Notes Payable

3 Months Ended

Sep. 30, 2023

Debt Disclosure [Abstract]

Notes Payable

10. Notes Payable

On May 17, 2023, the Company entered into a Credit Agreement (the “Credit Agreement”) with Mercuria Investments US, Inc. for pre-payment on the purchase of the Company’s recycled battery metal products. As such, inventory serves as collateral for outstanding balances. The Credit Agreement provides for an aggregate loan amount of up to $20 million, comprised of (i) an initial term loan in the aggregate principal amount of $6 million and (ii) delayed draw term loan commitments in an aggregate amount equal to $14 million. Borrowings under the Credit Agreement carry interest calculated as the secured overnight financing rate published on the Federal Reserve Bank of New York’s website, plus the applicable credit spread adjustment, based on the elected interest period, plus an applicable margin rate of 6%. The agreement contains provisions that allow the Company to remit principal and interest payments via future delivery of its initial recycling byproduct, black mass.

On August 30, 2023, the Company caused the repayment in full of all indebtedness, liabilities and other obligations under, and terminated, its former credit agreement, dated as of May 17, 2023 by and among the Company, as Borrower, and Mercuria Investments US, Inc., as Agent. The Company did not incur any material early termination penalties because of such termination of the credit agreement. The Company remains engaged with Mercuria Investments US, Inc. in a marketing and presale capacity.

On August 29, 2023, the Company and High Trail (the “Buyers”) entered into a Securities Purchase Agreement (the “Purchase Agreement”), pursuant to which the Company sold to the Buyers up to $51.0 million of a new series of senior secured convertible notes (the “Notes”). To date, $25.0 million has been received. Buyers may request partial redemptions of up to an aggregate of $1,800,000 on the 15^th of each month or may convert the Notes into shares of common stock of the Company (“Conversion Shares”) at a conversion rate of 110% of the last reported sales price on the date of the agreement to acquire such Notes. The Notes bear zero coupon, mature on September 1, 2025, require a minimum of $5.0 million maintained in cash and cash equivalents, and are secured by certain real property and cash and investment accounts of the Company. None of the embedded terms required bifurcation and liability classification under ASC 815.

Note discount and issuance costs totaled $4.7 million and reduced the carrying value of the convertible notes as a debt discount. The carrying value, net of debt discount, is being accreted over the term of the convertible notes from date of issuance to date of full repayment using the effective interest rate method. For the three months ended September 30, 2023, amortization of debt discount and issuance costs totaled $0.3 million.

The table below presents the net carrying amounts of the Notes as of:

	September 30, 2023			June 30, 2023
Principle outstanding	$	23,283,333		$	-
Unamortized debt discount and issuance costs		(4,351,544	)		-
Net carrying value	$	18,931,789		$	-

The table below presents the maturities of notes payable as of September 30, 2023:

September 30, 2024	$	21,600,000
September 30, 2025		1,683,333
Total note payments		23,283,333
Less: unamortized debt discount and issuance costs		(4,351,544	)
Total notes payable	$	18,931,789
Notes payable, current	$	21,600,000
Notes payable, non-current	$	1,683,333