Summary of Significant Accounting Policies

9 Months Ended

Mar. 31, 2024

Accounting Policies [Abstract]

Summary of Significant Accounting Policies

2. Summary of Significant Accounting Policies

a) Basis of Presentation and Principles of Consolidation

The condensed 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 condensed 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 one-for-fifteen reverse-stock-split with respect to the authorized, issued, and outstanding shares of common stock and preferred stock. All share and per-share amounts included in this Form 10-Q are presented as if the stock split had been effective from the beginning of the earliest period presented.

AMERICAN BATTERY TECHNOLOGY COMPANY

Notes to the Condensed Consolidated Financial Statements

For the period ended March 31, 2024

(unaudited)

Immaterial Correction of Previously Issued Consolidated Financial Statements

Subsequent to the issuance of the Company’s December 31, 2023 condensed consolidated financial statements, the Company identified errors in the application of Accounting Standards Codification (“ASC”) 710, “Compensation-General,” and ASC 718, “Compensation-Stock Compensation,” related to expense recognition for cash and equity awards that are subject to both service and performance conditions. ASC 710 and ASC 718 require recognition of compensation cost once achievement of the performance condition becomes probable as the requisite service is provided. Historically, the Company did not recognize compensation cost for certain cash and equity awards until the performance conditions in the form of milestones were achieved, and for the Company’s common share warrant performance-based awards, no compensation cost had previously been recognized when the performance conditions either became probable of achievement or were achieved. As the common share warrant and RSU performance-based awards to executive officers and key employees are granted with a fixed dollar value and settled in a variable number of common share warrants or RSUs, these awards are liability-classified and the corresponding compensation cost should be recorded to current or long-term liabilities, depending on expected timing of settlement of the award, once the performance conditions become probable of achievement.

The correction of this error resulted in an increase in compensation cost of $0.9 million as of and for the fiscal year ended June 30, 2023, and an increase in compensation cost of $1.6 million and $0.6 million for the quarters ended September 30, 2023 and December 31, 2023, respectively. For the six-month period ended December 31, 2023, the errors resulted in an increase in compensation cost of $2.2 million. As certain of these awards are liability-classified, the correction of this error resulted in an increase of $0.3 million in accounts payable and accrued liabilities for the current portion of the awards and an increase of $0.8 million in equity compensation liability for the noncurrent portion of the awards as of June 30, 2023.

The Company also identified an error in application of ASC 815, “Derivatives and Hedging,” related to the initial and subsequent recognition of a conversion option in the Company’s convertible notes that does not qualify for equity classification. ASC 815 requires bifurcation of the conversion option with subsequent changes in the fair value of the bifurcated derivative to be recorded in earnings. At issuance of the convertible notes, the Company should have recognized a derivative liability and a corresponding discount on the convertible notes resulting from bifurcation of the derivative, with subsequent changes in the fair value of the derivative liability and accretion of the discount recorded in earnings.

The correction of this error resulted in an increase in interest and other expense of less than $0.1 million for the quarter ended September 30, 2023 and $0.3 million for the quarter ended December 31, 2023. For the six-month period ended December 31, 2023, the error resulted in an increase in interest and other expenses of $0.4 million.

The Company has evaluated the effects of the corrections detailed in the tables below on the previously issued consolidated financial statements, individually and in the aggregate, in accordance with the guidance in ASC 250, “Accounting Changes and Error Corrections.” The Company has concluded such corrections to be immaterial to its previously issued consolidated financial statements. While management believes the effect of the errors is immaterial to the Company’s previously issued consolidated financial statements as of and for the year ended June 30, 2023, and the condensed consolidated financial statements as of and for the three months ended September 30, 2023 and as of and for the three and six months ended December 31, 2023, the financial statement line items impacted by these errors have been corrected. In addition, the immaterial error is being corrected prospectively in the Company’s subsequent quarterly and annual filings.

The tables below reflect the sections of the Company’s condensed consolidated financial statements that were impacted by the error.

CONSOLIDATED BALANCE SHEET

	June 30, 2023
	As Reported			Adjustments			As Corrected
Liabilities and Stockholders’ Equity
Current liabilities:
Accounts payable and accrued liabilities	$	7,389,864		$	345,000		$	7,734,864
Total current liabilities		13,389,864			345,000			13,734,864
Equity compensation liability		-			833,427			833,427
Total liabilities		13,444,168			1,178,427			14,622,595
Stockholders’ equity
Additional paid in capital	$	222,626,865		$	(325,494	)	$	222,301,371
Accumulated deficit		(159,973,575	)		(852,933	)		(160,826,508	)
Total stockholders’ equity		61,214,484			(1,178,427	)		60,036,057

AMERICAN BATTERY TECHNOLOGY COMPANY

Notes to the Condensed Consolidated Financial Statements

For the period ended March 31, 2024

(unaudited)

CONSOLIDATED STATEMENT OF OPERATIONS

	Fiscal year ended June 30, 2023
	As Reported			Adjustments			As Corrected
Operating expenses
General and administrative	$	11,960,831		$	887,300		$	12,848,131
Research and development		7,703,895			(138,160	)		7,565,735
Exploration		1,910,548			103,793			2,014,341
Total operating expenses		21,575,274			852,933			22,428,207
Net loss before other income (expense)	$	(21,575,274	)	$	(852,933	)	$	(22,428,207	)
Net loss attributable to common stockholders	$	(21,338,207	)	$	(852,933	)	$	(22,191,140	)
Net loss per share, basic and diluted	$	(0.49	)	$	(0.02	)	$	(0.51	)

CONSOLIDATED STATEMENT OF STOCKHOLDERS’ EQUITY

	Fiscal year ended June 30, 2023
	As Reported			Adjustments			As Corrected
Stockholders’ Equity
Additional Paid-In Capital:
Stock-based compensation expense	$	9,249,462		$	(325,494	)	$	8,923,968
Balance, June 30, 2023	$	222,626,865		$	(325,494	)	$	222,301,371
Accumulated Deficit
Net loss for period	$	(21,338,207	)	$	(852,933	)	$	(22,191,140	)
Balance, June 30, 2023		(159,973,575	)	$	(852,933	)	$	(160,826,508	)

CONSOLIDATED STATEMENTS OF CASH FLOWS

	Fiscal year ended June 30, 2023
	As Reported			Adjustments			As Corrected
Operating Activities
Net loss attributable to stockholders	$	(21,338,207	)	$	(852,933	)	$	(22,191,140	)
Adjustments to reconcile net loss to net cash used in operating activities:
Stock-based compensation		9,249,462			507,933			9,757,395
Changes in operating assets and liabilities:
Accounts payable and accrued liabilities	$	(187,796	)	$	345,000		$	157,204
Net Cash Used in Operating Activities	$	(13,367,980	)	$	-		$	(13,367,980	)

CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS

	Three months ended September 30, 2023
	As Reported			Adjustments			As Corrected
Operating expenses
General and administrative	$	2,948,846		$	105,152		$	3,053,998
Research and development		2,155,314			1,458,538			3,613,852
Exploration		1,279,782			70,138			1,349,920
Total operating expenses		6,383,942			1,633,827			8,017,769
Net loss before other income (expense)	$	(6,383,942	)	$	(1,633,827	)	$	(8,017,769	)
Other income (expense)
Amortization of financing costs	$	(706,731	)	$	(26,165	)	$	(732,896	)
Total other income (expense)		(848,043	)		(26,165	)		(874,208	)
Net loss attributable to common stockholders	$	(7,231,985	)	$	(1,659,992	)	$	(8,891,977	)
Net loss per share, basic and diluted	$	(0.16	)	$	(0.03	)	$	(0.19	)

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

	Three months ended September 30, 2023
	As Reported			Adjustments			As Corrected
Stockholders’ Equity
Additional Paid-In Capital:
Balance, June 30, 2023	$	222,626,865		$	(325,494	)	$	222,301,371
Stock-based compensation expense		1,921,442			981,396			2,902,838
Balance, September 30, 2023	$	226,317,285		$	655,903		$	226,973,188
Accumulated Deficit
Balance, June 30, 2023	$	(159,973,575	)	$	(852,933	)	$	(160,826,508	)
Net loss for period		(7,231,985	)		(1,659,992	)		(8,891,977	)
Balance, September 30, 2023	$	(167,205,560	)	$	(2,512,926	)	$	(169,718,486	)

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

		Three months ended September 30, 2023
		As Reported			Adjustments			As Corrected
Operating Activities
Net loss attributable to stockholders	$	(7,231,985	)	$	(1,659,992	)	$	(8,891,977	)
Adjustments to reconcile net loss to net cash used in operating activities:
Accretion expense	$	256,459		$	26,165		$	282,624
Stock-based compensation		1,921,442			1,447,827			3,369,269
Changes in operating assets and liabilities:
Accounts payable and accrued liabilities	$	228,071		$	186,000		$	414,071
Net Cash Used in Operating Activities	$	(4,758,984	)	$	-		$	(4,758,984	)

AMERICAN BATTERY TECHNOLOGY COMPANY

Notes to the Condensed Consolidated Financial Statements

For the period ended March 31, 2024

(unaudited)

CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS

	Three months ended December 31, 2023
	As Reported			Adjustments			As Corrected
Operating expenses
General and administrative	$	4,310,452		$	106,264		$	4,416,716
Research and development		3,148,873			420,294			3,569,167
Exploration costs		771,523			51,902			823,425
Total operating expenses		8,230,848			578,459			8,809,307
Net loss before other income (expense)	$	(8,230,848	)	$	(578,459	)	$	(8,809,307	)
Other income (expense)
Amortization and accretion of financing costs	$	(1,053,766	)	$	(78,492	)	$	(1,132,258	)
Change in fair value of derivative liability		-			(229,473	)		(229,473	)
Total other income (expense)		(1,060,587	)		(307,965	)		(1,368,552	)
Net loss	$	(9,291,435	)	$	(886,424	)	$	(10,177,859	)
Net loss per share, basic and diluted	$	(0.19	)	$	(0.02	)	$	(0.21	)

CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS

	Six months ended December 31, 2023
	As Reported			Adjustments			As Corrected
Operating expenses
General and administrative	$	7,259,298		$	211,415		$	7,470,713
Research and development		5,304,187			1,878,831			7,183,018
Exploration costs		2,051,305			122,040			2,173,345
Total operating expenses		14,614,790			2,212,286			16,827,076
Net loss before other income (expense)	$	(14,614,790	)	$	(2,212,286	)	$	(16,827,076	)
Other income (expense)
Amortization and accretion of financing costs	$	(1,760,497	)	$	(104,657	)	$	(1,865,154	)
Change in fair value of derivative liability		-			(229,473	)		(229,473	)
Total other income (expense)		(1,908,630	)		(334,130	)		(2,242,760	)
Net loss	$	(16,523,420	)	$	(2,546,416	)	$	(19,069,836	)
Net loss per share, basic and diluted	$	(0.35	)	$	(0.05	)	$	(0.40	)

AMERICAN BATTERY TECHNOLOGY COMPANY

Notes to the Condensed Consolidated Financial Statements

For the period ended March 31, 2024

(unaudited)

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

	Three months ended December 31, 2023
		As Reported			Adjustments			As Corrected
Stockholders’ Equity
Additional Paid-In Capital:
Balance, September 30, 2023	$	226,317,285		$	655,903		$	226,973,188
Stock-based compensation expense		3,836,466			146,877			3,983,343
Balance, December 31, 2023	$	243,020,935		$	802,779		$	243,823,714
Accumulated Deficit
Balance, September 30, 2023	$	(167,205,560	)	$	(2,512,926	)	$	(169,718,486
Net loss for period		(9,291,435	)		(886,424	)		(10,177,859	)
Balance, December 31, 2023	$	(176,496,995	)	$	(3,399,350	)	$	(179,896,345	)

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

	Six months ended December 31, 2023
	As Reported			Adjustments			As Corrected
Stockholders’ Equity
Additional Paid-In Capital:
Balance, June 30, 2023	$	222,626,865		$	(325,494	)	$	222,301,371
Stock-based compensation expense		5,757,908			1,128,273			6,886,181
Balance, December 31, 2023	$	243,020,935		$	802,779		$	243,823,714
Accumulated Deficit
Balance, June 30, 2023	$	(159,973,575	)	$	(852,933	)	$	(160,826,508	)
Net loss for period		(16,523,420	)		(2,546,416	)		(19,069,836	)
Balance, December 31, 2023	$	(176,496,995	)	$	(3,399,350	)	$	(179,896,345	)

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

	Six months ended December 31, 2023
	As Reported			Adjustments			As Corrected
Operating Activities
Net loss attributable to stockholders	$	(16,523,420	)	$	(2,546,416	)	$	(19,069,836	)
Adjustments to reconcile net loss to net cash used in operating activities:
Accretion of financing costs	$	1,760,497		$	104,657		$	1,865,154
Stock-based compensation		5,757,908			1,933,603			7,691,511
Shares issued for professional services		(132)			(316	)		(448	)
Change in fair value of derivative liability		-			229,473			229,473
Changes in operating assets and liabilities:
Accounts payable and accrued liabilities	$	2,223,865		$	279,000		$	2,502,865
Net Cash Used in Operating Activities	$	(7,418,700	)	$	-		$	(7,418,700	)

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, valuation and recoverability of long-lived assets and intangible assets subject to impairment testing, 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.

AMERICAN BATTERY TECHNOLOGY COMPANY

Notes to the Condensed Consolidated Financial Statements

For the period ended March 31, 2024

(unaudited)

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 ASC 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 buildings, vehicles, equipment, and land. Buildings, vehicles, and equipment are depreciated on a straight-line basis over their estimated value lives ranging between three and thirty years.

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. Any impairment in value is recognized as an expense in the period when the impairment occurs. No impairment charges were recorded in the three or nine months ended March 31, 2024.

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 consist of water rights 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. Annually, or when there is a triggering event, the Company first performs a qualitative assessment by evaluating all relevant events and circumstances to determine if it is more likely than not that the indefinite-lived intangible assets are impaired; this includes considering any potential effect on significant inputs to determining the fair value of the indefinite-lived intangible assets. When it is more likely than not that an indefinite-lived intangible asset is impaired, then the Company calculates the fair value of the intangible asset and performs a quantitative impairment test. No impairment charges were recorded in the three or nine months ended March 31, 2024.

AMERICAN BATTERY TECHNOLOGY COMPANY

Notes to the Condensed Consolidated Financial Statements

For the period ended March 31, 2024

(unaudited)

2. Summary of Significant Accounting Policies (continued)

f) Loss per Share

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) attributable to common stockholders (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. At March 31, 2024, the Company had 10,581,138 potentially dilutive shares outstanding, consisting of 1,355,853 from convertible notes, 5,757,894 from warrants and 3,467,391 from share awards outstanding. As the Company has reported losses for all periods presented, all potentially dilutive securities are anti-dilutive, and accordingly, basic net loss per share equaled diluted net loss per share.

g) Stock-based Compensation

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. Compensation in the form of warrants is limited to executives, and recorded as a liability until the warrant is exercised or expires. Executives may also receive compensation in the form of RSUs that are recorded as a liability until the award is settled in shares of common stock. The liability classification of these awards is based on the total value of the award granted at a fixed value but settled in a variable number of warrants or RSUs until the milestones are achieved and the warrants or RSUs are issued.

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 on a prospective basis. 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 March 31, 2024 and 2023, the Company has not capitalized any such mineral property costs.

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 Accounting Standards Update (“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. As the federal grants receivable are not deemed to have any significant realization risk, the Company believes this best reflects the expected net expenditures associated with these programs.

AMERICAN BATTERY TECHNOLOGY COMPANY

Notes to the Condensed Consolidated Financial Statements

For the period ended March 31, 2024

(unaudited)

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 determines 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.

The Company has elected not to recognize ROU assets and lease liabilities for short-term leases that have a lease term of 12 months or less. The Company recognizes the lease payments associated with its short-term office space leases as an expense on a straight-line basis over the lease term. Variable lease payments associated with these leases are recognized and presented in the same manner as for all other Company leases.

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-forwards.

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, the likelihood of deferred tax assets being realized does not meet the more likely than not assessment guidelines. Accordingly, a valuation allowance equal to the deferred tax asset has been recorded at March 31, 2024 and June 30, 2023.

l) Accounting Pronouncements

In November 2023, the FASB issued ASU 2023-07, “Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures.” The amendment in this update expands segment disclosures by requiring disclosures about significant segment expenses that are regularly provided to the chief operating decision maker and included within each reported measure of segment profit or loss, an amount and description of its composition for other segment items, and interim disclosures of a reportable segment’s profit or loss and assets. This update is effective for our annual report for fiscal year 2025, for interim period reporting beginning in fiscal year 2026, with early adoption permitted, and will be applied retrospectively to all prior periods presented in the financial statements. We are currently evaluating the timing of adoption and the impact of this ASU on our Consolidated Financial Statements and related disclosures.

AMERICAN BATTERY TECHNOLOGY COMPANY

Notes to the Condensed Consolidated Financial Statements

For the period ended March 31, 2024

(unaudited)

In December 2023, the FASB issued ASU 2023-09, “Income Taxes (Topic 740): Improvement to Income Tax Disclosures.” The amendments further enhance income tax disclosures, primarily through standardization and disaggregation of rate reconciliation categories and income taxes paid by jurisdiction. This ASU is effective for our annual report for fiscal year 2026, with early adoption permitted, and should be applied either prospectively or retrospectively. We are currently evaluating the timing of adoption and impact of this ASU on our Consolidated Financial Statements and related disclosures.

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 earnings in the condensed consolidated statements of operations.

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, with the current portion reclassified to a short-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 condensed consolidated balance sheets. The debt discount, 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 condensed consolidated statements of operations.

o) Inventory

Inventory is stated at the lower of cost or market (net realizable value). The Company performs an assessment of the recoverability of capitalized inventory during each reporting period and writes down any excess and obsolete inventories to their net realizable value in the period in which the impairment is first identified.

p) Cash and Cash Equivalents

The Company considers all short-term investments with an original maturity of three months or less when purchased to be cash equivalents. The Company did not have any cash equivalents as of March 31, 2024 and June 30, 2023.

q) Fair Value of Financial Instruments

The fair value of the Company’s assets and liabilities, which qualify as financial instruments under the ASC 820, “Fair Value Measurements,” equals or approximates the carrying amounts represented in the condensed consolidated balance sheets.

r) Other Current Assets

Other Current Assets are comprised of payroll tax credits related to research and development activities per IRS form 6765.

s) Accrued Claims and Contingencies

The Company is subject to various claims and contingencies related to lawsuits. A liability is recorded for claims, legal costs or other contingencies when the risk of loss is probable and reasonable estimable. The required reserves may change due to new developments in each period.

AMERICAN BATTERY TECHNOLOGY COMPANY

Notes to the Condensed Consolidated Financial Statements

For the period ended March 31, 2024

(unaudited)