Item 1A. Risk Factors
Item 1A. Risk Factors.
Except as described below, there have been no material changes to the risk factors previously disclosed in Part I, Item 1A., “Risk Factors” of our Annual Report on Form 10-K for the fiscal year ended June 30, 2024. You should carefully consider the factors discussed in Part 1, Item 1A. “Risk Factors” in our Annual Report on Form 10-K for the fiscal year ended June 30, 2024, which could materially affect our business, financial condition, and future results. Additional risk and uncertainties not currently known to us may also materially adversely affect our business, financial condition, cash flows or results of operations.
The consummation of the transactions contemplated by the Restructuring Support Agreement resulted in substantial dilution to our existing stockholders and in a significant amount of our Common Stock being held by Ascend and Bluescape.
As previously disclosed, on January 14, 2025, we entered into a restructuring support agreement (the “Restructuring Support Agreement”) with BEP Special Situations IV LLC (“Bluescape”), Meridian Investments Corporation (“Meridian”) and Ascend Global Investment Fund SPC, for and on behalf of Strategic SP (together with Meridian, “Ascend”) relating to certain restructuring and recapitalization transactions with respect to our capital structure (collectively the “Transaction”), including our outstanding Convertible Notes.
On March 5, 2025, pursuant to the Restructuring Support Agreement, the parties implemented the Exchange Transaction as an Out-of-Court Restructuring, which resulted in 13,586,524 shares of the Company’s Common Stock being issued to Bluescape and Ascend, the termination of the Amended and Restated Note Purchase Agreement, and the extinguishment of all indebtedness owed by the Company under the Amended and Restated Note Purchase Agreement. On March 13, 2025, pursuant to the January 2025 Subscription Agreement, we issued and sold an aggregate of 1,408,173 shares of common stock to Bluescape and Ascend, at a Subscription Price of $3.5507 per share for aggregate gross proceeds of $5.0 million. Also pursuant to the January 2025 Subscription Agreement, we issued Restructuring Warrants to purchase up to an aggregate of 5,632,692 shares of common stock to Bluescape and Ascend.
Following the consummation of the Out-of-Court Restructuring, our stockholders experienced substantial dilution. Our stockholders held less than 20% of our Common Stock immediately prior to the Transaction. If Ascend and Bluescape were to choose to act together, they would be able to control all matters submitted to our stockholders for approval, as well as our management and affairs. For example, these parties, if they choose to act together, could control the election of directors and approval of any merger, consolidation or sale of all or substantially all of our assets. This concentration of ownership control may delay, defer or prevent a change in control, entrench our management or the board of directors, or impede a merger, consolidation, takeover or other business combination involving us that other stockholders may desire. These parties may have interests that are different than those of other stockholders.
Exercise of our outstanding Warrants will dilute the ownership interest of our existing stockholders or may otherwise depress the price of our Common Stock.
On March 13, 2025, we issued and sold warrants to purchase an aggregate of 1,408,173 shares of our common stock at an exercise price of $3.5507 per share, which were immediately exercisable (the “Restructuring Warrants”). The Restructuring Warrants expire on the first anniversary of their issuance.
Additionally, in August 2024, we issued and sold warrants to purchase an aggregate of 460,870 shares of our common stock at an exercise price of $18.3563 per share, including 230,435 Series A Warrants and 230,435 Series B Warrants, which became initially exercisable on February 27, 2025. The Series A Warrants will expire on February 27, 2030 and the Series B Warrants will expire on February 27, 2027.
The exercise of some or all of the warrants will dilute the ownership interests of existing stockholders and increase the number of shares of common stock eligible for resale in the public market. Any sales in the public market of the shares of common stock issuable upon such exercise of the warrants, or the anticipation of such exercises and sales, could adversely affect the prevailing market prices of our common stock. Additionally, the existence of the warrants may encourage short selling by market participants because the
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exercise of the warrants could be used to satisfy short positions, or the anticipated exercise of the warrants for shares of common stock could depress the price of our common stock.
Changes in U.S. trade policies, including the imposition of tariffs, could materially increase the cost of constructing our proposed commercial-scale facility and materially adversely impact the economic viability of our project.
Our planned commercial-scale facility for in-situ mining of boron will require significant capital investment, currently estimated to be between approximately $390 and $430 million. The construction of this facility will involve sourcing equipment from within the United States, but also from various European countries and other international sources. Recent and potential future changes in U.S. trade policies, including tariffs implemented or proposed by the U.S. government and any retaliatory actions taken in response by foreign governments, could significantly increase the cost of imported equipment and materials required for the construction of our facility.
Our economic feasibility studies that we are currently undertaking and our preliminary cost analyses have not accounted for the impact of existing or future tariffs. The ultimate impact of currently announced tariffs and any future tariffs or trade policies will depend on various factors, including the timing of implementation and the amount, scope and nature of such tariffs or policies. Given the uncertainty and volatility surrounding trade and tariff policies, particularly in light of historical shifts in tariff approaches, including those imposed under the current Trump administration, we may experience materially increased costs that are difficult to predict accurately at this time. Such cost increases could negatively affect the projected economics of our facility and our ability to access financing, potentially causing the economic feasibility of the project to deteriorate substantially, or render the project economically unviable, thereby causing us to delay, significantly modify, or cancel the project entirely, which would have a material adverse effect on our business, financial condition, results of operations, and prospects.