UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
For
the quarterly period ended
Commission
File number:
(Exact name of registrant as specified in its charter) |
(State or other jurisdiction of incorporation or organization) |
(I.R.S. Employer Identification No.) |
(Address of principal executive offices, including zip code) |
(Registrant’s telephone number, including area code) |
Securities registered pursuant to Section 12(b) of the Act: None
Title of Each Class | Trading Symbol(s) | Name of Each Exchange on Which Registered | ||
The
|
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes ☐ No ☒
Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes ☐ No ☒
Indicate
by check mark whether the registrant (1) filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act
of 1934 during the past 12 months (or for such shorter quarter that the registrant was required to file such reports), and (2) has been
subject to such filing requirements for the past 90 days.
Indicate
by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule
405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter quarter that the registrant
was required to submit such files).
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 quarter for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate
by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act) Yes ☐
As of November 8, 2023,
shares of common stock, $0.001 par value per share were outstanding.
CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS
This quarterly report on Form 10-Q (this “Report”) contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended (“Securities Act”), and Section 21E of the Securities Exchange Act of 1934, as amended (“Exchange Act”). All statements included in this Report, other than statements of historical facts, that address activities, conditions, events, or developments with respect to our financial condition, results of operations, business prospects or economic performance that we expect, believe, or anticipate will or may occur in the future, or that address plans and objectives of management for future operations, are forward-looking statements. The forward-looking statements are contained principally in the “Business” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” sections of this Report. These statements involve known and unknown risks, uncertainties and other factors that may cause our actual results, performance or achievements to be materially different from any future results, performances or achievements expressed or implied by the forward-looking statements. In some cases, you can identify forward-looking statements by terms such as “anticipates”, “believes”, “seeks”, “could”, “estimates”, “expects”, “intends”, “may”, “plans”, “potential”, “predicts”, “projects”, “should”, “would” and similar expressions intended to identify forward-looking statements.
Forward-looking statements appear throughout this report, and include statements about such matters as: anticipated operating results; relationships with our customers; consumer demand; financial resources and condition; changes in revenues; changes in profitability; changes in accounting treatment; cost of sales; selling, general and administrative expenses; interest expense; the ability to produce the liquidity or enter into agreements to acquire the capital necessary to continue our operations and take advantage of opportunities; legal proceedings and claims.
Forward-looking statements reflect our current views with respect to future events and are based on assumptions and analyses made by us in light of our experience and our perception of historical trends, current conditions, expected future developments, and other factors that we believe are appropriate under the circumstances. We caution you that forward-looking statements are not guarantees of future performance and these statements are subject to known and unknown risks and uncertainties, which may cause our actual results or performance to be materially different from any future results or performance expressed or implied by the forward-looking statements.
Also, forward-looking statements represent our estimates and assumptions only as of the date of this Report. You should read this Report and the documents that we reference and file as exhibits to this Report completely and with the understanding that our actual future results may be materially different from what we expect. The forward-looking statements in this report speak only as of the filing of this Report. Except as required by applicable securities laws, we assume no obligation to update any prior forward-looking statements.
PRESENTATION OF INFORMATION
Except as otherwise indicated by the context, references in this Report to “we”, “us”, “our” and the “Company” are to the combined business of American Battery Technology Company and its consolidated subsidiaries.
This Report includes our unaudited consolidated financial statements as of and for the three months ended September 30, 2023 and 2022. These financial statements have been prepared in accordance with generally accepted accounting principles in the United States (“US GAAP”). All financial information in this Report is presented in US dollars, unless otherwise indicated, and should be read in conjunction with our unaudited consolidated financial statements and the notes included in this Report.
2 |
TABLE OF CONTENTS
PART I | ||
ITEM 1 | Financial Statements | 4 |
ITEM 2 | Management’s Discussion and Analysis of Financial Condition and Results of Operations | 23 |
ITEM 3 | Quantitative and Qualitative Disclosures about Market Risk | 26 |
ITEM 4 | Controls and Procedures | 26 |
PART II. OTHER INFORMATION | ||
ITEM 1 | Legal Proceedings | 28 |
ITEM 1A | Risk Factors | 28 |
ITEM 2. | Unregistered Sales of Equity Securities and Use of Proceeds | 28 |
ITEM 3. | Defaults Upon Senior Securities | 28 |
ITEM 4. | Mine Safety Disclosure | 28 |
ITEM 5. | Other Information | 28 |
3 |
ITEM 1. FINANCIAL STATEMENTS
The accompanying condensed consolidated financial statements (unaudited) have been prepared by the Company’s management in conformity with accounting principles generally accepted in the United States of America. In the opinion of management, all adjustments considered necessary for a fair presentation of the results of operations and financial position have been included and all such adjustments are of a normal recurring nature.
Operating results for the three months ended September 30, 2023, are not necessarily indicative of the results that can be expected for the fiscal year ending June 30, 2024.
4 |
AMERICAN BATTERY TECHNOLOGY COMPANY
Condensed Consolidated Balance Sheets
September 30, 2023 (unaudited) | June 30, 2023 (audited) | |||||||
ASSETS | ||||||||
Current assets | ||||||||
Cash | $ | $ | ||||||
Investments | ||||||||
Inventory (Note 3) | ||||||||
Grants receivable (Note 4) | ||||||||
Prepaid expenses and deposits | ||||||||
Subscription receivable | ||||||||
Other current assets | ||||||||
Total current assets | ||||||||
Other deposits (Note 5) | ||||||||
Property and equipment, net (Note 6) | ||||||||
Mining properties (Note 7) | ||||||||
Intangible assets (Note 8) | ||||||||
Right-of-use asset (Note 11) | ||||||||
Total assets | $ | $ | ||||||
LIABILITIES & STOCKHOLDERS’ EQUITY | ||||||||
Current liabilities | ||||||||
Accounts payable and accrued liabilities (Note 9) | $ | $ | ||||||
Notes payable, current (Note 10) | ||||||||
Total current liabilities | ||||||||
Notes payable, non-current (Note 10) | ||||||||
Total liabilities | ||||||||
Commitments and contingencies (Note 16) | ||||||||
STOCKHOLDERS’ EQUITY | ||||||||
Series A Preferred Stock Authorized: | preferred shares, par value of $ per share; Issued and outstanding: preferred shares as of September 30, 2023 and June 30, 2023.||||||||
Series B Preferred Stock Authorized: preferred shares, par value of $ per share; Issued and outstanding: preferred shares as of September 30, 2023 and June 30, 2023. | ||||||||
Series C Preferred Stock Authorized: preferred shares, par value of $ per share; Issued and outstanding: preferred shares as of September 30, 2023 and June 30, 2023. | ||||||||
Common Stock Authorized: | common shares, par value of $ per share; Issued and outstanding: and common shares as of September 30, 2023 and June 30, 2023, respectively||||||||
Additional paid-in capital | ||||||||
Common stock issuable | ( | |||||||
Accumulated deficit | ( | ) | ( | ) | ||||
Total stockholders’ equity | ||||||||
Total liabilities and stockholders’ equity | $ | $ |
(The accompanying notes are an integral part of these condensed consolidated financial statements)
5 |
AMERICAN BATTERY TECHNOLOGY COMPANY
Condensed Consolidated Statements of Operations (unaudited)
Three months ended September 30, 2023 | Three months ended September 30, 2022 | |||||||
Operating expenses | ||||||||
General and administrative | $ | $ | ||||||
Research and development | ||||||||
Exploration | ||||||||
Total operating expenses | ||||||||
Net loss before other income (expense) | ( | ) | ( | ) | ||||
Other income (expense) | ||||||||
Accretion and interest expense | ( | ) | ||||||
Amortization of financing costs | ( | ) | ||||||
Unrealized gain (loss) on investment | ( | ) | ||||||
Gain on sale of mining claims | ||||||||
Other income | ||||||||
Total other income (expense) | ( | ) | ||||||
Net loss attributable to common stockholders | $ | ( | ) | $ | ( | ) | ||
Net loss per share, basic and diluted | $ | ) | $ | ) | ||||
Weighted average shares outstanding |
(The accompanying notes are an integral part of these condensed consolidated financial statements)
6 |
AMERICAN BATTERY TECHNOLOGY COMPANY
Condensed Consolidated Statements of Stockholders’ Equity (unaudited)
Three months ended September 30, 2023:
Common Shares | Additional Paid-In | Common Stock | Accumulated | |||||||||||||||||||||
Number | Amount | Capital | Issuable | Deficit | Total | |||||||||||||||||||
Balance, June 30, 2023 | $ | $ | $ | ( | ) | $ | ( | ) | $ | |||||||||||||||
Shares issued for professional services | ( | ) | ( | ) | ||||||||||||||||||||
Vesting of share-based awards | ( | ) | ||||||||||||||||||||||
Stock-based compensation expense | – | |||||||||||||||||||||||
Shares issued pursuant to rounding of share reverse split | ( | ) | ||||||||||||||||||||||
Shares reclaimed pursuant to asset acquisition | ( | ) | ( | ) | ( | ) | ||||||||||||||||||
Shares issued pursuant to share purchase agreement, net of issuance costs | ||||||||||||||||||||||||
Shares issued pursuant to warrant exercises | ( | ) | ||||||||||||||||||||||
Net loss for the period | – | ( | ) | ( | ) | |||||||||||||||||||
Balance, September 30, 2023 | $ | $ | $ | $ | ( | ) | $ |
Three months ended September 30, 2022:
Common Shares | Additional Paid-In | Common Stock | Accumulated | |||||||||||||||||||||
Number | Amount | Capital | Issuable | Deficit | Total | |||||||||||||||||||
Balance, June 30, 2022 | $ | $ | $ | $ | ( | ) | $ | |||||||||||||||||
Vesting of share-based awards | – | |||||||||||||||||||||||
Stock-based compensation expense | – | |||||||||||||||||||||||
Net loss for the period | – | ( | ) | ( | ) | |||||||||||||||||||
Balance, September 30, 2022 | $ | $ | ( | ) | $ |
(The accompanying notes are an integral part of these condensed consolidated financial statements)
7 |
AMERICAN BATTERY TECHNOLOGY COMPANY
Condensed Consolidated Statements of Cash Flows (unaudited)
Three months ended September 30, 2023 | Three months ended September 30, 2022 | |||||||
Operating Activities | ||||||||
Net loss attributable to stockholders | $ | ( | ) | $ | ( | ) | ||
Adjustments to reconcile net loss to net cash used in operating activities: | ||||||||
Depreciation expense | ||||||||
Accretion expense | ||||||||
Amortization of right-of-use asset | ||||||||
Unrealized (gain) loss on investment | ( | ) | ||||||
Stock-based compensation | ||||||||
Shares issued for professional services | ( | ) | ||||||
Changes in operating assets and liabilities: | ||||||||
Inventory | ( | ) | ||||||
Other receivables | ( | ) | ( | ) | ||||
Prepaid expenses and deposits | ||||||||
Other current assets | ( | ) | ||||||
Accounts payable and accrued liabilities | ( | ) | ||||||
Net change in operating lease liability | ( | ) | ( | ) | ||||
Net Cash Used in Operating Activities | ( | ) | ( | ) | ||||
Investing Activities | ||||||||
Other acquisition deposits | ( | ) | ||||||
Acquisition of property and equipment | ( | ) | ( | ) | ||||
Purchase of mining properties | ( | ) | ||||||
Purchase of water rights/intangible assets | ( | ) | ||||||
Net Cash Used in Investing Activities | ( | ) | ( | ) | ||||
Financing Activities | ||||||||
Proceeds from exercise of share purchase warrants | ||||||||
Principal paid on notes payable | ( | ) | ||||||
Proceeds from notes payable, net of issuance costs | ||||||||
Proceeds from share purchase agreements, net of issuance costs | ||||||||
Net Cash Provided by Financing Activities | ||||||||
Increase (decrease) in Cash | ( | ) | ||||||
Cash – Beginning of Period | ||||||||
Cash – End of Period | $ | $ | ||||||
Supplemental disclosures (Note 15) |
(The accompanying notes are an integral part of these condensed consolidated financial statements)
8 |
AMERICAN BATTERY TECHNOLOGY COMPANY
Notes to the Consolidated Financial Statements
For the three months ended September 30, 2023 and 2022
1. Organization and Nature of Operations
American Battery Technology Company (“the Company”) is a new entrant in the lithium-ion battery industry that is working to increase the domestic US production of battery materials, such as lithium, nickel, cobalt, and manganese through its engagement in the exploration of new primary resources of battery metals, in the development and commercialization of new technologies for the extraction of these battery metals from primary resources, and in the commercialization of an internally developed integrated process for the recycling of lithium-ion batteries. Through this three-pronged approach the Company is working to both increase the domestic production of these battery materials, and to ensure that as these materials reach their end of lives that the constituent elemental battery metals are returned to the domestic manufacturing supply chain in a closed-loop fashion.
The Company was incorporated under the laws of the State of Nevada on October 6, 2011, for the purpose of acquiring rights to mineral properties with the eventual objective of being a producing mineral company. We have a limited operating history and have not yet generated or realized any revenues from our activities. Our principal executive offices are located at 100 Washington Ave., Suite 100, Reno, NV 89503.
Liquidity and Capital Resources
During
the three months ended September 30, 2023, the Company incurred a net loss of $
2. Summary of Significant Accounting Policies
a) Basis of Presentation and Principles of Consolidation
The consolidated financial statements of the Company have been prepared in accordance with accounting principles generally accepted in the United States (“US GAAP”) and are expressed in U.S. dollars. The Company’s fiscal year end is June 30.
These consolidated financial statements include the accounts of the Company and its wholly owned subsidiaries, Oroplata Exploraciones E Ingenieria SRL (dissolved), LithiumOre Corporation (formerly Lithortech Resources Inc), ABMC AG, LLC (dissolved) and Aqua Metals Transfer LLC. All inter-company accounts and transactions have been eliminated upon consolidation.
On
September 11, 2023, the Company effected a
b) Use of Estimates
The preparation of these consolidated financial statements in conformity with US GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting periods. The Company regularly evaluates estimates and assumptions related to the fair value of stock-based compensation, recoverability of long-lived assets and deferred income tax asset valuation allowances.
The Company bases its estimates and assumptions on current facts, historical experience, and various other factors that it believes to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities and the accrual of costs and expenses that are not readily apparent from other sources. The actual results experienced by the Company may differ materially and adversely from the Company’s estimates. To the extent there are material differences between the estimates and the actual results, future results of operations may be affected.
9 |
AMERICAN BATTERY TECHNOLOGY COMPANY
Notes to the Consolidated Financial Statements
For the three months ended September 30, 2023 and 2022
2. Summary of Significant Accounting Policies (continued)
c) Long-Lived Assets
Long-lived
assets, such as property and equipment, mineral properties, and purchased intangibles, are evaluated for impairment whenever events or
changes in circumstances indicate that the carrying amount of the asset may not be recoverable in accordance with Accounting Standards
Codification (“ASC”) topic 360, Property, Plant, and Equipment. Circumstances which could trigger a review include, but are
not limited to: significant decreases in the market price of the asset; significant adverse changes in the business climate or legal
factors; accumulation of costs significantly in excess of the amount originally expected for the acquisition or construction of the asset;
current period cash flow or operating losses combined with a history of losses or a forecast of continuing losses associated with the
use of the asset; and current expectation that the asset will more likely than not be sold or disposed significantly before the end of
its estimated useful life. The Company’s long-lived assets consist of vehicles, equipment, and land. Vehicles and equipment are
depreciated on a straight-line basis over their estimated value lives ranging between and
The recoverability of assets is measured by a comparison of the carrying amount of an asset to estimated undiscounted future cash flows expected to be generated by an asset. If the carrying amount of an asset exceeds its estimated future cash flows, an impairment charge is recognized as the amount by which the carrying amount exceeds the estimated fair value of the asset. The estimated fair value is determined using a discounted cash flow analysis. Any impairment in value is recognized as an expense in the period when the impairment occurs.
Expenses for major repairs and maintenance which extend the useful lives of property and equipment are capitalized. All other maintenance expenses, including planned major maintenance activities, are expensed as incurred. Gains or losses from property disposals are included in income or loss from operations.
d) Mining Properties
Costs of lease, exploration, carrying and retaining unproven mineral properties are expensed as incurred. The Company expenses all mineral exploration costs as incurred as it is still in the exploration stage. If the Company identifies proven and probable reserves in its investigation of its properties and upon development of a plan for operating a mine, it will enter the development stage and capitalize future costs until production is established. When a property reaches the production stage, the related capitalized costs are amortized on a units-of-production basis over the proven and probable reserves following the commencement of production. Interest expense allocable to the cost of developing mining properties and to construct new facilities is capitalized until assets are ready for their intended use.
To date, the Company has not established the commercial feasibility of any exploration prospects; therefore, all exploration costs are being expensed.
ASC 930-805, “Extractive Activities-Mining: Business Combinations,” states that mineral rights consist of the legal right to explore, extract, and retain at least a portion of the benefits from mineral deposits. Mining assets include mineral rights which are considered tangible assets under ASC 930-805. ASC 930-805 requires that mineral rights be recognized at fair value as of the acquisition date. As a result, the direct costs to acquire mineral rights are initially capitalized as tangible assets. Mineral rights include costs associated with acquiring patented and unpatented mining claims.
e) Intangible Assets
Intangible assets that have indefinite useful lives are tested annually for impairment, or more frequently if events and circumstances indicate that the asset might be impaired. An impairment loss is recognized to the extent that the carrying amount of the asset group exceeds its fair value.
10 |
AMERICAN BATTERY TECHNOLOGY COMPANY
Notes to the Consolidated Financial Statements
For the three months ended September 30, 2023 and 2022
2. Summary of Significant Accounting Policies (continued)
The
Company computes net income (loss) per share in accordance with ASC 260, “Earnings per Share.” ASC 260 requires
presentation of both basic and diluted earnings per share (“EPS”) on the face of the income statement. Basic EPS is
computed by dividing net income (loss) available to common shareholders (numerator) by the weighted average number of shares
outstanding (denominator) during the period. diluted EPS gives effect to all dilutive potential common shares outstanding during the
period using the treasury stock method and convertible preferred stock using the if-converted method. In computing diluted EPS, the
average stock price for the period is used in determining the number of shares assumed to be purchased from the exercise of stock
options, warrants and awards. Diluted EPS excludes all dilutive potential shares if their effect is anti-dilutive. At September 30,
2023, the Company had
The Company records stock-based compensation in accordance with ASC 718, “Stock Compensation,” using the fair value method. All transactions in which goods or services are the consideration received for the issuance of equity instruments are accounted for based on the fair value of the consideration received or the fair value of the equity instrument issued, whichever is more reliably measurable. Equity instruments issued to employees and the cost of the services received as consideration are measured and recognized based on the fair value of the equity instruments issued. The Company utilizes the Black Scholes method when calculating stock-based compensation expense relating to stock option awards and warrants.
The Company records the stock-based compensation expense attributed to share awards in accordance with US GAAP using the graded-vesting method. The Company amortizes the grant date fair value over the respective vesting period, beginning with recognition on the date of grant.
h) Exploration Costs
Mineral
property acquisition costs are capitalized as incurred. Exploration and evaluation costs are expensed as incurred until proven and probable
reserves are established. The Company assesses the carrying costs for impairment under ASC 360 – Property, Plant, and Equipment
at each period end. When it has been determined that a mineral property can be economically developed as a result of establishing proven
and probable reserves, the costs then incurred to develop such property are capitalized. Such costs will be amortized using the units-of-production
method over the estimated life of the probable reserve. If mineral properties are subsequently abandoned or impaired, any capitalized
costs will be charged to operations. As of September 30, 2023 and 2022, the Company has
i) Research and Development Costs
Research and development (“R&D”) costs are accounted for in accordance with ASC 730, “Research and Development.” ASC 730-10-25 requires that all R&D costs be recognized as an expense as incurred. However, some costs associated with R&D activities that have an alternative future use (e.g., materials, equipment, facilities) may be capitalizable.
The Company has been awarded federal grant awards for specific R&D programs. Under ASU No. 2021-10 “Government Assistance,” the Company recognizes invoiced government funds as an offset to R&D costs in the period the qualifying costs are incurred. The Company believes this best reflects the expected net expenditures associated with these programs.
11 |
AMERICAN BATTERY TECHNOLOGY COMPANY
Notes to the Consolidated Financial Statements
For the three months ended September 30, 2023 and 2022
2. Summary of Significant Accounting Policies (continued)
j) Leases
The Company follows the guidance of ASC 842 – Leases, which requires an entity to recognize a right-of-use (“ROU”) asset and a lease liability for virtually all leases. Operating lease ROU assets and liabilities are recognized at commencement date based on the present value of lease payments over the lease term. ROU assets represent the Company’s right to use an underlying asset for the lease term and lease liabilities represent the Company’s obligation to make lease payments arising from the lease. The Company uses an implicit rate of interest to determine the present value of lease payments utilizing its incremental borrowing rate, as the implicit rate of interest in the respective leases is not readily determinable. The Company’s incremental borrowing rate is a hypothetical rate based on its understanding of what its credit rating would be.
k) Income Taxes
The Company accounts for income taxes using the asset and liability method in accordance with ASC 740 – Income Taxes. The asset and liability method provides that deferred tax assets and liabilities are recognized for the expected future tax consequences of temporary differences between the financial reporting and tax bases of assets and liabilities, and for operating loss and tax credit carry-forward.
Deferred tax assets and liabilities are measured using the currently enacted tax rates and laws that will be in effect when the differences are expected to reverse. The Company records a valuation allowance to reduce deferred tax assets to the amount that is believed more likely than not to be realized.
Any uncertain tax position liabilities have been applied against the deferred tax balance given that there is a sufficient net operating loss to cover any penalties and fees associated with the uncertain tax position. The Company assesses each of its identified uncertain positions and determines whether any potential penalties and interest liability should be accrued at the balance sheet dates.
Due to the Company’s cumulative loss position since inception, there exists little assurance as to the realization of its deferred tax assets. Accordingly, a valuation allowance equal to the deferred tax asset has been recorded at September 30, 2023 and June 30, 2023.
l) Accounting Pronouncements
No new accounting pronouncements issued or effective in the period had or are expected to have a material impact on our accompanying unaudited condensed consolidated statements.
m) Derivative Financial Instruments
The Company evaluates its financial instruments to determine if such instruments are derivatives or contain features that qualify as embedded derivatives in accordance with ASC 815, “Derivatives and Hedging”. For derivative financial instruments that are accounted for as liabilities, the derivative instrument is initially recorded at its fair value on the issuance date and is then re-valued at each reporting date, with changes in the fair value reported in the statements of operations. The fair value of any assets or liabilities that are short-term in nature and qualify as financial instruments under ASC 820, “Fair Value Measurement,” approximate the carrying amounts represented in the Company’s balance sheet.
n) Convertible Notes
The Company evaluates all conversion, repurchase and redemption features contained in a debt instrument to determine if there are any embedded features that require bifurcation as a derivative. The Company accounts for its convertible notes as a long-term liability equal to the proceeds received from issuance, including any embedded conversion features, net of the unamortized debt discount and offering costs in the accompanying unaudited consolidated balance sheets. The debt issuance and offering costs are amortized over the term of the convertible notes, using the effective interest method, as interest expense in the accompanying unaudited consolidated statements of operations.
12 |
AMERICAN BATTERY TECHNOLOGY COMPANY
Notes to the Consolidated Financial Statements
For the three months ended September 30, 2023 and 2022
3. Inventories
The Company’s inventory as of September 30, 2023 and June 30, 2023 was comprised of raw materials in the form of end-of-life battery feedstock. Inventories are valued at the lower of average cost or net realizable value. Carrying value of inventory includes those costs to acquire battery feedstock and any related carrying costs incurred by the Company.
September 30, 2023 | June 30, 2023 | |||||||
Raw materials | $ | $ |
4. Grant Awards
Grants
receivable represent qualifying costs incurred where there is reasonable assurance that the conditions of the grant have been met but
the corresponding funds have not been received as of the reporting date. Accordingly, no allowance for doubtful accounts has been established.
If amounts become uncollectible, they are charged to operations. Grants receivable were $
On
August 16, 2021, the Company received a contract award for a 30-month project with a total budget of $
On
January 20, 2021, the US Department of Energy (“DOE”) announced that the Company had been selected for award negotiation for a three-year project with a total
budget of $
On
October 21, 2022, the US DOE announced that the Company had been selected for award negotiation for a five-year project with a total
budget of $
On
November 17, 2022, the US DOE announced that the Company had been selected for award negotiation for a three-year project with a
total budget of $
13 |
AMERICAN BATTERY TECHNOLOGY COMPANY
Notes to the Consolidated Financial Statements
For the three months ended September 30, 2023 and 2022
5. Other Deposits
On
March 1, 2023, the Company and Linico Corporation (“Linico”) entered into, and consummated, an Asset Purchase Agreement
(“APA”) whereby the Company acquired specific tangible equipment and personal property for an aggregate purchase price
of $
On
June 30, 2023, the Company and Linico entered into an amendment to the MIPA. Pursuant to the terms of the amended agreement, the parties
agreed to (i) remove the requirement that $
14 |
AMERICAN BATTERY TECHNOLOGY COMPANY
Notes to the Consolidated Financial Statements
For the three months ended September 30, 2023 and 2022
6. Property and Equipment
The table below presents the property and equipment as of September 30, 2023 and June 30, 2023:
Land | Building | Equipment | Total | |||||||||||||
Cost: | ||||||||||||||||
Balance, June 30, 2023 | $ | $ | $ | $ | ||||||||||||
Additions | ||||||||||||||||
Balance, September 30, 2023 | $ | $ | $ | $ | ||||||||||||
Accumulated Depreciation: | ||||||||||||||||
Balance, June 30, 2023 | $ | $ | $ | $ | ||||||||||||
Additions | ||||||||||||||||
Balance, September 30, 2023 | $ | $ | $ | $ | ||||||||||||
Carrying Amounts: | ||||||||||||||||
Balance, June 30, 2023 | $ | $ | $ | $ | ||||||||||||
Balance, September 30, 2023 | $ | $ | $ | $ |
On August 21, 2023, the Company finalized the purchase of its commercial-scale battery recycling facility located in the TRIC. It has installed industrial utility equipment on site to accelerate the first commercial scale implementation of its internally developed first-of-kind lithium-ion battery recycling technologies.
7. Mining Properties
During
the three months ended September 30, 2022, the Company exercised its option to purchase unpatented mining claims in Tonopah, Nevada,
USA for total costs of $
8. Intangible Assets
On
September 12, 2023, the Company acquired approximately
The
Company’s acquisition of the commercial-scale battery recycling facility at the TRIC included water rights valued at $
The table below presents total intangible assets at:
September 30, 2023 | June 30, 2023 | |||||||
Water rights | $ | $ |
15 |
AMERICAN BATTERY TECHNOLOGY COMPANY
Notes to the Consolidated Financial Statements
For the three months ended September 30, 2023 and 2022
9. Accounts Payable and Accrued Liabilities
The table below presents total accounts payable and accrued liabilities at:
September 30, 2023 | June 30, 2023 | |||||||
Trade payables | $ | $ | ||||||
Accrued fixed assets | ||||||||
Accrued expenses | ||||||||
Right-of-use liability, current | ||||||||
Total accounts payable and accrued liabilities | $ | $ |
As
of September 30, 2023, the Company had a significant construction supplier that accounted for
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 $
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 $
Note discount and issuance costs totaled $
The table below presents the net carrying amounts of the Notes as of:
September 30, 2023 | June 30, 2023 | |||||||
Principle outstanding | $ | $ | ||||||
Unamortized debt discount and issuance costs | ( | ) | ||||||
Net carrying value | $ | $ |
The table below presents the maturities of notes payable as of September 30, 2023:
September 30, 2024 | $ | |||
September 30, 2025 | ||||
Total note payments | ||||
Less: unamortized debt discount and issuance costs | ( | ) | ||
Total notes payable | $ | |||
Notes payable, current | $ | |||
Notes payable, non-current | $ |
16 |
AMERICAN BATTERY TECHNOLOGY COMPANY
Notes to the Consolidated Financial Statements
For the three months ended September 30, 2023 and 2022
11. Leases
A lease provides the lessee the right to control the use of an identified asset for a period in exchange for consideration. Operating lease right-of-use assets (“RoU assets”) are presented within the asset section of the Company’s consolidated balance sheets, while lease liabilities are included within the liability section of the Company’s consolidated balance sheets at September 30, 2023 and June 30, 2023.
RoU assets represent the Company’s right to use an underlying asset for the lease term and operating lease liabilities represent the Company’s obligation to make lease payments arising from the lease. The Company determines if an arrangement is a lease at inception. RoU assets and liabilities are recognized at the lease commencement date based on the present value of lease payments over the lease term. Most operating leases contain renewal options that provide for rent increases based on prevailing market conditions. The terms used to calculate the RoU assets for certain properties include the renewal options that the Company is reasonably certain to exercise.
The
discount rate used to determine the commencement date present value of lease payments is the interest rate implicit in the lease, or
when that is not readily determinable, the Company estimates a rate of
The
Company occupies office facilities under lease agreements that expire at various dates, many of which do not exceed a year in length.
Total operating lease costs for the three months ended September 30, 2023 and 2022, were approximately $
As
of September 30, 2023, current lease liabilities of $
September 30, 2023 | June 30, 2023 | |||||||
Operating lease right-of-use asset | $ | $ | ||||||
Operating lease liabilities | $ | $ |
The table below presents the maturities of operating lease liabilities as of September 30, 2023:
September 30, 2024 | $ | |||
September 30, 2025 | ||||
Total lease payments | ||||
Less: discount | ( | ) | ||
Total operating lease liabilities | $ | |||
Operating lease liabilities, current | $ | |||
Operating lease liabilities, non-current | $ |
The table below presents the weighted average remaining lease term for operating leases and weighted average discount rate used in calculating operating lease right-of-use asset as of September 30, 2023.
Weighted average lease term (years) | ||||
Weighted average discount rate | % |
17 |
AMERICAN BATTERY TECHNOLOGY COMPANY
Notes to the Consolidated Financial Statements
For the three months ended September 30, 2023 and 2022
12. Stockholders’ Equity
On September 21, 2023, the Company’s common stock began trading on the Nasdaq Capital Market under the symbol “ABAT.” The Company was previously traded on the OTCQX Markets under the symbol “ABML.”
Preferred Stock
Our amended and restated articles of incorporation authorize shares of preferred stock and provide that shares of preferred stock may be issued from time to time in one or more series. Our board of directors will be authorized to fix the voting rights, if any, designations, powers, preferences, the relative, participating, optional or other special rights and any qualifications, limitations and restrictions thereof, applicable to the shares of each series. Our board of directors will be able to, without stockholder approval, issue shares of preferred stock with voting and other rights that could adversely affect the voting power and other rights of the holders of the common stock and could have anti-takeover effects. The ability of our board of directors to issue shares of preferred stock without stockholder approval could have the effect of delaying, deferring or preventing a change of control of us or the removal of existing management.
To date, the Company has authorized a total of shares of preferred stock. Of this amount the Company has designated a total of shares to three classes of preferred stock, Series A Preferred Stock, Series B Preferred Stock and Series C Preferred Stock. A description of each class of preferred stock is listed below.
Series A Preferred Stock
The Company has shares of Series A Preferred Stock authorized with a par value of $ , per share. The Company had shares of Series A Preferred Stock issued and outstanding at September 30, 2023 and June 30, 2023.
Series B Preferred Stock
The Company has shares of Series B Preferred Stock authorized with a par value of $ , per share. The Company had shares of Series B Preferred Stock issued and outstanding at September 30, 2023 and June 30, 2023.
Series C Preferred Stock
The Company has shares of Series C Preferred Stock authorized with a par value of $ , per share. The Company had shares of Series C Preferred Stock issued and outstanding at September 30, 2023 and June 30, 2023.
Common Stock
The Company has million shares of common stock authorized, with a par value of $ , per share.
On September 11, 2023, in preparation for listing on the Nasdaq Capital Market, the Company implemented a one-for-fifteen (1-for-15) reverse split of our common stock. Prior to the reverse stock split the Company had shares of common stock issued and outstanding, and after the reverse stock split, the Company had approximately shares of common stock issued and outstanding. Immediately after the reverse stock split, each stockholder’s percentage ownership interest in the Company and proportional voting power remained unchanged aside from rounding fractional shares into whole shares, resulting in an additional common shares issued. The reverse stock split did not change the par value of the common stock or preferred stock.
18 |
AMERICAN BATTERY TECHNOLOGY COMPANY
Notes to the Consolidated Financial Statements
For the three months ended September 30, 2023 and 2022
12. Stockholders’ Equity (continued)
Common Stock (continued)
Three months ended September 30, 2023:
During the period the Company issued shares that were previously listed as issuable as of June 30, 2023. These shares for professional services relate to previously earned board compensation.
During
the period, the Company issued
On
July 28, 2023, the Company recorded an increase of $
On
June 26, 2023, the Company filed a prospectus supplement related to the offer and sale from time to time of up to
During
the period, the Company issued
Three months ended September 30, 2022:
During the period, the Company did not issue any shares of common stock, however the Company had shares issuable for professional services of approximately $ million.
19 |
AMERICAN BATTERY TECHNOLOGY COMPANY
Notes to the Consolidated Financial Statements
For the three months ended September 30, 2023 and 2022
During
the three months ended September 30, 2023, the Company received cash proceeds of $
Number of Warrants | Weighted Average Exercise Price | |||||||
Balance, June 30, 2023 | $ | |||||||
Granted | $ | |||||||
Exercised | ( | ) | $ | ( | ) | |||
Expired | $ | |||||||
Balance, September 30, 2023 | $ |
Outstanding and Exercisable | ||||||||
Range of Exercise Prices | Number of Warrants | Weighted Average Remaining Contractual Life (years) | ||||||
$ | - $||||||||
$ | - $||||||||
$ | - $||||||||
The Company has established the 2021 Retention Plan (“the Retention Plan”) to issue shares in the effort to retain key executives, directors, and employees. The Retention Plan allows for several different types of awards to be granted, including but not limited to, restricted share units and restricted share awards, collectively referred to as “share awards”. Share awards generally have the same expense characteristics under US GAAP and generally vest over a -year period at a rate of % per annum.
Under the Retention Plan, the Company is authorized to issue shares of common stock to employees and non-employees up to ten percent ( %) of the total number of shares of common stock outstanding as of December 31, 2022, on a fully diluted basis. The Company adjusts the authorized shares under the plan each December 31, while the Retention Plan remains in effect.
The Company did t grant any share awards for the three months ended September 30, 2023 and 2022, respectively. As of September 30, 2023 several grant performance targets for the fiscal year ended June 30, 2023 have been defined via employee and retention agreements. These performance targets have not yet been achieved by employees and officers thus, the Company has deferred any stock-based compensation recognition until such achievements are expected to be reached and approval by the board of directors has occurred.
20 |
AMERICAN BATTERY TECHNOLOGY COMPANY
Notes to the Consolidated Financial Statements
For the three months ended September 30, 2023 and 2022
14. Share Awards (continued)
Units | Weighted- Average Grant Date Fair Value per Unit | |||||||
Unvested share awards at June 30, 2023 | $ | |||||||
Granted | $ | |||||||
Vested | ( | ) | $ | |||||
Other | ||||||||
Forfeitures | $ | |||||||
Unvested awards at September 30, 2023 | $ |
As awards are granted, stock-based compensation equivalent to the fair market value on the date of grant is expensed over the requisite service period, using the graded vesting attribution method as acceptable under ASC 718, “Stock-Based Compensation.”
The Company recognized stock-based compensation expense of $ million and $ million for the three months ended September 30, 2023 and 2022, respectively. Of these amounts, $ million and $ million were related to officers and directors of the Company for the three months ended September 30, 2023 and 2022, respectively.
As of September 30, 2023 and June 30, 2023, there were approximately $ million and $ million of unamortized expenses relating to outstanding share awards to be recognized over a remaining weighted-average period of years and years, respectively.
For the three months ended September 30:
2023 | 2022 | |||||||
General and administrative | $ | $ | ||||||
Research and development | ||||||||
Exploration | ||||||||
$ | $ |
Executive officers and selected other key employees are eligible to receive common share performance-based awards, as determined by the board of directors. The payouts, in the form of share awards, vary based on the degree to which corporate operating objectives are met. These performance-based awards typically include a service-based requirement, which are generally four-years. No granting of these awards occurs until performance thresholds are achieved. The Company has granted million and performance-based awards to officers and employees of the Company for the three months ended September 30, 2023 and 2022, respectively. The Company grants awards at the time of reaching such performance targets.
21 |
AMERICAN BATTERY TECHNOLOGY COMPANY
Notes to the Consolidated Financial Statements
For the three months ended September 30, 2023 and 2022
15. Supplemental Statement of Cash Flow Disclosures
For the three months ended September 30:
2023 | 2022 | |||||||
Supplemental disclosures: | ||||||||
Interest paid | $ | $ | ||||||
Non-cash investing and financing activities: | ||||||||
Current liabilities capitalized as investing activities | $ | $ | ||||||
Deposits capitalized as investing activities | ||||||||
Other receivables recognized as financing activities |
16. Commitments and Contingencies
From time to time, the Company may become involved in various lawsuits and legal proceedings, which arise in the ordinary course of business. Litigation is subject to inherent uncertainties, and an adverse result in these or other matters may arise from time to time that may harm business. Except as otherwise identified herein, management is currently not aware of any such legal proceedings or claims that could have, individually or in aggregate, a material adverse effect on our business, financial condition, or operating results.
Operating Leases
The Company leases its principal office location in Reno, Nevada. It also leases two adjacent Lab spaces in the University of Nevada, Reno on short term leases. The principal office location lease expires on November 30, 2024 and the Lab leases expire on November 30, 2024. Consistent with the guidance in ASC 842, The Company has recorded the principal office lease in its consolidated balance sheet as an operating lease. For further information on operating lease commitments, refer to Note 6 – Leases.
Financial Assurance:
Nevada
and other states, as well as federal regulations governing mine operations on federal land, require financial assurance to be provided
for the estimated costs of mine reclamation and closure, including groundwater quality protection programs. The Company has satisfied
financial assurance requirements using a combination of cash bonds and surety bonds. The amount of financial assurance The Company is
required to provide will vary with changes in laws, regulations, reclamation and closure requirements, and cost estimates. At September
30, 2023, The Company’s financial assurance obligations associated with U.S. mine closure and reclamation/restoration cost estimate
totaled $
17. Subsequent Events
Pursuant to the Tysadco Agreement, subsequent to September, 30, 2023, the Company has issued common shares for proceeds of $ million.
22 |
ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Forward-Looking Statements
You should read the following discussion of our financial condition and results of operations in conjunction with the consolidated financial statements and the notes thereto included elsewhere in this Form 10-K. The information in this discussion contains forward-looking statements and information within the meaning of Section 27A of the Securities Act and Section 21E of the Exchange Act. These forward-looking statements include, but are not limited to, statements concerning our strategy, future operations, future financial position, future revenues, projected costs, prospects and plans and objectives of management. The words “anticipates,” “believes,” “estimates,” “expects,” “intends,” “may,” “plans,” “projects,” “will,” “would” and similar expressions are intended to identify forward-looking statements, although not all forward-looking statements contain these identifying words. We may not actually achieve the plans, intentions, or expectations disclosed in our forward-looking statements and you should not place undue reliance on our forward-looking statements. Actual results or events could differ materially from the plans, intentions and expectations disclosed in the forward-looking statements that we make. These forward-looking statements involve risks and uncertainties that could cause our actual results to differ materially from those in the forward-looking statements, including, without limitation, the risks set forth in our filings with the SEC. The forward-looking statements are applicable only as of the date on which they are made, and we do not assume any obligation to update any forward-looking statements except as required by applicable securities laws.
Overview
American Battery Technology Company (the “Company”) is a new entrant in the lithium–ion battery industry that is working to increase the domestic U.S. production of battery materials, such as lithium, nickel, cobalt, and manganese through its exploration of new primary resources of battery metals, development and commercialization of new technologies for the extraction of these battery metals from primary resources, and commercialization of an internally developed integrated process for the recycling of lithium–ion batteries. Through this three–pronged approach the Company is working to both increase the domestic production of these battery materials, and to ensure spent batteries have their elemental battery metals returned to the domestic manufacturing supply chain in an economical, environmentally-conscious, closed–loop fashion.
To implement this business strategy, the Company is currently commissioning and operating its first integrated lithium–ion battery recycling facility, which takes in waste and end–of–life battery materials from the electric vehicle, stationary storage, and consumer electronics industries. The retrofitting, commissioning, and operation of this facility are of the highest priority to the Company, and as such it has significantly increased the resources devoted to its execution including the further internal hiring of technical staff, expansion of laboratory facilities, and purchasing of equipment. The Company has been awarded a competitively bid grant from the U.S. Advanced Battery Consortium to support a $2 million project to accelerate the development and demonstration of this pre–commercial scale integrated lithium–ion battery recycling facility, and the Company has been awarded an additional grant to support a $20 million project under the Bipartisan Infrastructure Law to validate, test, and deploy three disruptive advanced separation and processing technologies.
Additionally, the Company is accelerating the demonstration and commercialization of its internally developed low–cost and low–environmental impact processing train for the manufacturing of battery grade lithium hydroxide from Nevada–based sedimentary claystone resources. The Company has been awarded a grant cooperative agreement from the U.S. Department of Energy’s Advanced Manufacturing and Materials Technologies Office through the Critical Materials Innovation program to support a $4.5 million project for the construction and operation of a multi–ton per day integrated continuous demonstration system to support the scale–up and commercialization of these technologies. The Company has been awarded an additional grant award under the Bipartisan Infrastructure Law to support a $115 million project to design, construct, and commission the first phase of a first-of-kind commercial manufacturing facility to produce battery-grade lithium hydroxide from this resource.
Financial Highlights:
● | On August 21, 2023, the Company finalized the purchase of its commercial-scale, lithium-ion battery recycling facility located in the Tahoe-Reno Industrial Center (TRIC) at 2500 Peru Drive, McCarran, Nevada. | |
● | As of September 30, 2023, the Company had total cash on hand of $5.4 million. | |
● | Cash used for the acquisition of property, construction, equipment, and water rights for the three months ended September 30, 2023 was $7.3 million. Cash used in the same period of the prior year totaled $4.1 million for water rights and equipment. | |
● | Cash used in operations for the three months ended September 30, 2023 was $4.8 million, up $0.7 million year–over–year compared to the three months ended September 30, 2022. | |
● | Total operating costs for the three months ended September 30, 2023 were $6.4 million, up $3.8 million year–over–year, largely due to increased hiring related to R&D and exploration activities compared to the three months ended September 30, 2022. | |
● | The Company recorded $2.2 million in research and development costs for the three months ended September 30, 2023, an increase of $1.9 million when compared to the same period of the prior year. The Company recorded an offset to research and development costs of $0.5 million and $0.3 million for federal grant funds recognized for the three months ended September 30, 2023 and 2022, respectively. |
23 |
ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (CONTINUED)
Components of Statements of Operations
Operating Expenses
During the three months ended September 30, 2023, the Company incurred $6.4 million of operating expenses compared to $2.6 million of operating expenses during the three months ended September 30, 2022. The increase is primarily due to the items described below.
General and administrative expenses consist of stock-based compensation, office expenses, legal, recruitment, business development, public relations, and general facility expenses. The Company recognizes stock-based compensation for its employees over the requisite service period of the employee. The Company recognized a $2.0 million reduction to the non-cash compensation components on the statement of operations and statement of cash flows for the three months ended September 30, 2023 compared to the same period in the prior year.
Research and development expenditures are charged to operations as incurred. These costs consist primarily of laboratory leases, supplies, salaries, stock-based compensation, and benefits. Research and development costs for the three months ended September 30, 2023 and 2022 were $2.2 million and $0.2 million, respectively. The increase in the first three months of fiscal 2024 is attributed to increased headcount. These costs are partially offset by federal grant funds it receives for grant awards that it has contracted with various federal agencies. The Company recognized an offset to its research and development costs of $0.5 million and $0.3 million for the three months ended September 30, 2023 and 2022, respectively.
Exploration costs consist primarily of drilling, assay, claim fees, field office lease and warehouse costs, personnel, stock-based compensation, travel and other costs related to exploration of claims in central Nevada as the Company pursues critical battery metals in the region.
Other Income (Expense)
During the three months ended September 30, 2023, the Company recorded other expense of $0.8 million, including $0.1 million for interest expense and $0.7 million for amortization of debt financing costs. During the three months ended September 30, 2022, the Company recorded other income of $0.1 million largely related to the sale of mining claims it previously held in Railroad Valley, NV.
Net Loss
During the three months ended September 30, 2023, the Company incurred a net loss of $7.2 million or $0.16 loss per share compared to a net loss of $2.4 million during the three months ended September 30, 2022.
Liquidity and Capital Resources
At September 30, 2023, the Company had cash of $5.4 million and total assets of $83.9 million compared to cash of $2.3 million and total assets of $74.7 million at June 30, 2023. The increase in cash is due to the Company having received net proceeds of $15.5 million from High Trail and Tysadco financing transactions.
The Company had total current liabilities of $23.0 million at September 30, 2023, compared to $13.4 million at June 30, 2023. The increase in current liabilities is primarily due to the costs necessary to equip its recycling facility and prepare the facility for its intended use.
As of September 30, 2023 the Company had a working capital deficiency of $14.6 million compared to a working capital deficiency of $8.6 million at June 30, 2023. The higher level of working capital deficiency is attributed to increased acquisitions of property and equipment and an increased level of cash used in operating activities, partially offset by an increase in cash generated from financing activities during the three months ended September 30, 2023. The Company believes its cash holdings and subsequent available financing will be sufficient to meet its current working capital needs.
24 |
ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (CONTINUED)
Cash Flows
For the three months ended September 30:
2023 | 2022 | |||||||
Cash used in operating activities | $ | (4,758,984 | ) | $ | (4,037,784 | ) | ||
Cash used in investing activities | (7,272,098 | ) | (4,077,530 | ) | ||||
Cash provided by financing activities | 15,090,046 | - | ||||||
Net increase (decrease) in cash during the period | 3,058,964 | (8,115,314 | ) |
Cash from Operating Activities.
During the three months ended September 30, 2023, the Company used $4.8 million of cash for operating activities as compared to $4.0 million used during the three months ended September 30, 2022. The increase included cash costs for engineering, research and development as well as increased exploration expenses. Increased research and development costs were to support the development of the Company’s process for the recycling of lithium-ion batteries and for the extraction of lithium from the Company’s lithium claystone mining claims. The Company has also seen a steady increase in exploration activity expenses as it continues to evaluate its claims in the Tonopah, Nevada region. The Company also continues to see a stable increase in its general administrative function to further support its business objectives.
Cash from Investing Activities
During the three months ended September 30, 2023, the Company used cash in investing activities of $7.3 million, including acquisition costs of $6.5 million of property and equipment for its recycling facilities. This is in comparison to cash used in investing activities of $4.1 million for the three months ended September 30, 2022, consisting primarily of $4.0 million for mineral rights.
As of September 30, 2023, the Company had total non-current assets of $75.5 million compared to $69.9 million at June 30, 2023. The Company will continue to see an increase in investing activities as it continues to invest heavily in its recycling and primary resource extraction activities.
Cash from Financing Activities
During the three months ended September 30, 2023, the Company had net cash provided by financing activities of $15.1 million. This represents the need for capital while the Company nears completion of its revenue-generating recycling facility.
During the three months ended September 30, 2023, the Company issued 306,252 shares of common stock pursuant to purchase agreements for net proceeds of $3.0 million, of which, $1.0 million was received after September 30, 2023.
Working Capital
For the three months ended September 30:
2023 | 2023 | |||||||
Current assets | $ | 8,408,245 | $ | 4,753,590 | ||||
Current liabilities | $ | 23,044,460 | $ | 13,389,864 | ||||
Working capital | $ | (14,636,215 | ) | $ | (8,636,274 |
Future Financing
We will continue to rely on sales of our common shares, debt, or other financing to fund our business operations. Issuances of additional shares will result in dilution to existing stockholders. There is no assurance that we will achieve any additional sales of the securities or arrange for debt or other financing to fund planned operating activities, acquisitions and exploration activities.
Off-Balance Sheet Arrangements
As of September 30, 2023, we had no significant off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenses or capital resources that are material to stockholders.
25 |
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Not Applicable.
ITEM 4. CONTROLS AND PROCEDURES
Controls and Procedures
Evaluation of Disclosure Controls and Procedures
We maintain disclosure controls and procedures, as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act. Disclosure controls and procedures are controls and other procedures designed to ensure that the information required to be disclosed by us in the reports that we file or submit under the Exchange Act is recorded, processed, summarized, and reported within the time periods specified in the SEC’s rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by us in the reports that we file or submit under the Exchange Act is accumulated and communicated to our management, including our principal executive officer and our principal financial officer, as appropriate, to allow timely decisions regarding required disclosure. In designing and evaluating the disclosure controls and procedures, management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable and not absolute assurance of achieving the desired control objectives, and management necessarily applies its judgment in evaluating the cost-benefit relationship of possible controls and procedures.
The Company’s management, with the participation of the Chief Executive Officer and Chief Financial Officer of the Company, carried out an evaluation of the effectiveness of the design and operation of the Company’s disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”)) as of September 30, 2023, the end of the period covered by this report. Based on such evaluation, the Company’s Chief Executive Officer and Chief Financial Officer have concluded that, as of September 30, 2023, the Company’s disclosure controls and procedures are not effective, based on the material weakness described below, to ensure that information required to be disclosed by the Company in reports that it files or submits under the Exchange Act is recorded, processed, summarized and reported within the required time periods and are designed to ensure that information required to be disclosed in its reports is accumulated and communicated to the Company’s management, including the Chief Executive Officer and Chief Financial Officer, as appropriate to allow timely decisions regarding required disclosure.
Our management is responsible for establishing and maintaining adequate internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) of the Exchange Act). Internal control over financial reporting is a process designed under the supervision and with the participation of our management, including the individuals serving as our principal executive officer and principal financial officer, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with accounting principles generally accepted in the United States of America.
A material weakness is a deficiency, or combination of deficiencies, in internal controls over financial reporting, such that there is a reasonable possibility that a material misstatement of annual or interim financial statements will not be prevented or detected on a timely basis.
Management assessed the effectiveness of our internal controls over financial reporting based on the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission in Internal Control-Integrated Framework (2013 Framework). Based on this assessment, management concluded that, as of September 30, 2023, our internal control over financial reporting was deemed not to be effective, based on the criteria therein. Material weaknesses presiding over our internal controls as it relates to financial reporting are described below.
Material Weakness in Internal Control over Financial Reporting
We did not maintain appropriate segregation of duties related to accounting processes. While procedures in place as of June 30, 2023 and September 30, 2023 addressed the material weakness regarding segregation of duties, internal controls are required to be in place and effective for an adequate period of time.
This material weakness creates a reasonable possibility that a material misstatement to the financial statements will not be prevented or detected on a timely basis, and we concluded that the deficiency represents a material weakness in our internal control over financial reporting and our internal control over financial reporting was not effective as of September 30, 2023.
26 |
ITEM 4. CONTROLS AND PROCEDURES (CONTINUED)
Remediation Plan
During the year ended June 30, 2023, we enhanced our internal control over financial reporting and remediated material weaknesses including lack of adequate documentation evidencing operating effectiveness of internal controls and controls relating to the supervision and review of complex accounting matters. These material weaknesses were previously presented in our financial statements for the fiscal years ended June 30, 2022 and 2021.
The steps below were implemented, and as a result we have remediated the material weaknesses, aside from segregation of duties.
● | Successful hiring of additional personnel with the expertise necessary to improve the financial reporting function | |
● | Complete the implementation of a robust Enterprise Resource Planning (ERP) solution that provides the necessary segregation and approval workstreams necessary to mitigate control weaknesses in key accounting processes and procedures | |
● | Provide additional guidance, education and training to employees relating to our accounting procedures with a continued focus on its segregation-of-duties as the Company hires more accounting personnel | |
● | Further develop and document detailed accounting policies for significant accounts, accounting estimates and presentation of complex items, as is required by US GAAP | |
● | Establishing effective general controls over IT systems to ensure that information produced can be relied upon by process level controls | |
● | We have engaged a firm that specializes in Cyber and IT protection to further enhance the protection of our financial information, employee information, proprietary methods, and strategic partnerships |
We are committed to ensuring that our internal control over financial reporting is designed and operating effectively. While procedures in place as of June 30, 2023 and September 30, 2023 addressed the remaining material weakness regarding segregation of duties, remediation steps are required to be in place and effective for an adequate period of time. We expect to remediate this material weakness during the three months ending December 31, 2023. However, there is no guarantee that such material weaknesses will be remediated during the year, and we may discover additional material weaknesses that may require additional time and resources to remediate.
Changes in Internal Control over Financial Reporting
There was no change in our internal control over financial reporting that occurred during the three months covered by this Interim Report on Form 10–Q that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.
27 |
PART II – OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
Please refer to “Item 1. Legal Proceedings” in our 2023 Form 10-Q for the three months ended December 31, 2022, for information regarding material pending legal proceedings. There have been no new material legal proceedings and no material developments in the legal proceedings previously disclosed.
Other than these proceedings, to the best of our knowledge, we are not currently a party to any legal proceedings that, individually or in the aggregate, are deemed to be material to our financial condition or results of operations.
ITEM 1A. RISK FACTORS
There were no material changes from the risk factors set forth under Part I, Business; Item 1A, Risk Factors in our Annual Report on Form 10-K for the fiscal year ended June 30, 2023, as filed with the SEC on September 28, 2023.
ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
None.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
None.
ITEM 4. MINE SAFETY DISCLOSURE
Not Applicable
ITEM 5. OTHER INFORMATION
None.
28 |
ITEM 6. EXHIBITS
The following exhibits are either provided with this Annual Report or are incorporated herein by reference:
Exhibit | Description | Filed Herein | Incorporated Date |
By Form |
Reference Exhibit | |||||
3.1 | Articles of Incorporation, as amended | September 12, 2022 | 10-K | 3.1 | ||||||
3.2 | Amended and Restated Bylaws | September 14, 2022 | 8-K | 3.1 | ||||||
3.3 | Certificate of Change Pursuant to NRS 78.209 of American Battery Technology Company, filed with the Nevada Secretary of State on August 31, 2023 | September 11, 2023 | 8-K | 3.1 | ||||||
10.1 | Form of Securities Purchase Agreement | x | ||||||||
10.2 | Form of Convertible Note | x | ||||||||
10.3 | Assistance Agreement between the Company and the United States Department of Energy, dated September 1, 2023 |
x | ||||||||
10.4 | Assistance Agreement between the Company and the United States Department of Energy, dated September 27, 2023 |
x | ||||||||
31.1 | Rule 13a-14(a)/ 15d-14(a) Certification of Chief Executive Officer | x | ||||||||
31.2 | Rule 13a-14(a)/ 15d-14(a) Certification of Chief Financial Officer | x | ||||||||
32.1 | Section 1350 Certification of Chief Executive Officer* | |||||||||
32.2 | Section 1350 Certification of Chief Financial Officer* | |||||||||
101 | INS Inline XBRL Instant Document. | x | ||||||||
101 | SCH Inline XBRL Taxonomy Extension Schema Document | x | ||||||||
101 | CAL Inline XBRL Taxonomy Extension Calculation Linkbase Document | x | ||||||||
101 | LAB Inline XRBL Taxonomy Label Linkbase Document | x | ||||||||
101 | PRE Inline XBRL Taxonomy Extension Presentation Linkbase Document | x | ||||||||
101 | DEF Inline XBRL Taxonomy Extension Definition Linkbase Document | x | ||||||||
104 | Cover Page Interactive Data File (embedded within the Inline XBRL document) | x |
*Furnished herewith.
29 |