UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
Washington,
D.C. 20549
FORM
10-K
(Mark
One)
☒ ANNUAL
REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For
the fiscal year ended: December 31, 2023
or
☐ TRANSITION
REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For
the transition period from _______________ to _______________
Commission
File Number: 001-41594
AMERICAN
BATTERY MATERIALS, INC.
(Exact
name of Registrant as specified in its charter)
Delaware | | 22-3956444 |
(State or Other Jurisdiction of Incorporation or Organization) | | (IRS Employer Identification No.) |
500 West Putnam Avenue, Suite 400, Greenwich, CT | | 06830 |
(Address of principal executive offices) | | (Zip Code) |
800-998-7962
(Registrant’s
telephone number, including area code)
Securities
registered pursuant to Section 12(b) of the Act:
Title
of each class |
|
Trading
Symbol(s) |
|
Name
of each exchange on which registered |
None |
|
N/A |
|
N/A |
Securities
registered pursuant to Section 12(g) of the Act
Common
Stock, $0.001 par value
(Title
of class)
Indicate
by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 the Securities Act. Yes ☐ No ☒
Indicate
by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes ☐ No ☒
Indicate
by check mark whether the registrant (1) filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject
to such filing requirements for the past 90 days. Yes ☒ No ☐
Indicate
by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule
405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant
was required to submit such files). Yes ☒ No ☐
Indicate
by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting
company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer”,
“smaller reporting company”, and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer | ☐ | Accelerated filer | ☐ |
Non-accelerated filer | ☒ | Smaller reporting company | ☒ |
| Emerging growth company | ☐ |
If
an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying
with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act ☐
Indicate
by check mark whether the registrant has filed a report on and attestation to its management’s assessment of the effectiveness
of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered
public accounting firm that prepared or issued its audit report. ☐
If
securities are registered pursuant to Section 12(b) of the Act, indicate by check mark whether the financial statements of the registrant
included in the filing reflect the correction of an error to previously issued financial statements. ☐
Indicate
by check mark whether any of those error corrections are restatements that required a recovery analysis of incentive-based compensation
received by any of the registrant’s executive officers during the relevant recovery period pursuant to § 240.10D-1(b). ☐
Indicate
by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒
Aggregate
market value of the voting and non-voting common equity held by non-affiliates computed by reference to the price at which the common
equity was last sold, or the average bid and asked price of such common equity, as of June 30, 2023: $13,963,544
The number of shares of registrant’s common
stock outstanding as of April 1, 2024: 11,375,459.
DOCUMENTS
INCORPORATED BY REFERENCE
None.
AMERICAN
BATTERY MATERIALS, INC.
FORM
10-K
December
31, 2023
TABLE
OF CONTENTS
CAUTIONARY
STATEMENT REGARDING FORWARD-LOOKING STATEMENTS
Except
for historical information, this Annual Report on Form 10-K (the “Annual Report”) contains forward-looking statements
within the meaning of the federal securities laws. Such forward-looking statements are based on management’s current expectations,
assumptions, and beliefs concerning future developments and their potential effect on our business, and are subject to risks and uncertainties
that could negatively affect our business, operating results, financial condition, and stock price. We have attempted to identify forward-looking
statements by terminology including “anticipates,” “believes,” “can,” “continue,” “could,”
“estimates,” “expects,” “intends,” “may,” “plans,” “potential,”
“predicts,” “should,” “will,” “would”, “if, “shall”, “might”,
“will likely result, “projects”, “goal”, “objective”, or “continues”, or the negative
of these terms or other comparable terminology, although the absence of these words does not necessarily mean that a statement is not
forward-looking. Additionally, statements concerning future matters such as our business strategy, development of new products, sales
levels, expense levels, cash flows, future commercial and financing matters, future partnering opportunities and other statements regarding
matters that are not historical are forward-looking statements.
By
their nature, forward-looking statements involve risks and uncertainties because they relate to events and depend on circumstances that
may or may not occur in the future. We believe that these risks and uncertainties include, but are not limited to, those described in
the “Risk Factors” section of this Annual Report, which include, but are not limited to, the following:
| ● | doubt
regarding our ability to continue as a going concern; |
| ● | the
need for additional capital to fund our operations; |
| ● | potential
challenges and uncertainties in our new lithium extraction operation, such as unexpected
geological formations, technological hurdles, regulatory changes, unforeseen costs, and construction
delays; |
| ● | anticipated
exploration results, feasibility assessments, regulatory approvals, and property development
plans; |
| ● | expected
growth in the lithium battery market; |
| ● | intense
competition in our market and the lack of sufficient financial and other resources to maintain
and enhance our competitive position; |
| ● | our
expectations, beliefs, future plans, strategies, and anticipated developments; |
| ● | anticipated
government regulations concerning electric and gas-powered vehicles; |
| ● | evaluation
of strategic alternatives related to our business; |
| ● | timeframe
for addressing internal control weaknesses and improving disclosure controls; |
| ● | our
expectation of obtaining or renewing permits; |
| ● | other
risks detailed in the “Risk Factors” section. |
The
risks described above should not be construed as exhaustive and should be read with the other cautionary statements in this Annual Report.
Although
we base these forward-looking statements on assumptions that we believe are reasonable when made, we caution you that forward-looking
statements are not guarantees of future performance and that our actual results of operations, financial condition and liquidity, and
industry developments may differ materially from statements made in or suggested by the forward-looking statements contained in this
Annual Report. The matters summarized under “Management’s Discussion and Analysis of Financial Condition and Results of Operations”,
“Business”, and elsewhere in this Annual Report could cause our actual results to differ significantly from those contained
in our forward-looking statements. In addition, even if our results of operations, financial condition and liquidity, and industry developments
are consistent with the forward-looking statements contained in this Annual Report, those results or developments may not be indicative
of results or developments in subsequent periods.
We
operate in a very competitive and rapidly changing environment. New risks emerge from time-to-time. It is not possible for our management
to predict all risks, nor can we assess the impact of all factors on our business or the extent to which any factor, or combination of
factors, may cause actual results to differ materially from those contained in any forward-looking statements we may make. Moreover,
except as required by law, neither we nor any other person assumes responsibility for the accuracy and completeness of the forward-looking
statements. We undertake no obligation to update publicly any forward-looking statements for any reason after the date of this Annual
Report to conform these statements to actual results or to changes in our expectations. You should, however, review the risks we describe
in the reports we will file from time to time with the SEC after the date of this Annual Report. Readers are urged to carefully review
and consider the various disclosures made in this Annual Report.
Comparisons
of results for current and any prior periods are not intended to express any future trends or indications of future performance, unless
specifically expressed as such, and should only be viewed as historical data.
CERTAIN
REFERENCES AND NAMES OF OTHERS USED HEREIN
This
Annual Report may contain additional trade names, trademarks, and service marks of others, which are the property of their respective
owners. We do not intend our use or display of other companies’ trade names, trademarks, or service marks to imply a relationship
with, or endorsement or sponsorship of us by, these other companies.
OTHER
INFORMATION
As
used in this Annual Report on Form 10-K, the terms “we”, “us”, “our”, “BLTH”, the “registrant”,
and the “Company” refer to AMERICAN BATTERY MATERIALS, INC., a Delaware corporation, unless otherwise stated. “SEC”
and the “Commission” refer to the Securities and Exchange Commission. Reverse split occurred and is reflected (p. F-13)
PART
I
Item
1. Business.
Overview
of Our Company
We
operate as a U.S. based renewable energy company focused on the extraction, refinement and distribution of technical minerals in an environmentally
responsible manner. We formerly developed, marketed and distributed various self-serve electronic kiosks and mall/airport co-branded
islands throughout North America. Due to the nationwide shutdown related to the Covid-19 pandemic, we spent a portion of 2020 restructuring
and retiring certain corporate debt and obligations, and focusing on implementing a new operational direction.
Through
the corporate reorganization and repositioning process, we found a unique opportunity to acquire mining claims that historically reported
high levels of lithium and other tech minerals. We hired and affiliated ourselves with industry veterans that bring decades of experience,
credibility and relationships.
On
November 5, 2021, we acquired the rights to 102 federal mining claims located in the Lisbon Valley of Utah for $100,000 plus the
future payment of royalties based on a percentage of the net revenue from the sale of lithium produced from a portion of the mining property.
The acquisition was driven by historical mineral data from seven existing wells with brine aquifer access. We have not yet commenced
any mining operations, and we are an exploration stage issuer, as defined in SEC Regulation S-K Item 1300 (“Regulation S-K 1300”).
An independent third-party technical report indicated that further investment and development in the claims was warranted, although no
determination has been made whether we have any reserves of minerals. Similarly, no determination has been made whether mineralization
could be economically and legally produced or extracted. We have no mineral reserves as defined by Regulation S-K 1300 and have had no
mining revenue to date.
In
July 2023, we acquired and staked additional lithium mining claims adjacent to our Lisbon Valley Project in Utah. The new claims
have been registered with the Bureau of Land Management (BLM). We now own a total of 743 placer claims over 14,320 acres, comprised of
the 102 original claims held and the 641 new claims.
Our
Growth Strategy
Our
strategic goal is to become a producer of lithium in the United States. We believe that a strategy of employing advanced brine extractive
technology methodologies for selective mineral extraction is the most cost-effective and environmentally friendly approach currently
available. We believe that this approach is environmentally friendly because we would not deconstruct land structures which leave dirty
tailings, but rather we would extract the desired minerals and metals from subsurface brines that re-inject the brines back down into
the aquafer to maintain pressure after lithium extraction. We plan, as part of our sustainability goals within our overall environmental,
social and governance (“ESG”) strategy, to develop sustainable production operations. Our plan is to develop our projects
and strategic equity investments on a measured timeline to provide the potential for both near-term cash flow and long-term value maximization.
We
have been executing the necessary steps to determine analytical results from our technical report, which should provide current results,
analytical, geotech modeling, aquifer modeling, recharge, flows and depth. We have engaged RESPEC Company LLC as our geotech, engineering
and resource management partner to assist in the exploration of the Lisbon Valley brine extraction project. Leveraging its expertise,
we will focus on several initiatives, which include the following:
|
● |
advancement
of geotech, engineering, geology and fieldwork to complete technical reports on the Lisbon Valley Project; |
|
● |
understanding
Lisbon Valley brines, on and around owned leases; |
|
● |
develop
a well plan to re-enter, sample and test the “Superior Well,” that has a historical lithium concentration of 340 ppm
(parts per million); |
|
● |
enter
other prospective plugged and abandoned wells, taking brine samples and performing hydrological testing at each identified high potential
zone to evaluate the properties of the clastic formation; |
|
● |
as
information is advanced, prepare technical reports following the Regulation S-K 1300 Standards of Disclosure for Mineral Projects,
initially a Preliminary Economic Assessment (PEA) and longer term, a Preliminary Feasibility Study (PFS); |
|
● |
test
the collected brines for lithium, but also for previously identified high value elements such as cobalt, manganese, magnesium, and
suites of metals in the alkaline earth metals, transition metals, and halogens group; and |
|
● |
based
on the results of the Superior well, develop area resource estimates. |
The
Lisbon Valley of Utah also provides many added benefits:
|
● |
historically
rich industrial and natural resource extraction area; |
|
● |
a
developed infrastructure including high voltage electrical, proximity to major roadways and rail spurs; and |
|
● |
state
and local agency support through the Utah Division of Oil, Gas and Mining (UDOGM) and the Trust Land Administration (SITLA). |
We
will also look to expand our holdings in the Lisbon Valley area with the acquisition of additional mineral claims and joint venture opportunities.
We continue to explore and evaluate opportunities to further expand our resource base and production capacity through the possible acquisition
of properties and projects in other areas of the United States, as well as in South America, particularly Argentina.
As
part of our strategy for growth, our projects and strategic investments will be developed on a measured timeline, and we will evaluate
all opportunities to further expand our resource base and production capacity. We understand that our timelines are subject to a variety
of risks and variables, including, without limitation, obtaining permits, approvals and funding. We are also focused on the implementation
of direct lithium extraction (DLE) technologies, which we believe have the potential to significantly increase the supply of lithium
from our brine projects, similar to the impact which shale did for oil.
To
achieve our goal of becoming a producer of lithium, we will rely on our competitive strengths and experienced management team to explore
and consider all opportunities to generate revenue and increase our projects, properties and assets, as well as all potential funding
options. Some opportunities for growth may be in the form of (i) strategic partnerships, (ii) off-take agreements, (iii) diversification
of projects and properties, (iv) acquisitions of companies and technologies, and (v) participation in related commercial development
activities.
The
Lithium Market
Lithium
is on the list of the 35 minerals considered critical to the economic and national security of the United States, as first published
by the U.S. Department of the Interior on May 18, 2018. In June 2021, the U.S. Department of Energy published a report
titled “National Blueprint for Lithium Batteries 2021-2030” (the “NBLB Report”) which was developed by the Federal
Consortium for Advanced Batteries (“FCAB”), a collaboration by the U.S. Departments of Energy, Defense, Commerce, and State.
According to the Report, one of the main goals of this U.S. government effort is to “secure U.S. access to raw materials for lithium
batteries.” In the NBLB Report, Jennifer M. Granholm, the U.S. Secretary of Energy, states: “Lithium-based batteries
power our daily lives from consumer electronics to national defense. They enable electrification of the transportation sector and provide
stationary grid storage, critical to developing the clean-energy economy.”
The
NBLB Report summarizes the U.S. government’s views on the need for lithium and the expected growth of the lithium battery market
as follows:
|
● |
“A
robust, secure, domestic industrial base for lithium-based batteries requires access to a reliable supply of raw, refined, and
processed material inputs…” |
|
● |
“The
worldwide lithium battery market is expected to grow by a factor of 5 to 10 in the next decade.” |
The
growth in electric vehicles (“EVs”) will provide the greatest needs for lithium-based batteries. The NBLB Report states:
“Bloomberg projects worldwide sales of 56 million passenger electric vehicles in 2040, of which 17% (about 9.6 million EVs) will
be in the U.S. market.” Source: NBLB Report (defined above). Original Source: Bloomberg NEF Long-Term Electric Vehicle Outlook
2019.
In
a February 2021 report, Canalys, a global technology market analyst firm, states that global sales of EVs in 2020
increased by 39% year on year to 3.1 million units. This compares with a sales decline of 14% of the total passenger car market
in 2020. Canalys forecasts that the number of EVs sold will rise to 30 million in 2028 and EVs will represent nearly half of all passenger
cars sold globally by 2030.
Bloomberg’s
Long-Term Electric Vehicle Outlook 2021 report states: “The outlook for EV adoption is getting much brighter, due to a combination
of more policy support, further improvements in battery density and cost, more charging infrastructure being built, and rising commitments
from automakers. Passenger EV sales are set to increase sharply in the next few years, rising from 3.1 million in 2020 to 14 million
in 2025. Globally, this represents around 16% of passenger vehicle sales in 2025, but some countries achieve much higher shares. In Germany,
for example, EVs represent nearly 40% of total sales by 2025, while China — the world’s largest auto market — hits
25%.”
Regarding
the lithium battery growth derived from grid storage demands, the NBLB Report states: “In addition to the EV market, grid
storage uses of advanced batteries are also anticipated to grow, with Bloomberg projecting total global deployment to reach over 1,095
GW by 2040, growing substantially from 9 GW in 2018;” and “Bloomberg forecasts 3.2 million EV sales in the U.S.
for 2028, and over 200 GW of lithium-ion battery-based grid storage deployed globally by 2028. With an average EV battery capacity of
100 kWh, 320 GWh of domestic lithium-ion battery production capacity will be needed just to meet passenger EV demand.
On
August 25, 2022, the Washington Post published an article titled “Did California just kill the gas-powered car?” and
with the sub-heading “California’s decision to ban the sales of combustion engine cars is the latest victory in the transition
to electric vehicles.” A particularly relevant passage from this article reads as follows:
“…the transition from gas-powered, internal combustion
engine vehicles to electric vehicles no longer feels niche, or speculative. It feels inevitable. And this week, another profound development:
California, which already leads the nation with 18 percent of new cars sold electric, is expected to approve a regulation to ban
the sales of new gas-only powered vehicles by 2035. In addition to EVs, only a limited number of plug-in hybrids will be allowed
to be sold. This is a big deal: California’s car market is only slightly smaller than those of France, Italy and Britain — and
while many countries have promised to phase out sales of gas cars by such-and-such date, few have concrete regulations like California.
Sixteen states have traditionally followed California’s lead in setting its own independent fuel standards — they
could soon follow.”
Although
no assurances can be given, these recent developments, if left unchallenged, may potentially increase demand for lithium in the U.S.,
as well as globally. Benchmark Mineral Intelligence, a global consulting firm specializing in the battery supply chain market, in a September
6, 2022 report, predicted that:
|
● |
demand
for lithium-ion batteries is set to grow six-fold by 2032 as global automakers scale up production of EVs; and |
|
● |
to
meet the world’s lithium requirements would require 74 new lithium mines with an average size of 45,000 tonnes by 2035. |
While
these figures are robust relative to historical data, there can be no guarantee that ultimate consumer adoption for EVs and plug-in-hybrid
vehicles (PHEV) will drive lithium demand as predicted.
Lithium
Brine Deposits and Direct Lithium Extraction
Lithium
is mined from three different deposit types: lithium brine deposits, pegmatite lithium deposits (also referred to as “hard
rock”), and sedimentary lithium deposits (also referred to as clay deposits). Brine deposits are the most common, accounting for
more than half of the world’s known lithium reserves. All our projects are in brine deposits.
As
described by the U.S. Geological Survey, lithium brine deposits are accumulations of saline groundwater that are enriched in dissolved
lithium. All producing lithium brine deposits share a number of first-order characteristics: (1) arid climate, (2) closed basin
containing a playa or salar, (3) tectonically driving subsidence, (4) associated igneous or geothermal activity, (5) suitable
lithium source-rocks, and (6) one or more adequate aquifers. South American countries Chile and Argentina are where the majority
of the lithium produced from brines originates, as well as Nevada, to a much smaller extent.
It
is anticipated that we will use a direct lithium extraction (“DLE”), and reinjection of the processed brine back into the
subsurface, rather than using evaporation ponds to recover the lithium and other potential mineral from brines, should the project advance
to the production stage. This method has been gaining favor in the lithium industry over the last several years because it does
not involve the use of evaporation ponds. DLE uses a much smaller footprint than evaporation ponds and is therefore more acceptable from
an environmental standpoint. As yet, we have not done any testing for the possibility of using DLE and will not be able to do any testing
until samples of brine are acquired from the target formations.
DLE
technologies precipitate lithium out of brine using filters, membranes, ceramic beads, or other equipment, which is often housed in a
small warehouse, significantly shrinking the environmental footprint of evaporation ponds used to produce commercial quantities of lithium
traditionally. In a DLE operation, brine is pumped to a processing unit where an adsorption, resin or membrane material is used to extract
only the lithium from the brine, while spent brine can be reinjected into the basin aquifers. The more rapid production time frame and
possible brine reinjection into the aquifer is a key environmental differentiator between the DLE process and traditional lithium process
that uses evaporation ponds.
While
there may still be challenges around scalability, water consumption, and the possible dilutive effects of brine reinjection, over the
past decade many DLE technologies have arisen to separate lithium from brine. DLE has the potential to significantly impact the lithium
industry, with implementation on the extraction of lithium brines potentially having a dramatic positive impact on production, capacity,
timing, and environmental impact. Similar to the impact shale exploration had on the oil industry, DLE has the potential to significantly
increase the supply of lithium from brine projects, nearly doubling lithium production/yield (taking recoveries from 40-60% to 70-90%+)
and improving project returns. DLE should also offer lower perceived environmental risk and yield significant environmental benefits
when compared to traditional brine ponds, offering sustainability benefits and ESG credentials. It is estimated that approximately 12%
of the world’s lithium supply in 2019 was produced using DLE technology. DLE technologies are broadly grouped into three main categories:
adsorption, ion exchange and solvent extraction.
|
● |
Adsorption
physically absorbs LiCl molecules onto the surface of a sorbent from a lithium loaded solution. The lithium is then stripped from
the surface of the sorbent with water. |
|
● |
Ion
exchange takes lithium ions from the solution and replaces them with a different positively charged cation that is contained in the
sorbent material. An acidic (or basic) solution is required to strip the lithium from the material and regenerate the sorbent material. |
|
● |
Solvent
extraction removes lithium ions from solution by contacting the solution with an immiscible fluid (i.e., oil or kerosene) that contains
an extractant that attaches to lithium ions and brings them into the immiscible fluid. The lithium is then stripped from the fluid
with water or chemical treatment. |
Our
identification as an “environmentally friendly” business is evidenced by our commitment to deploy direct lithium extraction
rather than the typical extraction techniques of hard-rock mining or underground brine water. Unlike those traditional methods for producing
lithium, DLE uses filters, membranes, or resin materials to extract the mineral from brine water, resulting in:
|
● |
recycling
of the majority of the brine water used; |
|
● |
consumption
of less fossil fuels; |
|
● |
reduction
in the need for additional processing and alternative mining sources; and |
|
● |
leaving
a smaller environmental footprint. |
Traditionally,
lithium produced from brine water is stored in evaporation ponds. As the water evaporates, the other elements of the brine such as magnesium
or calcium precipitate out, leaving the brine more concentrated to produce lithium carbonate. The evaporation process can take 9-18 months
depending on the type of project and weather conditions. With DLE, that process can be shortened to days or even hours. DLE also reduces
the amount of land required for the pond evaporation process, while the potential to reinject the remaining brine water after the process
further reduces the environmental impact.
Our
Market Opportunity
Our
Lisbon Valley Project (the “Project”) is located in San Juan County, Utah, approximately 35 miles southeast of the city of
Moab, part of an area known as the Paradox Basin. The Project consists of 743 placer mining claims staked on U. S. government land administered
by the BLM covering 14,300 acres, part of a semi-contiguous group named the LVL Group. The below map shows the approximate location of
our claims:
The
maps above are referenced with Professional Land Survey System (PLSS) and a latitude/longitude reference coordinate, accurate to 50 feet.
Our
placer claims are plotted on the figures above, which is a Public Land Survey System (PLSS) map using Salt Lake City Prime Meridian.
The claims are located in Southeast Utah in sections 17-18, 20-22, 25-29, 33-35 of Township 30 South and Range 25 East; sections 1, 3,
4, 8-15 of Township 31 South and Range 25 East; sections 31 of Township 30 South and Range 26 East and sections 5-9, 17 and 18 of Township
31 South and Range 26 East. The latitude and longitude of the southeast corner of Section 36, Township 30 South, 25 East is noted on
the figure is accurate to +/- 50 feet.
There
is a network of dirt and paved roads within the claims area, which service the oil and gas wells and the Lisbon Valley Copper Mine. Two
existing natural gas pipelines traverse the claims. Power is supplied to the copper mine, also within the claim area, for use in their
electrowinning copper recovery process. Nine wellbores (8 oil and gas and 1 potash) are available for re-entry and nearby water rights
and private land are available for sale or lease.
Moab,
Utah, the nearest population center to the property, is a city of 5,336 persons (2020 Census). It is located in a relatively remote portion
of Utah but is easily accessed by U. S. Highway 191. Highway 191 intersects with Interstate 70 about 30 miles (48 kilometers) north of
Moab, at Crescent Junction. Moab is a tourist destination and has numerous motels and restaurants. Moab would also be the nearest source
of labor in the region.
The
region has a history of mining, primarily uranium and vanadium that dates back as far as 1881. The Lisbon Valley Copper Mine is in the
heart of the Lisbon Valley and is currently producing copper cathode. An all-weather road and electric power supply the mine. A few gravel
roads cross the property. Oil and gas drilling and production, along with ranching have made the area relatively accessible.
There
has been no exploration or drilling conducted on the property by us or our predecessors other than the gathering and assimilation of
data from all available sources. It will be necessary for us to re-enter an oil and gas well or to drill a new well to obtain brine samples
for analysis and metallurgical testing. Permits for such operations will be required from the BLM and the UDOGM. We are in the process
of permitting two appraisal wells.
We
believe there is abundant evidence from oil, gas and potash wells drilled in the Paradox Basin indicating a probability of identifying
and producing super saturated brines from beneath the Project. The geology of the area of the Project and of the Paradox Basin as a whole
is complex, although zones have been targeted and proven and they are mappable within and beyond the claims area. It is not likely that
the same zones vary significantly in terms of reservoir quality and thickness as evidenced by log analysis; however, these parameters
have not been confirmed by actual testing by us.
We
have not calculated mineral and resource estimation and has no revenue being generated from the subject property. The only way to determine
if the lithium enriched brines exist and can be economically produced from the target zones is to drill exploration wells to produce
and test brine from the targeted zones. We through our wholly owned operating company Mountain Sage Minerals, LLC intends to drill two
appraisal wells on the subject property to evaluate reservoir properties (porosity, permeability and pressure), flow rates and in situ
mineral concentrations. Information from the two wells will be used to assess the resource potential and devise a detailed development
plan.
The subsurface data collected from the two wells will be used to refine our proprietary subsurface model. The development model
will include a proprietary 3D seismic survey to refine the subsurface model and delineate reservoir(s) continuity below the subject property
and allow the team to select optimal spacing of future well locations and the network of production and injection wells required to fully
develop potential mineral (brine) resources. Based on a substantial number of studies with lithium analyses from the Paradox Basin, we
believe there is a substantial indication that lithium mineralization in brines occurs beneath the Project.
We
have retained a third-party consulting firm to assist with drilling, completion and review of test results for the two appraisal wells.
Any extracted brines should be tested to determine lithium and other important mineral concentrations and to prove the economic viability
of a pilot and permanent production program. We have identified an appraisal and development program that is proprietary. This information
will be disclosed in an advanced technical report after the appraisal wells are drilled and individual zones are identified and fully
evaluated. Cost estimates and authority for expenditures for both well tests and the 3D Survey are currently in process.
The
Technical Report Summary on the Project prepared by Bradley C. Peek, MSc. of CPG Peek Consulting, Inc., in accordance with Regulation
S-K 1300, is included as an exhibit to our registration statement, filed on February 12, 2024. The effective date of the report is
October 31, 2023.
Internal Controls
Even though we have yet to
establish mineral resource and reserve estimates, we have established internal controls for reviewing and documenting the information
we intend to use to support mineral reserve and mineral resource estimates. We have engaged third party service providers and specialists
in geosciences, and data and engineering for exploration and mine productivity and efficiency. A review of all progress on the development
of our mineral resources and reserves estimates, including related assumptions, is undertaken and finalized by our qualified person (“QP”).
When determining resources
and reserves, as well as the differences between resources and reserves, our QP will develop specific criteria, each of which must be
met to qualify as a resource or reserve, respectively. The QP and our management must agree on the reasonableness of the criteria for
the purposes of estimating resources and reserves. These criteria, such as demonstration of economic viability, points of reference, and
grade, must be specific and attainable. All estimates require a combination of historical data and key assumptions and parameters. When
possible, historical data and resources, data from public information, and generally accepted industry sources will be used to develop
these estimations.
We have developed quality
control and quality assurance (“QC/QA”) procedures at our Lisbon Valley property, which were reviewed by our QP to ensure
the process for developing mineral resource and reserve estimates is sufficiently accurate. QC/QA procedures include independent checks
on samples by third party laboratories, and duplicate sampling, among others. In addition, our QP will review the consistency of historical
production as part of its analysis of the QC/QA procedures.
We
recognize the risks inherent in mineral resource and reserve estimates, such as the geological complexity, interpretation and extrapolation
of data, changes in operating approach, macroeconomic conditions and new data, among others. Overestimated resources and reserves resulting
from these risks could have a material effect on future profitability.
Raw Materials
We
do not have any material dependence on any raw materials or raw material suppliers. All the raw materials that we need are available from
numerous suppliers and at market-driven prices.
Intellectual Property
We
do not own or license any intellectual property which we consider to be material.
Sales
and Marketing
We
currently do not have the commercial capabilities required to market and distribute lithium. There is no assurance that we will be able
to attain the necessary sales and marketing capabilities or secure the services of a firm to provide those capabilities, to achieve our
sales expectations.
Customers
We
have no customers and have no off-take agreements with customers at this stage of our development.
Future
Production and Sales
We
expect the demand for our lithium, if and when in production, to be facilitated by increasing global demand for lithium. We intend on
utilizing intermediaries for sales in order to focus on our core competencies of exploration and extraction.
Competition
and Market Barriers
We
compete with other mineral and chemical processing companies in connection with the acquisition of suitable exploration properties and
the engagement of qualified personnel. Many of our competitors possess greater financial resources and technical facilities than we do.
Although we aspire to be a leading lithium producer, the lithium mining and chemical industries are fragmented. We are one of many participants
in these sectors. Many of our competitors, as compared to us, have been in business longer, have established more strategic partnerships
and relationships, and have greater financial accessibility.
While
we compete with other exploration companies in acquiring suitable properties, we believe there will be readily available purchasers of
lithium chemical products or other industrial minerals if they are produced from any of our owned or leased properties. The price of
our planned products may be affected by factors beyond our control, including fluctuations in the market prices for lithium, supplies
of lithium, demand for lithium, and mining activities of others. If we identify lithium mineralization that is determined to be of economic
grade and in sufficient quantity to justify production, additional capital would be required to develop, mine and sell that production.
Government
Regulation
Exploration
and development activities for our projects are subject to extensive laws and regulations, which are overseen and enforced by multiple
U.S. federal, state and local authorities as well as foreign jurisdictions. These applicable laws govern exploration, development, production,
exports, various taxes, labor standards, occupational and mine health and safety, waste disposal, protection and remediation of the environment,
protection of endangered and protected species, and other matters. Various permits from government bodies are required for drilling,
mining, or manufacturing operations to be undertaken, and we cannot be assured such permits will be received. Environmental laws and
regulations may also, among other things:
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require
notice to stakeholders of proposed and ongoing exploration, drilling, environmental studies, mining, or production activities; |
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require
the installation of pollution control equipment; |
|
● |
restrict
the types, quantities and concentrations of various substances that can be released into the environment in connection with exploration,
drilling, mining, lithium manufacturing, or other production activities; |
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● |
limit
or prohibit drilling, mining, lithium manufacturing or other production activities on lands located within wetlands, areas inhabited
by endangered species and other protected areas, or otherwise restrict or prohibit activities that could impact the environment,
including water resources; |
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● |
impose
substantial liabilities for pollution resulting from current or former operations on or for any preexisting environmental impacts
from our projects; |
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require
significant reclamation obligations in the future as a result of our extraction and chemical operations; and |
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require
preparation of an environmental assessment or an environmental impact statement. |
Compliance
with environmental laws and regulations may impose substantial costs on us, subject us to significant potential liabilities, and have
an adverse effect on our capital expenditures, results of operations, or competitive position. Violations and liabilities with respect
to these laws and regulations could result in significant administrative, civil, or criminal penalties, remedial clean-ups, natural resource
damages, permit modifications and/or revocations, operational interruptions and/or shutdowns, and other liabilities, as well as reputational
harm, including damage to our relationships with customers, suppliers, investors, governments or other stakeholders. The costs of remedying
such conditions may be significant, and remediation obligations could adversely affect our business, results of operations, and financial
condition. Federal, state, and local legislative bodies and agencies frequently revise environmental laws and regulations, and any changes
in these regulations, or the interpretations thereof, could require us to expend significant resources to comply with new laws or regulations
or changes to current requirements and could have a material adverse effect on our business operations. As of December 31, 2023, we have
not been required to spend material amounts on compliance regarding environmental regulations.
Permits
Obtaining
and renewing governmental permits is a complex and time-consuming process and involves numerous jurisdictions, public hearings, and possibly
costly undertakings. The timeliness and success of permitting efforts are contingent upon many variables not within our control, including
the interpretation of permit approval requirements administered by the applicable permitting authority. We may not be able to obtain
or renew permits that are necessary for our planned operations, or the cost and time required to obtain or renew such permits may exceed
our expectations. Any unexpected delays or costs associated with the permitting process could delay the exploration, development and/or
operation of our projects.
Environmental,
Social and Governance
We
are committed to ESG causes. As we start to hire employees for our projects, our hiring efforts will focus on hiring workers from communities
near our project areas. Many such communities have high levels of unemployment.
Human
Capital Management
As
of April 1, 2024, we had two full-time employees, who are our Co-Chief Executive Officers. We also utilize four independent contractors,
two to provide us with accounting support and two for geological expertise. We are committed to diversity, equity, and inclusion
as part of our growth strategy. We will treat each employee and job applicant without regard to race, color, age, sex, religion, national
origin, citizenship, sexual orientation, gender identity, ancestry, veteran status, or any other category protected by law. We believe
in allocating resources and establishing, in an equitable manner, policies and procedures that are fair, impartial, and just. To provide
a diverse and inclusive workplace, we will focus our efforts on creating a culture where all employees can contribute their skills and
talents and be themselves.
Item
1A. Risk Factors.
You
should carefully consider the risks described below, together with all the other information in this Annual Report. If any of the following
risks occur, our business, financial condition and results of operations could be seriously harmed, and you could lose all or part of
your investment. Further, if we fail to meet the expectations of the public market in any given period, the market price of our common
stock could decline. We operate in a competitive environment that involves significant risks and uncertainties, some of which are outside
of our control. If any of these risks actually occurs, our business and financial condition could suffer and the price of our stock could
decline. We caution you that the risks, uncertainties and other factors referred to below and elsewhere in our Annual Report may not
contain all the risks, uncertainties, and other factors that may affect our future results and operations. Our future results and operations
could also be affected by factors, events, or uncertainties that are not presently known to us or that we currently do not consider to
present a material risk. It is not possible for our management to predict all risks.
Business
Risks
Our
future performance is difficult to evaluate because we have a limited operating history in the lithium industry.
We
entered the lithium industry in November 2021. We have not realized any revenues to date from the sale of lithium, and our operating
cash flow needs have been financed primarily through issuances of debt and equity securities, and not through cash flows derived from
our operations. As a result, we have little historical financial and operating information from our lithium business to help you evaluate
our performance.
We
have a history of losses and expect to continue to incur losses in the future.
We have an accumulated deficit
of approximately $20,239,639 as of December 31, 2023. We expect to continue to incur losses unless and until such time as our projects
or one of our future acquired properties enters into commercial production and generates sufficient revenues to fund continuing operations
and we are able to develop at least one economic deposit. We recognize that if we are unable to generate cash flows from our operations,
we will not be able to earn profits or continue operations. At this early stage of our lithium operations, we also expect to face the
risks, uncertainties, expenses and difficulties encountered by companies at the mineral exploration stage. We cannot be sure that we will
be successful in addressing these risks and uncertainties and our failure to do so could have a materially adverse effect on our financial
condition. In the report by our auditor dated April 1, 2024 the auditor expressed doubt about our ability to continue as a going
concern.
There
is uncertainty regarding our ability to implement our business plan and to grow our operations with our existing financial resources
without additional financing. Our ability to implement our business plan is dependent on us generating cash from operations, the sale
of our stock and/or obtaining debt financing. Historically, we have funded our operations primarily through the issuance of debt and
equity securities. Management’s plan to fund our capital requirements and ongoing operations includes the generation of revenue
from our lithium operations and projects. Management’s secondary plan to cover any shortfall is selling our equity securities and
obtaining debt financing. There is no assurance that we will be successful in implementing our business plan or that we will be able
to generate sufficient cash from operations, sell securities or borrow funds on favorable terms or at all. Our inability to generate
significant revenue or obtain additional financing could have a material adverse effect on our ability to fully implement our business
plan and grow our business to a greater extent than we can with our existing financial resources.
We
are an exploration stage company, and there is no guarantee that our development will result in the commercial extraction of mineral
deposits.
As
defined under Regulation S-K 1300, we are an exploration stage company as we have no known mineral reserves, and we have not yet conducted
any mining operations. Accordingly, we cannot assure you that we will ever realize any profits. Any profitability in the future from
our business will be dependent upon the development of an economic deposit of minerals and further exploration and development of other
economic deposits of minerals, each of which is subject to numerous risk factors. Further, we cannot assure you that any of our property
interests can be commercially mined or that any exploration programs will result in profitable commercial mining operations. The exploration
and development of mineral deposits involves a high degree of financial risk over a significant period of time, which may or may not
be reduced or eliminated through a combination of careful evaluation, experience, and skilled management. While discovery of additional
ore-bearing deposits may result in substantial rewards, few properties that are explored are ultimately developed into producing mines.
Major expenses may be required to construct processing facilities and to establish reserves.
Our
exploration prospects may not contain any reserves and any funds spent on evaluation and exploration may be lost. We do not know with
certainty that economically recoverable lithium exists on our properties. In addition, the quantity of any reserves may vary depending
on commodity prices. Any material change in the quantity or grade of reserves may affect the economic viability of our properties.
Exploration
and development projects like ours have no operating history upon which to base estimates of future operating costs and capital requirements.
Actual operating costs and economic returns of any and all exploration projects may materially differ from the costs and returns estimated,
and accordingly, our financial condition, results of operations, and cash flows may be negatively affected.
We
face numerous risks related to exploration, construction, and extraction of mineral deposits.
Our level of profitability,
if any, in future years will depend to a great degree on lithium prices and whether our properties can be brought into production. Exploration
and development of lithium resources are highly speculative in nature, and it is impossible to ensure that any of our existing properties
will establish reserves. Whether it will be economically feasible to extract lithium depends on a number of factors, including, but not
limited to: (i) the particular attributes of the deposit, such as size, grade, and proximity to infrastructure; (ii) lithium prices; (iii)
extraction, processing, and transportation costs; (iv) the willingness of lenders and investors to provide project financing; (v) labor
costs and possible labor strikes; (vi) non-issuance of permits; and (vii) governmental regulations, including, without limitation, regulations
relating to prices, taxes, royalties, land tenure, land use, importing and exporting materials, foreign exchange, environmental protection,
employment, worker safety, transportation, and reclamation and closure obligations.
We
are also subject to the risks normally encountered in the lithium industry, which include, without limitation:
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the
discovery of unusual or unexpected geological formations; |
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accidental
fires, floods, earthquakes, severe weather, seismic activity, or other natural disasters; |
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unplanned
power outages and water shortages; |
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● |
construction
delays and higher than expected capital costs due to, among other things, supply chain disruptions, higher transportation costs,
and inflation; |
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● |
the
ability to obtain suitable or adequate machinery, equipment, or labor; |
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● |
shortages
in materials or equipment and energy and electrical power supply interruptions or rationing; |
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environmental
liability; and |
|
● |
other
unknown risks involved in the conduct of lithium exploration and operations. |
The
nature of these risks is such that liabilities could exceed any applicable insurance policy limits or could be excluded from coverage.
There are also risks against which we cannot insure or against which we may elect not to insure. The potential costs, which could be
associated with any liabilities not covered by insurance or in excess of insurance coverage, or compliance with applicable laws and regulations
may cause substantial delays and require significant capital outlays, adversely affecting our future earnings, competitive position,
and potentially our financial viability.
The mineral and chemical processing industry is intensely competitive.
The mineral and chemical processing
industry is intensely competitive. We may be at a competitive disadvantage because we must compete with other individuals and companies,
many of which have greater financial resources, operational experience and technical capabilities than we do. Increased competition could
adversely affect our ability to attract necessary capital funding or acquire suitable exploration properties. We may also encounter increasing
competition from other mineral and chemical processing companies in our efforts to locate acquisition targets, hire experienced mining
professionals and acquire exploration resources.
Our quarterly and
annual operating and financial results and our revenue are likely to fluctuate significantly in future periods.
Our quarterly and annual operating
and financial results are difficult to predict and may fluctuate significantly from period to period. Our revenues, net income and results
of operations may fluctuate as a result of a variety of factors that are outside our control including, but not limited to, lack of sufficient
working capital, equipment malfunction and breakdowns, inability to timely find spare machines or parts to fix the broken equipment, regulatory
or licensing delays and severe weather phenomena.
Our long-term success will depend ultimately
on our ability to generate revenues, achieve and maintain profitability, and develop positive cash flows from our lithium activities.
Our ability to (i) acquire
additional lithium projects, and (ii) initiate and continue exploration, development, commissioning of lithium ultimately depends on our
ability to generate revenues, achieve and maintain profitability, and generate positive cash flow from our operations. The economic viability
of our future extraction activities has many risks and uncertainties including, but not limited to:
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significant, prolonged decrease in the market price of lithium; |
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● |
significantly higher than expected construction and extraction costs; |
|
● |
significantly lower than expected lithium extraction; |
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● |
significant delays, reductions, or stoppages in lithium extraction activities; |
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● |
significant shortages of adequate and skilled labor or a significant increase in labor costs; |
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● |
significantly more stringent regulatory laws and regulations; and |
|
● |
significant difficulty in marketing and/or selling lithium or lithium hydroxide; |
It
is common for a new lithium extraction operation to experience unexpected costs, problems, and delays during construction, commissioning
and start-up. Most similar projects suffer delays during these periods due to numerous factors, including the factors listed above. Any
of these factors could result in changes to economic returns or cash flow estimates of the project or have other negative impacts on
our financial position. There is no assurance that our projects will commence commercial production on schedule, or at all, or will result
in profitable operations. If we are unable to develop our projects into a commercial operating mine, our business and financial condition
will be materially adversely affected. Moreover, even if a feasibility study supports a commercially viable project, there are many additional
factors that could impact the project’s development, including terms and availability of financing, cost overruns, litigation or
administrative appeals concerning the project, delays in development, and any permitting changes, among other factors.
Our
future lithium extraction activities may change as a result of any one or more of these risks and uncertainties. We cannot assure you
that any of our activities will result in achieving and maintaining profitability and developing positive cash flows.
We
depend on our ability to successfully access the capital and financial markets. Any inability to access the capital or financial markets
may limit our ability to meet our liquidity needs and long-term commitments, fund our ongoing operations, execute our business plan or
pursue investments that we may rely on for future growth.
Until
commercial production is achieved from our planned projects, we will continue to incur operating and investing net cash outflows associated
with including, but not limited to, maintaining and acquiring exploration properties, undertaking exploration activities, and the development
of our planned projects. As a result, we rely on access to capital markets as a source of funding for our capital and operating requirements.
We require additional capital to meet our liquidity needs related to expenses for our various corporate activities, including the costs
related to our status as a publicly traded company, fund our ongoing operations, explore and define lithium mineralization, and establish
any future lithium operations. We cannot assure you that such additional funding will be available to us on satisfactory terms, or at
all.
To
finance our future ongoing operations, and future capital needs, we may require additional funds through the issuance of additional equity
or debt securities. Depending on the type and terms of any financing we pursue, stockholders’ rights and the value of their investment
in our common stock could be reduced. Any additional equity financing will dilute shareholdings. If the issuance of new securities results
in diminished rights to holders of our common stock, the market price of our common stock could be negatively impacted. New or additional
debt financing, if available, may involve restrictions on financing and operating activities. In addition, if we issue secured debt securities,
the holders of the debt would have a claim to our assets that would be prior to the rights of stockholders until the debt is paid. Interest
on such debt securities would increase costs and negatively impact operating results.
If
we are unable to obtain additional financing, as needed, at competitive rates, our ability to fund our current operations and implement
our business plan and strategy will be affected. These circumstances may require us to reduce the scope of our operations and scale back
our exploration, development and extraction programs. There is, however, no guarantee that we will be able to secure any additional funding
or be able to secure funding to provide us with sufficient funds to meet our objectives, which may adversely affect our business and
financial position.
We
are dependent upon key management employees.
The
responsibility of overseeing the day-to-day operations and the strategic management of our business depends substantially on our senior
management and key personnel. Loss of any such personnel may have an adverse effect on our performance. The success of our operations
will depend upon numerous factors, many of which, in part, are beyond our control, including our ability to attract and retain additional
key personnel in sales, marketing, technical support, and finance. Certain areas in which we operate are highly competitive and competition
for qualified personnel is significant. We may be unable to hire suitable field personnel for our technical team or there may be periods
of time where a particular position remains vacant while a suitable replacement is identified and appointed. We may not be successful
in attracting and retaining the personnel required to grow and operate our business profitably.
Our
ability to manage growth will have an impact on our business, financial condition, and results of operations.
Future
growth may place strains on our financial, technical, operational, and administrative resources and cause us to rely more on project
partners and independent contractors, thus, potentially adversely affecting our financial position and results of operations. Our ability
to grow will depend on a number of factors, including, but not limited to:
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our
ability to develop existing prospects; |
|
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our
ability to identify and acquire or lease new exploratory prospects; |
|
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our
ability to maintain or enter into new relationships with project partners and independent contractors; |
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our
ability to continue to retain and attract skilled personnel; |
|
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the
market price for lithium products; and |
|
● |
our
ability to enter into agreements for the sale of lithium products. |
Lawsuits
may be filed against us and an adverse ruling in any such lawsuit may adversely affect our business, financial condition, or liquidity
or the market price of our common stock.
We
may become involved in, named as a party to, or be the subject of, various legal proceedings, including regulatory proceedings, tax proceedings,
and legal actions relating to personal injuries, property damage, property taxes, land rights, the environment, and contract disputes.
The
outcome of future legal proceedings cannot be predicted with certainty and may be determined adversely to us and as a result, could have
a material adverse effect on our assets, liabilities, business, financial condition, or results of operations. Even if we prevail in
any such legal proceeding, the proceedings could be costly, time-consuming, and may divert the attention of management and key personnel
from our business operations, which could adversely affect our financial condition.
Our
success as a company producing lithium and related products depends to a great extent on our research and development
capabilities for direct lithium extraction and our ability to secure capital for the implementation of brine
processing plants.
Our
success as a producer of lithium and related products is dependent on our ability to develop and implement more efficient production
capabilities based on mineral rich brine and implementation of direct lithium extraction (DLE) technologies, which while having the potential
to significantly increase the supply of lithium from brine projects, the technology for DLE remains subject to many questions. A number
of DLE technologies are emerging and being tested at scale, with a handful of projects already in commercial construction. However, there
remain challenges around scalability and water consumption/ brine reinjection. We expect to make significant investment in research and
development of the DLE process, and we will need to continue to invest heavily to scale our manufacturing to ultimately producing sufficient
amounts of lithium. We cannot assure you that our future product research and development projects and financing efforts will be successful
or be completed within the anticipated time frame or budget. There is no guarantee we will achieve anticipated sales target or in a profitable
manner. In addition, we cannot assure you that our existing or potential competitors will not develop products which are similar or superior
to our products or are more competitively priced. As it is often difficult to project the time frame for developing new products and
the duration of market window for these products, there is a substantial risk that we may have to abandon a potential product that is
no longer commercially viable, even after we have invested significant resources in the development of such product and our facilities.
If we fail in our product launching efforts, our business, prospects, financial condition and results of operations may be materially
and adversely affected.
The
development of non-lithium battery technologies could adversely affect us.
The
development and adoption of new battery technologies that rely on inputs other than lithium compounds could significantly impact our
prospects and future revenues. Current and next generation high energy density batteries for use in electric vehicles rely on lithium
compounds as a critical input. Alternative materials and technologies are being researched with the goal of making batteries lighter,
more efficient, faster charging and less expensive, and some of these could be less reliant on lithium compounds. We cannot predict which
new technologies may ultimately prove to be commercially viable and on what time horizon. Commercialized battery technologies that use
no, or significantly less, lithium could materially and adversely impact our prospects and future revenues.
Our
business is subject to cybersecurity risks.
Our
operations depend on effective and secure information technology systems. Threats to information technology systems, such as cyberattacks
and cyber incidents, continue to increase. Cybersecurity risks include, but are not limited to, malicious software, attempts to gain
unauthorized access to our data and the unauthorized release, corruption or loss of our data and personal information, as well as interruptions
in communication and operations. It is possible that our business, financial, and other systems could be compromised, which could go
unnoticed for a prolonged period of time. We have not experienced a material breach of our information technologies. Nevertheless, we
continue to take steps to mitigate these risks by employing a variety of measures, including employee training, technical security controls,
and maintenance of backup and protective systems. Despite these mitigation efforts, cybersecurity attacks and other threats exist and
continue to increase, any of which could have a material adverse effect on our business, results of operations, financial condition,
and cash flows.
Regulatory
and Industry Risks
We
will be required to obtain governmental permits and approvals in order to conduct development and extraction operations, a process that
is often costly and time-consuming. There is no certainty that all necessary permits and approvals for our planned operations will be
granted.
We
are required to obtain and renew governmental permits and approvals for our exploration and development activities and, prior to extracting
any mineralization we discover, we will be required to obtain additional governmental permits and approvals that we do not currently
possess. Obtaining and renewing any of these governmental permits is a complex, time consuming and uncertain process involving numerous
jurisdictions, public hearings, and possibly costly undertakings. The timeliness and success of permitting efforts are contingent upon
many variables not within our control, including the interpretation of approval requirements administered by the applicable governmental
authority.
We
may not be able to obtain or renew permits or approvals that are necessary to our planned operations, or we may discover that the cost
and time required to obtain or renew such permits and approvals exceeds our expectations. Any unexpected delays, costs or conditions
associated with the governmental approval process could delay our planned exploration, development and extraction operations, which in
turn could materially adversely affect our prospects, revenues, and profitability. In addition, our prospects may be adversely affected
by the revocation or suspension of permits or by changes in the scope or conditions to use of any permits obtained.
Private
parties, such as environmental activist organizations, frequently attempt to intervene in the permitting process to persuade regulators
to deny necessary permits or seek to overturn permits that have been issued. These third-party actions can materially increase the costs,
cause delays in the permitting process, and could cause us to not proceed with the development or operation of a property. In addition,
our ability to successfully obtain key permits and approvals to explore for, develop, operate, and expand operations will likely depend
on our ability to undertake such activities in a manner consistent with the creation of social and economic benefits in the surrounding
communities, which may or may not be required by law. Our ability to obtain permits and approvals and to successfully operate in particular
communities may be adversely affected by real or perceived detrimental events associated with our activities.
Our
operations face substantial regulation of health and safety.
Our
operations are subject to extensive and complex laws and regulations governing worker health and safety across our operating regions
and our failure to comply with applicable legal requirements can result in substantial penalties. Future changes in applicable laws,
regulations, permits and approvals or changes in their enforcement or regulatory interpretation could substantially increase costs to
achieve compliance, lead to the revocation of existing or future exploration or mining rights or otherwise have an adverse impact on
our results of operations and financial position.
Our
mining claims are inspected on a regular basis by government regulators who may issue citations and orders when they believe a violation
has occurred under local mining regulations. If inspections result in an alleged violation, we may be subject to fines, penalties or
sanctions and our mining operations could be subject to temporary or extended closures.
In
addition to potential government restrictions and regulatory fines, penalties or sanctions, our ability to operate (including the effect
of any impact on our workforce) and thus, our results of operations and our financial position (including because of potential related
fines and sanctions), could be adversely affected by accidents, injuries, fatalities or events detrimental (or perceived to be detrimental)
to the health and safety of our employees, the environment or the communities in which we operate.
Compliance
with environmental regulations and litigation based on environmental regulations could require significant expenditures.
Environmental
regulations mandate, among other things, the maintenance of air and water quality standards, land development, and land reclamation,
and set forth limitations on the generation, transportation, storage, and disposal of solid and hazardous waste. Environmental legislation
is evolving in a manner that may require stricter standards and enforcement, increased fines and penalties for non-compliance, more stringent
environmental assessments of proposed projects, and a heightened degree of responsibility for mining companies and their officers, directors,
and employees. We may incur environmental costs that could have a material adverse effect on financial condition and results of operations.
Any failure to remedy an environmental problem could require us to suspend operations or enter into interim compliance measures pending
completion of the required remedy.
Moreover,
governmental authorities and private parties may bring lawsuits based upon damage to property and injury to persons resulting from the
environmental, health, and safety impacts of prior and current operations. These lawsuits could lead to the imposition of substantial
fines, remediation costs, penalties, and other civil and criminal sanctions, as well as reputational harm, including damage to our relationships
with customers, suppliers, investors, governments or other stakeholders. Such laws, regulations, enforcement, or private claims may have
a material adverse effect on our financial condition, results of operations, or cash flows.
Lithium
prices are subject to unpredictable fluctuations.
We
expect to derive revenues, if any, from the extraction and sale of lithium. The prices of lithium may fluctuate widely and are affected
by numerous factors beyond our control, including international, economic, and political trends, expectations of inflation, currency
exchange fluctuations, interest rates, global or regional consumptive patterns, speculative activities, increased production due to new
extraction developments and improved extraction and production methods and technological changes in the markets for the end products.
The effect of these factors on the prices of lithium and lithium byproducts, and therefore the economic viability of any of our exploration
properties, cannot accurately be predicted.
Changes
in technology or other developments could adversely affect demand for lithium compounds or result in preferences for substitute products.
Lithium
and its derivatives are preferred raw materials for certain industrial applications, such as rechargeable batteries. For example, current
and future high energy density batteries for use in electric vehicles will rely on lithium compounds as a critical input. The pace of
advancements in current battery technologies, development and adoption of new battery technologies that rely on inputs other than lithium
compounds, or a delay in the development and adoption of future high nickel battery technologies that utilize lithium could significantly
impact our prospects and future revenues. Many materials and technologies are being researched and developed with the goal of making
batteries lighter, more efficient, faster charging, and less expensive, some of which could be less reliant on lithium or other lithium
compounds. Some of these technologies, such as commercialized battery technologies that use no, or significantly less, lithium compounds,
could be successful and could adversely affect demand for lithium batteries in personal electronics, electric and hybrid vehicles, and
other applications. We cannot predict which new technologies may ultimately prove to be commercially viable and on what time horizon.
In addition, alternatives to industrial applications dependent on lithium compounds may become more economically attractive as global
commodity prices shift. Any of these events could adversely affect demand for and market prices of lithium, thereby resulting in a material
adverse effect on the economic feasibility of extracting any mineralization we discover and reducing or eliminating any reserves we identify.
Risks
Related to an Investment in Our Common Stock
An
active trading market for our common stock may not develop, and you may be unable to resell your shares at or above the price you paid
for them.
Our
common stock trading over the counter has not been historically active. An active trading market for our shares may never develop or
be sustained. No assurance can be given that our common stock will be accepted to trade on a national securities exchange. In the absence
of an active trading market for our common stock, shareholders may not be able to sell their common stock at or above the price they
paid for them.
Our
stock price may be volatile, and the market price of our common stock may drop below the price you pay due to a variety of factors, many
of which are beyond our control.
The
market price of our common stock could be subject to significant fluctuations, and it may decline. Market prices for securities of early-stage
companies have historically been particularly volatile. As a result of this volatility, you may not be able to sell your common stock
at or above the price you paid for them. Some of the factors that may cause the market price of our common stock to fluctuate include:
| ● | fluctuations
in our quarterly financial results or the quarterly financial results of companies perceived to be similar to our company; |
| ● | changes
in estimates of our financial results or recommendations by securities analysts; |
| ● | failure
of our business to achieve or maintain market acceptance in the lithium industry; |
|
● |
changes in market valuations of similar companies; |
|
● |
success of competitive service offerings or technologies; |
|
● |
changes in our capital structure, such as future issuances of securities or the incurrence of debt; |
|
● |
announcements by us or our competitors of significant services, contracts, acquisitions, or strategic alliances; |
|
● |
changes in market valuations of similar companies; |
|
● |
success of competitive service offerings or technologies; |
|
● |
changes in our capital structure, such as future issuances of securities or the incurrence of debt; |
|
● |
announcements by us or our competitors of significant services, contracts, acquisitions, or strategic alliances; |
| ● | regulatory
developments in the United States, foreign countries, or both; |
| ● | litigation
involving us; |
| ● | additions
or departures of key personnel; |
| ● | investors’
general perception of us; and |
| ● | other
events or factors, including those resulting from macroeconomic conditions, geopolitical crises, outbreak of hostilities or acts of war
such as the Russian invasion of Ukraine, the Israeli-Hamas war, and Houthi rebel ship attacks in the Red Sea, incidents of terrorism,
global pandemics such as the Covid-19 pandemic, natural disasters, and similar events, as well as responses to these and similar events. |
In
addition, if the market for lithium and technology sector stocks or the stock market in general experiences a loss of investor confidence,
the trading price of our common stock could decline for reasons unrelated to our business, financial condition, or results of operations.
If any of the foregoing occurs, it could cause our stock price to fall and may expose us to class action lawsuits that, even if unsuccessful,
could be costly to defend and a distraction to management.
Stockholders
may experience substantial dilution in the future.
In
the future, your percentage ownership in us may be diluted if we issue additional shares of our common stock or convertible debt securities
in connection with acquisitions, capital market transactions, or other corporate purposes, including equity awards that we may grant
to our directors, officers and employees.
Officers
and directors have significant voting power and may take actions that may not be in the best interests of other stockholders.
Our
executive officers and directors currently own or control 50.5% of our outstanding shares of common stock. If these stockholders act
together, they will be able to exert significant control over our management and affairs requiring stockholder approval, including approval
of significant corporate transactions. This concentration of ownership may have the effect of delaying or preventing a change in control
and might adversely affect the market price of our common stock. This concentration of ownership may not be in the best interests of
all of our stockholders.
We
do not expect to declare any dividends in the foreseeable future.
We
do not anticipate declaring any cash dividends to holders of our common stock in the foreseeable future. Consequently, stockholders may
need to rely on sales of their common stock after price appreciation, which may never occur, as the only way to realize any future gains
on their investment. Investors seeking cash dividends should not purchase our common stock.
Our
indemnification of officers and directors and limitations on their liability could limit our recourse against them.
Our
certificate of incorporation and bylaws contain broad indemnification and liability limiting provisions regarding our officers, directors
and employees, including the limitation of liability for certain violations of fiduciary duties. Stockholders therefore will have only
limited recourse against these individuals.
If
we fail to implement and maintain proper and effective internal controls and disclosure controls and procedures, our ability to produce
accurate and timely financial statements and public reports could be impaired, which could adversely affect our operating results, our
ability to operate our business and investors’ views of us.
Section 404
of the Sarbanes-Oxley Act of 2002 requires our company to evaluate the effectiveness of our internal control over financial reporting
as of the end of each year, and to include a management report assessing the effectiveness of our internal control over financial
reporting in each annual report on Form 10-K.
We
have identified our disclosure controls and procedures were not effective and that material weaknesses exist in our internal control
over financial reporting. The material weaknesses consist of an insufficient complement of qualified accounting personnel and controls
associated with segregation of duties and ineffective controls associated with identifying and accounting for complex and non-routine
transactions in accordance with U.S. generally accepted accounting principles. Due to the material weaknesses in internal control over
financial reporting and disclosure controls and procedures, there may be errors in our consolidated financial statements and in the accompanying
footnote disclosures that could require restatements. Investors may lose confidence in our reported financial information and disclosure,
which could negatively impact our stock price.
We
do not expect that our internal control over financial reporting will prevent all errors and all fraud. A control system, no matter how
well designed and operated, can provide only reasonable, not absolute, assurance that the control system’s objectives will be met.
Further, the design of a control system must reflect the fact that there are resource constraints, and the benefits of controls must
be considered relative to their costs. Controls can be circumvented by the individual acts of some persons, by collusion of two or more
people, or by management override of the controls. Over time, controls may become inadequate because changes in conditions or deterioration
in the degree of compliance with policies or procedures may occur. Because of the inherent limitations in a cost-effective control system,
misstatements due to error or fraud may occur and not be detected.
We
have additional common stock and preferred stock available for issuance, which, if issued, could adversely affect the rights of the holders
of our common stock.
Our Certificate of Incorporation
authorizes the issuance of up to 4,500,000,000 shares of our common stock, and up to 10,000,000 shares of preferred stock. The common
stock and the preferred stock can be issued by the Board of Directors without stockholder approval. As of April 1, 2024, there were 11,375,459
shares of our common stock outstanding and 0 shares of our preferred stock issued and outstanding.
Our stock is a penny stock subject to SEC
penny stock regulations, which could restrict the trading activity and limit the ability to buy and sell our stock.
Our company's stock qualifies
as a penny stock, as defined by Rule 15g-9 of the Securities and Exchange Commission (SEC), due to its market price being below $5.00
per share. This classification subjects our stock to regulatory restrictions imposed by the SEC and FINRA.
Under SEC regulations, broker-dealers
are required to comply with additional sales practice requirements when trading penny stocks with individuals who are not established
customers or accredited investors. These requirements include the delivery of a standardized risk disclosure document approved by the
SEC, provision of current bid and offer quotations, disclosure of broker-dealer compensation, and issuance of monthly account statements
to customers holding penny stocks. Prior to executing a transaction involving penny stocks, broker-dealers must assess the suitability
of the investment for the purchaser and obtain written agreement from the purchaser.
Furthermore, FINRA mandates that broker-dealers must have reasonable
grounds to believe that an investment is suitable for a customer before recommending it. This requirement necessitates gathering information
about the customer's financial status, tax status, investment objectives, and other relevant details. FINRA's regulations regarding speculative
low-priced securities create additional hurdles for broker-dealers in recommending or trading our company's common stock.
These regulatory obligations
may diminish the level of trading activity in the secondary market for our stock, potentially limiting investors' ability to buy and sell
our stock efficiently. Investors should be aware that these regulatory constraints on penny stock trading could impact the marketability
and liquidity of our common stock.
Item
1B. Unresolved Staff Comments.
None.
Item
1C. Cybersecurity.
Risk
Management and Strategy
Our
company recognizes the critical importance of addressing cybersecurity threats and managing associated risks. As part of our risk management
strategy, our Board of Directors actively oversees and reviews our strategic direction, considering our risk profile and exposure.
Given
that our day-to-day operations involve a limited number of individuals, we rely on technology systems operated and managed by third parties.
We have established agreements with these third parties for hardware, software, telecommunications, and other information technology
services essential to our business operations. Additionally, we collaborate with third-party business partners and operators who have
their own cybersecurity risk management procedures and tools. Our entire Board of Directors with our senior officers monitor cybersecurity
readiness
As
of the date of this filing, we are not aware of any cybersecurity threats that have materially affected our business. However, we acknowledge
the evolving nature of cybersecurity threats and remain committed to enhancing our protective measures as needed.
For
more detailed information about the specific cybersecurity risks our company faces, please refer to the risk factor titled “Our
business is subject to cybersecurity risks” in Item IA. Risk Factors of this Form 10-K.
Item
2. Properties.
The Company’s address
is 500 West Putnam Avenue, Suite 400, Greenwich, Connecticut 06830. We have contracted a third-party office provider to provide full office
services on a need basis, with a monthly payment of $142.
Details
about our mining claims can be found on pages 6-8 of this report, under the section titled “Our Lisbon Valley Lithium Project”.
Item
3. Legal Proceedings.
From
time to time, we may become involved in various lawsuits and legal proceedings, which arise in the ordinary course of business. However,
litigation is subject to inherent uncertainties, and an adverse result in these or other matters may arise from time to time that may
harm our business. There are no material legal proceedings to which the Company or any of its subsidiaries is a party or of which any
of their property is the subject.
Item
4. Mine Safety Disclosures.
The
Dodd-Frank Wall Street Reform and Consumer Protection Act (the “Act”) and Item 104 of Regulation S-K require certain mine
safety disclosures to be made by companies that operate mines regulated under the Federal Mine Safety and Health Act of 1977. However,
the requirements of the Act and Item 104 of Regulation S-K do not apply as the Company does not engage in mining activities. Therefore,
the Company is not required to make such disclosures.
PART
II
Item
5. Market For Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases Of Equity Securities.
There
is no established public trading market for our Common Stock. Our Common Stock is currently quoted on the OTC Markets Group’s Pink
(Current Information) Open Market under the trading symbol “BLTH”. For the periods indicated, the following table sets forth
the high and low bid prices per share of Common Stock based on inter-dealer prices, without retail mark-up, mark-down or commission and
may not represent actual transactions.
Fiscal Year 2022 | |
High Bid | | |
Low Bid | |
First Quarter | |
$ | 6.00 | | |
$ | 2.40 | |
Second Quarter | |
$ | 6.60 | | |
$ | 2.70 | |
Third Quarter | |
$ | 7.20 | | |
$ | 2.70 | |
Fourth Quarter | |
$ | 6.30 | | |
$ | 0.30 | |
Fiscal Year 2023 | |
High Bid | | |
Low Bid | |
First Quarter | |
$ | 3.60 | | |
$ | 1.20 | |
Second Quarter | |
$ | 6.30 | | |
$ | 0.30 | |
Third Quarter | |
$ | 5.70 | | |
$ | 2.40 | |
Fourth Quarter | |
$ | 0.99 | | |
$ | 0.60 | |
The last reported sales price of our common stock
on the OTC Pink on March 28, 2024 was $0.64. All stock prices reflect the 1-for-300 reverse stock split effective as of December 8, 2023.
The market value of our common stock is susceptible
to significant changes driven by fluctuations in our quarterly operational results, general market trends, and various external factors,
many of which are outside our direct control. Additionally, broader market volatility, along with general economic, business, and political
conditions, may adversely affect the market demand for our common stock, regardless of our actual or forecasted performance.
Penny
Stock Rules
The
Securities and Exchange Commission has adopted rules that regulate broker-dealer practices in connection with transactions in penny stocks.
Penny stocks are generally equity securities with a price of less than $5.00 (other than securities registered on certain national securities
exchanges or quoted on the NASDAQ system, provided that current price and volume information with respect to transactions in such securities
is provided by the exchange or system).
Our
shares constitute penny stock under the Securities Exchange Act. The shares will remain penny stocks for the foreseeable future. The
classification of penny stock makes it more difficult for a broker-dealer to sell the stock into a secondary market, which makes it more
difficult for a purchaser to liquidate his/her investment. Any broker-dealer engaged by the purchaser for the purpose of selling his
or her shares in us will be subject to Rules 15g-1 through 15g-10 of the Securities and Exchange Act. Rather than creating a need to
comply with those rules, some broker-dealers will refuse to attempt to sell penny stock.
The
penny stock rules require a broker-dealer, prior to a transaction in a penny stock not otherwise exempt from those rules, to deliver
a standardized risk disclosure document, which:
| ● | contains
a description of the nature and level of risk in the market for penny stock in both public offerings and secondary trading; |
| ● | contains
a brief, clear, narrative description of a dealer market, including “bid” and “ask” price for the penny stock
and the significance of the spread between the bid and ask price; |
| ● | contains
a toll-free telephone number for inquiries on disciplinary actions; |
| ● | defines
significant terms in the disclosure document or in the conduct of trading penny stocks; and |
| ● | contains
such other information and is in such form (including language, type, size and format) as the SEC shall require by rule or regulation. |
The
broker-dealer also must provide, prior to effecting any transaction in a penny stock, to the customer:
| ● | the
bid and offer quotations for the penny stock; |
| ● | the
compensation of the broker-dealer and its salesperson in the transaction; |
| ● | the
number of shares to which such bid and ask prices apply, or other comparable information relating to the depth and liquidity of the market
for such stock; and |
| ● | monthly
account statements showing the market value of each penny stock held in the customer’s account. |
In addition, the penny stock rules require that
prior to a transaction in a penny stock not otherwise exempt from those rules; the broker-dealer must make a special written determination
that the penny stock is a suitable investment for the purchaser and receive the purchaser’s written acknowledgment of the receipt
of a risk disclosure statement, a written agreement to transactions involving penny stocks, and a signed and dated copy of a written suitability
statement. These disclosure requirements will have the effect of reducing the trading activity in the secondary market for our stock because
it will be subject to these penny stock rules. Therefore, stockholders may have difficulty selling their securities.
Reports
We are subject to certain filing requirements
and will furnish annual financial reports to our stockholders, audited by our independent registered public accounting firm, and will
furnish un-audited quarterly financial reports in our quarterly reports filed electronically with the SEC. All reports and information
filed by us can be found at the SEC website, www.sec.gov.
Issued and Outstanding Shares
The Company’s certificate of incorporation
authorizes 4,500,000,000 shares of common stock, par value $0.001; and 10,000,000 shares of preferred stock, par value $0.001. As of April
1, 2024, the Company had 11,375,459 shares of common stock, and 50,000 shares of preferred stock, issued and outstanding.
Stockholders
As of April 1, 2024, the Company had approximately
739 record holders of its common stock. This number does not include the number of persons whose shares are in nominee or in “street
name” accounts through brokers.
Dividend Policy
The Company did not pay dividends during the years
ended December 31, 2023 and 2022. The Company has never declared or paid any cash dividends or distributions on our common stock and intend
to retain future earnings, if any, to support our operations and to finance expansion. Therefore, it does not anticipate paying any cash
dividends on the common stock in the foreseeable future.
Stock
Transfer Agent and Warrant Agent
The
Company’s stock transfer agent is Transfer Online, 512 SE Salmon Street 2nd Floor, Portland, OR 97214-3444. The Company
acts as its own warrant agent for its outstanding warrants and maintains all records for its preferred shares.
Recent
Issuances of Unregistered Securities
The
following information represents securities sold by the Company during the period covered by this Annual Report, and the subsequent period,
which were not registered under the Securities Act. Included are sales of reacquired securities, as well as new issues, securities issued
in exchange for property, services, or other securities, and new securities resulting from the modification of outstanding securities.
All issuances were exempt under Section 4(a)(2) of the Securities Act unless otherwise noted.
|
● |
On January 5, 2023, in consideration of the payment of $14,000, the company issued 12,281 shares of its common stock upon the cash exercise of a warrant. |
|
● |
On January 31, 2023, in consideration of the payment of $140,000, the company issued 122,808 shares of its common stock upon the cash exercise of a warrant. |
|
|
|
|
● |
On February 28, 2023, the company issued
8,987 shares of its common stock upon the cashless exercise of a warrant. |
|
|
|
|
● |
On March 27, 2023, in consideration of the payment of $35,000, the company issued 30,702 shares of its common stock upon the exercise of a warrant. |
|
|
|
|
● |
On April 8, 2023, the company issued 10,679 shares of its common stock upon the cashless exercise of a warrant. |
|
|
|
|
● |
On April 30, 2023, the company issued 2,390 shares of its common stock upon the cashless exercise of a warrant. |
|
● |
On April 30, 2023, the company issued 833 shares of its common stock as payment for services rendered. |
|
● |
On May 16, 2023, the company issued 100,000 shares of its common stock as payment for services rendered. |
|
● |
On May 22, 2023, the company issued 65,558 shares of its common stock as payment for services rendered. |
|
|
|
|
● |
On July 31, 2023, the company issued 833 shares of its common stock as payment for services rendered. |
|
● |
On August 7, 2023, the company issued 22,945 shares of its common stock upon the cashless exercise of a warrant. |
|
● |
On August 15, 2023, the company issued 10,998 shares of its common stock upon the cashless exercise of a warrant. |
|
● |
On August 23, 2023, the company issued 33,333 shares of its common stock to retire preferred stock. |
|
● |
On September 7, 2023, the company issued 8,420 shares of its common stock related to the issuance of new convertible note. |
|
● |
On September 9, 2023, the company issued
6,736 shares of its common stock related to the issuance of new convertible note. |
|
● |
On September 11, 2023, the company issued 3,368 shares of its common stock in consideration for the extension of the maturity date of a convertible note. |
|
● |
On September 13, 2023, the company issued 38,732 shares of its common stock in consideration for the extension of the maturity date of three convertible notes. |
|
● |
On September 14, 2023, the company issued 1,684 shares of its common stock in consideration for the extension of the maturity date of a convertible note. |
|
● |
On September 20, 2023, the company issued 1,750 shares of its common stock as payment for services rendered. |
|
● |
On September 21, 2023, the company issued 11,667 shares of its common stock in consideration for the extension of the maturity date of a convertible note. |
|
● |
On September 21, 2023, the company issued 28,333 shares of its common stock related to the issuance of a new convertible note. |
|
● |
On October 17, 2023, in consideration of the payment of $35,000, the company issued 30,702 shares of its common stock upon the cash exercise of a warrant. |
|
● |
On October 31, 2023, the company issued 833 shares of its common stock as payment for services rendered. |
Shares Repurchased by the Registrant
The Company did not purchase or repurchase any of its securities in
the years ended December 31, 2023 and 2022.
Securities
Authorized for Issuance under Equity Compensation Plans
On
July 22, 2011, the Board of Directors of the Company approved the Company’s 2011 Equity Incentive Plan (the “Plan”)
and on July 26, 2011, stockholders holding a majority of shares of the Company approved, by written consent, the Plan and the issuance
under the Plan of 16,667 shares. On November 16, 2017, the Board of Directors approved an increase of 33,334 shares to be made available
for issuance under the Plan. Accordingly, the total number of shares of common stock available for issuance under the Plan is 50,000
shares. Awards may be granted to employees, officers, directors, consultants, agents, advisors and independent contractors of the Company
and its related companies. Such options may be designated at the time of grant as either incentive stock options or nonqualified stock
options. Stock based compensation includes expense charges related to all stock-based awards. Such awards include options, warrants and
stock grants. Generally, the Company issues stock options that vest over three years and expire in 5 to 10 years.
The Company records share-based payments under
the provisions of FASB ASC 718. Stock based compensation expense is recognized over the requisite service period based on the grant date
fair value of the awards. The fair value of each option grant is estimated on the date of grant using the Black-Scholes option-pricing
model on certain assumptions. The Company estimated the expected volatility based on data used by peer group of public companies. The
expected term was estimated using the simplified method. The risk-free interest rate assumption was determined using the equivalent U.S.
Treasury bonds yield over the expected term. The Company has never paid any cash dividends and does not anticipate paying any cash dividends
in the foreseeable future. Therefore, the Company assumed an expected dividend yield of zero.
The following table sets forth information as
of December 31, 2023, regarding equity compensation plans under which the equity securities are authorized for issuance.
Equity
Plan Compensation Information
Plan
Category | |
Number
of securities to be issued upon exercise of outstanding options, warrants and rights | | |
Weighted
average exercise price of outstanding options, warrants and rights | | |
Number
of securities remaining available under equity compensation Plans | |
Equity
compensation plans approved by securities holders (1) | |
| - | | |
$ | - | | |
| 50,000 | |
Equity compensation plans not approved by security holders | |
| - | | |
$ | - | | |
| | |
Total | |
| - | | |
| - | | |
| 50,000 | |
(1) |
Pursuant
to the 2011 Equity Incentive Plan, as amended. |
Item
6. [Reserved].
Item
7. Management’s Discussion and Analysis of Financial Condition and Results of Operations.
FORWARD-LOOKING
STATEMENTS
Certain
statements contained herein constitute “forward-looking statements”. Except for the historical information contained herein,
this report contains forward-looking statements (identified by the words “estimate,” “project,” “anticipate,”
“plan,” “expect,” “intend,” “believe,” “hope,” “strategy” and
similar expressions), which are based on our current expectations and speak only as of the date made. These forward-looking statements
are subject to various risks, uncertainties and factors that could cause actual results to differ materially from the results anticipated
in the forward-looking statements, including, without limitation, those discussed under Part I, Item 1A “Risk Factors” in
this Annual Report, and those described herein that could cause actual results to differ materially from the results anticipated in the
forward-looking statements, and the following:
| ● | Our
expectations about the strength of the global demand for lithium; |
| ● | Lithium
prices may experience fluctuations due to market dynamics and economic conditions; |
| ● | The
sustainability of industries relying on lithium may be influenced by factors such as consumer
preferences and regulatory requirements; |
| ● | Expected
benefits from business activities, such as the expectation that we will derive revenue from
lithium extraction; |
| ● | Higher
than expected capital costs due to, among other things, supply chain disruptions, higher
transportation costs, and inflation; |
| ● | Anticipated
production costs and production estimates. |
The
following discussion and analysis provides information that our management believes is relevant to an assessment and understanding of
our results of operations and financial condition, and should be read in conjunction with the consolidated financial statements and footnotes
that appear elsewhere in this report.
This Management’s
Discussion and Analysis is a supplement to our financial statements, including notes, referenced elsewhere in this Annual Report,
and is provided to enhance your understanding of our operations and financial condition. Due to rounding, some parts of this discussion
may not sum or calculate precisely to the totals and percentages provided in the tables.
Overview
We
are a U.S. based renewable energy company focused on the extraction, refinement and distribution of technical minerals in an environmentally
responsible manner. We formerly developed, marketed and distributed various self-serve electronic kiosks and mall/airport co-branded
islands throughout North America. Due to the nationwide shutdown related to the Covid-19 pandemic, we spent a portion of 2020 restructuring
and retiring certain corporate debt and obligations, and focusing on implementing a new operational direction.
Through
the corporate reorganization and repositioning process, we found ourselves with the unique opportunity to acquire mining claims that
historically reported high levels of lithium and other technical minerals. We hired and affiliated ourselves with industry veterans that
bring decades of experience, credibility and relationships.
On
November 5, 2021, we acquired the rights to 102 federal mining claims located in the Lisbon Valley of Utah for $100,000 plus the future
payment of royalties based on a percentage of the net revenue from the sale of lithium produced from a portion of the mining property.
The acquisition was driven by historical mineral data from seven existing wells with brine aquifer access. We have not yet commenced
any mining operations, and we are an exploration stage issuer, as defined in SEC Regulation S-K, Item 1300 (“Regulation S-K 1300”).
An independent third-party technical report indicated that further investment and development in the claims was warranted, although no
determination has been made whether we have any reserves of minerals. Similarly, no determination has been made whether mineralization
could be economically and legally produced or extracted. We have no mineral reserves as defined by Regulation S-K 1300 and have had no
mining revenue to date.
We
have been moving forward with our strategy of employing advanced brine extractive technology methodologies and have been in talks with
numerous extraction providers. Selective mineral extraction is clearly the most cost-effective and ESG friendly approach currently available.
Technologies are being utilized that can extract the desired minerals and metals from the brine and then re-inject the brines back down
into the aquafer. The prospective partners have been provided the analytical results from the technical reports, but will soon provide
current results, analytical, geotech modeling, aquifer modeling, recharge, flows, and depth. We will need funding to support continuing
operations and support our growth strategy, and we will need to finance operations by offering any combination of equity offerings, debt
financing, collaborations, strategic alliances, or other licensing arrangements. There is no assurance we will be able to raise sufficient
capital to finance our operations.
Corporate
Actions
On
October 20, 2022 we, following receipt of written approval from stockholders acting without a meeting and holding at least the minimum
number of votes that would be necessary to authorize or take such action at a meeting, filed an amendment to our certificate of incorporation
to (i) change the name of our company to “American Battery Materials, Inc.” (the “Name Change”); and (ii) increase
the total number of authorized shares of our common stock, par value $0.001 per share, from 600,000,000 to 4,500,000,000 (the “Authorized
Share Increase”). The Name Change was processed by FINRA and was effective on May 1, 2023, at which time our trading symbol was
also changed to BLTH. The Authorized Share Increase was effective as of October 20, 2022.
On
October 20, 2022, in addition to the Name Change and the Authorized Share Increase, the holder of 63.86% of the outstanding shares of
stock of our company entitled to vote took action by written consent and without a meeting, pursuant to Delaware General Corporate Law
Section 228, and adopted and approved the following actions:
| 1. | Future
amendment of our certificate of incorporation to implement a decrease in the authorized shares of our common stock from 4,500,000,000
to a number of not less than 10,000,000 and not more than 2,000,000,000 (the “Authorized Share Reduction”), at any time prior
to October 20, 2023 (the “Anniversary Date”), with the Board having the discretion to determine whether or not the Authorized
Share Reduction is to be effected, and if effected, the exact number of the Authorized Share Reduction within the above range. |
| 2. | Future
amendment of our certificate of incorporation to implement a reverse stock split of our common stock by a ratio of not less than 1-for-10
and not more than 1-for-1,000 (the “Reverse Split”), at any time prior to the Anniversary Date, with the Board having the
discretion to determine whether or not the Reverse Split is to be effected, and if effected, the exact ratio for the Reverse Split within
the above range. |
On
April 25, 2023, we formed Mountain Sage Minerals LLC, a Utah limited liability company. We will look to expand our holdings in the Lisbon
Valley area with the acquisition of additional mineral claims and joint venture opportunities through this new entity.
On
June 1, 2023, we entered into an Agreement and Plan of Merger (the “Merger Agreement”) with Seaport Global Acquisition II
Corp. (“SGII”), and Lithium Merger Sub, Inc., a wholly owned subsidiary of SGII. SGII is a blank check company, also referred
to as a special purpose acquisition company, formed for the purpose of effectuating a merger, capital stock exchange, asset acquisition,
stock purchase, reorganization or other similar business combination with one or more businesses. Following material changes
to the transaction proposed by SGII making the transaction untenable to us, on November 20, 2023, SGII notified us that it had elected
to terminate the Merger Agreement.
On
August 4, 2023, the Company filed an Amendment to the Certificate of Incorporation (the “Amendment”) in order to effect a
reverse stock split in the ratio of 1-for-300 (the “Reverse Split”). The Company and its shareholders holding a majority
of the issued and outstanding shares of stock of the Company entitled to vote previously approved a reverse stock split for not less
than 1-for-10 and not more than 1-for-1,000, at any time prior to October 20, 2023, with the Company’s Board having the discretion
to determine whether or not the Reverse Split is to be effected, and if effected, the exact ratio for the Reverse Split within the above
range. On August 1, 2023, the Company’s unanimously approved the Reverse Split and authorized the filing of the Amendment. On December
8, 2023, the company effectuated the reverse split of the common stock by a ratio of one-for-300 (the “Reverse Split”). All
per share amounts and number of shares in the consolidated financial statements and related notes have been retroactively restated to
reflect the Reverse Split.
Results
of Operations
Year Ended December
31, 2023, Compared to Year Ended December 31, 2022
Revenue
For the years ended December
31, 2023, and 2022, the Company had no revenue.
Operating
Expenses
General and administrative
expenses for the year ended December 31, 2023, were $2,453,700, an increase of $1,318,612 or 116%, compared to $1,135,088 for the year
ended December 31, 2022. The increase in operating expenses was mainly due to an increase in professional fees, mining maintenance fees
and stock compensation expenses. In the second quarter of 2022, the Company activated consulting teams to pursue additional land acquisitions,
and to begin the State and Federal permitting process for project development work.
In
addition, the Company initiated construction strategies based on reports from RESPEC, the Company’s engineering partner, for geological
modeling and drill entry design and related planning.
Change
in Fair Value of Derivative Liabilities
During
the year ended December 31, 2022, the Company recorded a gain on the change in fair value of derivative liabilities of $211,345. The
underlying convertible notes were converted during the fourth quarter of 2022, resulting in no derivative liabilities during the year
ended December 31, 2023.
Gain
on Settlement of Liabilities
During
the year ended December 31, 2023, the Company recorded a gain on settlement of liabilities of $441,041, consisting of $7,008 in principal
and $60,976 in interest forgiven by noteholders, and $373,057 in aged payables write-off. During the year ended December 31, 2022, creditors
forgave $32,019 in notes payable, which has been recorded as a gain on settlement.
Fair
value of stock issued for note modification
During
the year ended December 31, 2023, the Company recorded a fair value of stock issued for note modification of $168,856. No such transactions
were noted during the year ended December 31, 2022.
Interest
Expense
Interest expense for
the year ended December 31, 2023, was $203,287, as compared to $595,124 during the year ended December 31, 2022, due to the conversion
of convertible notes payable.
Net
Loss
As
a result of the foregoing, the net loss for the year ended December 31, 2023, was $2,384,802 as compared to the net loss of $1,486,848
during the year ended December 31, 2022.
Liquidity
and Capital Resources
We require cash to fund
our operating expenses and working capital requirements, including outlays for capital expenditures. The accompanying consolidated financial
statements have been prepared on a going concern basis. The Company had a net loss of $2,384,802 during the year ended December 31, 2023,
had accumulated losses totaling $20,239,639, and a working capital deficit of $3,222,893 as of December 31, 2023. These factors, among
others, indicate that the Company may be unable to continue as a going concern. The consolidated financial statements do not include any
adjustments that might result from the outcome of these uncertainties.
Since
we acquired our first mining claims in November 2021, we have faced an increasingly challenging liquidity situation that has limited
our ability to execute on our operating plan. The Company will need to raise additional financing in order to fund its operations for
the next 12 months, and to allow the Company to continue the development of its business plans and satisfy its obligations on a timely
basis. Should additional financing not be available, the Company will have to negotiate with its lenders to extend the repayment dates
of its indebtedness. There can be no assurance that the Company will be able to successfully restructure its debt obligations in the
event it fails to obtain additional financing.
Sources
of additional capital through various financing transactions or arrangements with third parties may include equity or debt financing,
bank loans or revolving credit facilities. We may not be successful in locating suitable financing transactions in the time period required
or at all, and we may not obtain the capital we require by other means. Unless we can attract additional investment, our operating as
a going concern is in doubt.
If
we are unable to obtain sufficient amounts of additional capital, we may have to cease filing the required reports and cease operations
completely. If we obtain additional funds by selling any of our equity securities or by issuing common stock to pay current or future
obligations, the percentage ownership of our stockholders will be reduced, stockholders may experience additional dilution, or the equity
securities may have rights preferences or privileges senior to the common stock.
Cash
Flows from Operating Activities
During
the year ended December 31, 2023, the Company used $2,278,206 of cash in operating activities as a result of the Company’s net
loss of $2,384,802, increased by gain on debt settlement of $441,041 and amortization of debt discount of $28,497, and offset by fair
value of options issued for note modification of $168,856, share-based compensation of $275,465, and net changes in operating assets
and liabilities of $131,813.
During
the year ended December 31, 2022, the Company used $910,709 of cash in operating activities as a result of the Company’s net loss
of $1,486,848, offset by share-based compensation of $62,080, net changes in operating assets and liabilities of $757,423, and increased
by gain on change in fair market value of derivative liability of $211,345 and gain on settlement of debt of $32,019.
Cash
Flows from Investing Activities
During
the year ended December 31, 2023, the Company expended $106,000 for staking activities related to new federal mining claims located in
the Lisbon Valley of Utah.
During
the year ended December 31, 2022, the Company had no investing activities.
Cash
Flows from Financing Activities
During
the year ended December 31, 2023, financing activities provided $2,349,000, resulting from $2,025,000 in proceeds from convertible notes,
$100,000 in proceeds from promissory notes, and $224,000 in proceeds from the exercise of warrants.
During
the year ended December 31, 2022, financing activities provided $945,000, resulting from $590,000 in proceeds from convertible notes,
$250,000 in proceeds from promissory notes, $130,000 in proceeds from the exercise of warrants, and $50,000 in proceeds from issuance
of preferred stock, offset by $75,000 in repayments of convertible notes.
Item
7A. Quantitative and Qualitative Disclosures About Market Risk.
Not
required by smaller companies.
Item
8. Financial Statements and Supplementary Data.
Index
to Consolidated Financial Statements
AMERICAN
BATTERY MATERIALS, INC.
December
31, 2023 and 2022
Report
of Independent Registered Public Accounting Firm
To the Board of Directors and Shareholders of American Battery Materials,
Inc.
Opinion on the Financial Statements
We have audited the accompanying consolidated balance
sheet of American Battery Materials, Inc. (the Company) as of December 31, 2023, and the related consolidated statement of operations,
stockholders’ deficit, and cash flows for the year then ended and the related notes (collectively referred to as the financial statements).
In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December
31, 2023, and the results of its operations and its cash flows for the year then ended, in conformity with accounting principles generally
accepted in the United States of America.
The financial statements
of the Company as of December 31, 2022, were audited by other auditors whose report dated April 20, 2023, expressed an unqualified opinion
on those statements.
Going Concern Considerations
The accompanying financial statements have been
prepared assuming that the Company will continue as a going concern. The Company has suffered recurring losses since inception and has
not achieved profitable operations, which raise substantial doubt about its ability to continue as a going concern. Management’s
plans in regard to these matters are described in Note 2. The financial statements do not include any adjustments that might result from
the outcome of this uncertainty.
Basis for Opinion
These financial statements are the responsibility
of the Company’s management. Our responsibility is to express an opinion on the Company’s financial statements based on our
audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are
required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and
regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the
standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged
to perform, an audit of its internal control over financial reporting. As part of our audits, we are required to obtain an understanding
of internal control over financial reporting, but not for the purpose of expressing an opinion on the effectiveness of the Company’s
internal control over financial reporting. Accordingly, we express no such opinion.
Our audits included performing procedures to assess
the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond
to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements.
Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating
the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.
Critical Audit Matter
Critical audit matters are matters arising from
the current period audit of the financial statements that were communicated or required to be communicated to the audit committee and
that (1) relate to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging,
subjective, or complex judgments. We determined that there were no critical audit matters.
April 1, 2024
We have served as the Company’s auditor since 2023.
Los Angeles, California
PCAOB ID Number 6580
AMERICAN
BATTERY MATERIALS, INC.
Consolidated
Balance Sheets
| |
December 31, | | |
December 31, | |
| |
2023 | | |
2022 | |
Assets | |
| | |
| |
Current assets | |
| | | |
| | |
Cash | |
$ | 7,376 | | |
$ | 42,582 | |
Prepaid expenses and other assets | |
| 143,202 | | |
| 62,717 | |
Total current assets | |
| 150,578 | | |
| 105,299 | |
Noncurrent assets | |
| | | |
| | |
Mineral claims | |
| 206,000 | | |
| 100,000 | |
Total assets | |
$ | 356,578 | | |
$ | 205,299 | |
| |
| | | |
| | |
Liabilities and Stockholders’ Deficit | |
| | | |
| | |
Current Liabilities: | |
| | | |
| | |
Accounts payable | |
$ | 164,948 | | |
$ | 438,667 | |
Accrued expenses | |
| 449,196 | | |
| 482,881 | |
Accrued interest | |
| 251,570 | | |
| 190,901 | |
Promissory notes payable, net of discount | |
| 300,000 | | |
| 357,008 | |
Promissory notes payable – related party | |
| 175,000 | | |
| - | |
Convertible notes payable, net of discount | |
| 1,971,503 | | |
| - | |
Convertible notes payable – related party | |
| 25,000 | | |
| - | |
Current capital lease obligation | |
| 36,254 | | |
| 36,254 | |
Total current liabilities | |
| 3,373,471 | | |
| 1,505,711 | |
Total Liabilities | |
| 3,373,471 | | |
| 1,505,711 | |
| |
| | | |
| | |
Stockholders’ deficit | |
| | | |
| | |
Preferred stock, $0.0001 par value, 10,000,000 shares authorized, 0 and 50,000 shares issued and outstanding, respectively | |
| 0 | | |
| 5 | |
Common stock, $0.001 par value, 4,500,000,000 shares authorized, 11,373,793 and 10,818,522 shares issued and outstanding, respectively | |
| 11,373 | | |
| 10,819 | |
Additional paid in capital | |
| 17,211,373 | | |
| 16,543,601 | |
Accumulated deficit | |
| (20,239,639 | ) | |
| (17,854,837 | ) |
Total stockholders’ deficit | |
| (3,016,893 | ) | |
| (1,300,412 | ) |
Total liabilities and stockholders’ deficit | |
$ | 356,578 | | |
$ | 205,299 | |
The
accompanying notes are an integral part of the consolidated financial statements.
AMERICAN
BATTERY MATERIALS, INC.
Consolidated
Statements of Operations
| |
Year Ended December 31, | | |
Year Ended December 31, | |
| |
2023 | | |
2022 | |
Operating Expenses | |
| | |
| |
General and administrative | |
$ | 2,453,700 | | |
$ | 1,135,088 | |
Total operating expenses | |
| 2,453,700 | | |
| 1,135,088 | |
| |
| | | |
| | |
Operating loss | |
| (2,453,700 | ) | |
| (1,135,088 | ) |
| |
| | | |
| | |
Other Expenses / Income | |
| | | |
| | |
Gain on change in fair value of derivative liabilities | |
| - | | |
| 211,345 | |
Gain on settlement of liabilities | |
| 441,041 | | |
| 32,019 | |
Fair value of stock issued for note modification | |
| (168,856 | ) | |
| - | |
Interest expense | |
| (203,287 | ) | |
| (595,124 | ) |
Total other income (expenses) | |
| 68,898 | | |
| (351,760 | ) |
| |
| | | |
| | |
Loss from operations before income taxes | |
| (2,384,802 | ) | |
| (1,486,848 | ) |
| |
| | | |
| | |
Provision for income taxes | |
| - | | |
| - | |
| |
| | | |
| | |
Net Loss | |
$ | (2,384,802 | ) | |
$ | (1,486,848 | ) |
| |
| | | |
| | |
Net loss per share – basic and diluted | |
$ | (0.21 | ) | |
$ | (1.33 | ) |
| |
| | | |
| | |
Weighted average common shares – basic and diluted | |
| 11,158,353 | | |
| 1,119,263 | |
The
accompanying notes are an integral part of the consolidated financial statements.
AMERICAN
BATTERY MATERIALS, INC.
Consolidated
Statements of Changes in Stockholders’ Deficit
Years
Ended December 31, 2023 and 2022
| |
Preferred stock | | |
Common stock | | |
Additional Paid in | | |
Accumulated | | |
Total Stockholders’ | |
| |
Shares | | |
Amount | | |
Shares | | |
Amount | | |
Capital | | |
Deficit | | |
Equity/(Deficit) | |
Balance as of December 31, 2021 | |
| - | | |
| - | | |
| 1,119,263 | | |
| 1,120 | | |
| 7,324,198 | | |
| (16,367,989 | ) | |
| (9,042,671 | ) |
Preferred stock issued for cash | |
| 50,000 | | |
| 5 | | |
| - | | |
| - | | |
| 49,995 | | |
| - | | |
| 50,000 | |
Shares issued for note conversion | |
| - | | |
| - | | |
| 9,560,224 | | |
| 9,560 | | |
| 8,977,467 | | |
| - | | |
| 8,987,027 | |
Shares issued for warrant exercise | |
| - | | |
| - | | |
| 114,035 | | |
| 114 | | |
| 129,886 | | |
| - | | |
| 130,000 | |
Shares issued for services | |
| - | | |
| - | | |
| 25,000 | | |
| 25 | | |
| 50,975 | | |
| - | | |
| 51,000 | |
Fair value of warrants | |
| - | | |
| - | | |
| - | | |
| - | | |
| 11,080 | | |
| - | | |
| 11,080 | |
Net loss | |
| - | | |
| - | | |
| - | | |
| - | | |
| - | | |
| (1,486,848 | ) | |
| (1,486,848 | ) |
Balance as of December 31, 2022 | |
| 50,000 | | |
| 5 | | |
| 10,818,522 | | |
| 10,819 | | |
| 16,543,601 | | |
| (17,854,837 | ) | |
| (1,300,412 | ) |
| |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
Shares issued for services | |
| - | | |
| - | | |
| 170,509 | | |
| 171 | | |
| 202,831 | | |
| - | | |
| 203,002 | |
Shares issued for warrant exercise | |
| - | | |
| - | | |
| 196,491 | | |
| 196 | | |
| 223,804 | | |
| - | | |
| 224,000 | |
Shares issued for cashless warrant exercise | |
| - | | |
| - | | |
| 55,998 | | |
| 56 | | |
| (56 | ) | |
| - | | |
| - | |
Conversion of preferred stock to common stock | |
| (50,000 | ) | |
| (5 | ) | |
| 33,333 | | |
| 33 | | |
| (28 | ) | |
| - | | |
| - | |
Shares issued for note modification | |
| - | | |
| - | | |
| 55,451 | | |
| 55 | | |
| 168,801 | | |
| - | | |
| 168,856 | |
Shares issued with notes | |
| - | | |
| - | | |
| 43,489 | | |
| 43 | | |
| 72,420 | | |
| - | | |
| 72,463 | |
Net loss | |
| - | | |
| - | | |
| - | | |
| - | | |
| - | | |
| (2,384,802 | ) | |
| (2,384,802 | ) |
Balance as of December 31, 2023 | |
| - | | |
| - | | |
| 11,373,793 | | |
| 11,373 | | |
| 17,211,373 | | |
| (20,239,639 | ) | |
| (3,016,893 | ) |
The
accompanying notes are an integral part of the consolidated financial statements.
AMERICAN
BATTERY MATERIALS, INC.
Consolidated
Statements of Cash Flows
| |
Year Ended | | |
Year Ended | |
| |
December 31, | | |
December 31, | |
| |
2023 | | |
2022 | |
Cash Flows from Operating Activities | |
| | |
| |
Net loss | |
$ | (2,384,802 | ) | |
$ | (1,486,848 | ) |
Adjustments to reconcile net loss to net cash used in operating activities: | |
| | | |
| | |
Stock based compensation | |
| 275,465 | | |
| 62,080 | |
Gain on settlement of liabilities | |
| (441,041 | ) | |
| (32,019 | ) |
Gain on change in fair value of debt and warrant liabilities | |
| - | | |
| (211,345 | ) |
Fair value of stock issued for note modification | |
| 168,856 | | |
| - | |
Amortization of debt discount | |
| (28,497 | ) | |
| - | |
Changes in operating assets and liabilities: | |
| | | |
| | |
Prepaid expenses and other assets | |
| (80,485 | ) | |
| (60,954 | ) |
Accounts payable and accrued expenses | |
| 165,781 | | |
| 373,099 | |
Accrued interest | |
| 46,517 | | |
| 445,278 | |
Net cash used in operating activities | |
| (2,278,206 | ) | |
| (910,709 | ) |
| |
| | | |
| | |
Cash Flows from Investing Activities: | |
| | | |
| | |
Acquisition of mineral claims | |
| (106,000 | ) | |
| - | |
Net cash used in investing activities | |
| (106,000 | ) | |
| - | |
| |
| | | |
| | |
Cash Flows from Financing Activities | |
| | | |
| | |
Proceeds from convertible notes | |
| 2,025,000 | | |
| 590,000 | |
Proceeds from promissory notes | |
| 100,000 | | |
| 250,000 | |
Proceeds from issuance of preferred stock | |
| - | | |
| 50,000 | |
Proceeds from warrant exercises | |
| 224,000 | | |
| 130,000 | |
Repayment of convertible note | |
| - | | |
| (75,000 | ) |
Net cash provided by financing activities | |
| 2,349,000 | | |
| 945,000 | |
| |
| | | |
| - | |
Net (decrease) increase in cash | |
| (35,206 | ) | |
| 34,291 | |
| |
| | | |
| | |
Cash, beginning of period | |
| 42,582 | | |
| 8,291 | |
| |
| | | |
| | |
Cash, end of period | |
$ | 7,376 | | |
$ | 42,582 | |
| |
| | | |
| | |
Supplemental disclosures: | |
| | | |
| | |
Interest paid | |
$ | - | | |
$ | - | |
| |
| | | |
| | |
Supplemental disclosures of non-cash items: | |
| | | |
| | |
Accounts payable and accrued payable exchanged for convertible note | |
$ | - | | |
$ | 16,667 | |
Convertible notes converted to common stock | |
$ | - | | |
$ | 6,659,705 | |
Accrued interest on convertible notes converted to common stock | |
$ | - | | |
$ | 2,327,322 | |
The
accompanying notes are an integral part of the consolidated financial statements.
AMERICAN
BATTERY MATERIALS, INC.
Notes
to Consolidated Financial Statements
For
the Years Ended December 31, 2023 and 2022
Note
1 - Nature of the Business
American
Battery Materials, Inc. (the “Company”) is a US based renewable energy company focused on the extraction, refinement and
distribution of technical minerals in an environmentally responsible manner.
The
Company formerly developed, marketed and distributed various self-serve electronic kiosks and mall/airport co-branded islands throughout
North America. Due to the nationwide shutdown related to the COVID-19 pandemic, the Company spent a portion of 2020 restructuring and
retiring certain corporate debt and obligations, while focusing on implementing a new operational direction.
Through
the corporate reorganization and repositioning process, the Company found itself with the unique opportunity to expand its management
team and acquire mining claims that historically reported high levels of Lithium and other tech minerals. The Company hired and affiliated
itself with industry veterans that bring decades of experience, credibility and relationships.
On
November 5, 2021, the Company acquired the rights to 102 Federal Mining Claims located in the Lisbon Valley of Utah for $100,000. The
acquisition was driven by historical mineral data from seven (7) existing wells with brine aquifer access. The independent third-party
Technical Report indicated that further investment and development in the claims were warranted.
On
April 25, 2023, the Company formed Mountain Sage Minerals LLC, a Utah limited liability company, of which it is the 100% owner.
The Company will look to expand its holdings in the Lisbon Valley area with the acquisition of additional mineral claims and joint venture
opportunities through this new LLC.
On
May 1, 2023, FINRA completed the processing of our application for a name change, and our name was officially changed to American Battery
Materials, Inc. At the same time, the Company’s trading symbol was changed to BLTH. These changes better reflect the business of
the Company.
On
June 1, 2023, the Company entered into an Agreement and Plan of Merger (the “Merger Agreement”) with Seaport Global Acquisition
II Corp., a Delaware corporation (“SGII”), and Lithium Merger Sub, Inc., a Delaware corporation and wholly-owned subsidiary
of SGII (“Merger Sub”). SGII is a blank check company, also referred to as a special purpose acquisition company, formed
for the purpose of effectuating a merger, capital stock exchange, asset acquisition, stock purchase, reorganization or other similar
business combination with one or more businesses. Following material changes to the transaction proposed by SGII making the
transaction untenable to us, on November 20, 2023, SGII notified us that it had elected to terminate the Merger Agreement..
On
August 4, 2023, the Company filed an Amendment to the Certificate of Incorporation (the “Amendment”) in order to effect a
reverse stock split in the ratio of 1-for-300 (the “Reverse Split”). The Company and its shareholders holding a majority
of the issued and outstanding shares of stock of the Company entitled to vote previously approved a reverse stock split for not less
than 1-for-10 and not more than 1-for-1,000, at any time prior to October 20, 2023, with the Company’s Board having the discretion
to determine whether or not the Reverse Split is to be effected, and if effected, the exact ratio for the Reverse Split within the above
range. On August 1, 2023, the Company’s unanimously approved the Reverse Split and authorized the filing of the Amendment. On December
8, 2023, the company effectuated the reverse split of the common stock by a ratio of one-for-300 (the “Reverse Split”). All
per share amounts and number of shares in the consolidated financial statements and related notes have been retroactively restated to
reflect the Reverse Split.
The
Company has been moving forward with its strategy of employing advanced brine extractive technology methodologies and has been in talks
with numerous extraction providers. Selective mineral extraction is clearly the most cost-effective and ESG friendly approach currently
available. Technologies are being utilized that can extract the desired minerals and metals from the brine and then re-inject the brines
back down into the aquafer. The prospective partners have been provided the analytical results from the technical reports, but will soon
provide current results, analytical, geotech modeling, aquifer modeling, recharge, flows, and depth.
Note
2 - Going Concern
The
accompanying consolidated financial statements have been prepared on a going concern basis. The Company had net loss of $2,384,802 during
the year ended December 31, 2023, has accumulated losses totaling $20,239,639, and has a working capital deficit of $3,222,893 as
of December 31, 2023. These factors, among others, indicate that the Company may be unable to continue as a going concern. The consolidated
financial statements do not include any adjustments that might result from the outcome of these uncertainties.
Until the Company can generate significant cash from operations, its
ability to continue as a going concern is dependent upon obtaining additional financing. The Company hopes to raise additional financing,
potentially through the sale of debt or equity instruments, or a combination, to fund its operations for the next 12 months and allow
the Company to continue the development of its business plans and satisfy its obligations on a timely basis. Should additional financing
not be available, the Company will have to negotiate with its lenders to extend the repayment dates of its indebtedness. There can be
no assurance that the Company will be able to successfully restructure its debt obligations in the event it fails to obtain additional
financing. These conditions have raised substantial doubt as to the Company’s ability to continue as a going concern for one year
from the issuance of the financial statements, which has not been alleviated.
Note 3 - Summary of Significant Accounting Policies
Basis of Presentation and Principles of Consolidation
The accompanying consolidated financial statements
have been prepared in accordance with U.S. generally accepted accounting principles (GAAP). The Company’s fiscal year end is December
31.
Use of Estimates
The preparation of consolidated financial statements
in conformity with GAAP requires management to make estimates and assumptions that affect amounts reported in the financial statements
and accompanying notes. Actual results could differ from those estimates and be based on events different from those assumptions. Future
events and their effects cannot be predicted with certainty; estimating, therefore, requires the exercise of judgment. Thus, accounting
estimates change as new events occur, as more experience is acquired, or as additional information is obtained.
Property and Equipment
Property and equipment are stated at cost less
depreciation. Depreciation is provided using the straight-line method over the estimated useful life of the assets. Equipment has estimated
useful lives between three and seven years. Expenditures for repairs and maintenance are charged to expense as incurred.
Impairment
of Long-lived Assets
Long-lived
assets, such as property and equipment and intangible assets subject to amortization are reviewed for impairment whenever events or changes
in circumstances indicate that the carrying amount of an asset group may not be recoverable. Recoverability of assets to be held and
used is measured by comparing the carrying amount to the estimated future undiscounted cash flows expected to be generated by the asset
group. If it is determined that an asset group is not recoverable, an impairment charge is recognized for the amount by which the carrying
amount of the asset group exceeds its fair value.
Mineral
Rights and Properties
The Company capitalizes acquisition costs until
the Company determines the economic viability of the property. Since the Company does not have proven and probable reserves as defined
by Securities and Exchange Commission (“SEC”) regulation S-K 1300, exploration expenditures are expensed as incurred. The
Company expenses mineral lease costs and repair and maintenance costs as incurred. The Company reviews the carrying value of our properties
for impairment, including mineral rights, upon the occurrence of events or changes in circumstances that indicate the related carrying
amounts may not be recoverable. During the period ending December 31, 2023, the Company took action to expand on its rights to 102 federal
mining claims located in the Lisbon Valley of Utah that it purchased on November 5, 2021, for $100,000. The Company acquired and staked
additional lithium mining claims adjacent to its Lisbon Valley Project in Utah for $106,000. The new claims have been registered with
the Bureau of Land Management. The Company now owns a total of 743 placer claims over 14,260 acres, comprised of (i) the 102
original claims held; and (ii) the 641 new claims. No impairment or capitalizable costs related to the mineral claims were noted during
the years ended December 31, 2023, or 2022.
Earnings Per Share
The Company presents basic and diluted earnings
per share in accordance with ASC 260, “Earnings per Share.” Basic earnings per share reflect the actual weighted average of
shares issued and outstanding during the period. Diluted earnings per share are computed including the number of additional shares that
would have been outstanding if dilutive potential shares had been issued. In a loss period, the calculation for basic and diluted earnings
per share is considered to be the same, as the impact of potential common shares is anti-dilutive.
As of December 31, 2023, and December 31, 2022,
there were approximately 290,000 and 320,000 shares potentially issuable under convertible debt agreements, options, warrants
and preferred stock that could dilute basic earnings per share if converted that were excluded from the years ended December 31, 2023
and 2022 because their inclusion would have been anti-dilutive due to the Company’s net losses.
Derivative Financial Instruments
The Company evaluates its financial instruments
to determine if such instruments are derivatives or contain features that qualify as embedded derivatives. Certain warrants issued by
the Company contain terms that result in the warrants being classified as derivative liabilities for accounting purposes. For derivative
financial instruments that are accounted for as liabilities, the derivative instrument is initially recorded at its fair market value
and then is revalued at each reporting date, with changes in fair value reported in the consolidated statement of operations. The Company
does not use derivative instruments to hedge exposures to cash flow, market or foreign currency risks.
Fair
Value of Financial Instruments
For
certain of the Company’s financial instruments, including cash and equivalents, prepaid expenses and other assets, accounts payable,
accrued liabilities and short-term debt, the carrying amounts approximate their fair values due to their short maturities. ASC 820, “Fair
Value Measurements and Disclosures,” requires disclosure of the fair value of financial instruments held by the Company. ASC 825,
“Financial Instruments,” defines fair value, and establishes a three-level valuation hierarchy for disclosures of fair value
measurement that enhances disclosure requirements for fair value measures. The three levels of valuation hierarchy are defined as follows:
|
● |
Level
1: Unadjusted quoted prices in active markets that are accessible at the measurement date for identical, unrestricted assets or liabilities.
The Company considers active markets as those in which transactions for the assets or liabilities occur in sufficient frequency and
volume to provide pricing information on an ongoing basis. |
|
● |
Level
2: Quoted prices in markets that are not active, or inputs which are observable, either directly or indirectly, for substantially
the full term of the asset or liability. This category includes those derivative instruments that the Company values using observable
market data. Substantially all of these inputs are observable in the marketplace throughout the term of the derivative instruments,
can be derived from observable data, or supported by observable levels at which transactions are executed in the marketplace. |
|
● |
Level
3: Measured based on prices or valuation models that require inputs that are both significant to the fair value measurement and less
observable from objective sources (i.e. supported by little or no market activity). Level 3 instruments include derivative warrant
instruments. The Company does not have sufficient corroborating evidence to support classifying these assets and liabilities as Level
1 or Level 2. |
Stock-Based
Compensation
The Company accounts for stock-based compensation
in accordance with ASC 718, “Compensation - Stock Compensation,” which requires all stock-based awards granted to employees,
directors, and non-employees to be measured at grant date fair value of the equity instrument issued and recognized as expense. Stock-based
compensation expense is recognized on a straight-line basis over the requisite service period of the award, which is generally equivalent
to the vesting period. The fair value of each stock option granted is estimated using the Black-Scholes option pricing model. The measurement
date for the non-forfeitable awards to non-employees that vest immediately is the date the award is issued.
Revenue
Recognition
We
recognize revenue under ASC 606, “Revenue from Contracts with Customers,” the core principle of which is that an entity should
recognize revenue to depict the transfer of control for promised goods or services to customers in an amount that reflects the consideration
to which the entity expects to be entitled in exchange for those goods or services. In applying the revenue recognition principles, an
entity is required to identify the contract(s) with a customer, identify the performance obligations, determine the transaction price,
allocate the transaction price to the performance obligations and recognize revenue as the performance obligations are satisfied (i.e.,
either over time or at a point in time). ASC 606 further requires that companies disclose sufficient information to enable readers of
financial statements to understand the nature, amount, timing and uncertainty of revenue and cash flows arising from contracts with customers.
The Company recognized $0 revenue during
the years ended December 31, 2023, and 2022.
Recent
Accounting Pronouncements
On
August 5, 2020, the FASB issued ASU 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): Accounting for Convertible Instruments and Contracts in an Entity’s
Own Equity, which simplifies the accounting for certain financial instruments with characteristics of liabilities and equity,
including convertible instruments and contracts on an entity’s own equity. This ASU is effective for public business entities,
excluding smaller reporting companies, for fiscal years beginning after December 15, 2021, and for all other entities for fiscal years
beginning after December 15, 2023. Early adoption is permitted for all entities no earlier than for fiscal years beginning after December
15, 2020. The Company is currently evaluating the effects this ASU will have on its financial statements.
The
Company has examined all other recent accounting pronouncements and determined that they will not have a material impact on its financial
position, results of operations, or cash flows.
Note
4 - Debt
Promissory
Notes Payable and Promissory Note Payable – Related Party
In 2014 and 2016, the Company issued two promissory
notes in the total principal amount of $70,000; a $40,000 Note issued December 19, 2014; and a $30,000 Note issued on March 29, 2016.
Each note had a one-year maturity date; was governed by California law; bears interest at 10% per annum; and requires notice from
the holder in order for the respective Note to be in default. The holder of each Note has failed to provide a notice of default under
either Note. Further, enforceability of each Note is uncertain as California law has a 6-year statute of limitations (commences on the
maturity date) to initiate a collection action on a note. At December 31, 2023 and December 31, 2022, neither of the Notes was in default,
and the balance outstanding was $70,000.
During the year ended December 31, 2016, the Company
issued two additional unsecured promissory notes and borrowed an aggregate amount of $80,000. $30,000 is represented by a note issued
on September 23, 2016. This note had a one-year maturity date; was governed by California law; bears interest at 10% per annum; and
requires notice from the holder in order to be in default. The holder of this Note has failed to provide a notice of default. Further,
enforceability of this Note is uncertain as California law has a 6-year statute of limitations (commences on the maturity date) to initiate
a collection action on a note. At December 31, 2023 and December 31, 2022, this Note was not in default, and the balance outstanding was
$30,000. $50,000 is represented by a note issued on Nov 20, 2016. During the year ended December 31, 2022, total principal and accrued
interest in the amount of $50,000 of principal and $27,972 of interest were converted into a $95,088 convertible
note dated September 23, 2022. The replacement note was converted in shares of our common stock during the quarter ended December 31,
2022. As of December 31, 2023 and December 31, 2022, the original $50,000 note was no longer issued and outstanding.
Accrued
interest at December 31, 2023 and December 31, 2022 on these notes totaled $134,414 and $131,414, respectively.
During
the year ended December 31, 2022, the Company entered into 5 promissory note agreements in the aggregate amount of $250,000, of which
$175,000 with the related parties. The notes have a 1-year term, bear interest of 7% and 9% if paid in cash. During
the year ended December 31, 2023, due dates of 4 promissory notes were extended for 7 – 9 months, of which 3 notes with related
parties for $175,000. A total of 3,368 shares of common stock were issued to related party in connection with the agreement of the holder
to extend the maturity date of a $100,000 note. The outstanding principal balance was $250,000 as of December 31, 2023. Accrued
interest at December 31, 2023 and December 31, 2022 on these notes totaled $19,880 and $7,513, respectively.
During the year ended December 31, 2023, the Company
entered into a short-term promissory note agreement in the amount of $125,000. The note has a discount of $25,000. A total of 8,500,000
shares of common stock were issued as additional consideration for the issuance of the note evidencing the loan.
During
the year ended December 31, 2023, $7,008 in principal and $60,976 in interest were forgiven by noteholders.
Convertible
Notes Payable and Convertible Notes Payable – Related Party
In February 2023, the Company entered into a convertible
promissory note agreement in the amount of $25,000 with a related party. The note has a 1-year term, bears interest of 9%,
and has a conversion price equal to the lesser of (1) the most recent issuance price; or (2) closing price for the common stock on the
maturity date. The outstanding principal balance was $25,000 as of December 31, 2023. Accrued interest as of December 31, 2023, was
$1,881.
During the year ended December 31, 2023, the Company
entered into Note Purchase Agreements with seven investors not affiliated with the Company (the “Purchasers”) pursuant to
which the Purchasers purchased from the Company convertible notes (the “Convertible Notes”) with an aggregate principal amount
of $2,000,000. A total of 67,239 shares of common stock were issued according to the note agreements or as additional consideration for
the issuance of the notes. The outstanding principal and accrued interest balances on December 31, 2023 were $2,000,000 and $95,396,
respectively.
The Convertible Notes provide for a maturity of
12-months; 7.5% interest per annum; and no right to prepay during the first 6-months after the date of issuance (the “Issuance
Date”). The Convertible Notes are convertible into shares of common stock of the Company (the “Conversion Shares”) as
follows:
(a) The Convertible Notes automatically convert
into Conversion Shares upon the shares of the Company’s common stock being listed on a higher exchange due to the (i) pricing and
funding of a form S-1 registration statement; or (ii) the closing of a transaction resulting in the uplist (either, a “Triggering
Transaction”). The conversion price for the Conversion Shares in an automatic conversion shall be equal to:
| (1) | 75% of the price under the Triggering Transaction if within 120-days of the Issuance Date; |
| (2) | 70% of the price under the Triggering Transaction if within 121 to 150-days of the Issuance Date; |
| (3) | 65% of the price under the Triggering Transaction if more than 150-days of the Issuance Date. |
(b) The Purchasers have the right to convert into
Conversion Shares, in whole or in part, at any time after 180 days following the Issuance Date. The conversion price for the Conversion
Shares in a voluntary conversion shall be equal to 65% of the volume weighted average price for the Company’s common stock
during the 20-consecutive trading days preceding the conversion.
Scheduled maturities of debt remaining as of December
31, 2023, for each respective fiscal year end are as follows:
2023 | |
$ | 0 | |
2024 | |
| 2,471,503 | |
Total | |
$ | 2,471,503 | |
The following table reconciles, for the years
ended December 31, 2023, and 2022, the beginning and ending balances for financial instruments related to the embedded conversion features
that are recognized at fair value in the consolidated financial statements.
| |
Year ended | |
| |
December 31, 2023 | | |
December 31, 2022 | |
Balance of embedded derivative at the beginning of the period | |
$ | | | |
$ | 211,345 | |
Change in fair value of conversion features | |
| | | |
| (211,345 | ) |
Balance of embedded derivatives at the end of the period | |
$ | - | | |
$ | - | |
Note
5 - Capital Lease Obligations
During the year ended December 31, 2018, the Company
entered into various capital lease agreements. The leases expire at various points through the year ended December 31, 2023.
The
following schedule provides minimum future rental payments required as of December 31, 2023.
2023 | |
$ | 36,692 | |
Total minimum lease payments | |
| 36,692 | |
Less: Amount represented interest | |
| (438 | ) |
Present value of minimum lease payments and guaranteed residual value | |
$ | 36,254 | |
Note
6 - Capital Stock
The Company filed a certificate of amendment to
its certificate of incorporation, which effectuated as of December 8, 2023, a reverse split of the Company’s common stock by a ratio
of one-for-300 (the “Reverse Split”). All per share amounts and number of shares in the consolidated financial statements
and related notes have been retroactively restated to reflect the Reverse Split.
On October 20, 2022 the Company, following receipt
of written approval from stockholders acting without a meeting and holding at least the minimum number of votes that would be necessary
to authorize or take such action at a meeting, filed an amendment to its Certificate of Incorporation to (i) change the name of the Company
to “AMERICAN BATTERY MATERIALS, INC.” (the “Name Change”); and (ii) increase the total number of authorized shares
of the Company’s common stock, par value $0.001 per share, from 600,000,000 to 4,500,000,000 (the “Authorized
Share Increase”). The Authorized Share Increase was effective as of October 20, 2022. The Name Change was processed by FINRA and
was effective as of May 1, 2023, at which time the Company’s trading symbol was changed to BLTH.
On
October 20, 2022, in addition to the Name Change and the Authorized Share Increase, the holder of 63.86% of the issued and outstanding
shares of stock of the Company entitled to vote took action by written consent and without a meeting, pursuant to Delaware General Corporate
Law Section 228, and adopted and approved the following actions:
| 1. | Future amendment of the Company’s Certificate of Incorporation to implement a decrease in the authorized shares of the Company’s Common Stock from 4,500,000,000 to a number of not less than 10,000,000 and not more than 2,000,000,000 (the “Authorized Share Reduction”), at any time prior to October 20, 2023 (the “Anniversary Date”), with the Board having the discretion to determine whether or not the Authorized Share Reduction is to be effected, and if effected, the exact number of the Authorized Share Reduction within the above range. |
| 2. | Future amendment of the Company’s Certificate of Incorporation to implement a reverse stock split of the Company’s Common Stock by a ratio of not less than 1-for-10 and not more than 1-for-1,000, (the “Reverse Split”), at any time prior to the Anniversary Date, with the Board having the discretion to determine whether or not the Reverse Split is to be effected, and if effected, the exact ratio for the Reverse Split within the above range. |
Preferred
Stock
The Company has authorization for “blank
check” preferred stock, which could be issued with voting, liquidation, dividend and other rights superior to common stock. As of
December 31, 2023, and December 31, 2022, there were 10,000,000 shares of preferred stock authorized, and 0 and 50,000 shares
issued and outstanding, respectively.
On
August 12, 2022, the Company effected with the Delaware Secretary of State a designation of 50,000 shares of Series A Super
Voting Preferred Convertible Stock, having a par value of $0.001 per share and a purchase price of $1.00 per share (the “Series
A Preferred”).
The
Series A Preferred may vote on any action upon which holders of the Common Stock may vote, and they shall vote together as one class
with voting rights equal to sixty percent (60%) of all of the issued and outstanding shares of Common Stock of the Company. The Series
A Preferred shall automatically convert into shares of Common Stock upon the earlier of either a) the effectiveness of a registration
statement under the Securities Act of 1933, or b) Twelve (12) months from the issuance of the Series A Preferred Stock at a ratio equal
to the purchase prices per share of the Series A Preferred divided by $0.005.
During
the year ended December 31, 2023, the Company converted 50,000 shares of its Series A Preferred stock into 33,333 shares of its common
stock.
Common
Stock
The
Company has authorized 4,500,000,000 shares of common stock, with 11,373,793 and 10,818,522 shares issued
and outstanding at December 31, 2023 and December 31, 2022, respectively.
During
the year ended December 31, 2023, the Company issued 555,271 shares of its common stock, including 170,509 shares of common
stock for services valued at $203,002; 196,491 shares of common stock upon warrant exercises for an aggregate exercise price
of $224,000; 55,998 shares of common stock upon cashless warrant exercise; 33,333 shares of common stock upon conversion of 50,000
shares of its Series A Preferred stock, 55,451 shares of common stock for note modification, and 43,489 shares of common stock in relation
to issuance of promissory and convertible notes.
During
the year ended December 31, 2022, the Company issued 9,699,259 shares of its common stock, including 9,560,224 shares upon the conversion
of $8,987,027 of convertible notes and accrued interest; 114,035 shares upon warrant exercises for an aggregate exercise price of $130,000;
and 25,000 shares for services valued at $51,000 issued pursuant to an Investors Relations Consulting Agreement with a third party dated
December 12, 2022.
Note
7 - Stock Options and Warrants
Warrants
As of December 31, 2023, the Company had the following
warrant securities outstanding:
|
|
Warrants |
|
|
Exercise Price |
|
|
Expiration |
2018 Warrants – financing |
|
|
3,166 |
|
|
$ |
1.14 |
|
|
September 2024 |
2019 Warrants –financing |
|
|
135,000 |
|
|
$ |
1.67 |
|
|
March - October 2024 |
2019 Warrants for services |
|
|
4,167 |
|
|
$ |
1.14 |
|
|
March - April 2024 |
2020 Warrants for services |
|
|
10,000 |
|
|
$ |
1.14 |
|
|
February 2025 |
2022 Exchange warrants |
|
|
237,232 |
|
|
$ |
1.14 |
|
|
September 2025 |
Total |
|
|
389,565 |
|
|
|
|
|
|
|
A summary of all warrant activity for the year
ended December 31, 2023, is as follows:
Post-split |
|
Number of
Warrants |
|
|
Weighted
Average
Exercise
Price |
|
|
Weighted
Average
Remaining
Contractual
Term |
|
Balance outstanding at December 31, 2022 |
|
|
422,205 |
|
|
$ |
4.86 |
|
|
|
2.32 |
|
Granted |
|
|
- |
|
|
|
- |
|
|
|
- |
|
Exercised |
|
|
(15,211 |
) |
|
|
1.26 |
|
|
|
- |
|
Cancelled |
|
|
- |
|
|
|
- |
|
|
|
- |
|
Expired |
|
|
(17,429 |
) |
|
|
21.00 |
|
|
|
- |
|
Balance outstanding at December 31, 2023 |
|
|
389,565 |
|
|
$ |
1.34 |
|
|
|
1.35 |
|
Exercisable at December 31, 2023 |
|
|
389,565 |
|
|
$ |
1.34 |
|
|
|
1.35 |
|
The intrinsic value of the outstanding warrants
as of December 31, 2023, was $0, as the exercise prices exceeded the common stock’s fair market value per share on that date.
Equity Incentive Plan
On July 22, 2011, the Board of Directors of the
Company approved the Company’s 2011 Equity Incentive Plan (the “Plan”) and on July 26, 2011, stockholders holding a
majority of shares of the Company approved, by written consent, the Plan and the issuance under the Plan of 16,667 shares. On
November 16, 2017, the Board of Directors approved an increase of 33,333 shares to be made available for issuance under the
Plan. Accordingly, the total number of shares of common stock available for issuance under the Plan is 50,000 shares. Awards
may be granted to employees, officers, directors, consultants, agents, advisors and independent contractors of the Company and its related
companies. Such options may be designated at the time of grant as either incentive stock options or nonqualified stock options. Stock-based
compensation includes expense charges related to all stock-based awards. Such awards include options, warrants and stock grants. Generally,
the Company issues stock options that vest over three years and expire in 5 to 10 years. There are currently no awards
issued and outstanding under the Plan.
Note
8 - Income Taxes
Loss from operations before provision (benefit) for income taxes and
associated tax provision (benefit) are summarized in the following table:
| |
Years ended December 31, | |
Net Loss | |
2023 | | |
2022 | |
Domestic | |
$ | (2,384,802 | ) | |
$ | (1,430,872 | ) |
Foreign | |
| - | | |
| - | |
| |
$ | (2,384,802 | ) | |
$ | (1,430,872 | ) |
| |
| | | |
| | |
Current | |
| | | |
| | |
Federal | |
$ | - | | |
$ | - | |
State | |
| | | |
| | |
Foreign | |
| - | | |
| - | |
Total Current | |
$ | | | |
$ | | |
| |
| | | |
| | |
Deferred | |
| | | |
| | |
Federal | |
$ | (590,371 | ) | |
$ | (270,482 | ) |
State | |
| (112,452 | ) | |
| (51,521 | ) |
Foreign | |
| - | | |
| - | |
Total Deferred | |
| (702,823 | ) | |
| (322,003 | ) |
Less Increase in Allowance | |
| 702,823 | | |
| 322,003 | |
Net Deferred | |
$ | - | | |
$ | - | |
| |
| | | |
| | |
Total Income Tax Provision | |
$ | | | |
$ | | |
The
significant components of the deferred tax assets and liabilities are summarized below:
| |
Years ended December 31, | |
| |
2023 | | |
2022 | |
Deferred Tax Assets (Liabilities): | |
| | |
| |
Net Operating Loss Carry-Forwards | |
$ | 4,273,846 | | |
$ | 3,677,645 | |
Depreciable and Amortizable Assets | |
| (20,520 | ) | |
| (20,520 | ) |
Stock Based Compensation | |
| 118,228 | | |
| 67,477 | |
Beneficial Conversion Feature | |
| 609,101 | | |
| 556,265 | |
Loss Reserve | |
| 457 | | |
| 457 | |
Accrued Compensation | |
| 37,326 | | |
| 35,146 | |
Other | |
| 32,364 | | |
| 31,509 | |
Total | |
| 5,050,802 | | |
| 4,347,979 | |
Less Valuation Allowance | |
| (5,050,802 | ) | |
| (4,347,979 | ) |
Net Deferred Tax Assets (Liabilities) | |
$ | - | | |
$ | - | |
At December 31, 2023 and 2022, the Company has available net operating
loss carry-forwards for federal and state income tax purposes of approximately $15.2 million and $12.8 million, respectively. Of the federal
net operating loss carryforward, $9.5 million, if not utilized earlier, expires through 2039 and $3.3 million will carry-forward indefinitely.
The state net operating loss carryforwards expire through 2042, if not utilized earlier. Due to the uncertainty as to the Company’s
ability to generate sufficient taxable income in the future and utilize the net operating loss carry-forwards before they expire, the
Company has recorded a valuation allowance to fully offset the net operating loss carry-forwards, as well as the total net deferred tax
assets.
Internal
Revenue Code Section 382 (“Section 382”) imposes limitations on the availability of a company’s net operating losses
and other corporate tax attributes as certain significant ownership changes occur. As a result of the historical equity instrument issuances
by the Company, a Section 382 ownership change may have occurred and a study will be required to determine the date of the ownership
change, if any. The amount of the Company’s net operating losses and other tax attributes incurred prior to any ownership change
may be limited based on the Company’s value. A full valuation allowance has been established for the Company’s deferred tax
assets, including net operating losses and any other corporate tax attributes.
During the years ended December 31, 2023, and
2022, the Company had no unrecognized uncertain tax positions. The Company’s policy is to recognize interest accrued and penalties
related to unrecognized uncertain tax positions in tax expense.
The
Company files income tax returns in the U.S. federal jurisdiction, as well as the states of California, Florida, Illinois and New York.
The tax years 2019-2023 generally remain open to examination by the U.S. federal and state taxing authorities.
A
reconciliation of the income tax provision using the statutory U.S. income tax rate compared with the actual income tax provision reported
on the consolidated statements of operations is summarized in the following table:
| |
Years ended December 31, | |
| |
2023 | | |
2022 | |
Statutory United States federal rate | |
| 21.00 | % | |
| 21.00 | % |
State income tax, net of federal benefit | |
| 4.00 | | |
| 4.00 | |
Change in valuation allowance | |
| (29.47 | ) | |
| (22.50 | ) |
Stock based compensation | |
| 2.13 | | |
| 1.08 | |
Permanent differences | |
| 0.04 | | |
| 0.11 | |
Other | |
| 2.31 | | |
| (3.69 | ) |
Effective tax rate benefit (provision) | |
| - | % | |
| - | % |
Note
9 - Subsequent Events
The Company has evaluated events occurring subsequent
to December 31, 2023, through the date these financial statements were issued and determined the following significant events require
disclosure:
| ● | On
January 1, 2024, the Company executed an exchange agreement to substitute a promissory note originally valued at $125,000 with a new
promissory note valued at $175,000. The additional principal of $50,000 was provided as non-cash consideration for extending the maturity
date of the original note. |
| ● | On January 16, 2024, a new convertible promissory note was issued with a principal amount of $30,000. |
| ● | On January 31, 2024, the company issued 833 shares of its common stock as payment for services rendered. |
|
● |
On February 23, 2024, the company issued 833 shares of its common stock as payment for services rendered. |
| ● | On February 29, 2024, a new convertible promissory note was issued with a principal amount of $25,000. |
| ● | On February 29, 2024, the Company executed an exchange agreement to substitute a promissory note originally valued at $175,000 with a new promissory note valued at $225,000. The additional principal of $50,000 was provided as non-cash consideration for extending the maturity date of the original note. |
|
● |
On March 21, 2024, a new convertible promissory note was issued for a value of $254,713.44, including $50,000 in additional capital, cancellation of a $50,000 promissory note dated July 27, 2022, cancellation of a $25,000 promissory note dated November 8, 2022, cancellation of accrued salary amounting to $96,653.84 as of February 29, 2024, and cancellation of $30,350 due in un-reimbursed advances. |
|
|
|
|
● |
On March 22, 2024, a new convertible promissory note was issued for a value of $138,073.94, involving the cancellation of a $25,000 promissory note dated February 28, 2022, and a $100,000 promissory note dated September 12, 2022. |
| ● | On March 22, 2024, a new convertible promissory note was issued for a value of $55,321.92, including the cancellation of a $50,000 promissory note dated September 14, 2022, which had a balance of $55,321.92. |
| ● | On March 22, 2024, a new convertible promissory note was issued for a value of $102,996.71, involving the cancellation of three promissory notes: a $40,000 note dated December 19, 2014, a $30,000 note dated March 29, 2016, and a $30,000 note dated September 23, 2016, with a combined current balance of $102,996.71. |
| ● | On March 22, 2024, a new convertible promissory note was issued for a value of $25,404.88, involving the cancellation of accrued expenses amounting to $25,404.88. |
Item
9. Changes In and Disagreements With Accountants On Accounting and Financial Disclosure.
None.
Item
9A. Controls and Procedures.
Evaluation
of Disclosure Controls and Procedures
Agustin Cabo (“Cabo”), who serves
as our Chief Financial Officer, and Principal Financial Officer, evaluated the effectiveness of our disclosure controls and procedures
as of December 31, 2023. The term “disclosure controls and procedures,” as defined in Rule 13a-15(e) under the Exchange Act,
means controls and other procedures of a company that are designed to ensure that information required to be disclosed by a company in
the reports that it files or submits under the Exchange Act is recorded, processed, summarized and reported, within the time periods specified
in the SEC’s rules and forms. Management recognizes that any controls and procedures, no matter how well designed and operated,
can provide only reasonable assurance of achieving their objectives and management necessarily applies its judgment in evaluating the
cost benefit relationship of possible controls and procedures. Based on its evaluation, management concluded as of December 31, 2023,
that our disclosure controls and procedures were not effective because of material weaknesses in our internal control over financial reporting,
described below in Management’s Report on Internal Control Over Financial Reporting. Notwithstanding the identified material weaknesses,
management believes the consolidated financial statements included in this Annual Report on Form 10-K fairly represent in all material
respects our financial condition, results of operations and cash flows at and for the periods presented in accordance with U.S. GAAP.
Management’s
Report on Internal Control Over Financial Reporting
Cabo, as our Principal Executive Officer and Principal
Financial Officer, is responsible for establishing and maintaining adequate internal control over financial reporting as such term is
defined in Rule 13a-15(f) under the Exchange Act. An evaluation was performed of the effectiveness of the Company’s internal control
over financial reporting. The evaluation was based on the framework in 2013 Internal Control — Integrated Framework issued by the
Committee of Sponsoring Organizations of the Treadway Commission (“COSO”).
Because
of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of
any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions,
or that the degree of compliance with the policies or procedures may deteriorate.
Based on our evaluation under the criteria set
forth in 2013 Internal Control — Integrated Framework, our management concluded that, as of December 31, 2023, our internal control
over financial reporting was not effective because of the identification of material weaknesses described as follows:
|
● |
We
did not have controls designed to validate the completeness and accuracy of underlying data used in the determination of accounting
transactions. Accordingly, we believe we have a material weakness because there is a reasonable possibility that a material misstatement
to the interim or annual consolidated financial statements would not be prevented or detected on a timely basis. |
|
● |
We
do not have written documentation of our internal control policies and procedures. Written documentation of key internal controls
over financial reporting is a requirement of Section 404 of the Sarbanes-Oxley Act which is applicable to us. Management evaluated
the impact of our failure to have written documentation of our internal controls and procedures on our assessment of our disclosure
controls and procedures and has concluded that the control deficiency that resulted represented a material weakness. |
|
● |
We
do not have sufficient segregation of duties within accounting functions, which is a basic internal control. Due to our size and
nature, segregation of all conflicting duties may not always be possible and may not be economically feasible. However, to the extent
possible, the initiation of transactions, the custody of assets and the recording of transactions should be performed by separate
individuals. Management evaluated the impact of our failure to have segregation of duties on our assessment of our disclosure controls
and procedures and has concluded that the control deficiency that resulted represented a material weakness. |
|
● |
We
have an inadequate number of personnel with requisite expertise in the key functional areas of finance and accounting. |
|
● |
We
do not have a functioning audit committee, resulting in ineffective oversight in the establishment and monitoring of required internal
controls and procedures. |
Remediation
Plan for Material Weaknesses in Internal Control over Financial Reporting
Management of the Company is committed to improving
its internal controls and will (i) continue to use third party specialists to address shortfalls in staffing and to assist the Company
with accounting and finance responsibilities; (ii) increase the frequency of independent reconciliations of significant accounts which
will mitigate the lack of segregation of duties until there are sufficient personnel; and, (iii) is currently considering appointing audit
committee members in the future.
Management
has discussed the material weaknesses noted above with our independent registered public accounting firm. Due to the nature of these
material weaknesses, it is reasonably possible that misstatements which could be material to the annual or interim consolidated financial
statements could occur that would not be prevented or detected during our financial close and reporting process.
This
Annual Report does not include an attestation report of our registered public accounting firm regarding internal control over financial
reporting. Management’s report was not subject to attestation by our independent registered public accounting firm pursuant to
temporary rules of the SEC that permit us to provide only management’s report in this annual report.
Changes
in Internal Controls Over Financial Reporting
There
were no changes in our internal control over financial reporting that occurred during our last fiscal year that have materially affected,
or are reasonably likely to materially affect, our internal control over financial reporting.
Item
9B. Other Information.
The company issued securities in accordance with
an exemption provided by Section 4(a)(2) of the Securities Act, which exempts transactions conducted by the issuer that do not constitute
public offerings and are therefore exempt from registration requirements.
|
● |
On January 1, 2024, the Company executed an exchange agreement to substitute a promissory note originally valued at $125,000 with a new promissory note valued at $175,000. The additional principal of $50,000 was provided as non-cash consideration for extending the maturity date of the original note. |
|
● |
On January 16, 2024, a new convertible promissory note was issued with a principal amount of $30,000. |
|
● |
On January 31, 2024, the company issued 833 shares of its common stock as payment for services rendered. |
|
● |
On February 23, 2024, the company issued 833 shares of its common stock as payment for services rendered. |
|
● |
On February 29, 2024, a new convertible promissory note was issued with a principal amount of $25,000. |
|
● |
On February 29, 2024, the Company executed an exchange agreement to substitute a promissory note originally valued at $175,000 with a new promissory note valued at $225,000. The additional principal of $50,000 was provided as non-cash consideration for extending the maturity date of the original note. |
|
● |
On March 21, 2024, a new convertible promissory note was issued for a value of $254,713.44, including $50,000 in additional capital, cancellation of a $50,000 promissory note dated July 27, 2022, cancellation of a $25,000 promissory note dated November 8, 2022, cancellation of accrued salary amounting to $96,653.84 as of February 29, 2024, and cancellation of $30,350 due in un-reimbursed advances. |
|
|
|
|
● |
On March 22, 2024, a new convertible promissory note was issued for a value of $138,073.94, involving the cancellation of a $25,000 promissory note dated February 28, 2022, and a $100,000 promissory note dated September 12, 2022. |
|
● |
On March 22, 2024, a new convertible promissory note was issued for a value of $55,321.92, including the cancellation of a $50,000 promissory note dated September 14, 2022, which had a balance of $55,321.92. |
|
● |
On March 22, 2024, a new convertible promissory note was issued for a value of $102,996.71, involving the cancellation of three promissory notes: a $40,000 note dated December 19, 2014, a $30,000 note dated March 29, 2016, and a $30,000 note dated September 23, 2016, with a combined current balance of $102,996.71. |
|
● |
On March 22, 2024, a new convertible promissory note was issued for a value of $25,404.88, involving the cancellation of accrued expenses amounting to $25,404.88. |
Item
9C. Disclosure Regarding Foreign Jurisdictions That Prevent Inspections.
David Graber was appointed by
the Board of Directors to serve as the Company’s sole Chief Executive Officer and remains the Company’s Chairman of the Board.
Sebastian Lux, resigned as the
Company’s Co-Chief Executive Officer and interim Chief Financial Officer, and remains as the President of the company in addition
to being appointed as the Chief Operating Officer by the Board of Directors. Mr. Lux’s resignation did not result from any disagreement
with the Company concerning any matter relating to the Company’s operations, policies or practices.
Agustin Cabo, was appointed by
the Board of Directors to serve as the Company’s Chief Financial Officer and principal financial and accounting officer.
For biographical information concerning Messrs. Graber, Lux and Cabo, see
Item 10, “Directors, Executive Officers and Corporate Governance” in this Form 10-K, which is incorporated herein by reference.
PART
III
Item
10. Directors, Executive Officers and Corporate Governance
Directors
and Executive Officers
Name |
|
Age |
|
Position |
|
Director/Officer Since |
David Graber |
|
52 |
|
CEO and Chairman |
|
February 2017 |
Sebastian Lux |
|
52 |
|
President, COO, Director |
|
July 2022 |
Agustin Cabo |
|
38 |
|
CFO |
|
March 2024 |
Dylan Glenn |
|
55 |
|
Director |
|
May 2023 |
Jared Levinthal |
|
51 |
|
Director |
|
December 2018 |
Andrew Suckling |
|
52 |
|
Director |
|
August 2022 |
Justin Vorwerk |
|
64 |
|
Director |
|
August 2022 |
Dr. Adam Lipson |
|
51 |
|
Director |
|
July 2022 |
The
principal occupations for at least the past five years of each of our directors and executive officers are as follows:
David Graber served as the Chief Executive
Officer and a director of our company from February 2017 to November 2018 and has served as a member of our Board since July 2022 and
our co-CEO and Chairman of the Board since March 2023. On March 2024, he was appointed sole CEO of the company. Mr. Graber is the managing
principal of Cobrador Capital Advisors, LLC, an investment advisory firm focused on the consumer sector and energy transition. Prior to
Cobrador Capital Advisors, LLC, Mr. Graber was Managing Director, investment banking at New Century Capital Partners (2011-2014) and National
Securities Corporation (2009-2010) where he focused on natural resources and energy transportation sectors. From 1994-2005, Mr. Graber
was a senior vice president and director in the equities division of Donaldson, Lufkin & Jenrette and subsequently, Credit Suisse
First Boston (CSFB) in New York and Los Angeles. Mr. Graber holds dual Master of Business Administration (MBA) from Columbia University
Graduate School of Business in New York City and London Business School in the UK. He also holds a B.A. in Psychology from Tulane University.
Mr. Graber brings extensive natural resource industry knowledge to our company and a deep background in corporate finance and capital
market activities.
Sebastian Lux was appointed to serve previously as our CEO and
interim CFO in July 2022, becoming the Co-CEO in March 2023, in addition to being appointed to our Board of Directors. On March 2024,
he was appointed President and COO of the company. Mr. Lux has over 25 years’ of experience working with multinational companies.
Immediately prior to joining us, Mr. Lux served as co-founder of Blue Duck Data, a cloud-based analytical solutions provider for end-to-end
supply chain analysis. Previously, Mr. Lux served from 2015 through 2020 as co-founder and director of supply chain logistics for Genuine
Origin, a division of Volcafe & ED&F Man. He is a multilingual professional experienced in strategic planning for international
operations, data analytics, financial modeling, logistics, purchasing, product development, supplier partnership management, process
improvements, negotiations, e-business, and franchise development. Mr. Lux earned an MBA in Entrepreneurship from Babson’s F.W.
Olin Graduate School of Business, an MSAS in E-Commerce from Boston University, and a B.A. in Economics from Roanoke College. In addition
to his operational leadership of our company, Mr. Lux has experience in entrepreneurial ventures in the United States, Europe and South
America where he developed international supply chains for the distribution of coffee, food goods, and after-market auto-parts as well
as having created multiple market entry programs and brand development projects for new and existing companies, making him well qualified
as a member of the Board.
Agustin Cabo, CFA, CMA, was appointed to serve
as our CFO in March 2024, previously serving as Director of Finance of the company. Prior to this, he was the CFO at Americhem Sales Company
(2020-2023). Agustin also served as an Associate of Strategic Business Development at Scientific Games International (2018-2020), Additionally,
he worked as a Senior Research Analyst at Crisil Limited, an S&P company (2010-2016). He holds an M.B.A. from Emory University's Goizueta
Business School, where he graduated in May 2018 as an Acosta International Scholar and a B.A. in Economics from University of Buenos Aires.
Agustin is also a Chartered Financial Analyst (CFA) and a member of the CFA Institute, having earned his certification in September 2015,
and a Certified Management Accountant (CMA) and member of the Institute of Management Accountants (IMA), certified in January 2024.
Dylan
Glenn became a director of our company in May 2023. He has been a Senior Director at Eldridge, a diversified holding company headquartered
in Greenwich, Connecticut, where he has been since October 2021. He is the former Chairman of Guggenheim KBBO Partners, Ltd., a Dubai-based
joint venture partnership between the KBBO Group and Guggenheim Partners. Prior to this role, Mr. Glenn was Senior Managing Director
of Guggenheim Partners, where he worked for nearly 15 years. While at Guggenheim Partners, Mr. Glenn worked mostly in two capacities.
First, he coordinated the joint venture – Guggenheim KBBO Partners, Ltd., a merchant banking business which leveraged Guggenheim’s
investment banking and asset management capabilities with an important strategic partner in the Middle East. Additionally, he led Guggenheim’s
Government Relations effort in Washington and was a Member of the Guggenheim Partners Public Affairs Committee. Prior to joining Guggenheim,
Mr. Glenn served as Deputy Chief of Staff to Governor Sonny Perdue of Georgia. As a Deputy Chief of Staff, Mr. Glenn was responsible
for all External Affairs. Mr. Glenn also served in the White House in Washington, D.C. as Special Assistant for President George W. Bush
for Economic Policy. He was a member of the National Economic Council team advising the President on various economic issues. Mr. Glenn
is a director of the George W. Bush Presidential Center. Mr. Glenn is a Director of the Renewable Energy Group, a leading global producer
and supplier of renewable fuels like biodiesel, renewable diesel, renewable chemicals and other products. He is also a Director of Intellicheck,
Inc., a leading authentication services company, since March 2020. Additionally, he serves on the Board of Managers of Stonebriar Commercial
Finance based in Plano, Texas. Mr. Glenn is a Trustee of Davidson College, where he earned his B.A. degree and is also a Trustee of the
Episcopal High School at Alexandria, Virginia. Mr. Glenn’s extensive experience in finance and economics, insight into regulatory
affairs and his expertise in oversight and governance gained through service in the public sector, bring unique and valuable perspective
to our Board and make him well qualified to be a member of the Board.
Jared
Levinthal has served as a Director of our company since December 2018. Mr. Levinthal, an attorney, is a partner with Lightfoot Franklin
& White, PLLC in Houston, Texas. Mr. Levinthal is a graduate, with Honors, Order of the Coif, from the University of Texas School
of Law. Mr. Levinthal is a graduate of Tulane University with a BA and is a member of the Texas Bar. Mr. Levinthal is well qualified
to serve as a director due to his substantial knowledge and working knowledge in corporate governance and controls.
Andrew Suckling has served
as a director of our company since August 2022. Mr. Suckling has over 25 years’ experience in the commodity industry and is currently
the non-executive chairman of Cadence Minerals (AIM: KDNC), the non-executive director of Macarthur Minerals (TSX-V: MMS, ASX: MIO. Mr.
Suckling started his professional career in 1994 as a trader on the London Metal Exchange, and subsequently became a founding partner,
research analyst and trader with the multibillion fund management group, Ospraie. Mr. Suckling is a graduate of Brasenose College, Oxford
University, earning a B.A. (Hons) in Modern History and an MA in Modern History. Mr. Suckling’s in-depth knowledge of the mining
industry and the broad range of mineral companies in the industry make him well qualified as a member of the Board.
Justin
Vorwerk has served as a director of our company since August 2022. For more than the past five years, Mr. Vorwerk has had a distinguished
career in finance and capital markets, holding positions as a managing director in investment banking with Goldman Sachs, The Royal Bank
of Scotland and Deutsche Bank Securities, as well as Donaldson, Lufkin & Jenrette and Credit Suisse, where he co-headed the financial
sponsors group. Mr. Vorwerk also served as head of investment banking and capital markets at CRT Capital Group, where he structured debt
and equity products and advised on mergers and acquisitions. Mr. Vorwerk holds an MBA from The University of Pennsylvania (Wharton) and
attended Princeton University, where he earned an A.B. degree in Economics. Mr. Vorwerk has extensive knowledge of capital markets, making
his input invaluable to the Board’s discussions of our capital raising initiatives.
Dr.
Adam Lipson was appointed to our Board of Directors in July 2022. Dr. Lipson is a world-renowned neurosurgeon, serving for more than
the past five years as managing partner of IGEA Brain, Spine & Orthopedics in New York City and New Jersey, a private medical practice
generating $30-40 million annual revenue with 75 employees. He has over a decade of experience as a private investor in over 20 biotechnology
and biomedical device companies. He has co-founded several other companies, including IGEA Ventures and STRYDD. He is passionate about
finding technologies that facilitate advances in energy transition, biomedical devices and cancer therapeutics. Dr. Lipson is a graduate
of Dartmouth College with a B.A. degree in Chemistry and History and M.D. degree from Harvard Medical School, Honors Society in Neuroscience,
and was a Fulbright Fellow at Karolinska Institute in Stockholm, Sweden. Dr. Lipson’s leadership of numerous medical and other
technology growth companies and as an investor in many early-stage companies make him well qualified as a member of the Board.
Term
of Office
Directors
are elected to hold office until the next annual meeting of stockholders and until their successors are elected and qualified. Annual
meetings of the stockholders, for the selection of directors to succeed those whose terms expire, are held at such time each year as
designated by the Board of Directors. Our officers are elected by the Board of Directors, which is required to consider that subject
at its first meeting after every annual meeting of shareholders. Each officer holds office until his successor is elected and qualified
or until his earlier resignation or removal.
Committees
of the Board of Directors
We
do not currently have any committees of the Board of Directors. We consider a majority of our Board members (consisting of Messrs. Glenn,
Levinthal, Suckling and Vorwerk) to be independent directors under NYSE American rules.
Corporate
Governance
We
do not currently have an audit committee, compensation committee, or nominating and corporate governance committee. To date, the functions
of each such committee have been performed by the entire Board of Directors. As part of our application to have our shares of common
stock trade on the NYSE American, our corporate governance structure will be enhanced by, among other things, forming required Board
committees with qualified individuals.
Item
11. Executive Compensation
The following table discloses compensation received
by our Co-Chief Executive Officers, David Graber and Sebastian Lux, for the years ended December 31, 2023, and 2022.
The following table also sets forth information
regarding all cash and non-cash compensation earned by or paid to the executive officers of the Company who served during the fiscal year
ended December 31, 2023, for services in all capacities to the Company.
Name and Principal Position | |
Year | | |
Salary ($) | | |
Bonus ($) | | |
Stock Awards ($) | | |
Warrant Awards ($) | | |
All Other Compensation ($) | | |
Total ($) | |
David Graber | |
2022 | | |
| - | | |
| - | | |
| - | | |
| - | | |
| - | | |
| - | |
Co-CEO | |
2023 | | |
| 200,000 | | |
| | | |
| | | |
| | | |
| | | |
| 200,000 | |
Sebastian Lux | |
2022 | | |
| 106,667 | | |
| - | | |
| - | | |
| - | | |
| - | | |
| 106,667 | |
Co-CEO, President, CFO | |
2023 | | |
| 240,000 | | |
| | | |
| | | |
| | | |
| | | |
| 240,000 | |
Employment
Arrangements
Messrs.
Graber and Lux, in consultation with our independent directors, have agreed to receive a monthly salary as our Co-Chief Executive Officers
at a rate of $20,000. Of this amount, $15,000 is payable in cash and $5,000 is accrued until such time as we are able to make the payment.
Both Messrs. Graber and Lux work full time for our company and there is no set term for their employment.
Directors Compensation
Our non-employee directors do not currently receive
cash compensation for their services as directors although they are provided reimbursement for out-of-pocket expenses incurred in attending
Board meetings.
Equity Incentive Plan
On July 22, 2011, the Board of Directors of the
Company approved the Company’s 2011 Equity Incentive Plan (the “Plan”) and on July 26, 2011, stockholders holding a
majority of shares of the Company approved, by written consent, the Plan. The Plan provides for the grant of options intended to qualify
as “incentive stock options” and “non-statutory stock options” within the meaning of Section 422 of the Internal
Revenue Code of 1986, together with the grant of bonus stock and stock appreciation rights, at the discretion of our Board of Directors.
Incentive stock options are issuable only to our eligible officers, directors and key employees. Non-statutory stock options are issuable
only to our non-employee directors and consultants. Upon stockholder approval of the Plan, a total of 16,667 shares of common stock or
appreciation rights may be issued under the Plan. The Plan will be administered by our full Board of Directors. Under the Plan, the Board
will determine which individuals shall receive options, grants or stock appreciation rights, the time period during which the rights may
be exercised, the number of shares of common stock that may be purchased under the rights and the option price. As of December 31, 2023,
the Company had no options outstanding under the Plan to employees, directors and outside consultants.
On November 16, 2017, the Company’s Board
of Directors approved the increase of the 33,333 shares reserved under the Plan. On November 22, 2017, stockholders of the Company holding
a majority of the outstanding shares of the Company’s common stock approved, by written consent, an increase in the number of shares
reserved under the Plan by 33,333 shares. After this increase of 33,333 shares, the total number of shares of common stock reserved under
the Plan totals 50,000 shares.
Limitation on Liability and Indemnification
of Officers and Directors
Our certificate of Incorporation provides that no director will be
liable to our company or our stockholders for monetary damages for breach of fiduciary duty acting in his/her capacity as a director,
except for liability (i) for any breach of the duty of loyalty to us or our stockholders; (ii) for acts or omissions not in good faith
or which involve intentional misconduct or a knowing violation of law; (iii) under Section 174 of the Delaware General Corporation Law
(the “DGCL”); or, (iv) for any transaction from which the director derived an improper personal benefit. If the DGCL is amended
to authorize corporate action further limiting or eliminating the personal liability of a director, then the liability of a director to
us shall be limited or eliminated to the fullest extent permitted by the DGCL, as so amended from time-to-time.
Our certificate of incorporation and bylaws provide
that we will indemnify any director, officer, employee, fiduciary, or agent of our company (each a “Covered Person”) who was
or is made or is threatened to be made a party to any action, suit or proceeding, whether civil, criminal, administrative or investigative
(a “Proceeding”), other than a Proceeding by or in the right of our company, by reason of the fact that such person is or
was a Covered Person, or, while a Covered Person, or is or was serving at the request of our company as a Covered Person of another corporation,
partnership, joint venture, trust or other enterprise, against all liability and loss suffered and expenses (including attorneys’
fees) actually and reasonably incurred by such person in connection with such Proceeding if such person acted in good faith and in a manner
he reasonably believed to be in or not opposed to the best interests of our company and, with respect to any criminal action or proceeding,
had no reasonable cause to believe his conduct was unlawful. The termination of any Proceeding by judgment, order, settlement, conviction
or upon a plea of nolo contendere or its equivalent, shall not, of itself, create a presumption that such person did not act in good faith
and in a manner which such person reasonably believed to be in or not opposed to the best interests of our company and, with respect to
any criminal action or proceeding, had reasonable cause to believe that such person’s conduct was unlawful. We will also have the
power to indemnify our Covered Persons as set forth in the DGCL or other applicable law.
Our
certificate of incorporation and bylaws also provide that we will indemnify any person who was or is made a party or is threatened to
be made a party to any Proceeding by or in the right of our company to procure a judgment in its favor by reason of the fact that such
person is or was a Covered Person of our company or is or was serving at the request of our company as a Covered Person of another corporation,
partnership, joint venture, trust or other enterprise, against all liability and loss suffered and expenses (including attorneys’
fees) actually and reasonably incurred by such person in connection with the defense or settlement of such action or suit if such person
acted in good faith and in a manner such person reasonably believed to be in or not opposed to the best interests of our company and
except that no indemnification shall be made in respect of any claim, issue or matter as to which such person shall have been adjudged
to be liable to our company unless and only to the extent that the Court of Chancery of the State of Delaware or the court in which such
action or suit was brought shall determine upon application that, despite the adjudication of liability but in view of all the circumstances
of the case, such person is fairly and reasonably entitled to indemnity for such expenses which the Court of Chancery of the State of
Delaware or such other court shall deem proper. Notwithstanding the foregoing, our company shall be required to indemnify a person in
connection with a Proceeding (or part thereof) commenced by such person only if the commencement of such Proceeding (or part thereof)
by such person was authorized in the specific case by the Board.
Our
bylaws further provide that, to the extent that a Covered Person has been successful on the merits or otherwise in defense of any Proceeding
referred to above, or in defense of any claim, issue or matter therein, we will indemnify such person against expenses (including attorneys’
fees) actually and reasonably incurred by such person in connection therewith.
Expenses
actually and reasonably incurred by a Covered Person in defending a civil or criminal Proceeding may be paid by our company in advance
of the final disposition of such Proceeding upon receipt of an undertaking by or on behalf of such person to repay such amount if it
shall ultimately be determined that such person is not entitled to be indemnified by our company. Such expenses may be so paid upon such
terms and conditions, if any, as the Board deems appropriate.
We
may purchase and maintain insurance on behalf of any person who is or was a Covered Person, or is or was serving at the request of our
company as a Covered Person of another corporation, partnership, joint venture, trust or other enterprise against any liability asserted
against such person and incurred by such person in any such capacity, or arising out of his status as such, whether or not our company
would have the power to indemnify such person against such liability under the provisions of our bylaws.
Item
12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters.
As of April 1, 2024, there were 11,375,459 shares
of common stock outstanding. The following table sets forth certain information regarding the beneficial ownership of the outstanding
common shares as of April 1, 2024, by (i) each person who owns beneficially more than 5% of our outstanding common stock; (ii) each of
our executive officers and directors; and (iii) all of our executive officers and directors as a group. The shares listed include as to
each person any shares that such person has the right to acquire within 60 days from the date hereof. Except as otherwise indicated, each
such person has sole investment and voting power with respect to such shares, subject to community property laws where applicable. The
address of our executive officers and directors is at 500 West Putnam Avenue, Suite 400, Greenwich, CT, 6830.
The following table sets forth, as of April 1, 2024, certain information
with regard to the record and beneficial ownership of the Company’s common stock by (i) each person known to the Company to be the
record or beneficial owner of more than 5% of the Company’s common stock; (ii) each director of the Company; (iii) each of the named
executive officers; and, (iv) all executive officers and directors of the Company as a group:
| |
Number of Shares | | |
Percentage of | |
Name and Address(1) | |
Beneficially Owned(2) | | |
Outstanding Shares(3) | |
| |
| | |
| |
Executive Officers & Directors | |
| | |
| |
David Graber | |
| 4,003,806 | (4) | |
| 35.2 | % |
Sebastian Lux | |
| 115,602 | | |
| 1.0 | % |
Dylan Glenn | |
| 5,556 | | |
| < 1.0 | % |
Jared Levinthal | |
| 6,556 | | |
| < 1.0 | % |
Andrew Suckling | |
| 5,556 | | |
| < 1.0 | % |
Justin Vorwerk | |
| 8,924 | | |
| < 1.0 | % |
Dr. Adam Lipson | |
| 1,627,610 | | |
| 14.3 | % |
Agustin Cabo | |
| - | | |
| < 1.0 | % |
All Current Executive Officers and Directors as a Group (8 Persons) | |
| 5,773,610 | | |
| 50.5 | % |
| |
| | | |
| | |
5% Shareholders | |
| | | |
| | |
David Graber | |
| 4,003,806 | (4) | |
| 35.2 | % |
Dr. Adam Lipson | |
| 1,627,610 | | |
| 14.3 | % |
Marilyn Kane | |
| 1,815,058 | (5) | |
| 16.0 | % |
| (1) | The
mailing address for each officer and director is c/o American Battery Materials, Inc., 500 West Putnam Avenue, Suite 400, Greenwich,
CT 06830. |
| (2) | Beneficial ownership is determined in accordance with the rules of
the SEC and generally includes voting or investment power with respect to securities. Beneficial ownership also includes shares of stock
subject to options and warrants currently exercisable or exercisable within 60 days of April 1, 2024. In determining the percent of common
stock owned by a person or entity as of April 1, 2024 (a) the numerator is the number of shares of the class beneficially owned by such
person or entity, including shares which may be acquired within 60 days on exercise of warrants or options and conversion of convertible
securities; and, (b) the denominator is the sum of (i) the total shares of common stock outstanding as of April 1, 2024, which is 11,375,459,
and (ii) the total number of shares that the beneficial owner may acquire upon exercise of the derivative securities. Unless otherwise
stated, each beneficial owner has sole power to vote and dispose of its shares. |
| (3) | Based on 11,375,459 outstanding shares as of April 1, 2024. |
(4) |
Includes
shares owned by Cobrador Multi-Strategy Partners, LP, of which Mr. Graber is the managing partner. |
|
|
(5) |
Includes
shares owned by (i) Automated Retail Leasing Partners, LP, of which Ms. Kane is the managing partner, and (ii) AJS Properties LLC,
of which Ms. Kane is the manager. Mr. Graber owns a non-controlling interest in Automated Retail Leasing Partners. |
Changes
in Control
The issuance of 50,000 shares of Series A Preferred
Stock to Dr. Adam Lipson on August 23, 2022, was a change in control as it afforded Dr. Lipson the voting power of 60% of all shares of
common stock issued and outstanding, giving Dr, Lipson voting control over all matters submitted to a vote of the common stockholders.
The preferred stock was converted to common stock on August 23, 2023. We are not aware of any other arrangements that may result in “changes
in control” as that term is defined by the provisions of Item 403 of Regulation S.
Item
13. Certain Relationships and Related Transactions, and Director Independence.
Given
our small size and limited financial resources to date, we have not adopted formal policies and procedures for the review, approval or
ratification of transactions with our executive officers, directors and significant stockholders. While we satisfy the requirements of
the DGCL for such related party transactions, we intend to establish additional formal policies and procedures in the future so that
such transactions will be subject to the review, approval or ratification of our Board of Directors, or an appropriate committee thereof.
Director
Independence
As
our common stock is currently quoted on the OTC Pink Open Market, we are not subject to the rules of any national securities exchange
that requires a majority of a listed company’s directors and specified committees of the board of directors to meet independence
standards prescribed by such rules. However, we consider a majority of our Board members (consisting of Messrs. Glenn, Levinthal, Suckling
and Vorwerk) to be independent directors in accordance with NYSE American listing rules.
Item
14. Principal Accountant Fees and Services.
The
following table provides information regarding the professional audit services and other services rendered to us by GreenGrowth CPAs
for the last two quarters of our fiscal year ended December 31, 2023, and Pinnacle Accountancy Group of Utah (a dba of the
registered firm Heaton & Company, PLLC), for audit and review services for the year ended December 31, 2022, and first two quarters
of 2023. All fees described below were approved by Board:
Fee Type | |
2023 | | |
2022 | |
Audit Fees(1) | |
$ | 40,082 | | |
$ | 38,034 | |
Audit-Related Fees(2) | |
| – | | |
| – | |
Tax Fees(3) | |
| – | | |
| – | |
All Other Fees(4) | |
| – | | |
| 1,000 | |
Total | |
| | | |
| | |
(1) |
“Audit
Fees” consist of fees billed for professional services rendered in connection with the audit of our annual financial statements,
review of our quarterly financial statements, and services that are normally provided by Pinnacle in connection with statutory and
regulatory filings or engagements. |
(2) |
“Audit-Related
Fees” consist of fees billed for professional services for assurance and related services that are reasonably related to the
performance of the audit or review of our consolidated financial statements and are not reported under “Audit Fees.” |
(3) |
“Tax
Fees” consist of fees billed for professional services rendered by Pinnacle for tax compliance, tax advice, and tax planning. |
(4) |
“All
Other Fees” consist of fees billed for products and services other than the services reported in Audit Fees, Audit-Related
Fees, and Tax Fees. |
Audit-Related
Fees
During
2023 and 2022, there were no fees paid to our principal accountants in connection with our compliance with Section 404 of the Sarbanes-Oxley
Act of 2002. No other fees were billed by principal accountants for the last two years that were reasonably related to the performance
of the audit or review of our financial statements and not reported under “Audit Fees” above.
Tax
Fees
There
were no fees billed by principal accountants during the last two fiscal years for professional services rendered for tax compliance,
tax advice, or tax planning. Accordingly, none of such services were approved pursuant to pre-approval procedures or permitted waivers
thereof.
All
Other Fees
There
were no other non-audit-related fees billed to us by principal accountants in 2023 or 2022.
Pre-Approval
Policies and Procedures
Engagement
of accounting services by us is not made pursuant to any pre-approval policies and procedures. Rather, we believe that our accounting
firm is independent because all of its engagements by us are approved by our Board of Directors prior to any such engagement. We do not
have an Audit Committee. All fees listed above were pre-approved in accordance with this policy.
PART
IV
Item
15. Exhibits and Financial Statement Schedules.
(a) | Documents
filed as part of this Annual Report: |
| (1) | The
Company’s consolidated financial statements and related notes thereto are listed and included in this Annual Report (Item 8). |
| (2) | Financial
statement schedules have been omitted either because they are not applicable, not required, or the information required to be set forth
therein is included in the financial statements or notes thereto. |
| (3) | Report
of Independent Registered Public Accounting Firm. |
| (4) | Notes
to Financial Statements. |
The
exhibits listed in the following Exhibit Index are filed as part of this Annual Report:
Exhibit
Number |
|
Description |
3.1 |
|
Certificate of Incorporation, dated March 26, 2007 (incorporated by reference to the Company’s Registration Statement on Form S-1 filed on April 9, 2010). |
|
|
|
3.2 |
|
Bylaws, as amended (incorporated by reference to the Company’s Registration Statement on Form S-1 filed on April 9, 2010). |
|
|
|
3.3 |
|
Certificate of Amendment of Certificate of Incorporation, dated October 4, 2010 (incorporated by reference to the Company’s Current Report on Form 8-K filed on October 7, 2010). |
|
|
|
3.4 |
|
Certificate of Amendment of the Certificate Incorporation (incorporated by reference to the Company’s Current Report on Form 8-K filed on March 1, 2018). |
|
|
|
3.5 |
|
Certificate of Designation for Series A Preferred Shares (incorporated by reference to the Company’s Current Report on Form 8-K filed on August 23, 2022). |
|
|
|
3.6 |
|
Certificate of Amendment of the Certificate Incorporation (incorporated by reference to the Company’s Current Report on Form 8-K filed on October 26, 2022). |
|
|
|
4.1 |
|
Description of Securities |
|
|
|
21.1 |
|
Subsidiaries of the Registrant.* |
|
|
|
31.1 |
|
Certification of the Chief Executive Officer pursuant to Section 13a-14(a) of the Securities Exchange Act of 1934, as amended, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.* |
|
|
|
31.2 |
|
Certification of Interim Chief Financial Officer pursuant to Section 13a-14(a) of the Securities Exchange Act of 1934, as amended, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.* |
|
|
|
32.1 |
|
Certification of the Chief Executive Officer and pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.** |
|
|
|
32.2 |
|
Certification of the Interim Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.** |
|
|
|
96.1 |
|
Technical Report. (incorporated by reference to the Company’s Registration Statement on Form S-1 filed on February 12, 2024) |
|
|
|
101 |
|
Interactive
Data files pursuant to Rule 405 of Regulation S-T.* |
|
|
|
101.SCH |
|
Inline
XBRL Taxonomy Extension Schema Document. |
|
|
|
101.CAL |
|
Inline
XBRL Taxonomy Extension Calculation Linkbase Document. |
|
|
|
101.DEF |
|
Inline
XBRL Taxonomy Extension Definition Linkbase Document. |
|
|
|
101.LAB |
|
Inline
XBRL Taxonomy Extension Label Linkbase Document. |
|
|
|
101.PRE |
|
Inline
XBRL Taxonomy Extension Presentation Linkbase Document. |
|
|
|
104 |
|
Cover
Page Interactive Data File (embedded within the Inline XBRL document). |
* |
Filed
herewith. |
** |
Furnished
herewith. |
# |
Indicates
management contract or compensatory plan. |
Item
16. Form 10-K Summary.
The
Company has elected not to provide a summary.
SIGNATURES
Pursuant
to the requirements of Section 13 or 15(d) 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 MATERIALS, INC. |
|
|
|
Date: April 1, 2024 |
BY: |
/s/ David Graber |
|
|
Chief Executive Officer |
Pursuant
to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the
registrant and in the capacities and on the dates indicated:
Signature |
|
Title |
|
Date |
|
|
|
|
|
/s/ David Graber |
|
Chief Executive Officer and Chairman |
|
April 1, 2024 |
|
|
(Principal Executive Officer) |
|
|
|
|
|
|
|
/s/ Agustin Cabo |
|
Chief Financial Officer |
|
April 1, 2024 |
|
|
(Principal Financial and Accounting Officer) |
|
|
|
|
|
|
|
/s/ Sebastian Lux |
|
President, Chief Operating Officer, Director |
|
April 1, 2024 |
|
|
|
|
|
|
|
|
|
|
/s/ Dylan Glenn |
|
Director |
|
April 1, 2024 |
|
|
|
|
|
|
|
|
|
|
/s/ Jared Levinthal |
|
Director |
|
April 1, 2024 |
|
|
|
|
|
|
|
|
|
|
/s/ Andrew Suckling |
|
Director |
|
April 1, 2024 |
|
|
|
|
|
|
|
|
|
|
/s/ Justin Vorwerk |
|
Director |
|
April 1, 2024 |
|
|
|
|
|
|
|
|
|
|
/s/ Dr. Adam Lipson |
|
Director |
|
April 1, 2024 |
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I, DAVID GRABER, certify pursuant to Section 906 of the Sarbanes-Oxley
Act of 2002, that the Annual Report on Form 10-K of AMERICAN BATTERY MATERIALS, INC., for the fiscal year ended December 31, 2023, fully
complies with the requirements of Section 13(a) or Section 15(d) of the Securities Exchange Act of 1934, as amended, and the information
contained in the Annual Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
A signed original of this written statement required
by Section 906 has been provided to the Company and will be retained by the Company and furnished to the Securities and Exchange Commission
or its staff upon request.
I, AGUSTIN CABO, certify pursuant to Section 906 of the Sarbanes-Oxley
Act of 2002, that the Annual Report on Form 10-K of AMERICAN BATTERY MATERIALS, INC., for the fiscal year ended December 31, 2023, fully
complies with the requirements of Section 13(a) or Section 15(d) of the Securities Exchange Act of 1934, as amended, and the information
contained in the Annual Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
A signed original of this written statement required
by Section 906 has been provided to the Company and will be retained by the Company and furnished to the Securities and Exchange Commission
or its staff upon request.