As filed with the Securities and Exchange Commission on February 12, 2024.
Registration No. 333-
UNITED
STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
REGISTRATION STATEMENT
UNDER THE SECURITIES ACT OF 1933
(Exact name of registrant as specified in its charter)
| 1000 | 22-395644 | |||
| (State or other jurisdiction of incorporation or organization) | (Primary Standard Industrial Classification Code No.) | (IRS Employer Identification No.) |
American
Battery Materials, Inc.
500 West Putnam Avenue, Suite 400
Greenwich, Connecticut 06830
(800) 998-7962
(Address, including zip code, and telephone number, including area code, of registrant’s principal executive offices)
Sebastian
Lux and David Graber
Co-Chief Executive Officers
American Battery Materials, Inc.
500 West Putnam Avenue, Suite 400
Greenwich, Connecticut 06830
(800) 998-7962
(Name, address, including zip code, and telephone number, including area code, of agent for service)
Copy to:
| Spencer G. Feldman,
Esq. Olshan Frome Wolosky LLP 1325 Avenue of the Americas, 15th Floor New York, New York 10019 (212) 451-2300 |
Approximate date of commencement of proposed sale to the public:
As soon as practicable after the effective date of this registration statement.
If any of the securities being registered on this Form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933, as amended, check the following box. ☐
If this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, please check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. ☐
If this Form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. ☐
If this Form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. ☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
| Large Accelerated Filer | ☐ | Accelerated Filer | ☐ | |||
| ☒ | Smaller Reporting Company | |||||
| Emerging Growth Company |
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided to Section 7(a)(2)(B) of the Securities Act. ☐
The Registrant hereby amends this Registration Statement on such date or dates as may be necessary to delay its effective date until the Registrant shall file a further amendment which specifically states that this Registration Statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act of 1933 or until the Registration Statement shall become effective on such date as the Commission, acting pursuant to said Section 8(a), may determine.
The information in this preliminary prospectus is not complete and may be changed. These securities may not be sold until the Registration Statement filed with the Securities and Exchange Commission becomes effective. This preliminary prospectus is not an offer to sell nor does it seek an offer to buy these securities in any jurisdiction where the offer or sale is not permitted.
| PRELIMINARY PROSPECTUS | SUBJECT TO COMPLETION DATED FEBRUARY 12, 2024 |
__________ Shares
AMERICAN BATTERY MATERIALS, INC.
Common Stock
This is a public offering of common stock of American Battery Materials, Inc. We are offering ________ shares. Our common stock is quoted on the OTC Pink Open Market, operated by the OTC Markets Group Inc., under the symbol “BLTH.” On February 9, 2024, our common stock closed at $0.50 per share. We intend to apply for the listing of our common stock for trading on the NYSE American and expect such listing to occur concurrently with this offering. A NYSE American listing, however, is not a condition to completing this offering.
Investing in our common stock involves a high degree of risk. See the section titled “Risk Factors” beginning on page 14 of this prospectus to read about factors you should consider before purchasing shares of our common stock.
| Per Share | Total | |||||||
| Public offering price | $ | $ | ||||||
| Underwriting discounts and commissions(1) | $ | $ | ||||||
| Proceeds to us, before expenses | $ | $ | ||||||
| (1) | Please see the section of this prospectus entitled “Underwriting’’ for additional information regarding compensation payable to the underwriters. |
We have granted a 30-day option to the underwriters to purchase up to ______ additional shares of our common stock, solely to cover over-allotments, if any, at the public offering price less underwriting discounts and commissions.
Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved of these securities or determined if this prospectus is truthful or complete. Any representation to the contrary is a criminal offense.
The underwriters expect to deliver the shares of our common stock to purchasers on or about _____, 2024.
The date of this prospectus is __________, 2024
American battery materials, INC.
Table of Contents
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About this Prospectus
Neither we nor the underwriters have authorized anyone to provide any information or to make any representations other than those contained in this prospectus. We and the underwriters take no responsibility for, and can provide no assurance as to the reliability of, any other information that others may give you. This prospectus is an offer to sell only the securities offered hereby and only under circumstances and in jurisdictions where it is lawful to do so. No dealer, salesperson or other person is authorized to give any information or to represent anything not contained in this prospectus. You should assume that the information appearing in this prospectus is accurate only as of the date on the front of this prospectus only, regardless of the time of delivery of this prospectus, or any sale of a security. Our business, financial condition, results of operations and prospects may have changed since those dates.
We are not, and the underwriters are not, offering to sell or seeking offers to purchase these securities in any jurisdiction where the offer or sale is not permitted. We and the underwriters have not done anything that would permit this offering or possession or distribution of this prospectus in any jurisdiction where action for that purpose is required, other than in the United States. Persons outside the United States who come into possession of this prospectus must inform themselves about, and observe any restrictions relating to, the offering of the securities as to distribution of the prospectus outside of the United States.
The industry and market data and certain other statistical information used throughout this prospectus are from our own research, surveys or studies conducted by third parties and industry or general publications. Industry publications and third-party research, surveys and studies generally indicate that their information has been obtained from sources believed to be reliable, although they do not guarantee the accuracy or completeness of such information. We are responsible for all of the disclosure contained in this prospectus, and we believe that these sources are reliable; however, we have not independently verified the information contained in such publications. While we are not aware of any misstatements regarding any third-party information presented in this prospectus, their estimates, in particular, as they relate to projections, involve numerous assumptions, are subject to risks and uncertainties, and are subject to change based on various factors, including those discussed under the section entitled “Risk Factors” and elsewhere in this prospectus. Some data are also based on our good faith estimates.
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PROSPECTUS SUMMARY
This summary highlights information contained in greater detail elsewhere in this prospectus. This summary is incomplete and does not contain all the information you should consider in making your investment decision. You should read the entire prospectus carefully before investing in our common stock. You should carefully consider, among other things, our financial statements and the related notes and the sections entitled “Risk Factors,” “Summary Consolidated Financial Information,” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” included elsewhere in this prospectus. Unless otherwise indicated or the context otherwise requires, the terms “we,” “us,” “our,” and “our company” refer to American Battery Materials, Inc., a Delaware corporation.
Our Company
We operate as a U.S. based renewable energy company focused on the extraction, refinement and distribution of technical minerals in an environmentally responsible manner. In November 2021, we found ourselves with the unique opportunity to acquire mining claims that historically reported high levels of lithium and other technical minerals. We hired and affiliated ourselves with industry veterans that bring decades of experience, credibility and relationships.
On November 5, 2021, we acquired the rights to 102 federal mining claims located in the Lisbon Valley of Utah for $100,000 plus the future payment of royalties based on a percentage of the net revenue from the sale of lithium produced from a portion of the mining property. The acquisition was driven by historical mineral data from seven existing wells with brine aquifer access. We have not yet commenced any mining operations, and we are an exploration stage issuer, as defined in SEC Regulation S-K Item 1300 (“Regulation S-K 1300”). An independent third-party technical report indicated that further investment and development in the claims was warranted, although no determination has been made whether we have any reserves of minerals. Similarly, no determination has been made whether mineralization could be economically and legally produced or extracted. We have no mineral reserves as defined by Regulation S-K 1300 and we have had no mining revenue to date.
In July 2023, we acquired and staked additional lithium mining claims adjacent to our Lisbon Valley Project in Utah. The new claims have been registered with the Bureau of Land Management (BLM). We now own a total of 743 placer claims over 14,320 acres, comprised of the 102 original claims held and the 641 new claims.
Our Growth Strategy
Our strategic goal is to become a producer of lithium in the United States. We believe that a strategy of employing advanced brine extractive technology methodologies for selective mineral extraction is the most cost-effective and environmentally friendly approach currently available. We believe that this approach is environmentally friendly because we would not deconstruct land structures which leave dirty tailings, but rather we would extract the desired minerals and metals from subsurface brines that re-inject the brines back down into the aquafer to maintain pressure after lithium extraction. We plan, as part of our sustainability goals within our overall environmental, social and governance (“ESG”) strategy, to develop sustainable production operations. Our plan is to develop our projects and strategic equity investments on a measured timeline to provide the potential for both near-term cash flow and long-term value maximization.
We have been executing the necessary steps to determine analytical results from our technical report, which should provide current results, analytical, geotech modeling, aquifer modeling, recharge, flows and depth. We have engaged RESPEC Company LLC as our geotech, engineering and resource management partner to assist in the exploration of the Lisbon Valley brine extraction project. Leveraging its expertise, we will focus on several initiatives, which include the following:
| ● | advancement of geotech, engineering, geology and fieldwork to complete technical reports on the Lisbon Project; |
| ● | understanding Lisbon Valley brines, on and around owned leases; |
| ● | develop a well plan to re-enter, sample and test the “Superior Well,” that has a historical lithium concentration of 340 ppm (parts per million); |
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| ● | enter other prospective plugged and abandoned wells, taking brine samples and performing hydrological testing at each identified high potential zone to evaluate the properties of the clastic formation; |
| ● | as information is advanced, prepare technical reports following the Regulation S-K 1300 Standards of Disclosure for Mineral Projects, initially a Preliminary Economic Assessment (PEA) and longer term, a Preliminary Feasibility Study (PFS); |
| ● | test the collected brines for lithium, but also for previously identified high value elements such as cobalt, manganese, magnesium, and suites of metals in the alkaline earth metals, transition metals, and halogens group; and |
| ● | based on the results of the Superior well, develop area resource estimates. |
The Lisbon Valley of Utah also provides many added benefits:
| ● | historically rich industrial and natural resource extraction area; |
| ● | a developed infrastructure including high voltage electrical, proximity to major roadways and rail spurs; and |
| ● | state and local agency support through the Utah Division of Oil, Gas and Mining (UDOGM) and the Trust Land Administration (SITLA). |
We will also look to expand our holdings in the Lisbon Valley area with the acquisition of additional mineral claims and joint venture opportunities. We continue to explore and evaluate opportunities to further expand our resource base and production capacity through the possible acquisition of properties and projects in other areas of the United States, as well as in South America, particularly Argentina.
As part of our strategy for growth, our projects and strategic investments will be developed on a measured timeline, and we will evaluate all opportunities to further expand our resource base and production capacity. We understand that our timelines are subject to a variety of risks and variables, including, without limitation, obtaining permits, approvals and funding. We are also focused on the implementation of direct lithium extraction (DLE) technologies, which we believe have the potential to significantly increase the supply of lithium from our brine projects, similar to the impact which shale did for oil.
To achieve our goal of becoming a producer of lithium, we will rely on our competitive strengths and experienced management team to explore and consider all opportunities to generate revenue and increase our projects, properties and assets, as well as all potential funding options. Some opportunities for growth may be in the form of (i) strategic partnerships, (ii) off-take agreements, (iii) diversification of projects and properties, (iv) acquisitions of companies and technologies, and (v) participation in related commercial development activities.
The Lithium Market
Lithium is on the list of the 35 minerals considered critical to the economic and national security of the United States, as first published by the U.S. Department of the Interior on May 18, 2018. In June 2021, the U.S. Department of Energy published a report titled “National Blueprint for Lithium Batteries 2021-2030” (the “NBLB Report”) which was developed by the Federal Consortium for Advanced Batteries (“FCAB”), a collaboration by the U.S. Departments of Energy, Defense, Commerce, and State. According to the Report, one of the main goals of this U.S. government effort is to “secure U.S. access to raw materials for lithium batteries.” In the NBLB Report, Jennifer M. Granholm, the U.S. Secretary of Energy, states: “Lithium-based batteries power our daily lives from consumer electronics to national defense. They enable electrification of the transportation sector and provide stationary grid storage, critical to developing the clean-energy economy.”
The NBLB Report summarizes the U.S. government’s views on the need for lithium and the expected growth of the lithium battery market as follows:
| ● | “A robust, secure, domestic industrial base for lithium-based batteries requires access to a reliable supply of raw, refined, and processed material inputs…” |
| ● | “The worldwide lithium battery market is expected to grow by a factor of 5 to 10 in the next decade.” |
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The growth in electric vehicles (“EVs”) will provide the greatest needs for lithium-based batteries. The NBLB Report states: “Bloomberg projects worldwide sales of 56 million passenger electric vehicles in 2040, of which 17% (about 9.6 million EVs) will be in the U.S. market.” Source: NBLB Report (defined above). Original Source: Bloomberg NEF Long-Term Electric Vehicle Outlook 2019.
In a February 2021 report, Canalys, a global technology market analyst firm, states that global sales of EVs in 2020 increased by 39% year on year to 3.1 million units. This compares with a sales decline of 14% of the total passenger car market in 2020. Canalys forecasts that the number of EVs sold will rise to 30 million in 2028 and EVs will represent nearly half of all passenger cars sold globally by 2030.
Bloomberg’s Long-Term Electric Vehicle Outlook 2021 report states: “The outlook for EV adoption is getting much brighter, due to a combination of more policy support, further improvements in battery density and cost, more charging infrastructure being built, and rising commitments from automakers. Passenger EV sales are set to increase sharply in the next few years, rising from 3.1 million in 2020 to 14 million in 2025. Globally, this represents around 16% of passenger vehicle sales in 2025, but some countries achieve much higher shares. In Germany, for example, EVs represent nearly 40% of total sales by 2025, while China — the world’s largest auto market — hits 25%.”
Regarding the lithium battery growth derived from grid storage demands, the NBLB Report states: “In addition to the EV market, grid storage uses of advanced batteries are also anticipated to grow, with Bloomberg projecting total global deployment to reach over 1,095 GW by 2040, growing substantially from 9 GW in 2018;” and “Bloomberg forecasts 3.2 million EV sales in the U.S. for 2028, and over 200 GW of lithium-ion battery-based grid storage deployed globally by 2028. With an average EV battery capacity of 100 kWh, 320 GWh of domestic lithium-ion battery production capacity will be needed just to meet passenger EV demand.
On August 25, 2022, the Washington Post published an article titled “Did California just kill the gas-powered car?” and with the sub-heading “California’s decision to ban the sales of combustion engine cars is the latest victory in the transition to electric vehicles.” A particularly relevant passage from this article reads as follows:
“…the transition from gas-powered, internal combustion engine vehicles to electric vehicles no longer feels niche, or speculative. It feels inevitable. And this week, another profound development: California, which already leads the nation with 18 percent of new cars sold electric, is expected to approve a regulation to ban the sales of new gas-only powered vehicles by 2035. In addition to EVs, only a limited number of plug-in hybrids will be allowed to be sold. This is a big deal: California’s car market is only slightly smaller than those of France, Italy and Britain — and while many countries have promised to phase out sales of gas cars by such-and-such date, few have concrete regulations like California. Sixteen states have traditionally followed California’s lead in setting its own independent fuel standards — they could soon follow.”
Although no assurance can be given, these recent developments, if left unchallenged, may potentially increase demand for lithium in the United States, as well as globally. Benchmark Mineral Intelligence, a global consulting firm specializing in the battery supply chain market, in a September 6, 2022 report, predicted that:
| ● | demand for lithium-ion batteries is set to grow six-fold by 2032 as global automakers scale up production of EVs; and |
| ● | to meet the world’s lithium requirements would require 74 new lithium mines with an average size of 45,000 tonnes by 2035. |
While these figures are robust relative to historical data, there can be no guarantee that ultimate consumer adoption for EVs and plug-in-hybrid vehicles (PHEV) will drive lithium demand as predicted.
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Lithium Brine Deposits and Direct Lithium Extraction
Lithium is mined from three different deposit types: lithium brine deposits, pegmatite lithium deposits (also referred to as “hard rock”), and sedimentary lithium deposits (also referred to as clay deposits). Brine deposits are the most common, accounting for more than half of the world’s known lithium reserves. All our projects are in brine deposits.
As described by the U.S. Geological Survey, lithium brine deposits are accumulations of saline groundwater that are enriched in dissolved lithium. All producing lithium brine deposits share a number of first-order characteristics: (1) arid climate, (2) closed basin containing a playa or salar, (3) tectonically driving subsidence, (4) associated igneous or geothermal activity, (5) suitable lithium source-rocks, and (6) one or more adequate aquifers. South American countries Chile and Argentina are where the majority of the lithium produced from brines originates, as well as Nevada to a much smaller extent.
It is anticipated that we will use a direct lithium extraction (“DLE”), and reinjection of the processed brine back into the subsurface, rather than using evaporation ponds to recover the lithium and other potential mineral from brines, as the project advances to the production stage. This method has been gaining favor in the lithium industry over the last several years because it does not involve the use of evaporation ponds. DLE uses a much smaller footprint than evaporation ponds and is therefore more acceptable from an environmental standpoint. As yet, we have not done any testing for the possibility of using DLE and will not be able to do any testing until samples of brine are acquired from the target formations. See “Risk Factors – Our success as a company producing lithium and related products depends to a great extent on our research and development capabilities for direct lithium extraction and our ability to secure capital for the implementation of brine processing plants.”
DLE technologies precipitate lithium out of brine using filters, membranes, ceramic beads or other equipment, which is often housed in a small warehouse, significantly shrinking the environmental footprint of evaporation ponds used to produce commercial quantities of lithium traditionally. In a DLE operation, brine is pumped to a processing unit where an adsorption, resin or membrane material is used to extract only the lithium from the brine, while spent brine can be reinjected into the basin aquifers. The more rapid production time frame and possible brine reinjection into the aquifer is a key environmental differentiator between the DLE process and traditional lithium process that uses evaporation ponds.
While there may still be challenges around scalability, water consumption, and the possible dilutive effects of brine reinjection, over the past decade many DLE technologies have arisen to separate lithium from brine. DLE has the potential to significantly impact the lithium industry, with implementation on the extraction of lithium brines potentially having a dramatic positive impact on production, capacity, timing, and environmental impact. Similar to the impact shale exploration had on the oil industry, DLE has the potential to significantly increase the supply of lithium from brine projects, nearly doubling lithium production/yield (taking recoveries from 40-60% to 70-90%+) and improving project returns. DLE should also offer lower perceived environmental risk and yield significant environmental benefits when compared to traditional brine ponds, offering sustainability benefits and ESG credentials. It is estimated that approximately 12% of the world’s lithium supply in 2019 was produced using DLE technology. DLE technologies are broadly grouped into three main categories: adsorption, ion exchange and solvent extraction.
| ● | Adsorption physically absorbs lithium chloride (LiCl) molecules onto the surface of a sorbent from a lithium loaded solution. The lithium is then stripped from the surface of the sorbent with water. |
| ● | Ion exchange takes lithium ions from the solution and replaces them with a different positively charged cation that is contained in the sorbent material. An acidic (or basic) solution is required to strip the lithium from the material and regenerate the sorbent material. |
| ● | Solvent extraction removes lithium ions from solution by contacting the solution with an immiscible fluid (i.e., oil or kerosene) that contains an extractant that attaches to lithium ions and brings them into the immiscible fluid. The lithium is then stripped from the fluid with water or chemical treatment. |
Our identification as an “environmentally friendly” business is evidenced by our commitment to deploy direct lithium extraction rather than the typical extraction techniques of hard-rock mining or underground brine water. Unlike those traditional methods for producing lithium, DLE uses filters, membranes, or resin materials to extract the mineral from brine water, resulting in:
| ● | usage of less water; |
| ● | recycling of the majority of the brine water used; |
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| ● | consumption of less fossil fuels; |
| ● | reduction in the need for additional processing and alternative mining sources; and |
| ● | leaving a smaller environmental footprint. |
Traditionally, lithium produced from brine water is stored in evaporation ponds. As the water evaporates, the other elements of the brine such as magnesium or calcium precipitate out, leaving the brine more concentrated to produce lithium carbonate. The evaporation process can take from 9 to 18 months depending on the type of project and weather conditions. With DLE, that process can be shortened to days or even hours. DLE also reduces the amount of land required for the pond evaporation process, while the potential to reinject the remaining brine water after the process further reduces the environmental impact.
Our Market Opportunity
Our Lisbon Valley Lithium Project is located in San Juan County, Utah, approximately 35 miles southeast of the city of Moab, part of an area known as the Paradox Basin. The Project consists of 743 placer mining claims staked on U.S. government land administered by the BLM covering 14,300 acres, part of a semi-contiguous group named the LVL Group. The map below shows the approximate location of our claims:
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Our original 102 placer claims were staked by Plateau Ventures LLC and sold to us have been assigned to our wholly owned subsidiary, Mountain Sage Minerals, LLC. Our additional 641 placer claims are registered or filed in the name of Mountain Sage Mineral, LLC. All such claims have been registered currently in good standing according to BLM records. All 743 Claims have been staked, recorded and are in good standing with BLM until next year’s maintenance fee renewal on September 1, 2024. No other mineral, land or water rights have been applied, granted or permitted to or by Mountain Sage Minerals LLC on the subject property. The following diagram is an overview of our claims which comprise our Lisbon Valley Lithium Project:
The maps above are referenced with Professional Land Survey System (PLSS) and a latitude/longitude reference coordinate, accurate to 50 feet.
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Our placer claims are plotted on the figures above, which is a Public Land Survey System (PLSS) map using Salt Lake City Prime Meridian. The claims are located in Southeast Utah in sections 17-18, 20-22, 25-29, 33-35 of Township 30 South and Range 25 East; sections 1, 3, 4, 8-15 of Township 31 South and Range 25 East; sections 31 of Township 30 South and Range 26 East and sections 5-9, 17 and 18 of Township 31 South and Range 26 East. The latitude and longitude of the southeast corner of Section 36, Township 30 South, 25 East is noted on the figure is accurate to +/- 50 feet.
There is a network of dirt and paved roads within the claims area, which service the oil and gas wells and the Lisbon Valley Copper Mine. Two existing natural gas pipelines traverse the claims. Power is supplied to the copper mine, also within the claim area, for use in their electrowinning copper recovery process. Nine wellbores (8 oil and gas and 1 potash) are available for re-entry and nearby water rights and private land are available for sale or lease.
Moab, Utah, the nearest population center to the property, is a city of 5,336 persons (2020 Census). It is located in a relatively remote portion of Utah but is easily accessed by U. S. Highway 191. Highway 191 intersects with Interstate 70 about 30 miles (48 kilometers) north of Moab, at Crescent Junction. Moab is a tourist destination and has numerous motels and restaurants. Moab would also be the nearest source of labor in the region.
The region has a history of mining, primarily uranium and vanadium that dates back as far as 1881. The Lisbon Valley Copper Mine is in the heart of the Lisbon Valley and is currently producing copper cathode. An all-weather road and electric power supply the mine. A few gravel roads cross the property. Oil and gas drilling and production, along with ranching have made the area relatively accessible.
There has been no exploration or drilling conducted on the property by us or our predecessors other than the gathering and assimilation of data from all available sources. It will be necessary for us to re-enter an oil and gas well or to drill a new well to obtain brine samples for analysis and metallurgical testing. Permits for such operations will be required from the BLM and the UDOGM. We are in the process of permitting two appraisal wells.
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The BLM Permit Process
The flow charts below outline the permit process for exploration of minerals (lithium well drilling) which is regulated by the UDOGM and the BLM. It is anticipated that it will take 300-360 days for approval to drill once the initial application is filed and under review by each agency.
We believe there is abundant evidence from oil, gas and potash wells drilled in the Paradox Basin indicating a probability of identifying and producing super saturated brines from beneath the Project. The geology of the area of the Project and of the Paradox Basin as a whole is complex, although zones have been targeted and proven and they are mappable within and beyond the claims area. It is not likely that the same zones vary significantly in terms of reservoir quality and thickness as evidenced by log analysis; however, these parameters have not been confirmed by actual testing by us.
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We have not calculated mineral and resource estimation and has no revenue being generated from the subject property. The only way to determine if the lithium enriched brines exist and can be economically produced from the target zones is to drill exploration wells to produce and test brine from the targeted zones. We through our wholly owned operating company Mountain Sage Minerals, LLC intends to drill two appraisal wells on the subject property to evaluate reservoir properties (porosity, permeability and pressure), flow rates and in situ mineral concentrations. Information from the two wells will be used to assess the resource potential and devise a detailed development plan. The subsurface data collected from the two wells will be used to refine our proprietary subsurface model. The development model will include a proprietary 3D seismic survey to refine the subsurface model and delineate reservoir(s) continuity below the subject property and allow the team to select optimal spacing of future well locations and the network of production and injection wells required to fully develop potential mineral (brine) resources. Based on a substantial number of studies with lithium analyses from the Paradox Basin, we believe there is a substantial indication that lithium mineralization in brines occurs beneath the Project.
We have retained a third-party consulting firm to assist with drilling, completion and review of test results for the two appraisal wells. Any extracted brines should be tested to determine lithium and other important mineral concentrations and to prove the economic viability of a pilot and permanent production program. We have identified an appraisal and development program that is proprietary. This information will be disclosed in an advanced technical report after the appraisal wells are drilled and individual zones are identified and fully evaluated. Cost estimates and authority for expenditures for both well tests and the 3D Survey are currently in process.
The Technical Report Summary on the Project prepared by Bradley C. Peek, MSc. of CPG Peek Consulting, Inc., in accordance with Regulation S-K 1300, is included as an exhibit to this registration statement, of which this prospectus forms a part. The effective date of the report is October 31, 2023.
Selected Risks Associated with Our Business
An investment in our common stock involves a high degree of risk. Our ability to execute on our growth strategies is also subject to certain risks. The risks described under the heading “Risk Factors” immediately following this prospectus summary may have an adverse effect on our business, cash flows, financial condition, and results of operations or may cause us to be unable to execute all or part of these strategies successfully. Below are the principal factors that make an investment in our company speculative or risky:
| ● | Our future performance is difficult to evaluate because we have a limited operating history in the lithium industry. |
| ● | We have a history of losses and expect to continue to incur losses in the future. |
| ● | There is substantial doubt about our ability to continue as a going concern. |
| ● | We are an exploration stage issuer and there is no guarantee that our development will result in the commercial extraction of mineral deposits. |
| ● | We face numerous risks related to exploration, construction and extraction of mineral deposits. |
| ● | The mineral and chemical processing industry is intensely competitive. |
| ● | Our long-term success will depend ultimately on our ability to generate revenues, achieve and maintain profitability, and develop positive cash flows from their lithium activities. |
| ● | Our growth strategy depends on their ability to successfully access the capital and financial markets. Any inability to access the capital or financial markets may limit their ability to meet our liquidity needs and long-term commitments, fund their ongoing operations, execute their business plan or pursue investments that we may rely on for future growth. |
| ● | We are dependent upon key management employees. |
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| ● | Our ability to manage growth will have an impact on our business, financial condition, and results of operations. |
| ● | Lawsuits may be filed against us and an adverse ruling in any such lawsuit may adversely affect our business, financial condition or liquidity or the market price of our common stock. |
| ● | Our success as a company producing lithium and related products depends to a great extent on our research and development capabilities for direct lithium extraction and our ability to secure capital for the implementation of brine processing plants. |
| ● | The development of non-lithium battery technologies could adversely affect our company. |
| ● | Our business is subject to cybersecurity risks. |
| ● | Our operations may be further disrupted, and our financial results may be adversely affected by the novel coronavirus pandemic. |
| ● | An escalation of the current war in Ukraine, conflict in the Middle East, or the emergence of conflict elsewhere, may adversely affect our business. |
| ● | We will be required to obtain governmental permits and approvals in order to conduct development and extraction operations, a process that is often costly and time-consuming. There is no certainty that all necessary permits and approvals for our planned operations will be granted. |
| ● | Our operations face substantial regulation of health and safety. |
| ● | Compliance with environmental regulations and litigation based on environmental regulations could require significant expenditures. |
| ● | Lithium prices are subject to unpredictable fluctuations. |
| ● | Changes in technology or other developments could adversely affect demand for lithium compounds or result in preferences for substitute products. |
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Corporate and Background Information
We are a Delaware corporation. Our corporate office is located at 500 West Putnam Avenue, Suite 400, Greenwich, Connecticut 06830. Our telephone number is (800) 998-7962. We maintain one active website, www.americanbatterymaterials.com, which serves as our corporate website and contains information about us and our business. Information contained on our website is not a part of this prospectus.
We were originally incorporated in the State of Delaware on March 26, 2007 under the name Internet Media Services, Inc. On April 9, 2010, we filed Form S-1 with the SEC in order to become an SEC reporting company. On January 7, 2014, we entered into an Exchange of Securities Agreement with U-Vend Canada, Inc., and our shareholders under which we acquired all issued and outstanding shares of U-Vend in exchange for shares of our common stock. While the transaction did not result in a change of control of our company, it did result in a new line of business for us. On April 15, 2014, we filed a Certificate of Amendment to change the name of our company to U-Vend Inc. On February 26, 2018, we filed a Certificate of Amendment to change the name of our company to BoxScore Brands, Inc. On October 20, 2022, we filed an amendment to our certificate of incorporation to, among other things, change the name of our company from BoxScore Brands, Inc. to American Battery Materials, Inc. The name change was processed by FINRA, and declared the name change effective as of May 1, 2023.
Channels for Disclosure of Information
Investors and others should note that we use social media to communicate about our company, services, new business developments, and other matters with the public. Any information we consider to be material to an evaluation of our company will be included in filings on the SEC website, http://www.sec.gov, and may also be disseminated using our investor relations website, which can be found at http://www.americanbatterymaterials.com, and press releases. However, we encourage investors, the media, and others interested in our company also to review our social media channels.
The information contained on, or that can be accessed through, our website is not incorporated by reference into this prospectus, and you should not consider any information contained on, or that can be accessed through, our website as part of this prospectus or in deciding whether to purchase our common stock.
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Summary of the Offering
Common stock offered |
__________ shares (_______ shares if the underwriters exercise their option to purchase additional shares in full). | |
| Common stock outstanding immediately before this offering | __________ shares. | |
| Common stock to be outstanding immediately after this offering | __________ shares (_______ shares if the underwriters’ option to purchase additional shares is exercised in full). | |
| Underwriters’ option to purchase additional shares | We have granted a 30-day option to the underwriters to purchase up to an aggregate of _______ additional shares of common stock from us at the public offering price, less underwriting discounts and commissions, on the same terms as set forth in this prospectus. | |
| Use of proceeds | We estimate that our net proceeds from the sale of shares of our common stock in this offering will be approximately $________, or $_______ if the underwriters’ option to purchase additional shares is exercised in full, based on the public offering price of $___ per share, and after deducting underwriting discounts and commissions and estimated offering expenses payable by us.
We intend to use a significant portion of the net proceeds from this offering to fund the development and operation of our Lisbon Valley Project, including the drilling, permitting and geological work on the 14,260-acre land position. We may also use a portion of the net proceeds to expand our mineral rights through acquisitions of land and claims, and joint venture opportunities. The remainder of the net proceeds will be used for working capital and other general corporate purposes. See the section titled “Use of Proceeds” for additional information. | |
| Risk Factors | You should carefully read the “Risk Factors” section of this prospectus for a discussion of factors that you should consider before deciding to invest in our common stock. | |
| OTC Pink Open Market symbol | BLTH
We intend to apply for the listing of our common stock for trading on the NYSE American and expect such listing to occur concurrently with this offering. A NYSE American listing, however, is not a condition to completing this offering. |
Unless otherwise indicated, all information contained in this prospectus assumes that the underwriters will not exercise their over-allotment option to purchase additional shares of our common stock.
All shares and per share information in this prospectus reflects, and where appropriate, is restated for, a 1-for-300 reverse stock split of our outstanding shares of common stock, effective December 8, 2023.
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SUMMARY CONSOLIDATED FINANCIAL DATA
Our consolidated balance sheet data as of December 31, 2022 and December 31, 2021, consolidated statement of operations data and consolidated statement of cash flow data for the years ended December 31, 2022 and December 31, 2021 are derived from our audited financial statements, included elsewhere in this prospectus. Our summary historical interim financial information as of September 30, 2023 and September 30, 2022 and for the nine months ended September 30, 2023 and 2022 are derived from the our unaudited condensed consolidated interim financial statements included elsewhere in this prospectus. Our historical results are not necessarily indicative of the results that may be expected in the future. Per share data and shares outstanding reflect an adjustment for the effect of the 1-for-300 reverse stock split of our outstanding shares of common stock, which became effective on December 8, 2023. This summary of historical financial data should be read together with the financial statements and the related notes, as well as “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” appearing elsewhere in this prospectus.
Nine Months Ended September 30, 2023 (unaudited) | Nine Months Ended September 30, 2022 (unaudited) | Year Ended December 31, 2022 | Year Ended December 31, 2021 | |||||||||||||
| Income Statement Data | ||||||||||||||||
| Revenue | $ | - | - | - | - | |||||||||||
| Loss from operations | $ | (2,462,799 | ) | (1,148,588 | ) | (1,135,088 | ) | $ | (393,376 | ) | ||||||
| Net income (loss) | $ | (2,462,799 | ) | (1,148,588 | ) | (1,486,848 | ) | $ | 1,762,466 | |||||||
| Loss per share, basic | $ | (0.00 | ) | (0.00 | ) | (0.00 | ) | $ | 0.01 | |||||||
| Loss per share, diluted | $ | (0.00 | ) | (0.00 | ) | (0.00 | ) | $ | (0.00 | ) | ||||||
| Weighted average common shares outstanding, basic | 3,324,638,012 | 382,019,948 | 335,778,778 | 210,477,658 | ||||||||||||
| Weighted average common shares outstanding, diluted | 3,324,638,012 | 382,019,948 | 335,778,778 | 374,389,986 | ||||||||||||
As
of September 30, (unaudited) | As
of December 31, 2022 | As Adjusted (1) | ||||||||||
| Balance Sheet Data | ||||||||||||
| Cash | $ | 338,982 | 42,582 | |||||||||
| Working capital | $ | (3,165,242 | ) | (1,400,412 | ) | |||||||
| Total assets | $ | 625,550 | 205,299 | |||||||||
| Total liabilities | $ | 3,584,792 | 1,505,711 | |||||||||
| Total stockholders’ equity (deficit) | $ | (2,959,242 | ) | (1,300,412 | ) | |||||||
| (1) | Reflects our sale of ________ shares of common stock offered by this prospectus at an assumed public offering price of $___ per share, after deducting the underwriting discount and the estimated offering expenses that we will pay. |
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RISK FACTORS
You should carefully review and consider the risk factors described below and the other information contained in this prospectus, including the financial statements and notes to the financial statements and matters addressed in the section entitled “Management’s Discussion and Analysis of Financial Condition and Results of Operations.” The occurrence of one or more of the events or circumstances described in these risk factors, alone or in combination with other events or circumstances, may have an adverse effect on our business, cash flows, financial condition, and results of operations. We may face additional risks and uncertainties that are not presently known to us, or, or that we currently deem immaterial, which may also harm our business, financial condition, results of operations, and prospects.
Risks Related to Our Business
Our future performance is difficult to evaluate because we have a limited operating history in the lithium industry.
We entered the lithium industry in November 2021. We have not realized any revenues to date from the sale of lithium, and our operating cash flow needs have been financed primarily through issuances of debt and equity securities, and not through cash flows derived from our operations. As a result, we have little historical financial and operating information from our lithium business to help you evaluate our performance.
We have a history of losses and expect to continue to incur losses in the future.
We have an accumulated deficit of approximately $17,854,837 as of December 31, 2022, which increased to $20,317,636 as of September 30, 2023. We expect to continue to incur losses unless and until such time as our projects or one of our future acquired properties enters into commercial production and generates sufficient revenues to fund continuing operations and we are able to develop at least one economic deposit. We recognize that if we are unable to generate cash flows from our operations, we will not be able to earn profits or continue operations. At this early stage of our lithium operations, we also expect to face the risks, uncertainties, expenses and difficulties encountered by companies at the mineral exploration stage. We cannot be sure that we will be successful in addressing these risks and uncertainties and our failure to do so could have a materially adverse effect on our financial condition.
There is uncertainty regarding our ability to implement our business plan and to grow our operations with our existing financial resources without additional financing. Our ability to implement our business plan is dependent on us generating cash from operations, the sale of our stock and/or obtaining debt financing. Historically, we have funded our operations primarily through the issuance of debt and equity securities. Management’s plan to fund our capital requirements and ongoing operations includes the generation of revenue from our lithium operations and projects. Management’s secondary plan to cover any shortfall is selling our equity securities and obtaining debt financing. There is no assurance that we will be successful in implementing our business plan or that we will be able to generate sufficient cash from operations, sell securities or borrow funds on favorable terms or at all. Our inability to generate significant revenue or obtain additional financing could have a material adverse effect on our ability to fully implement our business plan and grow our business to a greater extent than we can with our existing financial resources.
There is substantial doubt about our ability to continue as a going concern.
Our independent registered public accounting firm has included an explanatory paragraph in their report in our audited financial statements for the year ended December 31, 2022 to the effect that our recurring losses since inception and failure to achieve profitable operations raise substantial doubt about our ability to continue as a going concern. Our financial statements do not include any adjustments that might be necessary should we be unable to continue as a going concern within one year after the date that the financial statements are issued. We may be required to cease operations which could result in our stockholders losing all or almost all of their investment.
We are an exploration stage issuer and there is no guarantee that our development will result in the commercial extraction of mineral deposits.
As defined under Regulation S-K Item 1300, we are an exploration stage issuer as we have no known mineral reserves, and we have not yet conducted any mining operations. Accordingly, we cannot assure you that we will ever realize any profits. Any profitability in the future from our business will be dependent upon the development of an economic deposit of minerals and further exploration and development of other economic deposits of minerals, each of which is subject to numerous risk factors. Further, we cannot assure you that any of our property interests can be commercially mined or that any exploration programs will result in profitable commercial mining operations. The exploration and development of mineral deposits involves a high degree of financial risk over a significant period of time, which may or may not be reduced or eliminated through a combination of careful evaluation, experience, and skilled management. While discovery of additional ore-bearing deposits may result in substantial rewards, few properties that are explored are ultimately developed into producing mines. Major expenses may be required to construct processing facilities and to establish reserves.
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Our exploration prospects may not contain any reserves and any funds spent on evaluation and exploration may be lost. We do not know with certainty that economically recoverable lithium exists on our properties. In addition, the quantity of any reserves may vary depending on commodity prices. Any material change in the quantity or grade of reserves may affect the economic viability of our properties.
Exploration and development projects like ours have no operating history upon which to base estimates of future operating costs and capital requirements. Actual operating costs and economic returns of any and all exploration projects may materially differ from the costs and returns estimated, and accordingly, our financial condition, results of operations, and cash flows may be negatively affected.
We face numerous risks related to exploration, construction, and extraction of mineral deposits.
Our level of profitability, if any, in future years will depend to a great degree on lithium prices and whether our properties can be brought into production. Exploration and development of lithium resources are highly speculative in nature, and it is impossible to ensure that any of our existing properties will establish reserves. Whether it will be economically feasible to extract lithium depends on a number of factors, including, but not limited to: (i) the particular attributes of the deposit, such as size, grade, and proximity to infrastructure; (ii) lithium prices; (iii) extraction, processing, and transportation costs; (iv) the willingness of lenders and investors to provide project financing; (v) labor costs and possible labor strikes; (vi) non-issuance of permits; and (vii) governmental regulations, including, without limitation, regulations relating to prices, taxes, royalties, land tenure, land use, importing and exporting materials, foreign exchange, environmental protection, employment, worker safety, transportation, and reclamation and closure obligations.
We are also subject to the risks normally encountered in the lithium industry, which include, without limitation:
| ● | the discovery of unusual or unexpected geological formations; |
| ● | accidental fires, floods, earthquakes, severe weather, seismic activity, or other natural disasters; |
| ● | unplanned power outages and water shortages; |
| ● | construction delays and higher than expected capital costs due to, among other things, supply chain disruptions, higher transportation costs, and inflation; |
| ● | the ability to obtain suitable or adequate machinery, equipment, or labor; |
| ● | shortages in materials or equipment and energy and electrical power supply interruptions or rationing; |
| ● | environmental liability; and |
| ● | other unknown risks involved in the conduct of lithium exploration and operations. |
The nature of these risks is such that liabilities could exceed any applicable insurance policy limits or could be excluded from coverage. There are also risks against which we cannot insure or against which we may elect not to insure. The potential costs, which could be associated with any liabilities not covered by insurance or in excess of insurance coverage, or compliance with applicable laws and regulations may cause substantial delays and require significant capital outlays, adversely affecting our future earnings, competitive position, and potentially our financial viability.
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The mineral and chemical processing industry is intensely competitive.
The mineral and chemical processing industry is intensely competitive. We may be at a competitive disadvantage because we must compete with other individuals and companies, many of which have greater financial resources, operational experience and technical capabilities than we do. Increased competition could adversely affect our ability to attract necessary capital funding or acquire suitable exploration properties. We may also encounter increasing competition from other mineral and chemical processing companies in our efforts to locate acquisition targets, hire experienced mining professionals and acquire exploration resources.
Our quarterly and annual operating and financial results and our revenue are likely to fluctuate significantly in future periods.
Our quarterly and annual operating and financial results are difficult to predict and may fluctuate significantly from period to period. Our revenues, net income and results of operations may fluctuate as a result of a variety of factors that are outside our control including, but not limited to, lack of sufficient working capital, equipment malfunction and breakdowns, inability to timely find spare machines or parts to fix the broken equipment, regulatory or licensing delays and severe weather phenomena.
Our long-term success will depend ultimately on our ability to generate revenues, achieve and maintain profitability, and develop positive cash flows from our lithium activities.
Our ability to (i) acquire additional lithium projects; and (ii) initiate and continue exploration, development, commissioning of lithium ultimately depends on our ability to generate revenues, achieve and maintain profitability, and generate positive cash flow from our operations. The economic viability of our future extraction activities has many risks and uncertainties including, but not limited to:
| ● | significant, prolonged decrease in the market price of lithium; |
| ● | significantly higher than expected construction and extraction costs; |
| ● | significantly lower than expected lithium extraction; |
| ● | significant delays, reductions, or stoppages in lithium extraction activities; |
| ● | significant shortages of adequate and skilled labor or a significant increase in labor costs; |
| ● | significantly more stringent regulatory laws and regulations; and |
| ● | significant difficulty in marketing and/or selling lithium or lithium hydroxide. |
It is common for a new lithium extraction operation to experience unexpected costs, problems, and delays during construction, commissioning and start-up. Most similar projects suffer delays during these periods due to numerous factors, including the factors listed above. Any of these factors could result in changes to economic returns or cash flow estimates of the project or have other negative impacts on our financial position. There is no assurance that our projects will commence commercial production on schedule, or at all, or will result in profitable operations. If we are unable to develop our projects into a commercial operating mine, our business and financial condition will be materially adversely affected. Moreover, even if a feasibility study supports a commercially viable project, there are many additional factors that could impact the project’s development, including terms and availability of financing, cost overruns, litigation or administrative appeals concerning the project, delays in development, and any permitting changes, among other factors.
Our future lithium extraction activities may change as a result of any one or more of these risks and uncertainties. We cannot assure you that any of our activities will result in achieving and maintaining profitability and developing positive cash flows.
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We depend on our ability to successfully access the capital and financial markets. Any inability to access the capital or financial markets may limit our ability to meet our liquidity needs and long-term commitments, fund our ongoing operations, execute our business plan or pursue investments that we may rely on for future growth.
Until commercial production is achieved from our planned projects, we will continue to incur operating and investing net cash outflows associated with including, but not limited to, maintaining and acquiring exploration properties, undertaking exploration activities, and the development of our planned projects. As a result, we rely on access to capital markets as a source of funding for our capital and operating requirements. We require additional capital to meet our liquidity needs related to expenses for our various corporate activities, including the costs related to our status as a publicly traded company, fund our ongoing operations, explore and define lithium mineralization, and establish any future lithium operations. We cannot assure you that such additional funding will be available to us on satisfactory terms, or at all.
To finance our future ongoing operations, and future capital needs, we may require additional funds through the issuance of additional equity or debt securities. Depending on the type and terms of any financing we pursue, stockholders’ rights and the value of their investment in our common stock could be reduced. Any additional equity financing will dilute shareholdings. If the issuance of new securities results in diminished rights to holders of our common stock, the market price of our common stock could be negatively impacted. New or additional debt financing, if available, may involve restrictions on financing and operating activities. In addition, if we issue secured debt securities, the holders of the debt would have a claim to our assets that would be prior to the rights of stockholders until the debt is paid. Interest on such debt securities would increase costs and negatively impact operating results.
If we are unable to obtain additional financing, as needed, at competitive rates, our ability to fund our current operations and implement our business plan and strategy will be affected. These circumstances may require us to reduce the scope of our operations and scale back our exploration, development and extraction programs. There is, however, no guarantee that we will be able to secure any additional funding or be able to secure funding to provide us with sufficient funds to meet our objectives, which may adversely affect our business and financial position.
We are dependent upon key management employees.
The responsibility of overseeing the day to day operations and the strategic management of our business depends substantially on our senior management. Loss of any such personnel may have an adverse effect on our performance. The success of our operations will depend upon numerous factors, many of which, in part, are beyond our control, including our ability to attract and retain additional key personnel in sales, marketing, technical support, and finance. Certain areas in which we operate are highly competitive and competition for qualified personnel is significant. We may be unable to hire suitable field personnel for our technical team or there may be periods of time where a particular position remains vacant while a suitable replacement is identified and appointed. We may not be successful in attracting and retaining the personnel required to grow and operate our business profitably.
Our ability to manage growth will have an impact on our business, financial condition, and results of operations.
Future growth may place strains on our financial, technical, operational, and administrative resources and cause us to rely more on project partners and independent contractors, thus, potentially adversely affecting our financial position and results of operations. Our ability to grow will depend on a number of factors, including, but not limited to:
| ● | our ability to develop existing prospects; |
| ● | our ability to identify and acquire or lease new exploratory prospects; |
| ● | our ability to maintain or enter into new relationships with project partners and independent contractors; |
| ● | our ability to continue to retain and attract skilled personnel; |
| ● | our access to capital; |
| ● | the market price for lithium products; and |
| ● | our ability to enter into agreements for the sale of lithium products. |
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Lawsuits may be filed against us and an adverse ruling in any such lawsuit may adversely affect our business, financial condition or liquidity or the market price of our common stock.
We may become involved in, named as a party to, or be the subject of, various legal proceedings, including regulatory proceedings, tax proceedings, and legal actions relating to personal injuries, property damage, property taxes, land rights, the environment, and contract disputes. For additional information, refer to “Legal Proceedings”.
The outcome of future legal proceedings cannot be predicted with certainty and may be determined adversely to us and as a result, could have a material adverse effect on our assets, liabilities, business, financial condition, or results of operations. Even if we prevail in any such legal proceeding, the proceedings could be costly, time-consuming, and may divert the attention of management and key personnel from our business operations, which could adversely affect our financial condition.
Our success as a company producing lithium and related products depends to a great extent on our research and development capabilities for direct lithium extraction and our ability to secure capital for the implementation of brine processing plants.
Our success as a producer of lithium and related products is dependent on our ability to develop and implement more efficient production capabilities based on mineral rich brine and implementation of direct lithium extraction (DLE) technologies, which while having the potential to significantly increase the supply of lithium from brine projects, the technology for DLE remains subject to many questions. A number of DLE technologies are emerging and being tested at scale, with a handful of projects already in commercial construction. However, there remain challenges around scalability and water consumption/ brine reinjection. We expect to make significant investment in research and development of the DLE process, and we will need to continue to invest heavily to scale our manufacturing to ultimately producing sufficient amounts of lithium. We cannot assure you that our future product research and development projects and financing efforts will be successful or be completed within the anticipated time frame or budget. There is no guarantee we will achieve anticipated sales target or in a profitable manner. In addition, we cannot assure you that our existing or potential competitors will not develop products which are similar or superior to our products or are more competitively priced. As it is often difficult to project the time frame for developing new products and the duration of market window for these products, there is a substantial risk that we may have to abandon a potential product that is no longer commercially viable, even after we have invested significant resources in the development of such product and our facilities. If we fail in our product launching efforts, our business, prospects, financial condition and results of operations may be materially and adversely affected.
The development of non-lithium battery technologies could adversely affect us.
The development and adoption of new battery technologies that rely on inputs other than lithium compounds could significantly impact our prospects and future revenues. Current and next generation high energy density batteries for use in electric vehicles rely on lithium compounds as a critical input. Alternative materials and technologies are being researched with the goal of making batteries lighter, more efficient, faster charging and less expensive, and some of these could be less reliant on lithium compounds. We cannot predict which new technologies may ultimately prove to be commercially viable and on what time horizon. Commercialized battery technologies that use no, or significantly less, lithium could materially and adversely impact our prospects and future revenues.
Our business is subject to cybersecurity risks.
Our operations depend on effective and secure information technology systems. Threats to information technology systems, such as cyberattacks and cyber incidents, continue to increase. Cybersecurity risks include, but are not limited to, malicious software, attempts to gain unauthorized access to our data and the unauthorized release, corruption or loss of our data and personal information, as well as interruptions in communication and operations. It is possible that our business, financial, and other systems could be compromised, which could go unnoticed for a prolonged period of time. We have not experienced a material breach of our information technologies. Nevertheless, we continue to take steps to mitigate these risks by employing a variety of measures, including employee training, technical security controls, and maintenance of backup and protective systems. Despite these mitigation efforts, cybersecurity attacks and other threats exist and continue to increase, any of which could have a material adverse effect on our business, results of operations, financial condition, and cash flows.
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Risks Related to Regulation
We will be required to obtain governmental permits and approvals in order to conduct development and extraction operations, a process that is often costly and time-consuming. There is no certainty that all necessary permits and approvals for our planned operations will be granted.
We are required to obtain and renew governmental permits and approvals for our exploration and development activities and, prior to extracting any mineralization we discover, we will be required to obtain additional governmental permits and approvals that we do not currently possess. Obtaining and renewing any of these governmental permits is a complex, time consuming and uncertain process involving numerous jurisdictions, public hearings, and possibly costly undertakings. The timeliness and success of permitting efforts are contingent upon many variables not within our control, including the interpretation of approval requirements administered by the applicable governmental authority.
We may not be able to obtain or renew permits or approvals that are necessary to our planned operations, or we may discover that the cost and time required to obtain or renew such permits and approvals exceeds our expectations. Any unexpected delays, costs or conditions associated with the governmental approval process could delay our planned exploration, development and extraction operations, which in turn could materially adversely affect our prospects, revenues, and profitability. In addition, our prospects may be adversely affected by the revocation or suspension of permits or by changes in the scope or conditions to use of any permits obtained.
Private parties, such as environmental activist organizations, frequently attempt to intervene in the permitting process to persuade regulators to deny necessary permits or seek to overturn permits that have been issued. These third-party actions can materially increase the costs, cause delays in the permitting process, and could cause us to not proceed with the development or operation of a property. In addition, our ability to successfully obtain key permits and approvals to explore for, develop, operate, and expand operations will likely depend on our ability to undertake such activities in a manner consistent with the creation of social and economic benefits in the surrounding communities, which may or may not be required by law. Our ability to obtain permits and approvals and to successfully operate in particular communities may be adversely affected by real or perceived detrimental events associated with our activities.
Our operations face substantial regulation of health and safety.
Our operations are subject to extensive and complex laws and regulations governing worker health and safety across our operating regions and our failure to comply with applicable legal requirements can result in substantial penalties. Future changes in applicable laws, regulations, permits and approvals or changes in their enforcement or regulatory interpretation could substantially increase costs to achieve compliance, lead to the revocation of existing or future exploration or mining rights or otherwise have an adverse impact on our results of operations and financial position.
Our mining claims are inspected on a regular basis by government regulators who may issue citations and orders when they believe a violation has occurred under local mining regulations. If inspections result in an alleged violation, we may be subject to fines, penalties or sanctions and our mining operations could be subject to temporary or extended closures.
In addition to potential government restrictions and regulatory fines, penalties or sanctions, our ability to operate (including the effect of any impact on our workforce) and thus, our results of operations and our financial position (including because of potential related fines and sanctions), could be adversely affected by accidents, injuries, fatalities or events detrimental (or perceived to be detrimental) to the health and safety of our employees, the environment or the communities in which we operate.
Compliance with environmental regulations and litigation based on environmental regulations could require significant expenditures.
Environmental regulations mandate, among other things, the maintenance of air and water quality standards, land development, and land reclamation, and set forth limitations on the generation, transportation, storage, and disposal of solid and hazardous waste. Environmental legislation is evolving in a manner that may require stricter standards and enforcement, increased fines and penalties for non-compliance, more stringent environmental assessments of proposed projects, and a heightened degree of responsibility for mining companies and their officers, directors, and employees. We may incur environmental costs that could have a material adverse effect on financial condition and results of operations. Any failure to remedy an environmental problem could require us to suspend operations or enter into interim compliance measures pending completion of the required remedy.
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Moreover, governmental authorities and private parties may bring lawsuits based upon damage to property and injury to persons resulting from the environmental, health, and safety impacts of prior and current operations. These lawsuits could lead to the imposition of substantial fines, remediation costs, penalties, and other civil and criminal sanctions, as well as reputational harm, including damage to our relationships with customers, suppliers, investors, governments or other stakeholders. Such laws, regulations, enforcement, or private claims may have a material adverse effect on our financial condition, results of operations, or cash flows.
Lithium prices are subject to unpredictable fluctuations.
We expect to derive revenues, if any, from the extraction and sale of lithium. The prices of lithium may fluctuate widely and are affected by numerous factors beyond our control, including international, economic, and political trends, expectations of inflation, currency exchange fluctuations, interest rates, global or regional consumptive patterns, speculative activities, increased production due to new extraction developments and improved extraction and production methods and technological changes in the markets for the end products. The effect of these factors on the prices of lithium and lithium byproducts, and therefore the economic viability of any of our exploration properties, cannot accurately be predicted.
Changes in technology or other developments could adversely affect demand for lithium compounds or result in preferences for substitute products.
Lithium and its derivatives are preferred raw materials for certain industrial applications, such as rechargeable batteries. For example, current and future high energy density batteries for use in electric vehicles will rely on lithium compounds as a critical input. The pace of advancements in current battery technologies, development and adoption of new battery technologies that rely on inputs other than lithium compounds, or a delay in the development and adoption of future high nickel battery technologies that utilize lithium could significantly impact our prospects and future revenues. Many materials and technologies are being researched and developed with the goal of making batteries lighter, more efficient, faster charging, and less expensive, some of which could be less reliant on lithium or other lithium compounds. Some of these technologies, such as commercialized battery technologies that use no, or significantly less, lithium compounds, could be successful and could adversely affect demand for lithium batteries in personal electronics, electric and hybrid vehicles, and other applications. We cannot predict which new technologies may ultimately prove to be commercially viable and on what time horizon. In addition, alternatives to industrial applications dependent on lithium compounds may become more economically attractive as global commodity prices shift. Any of these events could adversely affect demand for and market prices of lithium, thereby resulting in a material adverse effect on the economic feasibility of extracting any mineralization we discover and reducing or eliminating any reserves we identify.
Risks Related to this Offering and Ownership of Our Common Stock
An active trading market for our common stock may not develop, and you may be unable to resell your shares at or above the public offering price.
Our common stock trading over the counter has not been historically active. Although we intend to apply for listing our common stock for trading on the NYSE American, an active trading market for our shares may never develop or be sustained following this offering. No assurance can be given that our common stock will be accepted to trade on the NYSE American. The public offering price of our common stock will be determined through negotiations between us and the underwriters. This public offering price may not be indicative of the market price of our common stock after the offering. In the absence of an active trading market for our common stock, investors may not be able to sell their common stock at or above the public offering price or at the time that they would like to sell.
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Our stock price may be volatile, and the market price of our common stock after this offering may drop below the price you pay due to a variety of factors, many of which are beyond our control.
The market price of our common stock could be subject to significant fluctuations after this offering, and it may decline below the public offering price. Market prices for securities of early-stage companies have historically been particularly volatile. As a result of this volatility, you may not be able to sell your common stock at or above the public offering price. Some of the factors that may cause the market price of our common stock to fluctuate include:
| ● | fluctuations in our quarterly financial results or the quarterly financial results of companies perceived to be similar to our company; |
| ● | changes in estimates of our financial results or recommendations by securities analysts; |
| ● | failure of our business to achieve or maintain market acceptance in the lithium industry; |
| ● | changes in market valuations of similar companies; |
| ● | success of competitive service offerings or technologies; |
| ● | changes in our capital structure, such as future issuances of securities or the incurrence of debt; |
| ● | announcements by us or our competitors of significant services, contracts, acquisitions, or strategic alliances; |
| ● | regulatory developments in the United States, foreign countries, or both; |
| ● | litigation involving us; |
| ● | additions or departures of key personnel; |
| ● | investors’ general perception of us; and |
| ● | other events or factors, including those resulting from macroeconomic conditions, geopolitical crises, outbreak of hostilities or acts of war such as the Russian invasion of Ukraine, the Israeli-Hamas war, and Houthi rebel ship attacks in the Red Sea, incidents of terrorism, global pandemics such as the Covid-19 pandemic, natural disasters, and similar events, as well as responses to these and similar events. |
In addition, if the market for lithium and technology sector stocks or the stock market in general experiences a loss of investor confidence, the trading price of our common stock could decline for reasons unrelated to our business, financial condition, or results of operations. If any of the foregoing occurs, it could cause our stock price to fall and may expose us to class action lawsuits that, even if unsuccessful, could be costly to defend and a distraction to management.
Purchasers in this offering may experience substantial dilution in the book value of their investment.
In the future, your percentage ownership in us may be diluted if we issue additional shares of our common stock or convertible debt securities in connection with acquisitions, capital market transactions, or other corporate purposes, including equity awards that we may grant to our directors, officers and employees.
Our officers and directors have significant voting power and may take actions that may not be in the best interests of other stockholders.
Our executive officers and directors currently own or control 51.4% of our outstanding shares of common stock. Upon the completion of this offering, our executive officers and directors will own or control approximately ___% of our outstanding shares. If these stockholders act together, they will be able to exert significant control over our management and affairs requiring stockholder approval, including approval of significant corporate transactions. This concentration of ownership may have the effect of delaying or preventing a change in control and might adversely affect the market price of our common stock. This concentration of ownership may not be in the best interests of all of our stockholders.
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After the completion of this offering, we do not expect to declare any dividends in the foreseeable future.
After the completion of this offering, we do not anticipate declaring any cash dividends to holders of our common stock in the foreseeable future. Consequently, investors may need to rely on sales of their common stock after price appreciation, which may never occur, as the only way to realize any future gains on their investment. Investors seeking cash dividends should not purchase our common stock.
Our indemnification of officers and directors and limitations on their liability could limit our recourse against them.
Our certificate of incorporation and bylaws contain broad indemnification and liability limiting provisions regarding our officers, directors and employees, including the limitation of liability for certain violations of fiduciary duties. Stockholders therefore will have only limited recourse against these individuals.
If we fail to implement and maintain proper and effective internal controls and disclosure controls and procedures, our ability to produce accurate and timely financial statements and public reports could be impaired, which could adversely affect our operating results, our ability to operate our business and investors’ views of us.
Section 404 of the Sarbanes-Oxley Act of 2002 requires our company to evaluate the effectiveness of our internal control over financial reporting as of the end of each year, and to include a management report assessing the effectiveness of our internal control over financial reporting in each annual report on Form 10-K.
We have identified our disclosure controls and procedures were not effective and that material weaknesses exists in our internal control over financial reporting. The material weaknesses consist of an insufficient complement of qualified accounting personnel and controls associated with segregation of duties and ineffective controls associated with identifying and accounting for complex and non-routine transactions in accordance with U.S. generally accepted accounting principles. Due to the material weaknesses in internal control over financial reporting and disclosure controls and procedures, there may be errors in our consolidated financial statements and in the accompanying footnote disclosures that could require restatements. Investors may lose confidence in our reported financial information and disclosure, which could negatively impact our stock price.
We do not expect that our internal control over financial reporting will prevent all errors and all fraud. A control system, no matter how well designed and operated, can provide only reasonable, not absolute, assurance that the control system’s objectives will be met. Further, the design of a control system must reflect the fact that there are resource constraints, and the benefits of controls must be considered relative to their costs. Controls can be circumvented by the individual acts of some persons, by collusion of two or more people, or by management override of the controls. Over time, controls may become inadequate because changes in conditions or deterioration in the degree of compliance with policies or procedures may occur. Because of the inherent limitations in a cost-effective control system, misstatements due to error or fraud may occur and not be detected.
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CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS
Information set forth in this prospectus may contain various “forward-looking statements.” All information relative to future markets for our product candidates and trends in, and anticipated levels of, revenue, and expenses, as well as other statements containing words such as “anticipate,” “believe,” “estimate,” “expect,” “intend,” “may,” “plan,” “project,” “target,” “should” and “will” and other similar expressions constitute forward-looking statements. These forward-looking statements are subject to business, economic, and other risks and uncertainties, both known and unknown, and actual results may differ materially from those contained in the forward-looking statements. Examples of risks and uncertainties that could cause actual results to differ materially from historical performance and any forward-looking statements include, but are not limited to, the risks described under the section titled “Risk Factors.”
Given these risks, uncertainties, and other factors, you should not place undue reliance on these forward-looking statements. Also, these forward-looking statements represent our estimates and assumptions only as of the date such forward-looking statements are made. You should read carefully this prospectus and any related free writing prospectuses that we have authorized for use in connection with this offering, completely and with the understanding that our actual future results may be materially different from what we expect. We hereby qualify all of our forward-looking statements by these cautionary statements. Except as required by U.S. federal securities law, we assume no obligation to update these forward-looking statements publicly or to update the reasons actual results could differ materially from those anticipated in these forward-looking statements, even if new information becomes available in the future.
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USE OF PROCEEDS
We estimate that the net proceeds to us from this offering will be approximately $________ (or approximately $________ if the underwriters exercise in full their option to purchase up to ______ additional shares of common stock), based on an assumed public offering price of $____ per share, after deducting underwriting discounts and commissions and estimated offering expenses payable by us.
The principal purposes of this offering are to obtain additional capital to support our mining operations, to create a public market for our common stock and to facilitate our future access to the public equity markets.
We currently intend to use the net proceeds from this offering, together with our existing cash and cash equivalents, as follows:
| ● | approximately $______ to fund the development and operation of our Lisbon Valley Project, including the drilling, permitting, claim re-registration and related geological work on the 14,260-acre land position; |
| ● | approximately $______ to fund potential expansion of our mineral rights through acquisitions of land and claims, and joint venture opportunities; and |
| ● | the remainder for working capital and general corporate purposes, including amounts required to pay for research and development expenses, salaries, professional fees, public reporting costs, office-related expenses and other corporate expenses. |
We currently have no commitments with respect to any acquisitions or joint ventures.
Our expected use of net proceeds from this offering represents our current intentions based upon our present plans and business condition. As of the date of this prospectus, we cannot predict with certainty all of the particular uses for the net proceeds to be received upon the closing of this offering, or the amounts that we will actually spend on the uses set forth above. The amounts and timing of our actual use of the net proceeds will vary depending on numerous factors. We may find it necessary or advisable to use the net proceeds for other purposes, and our management will have broad discretion in the application of the net proceeds, and investors will be relying on our judgment regarding the application of the net proceeds from this offering.
Pending these uses, we intend to invest the net proceeds from this offering in short-term, investment-grade, interest-bearing securities.
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DIVIDEND POLICY
We did not pay dividends during the years ended December 31, 2023 and 2022. We have never declared or paid any cash dividends or distributions on our common stock and intend to retain future earnings, if any, to support our operations and to finance expansion. Therefore, we do not anticipate paying any cash dividends on the common stock in the foreseeable future.
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CAPITALIZATION
The following table summarizes our capitalization at December 31, 2023, giving effect to the issuance and sale of _____ shares of our common stock in this offering based on an assumed public offering price of $___ per share, after deducting underwriting discount and estimated offering expenses we will pay.
| As of December 31, 2023 | ||||||||
| Actual | As Adjusted | |||||||
| (unaudited) | ||||||||
| Cash | ||||||||
| Debt, current portion | ||||||||
| Long-term debt, net of current portion | ||||||||
| Stockholders’ equity (deficit) | ||||||||
| Common stock, $0.001 par value, ______ shares authorized, ______ shares issued and outstanding, actual; ______ shares issued and outstanding, | ||||||||
| Additional paid-in capital | ||||||||
| Accumulated deficit | ||||||||
| Total stockholders’ equity (deficit) | ||||||||
| Total capitalization | ||||||||
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DILUTION
If you invest in our common stock in this offering, your ownership interest will be immediately diluted to the extent of the difference between the public offering price per share and the pro forma, as adjusted net tangible book value per share of our common stock immediately after this offering. Net tangible book value per share is determined by dividing our total tangible assets less total liabilities by the number of outstanding shares of common stock.
As of December 31, 2023, we had a net tangible book value of $________ (unaudited) or $____ per share of common stock. Our pro forma net tangible book value per share represents the amount of our total tangible assets reduced by the amount of our total liabilities and divided by the total number of shares of our common stock outstanding as of December 31, 2023.
Investors participating in this offering will incur immediate and substantial dilution. After giving effect to the issuance and sale of _____ shares of our common stock in this offering based on an assumed public offering price of $___ per share, after deducting underwriting discounts and commissions and estimated offering expenses payable by us, our as adjusted net tangible book value as of December 31, 2023 would have been approximately $________, or $____ per share of common stock. This represents an immediate increase in the pro forma net tangible book value of $____ per share to existing stockholders and an immediate decrease of $____ per share to investors purchasing shares of our common stock in this offering. The following table illustrates this per share dilution on a per share basis:
| Amount | ||||
| Assumed public offering price per share of common stock | ||||
| Pro forma net tangible book value (deficit) before offering | ||||
| Increase in pro forma net tangible book value attributable to new investors | ||||
| Pro forma as adjusted net tangible book value after offering | ||||
| Dilution in pro forma net tangible book value to new investors | ||||
If the underwriters exercise their over-allotment option in full to purchase an additional ______ shares of common stock from us in this offering to cover over-allotments, if any, the pro forma as adjusted net tangible book value per share after the offering would be $____ per share, the increase in the pro forma net tangible book value per share to existing stockholders would be $____ per share and the dilution per share to new investors purchasing common stock in this offering would be $____ per share.
To the extent that new stock options are issued or we issue additional shares of common stock in the future, there will be further dilution to investors participating in this offering. In addition, we may choose to raise additional capital because of market conditions or strategic considerations, even if we believe that we have sufficient funds for our current or future operating plans. If we raise additional capital through the sale of equity or convertible debt securities, the issuance of those securities could result in further dilution to our stockholders.
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MANAGEMENT’S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The following discussion and analysis is intended to help you understand our results of operations and financial condition. This discussion and analysis is provided as a supplement to, and should be read in conjunction with, the section entitled “Our Selected Financial Information” and our consolidated financial statements and notes thereto included elsewhere in this prospectus. This discussion may contain forward-looking statements based upon current expectations that involve risks and uncertainties. Our actual results may differ materially from those anticipated in these forward-looking statements as a result of various factors, including those set forth under the sections entitled “Risk Factors” or “Cautionary Note Regarding Forward-Looking Statements” in other parts of this prospectus.
Cautionary Statement
The following discussion and analysis should be read in conjunction with our financial statements and related notes included elsewhere in this prospectus. Our actual results may differ materially from those anticipated in the following discussion, as a result of a variety of risks and uncertainties, including those described under “Risk Factors.”
Forward-Looking Statements
Certain statements contained herein constitute “forward-looking statements.” Except for the historical information contained herein, this report contains forward-looking statements (identified by the words “estimate,” “project,” “anticipate,” “plan,” “expect,” “intend,” “believe,” “hope,” “strategy” and similar expressions), which are based on our current expectations and speak only as of the date made. These forward-looking statements are subject to various risks, uncertainties and factors that could cause actual results to differ materially from the results anticipated in the forward-looking statements, including, without limitation, those discussed under Part I, Item 1A “Risk Factors” in our annual report on Form 10-K for the year ended December 31, 2022, as filed with the Securities and Exchange Commission on April 21, 2023, and those described herein that could cause actual results to differ materially from the results anticipated in the forward-looking statements, and the following:
| ● | our limited operating history with our business model; |
| ● | the limited financing currently available to us. We may in the near future have a number of obligations that we will be unable to meet without generating additional income or raising additional capital; |
| ● | further cost reductions or curtailment in future operations due to our low cash balance and negative cash flow; |
| ● | our ability to effect a financing transaction to fund our operations which could adversely affect the value of our stock; |
| ● | our limited cash resources may not be sufficient to fund continuing losses from operations; |
| ● | the failure of our products and services to achieve market acceptance; and |
| ● | the inability to compete in our market, especially against established industry competitors with greater market presence and financial resources. |
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Objective
The objective of our Management’s Discussion and Analysis of Financial Condition and Results of Operations (“MD&A”) is to provide users of our financial statements with the following:
| ● | A narrative explanation from the perspective of management of our financial condition, results of operations, cash flows, liquidity and certain other factors that may affect future results; |
| ● | Useful context to the financial statements; and |
| ● | Information that allows assessment of the likelihood that past performance is indicative of future performance. |
This MD&A is a supplement to, and should be read together with, our financial statements, including notes, referenced elsewhere in this prospectus, and is provided to enhance your understanding of our operations and financial condition. Due to rounding, some parts of this discussion may not sum or calculate precisely to the totals and percentages provided in the tables.
The following discussion and analysis provide information that our management believes is relevant to an assessment and understanding of our results of operations and financial condition, and should be read in conjunction with the consolidated financial statements and footnotes that appear elsewhere in this prospectus.
Overview and Outlook
We are a U.S. based renewable energy company focused on the extraction, refinement and distribution of technical minerals in an environmentally responsible manner. We formerly developed, marketed and distributed various self-serve electronic kiosks and mall/airport co-branded islands throughout North America. Due to the nationwide shutdown related to the Covid-19 pandemic, we spent a portion of 2020 restructuring and retiring certain corporate debt and obligations, and focusing on implementing a new operational direction.
Through the corporate reorganization and repositioning process, we found ourselves with the unique opportunity to acquire mining claims that historically reported high levels of lithium and other technical minerals. We hired and affiliated ourselves with industry veterans that bring decades of experience, credibility and relationships.
On November 5, 2021, we acquired the rights to 102 federal mining claims located in the Lisbon Valley of Utah for $100,000 plus the future payment of royalties based on a percentage of the net revenue from the sale of lithium produced from a portion of the mining property. The acquisition was driven by historical mineral data from seven existing wells with brine aquifer access. We have not yet commenced any mining operations, and we are an exploration stage issuer, as defined in SEC Regulation S-K, Item 1300 (“Regulation S-K 1300”). An independent third-party technical report indicated that further investment and development in the claims was warranted, although no determination has been made whether we have any reserves of minerals. Similarly, no determination has been made whether mineralization could be economically and legally produced or extracted. We have no mineral reserves as defined by Regulation S-K 1300 and have had no mining revenue to date.
On October 20, 2022 we, following receipt of written approval from stockholders acting without a meeting and holding at least the minimum number of votes that would be necessary to authorize or take such action at a meeting, filed an amendment to our certificate of incorporation to (i) change the name of our company to “American Battery Materials, Inc.” (the “Name Change”); and (ii) increase the total number of authorized shares of our common stock, par value $0.001 per share, from 600,000,000 to 4,500,000,000 (the “Authorized Share Increase”). The Name Change was processed by FINRA and was effective on May 1, 2023, at which time our trading symbol was also changed to BLTH. The Authorized Share Increase was effective as of October 20, 2022.
On October 20, 2022, in addition to the Name Change and the Authorized Share Increase, the holder of 63.86% of the outstanding shares of stock of our company entitled to vote took action by written consent and without a meeting, pursuant to Delaware General Corporate Law Section 228, and adopted and approved the following actions:
| 1. | Future amendment of our certificate of incorporation to implement a decrease in the authorized shares of our common stock from 4,500,000,000 to a number of not less than 10,000,000 and not more than 2,000,000,000 (the “Authorized Share Reduction”), at any time prior to October 20, 2023 (the “Anniversary Date”), with the Board having the discretion to determine whether or not the Authorized Share Reduction is to be effected, and if effected, the exact number of the Authorized Share Reduction within the above range. |
| 2. | Future amendment of our certificate of incorporation to implement a reverse stock split of our common stock by a ratio of not less than 1-for-10 and not more than 1-for-1,000 (the “Reverse Split”), at any time prior to the Anniversary Date, with the Board having the discretion to determine whether or not the Reverse Split is to be effected, and if effected, the exact ratio for the Reverse Split within the above range. |
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On April 25, 2023, we formed Mountain Sage Minerals LLC, a Utah limited liability company. We will look to expand our holdings in the Lisbon Valley area with the acquisition of additional mineral claims and joint venture opportunities through this new entity.
On June 1, 2023, we entered into an Agreement and Plan of Merger (the “Merger Agreement”) with Seaport Global Acquisition II Corp. (“SGII”), and Lithium Merger Sub, Inc., a wholly owned subsidiary of SGII. SGII is a blank check company, also referred to as a special purpose acquisition company, formed for the purpose of effectuating a merger, capital stock exchange, asset acquisition, stock purchase, reorganization or other similar business combination with one or more businesses. SGII is an early stage and emerging growth company. As a result of the transaction under the Merger Agreement, we would have become a wholly owned subsidiary of SGII. Following material changes to the transaction proposed by SGII making the transaction untenable to us, on November 20, 2023, SGII notified us that it had elected to terminate the Merger Agreement.
We have been moving forward with our strategy of employing advanced brine extractive technology methodologies and have been in talks with numerous extraction providers. Selective mineral extraction is clearly the most cost-effective and ESG friendly approach currently available. Technologies are being utilized that can extract the desired minerals and metals from the brine and then re-inject the brines back down into the aquafer. The prospective partners have been provided the analytical results from the technical reports, but will soon provide current results, analytical, geotech modeling, aquifer modeling, recharge, flows, and depth. We will need funding to support continuing operations and support our growth strategy, and we will need to finance operations by offering any combination of equity offerings, debt financing, collaborations, strategic alliances, or other licensing arrangements. There is no assurance we will be able to raise sufficient capital to finance our operations.
Results of Operations
Nine months Ended September 30, 2023 Compared to Nine months Ended September 30, 2022
Revenue
For the nine months ended September 30, 2023 and 2022, we had no revenue.
Operating Expenses
General and administrative expenses for the nine months ended September 30, 2023 were $2,165,494, an increase of $1,343,499 or 163%, compared to $821,995 for the nine months ended September 30, 2022. The increase in operating expenses was mainly due to an increase in professional fees, mining maintenance fees and stock compensation expenses. In the second quarter of 2022, we activated consulting teams to pursue additional land acquisitions, and to begin the State and Federal permitting process for project development work.
In addition, we initiated construction strategies based on reports from RESPEC, our engineering partner, for geological modeling and drill entry design and related planning.
Change in Fair Value of Derivative Liabilities
During the nine months ended September 30, 2022, we recorded a gain on the change in fair value of derivative liabilities of $211,345. The underlying convertible notes were converted during the fourth quarter of 2022, resulting in no derivative liabilities during the nine months ended September 30, 2023.
Gain on Settlement of Liabilities
During the nine months ended September 30, 2023, we recorded a gain on settlement of liabilities of $67,984, consisting of $7,008 in principal and $60,976 in interest forgiven by noteholders. No such transactions were noted during the nine months ended September 30, 2022.
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Fair value of stock issued for note modification
During the nine months ended September 30, 2023, we recorded a fair value of stock issued for note modification of $168,856. No such transactions were noted during the nine months ended September 30, 2022.
Extension fees due to SPAC Sponsor
During the nine months ended September 30, 2023, we recorded $101,662 of extension fees due to SPAC Sponsor. No such transactions were noted during the nine months ended September 30, 2022.
Interest Expense
Interest expense for the nine months ended September 30, 2023 was $94,771, as compared to $537,938 during the nine months ended September 30, 2022 due to the conversion of convertible notes payable during the fourth quarter of 2022.
Net Loss
As a result of the foregoing, the net loss for the nine months ended September 30, 2023, was $2,462,799 as compared to the net loss of $1,148,558 during the nine months ended September 30, 2022.
Year Ended December 31, 2022 Compared to Year Ended December 31, 2021
Revenue
For the year ended December 31, 2022 and 2021, we had no revenue.
Operating Expenses
General and administrative expenses for the year ended December 31, 2022 were $1,135,088, an increase of $741,712 or 189%, compared to $393,376 for the year ended December 31, 2021. The increase in operating expenses was mainly due to an increase in professional fees. In the second quarter of 2022, we activated consulting teams to pursue additional land acquisitions, and to begin the State and Federal permitting process for project development work.
In addition, we initiated construction strategies based on reports from RESPEC, our engineering partner, for geological modeling and drill entry design and related planning.
Change in Fair Value of Derivative Liabilities
During the year ended December 31, 2022, we recorded a gain on the change in fair value of derivative liabilities of $211,345, as compared to a gain on the change in fair value of derivative liabilities of $2,871,910 during the year ended December 31, 2021.
Interest Expense
Interest expense for the year ended December 31, 2022 was $595,124, as compared to $760,663 during the year ended December 31, 2021.
Net Loss
As a result of the foregoing, the net loss for the year ended December 31, 2022 was $1,486,848 as compared to the net income of $1,762,466 during the year ended December 31, 2021.
Liquidity and Capital Resources
We require cash to fund our operating expenses and working capital requirements, including outlays for capital expenditures. The accompanying consolidated financial statements have been prepared on a going concern basis. We had a net loss of $1,486,848 during the year ended December 31, 2022, had accumulated losses totaling $17,854,837, and had a working capital deficit of $1,400,412 at December 31, 2022. These factors, among others, indicate that we may be unable to continue as a going concern. The consolidated financial statements do not include any adjustments that might result from the outcome of these uncertainties.
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Since we acquired our first mining claims in November 2021 we have faced an increasingly challenging liquidity situation that has limited our ability to execute our operating plan. We will need to raise additional financing in order to fund our operations for the next 12 months, and to allow us to continue the development of our business plans and satisfy our obligations on a timely basis. Should additional financing not be available, we will have to negotiate with its lenders to extend the repayment dates of its indebtedness. There can be no assurance that we will be able to successfully restructure our debt obligations in the event we fail to obtain additional financing.
Sources of additional capital through various financing transactions or arrangements with third parties may include equity or debt financing, bank loans or revolving credit facilities. We may not be successful in locating suitable financing transactions in the time period required or at all, and we may not obtain the capital we require by other means. Unless we can attract additional investment, our operating as a going concern is in doubt.
If we are unable to obtain sufficient amounts of additional capital, we may have to cease filing the required reports and cease operations completely. If we obtain additional funds by selling any of our equity securities or by issuing common stock to pay current or future obligations, the percentage ownership of our stockholders will be reduced, stockholders may experience additional dilution, or the equity securities may have rights preferences or privileges senior to the common stock.
Cash Flows
Nine months Ended September 30, 2023 Compared to Nine months Ended September 30, 2022
Operating Activities
During the nine months ended September 30, 2023, we used $1,911,600 of cash in operating activities as a result of our net loss of $2,462,799, increased by gain on debt settlement of $67,984 and amortization of debt discount of $89,876, and offset by fair value of options issued for note modification of $168,856, share-based compensation of $446,113, and net changes in operating assets and liabilities of $94,090.
During the nine months ended September 30, 2022, we used $720,338 of cash in operating activities as a result of our net loss of $1,148,588, offset by share-based compensation of $11,080, change in fair market value of derivative liability of $211,345, and net changes in operating assets and liabilities of $628,515.
Investing Activities
During the nine months ended September 30, 2023, we expended $106,000 for staking activities related to new federal mining claims located in the Lisbon Valley of Utah.
During the nine months ended September 30, 2022, we had no investing activities.
Financing Activities
During the nine months ended September 30, 2023, financing activities provided $2,314,000, resulting from $2,025,000 in proceeds from convertible notes, $100,000 in proceeds from promissory notes, and $189,000 in proceeds from the exercise of warrants.
During the nine months ended September 30, 2022, financing activities provided $765,000, resulting from $590,000 in proceeds from convertible notes, $200,000 in proceeds from promissory notes, and $50,000 in proceeds from issuance of preferred stock, offset by $75,000 in repayments of convertible notes.
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Year Ended December 31, 2022 Compared to Year Ended December 31, 2021
Operating Activities
During the year ended December 31, 2022, we used $910,709 of cash in operating activities as a result of our net loss of $1,486,848, offset by share-based compensation of $62,080, net changes in operating assets and liabilities of $757,423, and increased by gain on change in fair market value of derivative liability of $211,345 and gain on settlement of debt of $32,019.
During the year ended December 31, 2021, we used $392,445 of cash in operating activities as a result of our net income of $1,762,466, increased by share-based compensation of $6,296, write-off of assets of $17,500, and net changes in operating assets and liabilities of $755,297, and offset by change in fair market value of derivative liability of $2,871,910 and gain on settlement of liabilities of $62,095.
Investing Activities
During the year ended December 31, 2022, we had no investing activities.
During the year ended December 31, 2021, we purchased $100,000 in mineral claims.
Financing Activities
During the year ended December 31, 2022, financing activities provided $945,000, resulting from $590,000 in proceeds from convertible notes, $250,000 in proceeds from promissory notes, $130,000 in proceeds from the exercise of warrants, and $50,000 in proceeds from issuance of preferred stock, offset by $75,000 in repayments of convertible notes.
During the year ended December 31, 2021, financing activities provided $477,150, resulting from $885,000 in proceeds from convertible notes, offset by $82,000 in repayments of capital lease obligations, $300,850 in repayments of convertible notes, and $25,000 in repayments of promissory notes.
Off-Balance Sheet Arrangements
We do not have any off-balance sheet arrangements that have, or are reasonably likely to have, an effect on our financial condition, financial statements, revenues or expenses.
Impact of Inflation
Management continues to evaluate the impact of the existence of inflationary trends on the U.S. economy and the recent increase in interest rates. Although our operations are influenced by general economic conditions, we do not believe that inflation or rising interest rates had a material effect on our results of operations during the last two years. While it is reasonably possible that such uncertainties, and governmental and societal actions to manage them, could have a negative effect on our financial position in the future, the specific impact is currently not readily determinable.
Critical Accounting Policies
The preparation of financial statements and related disclosures in conformity with accounting principles generally accepted in the United States requires management to make judgments, assumptions and estimates that affect the amounts reported in our consolidated financial statements and accompanying notes. The consolidated financial statements as of June 30, 2023 describe the significant accounting policies and methods used in the preparation of the consolidated financial statements. Actual results could differ from those estimates and be based on events different from those assumptions. Future events and their effects cannot be predicted with certainty; estimating, therefore, requires the exercise of judgment. Thus, accounting estimates change as new events occur, as more experience is acquired or as additional information is obtained. The following critical accounting policies are impacted significantly by judgments, assumptions and estimates used in the preparation of our consolidated financial statements:
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Fair Value of Financial Instruments
For certain of our financial instruments, including cash and equivalents, accounts receivable, accounts payable, accrued liabilities and short-term debt, the carrying amounts approximate their fair values due to our short maturities. ASC Topic 820, “Fair Value Measurements and Disclosures,” requires disclosure of the fair value of financial instruments held by us. ASC Topic 825, “Financial Instruments,” defines fair value, and establishes a three-level valuation hierarchy for disclosures of fair value measurement that enhances disclosure requirements for fair value measures. The three levels of valuation hierarchy are defined as follows:
| ● | Level 1: Unadjusted quoted prices in active markets that are accessible at the measurement date for identical, unrestricted assets or liabilities. We consider active markets as those in which transactions for the assets or liabilities occur in sufficient frequency and volume to provide pricing information on an ongoing basis. |
| ● | Level 2: Quoted prices in markets that are not active, or inputs which are observable, either directly or indirectly, for substantially the full term of the asset or liability. This category includes those derivative instruments that we value using observable market data. Substantially all of these inputs are observable in the marketplace throughout the term of the derivative instruments, can be derived from observable data, or supported by observable levels at which transactions are executed in the marketplace. |
| ● | Level 3: Measured based on prices or valuation models that require inputs that are both significant to the fair value measurement and less observable from objective sources (i.e. supported by little or no market activity). |
Derivative Financial Instruments
We evaluate our financial instruments to determine if such instruments are derivatives or contain features that qualify as embedded derivatives. Certain warrants issued by us contain terms that result in the warrants being classified as derivative liabilities for accounting purposes. For derivative financial instruments that are accounted for as liabilities, the derivative instrument is initially recorded at its fair market value and then is revalued at each reporting date, with changes in fair value reported in the consolidated statement of operations. We do not use derivative instruments to hedge exposures to cash flow, market or foreign currency risks.
Factors That May Adversely Affect our Results of Operations
Our results of operations may be adversely affected by various factors that could cause economic uncertainty and volatility in the financial markets, many of which are beyond our control. Our business could be impacted by, among other things, downturns in the financial markets or in economic conditions, increases in oil prices, inflation, increases in interest rates, supply chain disruptions, declines in consumer confidence and spending, any ongoing effects of the Covid-19 pandemic, including resurgences and the emergence of new variants, and geopolitical instability, such as the military conflict in Ukraine and the Middle East. We cannot at this time fully predict the likelihood of one or more of the above events, their duration, or magnitude, or the extent to which they may negatively impact our business.
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BUSINESS
Overview of Our Company
We operate as a U.S. based renewable energy company focused on the extraction, refinement and distribution of technical minerals in an environmentally responsible manner. We formerly developed, marketed and distributed various self-serve electronic kiosks and mall/airport co-branded islands throughout North America. Due to the nationwide shutdown related to the Covid-19 pandemic, we spent a portion of 2020 restructuring and retiring certain corporate debt and obligations, and focusing on implementing a new operational direction.
Through the corporate reorganization and repositioning process, we found itself with the unique opportunity to acquire mining claims that historically reported high levels of lithium and other tech minerals. We hired and affiliated ourselves with industry veterans that bring decades of experience, credibility and relationships.
On November 5, 2021, we acquired the rights to 102 federal mining claims located in the Lisbon Valley of Utah for $100,000 plus the future payment of royalties based on a percentage of the net revenue from the sale of lithium produced from a portion of the mining property. The acquisition was driven by historical mineral data from seven existing wells with brine aquifer access. We have not yet commenced any mining operations, and we are an exploration stage issuer, as defined in SEC Regulation S-K Item 1300 (“Regulation S-K 1300”). An independent third-party technical report indicated that further investment and development in the claims was warranted, although no determination has been made whether we have any reserves of minerals. Similarly, no determination has been made whether mineralization could be economically and legally produced or extracted. We have no mineral reserves as defined by Regulation S-K 1300 and have had no mining revenue to date.
In July 2023, we acquired and staked additional lithium mining claims adjacent to our Lisbon Valley Project in Utah. The new claims have been registered with the Bureau of Land Management (BLM). We now own a total of 743 placer claims over 14,320 acres, comprised of the 102 original claims held and the 641 new claims.
Our Growth Strategy
Our strategic goal is to become a producer of lithium in the United States. We believe that a strategy of employing advanced brine extractive technology methodologies for selective mineral extraction is the most cost-effective and environmentally friendly approach currently available. We believe that this approach is environmentally friendly because we would not deconstruct land structures which leave dirty tailings, but rather we would extract the desired minerals and metals from subsurface brines that re-inject the brines back down into the aquafer to maintain pressure after lithium extraction. We plan, as part of our sustainability goals within our overall environmental, social and governance (“ESG”) strategy, to develop sustainable production operations. Our plan is to develop our projects and strategic equity investments on a measured timeline to provide the potential for both near-term cash flow and long-term value maximization.
We have been executing the necessary steps to determine analytical results from our technical report, which should provide current results, analytical, geotech modeling, aquifer modeling, recharge, flows and depth. We have engaged RESPEC Company LLC as our geotech, engineering and resource management partner to assist in the exploration of the Lisbon Valley brine extraction project. Leveraging its expertise, we will focus on several initiatives, which include the following:
| ● | advancement of geotech, engineering, geology and fieldwork to complete technical reports on the Lisbon Project; |
| ● | understanding Lisbon Valley brines, on and around owned leases; |
| ● | develop a well plan to re-enter, sample and test the “Superior Well,” that has a historical lithium concentration of 340 ppm (parts per million); |
| ● | enter other prospective plugged and abandoned wells, taking brine samples and performing hydrological testing at each identified high potential zone to evaluate the properties of the clastic formation; |
| ● | as information is advanced, prepare technical reports following the Regulation S-K 1300 Standards of Disclosure for Mineral Projects, initially a Preliminary Economic Assessment (PEA) and longer term, a Preliminary Feasibility Study (PFS); |
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| ● | test the collected brines for lithium, but also for previously identified high value elements such as cobalt, manganese, magnesium, and suites of metals in the alkaline earth metals, transition metals, and halogens group; and |
| ● | based on the results of the Superior well, develop area resource estimates. |
The Lisbon Valley of Utah also provides many added benefits:
| ● | historically rich industrial and natural resource extraction area; |
| ● | a developed infrastructure including high voltage electrical, proximity to major roadways and rail spurs; and |
| ● | state and local agency support through the Utah Division of Oil, Gas and Mining (UDOGM) and the Trust Land Administration (SITLA). |
We will also look to expand our holdings in the Lisbon Valley area with the acquisition of additional mineral claims and joint venture opportunities. We continue to explore and evaluate opportunities to further expand our resource base and production capacity through the possible acquisition of properties and projects in other areas of the United States, as well as in South America, particularly Argentina.
As part of our strategy for growth, our projects and strategic investments will be developed on a measured timeline, and we will evaluate all opportunities to further expand our resource base and production capacity. We understand that our timelines are subject to a variety of risks and variables, including, without limitation, obtaining permits, approvals and funding. We are also focused on the implementation of direct lithium extraction (DLE) technologies, which we believe have the potential to significantly increase the supply of lithium from our brine projects, similar to the impact which shale did for oil.
To achieve our goal of becoming a producer of lithium, we will rely on our competitive strengths and experienced management team to explore and consider all opportunities to generate revenue and increase our projects, properties and assets, as well as all potential funding options. Some opportunities for growth may be in the form of (i) strategic partnerships, (ii) off-take agreements, (iii) diversification of projects and properties, (iv) acquisitions of companies and technologies, and (v) participation in related commercial development activities.
The Lithium Market
Lithium is on the list of the 35 minerals considered critical to the economic and national security of the United States, as first published by the U.S. Department of the Interior on May 18, 2018. In June 2021, the U.S. Department of Energy published a report titled “National Blueprint for Lithium Batteries 2021-2030” (the “NBLB Report”) which was developed by the Federal Consortium for Advanced Batteries (“FCAB”), a collaboration by the U.S. Departments of Energy, Defense, Commerce, and State. According to the Report, one of the main goals of this U.S. government effort is to “secure U.S. access to raw materials for lithium batteries.” In the NBLB Report, Jennifer M. Granholm, the U.S. Secretary of Energy, states: “Lithium-based batteries power our daily lives from consumer electronics to national defense. They enable electrification of the transportation sector and provide stationary grid storage, critical to developing the clean-energy economy.”
The NBLB Report summarizes the U.S. government’s views on the need for lithium and the expected growth of the lithium battery market as follows:
| ● | “A robust, secure, domestic industrial base for lithium-based batteries requires access to a reliable supply of raw, refined, and processed material inputs…” |
| ● | “The worldwide lithium battery market is expected to grow by a factor of 5 to 10 in the next decade.” |
The growth in electric vehicles (“EVs”) will provide the greatest needs for lithium-based batteries. The NBLB Report states: “Bloomberg projects worldwide sales of 56 million passenger electric vehicles in 2040, of which 17% (about 9.6 million EVs) will be in the U.S. market.” Source: NBLB Report (defined above). Original Source: Bloomberg NEF Long-Term Electric Vehicle Outlook 2019.
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In a February 2021 report, Canalys, a global technology market analyst firm, states that global sales of EVs in 2020 increased by 39% year on year to 3.1 million units. This compares with a sales decline of 14% of the total passenger car market in 2020. Canalys forecasts that the number of EVs sold will rise to 30 million in 2028 and EVs will represent nearly half of all passenger cars sold globally by 2030.
Bloomberg’s Long-Term Electric Vehicle Outlook 2021 report states: “The outlook for EV adoption is getting much brighter, due to a combination of more policy support, further improvements in battery density and cost, more charging infrastructure being built, and rising commitments from automakers. Passenger EV sales are set to increase sharply in the next few years, rising from 3.1 million in 2020 to 14 million in 2025. Globally, this represents around 16% of passenger vehicle sales in 2025, but some countries achieve much higher shares. In Germany, for example, EVs represent nearly 40% of total sales by 2025, while China — the world’s largest auto market — hits 25%.”
Regarding the lithium battery growth derived from grid storage demands, the NBLB Report states: “In addition to the EV market, grid storage uses of advanced batteries are also anticipated to grow, with Bloomberg projecting total global deployment to reach over 1,095 GW by 2040, growing substantially from 9 GW in 2018;” and “Bloomberg forecasts 3.2 million EV sales in the U.S. for 2028, and over 200 GW of lithium-ion battery-based grid storage deployed globally by 2028. With an average EV battery capacity of 100 kWh, 320 GWh of domestic lithium-ion battery production capacity will be needed just to meet passenger EV demand.
On August 25, 2022, the Washington Post published an article titled “Did California just kill the gas-powered car?” and with the sub-heading “California’s decision to ban the sales of combustion engine cars is the latest victory in the transition to electric vehicles.” A particularly relevant passage from this article reads as follows:
“…the transition from gas-powered, internal combustion engine vehicles to electric vehicles no longer feels niche, or speculative. It feels inevitable. And this week, another profound development: California, which already leads the nation with 18 percent of new cars sold electric, is expected to approve a regulation to ban the sales of new gas-only powered vehicles by 2035. In addition to EVs, only a limited number of plug-in hybrids will be allowed to be sold. This is a big deal: California’s car market is only slightly smaller than those of France, Italy and Britain — and while many countries have promised to phase out sales of gas cars by such-and-such date, few have concrete regulations like California. Sixteen states have traditionally followed California’s lead in setting its own independent fuel standards — they could soon follow.”
Although no assurances can be given, these recent developments, if left unchallenged, may potentially increase demand for lithium in the U.S., as well as globally. Benchmark Mineral Intelligence, a global consulting firm specializing in the battery supply chain market, in a September 6, 2022 report, predicted that:
| ● | demand for lithium-ion batteries is set to grow six-fold by 2032 as global automakers scale up production of EVs; and |
| ● | to meet the world’s lithium requirements would require 74 new lithium mines with an average size of 45,000 tonnes by 2035. |
While these figures are robust relative to historical data, there can be no guarantee that ultimate consumer adoption for EVs and plug-in-hybrid vehicles (PHEV) will drive lithium demand as predicted.
Lithium Brine Deposits and Direct Lithium Extraction
Lithium is mined from three different deposit types: lithium brine deposits, pegmatite lithium deposits (also referred to as “hard rock”), and sedimentary lithium deposits (also referred to as clay deposits). Brine deposits are the most common, accounting for more than half of the world’s known lithium reserves. All our projects are in brine deposits.
As described by the U.S. Geological Survey, lithium brine deposits are accumulations of saline groundwater that are enriched in dissolved lithium. All producing lithium brine deposits share a number of first-order characteristics: (1) arid climate, (2) closed basin containing a playa or salar, (3) tectonically driving subsidence, (4) associated igneous or geothermal activity, (5) suitable lithium source-rocks, and (6) one or more adequate aquifers. South American countries Chile and Argentina are where the majority of the lithium produced from brines originates, as well as Nevada, to a much smaller extent.
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It is anticipated that we will use a direct lithium extraction (“DLE”), and reinjection of the processed brine back into the subsurface, rather than using evaporation ponds to recover the lithium and other potential mineral from brines, should the project advance to the production stage. This method has been gaining favor in the lithium industry over the last several years because it does not involve the use of evaporation ponds. DLE uses a much smaller footprint than evaporation ponds and is therefore more acceptable from an environmental standpoint. As yet, we have not done any testing for the possibility of using DLE and will not be able to do any testing until samples of brine are acquired from the target formations.
DLE technologies precipitate lithium out of brine using filters, membranes, ceramic beads, or other equipment, which is often housed in a small warehouse, significantly shrinking the environmental footprint of evaporation ponds used to produce commercial quantities of lithium traditionally. In a DLE operation, brine is pumped to a processing unit where an adsorption, resin or membrane material is used to extract only the lithium from the brine, while spent brine can be reinjected into the basin aquifers. The more rapid production time frame and possible brine reinjection into the aquifer is a key environmental differentiator between the DLE process and traditional lithium process that uses evaporation ponds.
While there may still be challenges around scalability, water consumption, and the possible dilutive effects of brine reinjection, over the past decade many DLE technologies have arisen to separate lithium from brine. DLE has the potential to significantly impact the lithium industry, with implementation on the extraction of lithium brines potentially having a dramatic positive impact on production, capacity, timing, and environmental impact. Similar to the impact shale exploration had on the oil industry, DLE has the potential to significantly increase the supply of lithium from brine projects, nearly doubling lithium production/yield (taking recoveries from 40-60% to 70-90%+) and improving project returns. DLE should also offer lower perceived environmental risk and yield significant environmental benefits when compared to traditional brine ponds, offering sustainability benefits and ESG credentials. It is estimated that approximately 12% of the world’s lithium supply in 2019 was produced using DLE technology. DLE technologies are broadly grouped into three main categories: adsorption, ion exchange and solvent extraction.
| ● | Adsorption physically absorbs LiCl molecules onto the surface of a sorbent from a lithium loaded solution. The lithium is then stripped from the surface of the sorbent with water. |
| ● | Ion exchange takes lithium ions from the solution and replaces them with a different positively charged cation that is contained in the sorbent material. An acidic (or basic) solution is required to strip the lithium from the material and regenerate the sorbent material. |
| ● | Solvent extraction removes lithium ions from solution by contacting the solution with an immiscible fluid (i.e., oil or kerosene) that contains an extractant that attaches to lithium ions and brings them into the immiscible fluid. The lithium is then stripped from the fluid with water or chemical treatment. |
Our identification as an “environmentally friendly” business is evidenced by our commitment to deploy direct lithium extraction rather than the typical extraction techniques of hard-rock mining or underground brine water. Unlike those traditional methods for producing lithium, DLE uses filters, membranes, or resin materials to extract the mineral from brine water, resulting in:
| ● | usage of less water; |
| ● | recycling of the majority of the brine water used; |
| ● | consumption of less fossil fuels; |
| ● | reduction in the need for additional processing and alternative mining sources; and |
| ● | leaving a smaller environmental footprint. |
Traditionally, lithium produced from brine water is stored in evaporation ponds. As the water evaporates, the other elements of the brine such as magnesium or calcium precipitate out, leaving the brine more concentrated to produce lithium carbonate. The evaporation process can take 9-18 months depending on the type of project and weather conditions. With DLE, that process can be shortened to days or even hours. DLE also reduces the amount of land required for the pond evaporation process, while the potential to reinject the remaining brine water after the process further reduces the environmental impact.
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Our Market Opportunity
Our Lisbon Valley Lithium Project (the “Project”) is located in San Juan County, Utah, approximately 35 miles southeast of the city of Moab, part of an area known as the Paradox Basin. The Project consists of 743 placer mining claims staked on U. S. government land administered by the BLM covering 14,300 acres, part of a semi-contiguous group named the LVL Group. The below map shows the approximate location of our claims:
Our original 102 placer claims were staked by Plateau Ventures LLC and sold to us have been assigned to our wholly owned subsidiary, Mountain Sage Minerals, LLC. Our additional 641 placer claims are registered or filed in the name of Mountain Sage Mineral, LLC. All such claims have been registered currently in good standing according to BLM records. All 743 Claims have been staked, recorded and are in good standing with BLM until next year’s maintenance fee renewal on September 1, 2024. No other mineral, land or water rights have been applied, granted or permitted to or by Mountain Sage Minerals LLC on the subject property. The following diagram is an overview of our claims which comprise our Lisbon Valley Lithium Project:
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The maps above are referenced with Professional Land Survey System (PLSS) and a latitude/longitude reference coordinate, accurate to 50 feet.
Our placer claims are plotted on the figures above, which is a Public Land Survey System (PLSS) map using Salt Lake City Prime Meridian. The claims are located in Southeast Utah in sections 17-18, 20-22, 25-29, 33-35 of Township 30 South and Range 25 East; sections 1, 3, 4, 8-15 of Township 31 South and Range 25 East; sections 31 of Township 30 South and Range 26 East and sections 5-9, 17 and 18 of Township 31 South and Range 26 East. The latitude and longitude of the southeast corner of Section 36, Township 30 South, 25 East is noted on the figure is accurate to +/- 50 feet.
There is a network of dirt and paved roads within the claims area, which service the oil and gas wells and the Lisbon Valley Copper Mine. Two existing natural gas pipelines traverse the claims. Power is supplied to the copper mine, also within the claim area, for use in their electrowinning copper recovery process. Nine wellbores (8 oil and gas and 1 potash) are available for re-entry and nearby water rights and private land are available for sale or lease.
Moab, Utah, the nearest population center to the property, is a city of 5,336 persons (2020 Census). It is located in a relatively remote portion of Utah but is easily accessed by U. S. Highway 191. Highway 191 intersects with Interstate 70 about 30 miles (48 kilometers) north of Moab, at Crescent Junction. Moab is a tourist destination and has numerous motels and restaurants. Moab would also be the nearest source of labor in the region.
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The region has a history of mining, primarily uranium and vanadium that dates back as far as 1881. The Lisbon Valley Copper Mine is in the heart of the Lisbon Valley and is currently producing copper cathode. An all-weather road and electric power supply the mine. A few gravel roads cross the property. Oil and gas drilling and production, along with ranching have made the area relatively accessible.
There has been no exploration or drilling conducted on the property by us or our predecessors other than the gathering and assimilation of data from all available sources. It will be necessary for us to re-enter an oil and gas well or to drill a new well to obtain brine samples for analysis and metallurgical testing. Permits for such operations will be required from the BLM and the UDOGM. We are in the process of permitting two appraisal wells.
The BLM Permit Process
The flow charts below outline the permit process for exploration of minerals (lithium well drilling) which is regulated by the UDOGM and the BLM. It is anticipated that it will take 300-360 days for approval to drill once the initial application is filed and under review by each agency.
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We believe there is abundant evidence from oil, gas and potash wells drilled in the Paradox Basin indicating a probability of identifying and producing super saturated brines from beneath the Project. The geology of the area of the Project and of the Paradox Basin as a whole is complex, although zones have been targeted and proven and they are mappable within and beyond the claims area. It is not likely that the same zones vary significantly in terms of reservoir quality and thickness as evidenced by log analysis; however, these parameters have not been confirmed by actual testing by us.
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We have not calculated mineral and resource estimation and has no revenue being generated from the subject property. The only way to determine if the lithium enriched brines exist and can be economically produced from the target zones is to drill exploration wells to produce and test brine from the targeted zones. We through our wholly owned operating company Mountain Sage Minerals, LLC intends to drill two appraisal wells on the subject property to evaluate reservoir properties (porosity, permeability and pressure), flow rates and in situ mineral concentrations. Information from the two wells will be used to assess the resource potential and devise a detailed development plan. The subsurface data collected from the two wells will be used to refine our proprietary subsurface model. The development model will include a proprietary 3D seismic survey to refine the subsurface model and delineate reservoir(s) continuity below the subject property and allow the team to select optimal spacing of future well locations and the network of production and injection wells required to fully develop potential mineral (brine) resources. Based on a substantial number of studies with lithium analyses from the Paradox Basin, we believe there is a substantial indication that lithium mineralization in brines occurs beneath the Project.
We have retained a third-party consulting firm to assist with drilling, completion and review of test results for the two appraisal wells. Any extracted brines should be tested to determine lithium and other important mineral concentrations and to prove the economic viability of a pilot and permanent production program. We have identified an appraisal and development program that is proprietary. This information will be disclosed in an advanced technical report after the appraisal wells are drilled and individual zones are identified and fully evaluated. Cost estimates and authority for expenditures for both well tests and the 3D Survey are currently in process.
The Technical Report Summary on the Project prepared by Bradley C. Peek, MSc. of CPG Peek Consulting, Inc., in accordance with Regulation S-K 1300, is included as an exhibit to the registration statement, of which this prospectus forms a part. The effective date of the report is October 31, 2023.
Internal Controls
Even though we have yet to establish mineral resource and reserve estimates, we have established internal controls for reviewing and documenting the information we intend to use to support mineral reserve and mineral resource estimates. We have engaged third party service providers and specialists in geosciences, and data and engineering for exploration and mine productivity and efficiency. A review of all progress on the development of our mineral resources and reserves estimates, including related assumptions, is undertaken and finalized by our qualified person (“QP”).
When determining resources and reserves, as well as the differences between resources and reserves, our QP will develop specific criteria, each of which must be met to qualify as a resource or reserve, respectively. The QP and our management must agree on the reasonableness of the criteria for the purposes of estimating resources and reserves. These criteria, such as demonstration of economic viability, points of reference, and grade, must be specific and attainable. All estimates require a combination of historical data and key assumptions and parameters. When possible, historical data and resources, data from public information, and generally accepted industry sources will be used to develop these estimations.
We have developed quality control and quality assurance (“QC/QA”) procedures at our Lisbon Valley property, which were reviewed by our QP to ensure the process for developing mineral resource and reserve estimates is sufficiently accurate. QC/QA procedures include independent checks on samples by third party laboratories, and duplicate sampling, among others. In addition, our QP will review the consistency of historical production as part of its analysis of the QC/QA procedures.
We recognize the risks inherent in mineral resource and reserve estimates, such as the geological complexity, interpretation and extrapolation of data, changes in operating approach, macroeconomic conditions and new data, among others. Overestimated resources and reserves resulting from these risks could have a material effect on future profitability.
Raw Materials
We do not have any material dependence on any raw materials or raw material suppliers. All the raw materials that we need are available from numerous suppliers and at market-driven prices.
Intellectual Property
We do not own or license any intellectual property which we consider to be material.
Sales and Marketing
We currently do not have commercial capabilities required to market and distribute lithium. There is no assurance that we will be able to attain the necessary sales and marketing capabilities or secure the services of a firm to provide those capabilities, to achieve our sales expectations.
Customers
As we are not yet in production, we have no customers and have no off-take agreements with customers.
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Future Production and Sales
We expect the demand for our lithium, if and when in production, to be facilitated by increasing global demand for lithium. We intend on utilizing intermediaries for sales in order to focus on our core competencies of exploration and extraction.
Competition and Market Barriers
We compete with other mineral and chemical processing companies in connection with the acquisition of suitable exploration properties and the engagement of qualified personnel. Many of our competitors possess greater financial resources and technical facilities than we do. Although we aspire to be a leading lithium producer, the lithium mining and chemical industries are fragmented. We are one of many participants in these sectors. Many of our competitors, as compared to us, have been in business longer, have established more strategic partnerships and relationships, and have greater financial accessibility.
While we compete with other exploration companies in acquiring suitable properties, we believe there will be readily available purchasers of lithium chemical products or other industrial minerals if they are produced from any of our owned or leased properties. The price of our planned products may be affected by factors beyond our control, including fluctuations in the market prices for lithium, supplies of lithium, demand for lithium, and mining activities of others. If we identify lithium mineralization that is determined to be of economic grade and in sufficient quantity to justify production, additional capital would be required to develop, mine and sell that production.
Government Regulation
Exploration and development activities for our projects are subject to extensive laws and regulations, which are overseen and enforced by multiple U.S. federal, state and local authorities as well as foreign jurisdictions. These applicable laws govern exploration, development, production, exports, various taxes, labor standards, occupational and mine health and safety, waste disposal, protection and remediation of the environment, protection of endangered and protected species, and other matters. Various permits from government bodies are required for drilling, mining, or manufacturing operations to be undertaken, and we cannot be assured such permits will be received. Environmental laws and regulations may also, among other things:
| ● | require notice to stakeholders of proposed and ongoing exploration, drilling, environmental studies, mining, or production activities; |
| ● | require the installation of pollution control equipment; |
| ● | restrict the types, quantities and concentrations of various substances that can be released into the environment in connection with exploration, drilling, mining, lithium manufacturing, or other production activities; |
| ● | limit or prohibit drilling, mining, lithium manufacturing or other production activities on lands located within wetlands, areas inhabited by endangered species and other protected areas, or otherwise restrict or prohibit activities that could impact the environment, including water resources; |
| ● | impose substantial liabilities for pollution resulting from current or former operations on or for any preexisting environmental impacts from our projects; |
| ● | require significant reclamation obligations in the future as a result of our extraction and chemical operations; and |
| ● | require preparation of an environmental assessment or an environmental impact statement. |
Compliance with environmental laws and regulations may impose substantial costs on us, subject us to significant potential liabilities, and have an adverse effect on our capital expenditures, results of operations, or competitive position. Violations and liabilities with respect to these laws and regulations could result in significant administrative, civil, or criminal penalties, remedial clean-ups, natural resource damages, permit modifications and/or revocations, operational interruptions and/or shutdowns, and other liabilities, as well as reputational harm, including damage to our relationships with customers, suppliers, investors, governments or other stakeholders. The costs of remedying such conditions may be significant, and remediation obligations could adversely affect our business, results of operations, and financial condition. Federal, state, and local legislative bodies and agencies frequently revise environmental laws and regulations, and any changes in these regulations, or the interpretations thereof, could require us to expend significant resources to comply with new laws or regulations or changes to current requirements and could have a material adverse effect on our business operations. As of December 31, 2023, we have not been required to spend material amounts on compliance regarding environmental regulations.
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Permits
Obtaining and renewing governmental permits is a complex and time-consuming process and involves numerous jurisdictions, public hearings, and possibly costly undertakings. The timeliness and success of permitting efforts are contingent upon many variables not within our control, including the interpretation of permit approval requirements administered by the applicable permitting authority. We may not be able to obtain or renew permits that are necessary for our planned operations, or the cost and time required to obtain or renew such permits may exceed our expectations. Any unexpected delays or costs associated with the permitting process could delay the exploration, development and/or operation of our projects.
Environmental, Social and Governance
We are committed to ESG causes. As we start to hire employees for our projects, our hiring efforts will focus on hiring workers from communities near our project areas. Many such communities have high levels of unemployment.
Human Capital Management
As of February 9, 2024, we had two full-time employees, who are our Co-Chief Executive Officers. We also utilize four independent contractors, two to provide us with accounting support and two for geological expertise. We are committed to diversity, equity, and inclusion as part of our growth strategy. We will treat each employee and job applicant without regard to race, color, age, sex, religion, national origin, citizenship, sexual orientation, gender identity, ancestry, veteran status, or any other category protected by law. We believe in allocating resources and establishing, in an equitable manner, policies and procedures that are fair, impartial, and just. To provide a diverse and inclusive workplace, we will focus our efforts on creating a culture where all employees can contribute their skills and talents and be themselves.
Legal Proceedings
From time to time, we may become involved in various lawsuits and legal proceedings, which arise in the ordinary course of business. However, litigation is subject to inherent uncertainties, and an adverse result in these or other matters may arise from time to time that may harm our business. We are currently not aware of any such legal proceedings or claims that we believe will have a material adverse effect on our business, financial condition or operating results.
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MANAGEMENT
Information about Executive Officers and Directors
The following table sets forth certain information regarding our executive officers and directors as of the date of this prospectus:
| Name | Age | Position | Director/Officer Since | |||
| David Graber | 52 | Co-CEO and Chairman | February 2017 | |||
| Sebastian Lux | 52 | Co-CEO, President, CFO and Director | July 2022 | |||
| Dylan Glenn | 55 | Director | May 2023 | |||
| Jared Levinthal | 51 | Director | December 2018 | |||
| Andrew Suckling | 52 | Director | August 2022 | |||
| Justin Vorwerk | 64 | Director | August 2022 | |||
| Dr. Adam Lipson | 51 | Director | July 2022 |
The principal occupations for at least the past five years of each of our directors and executive officers are as follows:
David Graber served as the Chief Executive Officer and a director of our company from February 2017 to November 2018 and has served as a member of our Board since July 2022 and our Co-CEO and Chairman of the Board since March 2023. Mr. Graber is the managing principal of Cobrador Capital Advisors, LLC, an investment advisory firm focused on the consumer sector and energy transition. Prior to Cobrador Capital Advisors, LLC, Mr. Graber was Managing Director, investment banking at New Century Capital Partners (2011-2014) and National Securities Corporation (2009-2010) where he focused on natural resources and energy transportation sectors. From 1994-2005, Mr. Graber was a senior vice president and director in the equities division of Donaldson, Lufkin & Jenrette and subsequently, Credit Suisse First Boston (CSFB) in New York and Los Angeles. Mr. Graber holds dual Master of Business Administration (MBA) from Columbia University Graduate School of Business in New York City and London Business School in the UK. He also holds a B.A. in Psychology from Tulane University. Mr. Graber brings extensive natural resource industry knowledge to our company and a deep background in corporate finance and capital market activities.
Sebastian Lux was appointed to serve as our CEO and interim CFO in July 2022 (becoming the Co-CEO in March 2023) and was appointed to our Board of Directors in March 2023. Mr. Lux has over 25 years’ experience working with multinational companies. Immediately prior to joining us, Mr. Lux served as co-founder of Blue Duck Data, a cloud-based analytical solutions provider for end-to-end supply chain analysis. Previously, Mr. Lux served from 2015 through 2020 as co-founder and director of supply chain logistics for Genuine Origin, a division of Volcafe & ED&F Man. He is a multilingual professional experienced in strategic planning for international operations, data analytics, financial modeling, logistics, purchasing, product development, supplier partnership management, process improvements, negotiations, e-business, and franchise development. Mr. Lux earned an MBA in Entrepreneurship from Babson’s F.W. Olin Graduate School of Business, an MSAS in E-Commerce from Boston University, and a B.A. in Economics from Roanoke College. In addition to his operational leadership of our company, Mr. Lux has experience in entrepreneurial ventures where he developed international supply chains for the distribution of coffee, food and non-food goods, as well as created multiple U.S. market entry programs and brand development projects for new and existing companies, making him well qualified as a member of the Board.
Dylan Glenn became a director of our company in May 2023. He has been a Senior Director at Eldridge, a diversified holding company headquartered in Greenwich, Connecticut, where he has been since October 2021. He is the former Chairman of Guggenheim KBBO Partners, Ltd., a Dubai-based joint venture partnership between the KBBO Group and Guggenheim Partners. Prior to this role, Mr. Glenn was Senior Managing Director of Guggenheim Partners, where he worked for nearly 15 years. While at Guggenheim Partners, Mr. Glenn worked mostly in two capacities. First, he coordinated the joint venture – Guggenheim KBBO Partners, Ltd., a merchant banking business which leveraged Guggenheim’s investment banking and asset management capabilities with an important strategic partner in the Middle East. Additionally, he led Guggenheim’s Government Relations effort in Washington and was a Member of the Guggenheim Partners Public Affairs Committee. Prior to joining Guggenheim, Mr. Glenn served as Deputy Chief of Staff to Governor Sonny Perdue of Georgia. As a Deputy Chief of Staff, Mr. Glenn was responsible for all External Affairs. Mr. Glenn also served in the White House in Washington, D.C. as Special Assistant for President George W. Bush for Economic Policy. He was a member of the National Economic Council team advising the President on various economic issues. Mr. Glenn is a director of the George W. Bush Presidential Center. Mr. Glenn is a Director of the Renewable Energy Group, a leading global producer and supplier of renewable fuels like biodiesel, renewable diesel, renewable chemicals and other products. He is also a Director of Intellicheck, Inc., a leading authentication services company, since March 2020. Additionally, he serves on the Board of Managers of Stonebriar Commercial Finance based in Plano, Texas. Mr. Glenn is a Trustee of Davidson College, where he earned his B.A. degree and is also a Trustee of the Episcopal High School at Alexandria, Virginia. Mr. Glenn’s extensive experience in finance and economics, insight into regulatory affairs and his expertise in oversight and governance gained through service in the public sector, bring unique and valuable perspective to our Board and make him well qualified to be a member of the Board.
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Jared Levinthal has served as a Director of our company since December 2018. Mr. Levinthal, an attorney, is a partner with Lightfoot Franklin & White, PLLC in Houston, Texas. Mr. Levinthal is a graduate, with Honors, Order of the Coif, from the University of Texas School of Law. Mr. Levinthal is a graduate of Tulane University with a BA and is a member of the Texas Bar. Mr. Levinthal is well qualified to serve as a director due to his substantial knowledge and working knowledge in corporate governance and controls.
Andrew Suckling has served as a director of our company since August 2022. Mr. Suckling has over 25 years’ experience in the commodity industry and is currently the non-executive chairman of Cadence Minerals (AIM: KDNC), the non-executive director of Macarthur Minerals (TSX-V: MMS, ASX: MIO), and a board member of the privately held company IronMan Ltd. Mr. Suckling started his professional career in 1994 as a trader on the London Metal Exchange, and subsequently became a founding partner, research analyst and trader with the multibillion fund management group, Ospraie. Mr. Suckling is a graduate of Brasenose College, Oxford University, earning a B.A. (Hons) in Modern History and an MA in Modern History. Mr. Suckling’s in-depth knowledge of the mining industry and the broad range of mineral companies in the industry make him well qualified as a member of the Board.
Justin Vorwerk has served as a director of our company since August 2022. For more than the past five years, Mr. Vorwerk has had a distinguished career in finance and capital markets, holding positions as a managing director in investment banking with Goldman Sachs, The Royal Bank of Scotland and Deutsche Bank Securities, as well as Donaldson, Lufkin & Jenrette and Credit Suisse, where he co-headed the financial sponsors group. Mr. Vorwerk also served as head of investment banking and capital markets at CRT Capital Group, where he structured debt and equity products and advised on mergers and acquisitions. Mr. Vorwerk holds an MBA from The University of Pennsylvania (Wharton) and attended Princeton University, where he earned an A.B. degree in Economics. Mr. Vorwerk has extensive knowledge of capital markets, making his input invaluable to the Board’s discussions of our capital raising initiatives.
Dr. Adam Lipson was appointed to our Board of Directors in July 2022. Dr. Lipson is a world-renowned neurosurgeon, serving for more than the past five years as managing partner of IGEA Brain, Spine & Orthopedics in New York City and New Jersey, a private medical practice generating $30-40 million annual revenue with 75 employees. He has over a decade of experience as a private investor in over 20 biotechnology and biomedical device companies. He has co-founded several other companies, including IGEA Ventures and STRYDD. He is passionate about finding technologies that facilitate advances in energy transition, biomedical devices and cancer therapeutics. Dr. Lipson is a graduate of Dartmouth College with a B.A. degree in Chemistry and History and M.D. degree from Harvard Medical School, Honors Society in Neuroscience, and was a Fulbright Fellow at Karolinska Institute in Stockholm, Sweden. Dr. Lipson’s leadership of numerous medical and other technology growth companies and as an investor in many early-stage companies make him well qualified as a member of the Board.
Term of Office
Directors are elected to hold office until the next annual meeting of stockholders and until their successors are elected and qualified. Annual meetings of the stockholders, for the selection of directors to succeed those whose terms expire, are held at such time each year as designated by the Board of Directors. Our officers are elected by the Board of Directors, which is required to consider that subject at its first meeting after every annual meeting of shareholders. Each officer holds office until his successor is elected and qualified or until his earlier resignation or removal.
Committees of the Board of Directors
We do not currently have any committees of the Board of Directors. We consider a majority of our Board members (consisting of Messrs. Glenn, Levinthal, Suckling and Vorwerk) to be independent directors under NYSE American rules.
Corporate Governance
We do not currently have an audit committee, compensation committee, or nominating and corporate governance committee. To date, the functions of each such committee have been performed by the entire Board of Directors. As part of our application to have our shares of common stock trade on the NYSE American, our corporate governance structure will be enhanced by, among other things, forming required Board committees with qualified individuals.
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EXECUTIVE COMPENSATION
Summary Compensation Table
The following table discloses compensation received by our Co-Chief Executive Officers, David Graber and Sebastian Lux, for the years ended December 31, 2023 and 2022.
The following table also sets forth information regarding all cash and non-cash compensation earned by or paid to our executive officers who served during the fiscal years ended December 31, 2022 and 2021 for services in all capacities to us.
| Name and Principal Position | Year | Salary ($) | Bonus ($) | Stock Awards ($) | Warrant Awards ($) | All Other Compensation ($) | Total ($) | |||||||||||||||||||
| Andrew Boutsikakis (1) | - | - | ||||||||||||||||||||||||
| Chief Executive Officer | 2022 | 70,000 | - | - | 6,296 | 53,550 | (3) | 123,550 | ||||||||||||||||||
| Pat Avery (2) | 2022 | 58,376 | - | - | - | - | 58,376 | |||||||||||||||||||
| Chief Operating Officer | ||||||||||||||||||||||||||
| David Graber | 2022 | - | - | - | - | - | - | |||||||||||||||||||
| Co-CEO | 2023 | 200,000 | 200,000 | |||||||||||||||||||||||
| Sebastian Lux | 2022 | 106,667 | - | - | - | - | 106,667 | |||||||||||||||||||
| Co-CEO, President, CFO | 2023 | 240,000 | 240,000 | |||||||||||||||||||||||
| 1) | Mr. Boutsikakis was appointed CEO effective February 1, 2020 and was granted a monthly salary of $12,500. During the year ended December 31, 2020, he earned $137,500 under this arrangement, of which $48,400 was paid during the year and remaining balance was earned but unpaid. Mr. Boutsikakis resigned from all positions on July 21, 2022. |
| 2) | Mr. Avery was appointed COO effective July 1, 2021 and was granted a monthly salary of $7,000. During the year ended December 31, 2021, he earned $42,000 under this arrangement, of which $35,000 was paid during the year and remaining balance was earned but unpaid. Mr. Avery resigned his position with us on November 9, 2022. |
| 3) | Amount paid to Mr. Boutsikakis pursuant to the Settlement Agreement executed with us. |
Employment Arrangements
We and Mr. Boutsikakis entered into an employment agreement, effective February 1, 2020, for a period of two years. Mr. Boutsikakis in his capacity as Chief Executive Officer was granted a monthly salary of $12,500, of which $7,500 payable in cash and $5,000 payable in a convertible note. Mr. Boutsikakis also received a five-year warrant to purchase 3,000,000 shares of common stock at $0.05 per share. The warrant has a two-year, quarterly vesting schedule. Mr. Boutsikakis resigned from all positions effective July 21, 2022. On or around September 25, 2022, we and Boutsikakis entered into a Settlement Agreement and Mutual Release, under which, among other things, we agreed to pay Mr. Boutsikakis a total of $63,000 in monthly installments over approximately six months.
Messrs. Graber and Lux, in consultation with our independent directors, have agreed to receive a monthly salary as our Co-Chief Executive Officers at a rate of $20,000. Of this amount, $15,000 is payable in cash and $5,000 is accrued until such time as we are able to make the payment. Both Messrs. Graber and Lux work full time for our company and there is no set term for their employment.
Directors Compensation
Our non-employee directors do not currently receive cash compensation for their services as directors although they are provided reimbursement for out-of-pocket expenses incurred in attending Board meetings.
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Equity Incentive Plan
On July 22, 2011, our Board of Directors approved our 2011 Equity Incentive Plan (the “Plan”) and, on July 26, 2011, stockholders holding a majority of our shares approved, by written consent, the Plan. The Plan provides for the grant of options intended to qualify as “incentive stock options” and “non-statutory stock options” within the meaning of Section 422 of the Internal Revenue Code of 1986, together with the grant of bonus stock and stock appreciation rights, at the discretion of our Board of Directors. Incentive stock options are issuable only to our eligible officers, directors and key employees. Non-statutory stock options are issuable only to our non-employee directors and consultants. Upon stockholder approval of the Plan, a total of 5,000,000 shares of common stock or appreciation rights may be issued under the Plan. The Plan will be administered by our full Board of Directors. Under the Plan, the Board will determine which individuals shall receive options, grants or stock appreciation rights, the time period during which the rights may be exercised, the number of shares of common stock that may be purchased under the rights and the option price. As of December 31, 2023, we had no options outstanding under the Plan to employees, directors and outside consultants.
On November 22, 2017, stockholders of our company holding a majority of the outstanding shares of our common stock approved, by written consent, an increase in the number of shares reserved under the Plan by 10,000,000 shares. After this increase of 10,000,000 shares, the total number of shares of common stock reserved under the Plan totals 15,000,000 shares. On November 16, 2017, our Board of Directors approved the increase of the 10,000,000 shares reserved under the Plan.
Limitation on Liability and Indemnification of Officers and Directors
Our certificate of Incorporation provides that no director will be liable to our company or our stockholders for monetary damages for breach of fiduciary duty acting in his/her capacity as a director, except for liability (i) for any breach of the duty of loyalty to us or our stockholders; (ii) for acts or omissions not in good faith or which involve intentional misconduct or a knowing violation of law; (iii) under Section 174 of the Delaware General Corporation Law (the “DGCL”); or, (iv) for any transaction from which the director derived an improper personal benefit. If the DGCL is amended to authorize corporate action further limiting or eliminating the personal liability of a director, then the liability of a director to us shall be limited or eliminated to the fullest extent permitted by the DGCL, as so amended from time-to-time.
Our certificate of incorporation and bylaws provide that we will indemnify any director, officer, employee, fiduciary, or agent of our company (each a “Covered Person”) who was or is made or is threatened to be made a party to any action, suit or proceeding, whether civil, criminal, administrative or investigative (a “Proceeding”), other than a Proceeding by or in the right of our company, by reason of the fact that such person is or was a Covered Person, or, while a Covered Person, or is or was serving at the request of our company as a Covered Person of another corporation, partnership, joint venture, trust or other enterprise, against all liability and loss suffered and expenses (including attorneys’ fees) actually and reasonably incurred by such person in connection with such Proceeding if such person acted in good faith and in a manner he reasonably believed to be in or not opposed to the best interests of our company and, with respect to any criminal action or proceeding, had no reasonable cause to believe his conduct was unlawful. The termination of any Proceeding by judgment, order, settlement, conviction or upon a plea of nolo contendere or its equivalent, shall not, of itself, create a presumption that such person did not act in good faith and in a manner which such person reasonably believed to be in or not opposed to the best interests of our company and, with respect to any criminal action or proceeding, had reasonable cause to believe that such person’s conduct was unlawful. We will also have the power to indemnify our Covered Persons as set forth in the DGCL or other applicable law.
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Our certificate of incorporation and bylaws also provide that we will indemnify any person who was or is made a party or is threatened to be made a party to any Proceeding by or in the right of our company to procure a judgment in its favor by reason of the fact that such person is or was a Covered Person of our company or is or was serving at the request of our company as a Covered Person of another corporation, partnership, joint venture, trust or other enterprise, against all liability and loss suffered and expenses (including attorneys’ fees) actually and reasonably incurred by such person in connection with the defense or settlement of such action or suit if such person acted in good faith and in a manner such person reasonably believed to be in or not opposed to the best interests of our company and except that no indemnification shall be made in respect of any claim, issue or matter as to which such person shall have been adjudged to be liable to our company unless and only to the extent that the Court of Chancery of the State of Delaware or the court in which such action or suit was brought shall determine upon application that, despite the adjudication of liability but in view of all the circumstances of the case, such person is fairly and reasonably entitled to indemnity for such expenses which the Court of Chancery of the State of Delaware or such other court shall deem proper. Notwithstanding the foregoing, our company shall be required to indemnify a person in connection with a Proceeding (or part thereof) commenced by such person only if the commencement of such Proceeding (or part thereof) by such person was authorized in the specific case by the Board.
Our bylaws further provide that, to the extent that a Covered Person has been successful on the merits or otherwise in defense of any Proceeding referred to above, or in defense of any claim, issue or matter therein, we will indemnify such person against expenses (including attorneys’ fees) actually and reasonably incurred by such person in connection therewith.
Expenses actually and reasonably incurred by a Covered Person in defending a civil or criminal Proceeding may be paid by our company in advance of the final disposition of such Proceeding upon receipt of an undertaking by or on behalf of such person to repay such amount if it shall ultimately be determined that such person is not entitled to be indemnified by our company. Such expenses may be so paid upon such terms and conditions, if any, as the Board deems appropriate.
We may purchase and maintain insurance on behalf of any person who is or was a Covered Person, or is or was serving at the request of our company as a Covered Person of another corporation, partnership, joint venture, trust or other enterprise against any liability asserted against such person and incurred by such person in any such capacity, or arising out of his status as such, whether or not our company would have the power to indemnify such person against such liability under the provisions of our bylaws.
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PRINCIPAL STOCKHOLDERS
As of February 9, 2024, there were 10,989,011 shares of common stock outstanding. The following table sets forth certain information regarding the beneficial ownership of the outstanding common shares as of February 9, 2024 by (i) each person who owns beneficially more than 5% of our outstanding common stock; (ii) each of our executive officers and directors; and (iii) all of our executive officers and directors as a group. The shares listed include as to each person any shares that such person has the right to acquire within 60 days from the date hereof. Except as otherwise indicated, each such person has sole investment and voting power with respect to such shares, subject to community property laws where applicable.
The following table sets forth, as of February 9, 2024, certain information with regard to the record and beneficial ownership of our common stock by (i) each person known to us to be the record or beneficial owner of more than 5% of our common stock, (ii) each director of our company, (iii) each of the named executive officers, and (iv) all executive officers and directors of our company as a group:
| Number of Shares | Percentage of | |||||||
| Name and Address(1) | Beneficially Owned(2) | Outstanding Shares(3) | ||||||
| Executive Officers & Directors | ||||||||
| David Graber | 3,998,249 | (4) | 36.1 | % | ||||
| Sebastian Lux | 110,045 | 1.0 | % | |||||
| Dylan Glenn | 29,301 | * | ||||||
| Jared Levinthal | 1,000 | * | ||||||
| Andrew Suckling | 0 | * | ||||||
| Justin Vorwerk | 0 | * | ||||||
| Dr. Adam Lipson | 1,507,414 | (5) | 13.7 | % | ||||
| All Current Executive Officers and Directors as a Group (7 Persons) | 5,646,009 | 51.4 | % | |||||
| 5% Shareholders | ||||||||
| David Graber | 3,998,249 | (4) | 36.1 | % | ||||
| Dr. Adam Lipson | 1,507,414 | (5) | 13.7 | % | ||||
| Marilyn Kane | 1,577,821 | (6) | 14.3 | % | ||||
| * | Represents less than 1% ownership. |
| (1) | The mailing address for each officer and director is c/o American Battery Materials, Inc., 500 West Putnam Avenue, Suite 400, Greenwich, CT 06830. |
| (2) | Beneficial ownership is determined in accordance with the rules of the SEC and generally includes voting or investment power with respect to securities. Beneficial ownership also includes shares of stock subject to options and warrants currently exercisable or exercisable within 60 days of the date of this table. In determining the percent of common stock owned by a person or entity as of the date of this prospectus (a) the numerator is the number of shares of the class beneficially owned by such person or entity, including shares which may be acquired within 60 days on exercise of warrants or options and conversion of convertible securities; and, (b) the denominator is the sum of (i) the total shares of common stock outstanding as of the date of this prospectus, which is 10,989,011 shares, and (ii) the total number of shares that the beneficial owner may acquire upon exercise of the derivative securities. Unless otherwise stated, each beneficial owner has sole power to vote and dispose of its shares. |
| (3) | Based on 10,989,011 outstanding shares as of February 9, 2024. |
| (4) | Includes shares owned by Cobrador Multi-Strategy Partners, LP, of which Mr. Graber is the managing partner. |
| (5) | Includes shares of common stock issued to Dr. Lipson upon conversion of our Series A Preferred Stock as of August 2023. |
| (6) | Includes shares owned by (i) Automated Retail Leasing Partners, LP, of which Ms. Kane is the managing partner, and (ii) AJS Properties LLC, of which Ms. Kane is the manager. Mr. Graber owns a non-controlling interest in Automated Retail Leasing Partners. |
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CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS
Given our small size and limited financial resources to date, we have not adopted formal policies and procedures for the review, approval or ratification of transactions with our executive officers, directors and significant stockholders. While we satisfy the requirements of the DGCL for such related party transactions, we intend to establish additional formal policies and procedures in the future so that such transactions will be subject to the review, approval or ratification of our Board of Directors, or an appropriate committee thereof.
Director Independence
As our common stock is currently quoted on the OTC Pink Open Market, we are not subject to the rules of any national securities exchange that requires a majority of a listed company’s directors and specified committees of the board of directors to meet independence standards prescribed by such rules. However, we consider a majority of our Board members (consisting of Messrs. Glenn, Levinthal, Suckling and Vorwerk) to be independent directors in accordance with NYSE American listing rules.
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DESCRIPTION OF CAPITAL STOCK
The following description of our capital stock is a summary only. This summary is subject to the General Corporation Law of the State of Delaware (the “DGCL”) and the complete text of our certificate of incorporation, amended (the “Certificate of Incorporation”), and our bylaws, as amended (the “Bylaws”).
General
Under our Certificate of Incorporation, we are authorized to issue up to 4,500,000,000 shares of common stock, par value $0.001 per share, and 10,000,000 shares of preferred stock, par value $0.001 per share.
In December 2023, we filed a certificate of amendment of our Certificate of Incorporation to effect a 1-for-300 reverse stock split of our outstanding common stock. The stock split became effective on December 8, 2023.
Common Stock
Voting Rights. The holders of our common stock are entitled to one vote per share on all matters on which stockholders are generally entitled to vote; provided, however, that, except as otherwise required by law, holders of common stock, as such, are not entitled to vote on any amendment to our Certificate of Incorporation that relates solely to the terms of one or more outstanding series of preferred stock if the holders of such affected series are entitled, either separately or together with the holders of one or more other such series, to vote thereon pursuant to our Certificate of Incorporation. Holders of our common stock do not have cumulative voting rights in the election of directors. Accordingly, the holders of a majority of the combined voting power of our common stock could, if they so choose, elect all the directors.
Dividends. Subject to the rights of the holders of any outstanding series of preferred stock, holders of common stock are entitled to receive any dividends to the extent permitted by law when, as and if declared by our board of directors.
Liquidation. Upon our dissolution, liquidation or winding up, subject to the rights of the holders of any outstanding series of preferred stock, the holders of shares of common stock are entitled to receive the assets of our company available for distribution to its stockholders ratably in proportion to the number of shares held by them.
Other Matters. Our Certificate of Incorporation does not entitle holders of our common stock to preemptive or conversion rights or other subscription rights. There are no redemption or sinking fund provisions applicable to our common stock. The common stock may be subdivided or combined in any manner unless the other class is subdivided or combined in the same proportion. All outstanding shares of our common stock are fully paid and non-assessable.
Preferred Stock
We have authorization for “blank check” preferred stock, which could be issued with voting, liquidation, dividend and other rights superior to common stock. There are 10,000,000 shares of preferred stock, par value $0.001 per share, authorized for issuance. We have 50,000 shares of Series A preferred stock designated and authorized. No shares of Series A preferred stock are outstanding.
Our Certificate of Incorporation authorizes our board of directors to establish from time-to-time the number of shares to be included in each series of preferred stock, and to fix the designation, powers, preferences, and relative, participating, optional or other rights, if any, and the qualifications, limitations or restrictions, if any, of the shares of each series of preferred stock. Our board of directors is also able to increase or decrease the number of authorized shares of any series of preferred stock (but not below the number of shares of that series of preferred stock then outstanding) without any further vote or action by the stockholders.
The existence of unissued and unreserved common stock or preferred stock may enable our board of directors to issue shares to persons friendly to current management, which could render more difficult or discourage an attempt to obtain control of our company by means of a merger, tender offer, proxy contest or otherwise, and could thereby protect the continuity of our management and possibly deprive stockholders of opportunities to sell their shares of common stock at prices higher than prevailing market prices.
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Anti-Takeover Effects of Delaware Law, Our Certificate of Incorporation and Our Bylaws
Certain provisions of DGCL, our Certificate of Incorporation, and our Bylaws could make the acquisition of our company more difficult and could delay, defer or prevent a tender offer or other takeover attempt that a stockholder might consider to be in its best interest, including takeover attempts that might result in the payment of a premium to stockholders over the market price for their shares. These provisions also may promote the continuity of our management by making it more difficult for a person to remove or change the incumbent members of our board of directors.
Authorized but Unissued Shares; Undesignated Preferred Stock
The authorized but unissued shares of our common stock are available for future issuance without stockholder approval except as required by law or by any stock exchange on which our common stock may be listed. These additional shares may be utilized for a variety of corporate purposes, including future public offerings to raise additional capital, acquisitions and employee benefit plans. In addition, our board of directors may authorize, without stockholder approval, the issuance of undesignated preferred stock with voting rights or other rights or preferences designated from time to time by our board of directors. The existence of authorized but unissued shares of common stock or preferred stock may enable our board of directors to render more difficult or to discourage an attempt to obtain control of us by means of a merger, tender offer, proxy contest or otherwise.
No Cumulative Voting
Holders of our common stock do not have cumulative voting rights in the election of directors.
Special Meetings of Stockholders
Under our Bylaws, special meetings of stockholders may be called at any time by the chairman of the Board of Directors, by a majority of the members of the Board of Directors or as otherwise provided by DGCL, or the Certificate of Incorporation. Our Bylaws further provide that the Board of Directors shall call a special meeting upon the written request of the record holders of at least 25%, in the aggregate, of the voting power of the outstanding shares of all classes of shares entitled to vote at such a meeting, subject to requirements and limitations set forth in our Bylaws. Under DGCL, written notice of any special meeting must be given not less than ten nor more than 60 days before the date of the special meeting to each stockholder entitled to vote at such meeting.
Requirements for Notice of Stockholder Director Nominations and Stockholder Business
Under our Bylaws, nominations for the election of directors may be made by the Board of Directors or by any stockholder entitled to vote for the election of directors who complies with the applicable notice and other requirements set forth in our Bylaws. If a stockholder wishes to bring any business before an annual or special meeting or nominate a person for election to our Board of Directors, our Bylaws contain certain procedures that must be followed for the advance timing required for delivery of stockholder notice of such nomination or other business and the information that such notice must contain.
Exchange Listing
We intend to apply for the listing of our common stock for trading on the NYSE American and expect such listing to occur concurrently with this offering. A NYSE American listing, however, is not a condition to completing this offering.
Transfer Agent and Registrar
The transfer agent and registrar for our common stock is Transfer Online, Inc., 512 SE Salmon Street, Portland, Oregon 97214.
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SHARES ELIGIBLE FOR FUTURE SALE
The sale, or availability for sale, of a substantial number of shares of common stock in the public market subsequent to this offering pursuant to Rule 144 of the Securities Act or otherwise could materially adversely affect the market price of our common stock and could impair our ability to raise additional capital through the sale of equity securities or debt financing. Upon completion of this offering, there will be approximately ________ shares of common stock issued and outstanding. Of these shares, approximately _______ shares would be freely transferable. Our executive officers and directors would beneficially own approximately ______ shares, or ___% of our outstanding common stock after the completion of this offering, which would be eligible for resale subject to the volume and manner of sale limitations of Rule 144 of the Securities Act. An additional ______ shares are “restricted securities,” as that term is defined in Rule 144, and are eligible for sale under the provisions of Rule 144.
The shares of common stock outstanding that are deemed to be “restricted securities” (as that term is defined under Rule 144) or that are owned by our affiliates may only be sold pursuant to an effective registration statement under the Securities Act, in compliance with the exemption provisions of Rule 144 or pursuant to another exemption under the Securities Act. Restricted shares and shares of common stock held by our affiliates that are not “restricted” will be eligible for sale, under Rule 144, subject to certain volume and manner of sale limitations prescribed by Rule 144. In general, under Rule 144 as currently in effect, a person (or persons whose shares are required to be aggregated), including a person who may be deemed an “affiliate” of the company, who has beneficially owned restricted securities for at least six months may sell, within any three-month period, a number of shares that does not exceed the greater of: (1) 1% of the then outstanding shares of common stock or (2) the average weekly trading volume of the common stock during the four calendar weeks preceding the date on which notice of such sale was filed under Rule 144. Sales of shares held by our affiliates that are not “restricted” are subject to such volume limitations, but are not subject to the holding period requirement. Sales under Rule 144 are also subject to certain requirements as to the manner of sale, notice and availability of current public information about our company. A person who is not deemed to have been an affiliate of our company at any time during the 90 days preceding a sale by such person, and who has beneficially owned the restricted shares for at least six months, is entitled to sell such shares under Rule 144 without regard to any of the restrictions described above.
Following this offering, we cannot predict the effect, if any, that the availability for sale of shares held by our current stockholders will have on the market price from time to time. Nevertheless, sales by our current stockholders of a substantial number of shares of common stock in the public market could materially and adversely affect the market price for our common stock. In addition, the availability for sale of a substantial number of shares of our common stock acquired through the exercise of outstanding stock options or warrants could materially adversely affect the market price of our common stock.
Lock-Up Agreements
All of the executive officers and directors and all of our stockholders have agreed that, without the prior written consent of the underwriter, we and they will not, during the period ending 90 days after the date of this prospectus:
| ● | offer, pledge, sell, contract to sell, sell any option or contract to purchase, purchase any option or contract to sell, grant any option, right or warrant to purchase, lend, or otherwise transfer or dispose of, directly or indirectly, any shares of our common stock or securities convertible into or exercisable or exchangeable for our common stock; or |
| ● | enter into any swap or other arrangement that transfers to another, in whole or in part, any of the economic consequences of ownership of our common stock; |
whether any transaction described above is to be settled by delivery of shares of our common stock or such other securities, in cash or otherwise. This agreement is subject to certain exemptions, as set forth in the section entitled “Underwriting.”
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UNDERWRITING
Subject to the terms and conditions set forth in the underwriting agreement between us and the underwriters named below, for whom _________ is acting as the representative (the “Representative”), we have agreed to sell to the underwriters, and each underwriter has severally agreed to purchase, the number of shares of our common stock listed next to its name in the following table:
| Underwriter | Number of Shares | |||
| Total | ||||
Under the terms of the underwriting agreement, the underwriters are committed to purchase all of the shares offered by this prospectus (other than the shares subject to the underwriters’ option to purchase additional shares), if the underwriters buy any of such shares. The underwriters’ obligation to purchase the shares is subject to certain conditions, including, among others, the continued accuracy of representations and warranties made by us in the underwriting agreement, delivery of legal opinions, and the absence of any material changes in our assets, business, or prospects after the date of this prospectus.
The underwriters initially propose to offer the common stock directly to the public at the public offering price set forth on the front cover page of this prospectus and to certain dealers at such offering price less a concession not to exceed $____ per share. After the public offering of the shares of our common stock, the offering price and other selling terms may be changed by the underwriters. Sales of shares of our common stock made outside the United States may be made by affiliates of certain of the underwriters.
We have been advised by the representative of the underwriters that the underwriters intend to make a market in our securities but that they are not obligated to do so and may discontinue making a market at any time without notice. In connection with the offering, the underwriters or certain of the securities dealers may distribute prospectuses electronically.
Over-Allotment Option
We have granted the underwriters an option to purchase up to ______ additional shares of our common stock at the same price per share as they are paying for the shares shown in the table above. The underwriters may exercise this option in whole or in part at any time within 30 days after the date of the underwriting agreement. To the extent the underwriters exercise this option, each underwriter will be committed, so long as the conditions of the underwriting agreement are satisfied, to purchase a number of additional shares proportionate to that underwriters’ initial commitment as indicated in the table at the beginning of this section plus, if any underwriter defaults in its obligation to purchase shares under the underwriting agreement, certain additional shares.
Discounts and Commissions
Except as disclosed in this prospectus, the underwriters have not received and will not receive from us any other item of compensation or expense in connection with this offering considered by the Financial Industry Regulatory Authority, Inc. (“FINRA”), to be underwriting compensation under its rule of fair price.
The underwriting discount is equal to the public offering price per share, less the amount paid by the underwriters to us per share. The underwriting discount was determined through an arms’ length negotiation between us and the underwriters. We have agreed to sell the shares of common stock in this offering to the underwriters at the offering price of $____ per share, less a ____% underwriting discount.
The following table shows the per share and total underwriting discounts and commissions we will pay to the underwriters. These amounts are shown assuming both no exercise and full exercise of the underwriters’ option to purchase additional shares of our common stock.
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| Total | ||||||||||||
| Per Share | No Exercise | Full Exercise | ||||||||||
| Public offering price | $ | $ | $ | |||||||||
| Underwriting discounts and commissions to be paid by us | $ | $ | $ | |||||||||
| Total | $ | $ | $ | |||||||||
| Proceeds, before expenses, to us | $ | $ | $ | |||||||||
We estimate that the total expenses of the offering payable by us, excluding underwriting discounts and commissions, will be approximately $_____. We have agreed to reimburse the underwriters for certain of their expenses, including fees of counsel in connection with filing with FINRA, in an amount not to exceed $_____.
We have agreed to pay a non-accountable expense allowance to the underwriters equal to ____% of the gross proceeds received in this Offering. In addition, we have also agreed to pay or reimburse the underwriters for certain of the underwriters’ out-of-pocket expenses relating to the offering, including legal and financial due diligence fees associated with it. All fees already paid shall be reimbursable to us to the extent not actually incurred. Further, pursuant to the underwriting agreement, the underwriters’ obligations are subject to customary conditions, representations, and warranties contained in the underwriting agreement, such as receipt by the underwriters of officers’ certificates and legal opinions.
Stabilization
In accordance with Regulation M under the Exchange Act, the underwriters may engage in activities that stabilize, maintain or otherwise affect the price of our common stock, including short sales and purchases to cover positions created by short positions, stabilizing transactions, syndicate covering transactions, penalty bids, and passive market making.
| ● | Short positions involve sales by the underwriters of shares over the number of shares the underwriters are obligated to purchase, which creates a syndicate short position. The short position may be either a covered short position or a naked short position. In a covered short position, the number of shares involved in the sales made by the underwriters in over the number of shares they are obligated to purchase is not greater than the number of shares they may purchase by exercising their option to purchase additional shares. In a naked short position, the number of shares involved is greater than the number of shares in their option to purchase additional shares. The underwriters may close out any short position by either exercising their option to purchase additional shares or purchasing shares in the open market. |
| ● | Stabilizing transactions permit bids to purchase the underlying security as long as the stabilizing bids do not exceed a specific maximum price. |
| ● | Syndicate covering transactions involve purchases of our common stock in the open market after the distribution has been completed to cover syndicate short positions. In determining the source of shares to close out the short position, the underwriters will consider, among other things, the price of shares available for purchase in the open market compared to the price at which they may purchase shares through the underwriters’ option to purchase additional shares. If the underwriters sell more shares than could be covered by the underwriters’ option to purchase additional shares, thereby creating a naked short position, the position can only be closed out by buying shares in the open market. A naked short position is more likely to be created if the underwriters are concerned that there could be downward pressure on the price of the shares in the open market after pricing that could adversely affect investors who purchase in the offering. |
| ● | Penalty bids permit the representative to reclaim a selling concession from a syndicate member when the common stock originally sold by the syndicate member is purchased in a stabilizing or syndicate-covering transaction to cover syndicate short positions. |
| ● | In passive market making, market makers in our common stock who are underwriters or prospective underwriters may, subject to limitations, make bids for or purchase shares of our common stock until the time, if any, at which a stabilizing bid is made. |
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These activities may have the effect of raising or maintaining the market price of our common stock or preventing or retarding a decline in the market price of our common stock. As a result of these activities, the price of our common stock may be higher than the price that might otherwise exist in the open market. These transactions may be effected on the NYSE American or otherwise and, if commenced, may be discontinued at any time.
Neither we nor any of the underwriters make any representation or prediction as to the direction or magnitude of any effect that the transactions described above may have on the price of our common stock. In addition, neither we nor any of the underwriters make any representation that the Representative will engage in these stabilizing transactions or that any transaction, once commenced, will not be discontinued without notice.
Indemnification
We and the underwriters have agreed to indemnify each other against certain liabilities, including liabilities under the Securities Act, or to contribute to payments the underwriters may be required to make in respect of such liabilities.
Discretionary Accounts
The underwriters have informed us that they do not expect to make sales to accounts over which they exercise discretionary authority in excess of 5% of the shares of our common stock being offered in this offering.
Pricing
The public offering price has been negotiated between us and the Representative. Among the factors considered in these negotiations are: the history of, and prospects for, us and the industry in which we compete; our past and present financial performance; an assessment of our management; the present state of our development; the prospects for our future earnings; the prevailing conditions of the applicable United States securities market at the time of this offering; previous trading prices for our common stock in the private market, and market valuations of publicly traded companies that we and the Representative believe to be comparable to us.
Lock-up Agreements
We have agreed that for a period of 90 days after the date of the underwriting agreement, we will not, without the prior written consent of the Representative, which may be withheld or delayed in the Representative’s sole discretion:
| ● | offer, pledge, sell, contract to sell, sell any option or contract to purchase, purchase any option or contract to sell, grant any option, right or warrant for the sale of, lend or otherwise dispose of or transfer, directly or indirectly, any of our common stock or any securities convertible into or exercisable or exchangeable for our common stock, or file any registration statement under the Securities Act with respect to any of the foregoing; or |
| ● | enter into any swap or other arrangement that transfers to another, in whole or in part, directly or indirectly, any of the economic consequences of ownership of any of our common stock, |
whether any such transaction described above is to be settled by delivery of shares of our common stock or such other securities, in cash or otherwise. The prior sentence will not apply to (i) the shares to be sold pursuant to the underwriting agreement, (ii) any shares of our common stock issued by us upon the exercise of an option or other security outstanding on the date hereof, (iii) such issuances of options or grants of restricted stock or other equity-based awards under our Equity Incentive Plan and the issuance of shares issuable upon exercise of any such equity-based awards, and (iv) the filing by us of registration statements on Form S-8.
Each of our directors and our executive officers has agreed that for a period ending 90 days after the date of the underwriting agreement, none of them will, without the prior written consent of the Representative which may be withheld or delayed in the Representative’s sole discretion:
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| ● | offer, pledge, sell, contract to sell, sell any option or contract to purchase, purchase any option or contract to sell, grant any option, right or warrant for the sale of, lend or otherwise dispose of or transfer, directly or indirectly, any shares of our common stock, or any securities convertible into or exercisable or exchangeable for our common stock owned directly by such director or executive officer or with respect to which such director or executive officer has beneficial ownership; or |
| ● | enter into any swap or other arrangement that transfers to another, in whole or in part, directly or indirectly, any of the economic consequences of ownership of our common stock, whether any such transaction described above is to be settled by delivery of our common stock or such other securities, in cash or otherwise. |
Notwithstanding the prior sentence, subject to applicable securities laws and the restrictions contained in our charter, our directors and executive officers may transfer our securities: (i) pursuant to the exercise or conversion of our securities, including, without limitation, options and warrants; (ii) as a bona fide gift or gifts, provided that the donee or donees thereof agree to be bound in writing by the restrictions set forth above; (iii) to any trust for the direct or indirect benefit of such director or executive officer or the immediate family of such director or executive officer, provided that the trustee of the trust agrees to be bound in writing by the restrictions set forth above; (iv) any transfer required under any benefit plans or our company’s charter or bylaws; (v) as required by participants in our Equity Incentive Plan to reimburse or pay federal income tax and withholding obligations in connection with vesting of restricted stock grants or the exercise of stock options or warrants; or (vi) in or in connection with any merger, consolidation, combination or sale of all or substantially all of our assets or in connection with any tender offer or other offer to purchase at least 50% of our common stock.
Notwithstanding the foregoing, nothing shall prevent our directors or executive officers from, or restrict their ability to, (i) purchase our securities in a public or private transaction, or (ii) exercise or convert any options, warrants or other convertible securities issued to or held by such director or executive officer.
Other Relationships
The Representative has provided, and may in the future provide, various investment banking and other financial advisory services for us and our affiliates for which services it has received, and may receive in the future, customary fees.
The Representative may release, or authorize us to release, as the case may be, the common stock and other securities subject to the lock-up agreements described above in whole or in part at any time with or without notice.
Electronic Distribution
A prospectus in electronic format may be made available on the websites maintained by one or more of the underwriters or selling group members, if any, participating in the offering. The Representative may allocate a number of shares to the underwriters and selling group members, if any, for sale to their online brokerage account holders. Any such allocations for online distributions will be made by the representative on the same basis as other allocations.
Listing
We intend to apply for the listing of our common stock for trading on the NYSE American and expect such listing to occur concurrently with this offering. There is no assurance, however, that our common stock will be listed on the NYSE American or any other national securities exchange. A NYSE American listing, however, is not a condition to completing this offering.
Transfer Agent and Registrar
The transfer agent and registrar for our common stock is Transfer Online, Inc., 512 SE Salmon Street, Portland, Oregon 97214.
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Selling Restrictions
Canada
The securities may be sold in Canada only to purchasers purchasing, or deemed to be purchasing, as principal that are accredited investors, as defined in National Instrument 45 106 Prospectus Exemptions or subsection 73.3(1) of the Securities Act (Ontario), and are permitted clients, as defined in National Instrument 31 103 Registration Requirements, Exemptions and Ongoing Registrant Obligations. Any resale of the securities must be made in accordance with an exemption from, or in a transaction not subject to, the prospectus requirements of applicable securities laws.
Securities legislation in certain provinces or territories of Canada may provide a purchaser with remedies for rescission or damages if this prospectus (including any amendment or supplement thereto) contains a misrepresentation, provided that the purchaser exercises the remedies for rescission or damages within the time limit prescribed by the securities legislation of the purchaser’s province or territory. The purchaser should refer to any applicable provisions of the securities legislation of the purchaser’s province or territory for particulars of these rights or consult with a legal advisor.
Pursuant to section 3A.3 of National Instrument 33 105 Underwriting Conflicts (NI 33 105), the underwriter is not required to comply with the disclosure requirements of NI 33 105 regarding underwriter conflicts of interest in connection with this offering.
European Economic Area
In relation to each Member State of the European Economic Area which has implemented the Prospectus Directive, each, a Relevant Member State, an offer to the public of any shares of our common stock may not be made in that Relevant Member State, except that an offer to the public in that Relevant Member State of any shares of our common stock may be made at any time under the following exemptions under the Prospectus Directive, if they have been implemented in that Relevant Member State:
| ● | to any legal entity which is a qualified investor as defined in the Prospectus Directive; |
| ● | to fewer than 100 or, if the Relevant Member State has implemented the relevant provision of the 2010 PD Amending Directive, 150, natural or legal persons (other than qualified investors as defined in the Prospectus Directive), as permitted under the Prospectus Directive, subject to obtaining the prior consent of the representatives for any such offer; or |
| ● | in any other circumstances falling within Article 3(2) of the Prospectus Directive, provided that no such offer of shares of our common stock shall result in a requirement for the publication by us or any underwriter of a prospectus pursuant to Article 3 of the Prospectus Directive. |
For the purposes of this provision, the expression an “offer to the public” in relation to any shares of our common stock in any Relevant Member State means the communication in any form and by any means of sufficient information on the terms of the offer and any shares of our common stock to be offered so as to enable an investor to decide to purchase any shares of our common stock, as the same may be varied in that Member State by any measure implementing the Prospectus Directive in that Member State, the expression “Prospectus Directive” means Directive 2003/71/EC (and amendments thereto, including the 2010 PD Amending Directive, to the extent implemented in the Relevant Member State), and includes any relevant implementing measure in the Relevant Member State, and the expression “2010 PD Amending Directive” means Directive 2010/73/EU.
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United Kingdom
The underwriter has represented and agreed that:
| ● | it has only communicated or caused to be communicated and will only communicate or cause to be communicated an invitation or inducement to engage in investment activity (within the meaning of Section 21 of the Financial Services and Markets Act 2000, or FSMA) received by it in connection with the issue or sale of the shares of our common stock in circumstances in which Section 21(1) of the FSMA does not apply to us; and |
| ● | it has complied and will comply with all applicable provisions of the FSMA with respect to anything done by it in relation to the shares of our common stock in, from or otherwise involving the United Kingdom. |
| Switzerland |
The shares may not be publicly offered in Switzerland and will not be listed on the SIX Swiss Exchange, or the SIX, or on any other stock exchange or regulated trading facility in Switzerland. This document has been prepared without regard to the disclosure standards for issuance prospectuses under art. 652a or art. 1156 of the Swiss Code of Obligations or the disclosure standards for listing prospectuses under art. 27 ff. of the SIX Listing Rules or the listing rules of any other stock exchange or regulated trading facility in Switzerland. Neither this document nor any other offering or marketing material relating to the shares or the offering may be publicly distributed or otherwise made publicly available in Switzerland.
Neither this document nor any other offering or marketing material relating to the offering, or the shares have been or will be filed with or approved by any Swiss regulatory authority. In particular, this document will not be filed with, and the offer of shares will not be supervised by, the Swiss Financial Market Supervisory Authority FINMA, and the offer of shares has not been and will not be authorized under the Swiss Federal Act on Collective Investment Schemes, or CISA. Accordingly, no public distribution, offering or advertising, as defined in CISA, its implementing ordinances and notices, and no distribution to any non-qualified investor, as defined in CISA, its implementing ordinances and notices, shall be undertaken in or from Switzerland, and the investor protection afforded to acquirers of interests in collective investment schemes under CISA does not extend to acquirers of shares.
Australia
No placement document, prospectus, product disclosure statement or other disclosure document has been lodged with the Australian Securities and Investments Commission, or the ASIC, in relation to the offering.
This prospectus does not constitute a prospectus, product disclosure statement or other disclosure document under the Corporations Act 2001, or the Corporations Act, and does not purport to include the information required for a prospectus, product disclosure statement or other disclosure document under the Corporations Act.
Any offer in Australia of the shares may only be made to persons, the Exempt Investors, who are “sophisticated investors” (within the meaning of section 708(8) of the Corporations Act), “professional investors” (within the meaning of section 708(11) of the Corporations Act) or otherwise pursuant to one or more exemptions contained in section 708 of the Corporations Act so that it is lawful to offer the shares without disclosure to investors under Chapter 6D of the Corporations Act.
The shares applied for by Exempt Investors in Australia must not be offered for sale in Australia in the period of 12 months after the date of allotment under the offering, except in circumstances where disclosure to investors under Chapter 6D of the Corporations Act would not be required pursuant to an exemption under section 708 of the Corporations Act or otherwise or where the offer is pursuant to a disclosure document which complies with Chapter 6D of the Corporations Act. Any person acquiring shares must observe such Australian on-sale restrictions.
This prospectus contains general information only and does not take account of the investment objectives, financial situation or particular needs of any particular person. It does not contain any securities recommendations or financial product advice. Before making an investment decision, investors need to consider whether the information in this prospectus is appropriate to their needs, objectives and circumstances, and, if necessary, seek expert advice on those matters.
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INDEMNIFICATION FOR SECURITIES ACT LIABILITIES
Pursuant to our certificate of incorporation and bylaws, we may indemnify an officer or director who is made a party to any proceeding, including a lawsuit, because of his or her position, if he or she acted in good faith and in a manner he or she reasonably believed to be in our best interest. In certain cases, we may advance expenses incurred in defending any such proceeding. To the extent that the officer or director is successful on the merits in any such proceeding as to which such person is to be indemnified, we must indemnify him or her against all expenses incurred, including attorney’s fees.
Insofar as indemnification for liabilities arising under the Securities Act of 1933 may be permitted to directors, officers, or persons controlling us pursuant to the foregoing provisions, or otherwise, we have been advised that in the opinion of the SEC, such indemnification is against public policy as expressed in the Act and is, therefore, unenforceable.
LEGAL MATTERS
The validity of the shares of common stock offered hereby will be passed upon for the issuer by Olshan Frome Wolosky LLP, New York, New York.
EXPERTS
The consolidated financial statements of American Battery Materials, Inc. as of December 31, 2022 and 2021 and for each of the two years in the period ended December 31, 2022 and 2021, included in this prospectus have been audited by Pinnacle Accountancy Group of Utah, a dba of Heaton & Company, PLLC, an independent registered public accounting firm, as stated in their report appearing herein and elsewhere in the Registration Statement to which this prospectus forms a part (which report expresses an unqualified opinion on the financial statements and includes explanatory paragraphs referring to conditions that raise substantial doubt about American Battery Materials, Inc.’s ability to continue as a going concern for one year from the issuance of the financial statements). Such financial statements have been so included in reliance upon the report of such firm given upon their authority as experts in accounting and auditing.
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WHERE YOU CAN FIND ADDITIONAL INFORMATION
We have filed with the SEC a registration statement on Form S-1, which includes exhibits, schedules and amendments, under the Securities Act with respect to the common stock we are offering pursuant to this prospectus. The rules and regulations of the SEC allow us to omit certain information from this prospectus that is included in the registration statement. Statements made in this prospectus concerning the contents of any contract, agreement or other document are summaries of all material information about the contract, agreement or other document summarized, but are not complete descriptions of all terms of those contracts, agreements or other documents. If we filed any of those contracts, agreements or other documents as an exhibit to the registration statement, you may read the contract, agreement or other document itself for a complete description of its terms. When we complete this offering, we will also be required to file annual, quarterly and special reports, proxy statements and other information with the SEC.
You can read our SEC filings, including the registration statement, over the Internet at the SEC’s website at www.sec.gov. You may also read and copy any document we file with the SEC at its public reference facilities at 100 F Street, N.E., Room 1580, Washington, D.C. 20549. To receive copies of public records not posted to the SEC’s web site at prescribed rates, you may complete an online form at http://www.sec.gov, send a fax to (202) 772-9337 or submit a written request to the SEC, Office of FOIA/PA Operations, 100 F Street, N.E., Mail Stop 2736, Washington, D.C. 20549. Please call the SEC at 1-800-SEC-0330 for further information on their public reference room.
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AMERICAN BATTERY MATERIALS, INC.
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
F-1
AMERICAN BATTERY MATERIALS, INC.
Condensed Consolidated Balance Sheets
(Unaudited)
| September 30, | December 31, | |||||||
| 2023 | 2022 | |||||||
| Assets | ||||||||
| Current assets | ||||||||
| Cash | $ | $ | ||||||
| Prepaid expenses and other assets | ||||||||
| Total current assets | ||||||||
| Noncurrent assets | ||||||||
| Mineral claims | ||||||||
| Total assets | $ | $ | ||||||
| Liabilities and Stockholders’ Deficit | ||||||||
| Current Liabilities: | ||||||||
| Accounts payable | $ | $ | ||||||
| Accrued expenses | ||||||||
| Accrued interest | ||||||||
| Promissory notes payable, net of discount | ||||||||
| Promissory notes payable – related party | ||||||||
| Convertible notes payable, net of discount | ||||||||
| Convertible notes payable – related party | ||||||||
| Current capital lease obligation | ||||||||
| Total current liabilities | ||||||||
| Total Liabilities | ||||||||
| Stockholders’ deficit | ||||||||
| Preferred stock, $ | ||||||||
| Common stock, $ | ||||||||
| Additional paid in capital | ||||||||
| Accumulated deficit | ( | ) | ( | ) | ||||
| Total stockholders’ deficit | ( | ) | ( | ) | ||||
| Total liabilities and stockholders’ deficit | $ | $ | ||||||
The accompanying notes are an integral part of the condensed consolidated unaudited financial statements.
F-2
AMERICAN BATTERY MATERIALS, INC.
Condensed Consolidated Statements of Operations
(Unaudited)
| Nine Months Ended | Nine Months Ended | |||||||
| September 30, | September 30, | |||||||
| 2023 | 2022 | |||||||
| Operating Expenses | ||||||||
| General and administrative | $ | $ | ||||||
| Total operating expenses | ||||||||
| Operating loss | ( | ) | ( | ) | ||||
| Other Expenses / Income | ||||||||
| Gain on change in fair value of derivative liabilities | ||||||||
| Gain on settlement of liabilities | ||||||||
| Fair value of stock issued for note modification | ( | ) | ||||||
| Extension fees due to SPAC Sponsor | ( | ) | ||||||
| Interest expense | ( | ) | ( | ) | ||||
| Total other expenses / income | ( | ) | ( | ) | ||||
| Loss from operations before income taxes | ( | ) | ( | ) | ||||
| Provision for income taxes | ||||||||
| Net Loss | $ | ( | ) | $ | ( | ) | ||
| $ | ( | ) | $ | ( | ) | |||
The accompanying notes are an integral part of the condensed consolidated unaudited financial statements.
F-3
AMERICAN BATTERY MATERIALS, INC.
Consolidated Statements of Changes in Stockholders’ Deficit
Nine Months Ended September 30, 2023 and 2022
(Unaudited)
| Preferred stock | Common stock | Additional Paid in | Accumulated | Total Stockholders’ | ||||||||||||||||||||||||
| Shares | Amount | Shares | Amount | Capital | Deficit | Deficit | ||||||||||||||||||||||
| Balance as of December 31, 2021 | ( | ) | ( | ) | ||||||||||||||||||||||||
| Preferred stock issued for cash | - | |||||||||||||||||||||||||||
| Shares issued for note conversion | - | |||||||||||||||||||||||||||
| Fair value of warrants | - | - | ||||||||||||||||||||||||||
| Net loss | - | - | ( | ) | ( | ) | ||||||||||||||||||||||
| Balance as of September 30, 2022 | ( | ) | ( | ) | ||||||||||||||||||||||||
| Balance as of December 31, 2022 | ( | ) | ( | ) | ||||||||||||||||||||||||
| Shares issued for services | - | |||||||||||||||||||||||||||
| Shares issued for warrant exercise | - | |||||||||||||||||||||||||||
| Shares issued for cashless warrant exercise | - | ( | ) | |||||||||||||||||||||||||
| Conversion of preferred stock to common stock | ( | ) | ( | ) | ( | ) | ||||||||||||||||||||||
| Shares issued for note modification | - | |||||||||||||||||||||||||||
| Shares issued with notes | - | |||||||||||||||||||||||||||
| Net loss | - | - | ( | ) | ( | ) | ||||||||||||||||||||||
| Balance as of September 30, 2023 | ( | ) | ( | ) | ||||||||||||||||||||||||
The accompanying notes are an integral part of the condensed consolidated unaudited financial statements.
F-4
AMERICAN BATTERY MATERIALS, INC.
Condensed Consolidated Statements of Cash Flows
(Unaudited)
| Nine Months Ended | Nine Months Ended | |||||||
| September 30, | September 30, | |||||||
| 2023 | 2022 | |||||||
| Cash Flows from Operating Activities | ||||||||
| Net income (loss) | $ | ( | ) | $ | ( | ) | ||
| Adjustments to reconcile net loss to net cash used in operating activities: | ||||||||
| Stock based compensation | ||||||||
| Gain on settlement of liabilities | ( | ) | ||||||
| Gain on change in fair value of debt and warrant liabilities | ( | ) | ||||||
| Fair value of stock issued for note modification | ||||||||
| Amortization of debt discount | ( | ) | ||||||
| Changes in operating assets and liabilities: | ||||||||
| Prepaid expenses and other assets | ( | ) | ( | ) | ||||
| Accounts payable and accrued expenses | ||||||||
| Accrued interest | ||||||||
| Net cash used in operating activities | ( | ) | ( | ) | ||||
| Cash Flows from Investing Activities: | ||||||||
| Acquisition of mineral claims | ( | ) | ||||||
| Net cash provided by (used in) investing activities | ( | ) | ||||||
| Cash Flows from Financing Activities | ||||||||
| Proceeds from convertible notes | ||||||||
| Proceeds from promissory notes | ||||||||
| Proceeds from issuance of preferred stock | ||||||||
| Proceeds from warrant exercises | ||||||||
| Repayment of convertible note | ( | ) | ||||||
| Net cash provided by financing activities | ||||||||
| Net increase (decrease) in cash | ||||||||
| Cash, beginning of period | ||||||||
| Cash, end of period | $ | $ | ||||||
| Supplemental disclosures: | ||||||||
| Interest paid | $ | $ | ||||||
| Supplemental disclosures of non-cash items: | ||||||||
| Convertible notes converted to common stock | $ | $ | ||||||
| Accounts payable and accrued payable exchanged for convertible note | $ | $ | ||||||
| Promissory notes converted to convertible notes | $ | $ | ||||||
| Accrued interest on promissory notes converted to convertible notes | $ | $ | ||||||
The accompanying notes are an integral part of the condensed consolidated unaudited financial statements.
F-5
AMERICAN BATTERY MATERIALS, INC.
Notes to Condensed Consolidated Financial Statements
For the Nine Months Ended September 30, 2023 and 2022
(Unaudited)
Note 1 - Nature of the Business
American Battery Materials, Inc. (the “Company”) is a US based renewable energy company focused on the extraction, refinement and distribution of technical minerals in an environmentally responsible manner.
The Company formerly developed, marketed and distributed various self-serve electronic kiosks and mall/airport co-branded islands throughout North America. Due to the nationwide shutdown related to the COVID-19 pandemic, the Company spent a portion of 2020 restructuring and retiring certain corporate debt and obligations, while focusing on implementing a new operational direction.
Through the corporate reorganization and repositioning process, the Company found itself with the unique opportunity to expand its management team and acquire mining claims that historically reported high levels of Lithium and other tech minerals. The Company hired and affiliated itself with industry veterans that bring decades of experience, credibility and relationships.
On
November 5, 2021, the Company acquired the rights to 102 Federal Mining Claims located in the Lisbon Valley of Utah for $
On
April 25, 2023, the Company formed Mountain Sage Minerals LLC, a Utah limited liability company, of which it is the
On May 1, 2023, FINRA completed the processing of our application for a name change, and our name was officially changed to American Battery Materials, Inc. At the same time, the Company’s trading symbol was changed to BLTH. These changes better reflect the business of the Company.
On June 1, 2023, the Company entered into an Agreement and Plan of Merger (the “Merger Agreement”) with Seaport Global Acquisition II Corp., a Delaware corporation (“SGII”), and Lithium Merger Sub, Inc., a Delaware corporation and wholly-owned subsidiary of SGII (“Merger Sub”). SGII is a blank check company, also referred to as a special purpose acquisition company, formed for the purpose of effectuating a merger, capital stock exchange, asset acquisition, stock purchase, reorganization or other similar business combination with one or more businesses. SGII is an early stage and emerging growth company. Pursuant to the Merger Agreement, Merger Sub will merge with and into the Company, with the Company surviving the merger. As a result of the transactions under the Merger Agreement, ABM will become a wholly-owned subsidiary of SGII. The stockholders of ABM will become stockholders of SGII under an exchange ratio in the Merger Agreement. The closing of the transactions under the Merger Agreement is expected to be consummated in 2023, after the required approval by the stockholders of SGII and the fulfillment of certain other conditions.
On
July 14, 2023, the Company, SGII, and Merger Sub (collectively, the “Parties”) entered into Amendment No. 1 to Agreement
and Plan of Merger (the “Amendment”). Pursuant to the Amendment, the Parties agreed to (i) reduce the value of the shares
of SGII common stock to be paid as consideration to ABM’s stockholders from $
On August 4, 2023, the Company filed an Amendment to the Certificate of Incorporation (the “Amendment”) in order to effect a reverse stock split in the ratio of 1-for-300 (the “Reverse Split”). The Company and its shareholders holding a majority of the issued and outstanding shares of stock of the Company entitled to vote previously approved a reverse stock split for not less than 1-for-10 and not more than 1-for-1,000, at any time prior to October 20, 2023, with the Company’s Board having the discretion to determine whether or not the Reverse Split is to be effected, and if effected, the exact ratio for the Reverse Split within the above range. On August 1, 2023, the Company’s unanimously approved the Reverse Split and authorized the filing of the Amendment. Although the Amendment has been filed, the Reverse Split will not be effective and will not be reflected (i) in the stock price of the Company; or, (ii) in the Company’s financials until the Revere Split is processed by FINRA. The Company has submitted an application to FINRA for a corporate action in order to implement and effect the Reverse Split.
F-6
The Company has been moving forward with its strategy of employing advanced brine extractive technology methodologies and has been in talks with numerous extraction providers. Selective mineral extraction is clearly the most cost-effective and ESG friendly approach currently available. Technologies are being utilized that can extract the desired minerals and metals from the brine and then re-inject the brines back down into the aquafer. The prospective partners have been provided the analytical results from the technical reports, but will soon provide current results, analytical, geotech modeling, aquifer modeling, recharge, flows, and depth.
Note 2 - Summary of Significant Accounting Policies
Basis of Presentation and Principles of Consolidation
The accompanying unaudited consolidated financial statements are condensed and have been prepared in accordance with U.S. generally accepted accounting principles (“GAAP”) for interim financial information and with the instructions to Form 10-Q. Accordingly, they do not include all the information and footnotes required by GAAP for complete financial statements. In the opinion of management, all adjustments consisting of normal recurring accruals considered necessary for a fair and non-misleading presentation of the financial statements have been included. Operating results for the nine months ended September 30, 2023 are not necessarily indicative of the results that may be expected for the year ending December 31, 2023. The balance sheet as of December 31, 2022 has been derived from the audited consolidated financial statements at that date but does not include all the information and footnotes required by GAAP for complete financial statements. These interim consolidated financial statements should be read in conjunction with the December 31, 2022 audited consolidated financial statements and the notes thereto contained in our Annual Report on Form 10-K for the year ended December 31, 2022, as filed with the Securities and Exchange Commission on April 21, 2023.
The accompanying consolidated financial statements include the accounts of American Battery Materials, Inc. and the operations of its wholly-owned subsidiaries U-Vend America, Inc., U-Vend Canada, Inc., U-Vend USA LLC, and Mountain Sage Minerals LLC. All intercompany balances and transactions have been eliminated in consolidation.
Use of Estimates
The preparation of consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect amounts reported in the financial statements and accompanying notes. Actual results could differ from those estimates and be based on events different from those assumptions. Future events and their effects cannot be predicted with certainty; estimating, therefore, requires the exercise of judgment. Thus, accounting estimates change as new events occur, as more experience is acquired, or as additional information is obtained.
Property and Equipment
Property and equipment are stated at cost less depreciation. Depreciation is provided using the straight-line method over the estimated useful life of the assets. Equipment has estimated useful lives between three and seven years. Expenditures for repairs and maintenance are charged to expense as incurred.
Impairment of Long-lived Assets
Long-lived assets, such as property and equipment and intangible assets subject to amortization are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset group may not be recoverable. Recoverability of assets to be held and used is measured by comparing the carrying amount to the estimated future undiscounted cash flows expected to be generated by the asset group. If it is determined that an asset group is not recoverable, an impairment charge is recognized for the amount by which the carrying amount of the asset group exceeds its fair value.
Mineral Rights and Properties
The
Company capitalizes acquisition costs until the Company determines the economic viability of the property. Since the Company does not
have proven and probable reserves as defined by Securities and Exchange Commission (“SEC”) regulation S-K 1300, exploration
expenditures are expensed as incurred. The Company expenses mineral lease costs and repair and maintenance costs as incurred. The Company
reviews the carrying value of our properties for impairment, including mineral rights, upon the occurrence of events or changes in circumstances
that indicate the related carrying amounts may not be recoverable. During the period ending September 30, 2023 the Company took action
to expand on its rights to 102 federal mining claims located in the Lisbon Valley of Utah that it purchased on November 5, 2021 for $
F-7
Earnings Per Share
The Company presents basic and diluted earnings per share in accordance with ASC 260, “Earnings per Share.” Basic earnings per share reflect the actual weighted average of shares issued and outstanding during the period. Diluted earnings per share are computed including the number of additional shares that would have been outstanding if dilutive potential shares had been issued. In a loss period, the calculation for basic and diluted earnings per share is considered to be the same, as the impact of potential common shares is anti-dilutive.
As
of September 30, 2023 and December 31, 2022, there were approximately
Derivative Financial Instruments
The Company evaluates its financial instruments to determine if such instruments are derivatives or contain features that qualify as embedded derivatives. Certain warrants issued by the Company contain terms that result in the warrants being classified as derivative liabilities for accounting purposes. For derivative financial instruments that are accounted for as liabilities, the derivative instrument is initially recorded at its fair market value and then is revalued at each reporting date, with changes in fair value reported in the consolidated statement of operations. The Company does not use derivative instruments to hedge exposures to cash flow, market or foreign currency risks.
Fair Value of Financial Instruments
For certain of the Company’s financial instruments, including cash and equivalents, prepaid expenses and other assets, accounts payable, accrued liabilities and short-term debt, the carrying amounts approximate their fair values due to their short maturities. ASC 820, “Fair Value Measurements and Disclosures,” requires disclosure of the fair value of financial instruments held by the Company. ASC 825, “Financial Instruments,” defines fair value, and establishes a three-level valuation hierarchy for disclosures of fair value measurement that enhances disclosure requirements for fair value measures. The three levels of valuation hierarchy are defined as follows:
| ● | Level 1: Unadjusted quoted prices in active markets that are accessible at the measurement date for identical, unrestricted assets or liabilities. The Company considers active markets as those in which transactions for the assets or liabilities occur in sufficient frequency and volume to provide pricing information on an ongoing basis. |
| ● | Level 2: Quoted prices in markets that are not active, or inputs which are observable, either directly or indirectly, for substantially the full term of the asset or liability. This category includes those derivative instruments that the Company values using observable market data. Substantially all of these inputs are observable in the marketplace throughout the term of the derivative instruments, can be derived from observable data, or supported by observable levels at which transactions are executed in the marketplace. |
| ● | Level 3: Measured based on prices or valuation models that require inputs that are both significant to the fair value measurement and less observable from objective sources (i.e. supported by little or no market activity). Level 3 instruments include derivative warrant instruments. The Company does not have sufficient corroborating evidence to support classifying these assets and liabilities as Level 1 or Level 2. |
Stock-Based Compensation
The Company accounts for stock-based compensation in accordance with ASC 718, “Compensation - Stock Compensation,” which requires all stock-based awards granted to employees, directors, and non-employees to be measured at grant date fair value of the equity instrument issued and recognized as expense. Stock-based compensation expense is recognized on a straight-line basis over the requisite service period of the award, which is generally equivalent to the vesting period. The fair value of each stock option granted is estimated using the Black-Scholes option pricing model. The measurement date for the non-forfeitable awards to nonemployees that vest immediately is the date the award is issued.
Revenue Recognition
We recognize revenue under ASC 606, “Revenue from Contracts with Customers,” the core principle of which is that an entity should recognize revenue to depict the transfer of control for promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. In applying the revenue recognition principles, an entity is required to identify the contract(s) with a customer, identify the performance obligations, determine the transaction price, allocate the transaction price to the performance obligations and recognize revenue as the performance obligations are satisfied (i.e., either over time or at a point in time). ASC 606 further requires that companies disclose sufficient information to enable readers of financial statements to understand the nature, amount, timing and uncertainty of revenue and cash flows arising from contracts with customers.
F-8
The
Company recognized $
Recent Accounting Pronouncements
On August 5, 2020, the FASB issued ASU 2020-06, Debt-Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging-Contracts in Entity’s Own Equity (Subtopic 815-40): Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity, which simplifies the accounting for certain financial instruments with characteristics of liabilities and equity, including convertible instruments and contracts on an entity’s own equity. This ASU is effective for public business entities, excluding smaller reporting companies, for fiscal years beginning after December 15, 2021, and for all other entities for fiscal years beginning after December 15, 2023. Early adoption is permitted for all entities no earlier than for fiscal years beginning after December 15, 2020. The Company is currently evaluating the effects this ASU will have on its financial statements.
The Company has examined all other recent accounting pronouncements and determined that they will not have a material impact on its financial position, results of operations, or cash flows.
Note 3 - Going Concern
The accompanying
consolidated financial statements have been prepared on a going concern basis. The Company had net loss of $
Until the Company can generate significant cash from operations, its ability to continue as a going concern is dependent upon obtaining additional financing. The Company hopes to raise additional financing, potentially through the sale of debt or equity instruments, or a combination, to fund its operations for the next 12 months and allow the Company to continue the development of its business plans and satisfy its obligations on a timely basis. Should additional financing not be available, the Company will have to negotiate with its lenders to extend the repayment dates of its indebtedness. There can be no assurance that the Company will be able to successfully restructure its debt obligations in the event it fails to obtain additional financing. These conditions have raised substantial doubt as to the Company’s ability to continue as a going concern for one year from the issuance of the financial statements, which has not been alleviated.
Note 4 - Debt
Promissory Notes Payable
In
2014 and 2016, the Company issued two promissory notes in the total principal amount of $
During
the year ended December 31, 2016, the Company issued two additional unsecured promissory notes and borrowed an aggregate amount of $
Accrued
interest at September 30, 2023 and December 31, 2022 on these notes totaled $
F-9
During
the year ended December 31, 2022, the Company entered into 5 promissory note agreements in the aggregate amount of $
During
the nine months ended September 30, 2023, the Company entered into short-term promissory note agreement in the amount of $
During
the nine months ended September 30, 2023, $
Convertible Notes Payable and Convertible Notes Payable – Related Party
In
February 2023, the Company entered into a convertible promissory note agreement in the amount of $
During
the nine months ended September 30, 2023, the Company entered into Note Purchase Agreements with seven investors not affiliated with
the Company (the “Purchasers”) pursuant to which the Purchasers purchased from the Company convertible notes (the “Convertible
Notes”) with an aggregate principal amount of $
The
Convertible Notes provide for a maturity of 12-months;
(a) The Convertible Notes automatically convert into Conversion Shares upon the shares of the Company’s common stock being listed on a higher exchange due to the (i) pricing and funding of an S-1 registration statement; or, (ii) the closing of a transaction resulting in the uplist (either, a “Triggering Transaction”). The conversion price for the Conversion Shares in an automatic conversion shall be equal to:
(1)
(2)
(3)
(b)
The Purchasers have the right to convert into Conversion Shares, in whole or in part, at any time after 180-days following the Issuance
Date. The conversion price for the Conversion Shares in a voluntary conversion shall be equal to
F-10
| 2023 | $ | |||
| 2024 | ||||
| Total | $ |
| Nine months ended | ||||||||
| September 30, 2023 | September 30, 2022 | |||||||
| Balance of embedded derivative at the beginning of the period | $ | $ | ||||||
| Change in fair value of conversion features | ( | ) | ||||||
| Balance of embedded derivatives at the end of the period | $ | $ | ||||||
Note 5 - Capital Lease Obligations
During the year ended December 31, 2018 the Company entered into various capital lease agreements. The leases expire at various points through the year ended December 31, 2023.
| 2023 | $ | |||
| Total minimum lease payments | ||||
| Less: Amount represented interest | ( | ) | ||
| Present value of minimum lease payments and guaranteed residual value | $ |
Note 6 - Capital Stock
On
October 20, 2022 the Company , following receipt of written approval from stockholders acting without a meeting and holding at least
the minimum number of votes that would be necessary to authorize or take such action at a meeting, filed an amendment to its Certificate
of Incorporation to (i) change the name of the Company to “AMERICAN BATTERY MATERIALS, INC.” (the “Name Change”);
and, (ii) increase the total number of authorized shares of the Company’s common stock, par value $
On
October 20, 2022, in addition to the Name Change and the Authorized Share Increase, the holder of
| 1. | Future
amendment of the Company’s Certificate of Incorporation to implement a decrease in the authorized shares of the Company’s
Common Stock from |
| 2. | Future amendment of the Company’s Certificate of Incorporation to implement a reverse stock split of the Company’s Common Stock by a ratio of not less than 1-for-10 and not more than 1-for-1,000, (the “Reverse Split”), at any time prior to the Anniversary Date, with the Board having the discretion to determine whether or not the Reverse Split is to be effected, and if effected, the exact ratio for the Reverse Split within the above range. |
F-11
Preferred Stock
The
Company has authorization for “blank check” preferred stock, which could be issued with voting, liquidation, dividend and
other rights superior to common stock. As of September 30, 2023 and December 31, 2022, there were
On
August 12, 2022, the Company effected with the Delaware Secretary of State a designation of
The
Series A Preferred may vote on any action upon which holders of the Common Stock may vote, and they shall vote together as one class
with voting rights equal to sixty percent (
During
the nine months ended September 30, 2023, the Company converted
Common Stock
The
Company has authorized
During
the nine months ended September 30, 2023, the Company issued
During
the nine months ended September 30, 2022, the Company issued
Note 7 - Stock Options and Warrants
Warrants
| Warrants | Exercise Price | Expiration | ||||||||
| 2018 Warrants – financing | $ | |||||||||
| 2018 Warrants for services | $ | |||||||||
| 2019 Warrants –financing | $ | |||||||||
| 2019 Warrants for services | $ | |||||||||
| 2020 Warrants for services | $ | |||||||||
| 2022 Exchange warrants | $ | |||||||||
| Total | ||||||||||
F-12
| Number of Warrants | Weighted Average Exercise Price | Weighted Average Remaining Contractual Term | ||||||||||
| Balance outstanding at December 31, 2022 | $ | |||||||||||
| Granted | ||||||||||||
| Exercised | ( | ) | ||||||||||
| Forfeited | ||||||||||||
| Cancelled | ||||||||||||
| Expired | ( | ) | ||||||||||
| Balance outstanding as of September 30, 2023 | $ | |||||||||||
| Exercisable as of September 30, 2023 | $ | |||||||||||
The
intrinsic value of the outstanding warrants as of September 30, 2023 was $
Equity Incentive Plan
On
July 22, 2011, the Board of Directors of the Company approved the Company’s 2011 Equity Incentive Plan (the “Plan”)
and on July 26, 2011, stockholders holding a majority of shares of the Company approved, by written consent, the Plan and the issuance
under the Plan of
Note 8 - Commitments and Contingencies
As
disclosed and discussed and Note 1, above, the Merger Agreement was amended on July 14, 2023. Pursuant to the Amendment, the parties
agreed, among other things, that the Company would fund one-half of the additional payment into trust (i.e., $
Note 9 - Subsequent Events
The Company has evaluated events occurring subsequent to September 30, 2023 through the date of the issuance of these financial statements and noted the following:
On
October 20, 2023, the Company issued
On
October 20, 2023, the Company issued
On October 26, 2023, the Company dismissed Pinnacle Accountancy Group of Utah (a dba of Heaton & Company, PLLC) (“Pinnacle”) as the Company’s independent registered accountant.
On October 26, 2023, the Company engaged and executed an agreement with GreenGrowth CPAs (“GreenGrowth”), as the Company’s new independent registered accountant. This change in the Company’s independent registered public accounting firm was approved by the Company’s Board of Directors effective October 26, 2023.
F-13
Report of Independent Registered Public Accounting Firm
To the Board of Directors and Stockholders
American Battery Materials, Inc. (formerly Boxscore Brands, Inc.)
Greenwich, CT
Opinion on the Financial Statements
We have audited the accompanying consolidated balance sheets of American Battery Materials, Inc. (formerly Boxscore Brands, Inc.) (the Company) as of December 31, 2022 and 2021, and the related consolidated statements of operations, changes in stockholders’ deficit, and cash flows for the years then ended, and the related notes (collectively referred to as the financial statements). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2022 and 2021, and the results of its operations and its cash flows for the years then ended, in conformity with accounting principles generally accepted in the United States of America.
Going Concern Considerations
The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. The Company has suffered recurring losses since inception and has not achieved profitable operations, which raise substantial doubt about its ability to continue as a going concern. Management’s plans in regard to these matters are described in Note 3. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.
Basis for Opinion
These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits, we are required to obtain an understanding of internal control over financial reporting, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion.
Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.
Critical Audit Matter
The critical audit matter communicated below is a matter arising from the current period audits of the financial statements that was communicated or required to be communicated to the audit committee and that: (1) relates to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.
F-14
Going Concern – Disclosure
The financial statements of the Company are prepared on a going concern basis, which assumes that the Company will continue in operation for the foreseeable future and, accordingly, will be able to realize its assets and discharge its liabilities in the normal course of operations. As noted in “Going Concern Considerations” above, the Company has a history of recurring net losses, a significant accumulated deficit and currently has net working capital deficit. The Company has contractual obligations, such as commitments for repayments of accounts payable, accrued liabilities, notes payable, convertible notes payable, and amounts due under capital lease (collectively “obligations”). Currently, management’s forecasts and related assumptions illustrate their ability to meet the obligations through management of expenditures, implementation of a new operational direction, obtaining additional debt financing, and issuance of capital stock for additional funding to meet its operating needs. Should there be constraints on the ability to implement its new business operations or access financing through stock issuances, the Company will continue to manage cash outflows and meet the obligations through debt financing.
We identified management’s assessment of the Company’s ability to continue as a going concern as a critical audit matter. Management made judgments regarding its intent and ability to effectively implement its plans and provide the necessary cash flows to fund the Company’s obligations as they become due. Specifically, the judgments with the highest degree of impact and subjectivity surrounding the Company’s intent and ability to continue as a going concern include its ability to manage expenditures, its ability to access funding from the capital market, its ability to obtain debt financing, and the successful implementation of its new operational direction. Auditing the judgments made by management required a high degree of auditor judgment and an increased extent of audit effort.
Addressing the matter involved performing procedures and evaluating audit evidence in connection with forming our overall opinion on the financial statements. These procedures included the following, among others, evaluating the Company’s intent and ability to: (i) access funding from the capital market; (ii) manage expenditures (iii) obtain debt financing, and (iv) implement its new business operational direction.
| /s/ Pinnacle Accountancy Group of Utah |
We have served as the Company’s auditor since 2021.
Pinnacle Accountancy Group of Utah
(a dba of Heaton & Company, PLLC)
PCAOB#: 6117
Farmington, Utah
April 19, 2023
F-15
American Battery Materials, Inc. (formerly Boxscore Brands, Inc.)
Consolidated Balance Sheets
| December 31, | December 31, | |||||||
| 2022 | 2021 | |||||||
| Assets | ||||||||
| Current assets | ||||||||
| Cash | $ | $ | ||||||
| Prepaid expenses and other assets | ||||||||
| Total current assets | ||||||||
| Noncurrent assets | ||||||||
| Mineral claims | ||||||||
| Total assets | $ | $ | ||||||
| Liabilities and Stockholders’ Deficit | ||||||||
| Current Liabilities: | ||||||||
| Accounts payable | $ | $ | ||||||
| Accrued expenses | ||||||||
| Accrued interest | ||||||||
| Senior convertible notes | ||||||||
| Promissory notes payable | ||||||||
| Convertible notes payable | ||||||||
| Current capital lease obligation | ||||||||
| Total current liabilities | ||||||||
| Noncurrent liabilities: | ||||||||
| Convertible notes payable | ||||||||
| Derivative liabilities | ||||||||
| Total noncurrent liabilities | ||||||||
| Total Liabilities | ||||||||
| Stockholders’ deficit | ||||||||
| Preferred stock, $ | ||||||||
| Common stock, $ | ||||||||
| Additional paid in capital | ||||||||
| Accumulated deficit | ( | ) | ( | ) | ||||
| Total stockholders’ deficit | ( | ) | ( | ) | ||||
| Total liabilities and stockholders’ deficit | $ | $ | ||||||
The accompanying notes are an integral part of the consolidated financial statements.
F-16
American Battery Materials, Inc. (formerly Boxscore Brands, Inc.)
Consolidated Statements of Operations
| Year Ended | Year Ended | |||||||
| December 31, | December 31, | |||||||
| 2022 | 2021 | |||||||
| Operating Expenses | ||||||||
| General and administrative | $ | $ | ||||||
| Total operating expenses | ||||||||
| Operating loss | ( | ) | ( | ) | ||||
| Other Expenses (Income) | ||||||||
| Gain on change in fair value of derivative liabilities | ||||||||
| Gain on settlement of liabilities | ||||||||
| Write-off of assets | ( | ) | ||||||
| Interest expense | ( | ) | ( | ) | ||||
| Total other expenses (income) | ( | ) | ||||||
| Income (loss) from operations before income taxes | ( | ) | ||||||
| Provision for income taxes | ||||||||
| Net Income (Loss) | $ | ( | ) | $ | ||||
| Net income (loss) per share – basic | $ | ( | ) | $ | ||||
| Net loss per share – diluted | $ | ( | ) | $ | ( | ) | ||
| Weighted average common shares – basic | ||||||||
| Weighted average common shares – diluted | ||||||||
The accompanying notes are an integral part of the consolidated financial statements.
F-17
American Battery Materials, Inc. (formerly Boxscore Brands, Inc.)
Consolidated Statements of Changes in Stockholders’ Deficit
Years ended December 31, 2022 and 2021
| Preferred stock | Common stock | Additional Paid in | Accumulated | Total Stockholders’ | ||||||||||||||||||||||||
| Shares | Amount | Shares | Amount | Capital | Deficit | Deficit | ||||||||||||||||||||||
| Balance as of December 31, 2020 | $ | $ | $ | $ | ( | ) | $ | ( | ) | |||||||||||||||||||
| Shares issued for note conversion | - | |||||||||||||||||||||||||||
| Fair value of warrants | - | - | ||||||||||||||||||||||||||
| Net income | - | - | ||||||||||||||||||||||||||
| Balance as of December 31, 2021 | $ | $ | $ | $ | ( | ) | $ | ( | ) | |||||||||||||||||||
| Preferred stock issued for cash | - | |||||||||||||||||||||||||||
| Shares issued for note conversion | - | |||||||||||||||||||||||||||
| Shares issued for warrant exercise | - | |||||||||||||||||||||||||||
| Shares issued for services | - | |||||||||||||||||||||||||||
| Fair value of warrants | - | - | ||||||||||||||||||||||||||
| Net loss | - | - | ( | ) | ( | ) | ||||||||||||||||||||||
| Balance as of December 31, 2022 | $ | $ | $ | $ | ( | ) | $ | ( | ) | |||||||||||||||||||
The accompanying notes are an integral part of the consolidated financial statements.
F-18
American Battery Materials, Inc. (formerly Boxscore Brands, Inc.)
Consolidated Statements of Cash Flows
For the Years Ended December 31, 2022 and 2021
| Year Ended | Year Ended | |||||||
| December 31, | December 31, | |||||||
| 2022 | 2021 | |||||||
| Cash Flows from Operating Activities | ||||||||
| Net income (loss) | $ | ( | ) | $ | ||||
| Adjustments to reconcile net loss to net cash used in operating activities: | ||||||||
| Stock based compensation | ||||||||
| Gain on settlement of liabilities | ( | ) | ( | ) | ||||
| Gain on change in fair value of debt and warrant liabilities | ( | ) | ( | ) | ||||
| Write-off of assets | ||||||||
| Changes in operating assets and liabilities: | ||||||||
| Prepaid expenses and other assets | ( | ) | ||||||
| Accounts payable and accrued expenses | ||||||||
| Accrued interest | ||||||||
| Net cash used in operating activities | ( | ) | ( | ) | ||||
| Cash Flows from Investing Activities: | ||||||||
| Acquisition of mineral claims | ( | ) | ||||||
| Net cash used in investing activities | ( | ) | ||||||
| Cash Flows from Financing Activities | ||||||||
| Proceeds from convertible notes | ||||||||
| Proceeds from promissory notes | ||||||||
| Proceeds from issuance of preferred stock | ||||||||
| Proceeds from warrant exercise | ||||||||
| Repayments of capital lease obligations | ( | ) | ||||||
| Repayments of convertible note | ( | ) | ( | ) | ||||
| Repayments of promissory notes | ( | ) | ||||||
| Net cash provided by financing activities | ||||||||
| Net increase (decrease) in cash | ( | ) | ||||||
| Cash, beginning of period | ||||||||
| Cash, end of period | $ | $ | ||||||
| Supplemental disclosures: | ||||||||
| Interest paid | $ | $ | ||||||
| Supplemental disclosures of non-cash items: | ||||||||
| Accounts payable and accrued payable exchanged for convertible note | $ | $ | ||||||
| Convertible notes converted to common stock | $ | $ | ||||||
| Accrued interest converted to common stock | $ | $ | ||||||
The accompanying notes are an integral part of the consolidated financial statements.
F-19
American Battery Materials, Inc. (formerly Boxscore Brands, Inc.)
Notes to Consolidated Financial Statements
For the Years Ended December 31, 2022 and 2021
Note 1 - Nature of the Business
BoxScore Brands, Inc. (the “Company”) is a US based renewable energy company focused on the extraction, refinement and distribution of technical minerals in an environmentally responsible manner.
The Company formerly developed, marketed and distributed various self-serve electronic kiosks and mall/airport co-branded islands throughout North America. Due to the nationwide shutdown related to the COVID-19 pandemic, the Company spent a portion of 2020 restructuring and retiring certain corporate debt and obligations, while focusing on implementing a new operational direction.
Through the corporate reorganization and repositioning process, the Company found itself with the unique opportunity to expand its management team and acquire mining claims that historically reported high levels of Lithium and other tech minerals. The Company hired and affiliated itself with industry veterans that bring decades of experience, credibility and relationships.
On November 5, 2021, the Company acquired the
rights to 102 Federal Mining Claims located in the Lisbon Valley of Utah for $
The Company has been moving forward with its strategy of employing advanced brine extractive technology methodologies and has been in talks with numerous extraction providers. Selective mineral extraction is clearly the most cost-effective and ESG friendly approach currently available. Technologies are being utilized that can extract the desired minerals and metals from the brine and then re-inject the brines back down into the aquafer. The prospective partners have been provided the analytical results from the technical reports, but will soon provide current results, analytical, Geotech modeling, aquifer modeling, recharge, flows, and depth.
The Company will also look to expand its holdings in the Lisbon Valley area with the acquisition of additional mineral claims and joint venture opportunities.
Note 2 - Summary of Significant Accounting Policies
Basis of Presentation and Principles of Consolidation
The accompanying consolidated financial statements have been prepared in accordance with U.S. generally accepted accounting principles (GAAP). The Company’s fiscal year end is December 31.
The accompanying consolidated financial statements include the accounts of BoxScore Brands, Inc. and the operations of its wholly-owned subsidiaries U-Vend America, Inc., U-Vend Canada, Inc. and U-Vend USA LLC. All intercompany balances and transactions have been eliminated in consolidation.
Use of Estimates
The preparation of consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect amounts reported in the financial statements and accompanying notes. Actual results could differ from those estimates and be based on events different from those assumptions. Future events and their effects cannot be predicted with certainty; estimating, therefore, requires the exercise of judgment. Thus, accounting estimates change as new events occur, as more experience is acquired, or as additional information is obtained.
F-20
American Battery Materials, Inc. (formerly Boxscore Brands, Inc.)
Notes to Consolidated Financial Statements
For the Years Ended December 31, 2022 and 2021
Property and Equipment
Property and equipment are stated at cost less
depreciation. Depreciation is provided using the straight-line method over the estimated useful life of the assets. Equipment has estimated
useful lives between
Impairment of Long-lived Assets
Long-lived assets, such as property and equipment and intangible assets subject to amortization are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset group may not be recoverable. Recoverability of assets to be held and used is measured by comparing the carrying amount to the estimated future undiscounted cash flows expected to be generated by the asset group. If it is determined that an asset group is not recoverable, an impairment charge is recognized for the amount by which the carrying amount of the asset group exceeds its fair value.
Mineral Rights and Properties
The Company capitalizes acquisition costs until
the Company determines the economic viability of the property. Since the Company does not have proven and probable reserves as defined
by Securities and Exchange Commission (“SEC”) regulation S-K 1300, exploration expenditures are expensed as incurred. The
Company expenses mineral lease costs and repair and maintenance costs as incurred. The Company reviews the carrying value of our properties
for impairment, including mineral rights, upon the occurrence of events or changes in circumstances that indicate the related carrying
amounts may not be recoverable. The Company currently owns the rights to 102 Federal Mining Claims located in the Lisbon Valley of Utah
that it purchased on November 5, 2021 for $
Earnings Per Share
The Company presents basic and diluted earnings per share in accordance with ASC 260, “Earnings per Share.” Basic earnings per share reflect the actual weighted average of shares issued and outstanding during the period. Diluted earnings per share are computed including the number of additional shares that would have been outstanding if dilutive potential shares had been issued. In a loss period, the calculation for basic and diluted earnings per share is considered to be the same, as the impact of potential common shares is anti-dilutive.
As of December 31, 2022
and 2021, there were approximately
F-21
American Battery Materials, Inc. (formerly Boxscore Brands, Inc.)
Notes to Consolidated Financial Statements
For the Years Ended December 31, 2022 and 2021
| Year Ended | ||||
| December 31, | ||||
| 2021 | ||||
| Numerator: | ||||
| Net income (loss) | $ | |||
| Gain on change in fair value of derivatives | $ | ( | ) | |
| Interest on convertible debt | $ | |||
| Net loss – diluted | $ | ( | ) | |
| Denominator: | ||||
| Weighted average common shares outstanding | ||||
| Effect of dilutive shares | ||||
| Diluted | ||||
| Net income (loss) per common share: | ||||
| Basic | $ | |||
| Diluted | $ | ( | ) | |
Derivative Financial Instruments
The Company evaluates its financial instruments to determine if such instruments are derivatives or contain features that qualify as embedded derivatives. Certain warrants issued by the Company contain terms that result in the warrants being classified as derivative liabilities for accounting purposes. For derivative financial instruments that are accounted for as liabilities, the derivative instrument is initially recorded at its fair market value and then is revalued at each reporting date, with changes in fair value reported in the consolidated statement of operations. The Company does not use derivative instruments to hedge exposures to cash flow, market or foreign currency risks.
Fair Value of Financial Instruments
For certain of the Company’s financial instruments, including cash and equivalents, prepaid expenses and other assets, accounts payable, accrued liabilities and short-term debt, the carrying amounts approximate their fair values due to their short maturities. ASC 820, “Fair Value Measurements and Disclosures,” requires disclosure of the fair value of financial instruments held by the Company. ASC 825, “Financial Instruments,” defines fair value, and establishes a three-level valuation hierarchy for disclosures of fair value measurement that enhances disclosure requirements for fair value measures. The three levels of valuation hierarchy are defined as follows:
| ● | Level 1: Unadjusted quoted prices in active markets that are accessible at the measurement date for identical, unrestricted assets or liabilities. The Company considers active markets as those in which transactions for the assets or liabilities occur in sufficient frequency and volume to provide pricing information on an ongoing basis. |
| ● | Level 2: Quoted prices in markets that are not active, or inputs which are observable, either directly or indirectly, for substantially the full term of the asset or liability. This category includes those derivative instruments that the Company values using observable market data. Substantially all of these inputs are observable in the marketplace throughout the term of the derivative instruments, can be derived from observable data, or supported by observable levels at which transactions are executed in the marketplace. |
| ● | Level 3: Measured based on prices or valuation models that require inputs that are both significant to the fair value measurement and less observable from objective sources (i.e. supported by little or no market activity). Level 3 instruments include derivative warrant instruments. The Company does not have sufficient corroborating evidence to support classifying these assets and liabilities as Level 1 or Level 2. |
F-22
American Battery Materials, Inc. (formerly Boxscore Brands, Inc.)
Notes to Consolidated Financial Statements
For the Years Ended December 31, 2022 and 2021
Certain of the Company’s debt and equity instruments include embedded derivatives that require bifurcation from the host contract under the provisions of ASC 815-40, “Derivatives and Hedging.”
| Carrying | Fair Value Measurement at December 31, 2022 | |||||||||||||||
| Value | Level 1 | Level 2 | Level 3 | |||||||||||||
| Derivative liabilities | $ | $ | ||||||||||||||
| Fair Value Measurement at | ||||||||||||||||
| Carrying | December 31, 2021 | |||||||||||||||
| Value | Level 1 | Level 2 | Level 3 | |||||||||||||
| Derivative liabilities | $ | $ | ||||||||||||||
Stock-Based Compensation
The Company accounts for stock-based compensation in accordance with ASC 718, “Compensation - Stock Compensation,” which requires all stock-based awards granted to employees, directors, and non-employees to be measured at grant date fair value of the equity instrument issued, and recognized as expense. Stock-based compensation expense is recognized on a straight-line basis over the requisite service period of the award, which is generally equivalent to the vesting period. The fair value of each stock option granted is estimated using the Black-Scholes option pricing model. The measurement date for the non-forfeitable awards to nonemployees that vest immediately is the date the award is issued.
Gain on Liabilities Settlement
During the year ended December 31, 2021 creditors
forgave an aggregate amount of $
Revenue Recognition
We recognize revenue under ASC 606, “Revenue from Contracts with Customers,” the core principle of which is that an entity should recognize revenue to depict the transfer of control for promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. In applying the revenue recognition principles, an entity is required to identify the contract(s) with a customer, identify the performance obligations, determine the transaction price, allocate the transaction price to the performance obligations and recognize revenue as the performance obligations are satisfied (i.e., either over time or at a point in time). ASC 606 further requires that companies disclose sufficient information to enable readers of financial statements to understand the nature, amount, timing and uncertainty of revenue and cash flows arising from contracts with customers.
The Company recognized $
F-23
American Battery Materials, Inc. (formerly Boxscore Brands, Inc.)
Notes to Consolidated Financial Statements
For the Years Ended December 31, 2022 and 2021
Recent Accounting Pronouncements
On August 5, 2020, the FASB issued ASU 2020-06, Debt-Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging-Contracts in Entity’s Own Equity (Subtopic 815-40): Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity, which simplifies the accounting for certain financial instruments with characteristics of liabilities and equity, including convertible instruments and contracts on an entity’s own equity. This ASU is effective for public business entities, excluding smaller reporting companies, for fiscal years beginning after December 15, 2021, and for all other entities for fiscal years beginning after December 15, 2023. Early adoption is permitted for all entities no earlier than for fiscal years beginning after December 15, 2020. The Company is currently evaluating the effects this ASU will have on its financial statements.
The Company has examined all other recent accounting pronouncements and determined that they will not have a material impact on its financial position, results of operations, or cash flows.
Note 3 - Going Concern
The accompanying consolidated financial statements
have been prepared on a going concern basis. The Company had net loss of $
Until the Company can generate significant cash from operations, its ability to continue as a going concern is dependent upon obtaining additional financing. The Company hopes to raise additional financing, potentially through the sale of debt or equity instruments, or a combination, to fund its operations for the next 12 months and allow the Company to continue the development of its business plans and satisfy its obligations on a timely basis. Should additional financing not be available, the Company will have to negotiate with its lenders to extend the repayment dates of its indebtedness. There can be no assurance that the Company will be able to successfully restructure its debt obligations in the event it fails to obtain additional financing. These conditions have raised substantial doubt as to the Company’s ability to continue as a going concern for one year from the issuance of the financial statements, which has not been alleviated.
Note 4 - Debt
Senior Convertible Notes
During the
year ended December 31, 2018, a Senior Convertible Note in the aggregate principal amount of $
F-24
American Battery Materials, Inc. (formerly Boxscore Brands, Inc.)
Notes to Consolidated Financial Statements
For the Years Ended December 31, 2022 and 2021
On December
31, 2016, the Company issued a Senior Convertible Note in the face amount of $
During December
2017, the Company issued a Senior Convertible Note in the amount of $
Promissory Notes Payable
During 2014,
the Company issued an unsecured promissory note to a former employee of U-Vend Canada. The original amount of this note was $
Starting
in 2015, the Company entered into a series of promissory notes from the same lender. All of the notes bear interest at a rate of
In June
2016, the Company issued a promissory note in the principal amount of $
During the
year ended December 31, 2016, the Company issued two unsecured promissory notes and borrowed an aggregate amount of $
F-25
American Battery Materials, Inc. (formerly Boxscore Brands, Inc.)
Notes to Consolidated Financial Statements
For the Years Ended December 31, 2022 and 2021
In December 2017, the Company
issued promissory notes in the aggregate principal balance of $
On April
13, 2018, the Company issued a promissory note in the principal amount of $
On November
19, 2018, the Company issued a promissory note in the principal amount of $
During the
year ended December 31, 2019, the Company issued two promissory notes in the aggregate principal amount of $
On March
5, 2019, the Company issued a non-equity linked promissory note for $
As of December
31, 2022, the above promissory notes were in default with an interest rate increased by
F-26
American Battery Materials, Inc. (formerly Boxscore Brands, Inc.)
Notes to Consolidated Financial Statements
For the Years Ended December 31, 2022 and 2021
During the
year ended December 31, 2022, the Company entered into 5 promissory note agreements in the aggregate amount of $
Convertible Notes Payable
2014 Stock Purchase Agreement
In 2014
and 2015 the Company entered into the 2014 Securities Purchase Agreement (the “2014 SPA”) pursuant to which it issued eight (8)
convertible notes in the aggregate face amount of $
The Company
and Cobrador held three of the convertible notes in the aggregate face amount of $
2015 Stock Purchase Agreement
During the
year ended December 31, 2015, the Company issued eleven subordinated convertible notes bearing interest at
F-27
American Battery Materials, Inc. (formerly Boxscore Brands, Inc.)
Notes to Consolidated Financial Statements
For the Years Ended December 31, 2022 and 2021
2016 Stock Purchase Agreement
On September
30, 2016, the Company entered into the 2016 Stock Purchase Agreement (the “2016 SPA”) pursuant to which it issued four convertible
notes in the aggregate principal amount of $
In connection
with the 2016 SPA, the Company granted a total of
On July
11, 2019, $
As of December
31, 2021, the 2016 SPA had a carrying value of $
During the
year ended December 31, 2016, the Company issued four convertible notes (the “Cobrador 2016 Notes”) in the aggregate principal
amount of $
During
the fourth quarter of 2016, the Company issued three additional convertible notes in the aggregate principal amount of $
F-28
American Battery Materials, Inc. (formerly Boxscore Brands, Inc.)
Notes to Consolidated Financial Statements
For the Years Ended December 31, 2022 and 2021
2017 Financings
During the
year ended December 31, 2017, the Company entered into 19 separate convertible notes agreements (the “2017 Convertible Notes)”
in the aggregate principal amount of $
2018 Financings
During the
year ended December 31, 2018, the Company entered into seventeen separate convertible notes agreements (the “2018 Convertible Notes)”
in the aggregate principal amount of $
On November
20, 2018, two officers converted $
F-29
American Battery Materials, Inc. (formerly Boxscore Brands, Inc.)
Notes to Consolidated Financial Statements
For the Years Ended December 31, 2022 and 2021
During the
year ended December 31, 2018, the Company entered into
2019 Financings
On March
14, 2019, the Company converted accounts payable of approximately $
On April
1, 2019, The Company converted an aggregate amount of principal and accrued interest of Perkins promissory note in the amount of $
F-30
American Battery Materials, Inc. (formerly Boxscore Brands, Inc.)
Notes to Consolidated Financial Statements
For the Years Ended December 31, 2022 and 2021
On April
15, 2019, The Company converted an accrued payable of $
On May 30,
2019, the Company issued a series of convertible notes under a $
During the
year ended December 31, 2019, the Company entered into several convertible notes agreements in the amount of $
During the year ended December
31, 2019, the Company entered into a convertible notes agreement in the amount of $
2020 Financings
During the
year ended December 31, 2020, the Company entered into several convertible notes agreements in the amount of $
F-31
American Battery Materials, Inc. (formerly Boxscore Brands, Inc.)
Notes to Consolidated Financial Statements
For the Years Ended December 31, 2022 and 2021
2021 Financings
During the
nine months ended September 30, 2021, the Company entered into several convertible notes agreements in the amount of $
On July
13, 2021, the Company issued a convertible note in the amount of $
On September 21, 2021, the Company issued a convertible note in the amount of $100,000. The note has a 2 year term, bears interest of 9.5% if paid in cash, 15% if paid in common stock, and is convertible into shares of common stock at a conversion price of $0.03 per share. The outstanding principal balance was $100,000 as of December 31, 2021. During the year ended December 31, 2022, total principal and accrued interest in the amount of $100,000 of principal and $9,738 of interest were exchanged into new convertible note resulting in carrying value of $0 as of December 31, 2022.
On March
1, 2021, the Company issued a convertible note for deferred compensation in the principal amount of $
On October
14, 2021, the Company issued a convertible note in the amount of $
On November
2, 2021,
2022 Financings
During the
nine months ended September 30, 2022, the Company entered into several convertible note agreements in the aggregate amount of $
F-32
American Battery Materials, Inc. (formerly Boxscore Brands, Inc.)
Notes to Consolidated Financial Statements
For the Years Ended December 31, 2022 and 2021
On September,
1, 2022, the Company converted 2 promissory notes into 2 convertible notes in the aggregate amount of $
On December,
14, 2022, the Company issued 6 convertible notes in the aggregate amount of $
| 2023 | ||||
| Total | $ |
| Year Ended | ||||||||
| December 31, 2022 | December 31, 2021 | |||||||
| Balance of embedded derivative at the beginning of the period | $ | $ | ||||||
| Change in fair value of conversion features | ( | ) | ( | ) | ||||
| Balance of embedded derivatives at the end of the period | $ | $ | ||||||
Note 5 - Capital Lease Obligations
The Company acquired capital assets under capital lease obligations. Pursuant to the agreement with the lessor, the Company makes quarterly lease payments and will make a guaranteed residual payment at the end of the lease as summarized below. At the end of the lease, the Company will own the equipment.
During the year ended December 31, 2018 the Company
entered into various capital lease agreements. The leases expire at various points through the year ended
| 2022 | $ | |||
| Total minimum lease payments | ||||
| Less: Amount represented interest | ( | ) | ||
| Present value of minimum lease payments and guaranteed residual value | $ |
Note 6 - Capital Stock
On October 20, 2022 the
Company, following receipt of written approval from stockholders acting without a meeting and holding at least the minimum number of votes
that would be necessary to authorize or take such action at a meeting, filed an amendment to its Certificate of Incorporation to (i) change
the name of the Company to “American Battery Materials, Inc.”
(the “Name Change”); and, (ii) increase the total number of authorized shares of the Company’s common stock, par value
$
F-33
American Battery Materials, Inc. (formerly Boxscore Brands, Inc.)
Notes to Consolidated Financial Statements
For the Years Ended December 31, 2022 and 2021
On October 20, 2022, in addition to the Name Change
and the Authorized Share Increase, the holder of
| 1. | Future amendment of the Company’s Certificate of Incorporation to implement a decrease in the authorized shares of the Company’s Common Stock from |
| 2. | Future amendment of the Company’s Certificate of Incorporation to implement a reverse stock split of the Company’s Common Stock by a ratio of not less than 1-for-10 and not more than 1-for-1,000, (the “Reverse Split”), at any time prior to the Anniversary Date, with the Board having the discretion to determine whether or not the Reverse Split is to be effected, and if effected, the exact ratio for the Reverse Split within the above range. |
Preferred Stock
The Company has authorization for “blank
check” preferred stock, which could be issued with voting, liquidation, dividend and other rights superior to common stock. As of
December 31, 2022 and 2021, there are
On August 12, 2022, the Company effected with
the Delaware Secretary of State a designation of
The Series A Preferred may vote on any action
upon which holders of the Common Stock may vote, and they shall vote together as one class with voting rights equal to sixty percent (
During the year ended December 31, 2022, the Company
issued
Common Stock
The Company has authorized
F-34
American Battery Materials, Inc. (formerly Boxscore Brands, Inc.)
Notes to Consolidated Financial Statements
For the Years Ended December 31, 2022 and 2021
During the year ended December 31, 2022, the Company
issued
| ● |
| ● |
| ● |
During the year ended December 31, 2021, the Company
issued
Note 7 - Stock Options and Warrants
Warrants
| Warrants | Exercise Price | Expiration | ||||||||
| 2018 Warrants – financing | $ | |||||||||
| 2018 Warrants for services | $ | |||||||||
| 2019 Warrants –financing | $ | |||||||||
| 2019 Warrants for services | $ | |||||||||
| 2020 Warrants for services | $ | |||||||||
| 2022 Exchange warrants | $ | |||||||||
| Total | ||||||||||
During the year ended December 31, 2020, the Company
issued warrants exercisable into
During the year ended December 31, 2022, the Company
issued warrants exercisable into
F-35
American Battery Materials, Inc. (formerly Boxscore Brands, Inc.)
Notes to Consolidated Financial Statements
For the Years Ended December 31, 2022 and 2021
| Number of Warrants | Weighted Average Exercise Price | Weighted Average Remaining Contractual Term | ||||||||||
| Balance outstanding at December 31, 2020 | $ | |||||||||||
| Granted | ||||||||||||
| Exercised | ||||||||||||
| Forfeited | ||||||||||||
| Cancelled | ||||||||||||
| Expired | ( | ) | ||||||||||
| Balance outstanding at December 31, 2021 | $ | |||||||||||
| Exercisable at December 31, 2021 | $ | |||||||||||
| Number of Warrants | Weighted Average Exercise Price | Weighted Average Remaining Contractual Term | ||||||||||
| Balance outstanding at December 31, 2021 | $ | |||||||||||
| Granted | ||||||||||||
| Exercised | ( | ) | ||||||||||
| Forfeited | ||||||||||||
| Cancelled | ||||||||||||
| Expired | ( | ) | ||||||||||
| Balance outstanding at December 31, 2022 | $ | |||||||||||
| Exercisable at December 31, 2022 | $ | |||||||||||
The intrinsic value of the outstanding warrants
at December 31, 2022 was $
Equity Incentive Plan
On July 22, 2011, the
Board of Directors of the Company approved the Company’s 2011 Equity Incentive Plan (the “Plan”) and on July 26, 2011,
stockholders holding a majority of shares of the Company approved, by written consent, the Plan and the issuance under the Plan of
F-36
American Battery Materials, Inc. (formerly Boxscore Brands, Inc.)
Notes to Consolidated Financial Statements
For the Years Ended December 31, 2022 and 2021
| Number of Options | Weighted Average Exercise Price | Weighted Average Remaining Contractual Term | ||||||||||
| Balance outstanding at December 31, 2020 | $ | |||||||||||
| Granted | ||||||||||||
| Exercised | ||||||||||||
| Cancelled or expired | ( | ) | ||||||||||
| Balance outstanding at December 31, 2021 | $ | |||||||||||
| Exercisable at December 31, 2021 | $ | |||||||||||
| Number of Options | Weighted Average Exercise Price | Weighted Average Remaining Contractual Term | ||||||||||
| Balance outstanding at December 31, 2021 | $ | |||||||||||
| Granted | ||||||||||||
| Exercised | ||||||||||||
| Cancelled or expired | ||||||||||||
| Balance outstanding at December 31, 2022 | $ | |||||||||||
| Exercisable at December 31, 2022 | $ |
| Total Deferred | (322,003 | ) | (68,793 | ) | ||||
| Less Increase in Allowance | 322,003 | 68,793 | ||||||
| Net Deferred | $ | - | $ | - | ||||
| Total Income Tax Provision | $ | 659 | $ | 3,285 |
F-37
American Battery Materials, Inc. (formerly Boxscore Brands, Inc.)
Notes to Consolidated Financial Statements
For the Years Ended December 31, 2022 and 2021
Note 8 - Income Taxes
| Years ended December 31, | ||||||||
| Net Income (Loss) | 2022 | 2021 | ||||||
| Domestic | $ | ( | ) | $ | ( | ) | ||
| Foreign | ||||||||
| $ | ( | ) | $ | ( | ) | |||
| Current | ||||||||
| Federal | $ | $ | ||||||
| State | ||||||||
| Foreign | ||||||||
| Total Current | $ | $ | ||||||
| Deferred | ||||||||
| Federal | $ | ( | ) | $ | ( | ) | ||
| State | ( | ) | ( | ) | ||||
| Foreign | ||||||||
| Years ended December 31, | ||||||||
| 2022 | 2021 | |||||||
| Deferred Tax Assets (Liabilities): | ||||||||
| Net Operating Loss Carry-Forwards | $ | $ | ||||||
| Depreciable and Amortizable Assets | ( | ) | ( | ) | ||||
| Stock Based Compensation | ||||||||
| Beneficial Conversion Feature | ||||||||
| Loss Reserve | ||||||||
| Accrued Compensation | ||||||||
| Other | ||||||||
| Total | ||||||||
| Less Valuation Allowance | ( | ) | ( | ) | ||||
| Net Deferred Tax Assets (Liabilities) | $ | $ | ||||||
F-38
American Battery Materials, Inc. (formerly Boxscore Brands, Inc.)
Notes to Consolidated Financial Statements
For the Years Ended December 31, 2022 and 2021
At December 31, 2022 and 2021, the Company has
available net operating loss carry-forwards for federal and state income tax purposes of approximately $
Internal Revenue Code Section 382 (“Section 382”) imposes limitations on the availability of a company’s net operating losses and other corporate tax attributes as certain significant ownership changes occur. As a result of the historical equity instrument issuances by the Company, a Section 382 ownership change may have occurred and a study will be required to determine the date of the ownership change, if any. The amount of the Company’s net operating losses and other tax attributes incurred prior to any ownership change may be limited based on the Company’s value. A full valuation allowance has been established for the Company’s deferred tax assets, including net operating losses and any other corporate tax attributes.
During the years ended December 31, 2022 and 2021, the Company had no unrecognized uncertain tax positions. The Company’s policy is to recognize interest accrued and penalties related to unrecognized uncertain tax positions in tax expense.
The Company files income tax returns in the U.S. federal jurisdiction, as well as the states of California, Florida, Illinois and New York. The tax years 2018-2022 generally remain open to examination by the U.S. federal and state taxing authorities.
| Years ended December 31, | ||||||||
| 2022 | 2021 | |||||||
| Statutory United States federal rate | % | % | ||||||
| State income tax, net of federal benefit | ||||||||
| Change in valuation allowance | ( | ) | ( | ) | ||||
| Stock based compensation | ||||||||
| Other | ( | ) | ||||||
| Permanent differences | ( | ) | ( | ) | ||||
| Effective tax rate benefit (provision) | % | ( | )% | |||||
F-39
American Battery Materials, Inc. (formerly Boxscore Brands, Inc.)
Notes to Consolidated Financial Statements
For the Years Ended December 31, 2022 and 2021
Note 9 - Subsequent Events
The Company has evaluated events occurring subsequent to December 31, 2022 through the date these financial statements were issued and determined the following significant events require disclosure:
| ● | On January 5, 2023, the Company issued |
| ● | On January 31, 2023, the Company issued |
| ● | On January 31, 2023, the Company issued |
| ● | On February 28, 2023, the Company issued |
| ● | On March 27, 2023, the Company issued |
| ● | On April 5, 2023, the Company closed transactions with four (4) investors under which the Company issued convertible promissory notes with an aggregate principal amount of $1,500,000. |
| ● | On April 8, 2023, the Company issued |
F-40
__________ Shares
AMERICAN BATTERY MATERIALS, INC.
Common Stock
Preliminary Prospectus
__________, 2024
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 13. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
The following table sets forth the fees and expenses, other than underwriting discounts and commissions, payable in connection with the registration of the common stock hereunder. All amounts are estimates except the SEC registration fee.
| Item | Amount to be Paid | |||
| SEC registration fee | $ | |||
| FINRA filing fee | ||||
| NYSE American listing fee | ||||
| Printing and mailing expenses | ||||
| Legal fees and expenses | ||||
| Accounting fees and expenses | ||||
| Transfer agent and registrar fees and expenses | ||||
| Miscellaneous expenses | ||||
| Total | $ | |||
ITEM 14. INDEMNIFICATION OF DIRECTORS AND OFFICERS
Under the General Corporation Law of the State of Delaware, we can indemnify our directors and officers against liabilities they may incur in such capacities, including liabilities under the Securities Act of 1933, as amended (the “Securities Act”). Our certificate of incorporation provides that, pursuant to Delaware law, our directors shall not be liable for monetary damages for breach of the directors’ fiduciary duty of care to us and our stockholders. This provision in the certificate of incorporation does not eliminate the duty of care, and in appropriate circumstances equitable remedies such as injunctive or other forms of non-monetary relief will remain available under Delaware law. In addition, each director will continue to be subject to liability for breach of the director’s duty of loyalty to us or our stockholders, for acts or omissions not in good faith or involving intentional misconduct or knowing violations of law, for any transaction from which the director directly or indirectly derived an improper personal benefit, and for payment of dividends or approval of stock repurchases or redemptions that are unlawful under Delaware law. The provision also does not affect a director’s responsibilities under any other law, such as the federal securities laws or state or federal environmental laws.
Our bylaws provide for the indemnification of our directors and officers to the fullest extent permitted by the Delaware General Corporation Law. We are not, however, required to indemnify any director or officer in connection with any (a) willful misconduct, (b) willful neglect, or (c) gross negligence toward or on behalf of us in the performance of his or her duties as a director or officer. We are required to advance, prior to the final disposition of any proceeding, promptly on request, all expenses incurred by any director or officer in connection with that proceeding on receipt of any undertaking by or on behalf of that director or officer to repay those amounts if it should be determined ultimately that he or she is not entitled to be indemnified under our bylaws or otherwise.
We have been advised that, in the opinion of the SEC, any indemnification for liabilities arising under the Securities Act of 1933 is against public policy, as expressed in the Securities Act, and is, therefore, unenforceable.
ITEM 15. RECENT SALES OF UNREGISTERED SECURITIES
The following information represents securities sold by the Company During the past three years which were not registered under the Securities Act. Included are sales of reacquired securities, as well as new issues, securities issued in exchange for property, services, or other securities, and new securities resulting from the modification of outstanding securities. All issuances were exempt under Section 4(a)(2) of the Securities Act unless otherwise noted.
| ● | On April 8, 2023, the Company issued 3,203,661 shares of its Common Stock upon the cashless exercise of a Warrant. | |
| ● | On April 5, 2023, the Company closed transactions with four (4) investors under which the Company issued identified convertible promissory notes with an aggregate principal amount of One Million Five Hundred Thousand Dollars ($1,500,000). The Company received net proceeds of $1,447,500. | |
| ● | On March 27, 2023, in consideration of the payment of $35,000, the Company issued 9,210,526 shares of its Common Stock upon the exercise of a Warrant. | |
| ● | On February 28, 2023, the Company issued 2,688,478 shares of its Common Stock upon the cashless exercise of a Warrant. | |
| ● | On January 31, 2023, in consideration of the payment of $70,000, the Company issued 18,421,053 shares of its Common Stock upon the exercise of a Warrant. | |
| ● | On January 31, 2023, in consideration of the payment of $70,000, the Company issued 18,421,053 shares of its Common Stock upon the exercise of a Warrant. | |
| ● | On January 5, 2023, in consideration of the payment of $14,000, the Company issued 3,684,211 shares of its Common Stock upon the exercise of a Warrant. |
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| ● | On December 29, 2022, in consideration of the payment of $45,000, the Company issued 11,842,103 shares of its Common Stock upon the exercise of a Warrant. | |
| ● | On December 26, 2022, the Company issued 7,500,000 shares to MZHCI in exchange for services rendered. | |
| ● | On December 14, 2022, the Company converted a total of $8,987,027 held by noteholders under 99 convertible promissory notes into a total of 2,818,277,866 shares of Common Stock as follows: | |
| ● | 119,284,531 shares were issued to six holders as voluntary conversions by each holder under each of the respective convertible promissory notes. | |
| ● | 655,868,191 shares were issued to 20 holders under the forced conversion provision under each of the respective convertible promissory notes. | |
| ● | 2,043,125,140 shares were issued to six holders under settlement agreements with each of the noteholders. | |
| ● | On December 14, 2022, in consideration of the payment of $25,000, the Company issued 6,578,947 shares of its common stock upon the exercise of a Warrant. | |
| ● | On December 2, 2022, in consideration of the payment of $35,000, the Company issued 9,210,526 shares of its Common Stock upon the exercise of a Warrant. | |
| ● | On November 21, 2022, in consideration of the payment of $25,000, the Company issued 6,578,947 shares of its Common Stock upon the exercise of a Warrant. | |
| ● | On August 23, 2022, the Company issued fifty thousand (50,000) shares of its Series A Preferred Convertible Stock in exchange for $50,000 of net proceeds from Adam Lipson, who is one of our Directors. | |
| ● | On February 10, 2022, a noteholder converted convertible debt into 10,650,681 shares of Common Stock. | |
| ● | On February 4, 2022, a noteholder converted convertible debt into 11,295,526 shares of Common Stock. | |
| ● | On January 6, 2022, a noteholder converted convertible debt into 12,631,579 shares of Common Stock. | |
| ● | On January 4, 2022, a noteholder converted convertible debt into 15,211,579 shares of Common Stock. |
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ITEM 16. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES.
| (a) | Exhibits. |
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| * | To be filed by amendment. |
| # | Indicates management contract or compensatory plan. |
(b) Financial statements schedules.
The financial statements filed as part of this registration statement are listed in the index to the financial statements immediately preceding such financial statements, which index to the financial statements is incorporated herein by reference.
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ITEM 17. UNDERTAKINGS
Insofar as indemnification for liabilities arising under the Securities Act of 1933 may be permitted to directors, officers and controlling persons of the registrant pursuant to the foregoing provisions, or otherwise, the registrant has been advised that in the opinion of the SEC such indemnification is against public policy as expressed in the Act and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by the registrant of expenses incurred or paid by a director, officer, or controlling person of the registrant in the successful defense of any action, suit or proceeding) is asserted by such director, officer or controlling person in connection with the securities being registered, the registrant will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in the Act and will be governed by the final adjudication of such issue.
The undersigned registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being made, a post-effective amendment to this registration statement:
(i) To include any prospectus required by Section 10(a)(3) of the Securities Act of 1933;
(ii) To reflect in the prospectus any facts or events arising after the effective date of the registration statement (or the most recent post-effective amendment thereof) which, individually or in the aggregate, represent a fundamental change in the information set forth in the registration statement. Notwithstanding the foregoing, any increase or decrease in volume of securities offered (if the total dollar value of securities offered would not exceed that which was registered) and any deviation from the low or high end of the estimated maximum offering range may be reflected in the form of prospectus filed with the Commission pursuant to Rule 424(b) if, in the aggregate, the changes in volume and price represent no more than 20 percent change in the maximum aggregate offering price set forth in the “Calculation of Registration Fee” table in the effective registration statement; and
(iii) To include any material information with respect to the plan of distribution not previously disclosed in the registration statement or any material change to such information in the registration statement.
(2) That, for the purpose of determining any liability under the Securities Act of 1933, each such post-effective amendment shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof.
(3) To remove from registration by means of a post-effective amendment any of the securities being registered which remain unsold at the termination of the offering.
(4) Intentionally omitted.
(5) That, for the purpose of determining liability under the Securities Act of 1933 to any purchaser:
(i) Intentionally omitted.
(ii) If the registrant is subject to Rule 430C, each prospectus filed pursuant to Rule 424(b) as part of a registration statement relating to an offering, other than registration statements relying on Rule 430B or other than prospectuses filed in reliance on Rule 430A, shall be deemed to be part of and included in the registration statement as of the date it is first used after effectiveness. Provided, however, that no statement made in a registration statement or prospectus that is part of the registration statement or made in a document incorporated or deemed incorporated by reference into the registration statement or made in a document incorporated or deemed incorporated by reference into the registration statement or prospectus that is part of the registration statement will, as to a purchaser with a time of contract of sale prior to such first use, supersede or modify any statement that was made in the registration statement or prospectus that was part of the registration statement or made in any such document immediately prior to such date of first use.
(6) That, for the purpose of determining liability of the registrant under the Securities Act of 1933 to any purchaser in the initial distribution of the securities:
The undersigned registrant undertakes that in a primary offering of securities of the undersigned registrant pursuant to this registration statement, regardless of the underwriting method used to sell the securities to the purchaser, if the securities are offered or sold to such purchaser by means of any of the following communications, the undersigned registrant will be a seller to the purchaser and will be considered to offer or sell such securities to such purchaser:
(i) Any preliminary prospectus or prospectus of the undersigned registrant relating to the offering required to be filed pursuant to Rule 424.
(ii) Any free writing prospectus relating to the offering prepared by or on behalf of the undersigned registrant or used or referred to by the undersigned registrant;
(iii) The portion of any other free writing prospectus relating to the offering containing material information about the undersigned registrant or its securities provided by or on behalf of the undersigned registrant; and
(iv) Any other communication that is an offer in the offering made by the undersigned registrant to the purchaser.
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SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the registrant has duly caused this Registration Statement on Form S-1 to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of Greenwich, State of Connecticut, on February 12, 2024.
| AMERICAN BATTERY MATERIALS, INC. | |||
| By: | /s/ David Graber | ||
| Name: | David Graber | ||
| Title: | Co-Chief Executive Officer and Chairman | ||
KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature appears below hereby constitutes and appoints David Graber and Sebastian Lux, and each of them, his or her true and lawful attorney in fact and agent, with full power of substitution and re-substitution, for him or her and in his or her name, place and stead, in any and all capacities, to sign any and all amendments, including post-effective amendments, to this registration statement and any registration statement relating to the offering covered by this registration statement and filed pursuant to Rule 462(b) under the Securities Act of 1933 and to file the same, with exhibits thereto and other documents in connection therewith, with the Securities and Exchange Commission, granting unto said attorney-in-fact and agent, full power and authority to do and perform each and every act and thing requisite and necessary to be done, as fully to all intents and purposes as he or she might or could do in person, hereby ratifying and conforming all that said attorney in fact and agent or his substitute or substitutes may lawfully do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, as amended, this Registration Statement on Form S-1 has been signed by the following persons in the capacities and on the dates indicated.
| Name | Position | Date | ||
| /s/ David Graber | Co-Chief Executive Officer and Chairman | February 12, 2024 | ||
| David Graber | (principal executive officer) | |||
| /s/ Sebastian Lux | Co-Chief Executive Officer, President, Chief Financial Officer and Director |
February 12, 2024 | ||
| Sebastian Lux | (principal financial and accounting officer) | |||
| /s/ Dylan Glenn | Director | February 12, 2024 | ||
| Dylan Glenn | ||||
| /s/ Jared Levinthal | Director | February 12, 2024 | ||
| Jared Levinthal | ||||
| /s/ Andrew Suckling | Director | February 12, 2024 | ||
| Andrew Suckling | ||||
| /s/ Justin Vorwerk | Director | February 12, 2024 | ||
| Justin Vorwerk | ||||
| /s/ Dr. Adam Lipson | Director | February 12, 2024 | ||
| Dr. Adam Lipson |
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