AMERICAN BATTERY TECHNOLOGY Co 10-Q for FY2022 Q2
AMERICAN BATTERY TECHNOLOGY Co (ABAT)
About this 10-Q
AMERICAN BATTERY TECHNOLOGY Co filed this 10-Q on February 14, 2022, covering the quarter ended December 31, 2021 (FY2022 Q2).
Headline figures
Quarter ended December 31, 2021, as reported in this filing, compared with the same period a year earlier where the filing states it.
- Net loss
- $4.09M
- compared with a net loss of $28.04M a year earlier
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
| QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For
the quarter period ended
| TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE EXCHANGE ACT OF 1934 |
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)
(Registrant’s telephone number)
(Former name, former address and former fiscal year, if changed since last report)
Securities registered pursuant to Section 12(b) of the Act: None
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 period 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 period 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 definition of “large-accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” Rule 12b-2 of the Exchange Act.
| ☐ | Large-accelerated filer | ☐ | Accelerated filer | |
| ☒ | Smaller reporting company | |||
| Emerging growth company |
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided 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
☐
The number of shares of the Registrant’s common stock, par value $0.001 per share, outstanding as of February 14, 2022 were .
AMERICAN BATTERY TECHNOLOGY COMPANY
Table of Contents
| 2 |
PART I – FINANCIAL STATEMENTS
ITEM 1. FINANCIAL STATEMENTS
The accompanying unaudited condensed consolidated financial statements 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 December 31, 2021 are not necessarily indicative of the results that can be expected for the year ending June 30, 2022.
| 3 |
AMERICAN BATTERY TECHNOLOGY COMPANY
Condensed Consolidated Balance Sheets
(unaudited)
December 31, 2021 $ | June 30, 2021 $ | |||||||
| ASSETS | ||||||||
| Current assets | ||||||||
| Cash | $ | $ | ||||||
| Prepaid expenses and deposits | ||||||||
| Total current assets | ||||||||
| Property and equipment (Note 3) | ||||||||
| Intangible assets (Note 4) | ||||||||
| Right-of-use asset | ||||||||
| Total assets | $ | $ | ||||||
| LIABILITIES | ||||||||
| Current liabilities | ||||||||
| Accounts payable and accrued liabilities | $ | $ | ||||||
| Due to related parties (Note 5) | ||||||||
| Total current liabilities | ||||||||
| Long-term liabilities | ||||||||
| Total liabilities | ||||||||
| Contingencies (Note 10) | ||||||||
| STOCKHOLDERS’ EQUITY | ||||||||
| Series A Preferred Stock Authorized: preferred shares, par value of $per share Issued and outstanding: preferred shares, as of December 31, 2021 and June 30, 2021 | ||||||||
| Series B Preferred Stock Authorized: preferred shares, par value of $per share Issued and outstanding: preferred shares as of December 31 and June 30, 2021 | ||||||||
| Series C Preferred Stock Authorized: preferred shares, par value of $per share Issued and outstanding: and preferred shares as of December 31, and June 30, 2021, respectively | ||||||||
| Preferred Stock | ||||||||
| Common Stock Authorized: common shares, par value of $per share Issued and outstanding: and common shares as of December 31 and June 30, 2021, 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 unaudited financial statements)
| 4 |
AMERICAN BATTERY TECHNOLOGY COMPANY
Condensed Consolidated Statements of Operations
(unaudited)
Three-months
ended $ | Three-months
ended $ | Six
months ended $ | Six
months ended $ | |||||||||||||
| Operating expenses | ||||||||||||||||
| Exploration costs | $ | $ | $ | $ | ||||||||||||
| General and administrative | ||||||||||||||||
| Total operating expenses | ||||||||||||||||
| Net loss before other income (expense) | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Other income (expense) | ||||||||||||||||
| Accretion and interest expense | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Financing costs | ( | ) | ( | ) | ||||||||||||
| Change in fair value of derivative liability (Note 7) | ( | ) | ( | ) | ||||||||||||
| Gain on settlement of debt | ||||||||||||||||
| Other income (expense) | ||||||||||||||||
| Total other income (expense) | ( | ) | ( | ) | ||||||||||||
| Net loss attributable to stockholders | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||
| Net loss per share, basic and diluted | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||
| Weighted average shares outstanding | ||||||||||||||||
(The accompanying notes are an integral part of these condensed consolidated unaudited financial statements)
| 5 |
AMERICAN BATTERY TECHNOLOGY COMPANY
Condensed Consolidated Statement of Stockholders’ Equity (Deficit)
(unaudited)
| Series A | Series C | Additional | ||||||||||||||||||||||||||||||||||||||
| P.
Shares Number | Par Amount | P.
Shares Number | Par Amount | C.
Shares Number | Par Amount | Paid-In Capital | C.
Stock Issuable | Accumulated Deficit | Total | |||||||||||||||||||||||||||||||
| Balance September 30, 2021 | ( | ) | ||||||||||||||||||||||||||||||||||||||
| Shares issued for services | - | - | ||||||||||||||||||||||||||||||||||||||
| Shares issued for exercise of warrants, shares | ||||||||||||||||||||||||||||||||||||||||
| Shares issued from private placement, net of issuance cost, shares | ||||||||||||||||||||||||||||||||||||||||
| Shares issued pursuant to note conversion | ||||||||||||||||||||||||||||||||||||||||
| Shares issued pursuant to note conversion, shares | ||||||||||||||||||||||||||||||||||||||||
| Share subscriptions received | ||||||||||||||||||||||||||||||||||||||||
| Share subscriptions received, shares | ||||||||||||||||||||||||||||||||||||||||
| Shares issued pursuant to Series C preferred shares conversion | - | ( | ) | ( | ) | |||||||||||||||||||||||||||||||||||
| Shares issued pursuant to share purchase agreement, shares | ||||||||||||||||||||||||||||||||||||||||
| Dividends declared | - | - | - | ( | ) | ( | ) | |||||||||||||||||||||||||||||||||
| Net loss for the period | - | - | - | ( | ) | ( | ) | |||||||||||||||||||||||||||||||||
| Balance, December 31, 2021 | ( | ) | ||||||||||||||||||||||||||||||||||||||
| Series A | Series C | Additional | ||||||||||||||||||||||||||||||||||||||
| P.
Shares Number | Par Amount | P.
Shares Number | Par Amount | C.
Shares Number | Par Amount | Paid-In Capital | C.
Stock Issuable | Accumulated Deficit | Total | |||||||||||||||||||||||||||||||
| Balance, September 30, 2020 | ( | ) | ( | ) | ||||||||||||||||||||||||||||||||||||
| Shares issued for services | - | |||||||||||||||||||||||||||||||||||||||
| Shares issued for exercise of warrants | - | - | ( | ) | ||||||||||||||||||||||||||||||||||||
| Shares issued from private placement, net of issuance costs | - | - | ( | ) | ||||||||||||||||||||||||||||||||||||
| Shares issued pursuant to note conversion | - | |||||||||||||||||||||||||||||||||||||||
| Share subscriptions received | - | - | ( | ) | ||||||||||||||||||||||||||||||||||||
| Dividends declared | - | - | - | ( | ) | ( | ) | |||||||||||||||||||||||||||||||||
| Net loss for the period, | - | - | - | ( | ) | ( | ) | |||||||||||||||||||||||||||||||||
| Balance, December 31, 2020 | ( | ) | ( | ) | ||||||||||||||||||||||||||||||||||||
| Series A | Series C | Additional | ||||||||||||||||||||||||||||||||||||||
| P.
Shares Number | Par Amount | P.
Shares Number | Par Amount | C.
Shares Number | Par Amount | Paid-In Capital | C.
Stock Issuable | Accumulated Deficit | Total | |||||||||||||||||||||||||||||||
| Balance, June 30, 2021 | ( | ) | ||||||||||||||||||||||||||||||||||||||
| Shares issued for services | - | - | ||||||||||||||||||||||||||||||||||||||
| Shares issued for exercise of warrants | - | - | ( | ) | ||||||||||||||||||||||||||||||||||||
| Shares issued from private placement, net of issuance costs | - | - | ||||||||||||||||||||||||||||||||||||||
| Shares issued pursuant to Series C preferred shares conversion | - | ( | ) | ( | ) | |||||||||||||||||||||||||||||||||||
| Shares issued pursuant to share purchase agreement | - | - | ||||||||||||||||||||||||||||||||||||||
| Dividends declared | - | - | - | ( | ) | ( | ) | |||||||||||||||||||||||||||||||||
| Net loss for the period | - | - | - | ( | ) | ( | ) | |||||||||||||||||||||||||||||||||
| Balance, December 31, 2021 | ( | ) | ||||||||||||||||||||||||||||||||||||||
| Series A | Series C | Additional | ||||||||||||||||||||||||||||||||||||||
| P.
Shares Number | Par Amount | P.
Shares Number | Par Amount | C.
Shares Number | Par Amount | Paid-In Capital | C.
Stock Issuable | Accumulated Deficit | Total | |||||||||||||||||||||||||||||||
| Balance, June 30, 2020 | ( | ) | ( | ) | ||||||||||||||||||||||||||||||||||||
| Shares issued for services | ||||||||||||||||||||||||||||||||||||||||
| Shares issued for exercise of warrants | - | ( | ) | |||||||||||||||||||||||||||||||||||||
| Shares issued from private placement, net of issuance costs | - | ( | ) | |||||||||||||||||||||||||||||||||||||
| Shares issued pursuant to note conversion | - | |||||||||||||||||||||||||||||||||||||||
| Share subscriptions received | - | |||||||||||||||||||||||||||||||||||||||
| Dividends declared | - | ( | ) | ( | ) | |||||||||||||||||||||||||||||||||||
| Net loss for the period, | - | - | - | ( | ) | ( | ) | |||||||||||||||||||||||||||||||||
| Balance, December 31, 2020 | ( | ) | ( | ) | ||||||||||||||||||||||||||||||||||||
(The accompanying notes are an integral part of these condensed consolidated unaudited financial statements)
| 6 |
AMERICAN BATTERY TECHNOLOGY COMPANY
Condensed Consolidated Statements of Cash Flows
(unaudited)
Six-months
ended | Six-months
ended | |||||||
| Operating Activities | ||||||||
| Net loss, attributable to common stockholders | $ | ( | ) | $ | ( | ) | ||
| Adjustments to reconcile net loss to net cash used in operating activities: | ||||||||
| Accretion expense | ||||||||
| Change in fair value of derivative liability | ||||||||
| Depreciation expense | ||||||||
| Right-of-use asset amortization | ||||||||
| Net change in operating lease liability | ( | ) | ||||||
| Discount on convertible notes payable | ||||||||
| Gain on settlement of debt | ( | ) | ||||||
| Shares issued for services | ||||||||
| Warrants issued | | |||||||
| Loss on impairment | ||||||||
| Changes in operating assets and liabilities: | ||||||||
| Prepaid expenses and deposits | ( | ) | ||||||
| Accounts payable and accrued liabilities | ||||||||
| Due to related parties | ( | ) | ||||||
| Net Cash Used In Operating Activities | ( | ) | ( | ) | ||||
| Investing Activities | ||||||||
| Acquisition of property and equipment | ( | ) | ( | ) | ||||
| Purchase of water rights | ( | ) | ( | ) | ||||
| Net Cash Used In Investing Activities | ( | ) | ( | ) | ||||
| Financing Activities | ||||||||
| Proceeds from issuance of convertible notes payable | ||||||||
| Repayment of convertible note payable | ( | ) | ||||||
| Proceeds from exercise of share purchase warrants | ||||||||
| Proceeds from issuance of common shares | ||||||||
| Share issuance costs | ( | ) | ||||||
| Net Cash Provided By Financing Activities | ||||||||
| Change in Cash | ( | ) | ||||||
| Cash – Beginning | ||||||||
| Cash – End | $ | $ | ||||||
| Supplemental disclosures | ||||||||
| Interest paid | ||||||||
| Non-cash investing and financing activities | ||||||||
| Building construction costs | ||||||||
| Discount on convertible debt | ||||||||
| Original issuance discount on convertible debt | ||||||||
| Beneficial conversion feature on convertible debt | ||||||||
| Common shares issued for conversion of debt | ||||||||
| Preferred shares issued for conversion of debt | ||||||||
| Common shares issued for conversion of preferred shares | ||||||||
| Fair value of commission warrants issued | ||||||||
| Dividends payable | ||||||||
(The accompanying notes are an integral part of these condensed consolidated unaudited financial statements)
| 7 |
AMERICAN BATTERY TECHNOLOGY COMPANY
Notes to the Condensed Consolidated Financial Statements
For the period ended December 31, 2021
(unaudited)
1. Organization and Nature of Operations
American Battery Technology Company (“ABTC”) is a startup company 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 ABTC 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 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 six months ended December 31, 2021, the Company incurred a net loss of $
On
September 27, 2021, the Company secured net proceeds of $
These condensed consolidated financial statements do not include any adjustments to the recoverability and classification of recorded asset amounts and classification of liabilities that might be necessary should the Company be unable to continue as a going concern.
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 and related notes are presented in accordance with accounting principles generally accepted in the United States and are expressed in U.S. dollars. These condensed consolidated financial statements include the accounts of the Company and its wholly owned subsidiaries, Oroplata Exploraciones E Ingenieria SRL (inactive) and LithiumOre Corporation (formerly Lithortech Resources Inc) and ABTC AG, LLC. All inter-company accounts and transactions have been eliminated upon consolidation.
(b) Interim Financial Statements
These condensed consolidated financial statements have been prepared on the same basis as the annual consolidated financial statements and in the opinion of management, reflect all adjustments, which include only normal recurring adjustments, necessary to present fairly the Company’s financial position, results of operations and cash flows for the periods shown. The results of operations for such periods are not necessarily indicative of the results expected for a full year or for any future period.
(c) Use of Estimates
The preparation of these condensed 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 period. 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 will be affected.
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 convertible shares. Diluted EPS excludes all dilutive potential shares if their effect is anti-dilutive. At December 31, 2021, the Company had share purchase warrants outstanding and Series C Preferred Stock convertible to common shares that are both potentially dilutive in nature.
(e) Recent Accounting Pronouncements
In August 2020, the FASB issued ASU No. 2020-06, Debt—Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging - Contracts in Entity’s Own Equity (Subtopic 815-40), which simplifies the accounting for convertible instruments. The guidance removes certain accounting models that separate the embedded conversion features from the host contract for convertible instruments, requiring bifurcation only if the convertible debt feature qualifies as a derivative under ASC 815 or for convertible debt issued at a substantial premium. The ASU is effective for annual reporting periods beginning after December 15, 2021, including interim reporting periods within those annual periods, with early adoption permitted no earlier than the fiscal year beginning after December 15, 2020. The Company is currently evaluating the timing and method of adoption and the related impact of the new guidance on the earnings per share and on its financial statements.
3. Property and Equipment
Schedule of Property and Equipment
| Building | Equipment | Vehicles | Land | Total | ||||||||||||||||
| Cost: | ||||||||||||||||||||
| Balance, June 30, 2021 | ||||||||||||||||||||
| Additions | ||||||||||||||||||||
| Impairment loss | ( | ) | ( | ) | ||||||||||||||||
| Balance, December 31, 2021 | ||||||||||||||||||||
| Accumulated Depreciation | ||||||||||||||||||||
| Balance, June 30, 2021 | ||||||||||||||||||||
| Additions | ||||||||||||||||||||
| Balance, December 31, 2021 | ||||||||||||||||||||
| Carrying Amounts: | ||||||||||||||||||||
| Balance, June 30, 2021 | ||||||||||||||||||||
| Balance, December 31, 2021 | ||||||||||||||||||||
| 8 |
AMERICAN BATTERY TECHNOLOGY COMPANY
Notes to the Condensed Consolidated Financial Statements
For the period ended December 31, 2021
(unaudited)
The
building is currently in construction and is not available for use. As of December 30, 2021, equipment deposits related to operations
of the Company whereby the equipment is not yet complete nor placed in service in the amount of $
The
Company has impaired the carrying value of land purchased February 2021 in Tonopah, NV. The Company adjusted the carrying value of the
land to that of the closing price stated in the agreement ($
4. Intangible Assets
Schedule of Intangible assets
Water
Rights | ||||
| Cost: | ||||
| Balance, June 30, 2021 | ||||
| Additions | ||||
| Impairment loss | ||||
| Balance, December 31, 2021 | ||||
During
the six months ended December 31, 2021, the Company purchased
5. Related Party Transactions
As
of December 31, 2021, the Company owes $
During
the six months ended December 31, 2021, the Company issued common
shares pursuant to the conversion of Series
C Preferred Shares to a company in which a director of the Company has a minority equity interest of
6. 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 as of December 31, 2021.
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 8.0% for the period ending December 31, 2021 based on historical lending agreements. ROU assets include any lease payments required to be made prior to commencement and exclude lease incentives. Both ROU assets and lease liabilities exclude variable payments not based on an index or rate, which are treated as period costs. The Company’s lease agreements do not contain significant residual value guarantees, restrictions, or covenants.
The
Company occupies office facilities under lease agreements that expire at various dates. The Company does not have any significant finance
leases. Total operating lease costs for the six months ended December 31, 2021 were $
As of December 31, 2021, short term lease liabilities of $71,286 are included in “Accounts payable and accrued expenses” on the consolidated balance sheets. The table below presents total operating lease ROU assets and lease liabilities at:
Schedule of Total Operating Lease ROU Assets and Lease Liabilities
December
31, $ | June 30, 2021 $ | |||||||
| Operating lease right-of-use asset | ||||||||
| Operating lease liabilities | ||||||||
The table below presents the maturities of operating lease liabilities as of December 31, 2021:
Schedule of Maturity of Operating Lease Liabilities
December
31, $ | ||||
| 2022 | ||||
| 2023 | ||||
| 2024 | ||||
| Total lease payments | ||||
| Less: discount | ( | ) | ||
| Total operating lease liabilities | ||||
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 assets:
Schedule of Weighted Average Remaining Lease Term For Operating Leases and Weighted Average Discount Rate
Six
Months Ended $ | ||||
| Weighted average lease term (years) | ||||
| Weighted average discount rate | % | |||
7. Derivative Liabilities
The Company records the fair value of the conversion option of convertible debentures in accordance with ASC 815, Derivatives and Hedging. The fair value of the derivatives was calculated using a multi-nominal lattice model. The fair value of the derivative liabilities is revalued on each balance sheet date with corresponding gains and losses recorded in the condensed consolidated statements of operations.
For
the six months ended December 31, 2021, the Company did not record an expense associated with the change in fair market value of derivatives
because the Company had no derivative liability at December 31, 2021 and June 30, 2021. For the six months ended December 31,
2020, the Company recognized an expense related to the change in fair value of derivative liabilities of $
| 9 |
AMERICAN BATTERY TECHNOLOGY COMPANY
Notes to the Condensed Consolidated Financial Statements
For the period ended December 31, 2021
(unaudited)
8. Stockholders’ Equity
The Company’s authorized common stock consists of shares of common stock, with par value of $.
Series A Preferred Stock
The
Company has shares of Series A Preferred Stock authorized
and outstanding with a par value of $as of December 31 and June 30, 2021.
Series B Preferred Stock
As of December 31 and June 30, 2021, shares authorized with a par value of $, shares issued.
Series C Preferred Stock
On
December 18, 2020, the Company issued
In
addition, on December 18, 2020, the Company issued 8 units of Series C Preferred Stock ( shares of Series C preferred stock) with
a fair value of $
During
the six months ended December 31, 2021, the Series C Preferred Stockholders converted shares of Series C Preferred Stock (par value
of $
Common Stock
Six Months Ended December 31, 2021
During the period, the Company issued common shares pursuant to the conversion of shares of Series C Preferred Stock at a conversion ratio of shares of common stock for each share of Series C Preferred Stock.
During
the period, the Company issued units for proceeds of $
During
the period, the Company issued common shares pursuant the exercise of
During
the period, the Company issued common shares pursuant the Share Purchase Agreement, effective April 2, 2021, for aggregate
proceeds of $
During the six months ended December
31, 2021, the Company issued common shares for services with a fair value of $
| 10 |
AMERICAN BATTERY TECHNOLOGY COMPANY
Notes to the Condensed Consolidated Financial Statements
For the period ended December 31, 2021
(unaudited)
Common Stock (Continued)
Six Months ended December 31, 2020
During
the period, the Company issued common shares for services with a fair value of $
During
the period, the Company issued common shares with a fair value of $
On
October 6, 2020, the Company entered into a Purchase Agreement (the “Agreement”) with Tysadco Partners LLC, a Delaware limited
company (“Tysadco”). Pursuant to the Agreement, The Company shall have the right, but not the obligation, to direct Tysadco to buy the lesser of $in
common stock per sale or 200% of the average shares traded for the 10 days prior to the closing request date, at a purchase price of
85% of the of the two lowest individual daily VWAPs during the five (5) trading days commencing on the first trading day following delivery
and clearing of the delivered shares, with a minimum request of $25,000. During the six months ended December
31, 2020, the Company issued common shares for proceeds of $
During
the period, the Company issued
During the period, the Company issued common shares for the exercise of cashless warrants.
Schedule of Share Purchase Warrants Activity
| 2021 | ||||||||
| Number of warrants | Weighted average exercise price | |||||||
| Balance, June 30 | ||||||||
| Issued | ||||||||
| Exercised | ( | ) | ||||||
| Expired | ||||||||
| Balance, December 31 | ||||||||
| 11 |
AMERICAN BATTERY TECHNOLOGY COMPANY
Notes to the Condensed Consolidated Financial Statements
For the period ended December 31, 2021
(unaudited)
Schedule of Additional Information Regarding Share Purchase Warrants
| 2021 | ||||||
| Outstanding and exercisable | ||||||
| Range of Exercise Prices | Number of Warrants | Weighted Average Remaining Contractual Life (years) | ||||
The Company has established a restricted share unit (RSU) incentive plan for executives, directors, and certain employees. Awards generally vest over a -year period at a rate of % per annum commencing on the first anniversary of the grant date.
During the three months ended September 30, 2021, the Company contracted restricted share units to two employees of the Company, including an officer of the Company. During the three months ended December 31, 2021, the identical employees amended their employee contracts to have these share unit agreements reverted back to the Company. Share-based compensation expense was originally recorded during the three months ended September 30, 2021, however, the expense has been reversed during the three months ended December 31, 2021. share-based compensation during the six months ended December 31, 2020.
11. 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. Management is currently not aware of any such legal proceedings or claims that could have, individually or in the aggregate, a material adverse effect on our business, financial condition, or operating results.
12. Subsequent Events
On January 27, 2022, the Company redeemed all outstanding shares of Series A Preferred Stock.
On
January 27, 2022, the Company issued shares from the cashless exercise of
On February 2, 2022 the Company issued a Mandatory Conversion Notice to the remaining Series C Preferred stockholders. The notice converts all outstanding shares of Series C Preferred Stock to common stock at an 80:1 conversion ratio. Common shares have been issued since October 1, 2021, with common shares being issued after December 31, 2021.
On
February 8, 2022 the Company issued $
The Company has evaluated subsequent events through the date the financial statements were available to be issued and has not identified any additional subsequent events requiring adjustments to, or disclosures in the accompanying condensed financial statements.
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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 financial statements and the notes thereto included elsewhere in the Form 10-Q. The following discussion contains forward-looking statements that reflect our plans, estimates and beliefs. Our actual results could differ materially from those discussed in the forward-looking statements. Factors that could cause or contribute to these differences include those discussed below and elsewhere in this Form 10-Q.
Background
The lithium-ion battery manufacturing supply chain is organized into four industries that operate in series: battery material manufacturers, material refiners, cell manufacturers, and end-use product (electric vehicle, stationary storage, consumer electronics, etc.) manufacturers. While the scale of manufacturing of lithium-ion battery cells and of electric vehicles and other end-use products have grown substantially within the US in recent years, there has been little domestic growth in the battery material manufacturing and material refining portions of the supply chain. This has led to an imbalance within the domestic US supply chain and has caused most of the cell manufacturing and end-use product manufacturers to rely on foreign supplies of their raw and refined feedstock materials. The situation is so dire that in its “Mineral Commodity Summaries 2021” report, the US Geological Survey estimated that less than 1% of each of these critical and strategic battery metals (lithium, nickel, cobalt, and manganese) produced globally in 2021 were produced within the US.
American Battery Technology Company (“ABTC”) is a technology development and commercialization company in the lithium-ion battery industry that is working to increase the domestic US production of these battery materials 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 for the recovery of battery metals. Through this three-pronged approach ABTC is working to both increase the domestic production of these battery metals, and to ensure that as these materials reach their end of lives that the constituent elemental metals are returned to the domestic manufacturing supply chain in a closed-loop fashion.
In order to implement this business strategy, the company is currently constructing its first integrated lithium-ion battery recycling facility, which will take in waste and end-of-life battery materials from the electric vehicle, stationary storage, and consumer electronics industries. The construction, commissioning, and operations 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. Correspondingly, while the company has traditionally enlisted the services of many external advisors and consultants, the company has conducted a thorough review and has ended service agreements that are not critical to the execution of this mission. The net impact of this increase in internal technical resources, and decrease in external consulting services, has resulted in an 80% decrease in total operating costs and a 90% reduction in the value of shares issued for services from the three months ended September 30, 2021 to the three months ended December 31, 2021.
Financial highlights:
| ● | Cash was $42.5 million as of December 31, 2021 | |
| ● | Cash provided by private placement for the six months ended December 31, 2021 was $36.9 million | |
| ● | Cash used for the acquisition of property, equipment and water rights for the six months ended December 31, 2021 were $7.2 million | |
| ● | Cash used in operations for the six months ended December 31, 2021 was $4.3 million, up 59% year-over-year | |
| ● | Total operating costs for the six months ended December 31, 2021 were $24.1 million, down 4% year-over-year | |
| ● | Total operating costs for the three months ended December 31, 2021 were $4.1 million, down 79% from the three months ended September 30, 2021 | |
| ● | Total value of shares issued for services for the three months ended December 31, 2021 were $1.7 million, down 90% from the three months ended September 30, 2021 |
Components of Statements of Operations
Expenses
Exploration costs consist of expenditures in the exploration of new primary resources of battery metals including drilling, travel and soil sampling costs.
General and administrative expenses consist of office expense, legal, salaries and benefits and laboratory costs. The Company has recognized non-cash expenses related to shares issued for professional services of $16.9 million during the three months ended September 30, 2021, and $1.8 million during the three months ended December 31, 2021. The Company has recognized non-cash expenses related to shares issued for professional services of $18.7 million during the six months ended December 31, 2021 compared to $22.6 million during the six months ended December 31, 2020.
During the six months ended December 31, 2021, the Company incurred $24.1 million of operating expenses compared to $25.0 million of operating expenses during the six months ended December 31, 2020.
The Company incurred other income of $35,635 during the six months ended December 31, 2021 compared to other expenses of $6.2 million during the six months ended December 31, 2020.
Net Loss
During the six months ended December 31, 2021, the Company incurred a net loss of $24.1 million or $0.04 loss per share compared to a net loss of $31.2 million or $0.07 loss per share during the six months ended December 31, 2020.
Liquidity and Capital Resources
At December 31, 2021, the Company had cash of $42.5 million and total assets of $60.2 million compared to cash of $12.8 million and total assets of $21.3 million at June 30, 2021. The increase in cash was due to the fact that the Company received net proceeds of $43.1 million from private placements and $0.3 million of proceeds from exercises of share purchase warrants. The increase in total assets was due to the increase in cash of $29.7 million and increase in property and equipment and intangible assets of $7.2 million relating to additional acquisitions of land and water rights which will be used for the Company’s future pilot plant operations.
The Company had total current liabilities of $4.7 million at December 31, 2021, compared to $1.8 million at June 30, 2021. The increase in current liabilities is due to an increase in accounts payable and accrued liabilities based on larger day-to-day operating expenditures and unbilled construction costs.
As of December 31, 2021, the Company had a working capital of $39.7 million compared to a working capital of $12.3 million at June 30, 2021. The increase in working capital was due to the settlement of outstanding convertible notes payable, and the extinguishment of the corresponding derivative liabilities associated with said convertible notes, with the issuance of common shares and payment of cash during the period. The increase in working capital was also attributed to the inflow of financing activity during the six months ended December 31, 2021.
Cash Flows
Cash from Operating Activities.
During the six months ended December 31, 2021, the Company used $4.3 million of cash for operating activities as compared to $2.7 million during the six months ended December 31, 2020. The increase in the use of cash for operating activities was due to an increase in operating activity in the current period including additional staff, legal costs, accounting costs and increased office expenses.
Cash from Investing Activities
During the six months ended December 31, 2021, the Company paid $7.2 million on expenditures related to the construction, procurement of equipment and water rights necessary to construct and commission the Pilot Plant. This is in comparison to the to acquisition costs of $0.9 million for the six months ended December 31, 2020. The increase in the investing activities is due to the fact that the Company continues to invest in the construction of its Pilot Plant where the necessary demonstrations will occur, as well as the continued acquisition of water rights and land in the Norther Nevada region to support further operations of the Company. The Company expects to see additional increases in investing activities as these projects progress to meet management expectations.
Cash from Financing Activities
During the six months ended December 31, 2021, the Company had net cash provided by financing activities of $41.2 million compared to $3.2 million for the six months ended December 31, 2020.
On September 27, 2021, the Company entered into a securities purchase agreement for the purchase and sale of an aggregate of 25,389,611 shares of the Company’s common stock and warrants to purchase an aggregate of up to 25,389,611 shares of common stock in a registered direct offering at a combined purchase price of $1.54 per share and warrant, for net proceeds to the Company of $36.9 million. The Warrants are immediately exercisable and may be exercised at any time until September 29, 2026, at an exercise price of $1.75 per share.
The Company engaged a placement agent to act as the Company’s placement agent in connection with the offering and agreed to pay the placement agent a cash fee of 5% of the gross proceeds the Company receives in the offering. In addition, the Company agreed to issue to the placement agent warrants to purchase shares equal to 5% of the gross proceeds sold under the securities purchase agreement or warrants to purchase up to an aggregate of 1,955,000 shares. The placement agent warrants generally will have the same terms as the investor warrants, except they will expire September 29, 2024, at an exercise price of $1.54.
On August 5, 2021, the Company elected to exercise its rights pursuant to the Purchase Agreement dated April 2, 2021, to issue 3,000,000 shares for net proceeds to the Company of $4.0 million.
In addition, the Company also received $0.3 million of proceeds from the exercise of share purchase warrants.
Off-Balance Sheet Arrangements
As of December 31, 2021, 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 expenditures or capital resources that are material to stockholders.
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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.
Based on our management’s evaluation (with the participation of the individuals serving as our principal executive officer and principal financial officer) of our disclosure controls and procedures as required by Rules 13a-15 and 15d-15 under the Exchange Act, each of the individuals serving as our principal executive officer and principal financial officer has concluded that our disclosure controls and procedures were not effective at the reasonable assurance level as of December 31, 2021, the end of the period covered by this report. . As set forth below, the Company is addressing the issues underlying this conclusion.
Management’s Report on Internal Control over Financial Reporting.
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 control 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 control 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, our management concluded that, as of December 31, 2021, our internal control over financial reporting was not effective based on those criteria due to material weaknesses in our internal control over financial reporting described below.
Material Weakness in Internal Control over Financial Reporting
We did not maintain adequate documentation evidencing the operating effectiveness of certain control activities and did not maintain proper levels of supervision and review of complex accounting matters. We did not maintain appropriate segregation of duties related to accounting processes.
The control deficiencies create a reasonable possibility that a material misstatement to the financial statements will not be prevented or detected on a timely basis, and there we concluded that the deficiencies represent material weaknesses in our internal control over financial reporting and our internal control over financial reporting was not effective as of December 31, 2021.
Remediation Plan
We continue to enhance our internal control over financial reporting to remediate the material weaknesses described above. We are committed to ensuring that our internal control over financial reporting is designed and operating effectively.
Our remediation process includes, but not limited to:
| ● | Successful hiring of additional personnel with the expertise necessary to improve the financial reporting function | |
| ● | Successful implementation of a more comprehensive ERP solution that include accounting modules that integrate internal controls into the accounting process | |
| ● | Providing guidance, education and training to employees relating to our accounting policies and procedures | |
| ● | Further developing and documenting detailed policies and procedures regarding business processes for significant accounts, critical accounting policies and critical accounting estimates | |
| ● | 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 expect to remediate these material weaknesses during fiscal 2022. However, we may discover additional material weaknesses that may require additional time and resources to remediate.
Attestation Report on Internal Control over Financial Reporting.
This Interim Report on Form 10-Q does not include an attestation report of our independent registered public accounting firm due to the deferral allowed for smaller reporting companies.
Changes in Internal Control over Financial Reporting
There was no change in our internal control over financial reporting that occurred during the period 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. Although we have altered some work routines due to the COVID-19 pandemic, the changes in our work environment, including remote work arrangements, have not materially impacted our internal controls over financial reporting and have not adversely affected the Company’s ability to maintain operations.
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PART II – OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
In January 2018, the Company filed a complaint in Nevada seeking the return or cancellation of 16 million common shares which the Company believes were fraudulently issued as well as claims against the former CEO of the Company, Craig Alford. As a result, the Company entered into agreements to cancel eleven million shares (of which ten million shares have already been cancelled). The remaining five million shares were cancelled and reissued after the Company determined that the recipients provided proper consideration for such shares. Alford has filed a counterclaim against the Company for amounts allegedly owed to him that the Company believes is entirely without merit. The litigation continues against Alford and certain other relief defendants but has been delayed due to Covid -19 restrictions.
On April 6, 2021, Alford served a complaint against the Company and its transfer agent, Action Stock Transfer, for failure to remove a restricted legend from 4,000,000 common shares held in Alford’s name and alleged damages to Alford for such failure. The complaint was filed in Utah state court. The Company responded with a motion to stay the proceedings until after the Nevada proceedings are completed. The motion was granted by the court to stay the proceedings until October 1, 2021. On September 15, 2021, the Company filed a motion to extend the stay in light of the continuance of the trial date of the November proceeding. The parties are in the process of negotiating a stipulation to extend the stay.
Other than the preceding, 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.
We are required by Section 78.090 of the Nevada Revised Statutes (the “NRS”) to maintain a registered agent in the State of Nevada. Our registered agent for this purpose is United Corporate Services, Inc., 2520 St Rose Pkwy Suite 319, Henderson, NV 89074. All legal process and any demand or notice authorized by law to be served upon us may be served upon our registered agent in the State of Nevada in the manner provided in NRS 14.020(2).
ITEM 1A. RISK FACTORS.
We are a smaller reporting company as defined by Rule 12b-2 of the Exchange Act and are not required to provide the information required under this item.
On March 11, 2020, the World Health Organization declared COVID-19 a global pandemic. This contagious disease outbreak and any related adverse public health developments, has adversely affected workforces, economies, and financial markets globally, leading to an economic downturn. The impact on the Company is not currently determinable, but management continues to monitor the situation.
ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
During the six months ended December 31, 2021, the Company issued 4,500,000 common shares pursuant the cash exercise of 4,750,000 share purchase warrants for proceeds of $337,500, of which 250,000 share purchase warrants, pursuant an aggregate cash exercise price of $18,750, exercised during the prior year ended June 30, 2021.
During the six months ended December 31, 2021, the Company issued 1,125,216 common shares for the cashless exercise of 1,250,000 share purchase warrants, of which 677,300 common shares pursuant to the cashless exercise of 800,000 share purchase warrants, exercised during the prior year ended June 30, 2021.
During the six months ended December 31, 2021, the Company issued 10,105,258 common shares for services with a fair value of $15,658,100, including 7,024,040 common shares with a fair value of $11,001,541 to officers and directors of the Company. As of December 31, 2021, the Company has 2,660,045 shares of common stock issuable for professional services with a fair value of $3,304,500 for professional services, of which 2,035,000 common shares with a fair value of $2,632,000 as compensation to board members of the Company.
The foregoing securities were issued under Section 4(a)(2) of the Securities Act of 1933, as amended, and/or Rule 506 of Regulation D under the Securities Act. In the case of the promissory notes, each investor represented that it was an accredited investor, as defined in Rule 501 of Regulation D, and that it was acquiring the securities for its own account, not as nominee or agent, and not with a view to the resale or distribution of any part thereof in violation of the Securities Act. Any proceeds issued from the above issuances were used for working capital purposes of the Company.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
None
ITEM 4. MINE SAFETY DISCLOSURE
Not Applicable
ITEM 5. OTHER INFORMATION
None
| 15 |
ITEM 6. EXHIBITS
(a) (3) Exhibits
The following exhibits are either provided with this Quarterly Report or are incorporated herein by reference:
| Exhibit | Description | Filed Herein | Incorporated Date | By Form |
Reference Exhibit | |||||
| 31.1 | Certification of Chief Executive Officer as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. | x | ||||||||
| 31.2 | Certification of Chief Financial Officer as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 | x | ||||||||
| 32.1 | Certification of Chief Executive Officer as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 | x | ||||||||
| 32.2 | Certification of Chief Financial Officer as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 | x | ||||||||
| 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 |
| 16 |
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
AMERICAN BATTERY TECHNOLOGY COMPANY (Registrant) | ||
| Date: February 14, 2022 | By: | /s/ Ryan Melsert |
| Ryan Melsert | ||
| Chief Executive Officer | ||
| Director | ||
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