UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For
the quarter period ended December 31,
2020
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR
15 (d) OF THE EXCHANGE ACT OF 1934
Commission File number: 000-55088
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AMERICAN BATTERY METALS
CORPORATION
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(Exact
name of registrant as specified in its charter)
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Nevada
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33-1227980
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(State
or other jurisdiction
of
incorporation or organization)
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(I.R.S. Employer
Identification No.)
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930
Tahoe Blvd. Suite 802-16, Incline Village, NV 89451
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(Address of principal executive offices)
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(775) 473-4744
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(Registrant's telephone number)
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(Former name, former address and former fiscal year, if changed
since last report)
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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 [X]
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 [X]
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.
|
[ ]
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Large accelerated
filer
|
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[ ]
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Accelerated filer
|
|
[X]
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Non-accelerated
filer
|
|
[X]
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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 [X]
The
number of shares of the Registrant’s common stock, par value $0.001
per share, outstanding as of February 11, 2021 were 527,456,202.
1
AMERICAN BATTERY METALS CORPORATION
Table
of Contents
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Page
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Number
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PART I.
FINANCIAL INFORMATION
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ITEM
I.
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Financial Statements
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3
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Condensed Consolidated Balance Sheets (unaudited) as at December
31, 2020 and June 30, 2020
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4
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Condensed Consolidated Statements of Operations (unaudited) for the
three and six months ended December 31, 2020 and 2019
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5
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Condensed Consolidated Statements of Stockholders’ Deficit
(unaudited) for the three and six months ended
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6
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December 31, 2020 and 2019
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Condensed Consolidated Statements of Cash Flows (unaudited) for the
six months ended
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7
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December 31, 2020 and 2019
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Notes
to the Condensed Consolidated Financial Statements (unaudited)
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8
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ITEM
2.
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Management's Discussion and Analysis of Financial Condition and
Results of Operations
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17
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ITEM
3.
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Quantitative and Qualitative Disclosures about Market Risk
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21
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ITEM
4.
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Controls and Procedures
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21
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PART II.
OTHER INFORMATION
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ITEM
1.
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Legal
Proceedings
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22
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ITEM
1A.
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Risk
Factors
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22
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ITEM
2.
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Unregistered Sales of Equity Securities and Use of Proceeds
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22
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ITEM
3.
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Defaults Upon Senior Securities
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23
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ITEM
4.
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Mine
Safety Disclosure
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23
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ITEM
5.
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Other
Information
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23
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ITEM
6.
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Exhibits
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23
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SIGNATURES
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24
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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 six months ended December 31, 2020 are
not necessarily indicative of the results that can be expected for
the year ending June 30, 2021.
3
AMERICAN BATTERY METALS CORPORATION
Condensed Consolidated Balance Sheets
(unaudited)
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|
December 31,
2020
$
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June 30,
2020
$
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ASSETS
|
|
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Current assets
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Cash
|
403,654
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829,924
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Prepaid expenses
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207,454
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237,334
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Total
current assets
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611,108
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1,067,258
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Investment in joint venture
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35,250
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35,250
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Property and equipment
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960,984
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58,806
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Total
assets
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1,607,342
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1,161,314
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LIABILITIES
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Current liabilities
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Accounts payable and accrued liabilities
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447,421
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514,838
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Due
to related parties
|
200,646
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624,949
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Derivative liability
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6,669,330
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4,519,654
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Notes
payable, net of unamortized discount of $569,705 and $2,084,051,
respectively
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523,173
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127,149
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Current portion of loans payable
|
8,934
|
8,580
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Total
current liabilities
|
7,849,504
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5,795,170
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|
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Loans
payable
|
301,509
|
306,648
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Total
liabilities
|
8,151,013
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6,101,818
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STOCKHOLDERS’ DEFICIT
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Series A Preferred Stock
Authorized:
1,000,000 preferred shares, par value of $0.001 per share
Issued and
outstanding: 500,000 and 300,000 preferred shares, respectively
|
500
|
300
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Series C Preferred Stock
Authorized:
1,000,000 preferred shares, par value of $10 per share
Issued and
outstanding: 281,450 and 0 preferred shares, respectively
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2,814,500
|
-
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Common Stock
Authorized:
1,200,000,000 common shares, par value of $0.001 per share
Issued and
outstanding: 502,622,746 and 365,191,213 common shares,
respectively
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502,622
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365,191
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Additional paid-in capital
|
90,974,257
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55,452,951
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Share
subscriptions received
|
1,235,000
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2,450,000
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Share
subscriptions receivable
|
(6,250)
|
-
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Accumulated deficit
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(102,064,300)
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(63,208,946)
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Total
stockholders’ deficit
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(6,543,671)
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(4,940,504)
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Total
liabilities and stockholders’ deficit
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1,607,342
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1,161,314
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(The
accompanying notes are an integral part of these condensed
consolidated financial statements)
4
AMERICAN BATTERY METALS CORPORATION
Condensed Consolidated Statements of Operations
(unaudited)
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For the
three
months
ended
December 31,
2020
$
|
For the three
months
ended
December 31,
2019
$
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For the six
months
ended
December 31,
2020
$
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For the six
months
ended
December 31,
2019
$
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|
Operating
expenses
|
|
|
|
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Exploration costs
|
2,902
|
11,311
|
109,699
|
334,679
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General and administrative
|
30,270,334
|
1,071,820
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32,576,630
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2,143,089
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Net loss from
operations
|
(30,273,236)
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(1,083,131)
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(32,686,329)
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(2,477,768)
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Other income
(expense)
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Accretion and interest expense
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(837,953)
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(1,119,583)
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(2,200,500)
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(2,220,077)
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Change in fair value of derivative liability
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(6,244,285)
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(876,960)
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(7,018,171)
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(939,514)
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Gain on settlement of debt
|
1,850,178
|
127,863
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3,462,611
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214,050
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Financing cost
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(190,980)
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-
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(405,096)
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-
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Other income
|
-
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3,746
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-
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3,746
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Other expense
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(7,869)
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-
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(7,869)
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-
|
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Total other income
(expense)
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(5,430,909)
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(1,864,934)
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(6,169,025)
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(2,941,795)
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Net loss
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(35,704,145)
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(2,948,065)
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(38,855,354)
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(5,419,563)
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Net loss per share,
basic and diluted
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(0.08)
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(0.02)
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(0.09)
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(0.04)
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Weighted average
shares outstanding, basic and diluted
|
462,276,476
|
150,474,502
|
453,644,098
|
137,016,722
|
(The
accompanying notes are an integral part of these condensed
consolidated financial statements)
5
AMERICAN BATTERY METALS CORPORATION
Condensed Consolidated Statement of Stockholders’ Deficit
(unaudited)
|
|
Series A
Preferred Shares
|
Series C
Preferred Shares
|
Common Shares
|
|
Share subscriptions
|
|
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|
|
Number
|
Amount
$
|
Number
|
Amount
$
|
Number
|
Amount
$
|
Additional
Paid-In
Capital
$
|
Received
$
|
Receivable
$
|
Accumulated
Deficit
$
|
Total
Stockholder’s
Deficit
$
|
|
Balance, June 30, 2020
|
300,000
|
300
|
-
|
-
|
365,191,213
|
365,191
|
55,452,951
|
2,450,000
|
-
|
(63,208,946)
|
(4,940,504)
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|
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Shares issued for services
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200,000
|
200
|
-
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-
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43,140,000
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43,140
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30,309,130
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35,000
|
-
|
-
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30,387,470
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|
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Shares issued for exercise of warrants
|
-
|
-
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-
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-
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12,381,562
|
12,381
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(12,381)
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-
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-
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-
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-
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|
|
|
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Shares issued from private placement
|
-
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-
|
241,450
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2,414,500
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60,625,000
|
60,625
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2,389,375
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(2,450,000)
|
(6,250)
|
-
|
2,408,250
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Shares issued pursuant to note conversion
|
-
|
-
|
40,000
|
400,000
|
21,284,971
|
21,285
|
2,564,182
|
-
|
-
|
-
|
2,985,467
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Share subscriptions received
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
1,200,000
|
-
|
-
|
1,200,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Beneficial conversion feature on convertible debts
|
-
|
-
|
-
|
-
|
-
|
-
|
271,000
|
-
|
-
|
-
|
271,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss for the period
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
(38,847,485)
|
(38,847,485)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Dividends declared
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
(7,869)
|
(7,869)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance, December 31, 2020
|
500,000
|
500
|
281,450
|
2,814,500
|
502,622,746
|
502,622
|
90,974,257
|
1,235,000
|
(6,250)
|
(102,064,300)
|
(6,543,671)
|
AMERICAN BATTERY METALS CORPORATION
Condensed Consolidated Statement of Stockholders’ Deficit
(unaudited)
|
|
Series A
Preferred Shares
|
Common Shares
|
|
|
|
|
|
|
Number
|
Amount
$
|
Number
|
Amount
$
|
Additional
Paid-In
Capital
$
|
Share
Subscriptions
$
|
Accumulated
Deficit
$
|
Total
Stockholder’s
Deficit
$
|
|
Balance, June 30, 2019
|
-
|
-
|
116,234,968
|
116,235
|
42,849,297
|
-
|
(47,419,040)
|
(4,453,508)
|
|
|
|
|
|
|
|
|
|
|
|
Issuance of preferred shares
|
300,000
|
300
|
–
|
–
|
(300)
|
-
|
-
|
-
|
|
|
|
|
|
|
|
|
|
|
|
Shares issued for services
|
-
|
-
|
9,210,000
|
9,210
|
914,810
|
-
|
-
|
924,020
|
|
|
|
|
|
|
|
|
|
|
|
Shares issued pursuant to note conversion
|
-
|
-
|
42,347,922
|
42,347
|
2,578,142
|
-
|
-
|
2,620,489
|
|
|
|
|
|
|
|
|
|
|
|
Shares issued for warrant exercise
|
-
|
-
|
2,996,985
|
2,997
|
(2,997)
|
-
|
-
|
–
|
|
|
|
|
|
|
|
|
|
|
|
Share subscriptions received
|
-
|
-
|
-
|
-
|
-
|
275,000
|
-
|
275,000
|
|
|
|
|
|
|
|
|
|
|
|
Share purchase warrants issued
|
-
|
-
|
-
|
-
|
94,786
|
-
|
-
|
94,786
|
|
|
|
|
|
|
|
|
|
|
|
Net loss for the period
|
-
|
-
|
-
|
-
|
-
|
-
|
(5,419,563)
|
(5,419,563)
|
|
|
|
|
|
|
|
|
|
|
|
Balance, December 31, 2019
|
300,000
|
300
|
170,789,875
|
170,789
|
46,433,738
|
275,000
|
(52,838,603)
|
(5,958,776)
|
(The
accompanying notes are an integral part of these condensed
consolidated financial statements)
6
AMERICAN BATTERY METALS CORPORATION
Condensed Consolidated Statements of Cash Flows
(unaudited)
|
|
For the
six months
ended
December 31,
2020
$
|
For the
six months
ended
December 31,
2019
$
|
|
Operating
Activities
|
|
|
|
Net loss
|
(38,855,354)
|
(5,419,563)
|
|
|
|
|
|
Adjustments to
reconcile net loss to net cash used in operating activities:
|
|
|
|
Accretion expense
|
2,111,346
|
1,911,522
|
|
Change in fair value of derivative liability
|
7,018,171
|
939,514
|
|
Depreciation
|
5,202
|
-
|
|
Dividends declared
|
7,869
|
-
|
|
Discount on convertible notes payable
|
73,499
|
297,318
|
|
Gain on settlement of debt
|
(3,462,611)
|
(214,050)
|
|
Shares issued for services
|
30,387,470
|
924,020
|
|
Warrants issued
|
-
|
94,786
|
|
|
|
|
|
Changes in operating assets and liabilities:
|
|
|
|
Prepaid expenses
|
29,880
|
(8,788)
|
|
Accounts payable and accrued liabilities
|
397,873
|
233,294
|
|
Due to related parties
|
(424,303)
|
(199,983)
|
|
|
|
|
|
Net Cash Used In
Operating Activities
|
(2,710,958)
|
(1,441,930)
|
|
|
|
|
|
Investing
Activities
|
|
|
|
Acquisition of equipment
|
(4,785)
|
-
|
|
Acquisition of land
|
(907,380)
|
-
|
|
|
|
|
|
Net Cash Used In
Investing Activities
|
(912,165)
|
-
|
|
|
|
|
|
Financing
Activities
|
|
|
|
Proceeds from issuance of convertible notes payable
|
1,350,000
|
1,382,500
|
|
Repayment of convertible note payable
|
(1,761,397)
|
(212,697)
|
|
Proceeds from private placement
|
3,608,250
|
275,000
|
|
|
|
|
|
Net Cash Provided By
Financing Activities
|
3,196,853
|
1,444,803
|
|
|
|
|
|
Change in Cash
|
(426,270)
|
2,873
|
|
Cash
– Beginning
|
829,924
|
16,690
|
|
Cash – End
|
403,654
|
19,563
|
|
|
|
|
|
Supplemental
disclosures:
|
|
|
|
Interest paid
|
63,216
|
8,966
|
|
Income taxes paid
|
-
|
-
|
|
|
|
|
|
Non-cash investing and financing activities:
|
|
|
|
|
|
|
|
Discount on convertible debenture
|
275,000
|
1,654,836
|
|
Original issuance discount on convertible debentures
|
51,000
|
44,700
|
|
Beneficial conversion feature on convertible debentures
|
271,000
|
-
|
|
Common shares issued for conversion of debt
|
2,585,467
|
2,620,489
|
|
Preferred shares issued for conversion of debt
|
400,000
|
-
|
(The
accompanying notes are an integral part of these condensed
consolidated financial statements)
7
AMERICAN BATTERY METALS CORPORATION
Notes
to the Condensed Consolidated Financial Statements
For
the period ended December 31, 2020
(unaudited)
1.
Organization and Nature of Operations
The
accompanying unaudited condensed consolidated financial statements
of American Battery Metals Corporation have been prepared in
accordance with the rules and regulations of the Securities and
Exchange Commission (the “SEC”), including the instructions to Form
10-Q and Regulation S-X. Certain information and note disclosures
normally included in financial statements prepared in accordance
with generally accepted accounting principles in the United States
of America have been condensed or omitted from these statements
pursuant to such rules and regulations and, accordingly, they do
not include all the information and notes necessary for
comprehensive consolidated financial statements and should be read
in conjunction with our audited consolidated financial statements
for the period ended June 30, 2020, included in our Annual Report
on Form 10-KT for the period ended June 30, 2020.
The Company
was incorporated under the laws of the state of Nevada on October
6, 2011 for the purpose of acquiring and developing mineral
properties. The Company has a wholly-owned subsidiary called
Oroplata Exploraciones E Ingenieria SRL, which was incorporated in
the Dominican Republic on January 10, 2012. On July 26, 2016, the
Company incorporated Lithortech Resources Inc., a Nevada company,
as a wholly-owned subsidiary. The Company currently holds mineral
rights in the Western Nevada Basin of Nye County in the state of
Nevada.
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 has not been significant, but
management continues to monitor the situation.
Going Concern
These
unaudited condensed consolidated financial statements have been
prepared on a going concern basis, which implies that the Company
will continue to realize its assets and discharge its liabilities
in the normal course of business. As at December 31, 2020, the
Company has not earned any revenue, has a working capital deficit
of $7,238,396, and an accumulated deficit of $102,064,300. The
continuation of the Company as a going concern is dependent upon
the continued financial support from its management, and its
ability to identify future investment opportunities and obtain the
necessary debt or equity financing, and generating profitable
operations from the Company’s future operations. If the Company is
able to obtain financing, there is no certainty that terms will be
favorable to the Company. These factors raise substantial doubt
regarding the Company’s ability to continue as a going concern.
These unaudited 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
The 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.
(b)Principles
of Consolidation
These
unaudited 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 unaudited condensed consolidated financial
statements include the accounts of the Company and its wholly-owned
subsidiaries, Oroplata Exploraciones E Ingenieria SRL and
LithiumOre Corporation (formerly Lithortech Resources Inc). All
inter-company accounts and transactions have been eliminated on
consolidation.
8
AMERICAN BATTERY METALS CORPORATION
Notes
to the Condensed Consolidated Financial Statements
For
the period ended December 31, 2020
(unaudited)
3.
Convertible Notes Payable
|
|
December 31,
2020
$
|
June 30,
2020
$
|
|
Eagle
Equities, LLC, $147,250 on January 31, 2020, unsecured, bears
interest at 10% per annum, due on January 31, 2021, convertible
into common stock at 60% of the lowest trading price in the ten
trading days prior to conversion, unamortized discount of $nil
(June 30, 2020 - $137,038)
|
-
|
10,212
|
|
|
|
|
|
GS
Capital Partners, LLC, $147,250 on January 31, 2020, unsecured,
bears interest at 10% per annum, due on January 31, 2021,
convertible into common stock at 40% of the lowest trading price in
the twenty trading days prior to conversion, unamortized discount
of $nil (June 30, 2020 - $134,584)
|
-
|
12,666
|
|
|
|
|
|
GS
Capital Partners, LLC, $177,200 on February 7, 2020, unsecured,
bears interest at 10% per annum which increases to 22% per annum on
default, due on February 7, 2021, convertible into common stock at
60% of the lowest trading price in the twenty trading days prior to
conversion, unamortized discount of $nil (June 30, 2020 -
$165,770)
|
-
|
11,430
|
|
|
|
|
|
Power
Up Lending Group Ltd., $83,000 on February 14, 2020, unsecured,
bears interest at 10% per annum, due on December 1, 2021,
convertible into common stock at 61% of the lowest trading price in
the ten trading days prior to conversion, unamortized discount of
$nil (June 30, 2020 - $76,662)
|
-
|
6,338
|
|
|
|
|
|
Crown
Bridge Partners, LLC, $75,000 on February 14, 2020, unsecured,
bears interest at 10% per annum, due on February 14, 2021,
convertible into common stock at 65% of the lower of the lowest
closing bid or the lowest trading price in the twenty trading days
prior to conversion, unamortized discount of $nil (June 30, 2020 -
$70,577)
|
-
|
4,423
|
|
|
|
|
|
BHP
Capital NY Inc., $110,000 on February 18, 2020, unsecured, bears
interest at 10% per annum, due on February 18, 2021, convertible
into common stock at 61% of the lesser of: (i) lowest trading price
during the previous twenty trading days before the issue date; or
(ii) the lowest trading price during the twenty trading days prior
to conversion, unamortized discount of $nil (June 30, 2020 -
$103,282)
|
-
|
6,718
|
|
|
|
|
|
Jefferson Street Capital, LLC, $110,000 on February 18, 2020,
unsecured, bears interest at 10% per annum, due on February 18,
2021, convertible into common stock at 61% of the lesser of: (i)
the lowest trading price during the previous twenty trading days
before the issue date; or (ii) the lowest trading price during the
twenty trading days prior to conversion, unamortized discount of
$nil (June 30, 2020 - $103,818)
|
-
|
6,182
|
9
AMERICAN BATTERY METALS CORPORATION
Notes
to the Condensed Consolidated Financial Statements
For
the period ended December 31, 2020
(unaudited)
3.
Convertible Notes Payable (continued)
|
|
December 31,
2020
$
|
June 30,
2020
$
|
|
Odyssey Capital, LLC, $220,000 on February 19, 2020, unsecured,
bears interest at 10% per annum, due on February 19, 2021
convertible into common stock at 60% of the lowest closing bid
price for the fifteen trading days prior to conversion, unamortized
discount of $nil (June 30, 2020 - $205,226)
|
-
|
14,774
|
|
|
|
|
|
GS
Capital Partners, LLC, $520,000 on March 17, 2020, unsecured, bears
interest at 10% per annum, due on March 17, 2021, convertible into
common stock at 63% of the lowest trading price in the twenty
trading days prior to conversion, unamortized discount of $nil
(June 30, 2020 - $478,979)
|
-
|
41,021
|
|
|
|
|
|
Power
Up Lending Group Ltd., $78,000 on April 6, 2020, unsecured, bears
interest at 12% per annum which increases to 22% per annum on
default, due on April 6, 2021, convertible into common stock at 61%
of the lowest trading price in the ten trading days prior to
conversion, unamortized discount of $nil (June 30, 2020 -
$75,816)
|
-
|
2,184
|
|
|
|
|
|
Adar
Alef, LLC, $110,000 on April 7, 2020, unsecured, bears interest at
10% per annum, due April 7, 2021, convertible into common stock at
60% of the lowest closing bid price for the fifteen trading days
prior to conversion, unamortized discount of $nil (June 30, 2020 -
$107,464)
|
-
|
2,536
|
|
|
|
|
|
Auctus Fund, LLC, $150,000 on April 10, 2020, unsecured, bears
interest at 10% per annum which increases to 24% per annum on
default, due on April 10, 2021, convertible into common stock at
68% of the lowest trading in the twenty trading days prior to
conversion, unamortized discount of $nil (June 30, 2020 -
$146,667)
|
-
|
3,333
|
|
|
|
|
|
Power
Up Lending Group Ltd., $43,000 on April 21, 2020, unsecured, bears
interest at 10% per annum which increases to 22% per annum on
default, due on April 21, 2021, convertible into common stock at
61% of the lowest trading price during the ten trading days prior
to conversion, unamortized discount of $nil (June 30, 2020 -
$42,176)
|
-
|
824
|
|
|
|
|
|
Black
Ice Advisors, LLC, $115,500 on April 22, 2020, unsecured, bears
interest at 10% per annum, due on April 22, 2021, convertible into
common stock at 60% of the lowest closing bid price for the fifteen
trading days prior to conversion, unamortized discount of $nil
(June 30, 2020 - $113,318)
|
-
|
2,182
|
|
|
|
|
|
Efrat
Investments, LLC, $125,000 on April 23, 2020, unsecured, bears
interest at 10% per annum, due on April 23, 2021, convertible into
common stock at 60% of the lowest closing bid price for the fifteen
trading days prior to conversion, unamortized discount of $nil
(June 30, 2020 - $122,674)
|
-
|
2,326
|
10
AMERICAN BATTERY METALS CORPORATION
Notes
to the Condensed Consolidated Financial Statements
For
the period ended December 31, 2020
(unaudited)
3.
Convertible Notes Payable (continued)
|
|
December 31,
2020
$
|
June 30,
2020
$
|
|
GS
Capital Partners, LLC, $520,000 on July 27, 2020, unsecured, bears
interest at 10% per annum, due on October 27, 2021 convertible into
common stock at 1) fixed price of $0.25 per share during the first
6 months this note is in effect; and 2) 64% of the lowest trading
price for the twenty trading days prior to conversion after the
6th monthly anniversary of the note, unamortized
discount of $10,000 (June 30, 2020 - $nil)
|
128,378
|
-
|
|
|
|
|
|
GS
Capital Partners, LLC, $312,000 on August 14, 2020, unsecured,
bears interest at 10% per annum, due on August 14, 2021,
convertible into common stock at 1) fixed price of $0.25 per share
during the first 6 months this note is in effect; and 2) 64% of the
lowest trading price for the twenty trading days prior to
conversion after the 6th monthly anniversary of the
note, unamortized discount of $6,000 (June 30, 2020 - $nil)
|
306,000
|
-
|
|
|
|
|
|
Jefferson Street Capital, LLC, $302,500 on September 29, 2020,
unsecured, bears interest at 1% per annum which increases to 22%
per annum on default, due on March 29, 2021, convertible into
common stock at the lesser of 1) 70% of the lowest trading price
for the ten trading days prior to the issue date of this note or;
2) 70% of the lowest trading price for the ten trading days prior
to conversion, unamortized discount of $300,525 (June 30, 2020 -
$nil)
|
1,975
|
-
|
|
|
|
|
|
GS
Capital Partners, LLC, $340,000 on October 20, 2020, unsecured,
bears interest at 10% per annum, due on October 20, 2021,
convertible into common stock at a fixed price of $0.10 per share,
unamortized discount of $253,180 (June 30, 2020 - $nil)
|
86,820
|
|
|
|
|
|
|
|
523,173
|
127,149
|
During the
six months ended December 31, 2020, the Company paid $1,824,613
(2019 - $221,663) for the settlement of $1,295,202 (2019 -
$163,766) of outstanding principal balance of convertible notes,
$63,216 (2019 - $8,966) of accrued interest, $403,938 (2019 - $nil)
of financing costs, and $3,148,613 (2019 - $128,013) of derivative
liabilities resulting in a gain on settlement of debt of $3,086,356
(2019 - $79,082).
11
AMERICAN BATTERY METALS CORPORATION
Notes
to the Condensed Consolidated Financial Statements
For
the period ended December 31, 2020
(unaudited)
4.
Property and Equipment
During the
six months ended December 31, 2020, the Company purchased land at a
cost of $907,380. The land is comprised of 12.44 acres and is
located at 345 Winston Lane in Fernley, Nevada. The Company will be
constructing five separate building areas on this property to
create a Pilot Plant campus that includes: Production Process
Areas, Feedstock Sorting Area, Analytical Laboratory Spaces &
Process Development Bays, a Storage Warehouse, and general Office
Space.
|
|
Vehicle
$
|
Land
$
|
Total
$
|
|
Cost:
|
|
|
|
|
Balance, June 30, 2020
|
61,916
|
-
|
61,916
|
|
Additions
|
-
|
907,380
|
907,380
|
|
|
|
|
|
|
Balance, December 31, 2020
|
61,916
|
907,380
|
969,296
|
|
|
|
|
|
|
Accumulated
Depreciation:
|
|
|
|
|
Balance, June 30,
2020
|
3,110
|
-
|
3,110
|
|
Additions
|
5,202
|
-
|
5,202
|
|
|
|
|
|
|
Balance, December 31, 2020
|
8,312
|
-
|
8,312
|
|
|
|
|
|
|
Carrying
Amounts:
|
|
|
|
|
Balance, June 30,
2020
|
58,806
|
-
|
58,806
|
|
Balance, December 31,
2020
|
53,604
|
907,380
|
960,984
|
5.
Related Party Transactions
(a)As
of December 31, 2020, the Company owes $120,146 (June 30, 2020 -
$120,146) to the former Chief Executive Officer and Director of the
Company for advances to the Company to fund day-to-day operations.
The amounts owing are unsecured, non-interest bearing, and due on
demand.
(b)As
of December 31, 2020, the Company owes $85,500 (June 30, 2020 -
$85,500) to the former Chief Executive Officer and Director of the
Company for advances to the Company to fund day-to-day operations
and accrued management fees. The amounts owing are unsecured,
non-interest bearing, and due on demand.
(c)As
of December 31, 2020, there is $5,000 (June 30, 2020 - $388,577
owed to) owing from the Chief Executive Officer. The amounts owing
are unsecured, non-interest bearing, and due on demand.
(d)As
of December 31, 2020, the Company owes $nil (June 30, 2020–
$30,726) to directors of the Company for accrued management fees.
The amounts owing are unsecured, non-interest bearing, and due on
demand.
6.
Investment in Joint Venture
On October 8,
2018, the Company entered into a joint venture agreement with CINC
Industries Inc. (“CINC”), a non-related Nevada company, for a
period of five years whereby the joint venture will propagate the
sale of a new process for extraction of lithium salt from salt
brine solutions using CINC’s existing and future processing
equipment. As part of the joint venture, each of CINC and the
Company holds a 50% interest in the joint venture.
CINC is
responsible for completing testing on the pilot project, providing
training to the Company for use of its processing equipment,
manufacturing up to 20 test units, and support and product
development, as well as shared costs on other personnel utilized in
the joint venture company. The Company is responsible for the
initial funding for all equipment and associated expenses, the cost
of the lease space, and marketing and sales of the joint venture
agreement.
12
AMERICAN BATTERY METALS CORPORATION
Notes
to the Condensed Consolidated Financial Statements
For
the period ended December 31, 2020
(unaudited)
6.
Investment in Joint Venture (Continued)
As part of the joint venture agreement, the Company issued 250,000
common shares to CINC. The joint venture is committed to acquiring
a minimum amount of processing equipment, goods, accessories,
and/or materials totaling: (i) $1,000,000 by October 8, 2020; (ii)
$3,000,000 by October 8, 2021; (iii) $6,000,000 by October 8, 2022;
and (v) $10,000,000 by October 8, 2023. In the event that the joint
venture fails to meet the minimum amounts above, the Company will
lose the exclusive right to market, promote and sell the processing
equipment provided by CINC. To date, the joint venture has not
purchased any amounts and the Company believes that it is unlikely
that any amounts shall be purchased in the future. Furthermore,
neither party is making any efforts towards the joint venture at
this time.
7.
Derivative Liabilities
The Company
records the fair value of the conversion price of the 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 consolidated statement of operations. For
the six months ended December 31, 2020, the Company recorded a loss
on the change in the fair value of derivative liability of
$7,018,171 (2019 - $939,514). As at December 31, 2020, the Company
recorded a derivative liability of $6,669,330 (June 30, 2020 -
$4,519,654).
The following
inputs and assumptions were used to value the derivative
liabilities outstanding at December 31, 2020 and June 30, 2020:
|
|
December 31,
2020
|
June 30,
2020
|
|
Expected
volatility
|
158-208%
|
158-240%
|
|
Risk free rate
|
0.12-0.14%
|
0.16%
|
|
Expected life (in
years)
|
0.25-1.0
|
0.5-1.0
|
A summary of
the activity of the derivative liability is shown below:
|
|
$
|
|
Balance, June 30,
2020
|
4,519,654
|
|
Derivative additions
associated with convertible notes
|
275,000
|
|
Adjustment for
conversion/prepayment
|
(5,143,495)
|
|
Mark-to-market
adjustment
|
7,018,171
|
|
|
|
|
Balance, December 31,
2020
|
6,669,330
|
8.
Loans Payable
(a)On
January 27, 2020, the Company entered into a finance loan agreement
relating to the acquisition of a company vehicle. Under the terms
of the finance loan, the Company will make monthly installment
payments of $1,089 at a finance loan interest rate of 7.99% per
annum, which is due in February 2026. As of December 31, 2020, the
Company owed $54,451 (June 30, 2020 - $59,236) on the finance loan,
including $8,934 (June 30, 2020 - $8,580) which is due in the next
twelve months. The remaining balance has been fully paid off
subsequent to the period ended December 31, 2020. Refer to Note
11.
(b)On
May 7, 2020, the Company received $255,992 from the U.S. Small
Business Administration as part of the Coronavirus Aid Relief and
Economic Security (“CARES”) Act Paycheck Protection Program. The
amounts are unsecured, bears interest at 1% per annum commencing on
November 7, 2020, and is due on May 7, 2022. Funds from these loans
may be used for payroll, rent, utilities and other qualifying
expenses. The terms of the loans provide that certain amounts may
be forgiven if the funds are used for qualifying expenses as
described in the CARES Act.
13
AMERICAN BATTERY METALS CORPORATION
Notes
to the Condensed Consolidated Financial Statements
For
the period ended December 31, 2020
(unaudited)
9.
Share Capital
The Company’s
authorized common stock consists of 1,200,000,000 shares of common
stock, with par value of $0.001 per share, 1,000,000 shares of
Series A preferred stock, with par value of $0.001 per share, and
1,000,000 shares of Series C preferred stock, with par value of $10
per share.
Series A Preferred
Stock
On December 17, 2020, the Company issued 200,000 Series A Preferred
Stock with a fair value of $200 to officers and directors of the
Company as management fee. The Series A Preferred Stock
has no conversion rights, not entitled to receive dividends,
carries voting rights of 1,000 votes per share of preferred stock,
and is redeemable at the option of the Company at par value of
$0.001 per share.
Series C Preferred
Stock
On December 18, 2020, the Company issued 48.29 units of Series C
Preferred Stock at $50,000 per unit for proceeds of $2,414,500.
Each unit is comprised of 5,000 shares of Series C Preferred Stock
(each share of Series C Preferred Stock is convertible into eighty
shares of common stock) and a warrant to purchase 400,000 common
shares of the Company at $0.25 per share until December 31, 2023.
Each holder is entitled to receive a non-cumulative dividend at 8%
per annum at the rate per share. 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 pay to the
holders the number of Common Shares equal to the dividend amount
divided by the Stated Value and then multiplied by eighty. The
investors in the Series C Preferred Stock are all independent
investors except for 2,500 shares of Series C Preferred Stock
purchased by our chief resource officer.
In addition,
the Company issued 8 units with a fair value of $400,000 for the
conversion of $381,622 of note payable and $18,378 of accrued
interest. During the six months ended December 31, 2020, the
Company has received additional $1,200,000 for future issuance.
Common Stock
On July 9,
2020, the Company issued 7,950,000 common shares with a fair value
of $941,280 for consulting services.
On July 9,
2020, the Company issued 6,081,150 common shares with a fair value
of $720,008 for the conversion of $147,250 of note payable, $6,503
of accrued interest, $105 of fees and $614,477 of derivative
liability resulting in a gain on settlement of $48,327.
On August 18,
2020, the Company issued 2,890,000 common shares with a fair value
of $262,990 for consulting services.
On August 26,
2020, the Company issued 2,196,822 common shares with a fair value
of $193,320 for the conversion of $100,000 of note payable, $5,342
of accrued interest, $105 of fees and $110,007 of derivative
liability resulting in a gain on settlement of $22,134.
On September
16, 2020, the Company issued 1,696,856 common shares with a fair
value of $157,808 for the conversion of $77,200 of note payable,
$4,931 of accrued interest, $105 of fees and $87,842 of derivative
liability resulting in a gain on settlement of $12,270.
On September
29, 2020, the Company issued 2,400,000 common shares with a fair
value of $378,000 for consulting services, including 2,000,000
common shares with a fair value of $315,000 issued to a director of
the Company as management fee.
On September
30, 2020, the Company issued 5,178,487 common shares with a fair
value of $699,096 for the conversion of $270,000 of note payable,
$13,833 of accrued interest, $105 of fees and $560,268 of
derivative liability resulting in a gain on settlement of
$145,110.
On October 6,
2020, the Company issued 4,805,558 common shares with a fair value
of $617,514 for the conversion of $250,000 of note payable, $12,311
of accrued interest, $105 of fees and $491,605 of derivative
liability resulting in a gain on settlement of $136,507.
14
AMERICAN BATTERY METALS CORPORATION
Notes
to the Condensed Consolidated Financial Statements
For
the period ended December 31, 2020
(unaudited)
9.
Share Capital (Continued)
On October
20, 2020, the Company issued 1,326,098 common shares with a fair
value of $197,721 for the conversion of $71,548 of note payable,
$7,396 of accrued interest and $130,683 of derivative liability
resulting in a gain on settlement of $11,906.
On November
30, 2020, the Company issued 3,000,000 common shares with a fair
value of $765,000 to directors of the Company for consulting
services.
On December
15, 2020, the Company issued 6,500,000 common shares with a fair
value of $1,365,000 for consulting services.
On December
23, 2020, the Company issued 6,000,000 common shares with a fair
value of $6,480,000 for consulting services.
On December
29, 2020, the Company issued 14,400,000 common shares with a fair
value of $20,160,000 for consulting services.
During the
six months ended December 31, 2020, the Company issued 60,625,000
units for proceeds of $2,450,000 received during the year ended
June 30, 2020. Each unit is comprised of one common share of the
Company and 0.8 share purchase warrant where each whole share
purchase warrant can be exercised into one common share of the
Company at $0.075 per share until October 31, 2024.
During the
six months ended December 31, 2020, the Company issued 12,381,562
common shares for the exercise of cashless warrants. The fair value
of $12,381 for the warrants exercised was transferred to common
shares from additional paid-in capital.
10.
Share Purchase Warrants
|
|
Number of
warrants
|
Weighted
average
exercise price
$
|
|
Balance, June 30,
2020
|
8,603,112
|
0.14
|
|
Issued
|
71,016,000
|
0.13
|
|
Exercised
|
(4,361,112)
|
0.13
|
|
|
|
|
|
Balance, December 31,
2020
|
75,258,000
|
0.13
|
Additional information regarding share purchase warrants as of
December 31, 2020, is as follows:
|
|
Outstanding and exercisable
|
|
Range of
Exercise Prices
$
|
Number of
Warrants
|
Weighted
Average Remaining
Contractual Life
(years)
|
|
0.075
|
51,500,000
|
2.62
|
|
0.10
|
1,000,000
|
0.03
|
|
0.25
|
22,516,000
|
0.9
|
|
0.50
|
242,000
|
0.0
|
|
|
|
|
|
|
75,258,000
|
3.55
|
15
AMERICAN BATTERY METALS CORPORATION
Notes
to the Condensed Consolidated Financial Statements
For
the period ended December 31, 2020
(unaudited)
11.
Subsequent Events
The
Company has evaluated events occurring subsequent to December 31,
2020 through the date these financial statements were issued and
noted the following:
(a)On
January 19, 2021, the Company issued 486,451 common shares for past
legal fees. The fair value of $35,000 has been included in share
subscriptions received as of December 31, 2020.
(b)On
February 3, 2021, the Company issued 3,200,000 common shares
pursuant to conversion of 40,000 Series C preferred
shares.
(c)On
February 5, 2021, the Company issued 69,252 common shares pursuant
to a rental agreement with purchase option dated February 24, 2019
for the sale of real property situate at 601 S Main Street, City of
Tonopah, County of Nye, State of Nevada. These common shares have
been held in escrow until title is transferred to the Company.
(d)On
February 10, 2021, the Company issued 175,958 common shares
pursuant to the conversion of $138,378 of convertible notes payable
and $2,388 of accrued interest dated July 27, 2020.
(e)On
February 10, 2021, the Company issued 408,271 common shares
pursuant to the conversion of $312,000 of convertible notes payable
and $14,617 of accrued interest dated August 14, 2020.
(f)On
February 10, 2021, the Company issued 379,441 common shares
pursuant to the conversion of $302,500 of convertible notes payable
and $1,053 of accrued interest dated September 29, 2020.
(g)On
February 10, 2021, the Company issued 437,109 common shares
pursuant to the conversion of $340,000 of convertible notes payable
and $9,688 of accrued interest dated October 20, 2020.
(h)Subsequent
to the period ended December 31, 2020, the Company issued
15,426,974 common shares for the exercise of warrants.
(i)Subsequent
to the period ended December 31, 2020, the Company issued 4,250,000
common shares to a third party pursuant to a share purchase
agreement dated October 20, 2020. Proceeds of $3,045,869 have been
received as of February 10, 2021.
(j)Subsequent
to the period ended December 31, 2020, the Company has fully paid
off the remaining balance of the finance loan agreement relating to
the acquisition of a company vehicle. Refer to Note 8(a).
16
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 feedstock
providers, 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
feedstock and material refining portions of the manufacturing
supply chain. This has led to an imbalance within the domestic US
supply chain and has caused the majority of 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 2020” report, the US Geological
Survey calculated that less than 1% of each of the critical and
strategic battery metals (lithium, nickel, cobalt, and manganese)
produced globally in 2019 were produced within the US.
American Battery Metals Corporation (“ABMC” or the “Company”) is a
startup company in the lithium-ion battery industry that is working
to increase the domestic US production of these four battery metals
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 ABMC is working to both increase the
domestic production of these battery metals, and also to ensure
that as these materials reach their end of lives that the
constituent elemental battery metals are returned to the
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, if and when it ever occurs. We have limited operating
history and have not yet generated or realized any revenues from
our activities. Our principal executive offices are located at 930
Tahoe Blvd., Suite 802-16, Incline Village, NV 89451.
On
August 8, 2016, the Company formed Lithortech Resources Inc. as a
wholly owned subsidiary of the Company to serve as its operating
subsidiary for lithium resource exploration and development. On
June 29, 2018, the Company changed the name of Lithortech Resources
to LithiumOre Corp. (“LithiumOre”). On May 3, 2019, the Company
changed its name to American Battery Metals Corporation.
The
growth in demand for lithium-ion batteries is predicted by industry
researchers to grow by over ten-fold over the next ten years, while
over the same period there are limited announcements for new
production sources of domestic US based lithium, nickel, cobalt, or
manganese. As a result, there will be increased pressure on the
prices of domestically sourced battery metals, and increased
reliance on foreign sourced battery metals. These industry trends
support and validate the Company’s multifaceted three-pronged
business model to increase the production of domestic US sourced
battery metals. The Company is currently a pre-revenue organization
and we do not anticipate earning revenues until such time as we
have initial operations of our lithium-ion battery recycling
facility underway, or until we have undertaken sufficient
exploration work to identify lithium and or other battery metals
reserves and have validated and commercialized a cost-effective
extraction system.
RESULTS OF OPERATIONS
American Battery Metals Corp. (“ABMC”) has not realized any revenue
from battery recycling or from its prior exploration activities on
the Nye County property and is unsure when it shall be able to
produce any revenue from such activities. ABMC’s ability to
generate revenue is dependent on its ability to secure sufficient
capital to fund its business operations.
17
Results of Operations
Revenues
During the three and six months ended December 31, 2020 and 2019,
the Company has not realized any revenues.
Expenses
Three Months Ended
December 31, 2020 and 2019
During the three months ended December 31, 2020, the Company
incurred $30,273,236 of operating expenses compared to $1,083,131
of operating expenses during the three months ended December 31,
2019. Overall, the increase in operating expense was due to the
fact that the Company issued 29,900,000 common shares for
consulting services with a fair value of $28,770,000 during the
three months ended December 31, 2020 compared with the issuance of
5,560,000 common shares with a fair value of $233,520 for
consulting services during the three months ended December 31,
2019. Of the remaining operating expenses not related to
share-based compensation of $1,503,536, the expenditures were
higher than the prior period amount of $849,611 due to an increase
in general and administrative expense as the overall level of
day-to-day operating costs increased including increases in payroll
and benefits expense as the Company required more staffing compared
to prior year.
In
addition to operating expenses, the Company incurred other income
and expense of $5,430,909 during the three months ended December
31, 2020 compared to $1,864,934 during the three months ended
December 31, 2019. The increase was due to a higher loss relating
to the change in fair value of the derivative liability of
$6,244,285 compared to $876,960 during the three months ended
December 31, 2019 due to the fact that the Company experienced a
larger volatility or spread in its share price at December 31, 2020
which resulted in a larger value attributed to the conversion
feature of the Company’s outstanding convertible debentures for the
period. In addition, the Company recorded a gain on the settlement
of debt of $1,850,178 for the three months ended December 31, 2020
compared to $127,863 during the three months ended December 31,
2019 due in large part to the fact that the Company was successful
in raising financing proceeds from the issuance of common shares
which resulted in the Company repaying some outstanding convertible
debentures resulting in the reversal of the fair value of the
derivative liability. Overall, the Company recorded accretion and
interest expense of $837,953 during the three months ended December
31, 2020 compared to $1,119,583 during the three months ended
December 31, 2019 and the decrease was due to the repayment of
various convertible debentures resulting in lower accretion and
interest costs incurred during the current period. As part of the
repayment of convertible debentures during the period, the Company
incurred financing and early payment penalty costs of $190,980.
Net Loss
During the three months ended December 31, 2020, the Company
incurred a net loss of $35,704,145 or $0.08 loss per share compared
to a net loss of $2,948,065 or $0.02 loss per share during the
three months ended December 31, 2019. The increase in the net loss
is due to the fact that the Company had more general and
administrative costs due to increases in share-based compensation,
but was offset by the fact that the Company recorded a larger gain
on settlement of debt in the current year due to an increase in the
number of debt settlements which included the elimination of the
derivative liability.
Six Months Ended
December 31, 2020 and 2019
During the six
months ended December 31, 2020, the Company incurred $32,686,329 of
operating expenses compared to $2,477,768 of operating expenses
during the six months ended December 31, 2019. Overall, the
increase in operating expense was due to the fact that the Company
issued 43,140,000 common shares for consulting services with a fair
value of $30,352,270 during the six months ended December 31, 2020
compared to the issuance of 9,210,000 common shares with a fair
value of $924,020 for consulting services during the six months
ended December 31, 2019. Of the remaining operating expenses
not related to share-based compensation of $2,334,359, the
expenditures were higher than the prior period amount of $2,244,248
due to an increase in general and administrative expense as the
overall level of day-to-day operating costs increased including
increases in payroll and benefits expense as the Company required
more staffing compared to prior year.
18
In addition to
operating expenses, the Company incurred other income and expense
of $6,169,025 during the six months ended December 31, 2020
compared to $2,941,795 during the six months ended December 31,
2019. The increase was due to a higher loss relating to the
change in fair value of the derivative liability of $7,018,171
compared to $939,514 during the six months ended December 31, 2019
due to the fact that the Company experienced a larger volatility or
spread in its share price at December 31, 2020 which resulted in a
larger value attributed to the conversion feature of the Company’s
outstanding convertible debentures for the period. In
addition, the Company recorded a gain on the settlement of debt of
$3,462,611 for the six months ended December 31, 2020 compared to
$214,050 during the six months ended December 31, 2019 due in large
part to the fact that the Company was successful in raising
financing proceeds from the issuance of common shares which
resulted in the Company repaying some outstanding convertible
debentures resulting in the reversal of the fair value of the
derivative liability. Overall, the Company recorded accretion
and interest expense of $2,200,500 during the six months ended
December 31, 2020 which was consistent to the six months ended
December 31, 2019 amount of $2,220,077. As part of the
repayment of convertible debentures during the period, the Company
incurred financing and early payment penalty costs of $405,096.
Net Loss
During the six months ended December 31, 2020, the Company incurred
a net loss of $38,855,354 or $0.09 loss per share compared to a net
loss of $5,419,563 or $0.04 loss per share during the six months
ended December 31, 2019. The increase in the net loss is due to the
fact that the Company had more general and administrative costs due
to increases in share-based compensation, but was offset by the
fact that the Company recorded a larger gain on settlement of debt
in the current year due to an increase in the number of debt
settlements which included the elimination of the derivative
liability.
Liquidity and Capital Resources
At
December 31, 2020, the Company had cash of $403,654 and total
assets of $1,607,342 compared to cash of $829,924 and total assets
of $1,161,314 as at June 30, 2020. The decrease in cash is due to
the fact that the Company incurred more operating costs as it had
more general and administrative expense and payroll expense due to
the increase in staffing during the current year compared to the
prior year. The Company’s cash flow is supported by its financing
activities, as it received $3,608,250 of financing from private
placements and $1,350,000 of proceeds from convertible debentures
during the period ended December 31, 2020 less repayments of
convertible debentures of $1,761,397. The increase in total assets
is due to the purchase of land in Nevada for $907,380 during the
period ended December 31, 2020 offset by the use of cash for
operating activities during the period.
The
Company had total current liabilities of $7,849,504 at December 31,
2020 compared to $5,795,170 at June 30, 2020. The increase in
liabilities is due to an increase in the derivative liability from
$4,519,654 at June 30, 2020 to $6,669,330 at December 31, 2020 as
the Company’s share price during the current period was more
volatile than the prior year which resulted in a larger spread
between the fair value of the Company’s common share and the
discounted variable conversion rate of the convertible debenture
and hence, a larger fair value in the carrying amount of the
conversion feature embedded into the convertible debentures. As at
December 31, 2020, the Company had total face value of convertible
debt outstanding of $1,092,878 compared to total face value of
convertible debt of $2,211,200 as at June 30, 2020. The decrease in
the face value of outstanding convertible debentures was due to the
repayment of numerous convertible notes during the period by
management as they used the proceeds from the issuance of common
shares and Series C preferred shares to repay outstanding debt
obligations.
As at
December 31, 2020, the Company had a working capital deficit of
$7,238,396 compared to a working capital deficit of $4,727,912 at
June 30, 2020. The increase in the working capital deficit was due
to the overall increase in the fair value of the derivative
liability relating to the conversion feature on the convertible
note payable offset by decreases in the settlement of outstanding
convertible notes payable. Trade accounts payable and accrued
liabilities were lower by $67,417 and due to timing differences
between recognition of costs and the repayment of obligations on a
period-by-period basis.
During the period ended December 31, 2020, the Company issued
43,140,000 common shares for services with a fair value of
$30,352,270, issued 21,284,971 common shares with a fair value of
$2,585,467 to convert outstanding notes payable and accrued
interest, issued 60,625,000 common shares in a private placement
for $2,450,000 (which was received during the year ended June 30,
2020), and issued 12,381,562 common shares for the exercise of
cashless share purchase warrants that were previously issued to
note holders as an inducement for the convertible note proceeds. In
addition, the Company issued 200,000 Series A preferred shares with
a par value of $200 to officers and directors during the period for
compensation and 241,450 Series C preferred shares at $10.00 per
share for proceeds of $2,414,500 and 40,000 Series C preferred
shares to settle outstanding convertible debt and accrued interest
of $400,000.
As at
December 31, 2020 and June 30, 2020, the Company does not have any
issued or outstanding stock options.
19
Cash Flows
Cash from Operating Activities.
During the six months ended December 31, 2020, the Company used
$2,710,958 of cash for operating activities as compared to
$1,441,930 during the six months ended December 31, 2019. The
increase in the use of cash for operating activities was due to the
fact that the Company raised more funding from financing
activities, including $3,608,250 from share subscriptions, which
allowed them to incur more operating costs to further the Company’s
development and operations.
Cash from Investing Activities
During the six months ended December 31, 2020, the Company incurred
$907,380 for the purchase of land in Nevada and $4,785 for the
purchase of equipment. The Company did not have any investing
activities during the six months ended December 31, 2019.
Cash from Financing Activities
During the six months ended December 31, 2020, the Company received
$3,196,853 of financing, which included $3,608,250 from
subscription proceeds related to a private placement of units,
$1,350,000 of funding from the issuance of convertible notes
payable less repayments of $1,761,397 on the convertible notes
during the period. Comparatively, for the six months ended December
31, 2019, the Company received $1,444,803 of funding from financing
activities which included $1,382,500 from the issuance of
convertible notes payable less repayments of $212,697, and proceeds
from private placement of $275,000.
Off-Balance Sheet Arrangements
None.
Critical Accounting Policies and Estimates
In
presenting the Company's financial statements in conformity with
U.S. generally accepting accounting principles, or GAAP, the
Company is required to make estimates and assumptions that affect
the reported amounts of assets, liabilities, revenue, costs and
expenses and related disclosures.
Some
of the estimates and assumptions the Company is required to make
relate to matters that are inherently uncertain as they pertain to
future events. The Company bases these estimates and assumptions on
historical experience or on various other factors that it believes
to be reasonable and appropriate under the circumstances. On an
ongoing basis, the Company reconsiders and evaluates its estimates
and assumptions. Actual results may differ significantly from these
estimates.
The
Company believes that the critical accounting policies listed below
involve its more significant judgments, assumptions and estimates
and, therefore, could have the greatest potential impact on its
financial statements. In addition, the Company believes that a
discussion of these policies is necessary to understand and
evaluate the financial statements contained in this filing.
Estimates and Assumptions
Management uses estimates and assumptions in preparing financial
statements in accordance with generally accepted accounting
principles. Those estimates and assumptions affect the reported
amounts of the assets and liabilities, the disclosure of contingent
assets and liabilities, and the reported revenues and expenses.
Actual results could vary from the estimates that were assumed in
preparing these financial statements.
Mineral claim acquisition and exploration costs
The
cost of acquiring mineral properties or claims is initially
capitalized and then tested for recoverability whenever events or
changes in circumstances indicate that its carrying amount may not
be recoverable. Mineral exploration costs are expensed as
incurred.
Income Taxes
The
Company utilizes the liability method of accounting for income
taxes. Under the liability method deferred tax assets and
liabilities are determined based on differences between financial
reporting and the tax bases of the assets and liabilities and are
measured using the enacted tax rates and laws that will be in
effect, when the differences are expected to be reversed. An
allowance against deferred tax assets is recorded, when it is more
likely than not, that such tax benefits will not be realized.
20
Recent Accounting Pronouncements
The
Company does not expect the adoption of any recent accounting
pronouncements to have a material impact on its financial
statements.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET
RISK.
Not
Applicable.
ITEM 4. CONTROLS AND PROCEDURES.
Evaluation of Disclosure Controls and Procedures
The
Company maintains disclosure controls and procedures designed to
provide reasonable assurance that information required to be
disclosed in reports filed pursuant to the Securities Exchange Act
of 1934 is recorded, processed, summarized and reported within the
time periods specified in the SEC’s rules and forms, and that such
information is accumulated and communicated to management,
including the Chief Executive Officer and Chief Financial Officer,
as appropriate, to allow timely decisions regarding required
disclosure. In addition, The Company contracts with an independent
firm to review and test its internal controls. A control system, no
matter how well conceived and operated, can provide only
reasonable, not absolute, assurance that the objectives of the
control system are met.
As of
December 31, 2020, the Company’s management carried out an
evaluation of the effectiveness of our disclosure controls and
procedures as such term is defined in Rule 13a-15(e) under the
Securities and Exchange Act of 1934. Based on that evaluation, it
was concluded the disclosure controls and procedures were not
effective as of December 31, 2020.
Changes in Internal Controls Over Financial Reporting
There
were no changes in our internal control over financial reporting
during the quarter ended December 31, 2020 that have materially
affected, or are reasonably likely to materially affect, our
internal control over financial reporting.
21
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.
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.
ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF
PROCEEDS
On
October 20, 2020, the Company issued a 10% Convertible Promissory
Note in the principal amount of $340,000 with a purchase price of
$332,500 to GS Capital Partners, LLC. The note is due October 20,
2021. The holder shall have the right from time to time, and at any
time to convert all or any amount of the outstanding and unpaid
principal amount of the note into fully paid and non-assessable
shares of common stock. The conversion price shall be a fixed price
of $0.10 per share. The note may be prepaid until 180 days from the
issuance date at a price of 108% - 128% of the face amount plus any
accrued interest as of the date of prepayment. The default rate on
the note is 24% per annum.
On November 30, 2020,
the Company issued 3,000,000 common shares with a fair value of
$765,000 to directors of the Company for consulting services.
On December 15, 2020,
the Company issued 6,500,000 common shares with a fair value of
$1,365,000 for consulting services.
On December 23, 2020,
the Company issued 6,000,000 common shares with a fair value of
$6,480,000 for consulting services.
On
December 29, 2020, the Company issued 14,400,000 common shares with
a fair value of $20,160,000 for consulting services
On
December 18, 2020, the Company issued 48.29 units of Series C
Preferred Stock at $50,000 per unit for proceeds of $2,414,500.
Each unit is comprised of 5,000 shares of Series C Preferred Stock
(each share of Series C Preferred Stock is convertible into eighty
shares of common stock) and a warrant to purchase 400,000 common
shares of the Company at $0.25 per share until December 31,
2023.
In
addition, the Company issued 8 units of Series C Preferred Stock
with a fair value of $400,000 for the conversion of $381,622 of
note payable and $18,378 of accrued interest.
From
October 1, 2020 through December 31, 2020, the Company issued
7,326,430 common shares for the exercise of cashless warrants.
From
October 1, 2020 through December 31, 2020, the Company issued
6,131,656 common shares for the conversions of $321,548 in
principal of convertible notes and $19,707 of accrued interest.
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.
22
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
None
ITEM 4. MINE SAFETY DISCLOSURE
Not
Applicable
ITEM 5. OTHER INFORMATION
As of
February 8, 2021, the Company no longer had any variable
convertible notes outstanding. The Company believes that going
forward it shall be able to finance its business operations from
more traditional sources.
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
|
|
10.1
|
Securities Purchase Agreement by and between American Battery
Metals Corporation and GS Capital Partners, LLC dated October 20,
2020
|
X
|
|
|
|
|
10.2
|
Convertible Promissory Note of American Battery Metals Corporation
in favor of GS Capital Partners, LLC dated October 20, 2020
|
X
|
|
|
|
|
31.1
|
Certification of Chief Executive 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
|
|
|
|
|
101
|
INS XBRL Instant Document.
|
X
|
|
|
|
|
101
|
SCH XBRL Taxonomy Extension Schema Document
|
X
|
|
|
|
|
101
|
CAL XBRL Taxonomy Extension Calculation Linkbase Document
|
X
|
|
|
|
|
101
|
LAB XRBL Taxonomy Label Linkbase Document
|
X
|
|
|
|
|
101
|
PRE XBRL Taxonomy Extension Presentation Linkbase Document
|
X
|
|
|
|
|
101
|
DEF XBRL Taxonomy Extension Definition Linkbase Document
|
X
|
|
|
|
23
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
METALS CORPORATION
(Registrant)
|
|
|
|
|
|
|
|
Date: February 16,
2021
|
By:
|
/s/ Douglas D
Cole
|
|
|
|
|
Douglas D Cole
|
|
|
|
|
Chief Executive
Officer,
Chief Financial
Officer
|
|
24
