beyond what is incurred by the third-party service provider through the date of such termination. In its going concern analysis, the Company considered the construction activity and related costs through the date the consolidated financial statements are issued. Based on this analysis and excluding potential external funding opportunities and the Company’s current equity facilities, the Company’s planned non-discretionary expenditures for one year past the issue date of these consolidated financial statements exceed the cash on hand as of the date of these consolidated financial statements. At December 31, 2024, the Company’s cash balances were $4.3 million. On August 29, 2024, the Company terminated the ATM Offering Agreement with Cantor, and on August 30, 2024, entered into a new ATM Sales Agreement with H.C. Wainwright. During the year ended December 31, 2024, the Company sold approximately 2.3 million shares of common stock for net proceeds of $1.1 million pursuant to the ATM Offering Agreement with Cantor, and sold 4.8 million shares of common stock for net proceeds of $2.7 million pursuant to the ATM Sales Agreement with H.C. Wainwright. As of December 31, 2024, the Company has approximately $5.1 million remaining available for future sales under the ATM Sales Agreement with H.C. Wainwright. On August 30, 2024, the Company entered into the 2024 Lincoln Park PA, pursuant to which Lincoln Park has committed to purchase up to $30.0 million of the Company’s common stock. During the year ended December 31, 2024, the Company sold approximately 1.0 million shares of common stock for net proceeds of $0.4 million pursuant to the 2024 Lincoln Park PA. As of December 31, 2024, the Company has approximately 9.5 million shares of common stock that are available for future sales pursuant to the 2024 Lincoln Park PA. See Note 8 for further details regarding the Company’s equity financing agreements. While the Company has advanced its business plan and has been successful in the past raising funds through equity financings as well as through the sale of non-core assets, no assurance can be given that additional financing will be available in amounts sufficient to meet its needs, or on terms acceptable to the Company. Recent volatility in the equity and debt capital markets, rising interest rates, inflation, electric vehicle production and adoption rates, generally uncertain economic conditions and regulatory policy and enforcement, and unstable geopolitical conditions could significantly impact the Company’s ability to access the necessary funding to advance its business plan. On July 3, 2024, the Company filed a new Registration Statement on Form S-3 (the “Registration Statement”), which was declared effective by the SEC on August 29, 2024. The Company is subject to General Instruction I.B. 6 of Form S-3, which limits the amount that the Company may sell under the Registration Statement. After giving effect to these limitations and the current public float of our common stock, and after giving effect to the terms of the ATM Offering Agreement with Cantor and the ATM Sales Agreement with H.C. Wainwright, the Company may offer and sell shares of our common stock having an aggregate offering price of up to approximately $5.1 million under the ATM Sales Agreement with H.C. Wainwright as of December 31, 2024. The Company’s ability to raise additional funds under the ATM Sales Agreement may be further limited by the Company’s market capitalization, share price and trading volume. When considering the above events and conditions in the aggregate, the Company believes such events and conditions raise substantial doubt about its ability to continue as a going concern within one year after the date that these consolidated financial statements are issued.

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- Definition The entire disclosure when substantial doubt is raised about the ability to continue as a going concern. Includes, but is not limited to, principal conditions or events that raised substantial doubt about the ability to continue as a going concern, management's evaluation of the significance of those conditions or events in relation to the ability to meet its obligations, and management's plans that alleviated or are intended to mitigate the conditions or events that raise substantial doubt about the ability to continue as a going concern. + References Reference 1: http://fasb.org/us-gaap/role/ref/legacyRef -Topic 205 -SubTopic 40 -Name Accounting Standards Codification -Publisher FASB -URI https://asc.fasb.org/205-40/tableOfContent + Details
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