Notes
to the Condensed Consolidated Financial Statements
For
the period ended March 31, 2022
(unaudited)
1.
Organization and Nature of Operations
American
Battery Technology Company (“ABTC”) is a startup company in the lithium-ion battery industry that is working to increase
the domestic US production of battery materials, such as lithium, nickel, cobalt and manganese through its engagement in the exploration
of new primary resources of battery metals, in the development and commercialization of new technologies for the extraction of these
battery metals from primary resources, and in the commercialization of an internally developed integrated process for the recycling of
lithium-ion batteries. Through this three-pronged approach ABTC is working to both increase the domestic production of these battery
materials, and to ensure that as these materials reach their end of lives that the constituent elemental battery metals are returned
to the domestic manufacturing supply chain in a closed-loop fashion.
The Company was incorporated under
the laws of the State of Nevada on October 6, 2011 for the purpose of acquiring rights to mineral properties with the eventual objective
of being a producing mineral company. We have limited operating history and have not yet generated or realized any revenues
from our activities. Our principal executive offices are located at 100 Washington Ave., Suite 100, Reno, NV 89503.
Liquidity
and Capital Resources
During
the nine months ended March 31, 2022, the Company incurred a net loss of $26.7
million and used cash of $7.3
million for operating activities. At March
31, 2022, the Company has an accumulated deficit of $131.8
million.
On
September 27, 2021, the Company secured net proceeds of $36,938,651 to construct and commission its lithium-ion battery recycling pilot
plant, fund operations, and increase research and development activities. The Company believes its recent capital raise, and its current
cash holdings will be sufficient to meet its future working capital needs. The Company cannot give assurance that it can increase its
cash balances or limit its cash consumption and thus maintain sufficient cash balances for its planned operations. The Company may need
to raise additional capital in the future. However, the Company cannot assure that it will be able to raise additional capital on acceptable
terms, or at all. Subject to the foregoing, management believes that the Company has sufficient capital and liquidity to fund its operations
for at least one year from the date of issuance of the accompanying 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.
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) and LithiumOre Corporation (formerly Lithortech
Resources Inc) and ABTC AG, LLC. All inter-company accounts and transactions have been eliminated upon consolidation.
| b) | Interim
Financial Statements |
These
condensed consolidated financial statements have been prepared on the same basis as the annual consolidated financial statements and
in the opinion of management, reflect all adjustments, which include only normal recurring adjustments, necessary to present fairly the
Company’s financial position, results of operations and cash flows for the periods shown. The 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, 2021. The results of operations for such periods are not necessarily indicative of the results expected for a full year or for any
future period.
The
preparation of these condensed consolidated financial statements in conformity with US GAAP requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date
of the financial statements and the reported amounts of revenues and expenses during the reporting period. The Company regularly evaluates
estimates and assumptions related to the fair value of stock-based compensation, recoverability of long-lived assets and deferred income
tax asset valuation allowances.
The
Company bases its estimates and assumptions on current facts, historical experience and various other factors that it believes to be
reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and
liabilities and the accrual of costs and expenses that are not readily apparent from other sources. The actual results experienced by
the Company may differ materially and adversely from the Company’s estimates. To the extent there are material differences between
the estimates and the actual results, future results of operations will be affected.
AMERICAN
BATTERY TECHNOLOGY COMPANY
Notes
to the Condensed Consolidated Financial Statements
For
the period ended March 31, 2022
(unaudited)
2.
Summary of Significant Accounting Policies (continued)
The
Company computes net income (loss) per share in accordance with ASC 260, Earnings per Share. ASC 260 requires presentation of both basic
and diluted earnings per share (“EPS”) on the face of the income statement. Basic EPS is computed by dividing net income
(loss) available to common shareholders (numerator) by the weighted average number of shares outstanding (denominator) during the period.
Diluted EPS gives effect to all dilutive potential common shares outstanding during the period using the treasury stock method and convertible
preferred stock using the if-converted method. In computing diluted EPS, the average stock price for the period is used in determining
the number of shares assumed to be purchased from the exercise of stock options, warrants and convertible shares. Diluted EPS excludes
all dilutive potential shares if their effect is anti-dilutive. At March 31, 2022, the Company had 41,210,611 share purchase warrants
outstanding exercisable into 41,210,611 common shares that are dilutive in nature.
| e) | Recent
Accounting Pronouncements |
In
August 2020, the Financial Accounting Standards Board (“FASB”) issued ASU No. 2020-06, Debt—Debt with Conversion and
Other Options (Subtopic 470-20) and Derivatives and Hedging - Contracts in Entity’s Own Equity (Subtopic 815-40), which simplifies
the accounting for convertible instruments. The guidance removes certain accounting models that separate the embedded conversion features
from the host contract for convertible instruments, requiring bifurcation only if the convertible debt feature qualifies as a derivative
under ASC 815 or for convertible debt issued at a substantial premium. The ASU is effective for annual reporting periods beginning after
December 15, 2021, including interim reporting periods within those annual periods, with early adoption permitted no earlier than the
fiscal year beginning after December 15, 2020. The Company is currently evaluating the timing and method of adoption and the related
impact of the new guidance on the earnings per share and on its financial statements.
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. The Company is currently evaluating the timing and method of adoption and the related impact of the new guidance on the earnings
per share and on its financial statements.
3.
Property and Equipment
Schedule
of Property and Equipment
| |
Building | | |
Equipment | | |
Vehicles | | |
Land | | |
Total | |
Cost: | |
| | | |
| | | |
| | | |
| | | |
| | |
| |
| | | |
| | | |
| | | |
| | | |
| | |
Balance,
June 30, 2021 | |
$ | - | | |
$ | 99,466 | | |
$ | 61,916 | | |
$ | 5,340,621 | | |
$ | 5,502,003 | |
Additions | |
| | | |
| 38,327 | | |
| - | | |
| 1,571,322 | | |
| 1,609,649 | |
Construction
in process | |
| 7,732,151 | | |
| 1,139,030 | | |
| - | | |
| - | | |
| 8,871,181 | |
Impairment
loss | |
| - | | |
| - | | |
| - | | |
| (186,779 | ) | |
| (186,779 | ) |
| |
| | | |
| | | |
| | | |
| | | |
| | |
Balance,
March 31, 2022 | |
$ | 7,732,151 | | |
$ | 1,276,823 | | |
$ | 61,916 | | |
$ | 6,725,164 | | |
$ | 15,796,054 | |
| |
| | | |
| | | |
| | | |
| | | |
| | |
Accumulated
Depreciation: | |
| | | |
| | | |
| | | |
| | | |
| | |
| |
| | | |
| | | |
| | | |
| | | |
| | |
Balance,
June 30, 2021 | |
$ | - | | |
$ | 4,356 | | |
$ | 13,422 | | |
$ | - | | |
$ | 17,778 | |
Additions | |
| - | | |
| 27,808 | | |
| 9,010 | | |
| - | | |
| 36,818 | |
Balance,
March 31, 2022 | |
$ | - | | |
$ | 32,164 | | |
$ | 22,432 | | |
$ | - | | |
$ | 54,596 | |
| |
| | | |
| | | |
| | | |
| | | |
| | |
Carrying
Amounts: | |
| | | |
| | | |
| | | |
| | | |
| | |
Balance,
June 30, 2021 | |
$ | - | | |
$ | 95,110 | | |
| 48,494 | | |
$ | 5,340,621 | | |
$ | 5,484,225 | |
Balance,
March 31, 2022 | |
$ | 7,732,151 | | |
$ | 1,244,659 | | |
| 39,484 | | |
$ | 6,725,164 | | |
$ | 15,741,458 | |
The
building and equipment expenditures are currently under construction and are not available for use.
The
Company has impaired the carrying value of land purchased February 2021 in Tonopah, NV. The Company adjusted the carrying value of the
land to that of the closing price stated in the agreement ($85,000). The impairment is due to the change in value of the stock from the
time the agreement was originally executed to the time the stock was transferred into the mutual escrow account. The execution of the
contract in full, including title transfer, did not occur until September 2021. The Company has adjusted the carrying value of the land
using the agreed-upon contract price of the parcel at inception of the contract. Loss on impairment of $186,779 is recognized in general
and administrative expenses for the nine months ended March 31, 2022.
AMERICAN
BATTERY TECHNOLOGY COMPANY
Notes
to the Condensed Consolidated Financial Statements
For
the period ended March 31, 2022
(unaudited)
4.
Intangible Assets
Schedule
of Intangible assets
| |
Water Rights | |
| |
| | |
| |
| | |
Balance, June 30, 2021 | |
$ | 1,643,160 | |
Additions | |
| 2,172,750 | |
Impairment loss | |
| - | |
Balance, March 31, 2022 | |
$ | 3,815,910 | |
To
date, the Company has purchased water rights in
the City of Fernley, Nevada for $3,815,910.
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 given that there are no expiration dates
on the water rights acquired by the Company.
5.
Related Party Transactions
As
of March 31, 2022, the Company owes $205,646 (June 30, 2021 - $205,646) to two former executives of the Company for advances made to
the Company to fund day-to-day operations. The amounts owing are unsecured, non-interest bearing, and due on demand.
6.
Leases
A
lease provides the lessee the right to control the use of an identified asset for a period in exchange for consideration. Operating lease
right-of-use assets (“ROU assets”) are presented within the asset section of the Company’s Consolidated Balance Sheets,
while lease liabilities are included within the liability section of the Company’s Consolidated Balance Sheets as of March 31,
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.
The
discount rate used to determine the commencement date present value of lease payments is the interest rate implicit in the lease, or
when that is not readily determinable, the Company estimates a rate of 8.0% for the period ending March 31, 2022 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, 2022 were $38,121.
As
of March 31, 2022, short term lease liabilities of $86,105 are included in “Accounts payable and accrued expenses” on the
consolidated balance sheets. The table below presents total operating lease ROU assets and lease liabilities at:
Schedule
of Total Operating Lease ROU Assets and Lease Liabilities
| |
March
31, 2022
| | |
June
30, 2021 | |
Operating lease right-of-use asset | |
$ | 273,449 | | |
$ | - | |
Operating lease liabilities | |
$ | 290,186 | | |
$ | - | |
The
table below presents the maturities of operating lease liabilities as of March 31, 2022:
Schedule
of Maturity of Operating Lease Liabilities
| |
| | |
March 31, 2023 | |
$ | 106,591 | |
March 31, 2024 | |
| 130,148 | |
March 31, 2025 | |
| 88,631 | |
Total lease payments | |
| 325,370 | |
Less: discount | |
| (35,184 | ) |
| |
| | |
Total operating lease liabilities | |
$ | 290,186 | |
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, 2022.
Schedule
of Weighted Average Remaining Lease Term For Operating Leases and Weighted Average Discount Rate
Weighted average lease term (years) | |
| 2.6 | |
Weighted average discount rate | |
| 8.0 | % |
AMERICAN
BATTERY TECHNOLOGY COMPANY
Notes
to the Condensed Consolidated Financial Statements
For
the period ended March 31, 2022
(unaudited)
7.
Derivative Liabilities
The
Company records the fair value of the conversion option of convertible debentures in accordance with ASC 815, Derivatives and Hedging.
The fair value of the derivatives was calculated using a multi-nominal lattice model. The fair value of the derivative liabilities is
revalued on each balance sheet date with corresponding gains and losses recorded in the condensed consolidated statements of operations.
For
the nine months ended March 31, 2022, the Company did not record an expense associated with the change in fair market value of derivatives
because the Company had no derivative liability at March 31, 2022 and June 30, 2021. For the nine months ended March 31, 2021,
the Company recognized an expense related to the change in fair value of derivative liabilities of $19,655,296,
offset by gain on settlement of debt of $18,683,279
for the same period.
8.
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 shares allow the holder to vote 1,000
shares for each share of Series A stock in any vote of the shareholders of the Company and the Board is authorized to issue such preferred
stock as is necessary. On August 25, 2021, the Board approved a resolution to retire all the outstanding Series A shares of Preferred
Stock. On January 27, 2022, the Company redeemed all outstanding shares of Series A Preferred Stock. The Company had Series A Preferred
Stock issued and outstanding of nil and 500,000 as of March 31, 2022 and June 30, 2021, respectively.
Series
B Preferred Stock
As
of March 31, 2022 and June 30, 2021, 2,000,000 shares authorized with a par value of $10.00, no shares issued.
Series
C Preferred Stock
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 $2,414,500.
Each unit is comprised of 5,000
shares of Series C Preferred Stock (each share
of Series C Preferred Stock is convertible into 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 $381,622 of note payable and $18,378 of accrued interest.
During
the nine months ended March 31, 2022, the Series C Preferred Stockholders converted 207,700 shares of Series C Preferred Stock (par value
of $2,077,000) to 16,616,000 shares of common stock.
On
February 2, 2022 the Company issued a Mandatory Conversion Notice to the remaining Series C Preferred stockholders. The notice converts
all outstanding shares of Series C Preferred Stock to common stock at a conversion ratio of 80 shares of common stock for each share
of Series C Preferred Stock.
On
February 8, 2022 the Company issued $125,700 in dividend payments to Series C stockholders that held shares from date of issuance. No
remaining dividends are expected to be paid in relation to Series C Preferred Stock as there are no remaining Series C Preferred Stock
outstanding as of March 31, 2022.
Common
Stock
Nine
months ended March 31, 2022
During
the period, the Company issued 16,616,000 common shares pursuant to the conversion of 207,700 shares of Series C Preferred Stock at a
conversion ratio of 80 shares of common stock for each share of Series C Preferred Stock.
During
the period, the Company issued 25,389,611 units for proceeds of $39,100,001 pursuant to a private placement issuance at $1.54 per share.
Each unit is comprised of one common share of the Company and one share purchase warrant, where each share purchase warrant is exercisable
into one common share of the Company at $1.75 per share for a period of five years from the issuance date. As part of the financing,
the Company paid $2,161,350 of share issuance costs and issued 1,955,000 warrants as a commission fee, which are exercisable at $1.54
per common share for a period of three years from the date of the issuance. The fair value of the commission warrants was $2,699,039
and was determined based on the Black-Scholes option pricing model assuming volatility of 166%, risk-free rate of 0.56%, expected life
of three years, and no expected forfeitures or dividends.
During
the period, the Company issued 14,293,366
common shares pursuant the exercise of 14,000,000
share purchase warrants for proceeds of $956,250,
of which 250,000
share purchase warrants, pursuant an aggregate
cash exercise price of $18,750,
exercised during the fiscal year ended June 30, 2021.
During
the period, the Company issued 3,000,000 common shares pursuant the Share Purchase Agreement, effective April 2, 2021, for aggregate
proceeds of $3,988,005.
During
the period, the Company issued 13,128,728 common shares for services with a fair value of $18,086,443, including 8,566,319 common shares
with a fair value of $11,993,327 to officers and directors of the Company. As of March 31, 2022, the Company has shares of common stock
issuable for professional services with a fair value of $7,500 for professional services to a current director of the Company.
On
January 27, 2022, the Company issued 668,150
shares pursuant a cashless exercise of
750,000
share purchase warrants.
On
January 27, 2022, the Company and a former executive agreed to cancel, for no consideration, 1,000,000
previously issued shares with an initial value
of $2,030,000.
The Company has recorded a contra-expense related to the cancelled shares.
AMERICAN
BATTERY TECHNOLOGY COMPANY
Notes
to the Condensed Consolidated Financial Statements
For
the period ended March 31, 2022
(unaudited)
8.
Stockholders’ Equity (continued)
Common
Stock (continued)
Nine
months ended March 31, 2021
During
the period, the Company issued 22,685,750 common shares with a fair value of $7,913,391 for the conversion of $2,002,876 of note payable,
$77,723 of accrued interest and fees and $21,429,714 of derivative liability resulting in a gain on settlement of $15,596,922.
During
the period, the Company issued 33,650,036 common shares for services with a fair value of $27,072,162 for professional services, including
7,023,585 shares issued to former directors of the Company with a fair value of $4,837,500.
On
October 6, 2020, the Company entered into a Purchase Agreement (the “Agreement”) with Tysadco Partners LLC, a Delaware limited
company (“Tysadco”). Pursuant to the Agreement, Tysadco
committed to purchase, subject to certain restrictions and conditions, up to $10,000,000 worth of the Company’s common stock over
a period of 24 months from the effectiveness of the registration statement registering the resale of shares purchased by Tysadco. The Company shall have the right, but not the obligation, to
direct Tysadco to buy the lesser of $250,000
in common stock per sale or 200% of the average shares traded for the 10 days prior to the closing request date, at a purchase price of 85% of the of the two lowest individual daily
VWAPs during the five (5) trading days commencing on the first trading day following delivery and clearing of the delivered shares, with
a minimum request of $25,000.
During
the period, 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 period, the Company issued 36,947,680
common shares pursuant to the cashless exercise
of share purchase warrants and 6,150,000
common shares pursuant to the exercise of share
purchase warrants for total proceeds of $531,250.
As of March 31, 2021, the Company had received additional $93,750
for future issuance of common shares.
9.
Share Purchase Warrants
Schedule
of Share Purchase Warrants Activity
| |
Number of Warrants | | |
Weighted
Average Exercise Price | |
| |
| | |
| |
Balance, June 30, 2021 | |
| 27,866,000 | | |
$ | 0.09 | |
Issued | |
| 27,344,611 | | |
$ | 1.73 | |
Exercised | |
| (14,000,000 | ) | |
$ | 0.08 | |
Expired | |
| - | | |
$ | - | |
Balance, March 31, 2022 | |
| 41,210,611 | | |
$ | 1.18 | |
Additional
information regarding share purchase warrants as of March 31, 2022, is as follows:
Schedule
of Additional Information Regarding Share Purchase Warrants
| |
Outstanding and Exercisable | |
Range of Exercise Prices | |
Number of Warrants | | |
Weighted Average Remaining Contractual Life (years) | |
| |
| | | |
| | |
0.075 | |
| 12,250,000 | | |
| 2.6 | |
0.25 | |
| 1,616,000 | | |
| 1.8 | |
1.54 | |
| 1,955,000 | | |
| 2.5 | |
1.75 | |
| 25,389,611 | | |
| 4.5 | |
| |
| 41,210,611 | | |
| 3.7 | |
10.
Restricted Share Units
The
Company has established a restricted share unit (RSU) incentive plan for executives, directors, and certain employees. Awards generally
vest over a four-year period at a rate of 25% per annum commencing on the first anniversary of the grant date.
No
stock-based compensation has been recorded in relation
to the 2021 Equity Incentive Stock Plan for the nine months ended March 31, 2022 and nine months ended March 31, 2021.
11.
Commitments and Contingencies
From
time to time, the Company may become involved in various lawsuits and legal proceedings, which arise in the ordinary course of business.
Litigation is subject to inherent uncertainties, and an adverse result in these or other matters may arise from time to time that may
harm business. Management is currently not aware of any such legal proceedings or claims that could have, individually or in the aggregate,
a material adverse effect on our business, financial condition, or operating results.
AMERICAN
BATTERY TECHNOLOGY COMPANY
Notes
to the Condensed Consolidated Financial Statements
For
the period ended March 31, 2022
(unaudited)
11.
Commitments and Contingencies (Continued)
Operating
Leases
We
lease our principal office location in Reno, Nevada. We also lease two adjacent Lab spaces in the University of Nevada, Reno on short
term leases. The principal office location lease expires on November 30, 2024 and the Lab leases expire on March 15, 2023. Consistent
with the guidance in ASC 842, we have recorded the principal office lease in our consolidated balance sheet as an operating lease. For
further information on operating lease commitments, refer to Note 6 - Leases.
Financial
Assurance:
Nevada
and other states, as well as federal regulations governing mine operations on federal land, require financial assurance to be provided
for the estimated costs of mine reclamation and closure, including groundwater quality protection programs. ABTC has satisfied financial
assurance requirements using a combination of cash bonds and surety bonds. The amount of financial assurance ABTC is required to provide
will vary with changes in laws, regulations, reclamation and closure requirements, and cost estimates. At March 31, 2022, ABTC’s
financial assurance obligations associated with U.S. mine closure and reclamation/restoration cost estimate totaled $47,730, for which
the Company is legally required to satisfy its financial assurance obligations for its mining properties in Nevada.
12.
Subsequent Events
The
Company has evaluated subsequent events through the date the financial statements were available to be issued and has not identified
any additional subsequent events requiring adjustments to, or disclosures in the accompanying condensed financial statements.