Liquidity

3 Months Ended

Mar. 31, 2018

Organization, Consolidation and Presentation of Financial Statements [Abstract]

Liquidity

2. LIQUIDITY

At March 31, 2018, the Company had working capital of $1.2 million, which along with the anticipated funding from the financing agreements described below is expected to provide it with the necessary liquidity through June 30, 2019. At December 31, 2017, the Company had working capital of $3.9 million. The decrease in working capital of $2.7 million for the three months ended March 31, 2018 was primarily due to the following:

● acquisition related costs incurred for the Alabama Graphite Corp. (“Alabama Graphite”) acquisition of $0.8 million.

● loan advances to Alabama Graphite to fund their operating and transaction costs of $0.6 million.

● a decrease of $0.8 million in the fair value of Laramide Resources Ltd. (“Laramide”) securities as of March 31, 2018.

During 2017, the Company entered into the following financing agreements and anticipates funding from these sources to sustain operations through June 30, 2019:

● Controlled Equity Offering Sales Agreement

On April 14, 2017, the Company entered into a Controlled Equity Offering Sales Agreement with Cantor Fitzgerald & Co. (“Cantor”) acting as sales agent, pursuant to which the Company has registered the offer and sale from time to time of shares of its common stock having an aggregate offering price of up to $30.0 million (the “ATM Offering”), of which approximately $28.6 million is available for future sales as of May 7, 2018.  The Company is unable to sell shares of its common stock through the Controlled Equity Offering Sales Agreement on dates that it places shares with Aspire Capital through its CSPA, as discussed below.

● Common Stock Purchase Agreement

On September 25, 2017, the Company entered into a Common Stock Purchase Agreement (“CSPA”) with Aspire Capital Fund, LLC (“Aspire Capital”) to place up to $22.0 million in the aggregate of its common stock over a term of 30 months.  Upon execution of the CSPA, the Company issued 880,000 shares of common stock to Aspire Capital as a commitment fee.  The Company cannot sell in excess of 5,033,677 shares of common stock, including the 880,000 commitment shares (“Exchange Cap”), unless (i) stockholder approval is obtained, or (ii) the average price paid for all shares issued under the CSPA (including the 880,000 commitment shares) is equal to or greater than $1.38.  In addition, the Company cannot sell shares under the CSPA when the closing sales price for its common stock on the Nasdaq Capital Market is less than $0.25 per share. As of May 7, 2018, the Company has dollar capacity of $18.7 million of common stock available for future sales, limited by the Exchange Cap to the issuance of no more than an additional 2.7 million shares of common stock unless conditions (i) or (ii) above are met. See Note 8 below for further details.

The Company believes that the ATM Offering and the CSPA, along with its existing working capital balance, will provide it with the necessary liquidity to fund operations through June 30, 2019. The Company will also continue to explore additional opportunities to raise capital, further monetize its non-core assets and identify ways to reduce its cash expenditures.

While the Company has been successful in the past raising funds through equity and debt financings as well as through the sale of non-core assets, no assurance can be given that additional financing will be available to it in amounts sufficient to meet the Company’s needs or on terms acceptable to the Company. In the event that funds are not available, the Company may be required to materially change its business plans.