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The following discussion and analysis provides information that management
believes is relevant to an assessment and understanding of our condensed
consolidated financial condition and results of operations. This discussion
should be read in conjunction with the Consolidated Financial Statements
included herewith, the footnotes thereto and the risk factors herein.
OVERVIEW
Comstock Inc. (together with its wholly-owned and majority owned subsidiaries), is a leading innovator of technologies that enable systemic decarbonization and circularity by efficiently converting under-utilized waste and renewable natural resources into fuels and electrification products that contribute to balancing global uses and emissions of carbon. We expect to generate revenue by developing, using, selling, and supporting new clean technologies that facilitate the more efficient use of scarce natural resources. We are commercializing environment-enhancing, material science-based technologies, products, and processes including carbon neutral cellulosic bio-fuels and carbon reducing lithium-ion battery ("LIB") metal recycling.
We intend to use our technologies to achieve exponential growth and
extraordinary financial, natural and social returns by:
– building, owning, and operating a fleet of advanced carbon neutral extraction and
refining facilities;
– selling an array of complimentary process solutions and related services, and
– licensing selected technologies to qualified strategic partners.
Our objective is to generate billions of dollars in revenue on an annualized basis by 2030, by responsibly producing and selling renewable energy products that enable us, our clients, and their downstream stakeholders to reduce greenhouse gas emissions by at least 100 million metric tons per year. Meeting that objective would offset the equivalent of more than 234 million barrels per year of fossil fuel, or about 6% of theU.S. transportation burn. Our technologies unlock vast quantities of historically wasted and unused feedstock supplies with enough short cycle carbon to offset many billions of metric tons of long cycle fossil fuel emissions worldwide. Most of that potential is provided by ourCellulosic Fuels technologies, which efficiently convert wasted, unused, widely-available and rapidly-replenishable woody biomass into intermediates and precursors for the production of carbon neutral oil, ethanol, gasoline, renewable diesel, sustainable aviation fuel ("SAF"), marine fuel, and other renewable replacements for long cycle fossil derivatives. Our portfolio of patented, patent-pending and proprietary technologies includes many additional processes that complement and add to that potential. We expect to use our technologies to meet our 2030 objectives with less than just 8% of the biomass residues produced annually in theU.S. , however, we have structured our business to achieve and enable exponentially greater gains. We believe that the Earth's natural carbon cycle provides the simplest, fastest, most scalable and most practical path for enabling systemic decarbonization and achieving a net zero carbon world. Our strategic plan is consequently based on innovating and using our technologies and renewable energy products to simultaneously:
– reduce reliance on long cycle fossil fuels;
– shift supply chains that terminate in combustion to short cycle renewable fuels;
and
– lead and support the adoption and growth of a highly profitable, balanced worldwide
short cycle ecosystem that continuously offsets, recycles, and contributes to
neutralizing global carbon emissions by rapidly growing and replenishing vast
quantities of feedstock for renewable circular fuels.
In that fashion, we plan to empower our clients, the industries in which they
operate, and the populations they serve to
Smarter
additional renewable fuels, and to thereby make disruptive contributions to
global decarbonization and helping to achieve a net zero carbon world.
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RECENT DEVELOPMENTS
Comstock historically focused on natural resource exploration, development, and production, with an emphasis on mining gold and silver resources from its extensive contiguous property holdings in the historic Comstock andSilver City mining districts inNevada (collectively, the "Comstock Mineral Estate "). We are currently focused, in conjunction with our investeeQuantum Generative Materials LLC , on developing technologies that enhance the efficacy and efficiency of mineral exploration and development activities, including advanced sensing and data collection capabilities and artificially intelligent interpretive and predictive technologies, while leveraging our extensive database of historical and current geologic data, for breakthrough mineral discovery. During 2021 and 2022 , we completed a series of transactions that were designed to build on our competencies and reposition us to capitalize on the global transition to clean energy. Those transactions primarily included (i) our option to sellComstock Mining LLC , the owner of our Lucerne mine inStorey County, Nevada , and related permits, (ii) our acquisitions of 100% ofComstock Innovations Corporation (F/K/A Plain Sight Innovations Corporation ), 100% ofComstock Engineering Corporation (F/K/A Renewable Process Solutions, Inc. ), and approximately 90% ofLINICO Corporation , and (iii) our investments of 48.19% ofQuantum Generative Materials LLC , and other minority investments. These transactions added the management, employees, facilities, intellectual properties, and other assets needed to transform our company and business into an emerging leader in the innovation and sustainable production of renewable energy products, primarily by commercializing two new lines of business, cellulosic fuels and electrification metals. Additional information on these transactions is provided in Note 2 to our Condensed Consolidated Financial Statements, Acquisitions and Investments. The acquisitions and business integrations during 2021 and 2022 established our new renewable energy platform for growth. We will innovate and commercialize technologies that contribute to global decarbonization by efficiently converting under-utilized natural resources into renewable fuels and electrification products that shift supply chains away from fossil fuels. We will also lead and support the adoption and growth of a balanced net zero ecosystem based on the feedstocks unlocked by our technologies, with powerful embedded economic incentives for our clients, their industries, and the populations they serve to decarbonize. We will rapidly achieve exponential growth and extraordinary financial, natural, and social gains by building, owning, and operating a fleet of advanced carbon neutral extraction and refining facilities, by selling an array of complimentary process solutions and related services, and by licensing selected technologies to qualified strategic partners Our goal is to accelerate the commercialization of decarbonizing technologies and generate billions in revenue on an annualized basis by 2030, by producing and selling renewable energy products that enable us, our clients, and their downstream stakeholders to reduce greenhouse gas emissions by at least 100 million metric tons per year. Meeting that objective would offset more than 234 million barrels per year of fossil fuel, or about 6% of theU.S. transportation burn, and require an estimated 8% of the existing biomass residues produced annually in theU.S. We also announced a significant expansion of our leading cellulosic technology portfolio by filing for a new patent covering breakthrough pathways to produce renewable diesel, marine, SAF and gasoline from woody biomass, at dramatically improved yield, efficiency, and cost in comparison to all known methods. These technology advancements enable a new sustainable feedstock capable of neutralizing a substantial share of currentU.S. mobility emissions. Renewable fuels provide a critical opportunity for decarbonization, however, most of the existingU.S. renewable fuel refineries draw from the same limited pool of constrained feedstocks. Comstock's plans to decarbonize with renewable fuels involves abundant feedstocks that are not used today, enabling a vast untapped energy source with superior benefits. Based on current performance data, Comstock projects best-in-class renewable fuel yields exceeding 80 gallons per dry ton (on a gasoline gallon equivalent basis), with lifecycle greenhouse gas emissions reductions well exceeding 80% over petroleum. About half of America's historical forest lands were clear cut for less productive uses. Restoring and using just about a quarter of that amount, or approximately 140 million acres, to sustainably grow, harvest, and replant fast-growing trees for use in producing renewable fuels would be sufficient to permanently neutralize more than 40% of America's mobility emissions. Such scales are achievable by leveraging existing external fuel infrastructure. Our expanded team has extensive experience in the renewable fuels industry, having designed and built over twenty renewable fuel production facilities in theU.S. We have already made remarkable progress. We are currently building commercial pilot scale cellulosic fuels and LIB facilities, and we are preparing to commence operations at our lithium-ion battery recycling facility later this year. We have also made significant strides in developing and establishing our new facilities and forging new revenue and licensing streams that we will soon share. -------------------------------------------------------------------------------- We have also made meaningful progress and will complete the monetization of our non-strategic assets, as quickly as possible, while funding our new businesses and limiting our outlook and focus to the objectives outlined above.
COVID-19
The outbreak in 2020 of the novel coronavirus ("COVID-19") resulted in
governments worldwide enacting emergency measures to combat the spread of the
virus For more than two years in Nevada , local governments, state health
officials, emergency managers, local health authorities and community partners
have come together in a statewide response to COVID-19. Processes continue to be
in place to support testing and vaccinations in communities throughout the
state. We are operating in alignment with these guidelines for protecting the
health of our employees, partners and suppliers.
On May 20, 2022 , Nevada Governor Steve Sisolak proclaimed the end of the
Declaration of Emergency related to the COVID-19 pandemic. The State of
Emergency declaration had been in place since March 2020 and allowed the State
to respond to challenges brought forward by the unprecedented pandemic. Due to
planning and collaboration across all levels of government in Nevada , the
declaration of emergency was ended, and the state remains ready to prevent,
treat and manage COVID-19 cases.
COMPARATIVE FINANCIAL INFORMATION
Below we set forth a summary of comparative financial information for the three
months ended
09/30/22 09/30/21 Change
Revenue $ 39,850 $ 362,713 $ (322,863)
Cost of goods sold - - -
Gross profit 39,850 362,713 (322,863)
Selling, general and administrative expenses 1,894,500 1,582,691 311,809
Research and development 1,330,340 164,334 1,166,006
Depreciation and amortization 794,565 335,605 458,960
Gain on sale of Daney Ranch (1,055,623) - (1,055,623)
Total operating expenses 2,963,782 2,082,630 881,152
Loss from operations (2,923,932) (1,719,917) (1,204,015)
Other Income (Expense)
Loss on investments (43,514) (302,211) 258,697
Interest expense (326,937) (4,076) (322,861)
Interest income 10,050 261,281 (251,231)
Change in fair value of derivative instruments (1,600,000) (7,230,000) 5,630,000
Recovery (impairment) of investments and intangible assets (145,559)
- (145,559) Other income (expense) (285,152) (499,583) 214,431 Total other income (expense), net (2,391,112) (7,774,589) 5,383,477 Net loss$ (5,315,044) $ (9,494,506) 4,179,462 Net loss attributable to noncontrolling interest$ (188,792) $ - (188,792) Net loss attributable to Comstock Inc.$ (5,126,252)
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RESULTS OF OPERATIONS
Three Months Ended
30, 2021
Revenues and gross profit for the three months endedSeptember 30, 2022 , decreased by$322,863 to$39,850 from$362,713 for the comparable 2021 period, as a result of engineering services revenue recognized in 2021 related to LINICO, which was an investment until a majority stake was acquired in the fourth quarter 2021, when the Company then consolidated LINICO. All intercompany engineering services revenues recognized since consolidation, and throughout 2022 have been eliminated. Revenue, costs of sales and gross profit in future periods will vary significantly depending on a number of factors, including the amount of renewable energy products that we produce and sell, the market prices for those products, the extent to which we secure and collect reasonable royalties, the degree to which we can provide event-driven engineering services, and the costs associated with each component of the aforementioned revenues. Selling, general and administrative expense for the three months endedSeptember 30, 2022 increased by$311,809 to$1,894,500 from$1,582,691 in the comparable 2021 period, primarily as a result of a$371,995 increase in legal and professional fees related to corporate governance, our acquisitions and other transactions,$161,533 in higher insurance costs and a$62,372 increase in other costs related to 2021 acquisitions, partially offset by a$284,091 decrease in employee costs, primarily from the redeployment of resources to research and development. Research and development expenses for the three months endedSeptember 30, 2022 increased by$1,166,006 to$1,330,340 from$164,334 in the comparable 2021 period. The increase primarily related to costs for the development of two pilot-scale systems, one for processing woody biomass into bio-intermediate materials for low-carbon pulps, paper, cellulosic sugars and cellulosic fuels and the other for crushing, separating and conditioning black mass derived from lithium ion batteries. These systems will be used to validate the processes and develop parameters for upscaling and commercializing these renewable technologies. Our Comstock Innovations and Comstock Engineering subsidiaries, respectively, are leading the research and development for commercializing these technologies. Depreciation and amortization for the three months endedSeptember 30, 2022 , increased by$458,960 to$794,565 from$335,605 in the comparable 2021 period, primarily from increased amortization from intangible and right of use assets acquired in 2021.
Gain on sale of
was
Loss on investments for the three months endedSeptember 30, 2022 , decreased by$258,697 to a loss on investments of$43,514 from a loss of$302,211 for the comparable 2021 period. The 2022 losses were primarily due to the lack of marketability of the Company's remaining ownership in Tonogold common stock resulting in an impairment of$30,303 . The 2021 period losses were primarily due to a decline in market value of Tonogold common shares and other investments. Interest expense for the three months endedSeptember 30, 2022 , increased by$322,861 to$326,937 from$4,076 in the comparable 2021 period, primarily due to$210,880 in higher interest on the AQMS lease liability assumed with the LINICO acquisition during the 2021 fourth quarter and the AST lease liability recognized during the 2022 second quarter, and$116,057 in interest and related amortization of the original issue discount ("OID") on the GHF promissory note that also originated during the fourth quarter of 2021. Interest income for the three months endedSeptember 30, 2022 , decreased by$251,231 to$10,050 from$261,281 in the comparable 2021 period, as a result of the transaction that extinguished the$6,650,000 Tonogold note receivable in exchange for the 100% membership interest inComstock LLC , the entity that owns the Lucerne mine properties and related permit, and the extinguishment of the MCU-P note receivable that was exchanged for the MCU assets, both of which are no longer accruing interest income. -------------------------------------------------------------------------------- Change in the fair value of our derivative instruments for the three months endedSeptember 30, 2022 , decreased by$5,630,000 to a loss of$1,600,000 from a loss of$7,230,000 in the comparable 2021 period, as a result of a lower decrease in the Company's share price and a settlement of the investment associated with LINICO, in connection with potential make-whole obligations for minimum value commitments on the Company's common shares. The 2022 loss, including$600,000 forQuantum Generative Materials LLC ("GenMat"),$300,000 from the Haywood acquisition and$700,000 associated with the LINICO investment made onDecember 30, 2021 . The 2021 loss was attributable to a$2,880,000 loss each for GenMat and LINICO derivatives and a$1,470,000 loss on the LPB derivative asset. Impairment losses for the three months endedSeptember 30, 2022 , increased by$145,559 , substantially all due to the impairment of$150,000 related to the Pelen purchase option. There was no similar impairment for the comparable 2021 period. Other expenses, net for the three months endedSeptember 30, 2022 were$285,152 , primarily consisting of losses from our equity method investments of$279,892 and other losses of$5,260 . Other expenses, net for the three months endedSeptember 30, 2021 were$499,583 , consisting of losses from the change in fair value of the Tonogold note receivable of$190,000 , losses from our equity method investments of$320,834 , partially offset by$11,251 of other income. Net loss for the three months endedSeptember 30, 2022 decreased by$4,179,462 to$5,315,044 from a loss of$9,494,506 for the comparable 2021 period. The decrease in net loss primarily resulted from a$5,630,000 decrease in losses from the estimated fair value of the derivative assets, partially offset by increases of$1,166,006 for research and development expenses,$458,960 in depreciation and amortization, and$311,809 for selling, general and administrative expenses. --------------------------------------------------------------------------------
Below we set forth a summary of comparative financial information for the nine
months ended
09/30/22 09/30/21 Change
Revenue $ 147,400 $ 465,838 $ (318,438)
Cost of goods sold - - -
Gross profit 147,400 465,838 (318,438)
Selling, general and administrative expenses 6,805,839 2,767,176 4,038,663
Research and development 5,104,908 164,334 4,940,574
Depreciation and amortization 2,447,988 566,204 1,881,784
Gain on sale of Daney Ranch (1,055,623) - (1,055,623)
Total operating expenses 13,303,112 3,497,714 9,805,398
Loss from operations (13,155,712) (3,031,876) (10,123,836)
Other Income (Expense)
Gain (loss) on investments 9,309 (2,129,693) 2,139,002
Interest expense (963,687) (148,652) (815,035)
Interest income 368,401 648,250 (279,849)
Change in fair value of derivative instruments (6,725,000) (2,232,750) (4,492,250)
Recovery (impairment) of investments and intangible assets (3,727,243)
- (3,727,243) Other income (expense) (1,758,732) (732,546) (1,026,186) Total other income (expense), net (12,796,952) (4,595,391) (8,201,561) Net loss (25,952,664) (7,627,267) (18,325,397) Net loss attributable to noncontrolling interest (681,011) - (681,011) Net loss attributable to Comstock Inc.$ (25,271,653) $ (7,627,267) $ (17,644,386) RESULTS OF OPERATIONS
Nine Months Ended
2021
Revenues and gross profit for the nine months endedSeptember 30, 2022 , decreased$318,438 to$147,400 from$465,838 for the comparable 2021 period as a result of engineering services revenue recognized in 2021 related to LINICO, which was an investment until a majority stake was acquired during the fourth quarter 2021, when the Company then consolidated LINICO. All intercompany engineering services revenues recognized since consolidation, and throughout 2022 have been eliminated. Revenue, costs of sales and gross profit in future periods will vary significantly depending on a number of factors, including the amount of renewable energy products that we produce and sell, the market prices for those products, the extent to which we secure and collect reasonable royalties, the degree to which we can provide event-driven engineering services, and the costs associated with each component of the aforementioned revenues. Selling, general and administrative expense for the nine months endedSeptember 30, 2022 increased by$4,038,663 to$6,805,839 from$2,767,176 in the comparable 2021 period. The increase primarily resulted from a$1,126,086 increase in legal, accounting and other costs related to the our acquisitions, corporate governance and other transactions,$438,062 in higher employee costs related to increased number of employees from the full period effects of our 2021 acquisitions and additional new hires during the nine months endedSeptember 30, 2022 ,$410,492 in higher insurance costs and a$325,089 increase in other costs primarily related to 2021 acquisitions. The increase was also driven by 2021 reductions to the -------------------------------------------------------------------------------- reclamation liability estimate, resulting in a decrease of$926,434 in general expenses from extending the estimated reclamation timing to five years, and Tonogold reimbursement of the Northern Comstock accelerated payment of$812,500 , which adjustments reduced expenses during the nine months endedSeptember 30, 2021 . Research and development expenses for the nine months endedSeptember 30, 2022 increased by$4,940,574 to$5,104,908 from$164,334 in the comparable 2021 period. The increase primarily related to costs for the development of two pilot-scale systems, one for processing woody biomass into bio-intermediate materials for low-carbon pulps, paper, cellulosic sugars and cellulosic fuels and the other for crushing, separating and conditioning black mass derived from lithium-ion batteries. These systems will be used to validate the processes and develop parameters for upscaling and commercializing these renewable technologies. Our Comstock Innovations and Comstock Engineering subsidiaries, respectively, are leading the research and development for commercializing these technologies.
Depreciation and amortization during the nine months ended
increased by
period, primarily from an increase in the intangible and right of use asset
amortization from 2021 acquisitions.
Gain on sale of
Gain on investments during the nine months endedSeptember 30, 2022 increased by$2,139,002 to$9,309 as compared to a loss of$2,129,693 for the comparable 2021 period. The 2022 gain was primarily a result of sales of 8,065,924 shares of Tonogold stock at an average price of approximately$0.12 per share compared to the share price of approximately$0.11 per share as ofDecember 31, 2021 . The 2021 loss was primarily due to a decrease in market value of$2,088,655 from Tonogold stock, and a loss of$20,354 from a decrease in the market value of other securities. Interest expense for the nine months endedSeptember 30, 2022 , increased by$815,035 to$963,687 from$148,652 for the comparable 2021 period primarily due to$612,762 higher interest on the AQMS lease liability assumed with the LINICO acquisition during the 2021 fourth quarter and the AST lease liability recognized during the 2022 second quarter, and$350,924 in interest and amortization of OID on the GHF note, which originated in lateDecember 2021 , partially offset by$148,652 in interest on prior promissory notes that were paid off in Q1 2022. Interest income for the nine months endedSeptember 30, 2022 , decreased by$279,849 to$368,401 from$648,250 in the comparable 2021 period, as a result of the transaction in which the Tonogold note was exchanged forComstock LLC stock and the write-off of the MCU-P note receivable, which was forgiven in exchange for the MCU assets, both of which are no longer accruing interest. Change in fair value of our derivative instruments for the nine months endedSeptember 30, 2022 , increased by$4,492,250 to a loss of$6,725,000 from a loss of$2,232,750 for the comparable 2021 period as a result of a decrease in the Company's share price in connection with potential make whole obligations for minimum value commitments on the Company's common shares. The change in fair value of derivatives for the nine months endedSeptember 30, 2022 included losses of$2,610,000 for GenMat,$1,665,000 for the Haywood acquisition,$3,045,000 from the additional LINICO investment made onDecember 30, 2021 , partially offset by a gain of$595,000 forLP Biosciences LLC ("LPB"). The change in fair value of derivatives of$2,232,750 for the nine months endedSeptember 30, 2021 was attributable to losses of$2,520,000 on the GenMat derivative and$1,470,000 on the LPB derivative, partially offset by gains on the LINICO derivative of$1,260,000 and MCU derivative of$497,250 . Impairment of investments and intangible assets, net of recoveries, for the nine months endedSeptember 30, 2022 , increased to$3,727,243 including$3,184,621 impairment, net of$895,204 in cash recoveries related to investments in MCU and MCU-P and the MCU-P note receivable, which were deemed unrecoverable as ofMarch 31, 2022 . We also recognized impairment of$338,035 related to the FPC intangible asset,$150,000 related to the Pelen purchase option and$54,587 related to the LPB investment. Other expenses, net, for the nine months endedSeptember 30, 2022 were$1,758,732 , primarily consisting of losses from our equity method investments of$858,711 , a reduction in value of the Tonogold note receivable of$605,000 , LPB settlement expense of$250,000 , and other losses of$45,020 . Other expenses, net, for the nine months endedSeptember 30, 2021 were$732,546 , primarily consisting of losses from the change in fair value of the Tonogold note receivable of$617,500 and losses from our equity method investments of$511,601 , partially offset by Tonogold note amendment fee income of$362,500 and other income of$34,055 . -------------------------------------------------------------------------------- Net loss for the nine months endedSeptember 30, 2022 , increased by$18,325,397 to$25,952,664 from a net loss of$7,627,267 for the comparable 2021 period. The$18,325,397 increase primarily resulted from a$4,492,250 decrease in the estimated fair value of the derivative assets and liabilities, a$3,727,243 increase in impairment losses on MCU and MCU-P related investments and notes receivable, net and to a lesser extent, the Flux Photon intangible,$4,038,663 , increase in selling, general and administrative expenses,$4,940,574 increase in research and development expenses, partially offset by increases in investment gains of$2,139,002 and a gain on the sale ofDaney Ranch of$(1,055,623) .
OUTLOOK
The 2021 cellulosic fuels and lithium-ion battery recycling acquisitions and business integrations established our new renewable energy platform for growth. We will innovate and commercialize technologies that contribute to global decarbonization by efficiently converting under-utilized natural resources into renewable fuels and electrification products that shift supply chains away from fossil fuels. We will also lead the adoption and growth of a balanced net zero ecosystem based on an abundance of woody biomass feedstocks unlocked by our cellulosic fuels technologies, with powerful economic benefits to us, our clients, their industries, and the populations they serve to decarbonize.
These two renewable energy businesses position us to achieve exponential growth
and extraordinary financial, natural, and social gains by commercializing
advanced carbon neutral extraction and refining facilities and lithium-ion
battery recycling facilities that produce an array of renewable fuels and
electrification products.
Our objective is to accelerate the commercialization of these decarbonizing technologies, and generate billions in revenue on an annualized basis by 2030, by producing and selling renewable energy products that enable us and our customers to reduce greenhouse gas emissions by at least 100 million metric tons per year. Meeting that objective would offset more than 234 million barrels per year of fossil fuel, or about 6% of theU.S. transportation burn, and only require an estimated 8% of the existing biomass residues produced annually in theU.S. Such scales are achievable quickly by leveraging existing external fuel infrastructure. Our expanded team has extensive experience in the renewable fuels industry, having designed and built several dozen renewable fuel production facilities in theU.S. We have already made remarkable progress. We are currently building commercial pilot scale cellulosic fuels and LIB facilities, and we are preparing pilot-scale operations of our crushing and separating systems that will produce mineral-rich black mass at our 137,000 square foot state of the art manufacturing facility later this year and also deploy our lithium extraction pilot capability in the same facility, both in 2023. We already received our operating permit for battery metal processing and our battery storage permit during the third and fourth quarter of 2022, respectively and expect our air quality permit for battery metal processing in the second quarter of 2023.
Our pilot scale cellulosic fuel system will also be operational in 2023,
positioning the scaling and ramp of our first cellulosic fuel bio refinery that
will produce an array of bio intermediaries and biofuels for today’s
infrastructure.
We have completed the draft of theDayton Consolidated Project (Dayton Project ) SK-1300 technical report.The Dayton Project includes theDayton resource, theSpring Valley exploration area, the Oest-Comet-Billie the Kidd (Oest) exploration area, and peripheral lands and expect to publish the report and related resource estimates during the fourth quarter of 2022. We have also made meaningful progress and expect to complete the monetization of our non-strategic assets during the first quarter of 2023, while funding our new business developments and limiting our focus to the objectives outlined above.
LIQUIDITY AND CAPITAL RESOURCES
Our financial position and liquidity are based on our ability to generate cash flows from our operations and certain asset sales, our net sources of capital from financing as generally compared to our net uses of capital from investing activities. Our cash balances atSeptember 30, 2022 andDecember 31, 2021 were$1,156,512 and$5,912,188 , respectively. The Company had current assets of$8,120,896 and current liabilities of$32,317,585 , representing working capital deficit, net of cash, of$25,353,201 atSeptember 30, 2022 . During the nine months endedSeptember 30, 2022 , we used$12,359,134 in cash in our operating activities, provided$101,188 from our investing activities, and$7,502,270 from our financing activities. During the nine months endedSeptember 30, 2021 , we used$4,989,020 in cash in our operating activities, and$11,145,269 in our investing activities and we provided$17,120,130 from our financing activities. During the nine months endedSeptember 30, 2022 , 12,218,565 common shares were issued --------------------------------------------------------------------------------
through equity issuance and private placement agreements at an average price per
share of
OnApril 12, 2022 , the Company entered into an equity purchase agreement (the "Purchase Agreement") withLeviston Resources LLC ("Leviston") for the purchase of up to$10,000,000 worth of shares of the Company's common stock from time to time, at the Company's option, on terms deemed favorable to the Company. Any shares offered and sold are issued pursuant to the Company's shelf registration statement on Form S-3 and the related prospectus (File No. 333-263930) filed by the Company with theU.S. Securities and Exchange Commission pursuant to the Securities Act of 1933 (the "Securities Act"). Sales of common stock, if any, under the Purchase Agreement may be made in sales deemed to be "at-the-market" equity offerings as defined in Rule 415 promulgated under the Securities Act, at a discount of 10% to the volume weighted average sales price of the common stock on the date that Leviston receives a capital call from the Company. In consideration of Leviston's agreement to enter the Purchase Agreement, the Company agreed to deliver additional shares of common stock to Leviston, for no additional consideration, on the first settlement date with respect to a put notice delivered by the Company. For the nine months endedSeptember 30, 2022 , we issued to Leviston 9,141,642 common shares with an aggregate sales price of$5,862,000 , at an average price per share of$0.64 , and an additional 343,883 common shares at a fair value of$500,000 in commitment and due diligence fees. As ofSeptember 30, 2022 , the 2022 Leviston Sales Agreement has$4,138,000 of remaining capacity. OnJune 21, 2022 , the Company entered into an equity purchase agreement (the "Purchase Agreement") withTysadco Partners, LLC ("Tysadco") for the private placement of 3,076,923 common shares at a purchase price of$0.65 per share. The Company paid$140,000 in cash and delivered 57,143 common shares with a fair value of$40,000 to the placement agent in connection with such sale. Such sale was exempt from registration pursuant to Section 4(a)(2) of the Securities Act. The Company also entered into an agreement for the purchase of up to$10,000,000 worth of shares of the Company's common stock from time to time, at the Company's option. Any shares offered and sold to Tysadco will be registered for resale pursuant to a registration statement on Form S-1 filed withU.S. Securities and Exchange Commission pursuant to the Securities Act of 1933 (the "Securities Act"). The Company paid a commission of 428,571 additional shares of common stock with a fair value of$300,000 to Tysadco in connection with such sale. Sales of common stock, if any, under the Purchase Agreement are made at a 10% discount to the volume weighted average sales price of the common stock on the date that Tysadco receives a capital call from the Company. We intend to fund our operations over the next twelve months from existing cash and cash equivalents, planned sales and profits from our cellulosic technology and related engineering services, planned sales of strategic and other investments, including our existing non-mining assets and investments in Tonogold and previously funded capital into our LINICO subsidiary. Based on these expected funding sources, management believes we will have sufficient funds to sustain our operations and meet our commitments under our investment agreements during the 12 months following the date of issuance of the condensed consolidated financial statements included herein. While we have been successful in the past in obtaining the necessary capital to support our operations, including registered equity financings from our existing shelf registration statement, borrowings and various other means, there is no assurance we will be able to obtain additional equity capital or other financing, if needed. Net cash used in operating activities for the nine months endedSeptember 30, 2022 increased by$7,370,114 to$12,359,134 from$4,989,020 in the comparable 2021 period, primarily from net increases in research and development, selling, general and administrative and interest and leasing costs, partially offset by an decrease in net uses of cash for working capital. Net cash provided by investing activities for the nine months endedSeptember 30, 2022 was$101,188 , compared to net cash used in investing activities of$11,145,269 in the comparable 2021 period, resulting in a$11,246,457 change, primarily due to decreases in uses for advances and investments of$3,035,000 for SSOF,$3,500,000 for LINICO,$1,300,000 for Quantum Generative Materials,$1,375,503 forComstock IP Holdings and$820,000 for MCU-P from 2021 and an increased 2022 sources of cash from theDaney Ranch sale, MCU fund recoveries and the Tonogold option payment of$1,500,000 ,$895,204 and$750,000 , respectively. Net cash provided in financing activities for the nine months endedSeptember 30, 2022 decreased$9,617,860 to$7,502,270 from$17,120,130 for the comparable 2021 period, primarily as a result of reduced net proceeds from the issuance of common stock of$13,356,500 , partially offset by reduced principal payments on debt of$2,735,602 , contributions of$500,000 from AQMS for additional shares in LINICO, and$240,077 from sales of treasury stock. -------------------------------------------------------------------------------- Risks to our liquidity could result from future operating expenditures above management's expectations, including but not limited to research and development, pre-development, exploration, selling, general and administrative, and investment related expenditures in excess of repayments of the advances to SSOF, and sale proceeds from theSilver Springs Properties and other investments, amounts to be raised from the issuance of equity under our existing shelf registration statement, declines in the market value of properties planned for sale, or declines in the share price of our common stock that would adversely affect our results of operations, financial condition and cash flows. If we were unable to obtain any necessary additional funds, this could have an immediate material adverse effect on liquidity and raise substantial doubt about our ability to continue as a going concern. In such case, we could be required to limit or discontinue certain business plans, activities or operations, reduce or delay certain capital expenditures or investments, or sell certain assets or businesses. There can be no assurance that we would be able to take any such actions on favorable terms, in a timely manner, or at all.
CRITICAL ACCOUNTING ESTIMATES
There have been no significant changes to the critical accounting estimates
disclosed in Management’s Discussion and Analysis of Financial Condition and
Results of Operations in our 2021 Form 10-K.
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