The Australian Securities and Investments Commission (ASIC) has filed a civil penalty action in the Federal Court against Magnis Energy Technologies Limited for failing to disclose material information about its self-proclaimed “flagship” lithium-ion battery manufacturing facility.

The regulator has also sued Magnis' executive chairman, Frank Poullas, for his alleged involvement in Magnis' alleged disclosure failures and for allegedly breaching his duties as a director by failing to ensure that Magnis met its disclosure obligations.

ASIC's case relates to Magnis' self-proclaimed flagship project, a lithium-ion battery plant in Endicott, New York, which is operated by US company Imperium3 New York, Inc (iM3NY). Magnis currently holds a majority interest in iM3NY.

The Commission stated that Magnis was aware that its statements regarding the funding of the iM3NY battery plant, the automation of battery production, and the ability to produce batteries at a rate of 1 gigawatt hour (GWh) per year, which equates to approximately 10,000 batteries per day, were incorrect and that it had failed to make timely disclosures. were incorrect and violated continuous disclosure laws by failing to disclose this information in a timely manner. ASIC also alleges that Mr. Poullas was involved in a continuing disclosure breach by Magnis.

ASIC further alleges that by failing to disclose information about the true state of affairs at the Battery Plant, Magnis and Mr. Poullas acted in a manner that was, or was likely to be, misleading or deceptive. ASIC alleges that Magnis shareholders and the wider market remain ignorant of the true state of affairs at the Battery Plant.

As a director of Magnis, a member of the Continuous Disclosure Committee and a member of the board of iM3NY, ASIC alleges that Mr. Poullas breached his duties as a director by failing to ensure that Magnis complied with its disclosure obligations.

Magnis also made several announcements on the ASX between April 19, 2021 and March 31, 2023 stating that the battery plant was fully funded and could produce at least 1 GWh of lithium-ion batteries per year. Mr. Plath repeated these claims to the media.

Magnis also repeatedly announced that its flagship project had begun commercial production and would be fully automated by 2022, and claimed that the plant's annual capacity was expected to increase to 1 GWh by the end of 2023 and continue to the end of the century with production of 1.8 GWh (15,000 cells per day) before reaching “double digit GWh “.

However, ASIC claims that by January 25, 2023, at the latest, Messrs. Magnis and Poullas realized that these statements and projections were inaccurate, and that at that time, the plant was struggling to produce 300 cells per day, primarily manually, with high costs and slow production processes.

ASIC further alleges that by April 23, 2023, Mr. Magnis and Mr. Poullas realized that the battery plant could not produce saleable, defect-free cells on a large scale or generate more than nominal revenues from the sale of cells produced at the plant.

ASIC is seeking declarations and fines against Messrs Magnis and Poullas and an order disqualifying Mr Poullas from managing the company for a period to be determined by the Court.