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 March 31, 2021
   
[  ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE EXCHANGE ACT OF 1934

 

Commission File number: 000-55088

 

AMERICAN BATTERY METALS CORPORATION

 

(Exact name of registrant as specified in its charter)

 

Nevada   33-1227980
(State or other jurisdiction   (I.R.S. Employer
of incorporation or organization)   Identification No.)

 

  930 Tahoe Blvd. Suite 802-16, Incline Village, NV 89451  
  (Address of principal executive offices)  

 

  (775) 473-4744  
  (Registrant’s telephone number)  

  

 

(Former name, former address and former fiscal year, if changed since last report)

 

Securities registered pursuant to Section 12(b) of the Act: None

 

Indicate by check mark whether the registrant (1) filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the past 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

Yes [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.

 

[  ]   Large accelerated filer   [  ] Accelerated filer
[X]   Non-accelerated filer   [X] 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 May 13, 2021 were 564,882,727.

 

 

 

 
 

 

AMERICAN BATTERY METALS CORPORATION

Table of Contents

 

   

Page

Number

PART I. FINANCIAL INFORMATION  
     
ITEM I. Financial Statements 3
     
  Condensed Consolidated Balance Sheets (unaudited) as at March 31, 2021 and June 30, 2020 4
     
  Condensed Consolidated Statements of Operations (unaudited) for the three and nine months ended March 31, 2021 and 2020 5
     
  Condensed Consolidated Statements of Stockholders’ Equity (Deficit) (unaudited) for the three and nine months ended March 31, 2021 and 2020 6
     
  Condensed Consolidated Statements of Cash Flows (unaudited) for the nine months ended March 31, 2021 and 2020 9
     
  Notes to the Condensed Consolidated Financial Statements (unaudited) 12
     
ITEM 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations 20
     
ITEM 3. Quantitative and Qualitative Disclosures about Market Risk 23
     
ITEM 4. Controls and Procedures 23
     
PART II. OTHER INFORMATION  
     
ITEM 1. Legal Proceedings 24
     
ITEM 1A. Risk Factors 24
     
ITEM 2. Unregistered Sales of Equity Securities and Use of Proceeds 24
     
ITEM 3. Defaults Upon Senior Securities 24
     
ITEM 4. Mine Safety Disclosure 24
     
ITEM 5. Other Information 25
     
ITEM 6. Exhibits 25
     
SIGNATURES 26

 

2
 

 

PART I – FINANCIAL STATEMENTS

 

ITEM 1. FINANCIAL STATEMENTS

 

The accompanying unaudited condensed consolidated financial statements have been prepared by the Company’s management in conformity with accounting principles generally accepted in the United States of America. In the opinion of management, all adjustments considered necessary for a fair presentation of the results of operations and financial position have been included and all such adjustments are of a normal recurring nature.

 

Operating results for the nine months ended March 31, 2021 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)

 

    March 31, 2021
$
    June 30, 2020
$
 
             
ASSETS                
                 
Current assets                
                 
Cash     6,949,269       829,924  
Prepaid expenses     489,366       237,334  
                 
Total current assets     7,438,635       1,067,258  
                 
Investment in joint venture     35,250       35,250  
Property and equipment     1,162,445       58,806  
Intangible assets     817,000        
                 
Total assets     9,453,330       1,161,314  
                 
LIABILITIES                
                 
Current liabilities                
                 
Accounts payable and accrued liabilities     635,435       514,838  
Due to related parties     205,646       624,949  
Derivative liability           4,519,654  
Notes payable, net of unamortized discount of $nil and $2,084,051, respectively           127,149  
Current portion of loans payable           8,580  
                 
Total current liabilities     841,081       5,795,170  
                 
Loans payable     255,992       306,648  
                 
Total liabilities     1,097,073       6,101,818  
                 
STOCKHOLDERS’ EQUITY (DEFICIT)
               
                 
Series A Preferred Stock
Authorized: 1,000,000 preferred shares, par value of $0.001 per share Issued and outstanding: 500,000 preferred shares and 300,000 preferred shares, respectively
    500       300  
                 
Series C Preferred Stock
Authorized: 1,000,000 preferred shares, par value of $10 per share Issued and outstanding: 240,200 and nil preferred shares, respectively
    2,402,000        
                 
Common Stock
Authorized: 1,200,000,000 common shares, par value of $0.001 per share Issued and outstanding: 544,868,931 and 365,191,213 common shares, respectively
    544,866       365,191  
                 
Additional paid-in capital     104,710,521       55,452,951  
                 
Share subscriptions received     93,750       2,450,000  
                 
Deficit     (99,395,380 )     (63,208,946 )
                 
Total stockholders’ equity (deficit)     8,356,257       (4,940,504 )
                 
Total liabilities and stockholders’ equity (deficit)     9,453,330       1,161,314  

 

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

 

4
 

 

AMERICAN BATTERY METALS CORPORATION

Condensed Consolidated Statements of Operations

(unaudited)

 

   

For the three months

ended

March 31, 2021

$

   

For the three months

ended

March 31, 2020

$

   

For the nine months

ended

March 31, 2021

$

   

For the nine months

ended

March 31, 2020

$

 
                         
Expenses                                
                                 
Exploration costs     211       229,335       109,910       564,014  
General and administrative     6,806,803       1,786,600       31,727,157       3,929,689  
                                 
Net loss from operations     (6,807,014 )     (2,015,935 )     (31,837,067 )     (4,493,703 )
                                 
Other income (expense)                                
                                 
Accretion and interest expense     (713,970 )     (2,503,804 )     (2,914,470 )     (4,723,881 )
Change in fair value of derivative liability     (12,637,125 )     (3,558,652 )     (19,655,296 )     (4,498,166 )
Gain (loss) on settlement of debt     15,220,668       565,405       18,683,279       779,455  
Financing cost     (41 )           (405,137 )      
Other income     1,396             1,396       3,746  
Other expense     (51,270 )           (59,139 )      
                                 
Total other income (expense)     1,819,658       (5,497,051 )     (4,349,367 )     (8,438,846 )
                                 
Net loss     (4,987,356 )     (7,512,986 )     (36,186,434 )     (12,932,549 )

Net loss per share, basic and diluted

    (0.01 )     (0.03 )     (0.08 )     (0.07 )

Weighted average shares outstanding, basic and diluted

    506,775,985       266,995,894       476,505,278       179,486,439  

 

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

 

5
 

 

AMERICAN BATTERY METALS CORPORATION

Condensed Consolidated Statement of Stockholders’ Equity (Deficit)

(unaudited)

 

For the nine months ended March 31, 2021

 

    Series A
Preferred Shares
    Series C
Preferred Shares
    Common Shares    

Additional

Paid-In

    Subscription          
    Number     Amount
$
    Number     Amount
$
    Number     Amount
$
   

Capital

$

   

Received

$

   

Deficit

$

   

Total

$

 
                                                             
Balance, June 30, 2020     300,000       300                   365,191,213       365,191       55,452,951       2,450,000       (63,208,946 )     (4,940,504 )
                                                                                 
Shares issued for services     200,000       200                   33,650,036       33,650       27,038,312                   27,072,162  
                                                                                 
Shares issued for exercise of warrants                             43,097,680       43,096       488,154                   531,250  
                                                                                 
Shares issued from private placement                 241,450       2,414,500       60,625,000       60,625       2,389,375       (2,450,000 )           2,414,500  
                                                                                 
Shares issued pursuant to note conversion                 40,000       400,000       22,685,750       22,685       7,890,707                   8,313,392  
                                                                                 
Shares issued pursuant to Series C preferred shares conversion                 (41,250 )     (412,500 )     3,300,000       3,300       409,200                    
                                                                                 
Shares issued pursuant to share purchase agreement                             16,250,000       16,250       10,415,388                   10,431,638  
                                                                                 
Shares issued pursuant to property purchase agreement                             69,252       69       271,710                   271,779  
                                                                                 
Share subscriptions received                                               93,750             93,750  
                                                                                 
Beneficial conversion feature on convertible debts                                         271,000                   271,000  
                                                                                 
Share purchase warrants issued                                         83,724                   83,724  
                                                                                 
Net loss for the period                                                     (36,127,295 )     (36,127,295 )
                                                                                 
Dividends declared                                                     (59,139 )     (59,139 )
                                                                                 
Balance, March 31, 2021     500,000       500       240,200       2,402,000       544,868,931       544,866       104,710,521       93,750       (99,395,380 )     8,356,257  

 

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

 

6
 

 

AMERICAN BATTERY METALS CORPORATION

Condensed Consolidated Statement of Stockholders’ Equity (Deficit)

(unaudited)

 

For the three months ended March 31, 2021

 

    Series A  Preferred Shares     Series C  Preferred Shares     Common Shares    

Additional

Paid-In

    Share subscriptions              
    Number     Amount
$
    Number     Amount
$
    Number     Amount
$
    Capital
$
    Received
$
    Receivable
$
    Deficit
$
    Total
$
 
                                                                   
Balance, December 31, 2020     500,000       500       281,450       2,814,500       502,622,746       502,622       84,517,981       35,000       (6,250 )     (94,408,024 )     (6,543,671 )
                                                                                         
Shares issued for services                             2,510,036       2,510       4,457,182       (35,000 )                 4,424,692  
                                                                                         
Shares issued for exercise of warrants                             30,716,118       30,715       500,535                         531,250  
                                                                                         
Shares issued pursuant to note conversion                             1,400,779       1,400       5,326,525                         5,327,925  
                                                                                         
Shares issued pursuant to share purchase agreement                             4,250,000       4,250       9,227,388                         9,231,638  
                                                                                         
Shares issued pursuant to Series C preferred shares conversion                 (41,250 )     (412,500 )     3,300,000       3,300       409,200                          
                                                                                         
Shares issued pursuant to property purchase agreement                             69,252       69       271,710                         271,779  
                                                                                         
Share subscriptions received                                               93,750       6,250             100,000  
                                                                                         
Net loss for the period                                                           (4,936,086 )     (4,936,086 )
                                                                                         
Dividends declared                                                           (51,270 )     (51,270 )
                                                                                         
Balance, March 31, 2021     500,000       500       240,200       2,402,000       544,868,931       544,866       104,710,521       93,750             (99,395,380 )     8,356,257  

 

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

 

7
 

 

AMERICAN BATTERY METALS CORPORATION

Condensed Consolidated Statement of Stockholders’ Equity (Deficit)

(unaudited)

 

For the nine months ended March 31, 2020

 

    Series A
Preferred Shares
    Common Shares    

Additional

Paid-In

    Share              
    Number     Amount
$
    Number     Amount
$
    Capital
$
    Subscriptions
$
    Deficit
$
    Total
$
 
                                                 
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                 26,446,200       26,446       1,587,022                   1,613,468  
                                                                 
Shares issued pursuant to note conversion                 181,426,905       181,426       9,580,114                   9,761,540  
                                                                 
Shares issued for warrant exercise                 4,310,807       4,311       (4,311 )                  
                                                                 
Share subscriptions received                                   1,125,000             1,125,000  
                                                                 
Share purchase warrants issued                             153,315                   153,315  
                                                                 
Net loss for the period                                         (12,932,549 )     (12,932,549 )
                                                                 
Balance, March 31, 2020     300,000       300       328,418,880       328,418       54,165,137       1,125,000       (60,351,589 )     (4,732,734 )

 

For the three months ended March 31, 2020

 

Balance, December 31, 2019     300,000       300       170,789,875       170,789       46,433,738       275,000       (52,838,603 )     (5,958,776 )
                                                                 
Shares issued for services                 17,236,200       17,236       672,212                   689,448  
                                                                 
Shares issued pursuant to note conversion                 139,078,983       139,079       7,001,975                   7,141,054  
                                                                 
Shares issued for warrant exercise                 1,313,822       1,314       (1,314 )                  
                                                                 
Share subscriptions received                                   850,000             850,000  
                                                                 
Share purchase warrants issued                             58,526                   58,526  
                                                                 
Net loss for the period                                         (7,512,986 )     (7,512,986 )
                                                                 
Balance, March 31, 2020     300,000       300       328,418,880       328,418       54,165,137       1,125,000       (60,351,589 )     (4,732,734 )

 

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

 

8
 

 

AMERICAN BATTERY METALS CORPORATION

Condensed Consolidated Statements of Cash Flows

(unaudited)

 

    For the
nine months
ended
March 31, 2021
$
    For the
nine months
ended
March 31, 2020
$
 
             
Operating Activities                
                 
Net loss     (36,186,434 )     (12,932,549 )
                 
Adjustments to reconcile net loss to net cash used in operating activities:                
                 
Accretion expense     2,803,429       4,280,275  
Change in fair value of derivative liability     19,655,296       4,498,166  
Gain on settlement of debt     (18,683,279 )     (779,455 )
Shares issued for services     27,072,162       1,613,468  
Discount on convertible notes payable     73,500       344,583  
Warrants issued     83,724       153,315  
Dividends declared     59,139        
Depreciation     7,741        
                 
Changes in operating assets and liabilities:                
                 
Prepaid expenses     (184,253 )     (84,768 )
Accounts payable and accrued liabilities     561,498       312,561  
Due to related parties     (419,303 )     (31,406 )
                 
Net Cash Used In Operating Activities     (5,156,780 )     (2,625,810 )
                 
Investing Activities                
                 
Acquisition of water rights     (817,000 )      
Acquisition of land     (907,380 )      
                 
Net Cash Used In Investing Activities     (1,724,380 )      
                 
Financing Activities                
                 
Proceeds from issuance of convertible notes payable     1,350,000       2,834,450  
Proceeds from exercise of share purchase warrants     531,250        
Proceeds from share purchase agreement     10,431,638        
Repayment of convertible notes payable     (1,761,397 )     (1,067,956 )
Repayment of loan payable     (59,236 )      
Proceeds from private placement     2,508,250       1,125,000  
                 
Net Cash Provided By Financing Activities     13,000,505       2,891,494  
                 
Change in Cash     6,119,345       265,684  
                 
Cash – Beginning     829,924       16,690  
                 
Cash – End     6,949,269       282,374  
                 
Supplemental disclosures:                
                 
Interest paid     63,216       46,817  
Income taxes paid            

 

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

 

9
 

 

AMERICAN BATTERY METALS CORPORATION

Condensed Consolidated Statements of Cash Flows (continued)

(unaudited)

 

             
Non-cash investing and financing activities:                
                 
Discount on convertible debenture     403,378       3,081,542  
Original issuance discount on convertible debentures     51,000       129,700  
Beneficial conversion feature on convertible debentures     271,000        
Common shares issued for conversion of debt     7,913,392       9,592,907  
Common shares issued for conversion of Series C preferred shares     412,500        
Common shares issued for property purchase     271,779        
Series C preferred shares issued for conversion of debt     400,000        

 

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

 

10
 

 

AMERICAN BATTERY METALS CORPORATION

Notes to the Condensed Consolidated Financial Statements

For the period ended March 31, 2021

(unaudited)

 

1. Organization and Nature of Operations

 

The accompanying 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 LithiumOre Corporation (formerly 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 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 March 31, 2021, the Company has not earned any revenue, used $5,156,780 of cash in operating activities, and has an accumulated deficit of $99,395,380. 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 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 condensed consolidated financial statements and related notes of the Company have been prepared and presented 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 and LithiumOre Corporation (formerly Lithortech Resources Inc). All inter-company accounts and transactions have been eliminated on consolidation.

 

(b) Use of Estimates

 

The preparation of these consolidated financial statements in conformity with U.S. 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 consolidated financial statements and the reported amounts of expenses during the reporting period. The Company regularly evaluates estimates and assumptions related to the fair value of stock-based compensation, the determination of the useful lives and recoverability of property and equipment, intangible assets, and valuation of derivative liability. 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.

 

11
 

 

AMERICAN BATTERY METALS CORPORATION

Notes to the Condensed Consolidated Financial Statements

For the period ended March 31, 2021

(unaudited)

 

2. Summary of Significant Accounting Policies (continued)

 

(c) Intangible Assets

 

Intangible assets include water rights that are measured at cost less accumulated impairment losses. These intangible assets have been assessed with indefinite lives from the date that they are available for use, since this most closely reflects the expected pattern of consumption of the future economic benefits embodied in the asset. Useful lives and residual values are reviewed at each financial year end and adjusted if appropriate.

 

These assets are reviewed for impairment or obsolescence when events or changes in circumstances indicate that the carrying amount may not be recoverable. If impaired, intangible assets are written down to fair value based on discounted cash flows or other valuation techniques.

 

3. Convertible Notes Payable

 

    March 31,
2021
$
    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  

 

12
 

 

AMERICAN BATTERY METALS CORPORATION

Notes to the Condensed Consolidated Financial Statements

For the period ended March 31, 2021

(unaudited)

 

3. Convertible Notes Payable (continued)

 

    March 31,
2021
$
    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  

 

13
 

 

AMERICAN BATTERY METALS CORPORATION

Notes to the Condensed Consolidated Financial Statements

For the period ended March 31, 2021

(unaudited)

 

3. Convertible Notes Payable (continued)

 

    March 31,
2021
$
    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 $ nil (June 30, 2020 - $nil)            
                 
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 $ nil (June 30, 2020 - $nil)            
                 
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 $ nil (June 30, 2020 - $nil)            
                 
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 $nil (June 30, 2020 - $nil)            
                 
          127,149  

 

During the nine months ended March 31, 2021, the Company paid $1,824,613 (2019 - $1,114,773) for the settlement of $1,295,202 (2019 - $781,136) of outstanding principal balance of convertible notes, $63,216 (2019 - $46,817) of accrued interest, $403,938 (2019 - $nil) of financing costs, and $3,148,613 (2019 - $754,570) of derivative liabilities resulting in a gain on settlement of debt of $3,086,356 (2019 - $467,750).

 

4. Property and Equipment  

 

During the nine months ended March 31, 2021, the Company purchased land for $907,380 comprised of 12.44 acres and located at 395 Logan 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.

 

In addition, the Company entered into a purchase agreement on January 25, 2019 at a cost of $204,000 to purchase certain real property situate in the County of Nye, State of Nevada, described as: That portion of the South Half (S1/2) of the Northeast Quarter (NE1/4) of Section 11, and the Northwest Quarter (NW1/4) and the West Half (W1/2) of the Northeast Quarter (NE1/4) of Section 12, Township 9 North, Range 57 East, M.D.B.&M. The Company has not yet completed the transaction. The 271,799 common shares included in Condensed Consolidated Statements of Cash Flows under “Common shares issued for property purchase” represent a deposit on this land purchase.

 

14
 

 

AMERICAN BATTERY METALS CORPORATION

Notes to the Condensed Consolidated Financial Statements

For the period ended March 31, 2021

(unaudited)

 

4. Property and Equipment (continued)

 

    Vehicle
$
    Land
$
    Total
$
 
                   
Cost:                        
                         
Balance, June 30, 2020     61,916             61,916  
Additions           1,111,380       1,111,380  
                         
Balance, March 31, 2021     61,916       1,111,380       1,173,296  
                         
Accumulated Depreciation:                        
                         
Balance, June 30, 2020     3,110             3,110  
Additions     7,741             7,741  
                         
Balance, March 31, 2021     10,851             10,851  

 

Carrying Amounts:                        
                         
Balance, June 30, 2020     58,806             58,806  
Balance, March 31, 2021     51,065       1,111,380       1,162,445  

 

5. Intangible Assets

 

During the nine months ended March 31, 2021, the Company acquired 55 acre feet portion of certain beneficial interests (“Water Interests”) dedicated to the City of Fernley by that certain Water Rights Deed from three parties for $817,000. These water rights occur in the Fernley Area of Nevada Hydrographic Basin 76, and ensure the Company’s lithium-ion battery recycling pilot plant will have adequate water to operate at full capacity once construction is complete.

 

6. Related Party Transactions

 

  (a) As of March 31, 2021, the Company owed $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 March 31, 2021, the Company owed $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 March 31, 2021, the Company owed $nil (June 30, 2020 - $388,577) to the Chief Executive Officer of the Company. The amounts owing are unsecured, non-interest bearing, and due on demand.
     
  (d) As of March 31, 2021, the Company owed $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.

 

7. 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.

 

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. The Company does not expect to have any future liability regarding the joint venture.

 

15
 

 

AMERICAN BATTERY METALS CORPORATION

Notes to the Condensed Consolidated Financial Statements

For the period ended March 31, 2021

(unaudited)

 

8. 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 nine months ended March 31, 2021, the Company recorded a loss on the change in the fair value of derivative liability of $19,655,296 (2020 - $4,498,166). As of March 31, 2021, the Company recorded a derivative liability of $nil (June 30, 2020 - $4,519,654).

 

The following inputs and assumptions were used to value the derivative liabilities outstanding at March 31, 2021 and June 30, 2020:

 

    March 31,
2021
    June 30,
2020
 
             
Expected volatility     136-286 %     158-240 %
Risk free rate     0.04-0.14 %     0.16 %
Expected life (in years)     0.2-1.0       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     403,378  
Adjustment for conversion/prepayment     (24,578,328 )
Mark-to-market adjustment     19,655,296  
         
Balance, March 31, 2021      

 

9. 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 an interest rate of 7.99% per annum, which is due in February 2026. On January 25, 2021, the Company repaid the remaining balance of $54,000 (June 30, 2020 - $59,236) on the finance loan.
     
  (b) On May 7, 2020, the Company received $255,992 from the U.S. Small Business Administration as part of the 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.

 

10. 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 a management fee. On October 1, 2019, the Company had issued 300,000 Series A Preferred Stock with a fair value of $300 to directors of the company as a management fee.

 

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 $0.075 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.

 

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.

 

16
 

 

AMERICAN BATTERY METALS CORPORATION

Notes to the Condensed Consolidated Financial Statements

For the period ended March 31, 2021

(unaudited)

 

10.   Share Capital (continued)

 

During the nine months ended March 31, 2021, the Company converted 41,250 Series C Preferred Stock to 3,300,000 shares of common stock.

 

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.

 

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 29, 2020, the Company issued 14,400,000 common shares with a fair value of $20,160,000 for consulting services.

 

On January 19, 2021, the Company issued 486,451 common shares with a fair value of $702,192 for legal services.

 

On February 3, 2021, the Company issued 3,200,000 common shares pursuant to the conversion of 40,000 Series C Preferred Stock.

 

On February 5, 2021, the Company issued 69,252 common shares with a fair value of $271,779 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.

 

On February 10, 2021, the Company issued 1,400,779 common shares with a fair value of $5,327,924 for the conversion of $1,086,878 of notes payable, $26,882 of accrued interest, and $19,434,832 of derivative liability resulting in a gain on settlement of $15,220,668

 

On February 24, 2021, the Company issued 100,000 common shares pursuant to the conversion of 1,250 Series C Preferred Stock.

 

On March 5, 2021, the Company issued 2,000,000 common shares with a fair value of $3,720,000 for services, including 1,000,000 common shares issued to the CEO of the Company and 1,000,000 common shares issued to a director of the Company.

 

On March 31, 2021, the Company issued 23,585 common shares with a fair value of $37,500, including 4,717 common shares issued to the CEO of the Company and 18,868 common shares issued to certain directors of the Company.

 

17
 

 

AMERICAN BATTERY METALS CORPORATION

Notes to the Condensed Consolidated Financial Statements

For the period ended March 31, 2021

(unaudited)

 

10. Share Capital (continued)

 

Common Stock (continued)

 

During the nine months ended March 31, 2021, 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 $0.15 per share until October 31, 2024.

 

During the nine months ended March 31, 2021, 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. The fair value of $12,381 for the warrants exercised was transferred to common shares from additional paid-in capital. As of March 31, 2021, the Company has received additional $93,750 for future issuance.

 

On October 6, 2020, the Company entered into a Purchase Agreement (the “Purchase Agreement”) with Tysadco Partners LLC, a Delaware limited company (“Tysadco”). Pursuant to the Purchase Agreement, Tysadco committed to purchase, subject to certain restrictions and conditions, up to $10,000,000 worth of the Company’s common stock (the “Commitment”), 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. For the nine months ended March 31, 2021, the Company issued 16,250,000 common shares for proceeds of $10,431,638 and issued another 500,000 commitment shares with a fair value of 105,000.

 

11. Share Purchase Warrants

 

    Number of
warrants
    Weighted average exercise price
$
 
             
Balance, June 30, 2020     8,603,112       0.14  
Issued     71,516,000       0.13  
Exercised     (36,253,112 )     0.13  
                 
Balance, March 31, 2021     43,866,000       0.13  

 

Additional information regarding share purchase warrants as of March 31, 2021, is as follows:

 

      Outstanding and exercisable  
Range of
Exercise Prices
$
    Number of Warrants     Weighted Average Remaining Contractual Life (years)  
               
  0.075       29,750,000       2.43  
  0.15       500,000       0.05  
  0.25       13,616,000       0.85  
                     
          43,866,000       3.33  

 

12. Subsequent Events

 

  (a) On April 5, 2021, the Company issued 200,000 common shares pursuant to the conversion of 2,500 Series C preferred shares.
     
  (b) On April 9, 2021, the Company issued 9,072,886 common shares for 10,600,000 cashless exercise of warrants.
     
  (c) On April 12, 2021, the Company issued 400,000 common shares pursuant to the conversion of 5,000 Series C preferred shares.

 

18
 

 

AMERICAN BATTERY METALS CORPORATION

Notes to the Condensed Consolidated Financial Statements

For the period ended March 31, 2021

(unaudited)

 

12. Subsequent Events (continued)

 

  (d) On April 16, 2021, the Company entered into a share purchase agreement with Tysadco Partners LLC, a Delaware limited company (“Tysadco”). Pursuant to the agreement, Tysadco is committed to purchase, subject to certain restrictions and conditions, up to $75,000,000 worth of the Company’s common stock, over a period of 24 months. In connection with this agreement, the Company issued 750,000 shares of restricted common stock as commitment fee. Subsequent to the signing of the agreement, the Company issued 500,000 common shares for proceeds of $591,813 related to the prior share purchase agreement entered into with Tysadco in October, 2020.
     
  (e) On April 16, 2021, the Company entered into a purchase and sale agreement with D.L.G Associates, LLC whereby the Company agreed to pay $2,172,750 for 172.82-acre feet of certain water rights.
     
  (f) On April 28, 2021, the Company filed a prospectus for 9,090,910 shares of common stock at $1.65 for gross proceeds of $15,000,001. In connection with the prospectus, the Company incurred 7% placement Agents’ fees, $250,000 legal fees, and issued 272,727 Agents’ warrants. Each Agent’s warrant is exercisable into one share of the common stock at a price of $1.815 per share until April 28, 2026.

 

19
 

 

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” or the “Company”) has not realized any revenue from its exploration activities on the Nye County property and it is extremely doubtful that the mineral property will be able to produce any revenue for many years. Without an ore reserve ABMC cannot seek substantial investors to further fund the Company so that production can be achieved. Not until commercial production is realized will ABMC have any chance of recognizing any form of revenue.

 

Results of Operations

 

Revenues

 

During the three and nine months ended March 31, 2021 and 2020, the Company did not realize any revenues.

 

20
 

 

Expenses

 

Three Months Ended March 31, 2021 and 2020

 

During the three months ended March 31, 2021, the Company incurred $6,807,014 of operating expenses compared to $2,015,935 of operating expenses during the three months ended March 31, 2020. Overall, the increase in operating expense was due to the fact that the Company issued 2,510,036 common shares for consulting services with a fair value of $4,424,692 during the three months ended March 31, 2021, compared with the issuance of 17,236,200 common shares with a fair value of $689,448 for consulting services during the three months ended March 31, 2020. The remaining operating expenses of $2,382,322 not related to share-based compensation was higher than the prior period amount of $1,326,487 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 as compared to the prior year.

 

In addition to operating expenses, the Company incurred other income and expense of $1,819,658 during the three months ended March 31, 2021 compared to $5,497,051 during the three months ended March 31, 2020. The decrease was due to a gain on the settlement of debt of $15,220,668 for the three months ended March 31, 2021 compared to a gain of $565,405 during the three months ended March 31, 2020 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. This was offset by a loss from change in fair value of the derivative liability of $12,637,125 during the three months ended March 31, 2021 compared to a loss of $3,558,652 during the three months ended March 31, 2020 due to the fact that the Company experienced a larger volatility or spread in its share price at March 31, 2021 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 accretion and interest expense of $713,970 during the three months ended March 31, 2021 compared to $2,503,804 during the three months ended March 31, 2020 and the decrease was due to the repayment of various convertible debentures resulting in lower accretion and interest costs incurred during the current period

 

Net Loss

 

During the three months ended March 31, 2021, the Company incurred a net loss of $4,987,356 or $0.01 loss per share compared to a net loss of $7,512,986 or $0.03 loss per share during the three months ended March 31, 2020. The decrease in the net loss is due to the fact that the Company recorded a gain from settlement of debt and incurred less accretion and interest expense on the convertible debts, which were offset by an increase in general and administrative expense and loss on change in fair value of derivative liability.

 

Nine Months Ended March 31, 2021 and 2020

 

During the nine months ended March 31, 2021, the Company incurred $31,837,067 of operating expenses compared to $4,493,703 of operating expenses during the nine months ended March 31, 2020. Overall, the increase in operating expense was due to the fact that the Company issued 33,650,036 common shares and 200,000 Series A preferred shares for consulting services with a fair value of $27,072,162 during the nine months ended March 31, 2021, compared to the issuance of 26,446,200 common shares with a fair value of $1,613,468 for consulting services during the nine months ended March 31, 2020. Of the remaining operating expenses not related to share-based compensation of $4,764,905, the expenditures were higher than the prior period amount of $2,880,235 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 interest and accretion expense of $2,914,470 during the nine months ended March 31, 2021 compared to $4,723,881 during the nine months ended March 31, 2020. The decrease was due to the Company converted and repaid all the remaining convertible debts during the current period. The Company incurred a higher loss relating to the change in fair value of the derivative liability of $19,655,296 during the nine months ended March 31, 2021 compared to $4,498,166 during the nine months ended March 31, 2020 due to the Company experiencing a higher volatility or spread in its share price at March 31, 2021 which resulted in a higher 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 $18,683,279 for the nine months ended March 31, 2021 compared to $779,455 during the nine months ended March 31, 2020 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 certain outstanding convertible debentures resulting in the reversal of the fair value of the derivative liability. As part of the repayment of convertible debentures during the period, the Company incurred financing and early payment penalty costs of $405,137 during the nine months ended March 31, 2021.

 

21
 

 

Net Loss

 

During the nine months ended March 31, 2021, the Company incurred a net loss of $36,186,434 or $0.08 loss per share compared to a net loss of $12,932,549 or $0.07 loss per share during the nine months ended March 31, 2020. 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 and lower accretion and interest expense on those convertible debts.

 

Liquidity and Capital Resources

 

At March 31, 2021, the Company had cash of $6,949,269 and total assets of $9,453,330 compared to cash of $829,924 and total assets of $1,161,314 as at June 30, 2020. The Company’s cash flow is supported by its financing activities, as it received $13,471,138 of financing from private placements/share purchase agreement/warrant exercise and $1,350,000 of proceeds from convertible debentures during the period ended March 31, 2021 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 and certain water rights for $817,000 during the period ended March 31, 2021 offset by the use of cash for operating activities during the period. The increase in cash used in operating activities 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 had total current liabilities of $841,081 at March 31, 2021 compared to $5,795,170 at June 30, 2020. As at March 31, 2021, the Company had total face value of convertible debt outstanding of $nil 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 debts was due to the repayment or conversion of the remaining 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 or they were converted by the debt holders into common stock of the Company. As a result, the derivative liability decreased from $4,519,654 at June 30, 2020 to $nil at March 31, 2021.

 

As at March 31, 2021, the Company had a working capital of $6,597,554 compared to a working capital deficit of $4,727,912 at June 30, 2020. The increase in the working capital was due to the settlement of derivative liability from the repayment or conversion of the remaining convertible debts. Trade accounts payable and accrued liabilities were higher by $120,597 due to timing differences between recognition of costs and the repayment of obligations on a period-by-period basis.

 

During the period ended March 31, 2021, the Company issued 33,650,036 common shares for services with a fair value of $27,072,162, issued 22,685,750 common shares with a fair value of $8,313,392 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), issued 16,250,000 common shares for a share purchase agreement for $10,431,638, and issued 36,947,680 common shares for the exercise of cashless share purchase warrants and 6,150,000 common shares for the exercise of share purchase warrants for $531,250. In addition, the Company issued 200,000 Series A preferred shares with per share par value of $0.001 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 March 31, 2021 and June 30, 2020, the Company does not have any issued or outstanding stock options.

 

Cash Flows

 

Cash from Operating Activities.

 

During the nine months ended March 31, 2021, the Company used $5,156,780 of cash for operating activities as compared to $2,625,810 during the nine months ended March 31, 2020. 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 $13,471,138 from share subscriptions, which allowed the Company to incur more operating costs to further the Company’s development and operations.

 

Cash from Investing Activities

 

During the nine months ended March 31, 2021, the Company incurred $907,380 for the purchase of land in Nevada and $817,000 for acquisition of certain water rights. The Company did not have any investing activities during the nine months ended March 31, 2020.

 

Cash from Financing Activities

 

During the nine months ended March 31, 2021, the Company received $13,000,505 of financing, which included $2,508,250 from subscription proceeds related to a private placement of units, $531,250 from exercise of share purchase warrants, $10,431,638 pursuant to a share purchase agreement, $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 nine months ended March 31, 2020, the Company received $2,891,494 of funding from financing activities which included $2,834,450 from the issuance of convertible notes payable less repayments of $1,067,956, and proceeds from private placement of $1,125,000.

 

22
 

 

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.

 

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, 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 March 31, 2021, 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 effective as of March 31, 2021.

 

23
 

 

Changes in Internal Controls Over Financial Reporting

 

Changes were made in our internal control over financial reporting during the quarter ended March 31, 2021 regarding the presentation of accounts payable and the authority to make such payments in order to better separate accounting functions and improve internal controls over financials. Other the preceding, there were no changes during the quarter ended March 31, 2021 that materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

 

PART II – OTHER INFORMATION

 

ITEM 1. LEGAL PROCEEDINGS

 

In January 2018, the Company filed a complaint in Nevada seeking the return or cancellation of 16 million common shares which the Company believes were fraudulently issued as well as claims against the former CEO of the Company, Craig Alford. As a result, the Company entered into agreements to cancel eleven million shares (of which ten million shares have already been cancelled). The remaining five million shares were cancelled and reissued after the Company determined that the recipients provided proper consideration for such shares. Alford has filed a counterclaim against the Company for amounts allegedly owed to him that the Company believes is entirely without merit. The litigation continues against Alford and certain other relief defendants but has been delayed due to Covid-19 restrictions. On April 6, 2021, Alford filed a complaint against the Company in Utah seeking removal of a restrictive legend on 4,000,000 shares held in his name and damages related thereto. The Company is seeking to stay the Utah proceeding until reaching resolution of the Nevada proceedings as the two proceedings are interconnected.

 

Other than the preceding disclosed above, 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 January 19, 2021, the Company issued 486,451 common shares with a fair value of $702,192 for legal services.

 

On February 5, 2021, the Company issued 69,252 common shares with a fair value of $271,779 pursuant to 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.

 

On February 10, 2021, the Company issued 1,400,779 common shares with a fair value of $5,327,924 for the conversion of $1,086,878 of notes payable, $26,882 of accrued interest.

 

On March 5, 2021, the Company issued 2,000,000 common shares with a fair value of $3,720,000 for services, including 1,000,000 common shares issued to the CEO of the Company and 1,000,000 common shares issued to a director of the Company.

 

On March 31, 2021, the Company issued 23,585 common shares with a fair value of $37,500, including 4,717 common shares issued to the CEO of the Company and 18,868 common shares issued to directors of the Company.

 

During the three months ended March 31, 2021, the Company issued 3,300,000 common shares pursuant to the conversion of 41,250 shares of Series C Preferred Stock.

 

The foregoing securities were issued under Section 4(a)(2) of the Securities Act of 1933, as amended, and/or Rule 506 of Regulation D under the Securities Act. In the case of the promissory notes, each investor represented that it was an accredited investor, as defined in Rule 501 of Regulation D, and that it was acquiring the securities for its own account, not as nominee or agent, and not with a view to the resale or distribution of any part thereof in violation of the Securities Act. Any proceeds issued from the above issuances were used for working capital purposes of the Company.

 

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

 

None

 

ITEM 4. MINE SAFETY DISCLOSURE

 

Not Applicable

 

24
 

 

ITEM 5. OTHER INFORMATION

 

None

 

ITEM 6. EXHIBITS

 

(a) (3) Exhibits

 

The following exhibits are either provided with this Quarterly Report or are incorporated herein by reference:

 

        Filed   Incorporated   By   Reference
Exhibit   Description   Herein   Date   Form   Exhibit
31.1   Certification of Chief Executive Officer as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.   x            
31.2   Certification of Chief Financial Officer as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002   x            
32.1   Certification of Chief Executive Officer as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002   x            
32.2   Certification of Chief Financial Officer as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002   x            
101   INS 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            

 

25
 

 

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: May 17, 2021 By: /s/ Douglas D Cole
    Douglas D Cole
    Chief Executive Officer
    Chairman

 

26

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