Powertech releases first quarter financial results
Zero operating revenue; $1 million in stock options paid to officers and directors; cash burn rate is $1.1 million per month; only $7.8 million cash left at June 30
Posted August 24, 2008
In its first quarter of fiscal year 2009, Powertech Uranium Corp. continued to burn through cash and pile up losses in its efforts to permit uranium mines in northern Colorado and South Dakota.
The company's fiscal year begins April 1. At March 31, Powertech had only $2 million (CAD) in cash and had been spending at an average rate of $1.2 million per month. A $9 million cash infusion from Belgian company Synatom in early June rescued Powertech from potential insolvency.
The Belgians, who had previously accumulated nearly 5 million shares of Powertech stock on the open market, were persuaded to purchase an additional 6 million shares at a price of $1.50 (CAD) a share. The private placement closed on June 4, and Synatom now owns 19.6% of Powertech. So far, the $9 million investment is under water. Powertech stock on the Toronto Stock Exchange closed Friday at $0.94, so the value of Synatom's investment has dropped $3.4 million or 37% in less than 3 months.
Interestingly, for the first time Powertech's financial statements are in US dollars rather than Canadian. According to the financial statement notes, the change "resulted from an increase in the business activities conducted in USD (U.S. dollars)." It is unclear which business activities are being referred to since Powertech has operated exclusively in the U.S. after converting from a water heater manufacturer to a uranium exploration company two years ago.
Highlights from the first quarter financial statements (all amounts are for the April-June period, unless otherwise noted):
- Operating revenue: $0
- Net loss: $1,874,290
- Cumulative losses: $19,680,200
- Cash raised from Synatom deal: $8,980,200
- Cash spent: $3,447,323
- Cash remaining at June 30: $7,838,203
- Legal fees: $283,666
- Permitting costs for Centennial Project: $465,935
- Cumulative capitalized costs for Centennial Project: $11,211,580
- Compensation, including stock options, paid to officers and directors (and companies with officers and directors in common with Powertech): $1,392,090
- Value of stock options granted to officers and directors (and companies with officers and directors in common with Powertech): $1,044,487
Powertech has only nine officers and directors. Four of these individuals (Wallace Mays, Richard Clement, Thomas Doyle, and Greg Burnett) are both officers and directors. For the three month period ended June 30, Powertech paid $1,392,090 to officers and directors and companies controlled by them. About three-quarters of the compensation was in stock options with an exercise price of $1.50 CAD. The options vested immediately.
The Powertech Board of Directors has a three-member Compensation Committee to determine compensation for CEO Richard Clement and other executives. The committee consists of Director Douglas Eacrett, Director Malcolm Clay, and....CEO Richard Clement.
New York Stock Exchange listing standards require that all compensation committee members be independent, meaning they should have no material relationship, either directly or indirectly, with the company. Powertech is not subject to this rule since it is listed on the Toronto Stock Exchange.