10-Q 1 form10-q.htm
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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

FORM 10-Q

 

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 

For the quarter period ended March 31, 2023

 

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE EXCHANGE ACT OF 1934

 

Commission File number: 000-55088

 

AMERICAN BATTERY TECHNOLOGY COMPANY
(Exact name of registrant as specified in its charter)

 

Nevada   33-1227980

(State or other jurisdiction

of incorporation or organization)

  

(I.R.S. Employer

Identification No.)

 

100 Washington Street Suite 100, Reno, NV 89503

(Address of principal executive offices)

 

(775) 473-4744

(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. Yes ☒ No ☐

 

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). Yes ☒ No ☐

 

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
  ☒ Non-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 ☐ No ☒

 

The number of shares of the Registrant’s common stock, par value $0.001 per share, outstanding as of May 12, 2023, were 680,361,529.

 

 

 

 

 

 

AMERICAN BATTERY TECHNOLOGY COMPANY

Table of Contents

 

    Page Number
  PART I. FINANCIAL INFORMATION 3
     
ITEM 1. Financial Statements 3
     
  Condensed Consolidated Balance Sheets at March 31, 2023 (unaudited) and June 30, 2022 (audited) 4
     
  Condensed Consolidated Statements of Operations (unaudited) for the three and nine months ended March 31, 2023 and 2022 5
     
  Condensed Consolidated Statements of Stockholders’ Equity (unaudited) for the three and nine months ended March 31, 2023 and 2022 6
     
  Condensed Consolidated Statements of Cash Flows (unaudited) for the nine months ended March 31, 2023 and 2022 8
     
  Notes to the Condensed Consolidated Financial Statements (unaudited) 9
     
ITEM 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations 20
     
ITEM 3. Quantitative and Qualitative Disclosures about Market Risk 23
     
ITEM 4. Controls and Procedures 23
     
  PART II. OTHER INFORMATION 26
     
ITEM 1. Legal Proceedings 26
     
ITEM 1A. Risk Factors 26
     
ITEM 2. Unregistered Sales of Equity Securities and Use of Proceeds 26
     
ITEM 3. Defaults Upon Senior Securities 26
     
ITEM 4. Mine Safety Disclosure 26
     
ITEM 5. Other Information 27
     
ITEM 6. Exhibits 27
     
ITEM 7. Signatures 28

 

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 nine months ended March 31, 2023, are not necessarily indicative of the results that can be expected for the fiscal year ending June 30, 2023.

 

3

 

 

AMERICAN BATTERY TECHNOLOGY COMPANY

Condensed Consolidated Balance Sheets

 

   March 31, 2023
(Unaudited)		   June 30, 2022 
ASSETS          
Current assets          
           
Cash  $

12,581,014

   $28,989,166 
Investments   9,304    21,013 
Prepaid expenses and deposits   1,565,993    878,813 
Grant receivable   276,231    – 
Total current assets   14,432,542    29,888,992 
           
Other deposits (Note 3)   6,081,591      
Property and equipment, net (Note 4)   24,667,886    18,876,895 
Mining properties (Note 5)   8,157,362    – 
Intangible assets (Note 6)   3,851,899    3,851,899 
Right–of–use asset (Note 8)   168,416    244,203 
Total assets  $57,359,696   $52,861,989 
           
LIABILITIES & STOCKHOLDERS’ EQUITY          
           
Current liabilities          
           
Accounts payable and accrued liabilities  $3,337,164   $3,052,141 
Total current liabilities   3,337,164    3,052,141 
           
Long–term liabilities   86,030    175,789 
Total liabilities   3,423,194    3,227,930 
           
Commitments and contingencies (Note 12)   -     -  
           
STOCKHOLDERS’ EQUITY          
           
Series A Preferred Stock Authorized: 500,000 preferred shares, par value of $0.001 per share; Issued and outstanding: nil preferred shares   –    – 
           
Series B Preferred Stock Authorized: 2,000,000 preferred shares, par value of $0.001 per share; Issued and outstanding: and nil preferred shares   –    – 
           
Series C Preferred Stock
Authorized: 2,000,000 preferred shares, par value of $0.001 per share; Issued and outstanding: nil preferred shares		   –    – 
           
Common Stock Authorized: 1,200,000,000 common shares, par value of $0.001 per share; issued and outstanding: 668,983,091 and 644,138,631 common shares as of March 31, 2023 and June 30, 2022, respectively   668,984    644,139 
           
Additional paid–in capital   206,123,645    187,550,288 
Common stock issuable   18,686    75,000 
Accumulated deficit   (152,874,813)   (138,635,368)
           
Total stockholders’ equity   53,936,502    49,634,059 
           
Total liabilities and stockholders’ equity  $57,359,696   $52,861,989 

 

(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
March 31, 2023		   Three months ended
March 31, 2022		   Nine months ended
March 31, 2023		   Nine months ended
March 31, 2022		 
Operating expenses                    
                     
General and administrative  $3,538,541   $2,492,753   $9,445,776   $25,645,149 
Research and development   1,509,085    138,267    3,464,372    622,508 
Exploration costs   584,344    202,555    1,479,507    473,539 
Impairment and write-down costs   –    –    –    186,779 
                     
Total operating expenses   5,631,970    2,833,575    14,389,655    26,927,975 
                     
Net loss before other income (expense)   (5,631,970)   (2,833,575)   (14,389,655)   (26,927,975)
                     
Other income (expense)                    
                     
Accretion and interest expense   –    (5,962)   –    (10,102)
Gain on sale of mining claims        153,393    98,919    153,393 
Unrealized gain(loss) on investment   2,949    (5,376)   (11,709)   (5,376)
Other income   21,000    60,969    63,000    100,744 
                     
Total other income (expense)   23,949    203,024    150,210    238,659 
                     
Net loss attributable to stockholders  $(5,608,021)  $(2,630,551)  $(14,239,445)  $(26,689,316)
                     
Net loss per share, basic and diluted  $(0.01)  $(0.00)  $(0.02)  $(0.04)
                     
Weighted average shares outstanding   651,997,819    634,379,111    648,021,868    619,973,643 

 

(The accompanying notes are an integral part of these condensed consolidated unaudited financial statements)

 

5

 

 

AMERICAN BATTERY TECHNOLOGY COMPANY

Condensed Consolidated Statements of Stockholders’ Equity

(unaudited)

 

For the three months ended March 31, 2023

 

                                                             
    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 December 31, 2022                      –     $       –                      –     $          –       650,115,948     $ 650,116     $ 193,179,179     $ (646,177 )   $ (147,266,792 )   $ 45,916,326  
Shares issued for professional services     –       –       –       –       –       –       –       10,596       –       10,596  
Shares issued upon vesting     –       –       –       –       2,581,428       2,581       (2,581 )     –       –       –  
Stock–based compensation – employees     –       –       –       –       –       –       1,388,555               –       1,388,555  
Stock-based compensation – Officers & Directors     –       –       –       –       –       –       1,167,029       –       –       1,167,029  
Shares issued from Purchase Placement Agreement     –       –       –       –       2,000,000       2,000       1,548,399       654,267       –       2,204,666  
Shares issued from private placement, net of issuance costs     –       –       –       –       14,285,715       14,287       8,843,064       –       –       8,857,351  
Net loss for the period     –       –       –       –       –       –       –       –       (5,608,021 )     (5,608,021 )
Balance, March 31, 2023     –     $ –       –     $ –       668,983,091     $ 668,984     $ 206,123,645     $ 18,686     $ (152,874,813 )   $ 53,936,502  

 

For the three months ended March 31, 2022

 

   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, December 31, 2021       500,000    500          27,700    277,000    631,787,717    631,788    180,279,474    3,304,500    (129,154,171)   55,339,091 
Shares issued for services   -    -    -    -    4,023,470    4,023    4,675,820    (3,297,000)   -    1,382,843 
Cancellation of previously issued shares   -    -    -    -    (1,000,000)   (1,000)   (2,029,000)   -    -    (2,030,000)
Shares issued for exercise of warrants   -    -    -    -    8,668,150    8,668    591,332    -    -    600,000 
Shares issued pursuant to Series C preferred share conversion   -    -    (27,700)   (277,000)   2,216,000    2,216    274,784    -    -    - 
Redemption of Series A preferred shares   (500,000)   (500)   -    -    -    -    500    -    -    - 
Dividends declared   -    -    -    -    -    -    -    -    -    - 
Net loss for the period   -    -    -    -    -    -    -    -    (2,630,551)   (2,630,551)
Balance, March 31, 2022   -    -    -    -    645,695,337    645,695    183,792,910    7,500    (131,784,722)   52,661,383 

 

6

 

 

For the nine months ended March 31, 2023

 

   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, 2022   –   $–    –   $–    644,138,631   $644,139   $187,550,288   $75,000   $(138,635,368)  $49,634,059 
Shares issued for professional services                       150,129    150    103,439    (56,314)        47,275 
Shares issued upon vesting   –    –    –    –    4,408,616    4,408    (4,408)   –    –    – 
Stock-based compensation - employees                       –    –    3,417,481              3,417,481 
Stock-based compensation – Officers & Directors                                 2,661,408              2,661,408 
Shares issued from Purchase Placement Agreement   –    –    –    –    6,000,000    6,000    3,552,373    –    –    3,558,373 
Shares issued from private placement, net of issuance costs   –    –    –    –    14,285,715    14,287    8,843,064    –    –    8,857,351 
Net loss for the period   –    –    –    –    –    –    –    –    (14,239,445)   (14,239,445)
                                                   
Balance, March 31, 2023   –   $–    –   $–    668,983,091   $668,984   $206,123,645   $18,686   $(152,874,813)  $53,936,502 

 

For the nine months ended March 31, 2022

 

   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   500,000    500    207,700    2,077,000    573,267,632    573,268    121,615,738    247,750    (105,073,651)  $19,440,605 
Shares issued for services   -    -    -    -    14,128,728    14,128    20,323,815    (221,500)   -    20,116,443 
Cancellation of previously issued shares   -    -    -    -    (1,000,000)   (1,000)   (2,029,000)   -    -    (2,030,000)
Shares issued for exercise of warrants   -    -    -    -    14,293,366    14,293    923,207    (18,750)   -    918,750 
Shares issued from private placement, net of issuance costs   -    -    -    -    25,389,611    25,390    36,913,261    -    -    36,938,651 
Shares issued pursuant to Series C preferred shares conversion   -    -    (207,700)   (2,077,000)   16,616,000    16,616    2,060,384    -    -    - 
Redemption of Series A preferred shares   (500,000)   (500)   -    -    -    -    500    -    -    - 
Shares issued pursuant to share purchase agreement   -    -    -    -    3,000,000    3,000    3,985,005    -    -    3,988,005 
Dividends declared   -    -    -    -    -    -    -    -    (21,755)   (21,755)
Net loss for the period   -    -    -    -    -    -    -    -    (26,689,316)   (26,689,316)
Balance, March 31, 2022   -    -    -    -    645,695,337    645,695    183,792,910    7,500    (131,784,722)  $52,661,383 

 

(The accompanying notes are an integral part of these condensed consolidated unaudited financial statements)

 

7

 

 

AMERICAN BATTERY TECHNOLOGY COMPANY

Condensed Consolidated Statements of Cash Flows

(unaudited)

 

   Nine months ended March 31, 2023   Nine months ended March 31, 2022 
         
Operating Activities          
           
Net loss, attributable to stockholders  $(14,239,445)  $(26,689,316)
           
Adjustments to reconcile net loss to net cash used in operating activities:          
           
Depreciation expense   66,436    36,818 
Net change in operating lease liability   (13,972)    (16,737)
Stock Based Compensation - employees   3,417,481    – 
Stock Based Compensation – officers & directors   2,661,408    – 
Shares issued for services   47,275    18,086,443 
Loss on impairment   -    186,779 
Settlement of mining claims in stock   -    (50,000)
Unrealized loss on investment   11,709    5,376 
           
Changes in operating assets and liabilities:          
           
Prepaid expenses and deposits   (837,180)   891,287 
Other receivables   (276,231)   - 
Accounts payable and accrued liabilities   (1,653,541)   254,676 
Due to related parties   -    - 
           
Net Cash Used in Operating Activities   (10,816,060)   (7,261,200)
           
Investing Activities          
           
Other acquisition deposit   (6,081,591)   – 
Acquisition of property and equipment   (3,918,863)   (8,805,942)
Purchase of water rights   -    (2,172,750)
Purchase of mining properties   (8,007,362)   – 
           
Net Cash Used In Investing Activities   (18,007,816)   (10,978,692)
           
Financing Activities          
           
Dividends paid   -    (125,700)
Proceeds from exercise of share purchase warrants   -    918,750 
Proceeds from share purchase agreement   3,558,373    -  
Proceeds from issuance of common shares, net of issuance costs   8,857,351    40,926,656 
           
Net Cash Provided by Financing Activities   12,415,724    41,719,706 
           
Change in Cash   (16,408,152)   23,479,814 
           
Cash – Beginning   28,989,166    12,843,502 
           
Cash – End  $12,581,014   $36,323,316 
           
Supplemental disclosures          
Interest paid   -    10,102 
    -      
Non-cash investing and financing activities   -      
           
Fair value of preferred shares redeemed   -    100 
Noncash construction costs in accounts payable   1,938,564    1,674,888 
Deposits capitalized to mineral claims   150,000    – 
Shares issued upon vesting   4,409    – 
Initial value of lease liabilities   311,570    311,570 
Common shares issued for conversion of preferred shares   -    2,216,000 
Fair value of commission warrants issued   933,102    2,699,039 

 

The accompanying notes are an integral part of these condensed consolidated unaudited financial statements)

 

8

 

 

AMERICAN BATTERY TECHNOLOGY COMPANY

Notes to the Condensed Consolidated Financial Statements

For the period ended March 31, 2023

(unaudited)

 

1. Organization and Nature of Operations

 

American Battery Technology Company (“the Company”) is a startup company in the lithium–ion battery industry that is working to increase the domestic production of battery materials, such as lithium, nickel, cobalt, and manganese through its engagement in the exploration of new primary resources of battery metals, in the development and commercialization of new technologies for the extraction of these battery metals from primary resources, and in the commercialization of an internally developed integrated process for the recycling of lithium–ion batteries. Through this three–pronged approach the Company is working to both increase the domestic production of these battery materials and ensure that as battery components reach the end of their useful lives, their 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 office is located at 100 Washington Street, Suite 100, Reno, NV 89503.

 

Liquidity and Capital Resources

 

The condensed consolidated financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America (GAAP), on a going concern basis which assumes that the Company will be able to realize its assets and discharge its liabilities in the normal course of business for the foreseeable future. As of March 31, 2023, the Company had cash of $12.6 million, an accumulated deficit of $152.9 million, negative cash flow from operations, and limited business operations. The Company expects to begin its battery recycling operations in the quarter ending September 30, 2023. The continuation of the Company as a going concern is dependent upon generating profit from these operations and its ability to identify future investment opportunities and obtain any necessary debt or equity financing. There is no assurance that the Company will be able to obtain such financing or obtain them on favorable terms. These material uncertainties raise substantial doubt as to the Company’s ability to continue as a going concern for 12 months from issuance of these financial statements. 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. These adjustments could be material.

 

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 (inactive), LithiumOre Corporation (formerly Lithortech Resources Inc) and ABTC AG, LLC. All inter–company accounts and transactions have been eliminated upon consolidation.

 

Certain prior year amounts disclosed in “General and administrative” expenses on the Statements of Operations have been reclassified to “Research and development” expense for consistency with the current year presentation. These reclassifications have no effect on the previously reported results of operations and cash flows for the three and nine months ended March 31, 2022.

 

9

 

 

AMERICAN BATTERY TECHNOLOGY COMPANY

Notes to the Condensed Consolidated Financial Statements

For the period ended March 31, 2023

(unaudited)

 

2. Summary of Significant Accounting Policies (continued)

 

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 interim financial statements and notes thereto should be read in conjunction with the Company’s latest Annual Report on Form 10–K for the fiscal year ended June 30, 2022. 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, going concern, 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.

 

d) 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) 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 awards and warrants. Diluted EPS excludes all dilutive potential shares if their effect is anti-dilutive.

 

On March 31, 2023, the Company had 92,620,434 potentially dilutive shares consisting of share purchase warrants exercisable into 69,639,184 common shares and restricted share units (RSUs) equivalent to 22,981,250 common shares.

 

10

 

 

AMERICAN BATTERY TECHNOLOGY COMPANY

Notes to the Condensed Consolidated Financial Statements

For the period ended March 31, 2023

(unaudited)

 

2. Summary of Significant Accounting Policies (continued)

 

e) 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.

 

f) Research and development costs

 

Research and development (“R&D”) costs are accounted for in accordance with ASC 730, “Research and Development.” ASC 730-10-25 requires that all R&D costs be recognized as an expense as incurred. However, some costs associated with R&D activities that have an alternative future use (e.g., materials, equipment, facilities) may be capitalizable.

 

The Company has been awarded federal grant awards for specific R&D programs. Under ASU No. 2021-10 “Government Assistance,” the Company recognizes invoiced government funds as an offset to R&D costs in the period the qualifying costs are incurred. The Company believes this best reflects the expected net expenditures associated with these programs.

 

g) Recent Accounting Pronouncements

 

In November 2021, FASB issued ASU No. 2021–10 “Government Assistance (Topic 832): Disclosures by Business Entities about Government Assistance.” This ASU will improve the transparency of government assistance received by most business entities by requiring the disclosure of: (1) the types of government assistance received; (2) the accounting for such assistance; and (3) the effect of the assistance on a business entity’s financial statements. ASU No. 2021–10 is effective for financial statements issued for annual periods beginning after December 15, 2021, with early application permitted. This ASU is applicable to the Company’s fiscal year beginning July 1, 2022.

 

11

 

 

AMERICAN BATTERY TECHNOLOGY COMPANY

Notes to the Condensed Consolidated Financial Statements

For the period ended March 31, 2023

(unaudited)

 

3. Other Deposits

 

On March 1, 2023, the Company and Linico Corporation (“Linico”) entered into, and consummated, an Asset Purchase Agreement (“APA”) whereby the Company acquired specific tangible equipment and personal property for an aggregate purchase price of $6,000,000. Contemporaneously with the signing of the APA, the Company and Linico entered into another agreement, the Membership Interest Purchase Agreement (“MIPA”), whereby the Company would acquire 100% of the membership interests in Aqua Metals Transfer, LLC, principally real property consisting of land and a building that houses the tangible equipment and personal property acquired under the APA, for an aggregate purchase price of $21,600,000. As the MIPA is expected to close on or near May 31, 2023, the $6,000,000 plus the associated fees and expenses related to the transaction paid by the Company to execute the APA is currently recorded as a deposit in other assets. Once the MIPA is consummated, the assets acquired through both agreements will be placed into service and the aggregate purchase price paid for both agreements will be allocated among all assets at that time.

 

4. Property and Equipment

 

   Land   Building   Equipment   Total 
Cost:                    
                     
Balance, June 30, 2022  $6,728,838   $10,798,780   $1,388,392   $18,916,010 
Additions   -    -    1,595,565    1,595,565 
Construction in process   -    4,261,862    -    4,261,862 
                     
Balance, March 31, 2023  $6,728,838   $15,060,642   $2,983,957   $24,773,437 
                     
Accumulated Depreciation:                    
                     
Balance, June 30, 2022  $–   $–   $39,115   $39,115 
Additions   -    -    66,436    66,436 
Balance, March 31, 2023  $-   $-   $105,551   $105,551 
                     
Carrying Amounts:                    
Balance, June 30, 2022  $6,728,838   $10,798,780   $1,349,277   $18,876,895 
Balance, March 31, 2023  $6,728,838   $15,060,642   $2,878,406   $24,667,886 

 

The building and equipment expenditures are primarily associated with assets under construction and are not commissioned for use as of March 31, 2023.

 

In February 2021, the Company entered into an agreement to purchase land with a fair value of $85,000 located in Tonopah, NV in exchange for an agreed-upon number of common shares though the transaction had not cleared escrow. In September 2021, the Company later issued the shares whereby the stock price had increased. To correct the carrying value, the Company recognized impairment expense of $186,779. The Company has included the impairment costs in general and administrative expenses for the nine months ended March 31, 2022.

 

12

 

 

AMERICAN BATTERY TECHNOLOGY COMPANY

Notes to the Condensed Consolidated Financial Statements

For the period ended March 31, 2023

(unaudited)

 

5. Mining Properties

 

During the nine months ended March 31, 2023, the Company exercised its option to purchase unpatented mining claims in Tonopah, NV for total costs of $8.2 million, of which $150,000 was previously recorded in Prepaid expenses and deposits at June 30, 2022.

 

6. Intangible Assets

 

   Water Rights 
     
Balance, June 30, 2022  $3,851,899 
Additions   - 
Disposals   - 
Balance, March 31, 2023  $3,851,899 

 

To date, the Company has purchased water rights in the City of Fernley, Nevada for approximately $3.9 million. The water rights will be used to ensure the Company’s lithium-ion battery recycling plant will have adequate water to operate at full capacity once construction is complete. The water rights are treated in accordance with ASC 350 “Intangible Assets,” and have an unlimited useful life upon assignment to a property through use of a will-serve, which has no expiration date.

 

The Company evaluates noteworthy events for potential adjustment to the carrying value of intangible assets, on a quarterly basis. The Company did not recognize any impairment on its intangible assets for the nine months ended March 31, 2023 and 2022.

 

7. Related Party Transactions

 

The Company recorded no related party transactions during the nine months ended March 31, 2023 and 2022.

 

At March 31, 2023 and June 30, 2022, the Company did not have any related party assets or liabilities.

 

8. 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 condensed consolidated balance sheets, while lease liabilities are included within the liability section of the Company’s condensed consolidated balance sheets at March 31, 2023 and June 30, 2022.

 

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.

 

13

 

 

AMERICAN BATTERY TECHNOLOGY COMPANY

Notes to the Condensed Consolidated Financial Statements

For the period ended March 31, 2023

(unaudited)

 

8. Leases (continued)

 

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% for the nine months ended March 31, 2023, 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 nine months ended March 31, 2023, and 2022 were $172,331 and $38,121, respectively.

 

As of March 31, 2023, short term lease liabilities of $118,051 are included in “Accounts payable and accrued liabilities” on the condensed consolidated balance sheets. The table below presents total operating lease RoU assets, net of amortization, and lease liabilities at:

 

   March 31, 2023   June 30, 2022 
Operating lease right–of–use asset  $168,416   $244,203 
Operating lease liabilities  $204,081   $274,794 

 

The table below presents the maturities of operating lease liabilities as of March 31, 2023:

 

      
March 31, 2024  $130,148 
March 31, 2025   88,631 
Total lease payments   218,779 
Less: discount   (14,698)
Total operating lease liabilities  $204,081 

 

The table below presents the weighted average remaining lease term for operating leases and weighted average discount rate used in calculating operating lease right–of–use asset as of March 31, 2023.

 

Weighted average lease term (years)   1.58 
Weighted average discount rate   8%

 

9. Stockholders’ Equity

 

The Company’s authorized common stock consists of 1,200,000,000 shares of common stock, with par value of $0.001.

 

Series A Preferred Stock

 

The Company has 500,000 shares of Series A Preferred Stock authorized with a par value of $0.001. The Company had no Series A Preferred Stock issued and outstanding at March 31, 2023 and June 30, 2022.

 

On January 27, 2022, the Company redeemed all outstanding shares of Series A Preferred Stock.

 

Series B Preferred Stock

 

The Company has 2,000,000 shares of Series B Preferred Stock authorized with a par value of $0.001. The Company had no Series B Preferred Stock issued and outstanding at March 31, 2023 and June 30, 2022.

 

14

 

 

AMERICAN BATTERY TECHNOLOGY COMPANY

Notes to the Condensed Consolidated Financial Statements

For the period ended March 31, 2023

(unaudited)

 

9. Stockholders’ Equity (continued)

 

Series C Preferred Stock

 

The Company has 2,000,000 shares of Series C Preferred Stock authorized with a par value of $0.001. The Company had no Series C Preferred Stock issued and outstanding at March 31, 2023 and June 30, 2022.

 

The Series C Preferred Stock was originally issued on December 18, 2020. The Company issued 48.29 units of Series C Preferred Stock (241,450 shares of Series C preferred stock) at $50,000 per unit for proceeds of $2.4 million. Each unit is comprised of 5,000 shares of Series C Preferred Stock (each share of Series C Preferred Stock is convertible into 80 shares of common stock) and a warrant to purchase 400,000 common shares of the Company at $0.25 per share until March 31, 2023. Each holder is entitled to receive a non–cumulative dividend at an 8% rate per share, per annum. The dividend shall be payable at the Company’s option either in cash or in common shares of the Company. If paid in common shares, the Company shall issue the number of common shares equal to the dividend amount divided by the stated value and then multiplied by eighty.

 

In addition, on December 18, 2020, the Company issued 8 units of Series C Preferred Stock (40,000 shares of Series C preferred stock) with a fair value of $400,000 for the conversion of $