Notes Payable

6 Months Ended

Dec. 31, 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 and $5.4 million has been repaid. The remaining $26 million under the facility includes $13.5 million with the condition that the Company started trading on the Nasdaq Capital Market, had $250,000 in sales, and establish an ATM or ELOC, and another $12.5 million at the discretion of the Buyers. 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. The Notes contain features that are either entirely within the Company’s control or based on events management considers the probability of occurring to be extremely remote. These features which are required to be bifurcated under ASC 815, “Derivatives and Hedging,” would likely have minimal or no value, and therefore deemed to not be material to the Condensed Consolidated Financial Statements.

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, expected to be in October 2023 based on partial redemption payments, using the effective interest rate method. For the six months ended December 31, 2023, amortization of debt discount and issuance costs totaled $1.3 million.

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

	December 31, 2023			June 30, 2023
Principle outstanding	$	19,683,333		$	-
Unamortized debt discount and issuance costs		(3,408,484	)		-
Net carrying value	$	16,274,850		$	-

The table below presents the maturities of notes payable as of December 31, 2023:

December 31, 2024	$	19,683,333
December 31, 2025		-
Total note payments		19,683,333
Less: unamortized debt discount and issuance costs		(3,408,484	)
Total notes payable	$	16,274,850
Notes payable, current	$	19,683,333
Notes payable, non-current	$	-

AMERICAN BATTERY TECHNOLOGY COMPANY

Notes to the Condensed Consolidated Financial Statements

For the period ended December 31, 2023

(unaudited)