UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
[X]☒ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year endedSeptemberJune 30 2017, 2023
[ ]☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE EXCHANGE ACT OF 1934
Commission File number:000-55088
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(Exact name of registrant as specified in its charter) |
Nevada | 33-1227980 | |
(State or other jurisdiction of incorporation or organization) | (I.R.S. Employer Identification No.) |
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(Address of principal executive |
(775)473-4744 |
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(Former name, former address and former fiscal year, if changed since last report)
Securities registered pursuant to Section 12(b) of the Act: None
| Trading Symbol(s) | Name of each exchange on which registered | ||
Securities registered pursuant to Section 12(g) of the Act: Common Stock, par value $0.001
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of 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 Securities Exchange Act of 1934 during the past 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes [X] ☒ No [ ]☐
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted 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 and post such files). Yes [X] ☒ No [ ]☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company, or an emerging growth company. See definitionthe definitions of "large“large accelerated filer", "accelerated filer"filer,” “accelerated filer,” “smaller reporting company,” and "smaller reporting company"“emerging growth company” in Rule 12b-2 of the Exchange Act.
| Large accelerated filer |
| Accelerated filer |
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| Non-accelerated filer |
| Smaller reporting company |
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| Emerging growth company |
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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 [X]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 [X] ☒
State the 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 the last business day of the registrant’s most recently completed second fiscal quarter.quarter: $61,677,861264.4 million aggregate market value as of January 12, 2018December 31, 2022, based on 67,778,69643,341,063 shares of common stock and a price of $0.091outstanding valued at $6.10 per share.
Indicate the number of shares outstanding of each of the registrant’s classes of common stock, as of the latest practicable date.78,778,696date: shares of common stock as of January 12, 2018.September 26, 2023.
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CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS
This annual report on Form 10-K (this “Report”) contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended (“Securities Act”), and Section 21E of the Securities Exchange Act of 1934, as amended (“Exchange Act”). All statements included in this Report, other than statements of historical facts, that address activities, conditions, events, or developments with respect to our financial condition, results of operations, business prospects or economic performance that we expect, believe, or anticipate will or may occur in the future, or that address plans and objectives of management for future operations, are forward-looking statements. The forward-looking statements are contained principally in the “Business” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” sections of this Report. These statements involve known and unknown risks, uncertainties and other factors whichthat may cause our actual results, performance or achievements to be materially different from any future results, performances or achievements expressed or implied by the forward-looking statements. In some cases, you can identify forward-looking statements by terms such as “anticipates”, “believes”, “seeks”, “could”, “estimates”, “expects”, “intends”, “may”, “plans”, “potential”, “predicts”, “projects”, “should”, “would” and similar expressions intended to identify forward-looking statements.
Forward-looking statements reflect our current views with respect to future eventsappear throughout this report, and are based on assumptions and subject to risks and uncertainties. Given these uncertainties, you should not place undue reliance on these forward-looking statements. Suchinclude statements may include, but are not limited to, information related to:about such matters as: anticipated operating results; relationships with our customers; consumer demand; financial resources and condition; changes in revenues; changes in profitability; changes in accounting treatment; cost of sales; selling, general and administrative expenses; interest expense; the ability to produce the liquidity or enter into agreements to acquire the capital necessary to continue our operations and take advantage of opportunities; legal proceedings and claims.
Forward-looking statements reflect our current views with respect to future events and are based on assumptions and analyses made by us in light of our experience and our perception of historical trends, current conditions, expected future developments, and other factors that we believe are appropriate under the circumstances. We caution you that forward-looking statements are not guarantees of future performance and these statements are subject to known and unknown risks and uncertainties, which may cause our actual results or performance to be materially different from any future results or performance expressed or implied by the forward-looking statements. Factors that may cause our financial condition, results of operations, business prospects or economic performance to differ from expectations include the factors discussed in Part I, Item 1A, Risk Factors below and elsewhere in this Report.
Also, forward-looking statements represent our estimates and assumptions only as of the date of this Report. You should read this Report and the documents that we reference and file or furnish as exhibits to this Report completely and with the understanding that our actual future results may be materially different from what we expect. The forward-looking statements in this report speak only as of the filing of this Report. Except as required by law,applicable securities laws, we assume no obligation to update any prior forward-looking statements publicly, or to update the reasons actual results could differ materially from those anticipated in any forward-looking statements, even if new information becomes available in the future.statements.
PRESENTATION OF INFORMATION
Except as otherwise indicated by the context, references in this Report to “we”, “us”, “our” and the “Company” are to the combined business of Oroplata Resources, Inc.American Battery Technology Company and its consolidated subsidiary.subsidiaries.
This Report includes our audited consolidated financial statements as atof and for the fiscal years ended SeptemberJune 30, 20172023 and 2016.June 30, 2022. These financial statements have been prepared in accordance with generally accepted accounting principles in the United States (“US GAAP”). All financial information in this Report is presented in US dollars, unless otherwise indicated, and should be read in conjunction with our audited consolidated financial statements and the notes thereto included in this Report.
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TABLE OF CONTENTS
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Item 9. | Changes in and Disagreements |
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| Item 9C. | Disclosure Regarding Foreign Jurisdictions that Prevent Inspections | 28 | |
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Item 12. | Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters |
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Item 13. | Certain Relationships and Related Transactions, and Director Independence |
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| Item 16. | Form 10-K Summary | 38 | |
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PART I
Item 1. Business
BackgroundIntroduction
WeAmerican Battery Technology Company (“the Company”, or “we”) is a technology development and commercialization company in the battery materials sector of the lithium-ion battery industry. The Company is working to increase the domestic US production of critical battery metals. To do so, we are engaged in (i) the exploration of new primary resources of battery metals, (ii) the development and commercialization of new technologies for the extraction and refining of these battery metals from primary resources, and (iii) the commercialization of an internally developed integrated process for the recycling of lithium-ion batteries for the recovery of battery materials. Through this three-pronged approach we are working to both increase the domestic production of these battery materials through the acquisition and exploration of mining claims and to ensure that these constituent elemental metals are returned to the domestic manufacturing supply chain in a start-up, lithiumclosed-loop fashion. In addition, we are committed to operating our business in a safe and environmentally responsible manner by working with our employees, customers, vendors, and local communities to minimize our environmental impact and comply with local, state and federal environmental laws and regulations.
The Company’s corporate headquarters are in Reno, Nevada, and its mineral exploration mining company whose purposeoffice is to explore mineral properties which, hopefully, will contain lithium and other economic minerals. We werelocated in Tonopah, Nevada. The Company is commissioning its novel recycling plant for recycling lithium-ion batteries in McCarran, Nevada.
Company History
The Company was incorporated as Oroplata Resources, Inc. under the laws of the State of Nevada on October 6, 2011, for the purpose of acquiring rights to mineral properties with the eventual objective of being a producing mineral company, if and when it ever occurs. We have limited operating history and have not yet generated or realized any revenues from our activities. Our principal executive offices are located at 930 Tahoe Blvd., Suite 802-16, Incline Village, NV 89451.
Currently, the Board of Directors (consisting of Mr. Douglas Cole, Mr. Douglas MacLellan and Mr. William Hunter) are significantly involved in guiding the Company though a significant management reorganization, financial statement restatements and to reorient the company’s goals and objective to solely focus on the exploration and develop of Lithium deposits in the State of Nevada, primarily through new capital commitments from one of the Company’s key stakeholders.
company. On August 8, 2016, the Company formed Lithortech Resources Inc. as a wholly owned subsidiary of the Company to serve as its operating subsidiary for lithium resource exploration and mine development. On June 29, 2018, the Company changed the name of Lithortech Resources Inc. currently has mining claims on 5200 acres into LithiumOre Corp. (“LithiumOre”). On May 3, 2019, the area known asCompany changed its name to American Battery Metals Corporation. On August 12, 2021, the Western Nevada Basin, situated in Railroad Valley in Nye County, Nevada (the “WNB Claim”). In the second half of 2017, we engaged expertsCompany further changed its name to evaluate the region and the WNB Claim to target on-site exploration efforts and determined that 260 claims of the WNB Claim were appropriate forAmerican Battery Technology Company, which better aligns with the Company’s planned exploration, which we expect to begin in the first half of 2018. With many features similar to Clayton Valleycurrent business activities and with no exploration work targeting lithium to date, Railroad Valley represents a new and untested target for lithium brine. The Railroad Valley brine exploration can build on both the dense existing oil field data and the experiences at Clayton Valley and other Li-brine basins to target potential brine aquifers. Please see the Company’s new website at:www.lithiumore.net.
The growth in demand for lithium batteries is predicted to far outpace lithium production in the coming decade. Lithium-ion batteries for the automotive industry are expected to advance demand to nearly unserviceable levels. These industry trends enhance the Company’s new business model.
future objectives. The Company has a limited operating history and has not earned anyyet generated or realized revenues to date and we do not anticipate earning revenues until such time as we have undertaken sufficient exploration work to identify an ore body. Exploration work will take a number of years and there is no certainty we will ever reach a production stage. Our Company is considered to be in the exploration stage due to not having done exploration work which would result in a development decision.from its primary business activities.
We own no real estate, other than mineral rights in the Nye County properties located in Nevada, United States.Industry Overview
Implications of Being an Emerging Growth Company
We qualify as an “emerging growth company” as defined in the Jumpstart Our Business Startups Act of 2012, or the JOBS Act. As an emerging growth company, we intend to take advantage of specified reduced disclosure and other requirements that are otherwise applicable generally to public companies. These provisions include:
· allowance to provide only two years of audited financial statements in addition to any required unaudited interim financial statements with correspondingly reduced “Management’s Discussion and Analysis of Financial Condition and Results of Operations” disclosure;
· reduced disclosure about our executive compensation arrangements;
· no non-binding advisory votes on executive compensation or golden parachute arrangements; and
· exemption from the auditor attestation requirement in the assessment of our internal control over financial reporting.
We may take advantage of these provisions for up to five years or such earlier time that we are no longer an emerging growth company. We would cease to be an emerging growth company on the date that is the earliest of (i) the last day of the fiscal year in which we have total annual gross revenues of $1 billion or more; (ii) the last day of our fiscal year following the fifth anniversary of the date of the completion of our initial public offering (our “IPO”); (iii) the date on which we have issued more than $1 billion in nonconvertible debt during the previous three years; or (iv) the date on which we are deemed to be a large accelerated filer under the rules of the Securities and Exchange Commission. We have taken advantage of reduced reporting requirements in this prospectus. Accordingly, the information contained herein may be different than the information you receive from other public companies in which you have beneficial ownership. In addition, we have elected to opt out of the extended transition period for complying with new or revised accounting standards pursuant to Section 107(b) of the Exchange Act. As a result, our financial statements may not be comparable to those of companies that comply with public company effective dates.
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Market and Industry
Lithium is extracted from primarily two sources: pegmatite crystals and lithium salt from brine pools. Currently the world’s five top producers of Lithium are Australia, Chile, China, Argentina and Zimbabwe.
In 2015, worldwide production totaled approximately 33,600 metric tons, with the top 3 countries contributing roughly 89% of the global production. Most of the world’s lithium supply is produced by three companies: FMC Corp., Sociedad Quimicay Minera de Chile (SQM) and the Albemarle Corporation. During 2016 worldwide product totaled approximately 35,000 metric tons.
Much of the current production of Lithium (i.e. Australia) is from conventional mining techniques of ancient Precambrian rocks containing Lithium ore which is crushed and fed into capital intensive processing plants which upgrade the lithium mineral using gravity, flotation, magnetic and roasting processes.
Alternatively Lithium production from Chile and Argentina uses a much less capital intense method. Lithium is located beneath flat, arid salt flats. The Lithium is leached from nearby source rocks and becomes concentrated in salty brines just under the surface.
Here Lithium enriched brines are pumped up to settle on hundreds of shallow surface evaporation pools which produces a thicker Lithium rich liquid. That liquid is treated with sodium carbonate, precipitating lithium carbonate.
Lithium (Li) is a soft silver-white metal. With an atomic number of 3, it is the lightest of the metals, only the gases Hydrogen (atomic number 1) and Helium (atomic number 2) are lighter.
Light weight Lithium has many applications but the metal is a perfect replacement of the much heavier Nickel used in most large batteries. Lithium batteries also have a high charge density, a longer life and lithium-ion batteries are rechargeable.
The Lithium market has typically been dominated by the ceramic and medical sectors, however, 2015 presented a marked change in the market as the demand for Lithium for the battery market outstripped any other sector.
At the moment, the main lithium-ion battery-makers are Samsung and LG of South Korea, Panasonic and Sony of Japan, and ATL of Hong Kong. China also has many battery- factories being built which will further its demand for lithium.
Lithium is not traded publicly but rather is usually distributed in a chemical form such as lithium carbonate (Li2CO3) and sold directly to end users for a negotiated price per ton of Lithium carbonate. Recently that price has spiked, exceeding expectations and is projected to rise.
General Market Analysis
Lithium-ion batteries have become the rechargeable battery of choice in cell phones, computers, electric carsvehicles, and now largerlarge scale electric storage. The growth instationary storage systems. Global production capacity of lithium-ion batteries was approximately 1,570 gigawatt hours per year (“GWh/yr”) at the end of 2022 and is forecasted to grow to approximately 6,700 GWh/yr by 2031, primarily driven by demand for electric vehicles. There are significant regulatory and social tailwinds driving demand growth for electric vehicles and large-format energy storage systems. This, in turn, is driving significant demand for battery materials such as lithium, cobalt, nickel, and manganese.
Lithium-ion batteries are designed in a variety of form-factors and chemistries. Current cell-level form-factors utilized are primarily cylindrical, prismatic, and pouch geometries. The most common battery cathode chemistries that have emerged are lithiated nickel cobalt aluminum oxide (“NCA”), lithiated nickel manganese cobalt oxide (“NMC”), lithiated cobalt oxide (“LCO”), and lithiated iron phosphate (“LFP”). The most common battery anode chemistries consist of graphite, silicon, and lithium metal. These chemistries are expected to evolve based on the development of new technologies and the availability, cost, and life-cycle environmental footprint of required minerals.
The current manufacturing supply chain for lithium-ion batteries is predictedsegmented and is organized into sub-industries that operate in a closed-loop fashion:
| ● | battery material providers, | |
| ● | chemical refiners, | |
| ● | cell manufacturers, and | |
| ● | end-use product (electric vehicle, stationary storage, consumer electronics, etc.) manufacturers. |
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Battery material providers can be classified into two categories: primary producers who explore for and extract virgin resources, and secondary producers who extract minerals from scrap and end-of-life products for re-sale into the lithium-ion battery supply chain. The Company intends to far outpace lithium productionoperate in both categories of the coming decade;battery material supply segment, which is discussed in particular, Lithium-ion batteriesgreater detail below.
Chemical refiners source battery-grade materials from suppliers to manufacture into cell components, including cathodes, anodes, electrolytes, and separators. Currently the vast majority of global refining capacity is located outside the USA, primarily in Asia.
Cell manufacturers source cell components and assemble those components into modules and packs, which are then sold to Original Equipment Manufacturers (“OEM” or “OEMs”). Cell manufacturing is also currently concentrated in Asia, with China accounting for over 75% of global cell manufacturing capacity.
The OEM segment is the automotive industryfinal step to manufacturing any end-use product containing lithium-ion batteries. OEM manufacturing capacity for electric vehicles, stationary storage, and consumer electronics is distributed globally and is expected to advance demand to nearly unserviceable levels.increase more than an order of magnitude over the next several years.
Recently Japan and South Korea have both recorded high levels of Lithium-ion battery exports in 1-H of 2016 as auto companies’ ramp up battery consumption to power all-electric vehicle offerings. Lithium ion battery shipments from Japan, the world’s leading producer topped 33,500 tons in 1-H of 2016, an increase of 31% year to year.
Goldman Sachs predicted that the market consumption could very well triple from the current production by 2025. Just a 1% increase of Electric Vehicles hitting the market could increase lithium demand by roughly halfEach segment of the currentlithium-ion battery supply chain has seen disparate quantities of investment, with those variations further pronounced with specific geographies. Investment in battery material suppliers, both primary and secondary, and chemical refining capacity, has been far outpaced by investments in cell manufacturing and end-use OEMs, with anticipated battery production capacity forecasted to be roughly ten times the forecasted capacity for precursor metal refining. This disconnect in available feedstock and refining capacity has caused significant imbalances in the global supply chain, with those imbalances even more pronounced within the US and apparent by the volatility in price of lithium today.
SQM’s CEO Patricio de Solminihac saidthese underlying materials. Further, while there is significant cell manufacturing and OEM manufacturing capacity in the USA, less than 1% of global battery materials needed to supply these facilities are sourced in the US, resulting in a 2015 interview with Benchmark Mineral Intelligence thatsevere domestic capacity imbalance and risk to the company could increasedomestic economy. This risk in the security and cost of supply has resulted in numerous issues for industries reliant on lithium-ion batteries and has the potential to dramatically slow the adoption of electric vehicles, renewable energy storage and other uses for lithium-ion battery metals.
Overview of Battery Materials Supply
Supply of battery materials is currently dominated by primary production. Development of new sources of primary supply are typically subject to long development times and high capital costs, putting further constraints on the supply of these materials. In addition, the majority of primary production within 12 months, if necessary, to meet higher demand.
FMC and Albemarle have decided not to wait. FMC announcedis concentrated in May it would triple its production of lithium hydroxide by 2019, increasing to 30,000 tons from 10,000. Albemarle also announced it would be increasing production of lithium carbonate to 70,000 tons from 24,000 over 27 years.
Tesla’s mile long Gigafactory is expected to start producing powerful Lithium-ion batteries in 2017 with their partner Panasonic. The Gigafactory will supply batteries for the 500,000 cars Tesla hopes to produce by the endhigh geopolitical risk locations. Each of the decade, as well as to power homes. Thisprimary minerals discussed are traded on a number of global commodity exchanges and market pricing for each is no one shot, Chrysler, Dodge, Ford, GM, Mercedes-Benz, Mitsubishi, Nissan, Saturn, Tesla and Toyota have all announced plans to build lithium-ion battery powered cars.
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Preordersreadily available. Additional details on the primary development of the new Tesla model 3 have sold out to 400,000 and productionmain critical materials are discussed below:
Lithium: Primary lithium is starting 2 years ahead of schedule. Elon Musk has stated that Tesla will have to acquire the entiretraditionally extracted from lithium market to meet the current demands.
Thus, the global lithium market is approaching a major shortage, which has made it the world’s hottest commodity and mineral explorers have launched a frantic effort to locate and bring new supply to a hungry marketplace.
Lithium brine exploration and development has proven to be much more cost effective and faster to be put into production than thebrines or from hard rock mine counterparts.
deposits, and with recent innovations to also manufacture primary lithium from lithium-bearing claystone resources. Lithium brine deposits are considered placeraccumulations of saline groundwater that are enriched in dissolved lithium. These deposits can be found in salt flats (such as those in South America), geothermal deposits (such as the Salton Sea in California), and oil fields. Extraction of lithium from brines typically involves large-scale evaporation techniques, thus consuming large amounts of water and energy. Hard rock sources of lithium are typically found in spodumene pegmatite deposits (such as those in Western Australia) and are easiermined using conventional mining and processing techniques. Extraction of lithium from claystone resources is a relatively new technique with various extraction technologies currently under development.
Nickel: Primary nickel is mined from both surface and underground operations. Traditional processing techniques for nickel involve crushing, leaching, and floatation techniques. The primary competing source of demand for nickel is the steel industry, for both a steel alloy and in plating of stainless steel. Supply is currently dominated by production from Indonesia, Philippines, and Russia.
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Cobalt: Cobalt is typically mined from open pit and underground operations using traditional mining and processing techniques. The majority of cobalt production is a by-product of copper or nickel production. The competing source of demand for cobalt is steel production where cobalt is utilized as a high-strength steel alloy. Concentration of supply from the Democratic Republic of Congo has given rise to permit. Brinesignificant environmental, social, and governance (“ESG”) concerns over the supply of primary cobalt resources.
Manganese: Manganese is alsotypically mined from open pit surface mines using traditional mining and processing techniques. As with the previously mentioned minerals, the primary competing source of demand is steel production, where manganese is used as an alloy and to deoxidize steel. South Africa is the world’s largest producer of manganese, followed by Australia and China.
Secondary supply of feedstock, or recycling, is a liquidrelatively new market segment that has seen limited investment compared to the other segments of the battery supply chain. Current recycling techniques can be classified into two categories: High temperature thermal processes (pyrometallurgy) and mechanical crushing/simple hydrometallurgy processes. Both techniques process the feedstock batteries into an intermediate compound, a metal matte or black mass, which meansis then further processed through a refining process to extract the constituent metals. Both processes mainly focus on the recovery of nickel and cobalt. The majority of these operations are located in China and South Korea.
High temperature thermal processes account for the majority of current recycling operations. Batteries are placed into high-temperature furnaces and melted. A number of the key battery materials are lost in the high temperature processing and smelting phase, including lithium, graphite, and aluminum. The remaining metal matte is then processed through a hydrometallurgical refining process. The high temperature processing can present challenges to refining the metal matte from this process into products that drillingmeet the high purity specifications required for battery cathode manufacturing. Further, the process is energy intensive and causes substantial air and water pollution.
The mechanical crushing/simple hydrometallurgy approach involves placing batteries into large shredding/grinding machines. The resulting shredded material is then processed to find itproduce a black mass. This resulting back mass is more akinthen processed through a bulk hydrometallurgical process designed to drilling for water. It’s also typically located relatively close to surface, which limitsremove impurities and extract the high-value minerals. The high level of impurities in the black mass resulting from the shredding/grinding process makes the recovery of battery grade materials challenging. Additionally, the solvents used in the extraction process have adverse environmental impacts and significantly increase the costs associated with the recycling process.
The black mass resulting from the recycling process has become a readily tradable commodity. However, the quality and value of the black mass is highly variable based on the chemistry of the battery that is being processed and the amount of meters drilled. Onceremaining impurities in the material. Metal refiners are developing processes to extract battery-grade materials from the various forms of black mass. The market, and thus pricing, for black mass is still developing.
The overall market and pricing for battery feedstock materials will be driven by the supply/demand balance of each commodity. Chemical refiners require specific purity and quality standards for the inputs for their manufacturing processes. Competition will be based on the ability of producers, both primary and secondary, to deliver reliable quantities of materials that meet the specifications required in the battery manufacturing process, while maintaining cash costs that are below the marginal cost of supply.
Our Business
Lithium-Ion Battery Recycling
The Company has developed a Lithium Brineuniversal lithium-ion battery recycling system that is found,capable of recycling batteries with both a wide range of form factors (packs, modules, cylindrical cells, prismatic cells, pouch cells, defect and intermediate waste cells, metal scraps, slurries, and powders) and of a wide range of cathode chemistries (lithiated cobalt oxide, lithiated nickel-cobalt-aluminum oxide, lithiated nickel-cobalt-manganese oxide, lithiated nickel-cobalt-manganese-aluminum oxide, lithiated nickel-oxide, and lithiated manganese-oxide) of various relative weighting of transition metals.
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The Company’s recycling system is a two-phase process: an automated de-manufacturing process followed by a targeted chemical extraction train to separate the continuityindividual high-value metals. The Company intends to commission each phase in sequence. Phase 1, the automated de-manufacturing process, separates the components of battery feedstock material into its constituent components, including scrap metals and cathode and anode powders in the form of black mass filter cake. Scrap metals are then sold as byproducts under various offtake agreements or into the open scrap market. The black mass filter cake produced in this phase will also be sold under offtake contracts or into the open market. Upon commissioning of Phase 2, the black mass produced in Phase 1 will be fed into a proprietary chemical extraction train to extract lithium, nickel, cobalt, and manganese elemental metals and upgrade them to the battery cathode grade specifications demanded by high energy density cathode manufacturers. The commissioning of Phase 1 is more straightforwardexpected to understandoccur in the fourth quarter of calendar year 2023 and quantify.the commissioning of Phase 2 is expected to occur in calendar year 2024.
The Company has acquired and leveraged the experience of several members of its leadership and implementation teams who worked on the design, construction, commissioning, and optimization of one of the largest lithium-ion battery manufacturing giga factories in the world. This significant pool of experience has enabled the team to leverage their knowledge of the failure mechanisms that can cause battery components, cells, and modules to fail leading to the development an automated deconstruction process combined with a targeted hydrometallurgical, non-smelting process that deconstructs battery packs to modules, modules to cells, cells to subcell components, and then sorting and separating those subcell components in a strategic fashion. Because of our uniquely pioneered recycling process, we are able to realize greater net benefits than current conventional methods. These benefits include:
| ● | Decreased air and liquid pollutant emissions through strategic design, and with no high-temperature operations, | |
| ● | Separation of low value materials early in the processing train allows for high recovery and purity of high value products, | |
| ● | Metal products manufactured to meet battery cathode specifications are able to re-enter supply chain in closed-loop fashion, | |
| ● | Throughput of recycling facilities equal to that of manufacturing facilities, on a per region basis, | |
| ● | Low capital costs, through avoidance of high-temperature operations and minimal generation of waste, and | |
| ● | Short processing residence times through high-speed strategic disassembly and material handling. |
Additional details regarding the recycling plant are discussed in Item 2. Properties.
Industry Collaborations
In September 2019, the Company was selected as the sole winner of the battery recycling portion of the Circularity Challenge hosted by BASF, Stanley Black & Decker, and Greentown Labs. BASF is one of the largest high-energy density cathode manufacturing companies in the US and one of the largest global purchasers of lithium-ion battery metal materials. The challenge was developed to encourage new, innovative technologies for the recycling of large-format lithium-ion batteries, with a goal to establish and develop a circular economy in the battery supply chain. Participants were asked to demonstrate their ability to recycle an end-of-life lithium-ion battery into battery grade minerals that could then be used for the manufacture of new lithium-ion batteries. As the brineswinner, the Company received seed funding, access to the Greentown Labs facilities (see Item 2. Properties), and the exploration of partnership agreements with the host companies. The Company and BASF continue to explore several avenues of collaboration to accelerate the commercialization of the Company’s lithium-ion battery recycling technology.
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In October 2021, the Company, as a co-grantee, received a competitively bid $2 million contract award from the US Advanced Battery Consortium (“USABC”). USABC is a subsidiary of the United States Council for Automotive Research LLC and enabled by a cooperative agreement with the U.S. Department of Energy (DOE). The member companies include General Motors, Ford Motor Company, and Stellantis NV. USABC’s mission is to develop electrochemical energy storage technologies that advance commercialization of next generation electrified vehicle applications. The objective of the contract award is for the commercial-scale development and demonstration of an integrated lithium-ion battery recycling system, the production of battery cathode grade metal products, the synthesis of high energy density active cathode material from these recycled battery metals by cathode producer and lithium-ion battery recycler BASF, and the fabrication of large format automotive battery cells from these recycled materials and the testing of these cells against otherwise identical cells made from virgin sourced metals by cell technology developer C4V. The demonstration of the entire closed-loop battery manufacturing supply chain within a single project is meant to foster the establishment of a domestic low-cost and low-environmental impact battery recycling infrastructure.
Competition
The Company expects to recover several types of byproducts as well as battery cathode grade lithium, nickel, cobalt, and manganese products through its recycling process and will compete with two categories of producers of these commodities: competing recycling processers and facilities and primary producers of the battery materials.
Competing recycling processes and facilities are foundprimarily located in large flat areas, the constructionUS, Europe, and China and employ various techniques for extraction of numerous flat evaporation poolsthe contained battery metals. In general, processers that employ high-temperature thermal processes or direct shredding/solvent extraction cantechniques focus on the recovery of nickel and cobalt, with limited ability to recover lithium, manganese, or other metals. The Company’s process to extract each of the battery components enables the Company to extract additional value from the same amount of feedstock to enable low-cost and low-environmental operations.
Primary producers of lithium, nickel, cobalt, and manganese are distributed globally. Lithium production is largely located in the Americas, Australia, and Asia. Approximately two-thirds of cobalt production is sourced from the Democratic Republic of Congo. Nickel production is dominated by Indonesia, China, and Australia. Manganese production is concentrated in South Africa, Australia, and China.
The commodities and specialty chemicals that are ultimately used by cathode manufacturers are required to meet stringent specifications, whether that mineral is sourced from a primary or a secondary resource. Thus, the competition in these markets will be achieved at relatively low cost. Environmental impactbased on product quality and reliability of supply.
Primary Resource Development & Refining
The Company has been designing and optimizing our internally developed sustainable lithium extraction process for the manufacturing of battery cathode grade lithium hydroxide from Nevada-based sedimentary claystone primary resources. We are currently conducting exploratory drilling programs on over 10,000 acres as part of our Tonopah Flats Lithium Exploration Project. (See Item 2. Properties for additional information).
The Company is minimizedcurrently conducting geological mapping, sampling, geochemical analysis, and proprietary extraction trials to characterize the resource and to quantify the performance of the lithium extraction and manufacturing operations. In parallel with the current exploration activities, the Company is designing and constructing a multi-ton per day pilot scale facility to process sedimentary resource from the project. This facility is intended to demonstrate the commercial viability of the Company’s extraction and refining processes. The Company will continue to analyze the economic competitiveness of the project throughout the demonstration phases.
The Company’s in-house developed extraction technologies do not require the inefficient evaporation ponds associated with conventional lithium-from-brine mining. Our extraction process utilizes a selective leaching process for the low-cost extraction of lithium from claystone sedimentary resources that allows for significantly lower consumption of acid, lower levels of contaminants in the generated leach liquor, and lower overall costs of production.
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Industry Collaborations
In October 2021, the Company, as the excess residual brines can be pumped back intoprimary grantee, with DuPont Water Solutions as a sub-grantee, was awarded a $4.5 million competitive grant through the salt flats.
Oroplata hasUS Department of Energy’s Advanced Manufacturing Office, Critical Materials Innovation program to compete with other companies searchingadvance the research, development, and commercialization of its technologies for minerals in Nevadathe mining and seeking financingmanufacturing of battery grade lithium hydroxide from its lithium-bearing claystone deposits. The grant provided partial funding for the development of their specific properties. Often, nota multi-tons per day processing facility to implement its lithium refining technology at pilot facility scale.
Competition
Primary lithium production is concentrated in all cases,the Americas, Australia, and Asia. The lithium that is ultimately used by cathode manufacturers is required to meet stringent specifications, whether that mineral is sourced from a primary or a secondary resource. Thus, the competition in these other mineral companies are better financed, have properties which have had sufficient exploration work done on them to warrant a future investor to consider investing in their company rather than ours. There are only a limited number of investors willing to invest in a company which had no proven reserves and has just started its exploration work. These other mineral exploration companies might induce investors to consider their properties and not ours. Hence, any additional funds they receivemarkets will be directedbased on product quality and reliability of supply.
Employees
As of September 26, 2023, the Company had 54 full-time and 2 part-time employees. Additional workers may be hired on a contract basis as needed.
Available Information
We are subject to the future exploration workinformation and periodic reporting requirements of the Securities Exchange Act of 1934, as amended, and, in accordance therewith, we file periodic reports, proxy statements and other information with the Securities and Exchange Commission. We make available, free of charge, our Annual Report on their properties whereasForm 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K and amendments to these reports on our company might be strapped for fundswebsite at https://americanbatterytechnology.com/ as soon as reasonably practicable after those reports are electronically filed with, or furnished to, the Securities and unable to do any worthwhile exploration work on the Western Nevada Basin claim. We might never be able to compete against these other companies and hence never bring the Western Nevada Basin project into a stage where a production decision is to be made. In addition, we will have to compete with both large and small exploration companies for other resources we will need; professional geologists, transportation to and from the Western Nevada Basin Project, materials to set up a camp if required and supplies including drill rigs.Exchange Commission.
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Item 1A. Risk Factors
Not required.An investment in the Company’s securities is subject to a number of risks at any given time. Below is a description of the principal risk factors affecting the Company. The risk factors set out below are not exhaustive and unidentified risks may have potential to adversely affect the Company’s financial condition, operating results, business or future prospects. Investors should carefully consider these risk factors, many of which are beyond the Company’s control, together with other disclosures and market information before investing in the Company’s securities.
Pre-Revenue Company Risks
A pre-revenue company such as ours is inherently subject to many risks. These risks and difficulties include challenges in accurate financial planning as a result of: (a) accumulated losses; (b) uncertainties resulting from a relatively limited time period in which to develop and evaluate business strategies as compared to companies with longer operating histories; (c) compliance with regulations required to commence sales on future products; (d) reliance on third parties for consulting, laboratory work, regulatory, commercialization or other activities; (e) reliance on third parties to carry out contractual arrangements; (f) financing the business; and (g) meeting the challenges of the other risk factors described herein. We have no operating history in our current areas of focus upon which investors may base an evaluation of our performance; therefore, we are subject to all risks incident to the creation and development of a new business.
Working Capital Risks
We will need additional financing to execute our business plan and fund operations, which additional financing may not be available on reasonable terms or at all. We will need to raise capital over the next 12 months to satisfy such requirements, the receipt of which cannot be assured. We will also require capital in order to fully develop our recycling, extraction and refining operations. We intend to seek additional funds through various financing sources, including the private sale of our equity and debt securities, joint ventures with capital partners, grants, government loans, and project financing of our recycling facilities. In addition, we will consider alternatives to our current business plan that may enable us to achieve revenue-producing operations and meaningful commercial success with a smaller amount of capital. However, there can be no guarantees that such funds will be available on commercially reasonable terms, if at all. If such financing is not available on satisfactory terms, we may be unable to further pursue our business plan and we may be unable to continue operations, in which case you may lose your entire investment.
Risks of Competitive Industry
Inherent to competitive industries, there are risks the Company may be unable to maintain or acquire financing, seek available opportunities, retain existing personnel or hire new personnel, or maintain or acquire technical or other resources, supplies or equipment, all on terms it considers acceptable to complete the development of its projects. Battery recycling is a highly competitive and speculative business. Competing recycling processes and facilities are primarily located in the USA, Europe, and China and employ various techniques for extraction of the contained battery metals. In seeking available opportunities, we will compete with a number of other companies, including established, multi-national companies that have more experience and resources than we do. There also may be other small companies that are developing similar processes and are farther along than the Company. Because we may not have the financial and managerial resources to compete with other companies, we may not be successful in our efforts to develop technology which is commercially viable.
Business Model Risks
We intend to engage in the business of lithium recycling through proprietary recycling technology. While the production of lithium-ion recycling is an established business, to date most lithium-ion recycling has been produced by way of performing bulk high temperature calcinations or bulk acid dissolutions. We have developed a highly strategic recycling processing train that does not employ any high temperature operations or any bulk chemical treatments of the full battery. We have tested our recycling process on a small scale and to a limited degree; however, there can be no assurance that we will be able to produce battery metals in commercial quantities at a cost of production that will provide us with an adequate profit margin. The uniqueness of our process presents potential risks associated with the development of a business model that is untried and unproven as we undertake the build-out and operation of a large-scale facility capable of recycling commercial quantities. There can be no assurance that as we commence large scale manufacturing or operations that we will not incur unexpected costs or hurdles that might restrict the desired scale of our intended operations or negatively impact our projected gross profit margin.
Share Price Risks
The market price of the stock of a publicly traded company is affected by a number of variables, many of which are outside the Company’s control. Such factors include: the general condition of markets for resource stocks, and particularly for stocks of lithium exploration and development companies and other battery-metals stocks; the general strength of the economy; the availability and attractiveness of alternative investments; analysts’ recommendations and their estimates of financial performance; investor perception and reactions to disclosures made by the Company, and by the Company’s competitors; future securities sales; reputational risks of the Company; and the breadth of the public markets for the stock. Investors could suffer significant losses if the Company’s Common Shares are depressed or illiquid when an investor seeks liquidity.
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Market Risks
The Company is exposed to commodity price movements for the inventory it holds and the products it plans to produce. Commodity price risk management activities are currently limited to monitoring market prices. The Company’s future revenues, if any, are sensitive to the market prices of the metals contained in its planned products.
The Company’s projects are highly dependent on the demand for and uses of lithium-based end products. This includes lithium-ion batteries for electric vehicles and other large format batteries that currently have limited market share and whose projected adoption rates are not assured. To the extent that such markets do not develop in the manner contemplated by the Company, then the long-term growth in the market for lithium products will be adversely affected. This would inhibit the potential for development of the projects, their potential commercial viability and would otherwise have a negative effect on the business and financial condition of the Company. In addition, as a commodity, lithium market demand is subject to the substitution effect in which end-users adopt an alternate commodity as a response to supply constraints or increases in market pricing. These circumstances could limit the quantity of customers and prices paid for our products. To the extent that these factors arise in the market for lithium, it could have a negative impact on overall prospects for growth of the lithium market and pricing, which in turn could have a negative effect on the Company and its projects.
Product Price and Quality Risks
The ability to reach and sustain profitable operations on the recycling and extraction projects, if and to the extent the projects are developed and enter commercial operation, will be significantly affected by changes in the market price of lithium-based end products. The market price of these products fluctuates widely and is affected by numerous factors beyond the Company’s control, including world supply and demand, pricing characteristics for alternate energy sources such as oil and gas, government policy and laws, interest rates, the rate of inflation and the stability of currency exchange rates, and other geopolitical and global economic factors. Such external economic factors are influenced by changes in international investment patterns, various political developments and macro-economic circumstances. Furthermore, the price of lithium products is significantly affected by their purity and performance, and by the specifications of end-user battery manufacturers. If the products produced from the Company’s projects do not meet battery-grade quality and/or do not meet customer specifications, pricing will be reduced from that expected for battery-grade product. In turn, the company may lose or fail to attract customers. The Company may not be able to effectively mitigate pricing risks for its products. Depressed pricing for the Company’s products will affect the level of revenues expected to be generated by the Company, which in turn could affect the value of the Company, its share price and the potential value of its properties.
Project and Process Risks
The processes contemplated by the Company for refining of extracted materials and refining of recycled materials have not previously been demonstrated at commercial scale. There are risks that efficiencies of recovery and throughput capacity will not be met, and risks that scaled production will not be cost effective or operate as expected. In addition, there is potential for unforeseen costs, additional changes to the process chemistry and engineering, and other unforeseen circumstances that could result in delays to the projects or increased capital or operating costs.
The Company is in the process of exploring and assessing a mineral resource in Tonopah, Nevada, with the intent of progressing the project to mining and processing activities. The Company has no prior history of completing the development of a mining project or conducting mining operations. If found to be economically feasible, the future development of mineral resources will require the construction and operation of a mine, processing plant and related infrastructure. While certain members of management have mining development and operational experience, the Company does not have any such experience as a collective organization. As a result of these factors, the Company’s future success is more uncertain than if it had a proven operating history.
If the Tonopah project advances, the Company is and will continue to be subject to all risks inherent with establishing new mining operations including: the time and costs of construction of mining and processing facilities and related infrastructure; the availability and costs of skilled labor and mining equipment and supplies; the need to obtain necessary environmental and other governmental approvals, licenses and permits, and the timing of the receipt of those approvals, licenses and permits; the availability of funds to finance construction and development activities; potential opposition from non-governmental organizations, indigenous peoples, environmental groups or local groups which may delay or prevent development activities; and potential increases in construction and operating costs due to various factors, including changes in the costs of fuel, power, labor, contractors, materials, supplies and equipment.
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It is common in new mining operations to experience unexpected costs, problems and delays during construction, commissioning and mine start-up, as well as delays in the early stages of mineral production.
The Company is concurrently overseeing the advancement of two major lithium projects. Work to advance these projects requires the dedication of considerable time and resources by the Company and its management team. The advancement of the projects concurrently brings with it the associated risk of strains on managerial, human and other resources. The Company’s ability to successfully manage each of these processes will depend on a number of factors, including its ability to manage competing demands on time and other resources, financial or otherwise, and successfully retain personnel and recruit new personnel to support its growth and the advancement of its projects.
Risks Relating to the U.S. DOE Grant Programs
The DOE’s invitation to enter into confirmatory due diligence and term sheet negotiations is not an assurance that DOE will offer a term sheet to the applicant, or that the terms and conditions of any term sheet will be consistent with the terms proposed by the applicant. The outcome of the Company’s application to the DOE for funding is wholly dependent on the results of DOE advanced due diligence and DOE’s determination whether to proceed, and there can be no assurances as to the outcome of such due diligence review, whether the DOE will determine to proceed and as to the terms and conditions of any term sheet that may be offered, if any.
Permitting Risks
Our operations in the United States are subject to the federal, state and local environmental, health and safety laws applicable to the reclamation of lithium-ion batteries and exploration for, and the development and operation of, mineral properties. Depending on how any particular operation is structured, our operations and related facilities will have to obtain environmental permits or approvals to operate, including those associated with, among other things, air emissions, water discharges, waste management and storage, and exploration and development of mineral properties on federal lands and related processing facilities. We may face opposition from local residents or public interest groups to the installation and operation of our facilities. Failure to secure (or significant delays in securing) the necessary approvals could prevent us from pursuing some of our planned operations and adversely affect our business, financial results and growth prospects. Additionally, there can be no certainty that current permits will be maintained, permitting changes will be approved, estimated permitting timelines will be met, estimated costs will be accurate, or additional or approvals required to carry out recycling, extraction and refining will be obtained. There is the risk that existing permits will be subject to challenges of regulatory administrative processes and similar litigation and appeal processes. Litigation and regulatory review processes can result in lengthy delays, with uncertain outcomes. Such issues could impact the expected timelines of the Company’s projects and consequently have a material adverse effect on the Company’s prospects and business.
Geopolitical Risks
In recent years there has been a substantial increase in political tensions, which is particularly acute in respect to lithium. Lithium has been identified as a ‘critical mineral’ in multiple jurisdictions and is the subject of increasingly active industrial policy. The Company does not believe this will result in a substantive adverse change to its business or operations. However, the Company does expect that over time it may limit our ability to undertake business opportunities with actors from non-Western countries.
Cost Estimate Risks
Capital costs, operating costs, raw materials costs, production and other estimates may differ significantly from those anticipated by the Company’s current estimates, and there can be no assurance that the Company’s actual costs will not be higher than currently anticipated. The Company’s actual costs and production may vary from estimates for a variety of reasons, including, but not limited to: lack of or availability of raw materials, resources or necessary supplies or equipment; inflationary pressures flowing from global supply chain shortages and increased transportation costs, which in turn are causing increased costs for supplies and equipment; increasing labor and personnel costs; unexpected construction or operating problems; higher than expected cost of commodities or feedstock; lower than expected realized lithium prices; revisions to construction plans; risks and hazards associated with exploration or mineral production; natural phenomena; floods; unexpected labor shortages or strikes; and general inflationary pressures. Many of these factors are beyond the Company’s control and could have a material effect on the Company’s operating cash flow, including the Company’s ability to service its indebtedness.
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Operating Risks
The Company’s operations are subject to all the hazards and risks normally incidental to the exploration for, and the development and operation of, mineral properties. The Company strives to implement comprehensive health and safety measures designed to comply with government regulations and protect the health and safety of the Company’s workforce in all areas of its business. The Company also strives to comply with environmental regulations in its operations. Nonetheless, risks associated with the Company’s planned operations include fires, power outages, shutdowns due to equipment breakdown or failure, aging of equipment or facilities, unexpected maintenance and replacement expenditures, human error, labor disruptions or disputes, inclement weather, higher than forecast precipitation, flooding, shortages of water, explosions, releases of hazardous materials, landslides, earthquakes, industrial accidents and explosions, protests and other security issues, and the inability to obtain adequate machinery, equipment or labor due to shortages, strikes or public health issues such as pandemics.
Risk of Hazardous Substances
We may be held responsible for the costs of remediating contamination at the site of current or former activities or at third party sites or be held liable to third parties for exposure to hazardous substances should those be identified in the future. Under the U.S. Comprehensive Environmental Response, Compensation, and Liability Act of 1980 (“CERCLA”) and its state law equivalents, current or former owners of properties may be held jointly and severally liable for the costs of site cleanup or required to undertake, remedial actions in response to unpermitted releases of hazardous substances at such property, in addition to, among other potential consequences, liability to governmental entities for the cost of damages to natural resources, which may be significant.
Risk of Health Epidemics and Diseases
The Company faces risks related to health epidemics and other outbreaks of communicable diseases, which could significantly impact our people, operations and surrounding communities. The Company could continue to incur costs to protect against COVID-19 and its variants. Other impacts of changing restrictions and the evolving health environment in connection with pandemics, epidemics or health outbreaks and emergencies could include prolonged travel restraints, shipment restraints, other supply chain disruptions and workforce interruptions, including loss of life, and reputational damage in connection with challenges or reactions to action or perceived inaction by the Company, which could have a material adverse effect on the Company’s cash flows, earnings, results of operations and financial position.
Costs and Requirements of Being a Public Company
As a public reporting company, we are subject to the information and reporting requirements of the Securities Exchange Act of 1934, as amended, and other federal securities laws, rules and regulations. Complying with these laws and regulations requires more time and attention of our Board of Directors, management and requires additional employees compared to a privately-held company. In addition, the costs of preparing and filing annual and quarterly reports, proxy statements and other information with the SEC, furnishing audited reports to stockholders, maintaining more comprehensive compliance functions, policies and procedures, and corporate governance, are greater than that of a privately-held company.
Risk of Fraud, Misconduct, or Non-Compliance with Anti-Corruption Laws
We may be exposed to fraud, non-compliance with anti-corruption laws, or other misconduct committed by our employees, joint venture partners, representatives, agents, vendors, customers or other third parties undertaking actions on our behalf that could subject us to litigation, financial losses and fines or penalties imposed by governmental authorities and affect our reputation.
Such misconduct could include, but is not limited to, misappropriating funds, engaging in misrepresentation or fraudulent, deceptive or otherwise improper activities, including activities in exchange for personal benefit or gain or activities that otherwise do not comply with applicable laws or our internal policies and procedures. The risk of fraud or other misconduct could increase as we expand our business.
Risk of Failure to Meet Development Timelines and Capital Estimates
Our required capital expenditure can be complex, may experience delays or other difficulties, and the costs may exceed our estimates.
Our capital expenditures primarily consist of substantial investments in new or used equipment, facilities and properties, as well as expenditures to maintain and improve existing equipment, facilities and properties. Execution of these capital expenditures can be complex, and commencement of production requires start-up, commission and certification of product quality by our customers, which may impact the expected output and timing of sales of product from such facilities. Construction of large operations is subject to numerous risks and uncertainties, including, among others, the ability to complete a project on a timely basis and in accordance with the estimated budget for such project and our ability to estimate future demand for our products. In addition, our returns on these capital expenditures may not meet our expectations. Future capital expenditures may be significantly higher, depending on the investment requirements of each of our business lines, and may also vary substantially if we are required to undertake actions to compete with new technologies in our industry. We may not have the capital necessary to undertake these capital investments. If we are unable to do so, we may not be able to effectively compete in some of our markets.
Risk of Failure to Comply with Covenants
The Company has contractual arrangements that contain affirmative and negative covenants that must be adhered to. It is possible that the Company could fail to meet the requirements of one or more covenants, resulting in penalties or acceleration of amounts due. No assurance can be given that a breach will not occur. This could result in a default under our credit agreements that would permit the applicable lenders to declare all amounts outstanding thereunder to be due and payable, together with accrued and unpaid interest. If we are unable to repay our debt, creditors would have the right to proceed against the collateral securing the debt. This in turn could have a material adverse effect on the Company’s business and operations.
Going Concern Risk
The Company has alleviated any substantial doubt about its ability to continue as a going concern. We believe that our existing cash and cash equivalents will enable us to fund our operating expenses and capital expenditure requirements more than one year from the date of this report. However, we have based this estimate on assumptions that may prove to be wrong, and we could exhaust our available capital resources sooner than we expect. In the future, if we are unable to obtain sufficient funding to support our operations, we could be forced to delay, reduce or eliminate our research and development programs or commercialization efforts, and our financial condition and results of operations could be materially and adversely affected, and we may be unable to continue as a going concern.
Risks from Changing Regulations and Laws
Changes to government laws and regulations may affect the development of the Company’s projects. Such changes could include laws relating to grant funds availability, taxation, royalties, restrictions on production, environmental, biodiversity and ecological compliance, mine development and operations, mine safety, permitting and numerous other aspects of the business.
Environmental Risks and Regulations
The Company must comply with stringent environmental regulations. These are evolving in a manner that is expected to 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 companies and their officers, directors and employees. Applicable environmental laws and regulations may require enhanced public disclosure and consultation. It is possible that a legal protest could be triggered through one of these requirements or processes that could delay development activities. No assurance can be given that new environmental laws and regulations will not be enacted or that existing environmental laws and regulations will not be applied in a manner that could limit or curtail the Company’s development programs. Such changes in environmental laws and regulations and associated regulatory requirements could delay and/or increase project costs or increase the risk of environmental liability associated with project operations. This in turn could have a material adverse effect on the Company’s business and operations.
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Insurance Risks
While the Company maintains insurance to protect against certain risks associated with its business, insurance may not be available to insure against all risks, or the costs of such insurance may be uneconomic. The Company may also elect not to obtain insurance for other reasons. Insurance policies maintained by the Company may not be adequate to cover the full costs of actual liabilities incurred by the Company, or may not be continued by insurers for reasons not solely within the Company’s control. The Company maintains liability insurance in accordance with industry standards. However, losses from uninsured and underinsured liabilities have the potential to materially affect the Company’s financial position and prospects.
Health and Safety Risks
The Company carries a risk of liability related to workers’ health and safety. Compliance with health and safety laws, and any changes to such laws, and the requirements of applicable permits and other regulatory requirements remains material to the Company’s business. The Company may become subject to government orders, investigations, inquiries or other proceedings (including civil claims) relating to health and safety matters. The occurrence of any of these events or any changes, additions to or more rigorous enforcement of health and safety laws, permits or other approvals could have a significant impact on operations and result in additional costs or penalties. In turn, these could have a material adverse effect on the Company’s reputation, operations and future prospects.
Risk of Catastrophic Events, Terrorism and War
The occurrence or threat of extraordinary events, including domestic and international terrorist attacks, may disrupt our operations and decrease demand for our products. Certain assets may be at greater risk of future terrorist attacks than other possible targets in the U.S. and around the world. Extraordinary events cannot be predicted, and their occurrence may negatively affect the economy in general, and the markets for our products in particular. The resulting damage from a direct attack on our assets, or assets used by us, could include loss of life and property damage. In addition, available insurance coverage may not be sufficient to cover all the damage incurred or, if available, may be prohibitively expensive.
Risk of Accounting Estimates and Impairment Charges
We make certain accounting estimates and projections in connection with our impairment analysis for long-lived assets in accordance with applicable accounting guidance. An impairment charge may be required if the impairment analysis indicates that the carrying value of an asset exceeds the sum of the expected undiscounted cash flows of the asset. The projection of future cash flows used in this analysis requires the use of judgment and a number of estimates and projections of future operating results. If actual results differ from Company estimates, additional charges for asset impairments may be required in the future. If impairment charges are significant, our financial results could be negatively affected.
Mineral Resource and Mineral Reserve Estimation Risks
Mineral Resources and Mineral Reserves figures are estimates only. Estimated tonnages and grades may not be achieved if the projects are brought into production; differences in grades and tonnage could be material; and, estimated levels of recovery may not be realized. The estimation of Mineral Resources and Mineral Reserves carries with it many inherent uncertainties, of which many are outside the control of the Company. Estimation is by its very nature a subjective process, which is based on the quality and quantity of available data, engineering assumptions, geological interpretation and judgements used in the engineering and estimation processes. Estimates may also need to be revised based on changes to underlying assumptions, such as commodity prices, drilling results, metallurgical testing, production, and changes to mine plans of operation. Any material decreases in estimates of Mineral Resources or Mineral Reserves, or an inability to extract Mineral Reserves could have a material adverse effect on the Company, its business, results of operations and financial position.
Any estimates of Inferred Mineral Resources are also subject to a high degree of uncertainty and may require a significant amount of exploration work to determine if they can be upgraded to a higher confidence category. Risks associated with upgrading the Tonopah project to a higher confidence category include the accuracy of fault modeling and offset of lithium-hosting lithologies on western-side of mineral resource, the lack of project-specific lithologic density data, the accuracy of processing cost used in the pit optimization to define the resource which can potentially affect resource cut-off grades, and the large fluctuations in commodity prices which can potentially affect resource cut-off grades.
Water Management Risks
Water management regulations are in place in Nevada where the Company’s projects are located. As such, the Company must obtain sufficient water rights and transfer those rights such that they may be used for planned recycling and extraction projects. The Company’s flowsheets are designed and/or being designed to lower the use of water to the extent possible by incorporating recycling technologies. The availability of water and pricing of water rights are risks that may be heightened by the potential effects of climate change and could have a material adverse effect on the Company’s business.
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Climate Change Risks
The introduction of climate change legislation is an increasing focus of various levels of government worldwide. The Company is committed to developing its business with a view to contributing to the low carbon economy. This includes incorporating sustainable energy sources and minimizing the use of non-renewable sources of energy to the extent that renewable sources are available with sufficient capacity, at cost effective pricing and that are complementary to the facilities and site design. However, the use of such low carbon technologies may be more costly in certain instances than non-renewable options in the near-term, or may result in higher design costs, long-term maintenance costs or replacement costs. Additionally, if the trend toward increasing regulations continues, the Company may face increasing operating costs at its projects to comply with these changing regulations. Until then, the Company views the risk of occurrence of such litigation as being low.
Risk of Future Losses and Lack of Profitability
The Company anticipates it will continue to have negative cash flow from operating activities in future periods until profitable commercial production is achieved. Although the Company has cash on hand and access to additional cash, the Company’s ability to continue as a going concern and the depletion of its capital will be dependent upon its ability to generate profits from its proposed operations, or to raise capital through equity or debt financing to continue to meet its obligations and repay its liabilities arising from normal business operations when they come due.
Intellectual Property Risks
The Company relies on the ability to protect its intellectual property rights and depends on patent, trademark and trade secret legislation to protect its proprietary know-how. There is no assurance that the Company has adequately protected or will be able to adequately protect its valuable intellectual property rights or will at all times have access to all intellectual property rights that are required to conduct its business or pursue its strategies, or that the Company will be able to adequately protect itself against any intellectual property infringement claims. There is also a risk that the Company’s competitors could independently develop similar technology, processes or know-how; that the Company’s trade secrets could be revealed to third parties; that any current or future patents, pending or granted, will be broad enough to protect the Company’s intellectual property rights; or, that foreign intellectual property laws will adequately protect such rights. The inability to protect the Company’s intellectual property could have a material adverse effect on the Company’s business, results of operations and financial condition. Additionally, the applied science industry is characterized by frequent allegations of intellectual property infringement. Though we do not expect to be subject to any of these allegations, any allegation of infringement could be time consuming and expensive to defend or resolve, result in substantial diversion of management resources, cause suspension of operations or force us to enter into royalty, license, or other agreement, rather than dispute the merits of such allegation. If patent holders or other holders of intellectual property initiate legal proceedings, we may be forced into protracted and costly litigation. We may not be successful in defending such litigation and may not be able to procure any required royalty or license agreements on acceptable terms or at all.
Risk of Defects in Title
We have investigated our rights to the assets we have purchased and developed, and, to the best of our knowledge, those rights are in good standing. However, no assurance can be given that such rights will not be revoked, or significantly altered, to our detriment. There can also be no assurance that our rights will not be challenged or impugned by third parties, including by governments and non-governmental organizations.
Risks Related to Research, and Development, and Changing Technology
Our research and development efforts may not succeed in addressing changes in our customers’ needs, and our competitors may develop more effective or successful products. The development and adoption of new battery technologies could rely on inputs other than lithium compounds which 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. The pace of advances in current battery technologies, the development and adoption of new battery technologies that rely on inputs other than lithium compounds, or a delay in the development and adoption of next generation high nickel battery technologies that utilize lithium hydroxide 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 these could be less reliant on lithium hydroxide or other lithium compounds, especially if the demand for batteries for use in electric vehicles outstrips the available supply of lithium hydroxide or other lithium compounds. We cannot predict which new technologies may ultimately prove to be commercially viable and their share in the overall mix over any time horizon. Commercialized battery technologies that use less lithium compounds could materially and adversely impact our prospects and future revenues.
Joint Venture, Acquisition and Strategic Alliance Risks
Our business strategy includes, in part, entering into joint ventures, acquisitions, and strategic alliances with parties involved in the manufacture and recycling of lithium-ion products. Failure to successfully identify or integrate such joint ventures, acquisitions or strategic alliances into our operations could adversely affect our business. Joint ventures, acquisitions and strategic alliances may involve significant other risks and uncertainties, including distraction of management’s attention away from normal business operations, insufficient revenue generation to offset liabilities assumed and expenses associated with the transaction, and unidentified issues not discovered in our due diligence process, such as product quality, technology issues and legal contingencies. In addition, we may be unable to effectively integrate any such initiatives into our operations. Our operating results could be adversely affected by any problems arising during or from such activity.
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Risks of Relying on Consultants
The Company has relied on, and may continue to rely on, consultants and others for mineral exploration and exploitation expertise. The Company believes that those consultants are competent and that they have carried out their work in accordance with internationally recognized industry standards. However, if the work conducted by those consultants is ultimately found to be incorrect or inadequate in any material respect, the Company may experience delays or increased costs in developing its properties.
Risk of No Dividends
The Company has not paid dividends on its Common Shares since incorporation, and currently has no ability to generate earnings as it is pre-revenue. The Company anticipates that it will retain its earnings and other cash resources for future operations and the ongoing development of its business. As such, the Company does not intend to declare or pay any cash dividends in the foreseeable future. Payment of any future dividends is solely at the discretion of the Board, which will take into account many factors including the Company’s operating results, financial condition and anticipated cash needs.
Information Technology and Cybersecurity Risks
Threats to information technology systems associated with cybersecurity risks and cyber incidents or attacks continue to grow and evolve in terms of severity and sophistication, particularly with the increase in remote work that began during the COVID-19 pandemic. A cybersecurity attack has the potential to compromise the business, financial and other systems of the Company, and could go unnoticed for some time. Risks associated with cybersecurity threats include, among other things, loss of intellectual property, disruption of business operations and safety procedures, loss or damage to worksite data delivery systems, privacy and confidentiality breaches, and increased costs and time to prevent, respond to or mitigate cybersecurity incidents. The Company has implemented a cybersecurity policy and provided training to its personnel as mitigation measures. System and network maintenance, upgrades and similar best practices are also followed. However, despite these measures, the occurrence of a significant cybersecurity incident could have a material adverse effect on the Company’s business and result in a prolonged disruption to it.
Talent Risk
The Company highly values the contributions of its key personnel. The success of the Company continues to depend largely upon the performance of key officers, employees and consultants who have advanced the Company to its current stage of development and contributed to its potential for future growth. The market for qualified talent has become increasingly competitive, with shortages of qualified talent relative to the number of available opportunities being experienced in all markets where the Company conducts its operations. The ability to remain competitive by offering higher compensation packages and programs for growth and development of personnel, with a view to retaining existing talent and attracting new talent, has become increasingly important to the Company and its operations in the current climate. Any prolonged inability to retain key individuals, or to attract and retain new talent as the Company grows, could have a material adverse effect upon the Company’s growth potential and prospects.
Additionally, the Company has not purchased any “key-man” insurance for any of its directors, officers or key employees and currently has no plans to do so.
Implementation of Business Plan Risks
Our ability to successfully implement our business plan requires an effective planning and management process. If funding is available, we may elect to increase the scope of our operations and acquire complementary businesses. Implementing our business plan will require significant additional funding and resources. If we grow our operations, we will need to hire additional employees and make significant capital investments. If we grow our operations, it will place a significant strain on our existing management and resources. Additionally, we will need to improve our financial and managerial controls and reporting systems and procedures, and we will need to expand, train and manage our workforce. Any failure to manage any of the foregoing areas efficiently and effectively would cause our business to suffer.
Risk of Failure of Internal Control Over Financial Reporting
Our reporting obligations as a public company place a significant strain on our management, operational and financial resources and systems. If we fail to maintain an effective system of internal control over financial reporting, we could experience delays or inaccuracies in our reporting of financial information, or non-compliance with the Commission, reporting and other regulatory requirements. This could subject us to regulatory scrutiny and result in a loss of public confidence in our management, which could, among other things, cause our stock price to drop.
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Risks of Legal Proceedings
The Company may be subject to a variety of regulatory requirements, and resulting investigations, claims, lawsuits and other proceedings in the ordinary course of its business, as a result of its status as a publicly traded company and because of its mining exploration and development business. Litigation related to environmental and climate change-related matters, ESG disclosure, and securities class actions arising from share price volatility is also on the rise. The occurrence and outcome of any legal proceedings cannot be predicted with any reasonable degree of certainty due to the inherently uncertain nature of litigation, including the effects of discovery of new evidence or advancement of new legal theories, the difficulty of predicting decisions of judges and juries and the possibility that decisions may be reversed on appeal. Defense and settlement costs of legal claims can be substantial, even with respect to claims that are determined to have little or no merit.
Litigation may be costly and time-consuming and can divert the attention of management and key personnel away from day-to-day business operations. The Company and its projects are, from time to time, subject to legal proceedings or the threat of legal proceedings. If the Company were to be unsuccessful in defending any such claims against it, or unable to settle claims on a satisfactory basis, the Company may be faced with significant monetary damages, injunctive relief or other negative impacts that could have a material adverse effect on the Company’s business and financial condition. To the extent the Company is involved in any active litigation, the outcome of such matters may not be determinable, and it may not be possible to accurately predict the outcome or quantum of any such proceedings at a given time.
Changes to Tax Laws and Other Tax Risks
Changes to U.S. tax laws could adversely affect the Company or holders of the Common Shares. In recent years, many changes to U.S. federal income tax laws have been proposed and made, and additional changes to U.S. federal income tax laws are likely to continue to occur in the future.
We are subject to review and audit by U.S. federal, state, local tax authorities. Tax authorities may disagree with or challenge tax positions we take, which if successful could harm our business. We may be subject to additional tax liabilities due to changes in non-income based taxes resulting from changes in federal, state or local tax laws, changes in taxing jurisdictions’ administrative interpretations, decisions, policies, and positions, results of tax examinations, settlements, or judicial decisions, changes in accounting principles, changes to our business operations, including acquisitions, as well as the evaluation of new information that results in a change to a tax position taken in a prior period. In the future, the company may also be subject to foreign jurisdictions where tax law changes may pose a similar risk.
Item 1B. Unresolved Staff Comments
Not applicable.required.
Item 2. Properties.Properties
The Company is engaged in the construction of a recycling plant to recycle end-of-life lithium-ion batteries and in the exploration of its lithium-bearing claystone unpatented mining claims. To do so, the Company owns or holds long-term leases on multiple properties, all located within the US, along with leases on laboratory facilities that support our research and development functions. In addition, the Company holds rights to certain assets, which facilitate the effective use of our properties. We believe that all of our properties and facilities are well maintained, effectively used, and are adequate to operate our business. Information regarding significant properties operated by us is outlined below.
Corporate Headquarters
The Company currently leases executive offices located at 100 Washington Street, Suite 100 in Reno, Nevada, USA. The office space consists of approximately 5,831 square feet and the lease expires November 30, 2024.
Recycling Operations
McCarran, Nevada
The Company closed on the purchase of the recycling facility in August 2023, and in tandem, the Company has developed new facility and technology-specific environmental, safety, operational standards and procedures, and is in the process of recruiting, hiring, and training of new staff in preparation for operations.
This facility is in the Tahoe-Reno Industrial Center, located at 2500 Peru Drive, McCarran, Nevada, was previously utilized for the recycling of lead-acid batteries, and was already equipped with much of the infrastructure and utility equipment necessary to implement the Company’s recycling processes, including the electrical distribution, HVAC, compressed air, water treatment, material handling, analytical quality control, and operational control rooms.
The facility will house the Company’s first-of-kind integrated battery recycling system which utilizes a strategic de-manufacturing and targeted chemical extraction train in order to recover battery materials with high yields, low cost, and with a low environmental footprint. These processes are fundamentally different than conventional methods of battery recycling, which utilize high temperature furnaces, such as smelting, or non-strategic shredding or grinding systems. The Company’s system results in battery metals separation, recovery and purification of high-value, battery-grade products with less environmental impact and greater potential cost efficiencies than conventional methods.
DescriptionAs the Company ramps up operations of Propertiesits integrated recycling processes, the facility will be commissioned in phases. In the first phase battery materials will be recycled into products including copper, aluminum, steel, a lithium intermediate, and a black mass intermediate material. Once the second phase of this integrated recycling facility is operational, this lithium intermediate will be further refined into a battery grade lithium hydroxide product, and the black mass intermediate material will be further refined into battery grade nickel, cobalt, manganese, and lithium hydroxide products.
Fernley, Nevada
On August 14, 2020, the Company purchased approximately 12.44 acres of undeveloped industrial land in Fernley, Nevada in a Qualified Opportunity Zone (QOZ). The WesternCompany began construction before prioritizing the new location in McCarran, Nevada. The Company’s strategy is to construct multiple facilities and the Fernley location is expected to be a subsequent plant.
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Feedstock Storage – Fernley, Nevada Basin (WNB) Property
On July 23, 2021, the Company purchased 11.55 acres of industrial-zoned land in Fernley, Nevada. The Company intends to construct a supplemental storage facility for recycled battery feedstock on this site. The City of Fernley has approved the City Use Permit for the site.
Land for Supplemental Storage – McCarran, Nevada
On June 28, 2021, the Company purchased approximately 13.87 acres of industrial-zoned land in McCarran, Nevada. The Company intends to construct a supplemental storage facility to store feedstock on this site.
Water Rights
To date, the Company has purchased water rights in the City of Fernley, Nevada for $3.9 million. The water rights will be used to ensure the Company’s Fernley plant will have adequate water to operate at full capacity once construction is locatedcomplete. This is expected to be a subsequent plant with the facility at McCarron, Nevada being the current priority. These water rights have an indefinite life upon assignment to the property through use of a will-serve.
Laboratory Facilities
To support the development of both its lithium-ion battery recycling and battery metal extraction technologies, the Company operates out of two laboratory facilities: The Center for Applied Research at the University of Nevada, Reno in east central Nye County,Reno, Nevada (Figure 1) approximately 93 miles northeastand Greentown Labs in Somerville, Massachusetts. The Company has developed long-standing partnerships with the operators of these facilities and all leases are in good standing.
Nevada Center for Applied Research - Reno, Nevada
The Company leases laboratory and office space from the University of Nevada, Reno. As of June 30, 2023, the Company occupies five laboratories totaling over 3,000 square feet. All laboratories and offices are housed within the Nevada Center for Applied Research (NCAR). The laboratory space is used to advance the Company’s in-house, first-of-kind developed battery metals extraction technologies for both the recycling of spent batteries and for the manufacturing of primary battery metals from domestic-based resources.
Greentown Labs - Somerville, Massachusetts
The Company occupies office and wet chemistry laboratory space in Greentown Labs, which is the largest clean technology incubator in North America. The Company has access to both desk and lab space at the facility. The Company was afforded this opportunity by winning the Greentown Labs Circularity Challenge, an accelerator program for start-ups developed in partnership with BASF, one of the county seatworld’s leading chemical companies.
Tonopah Flats Lithium Exploration Project
The Company currently holds the rights to 517 Unpatented Lode Claims near Tonopah, Nevada. In addition, the Company maintains an office to oversee these claims and the associated activity in Tonopah, Nevada.
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On September 1, 2021, the Company signed an exploration agreement with 1317038 Nevada Ltd., which gave the Company exclusive access to explore 305 Unpatented Lode Claims in the Tonopah Mining District (“Tonopah Flats”) in Nye and Esmeralda Counties, Nevada. The agreement gave the Company the right to explore the claims for critical battery materials. The agreement also gave the Company the option to purchase the Claims upon expiration of the exploration agreement. The Company completed its preliminary surface sampling of the property in February 2022 and proceeded with an exploration drilling program. In July 2022, the Company exercised the option to acquire the rights to those claims.
In addition to signing the exploration agreement mentioned above, the Company also staked additional claims in the region surrounding the claims included in the agreement. In total, the company holds approximately 10,340 acres in the region that it intends to explore for economic lithium deposits.
ABTC began surface sampling of these claims in the Summer of 2021, and subsequently performed additional subsurface drilling programs at depths of up to 1,430 feet totaling over 12,000 feet of exploration covering approximately 65% of its claims. The results of these initial successful exploration programs led to the development and publication of a third-party Qualified Person (QP) audited SK-1300 compliant Inferred Resource Report in February 2023. Based on the results, the Company disclosed its intention to continue the exploration of the deposit.
On July 22, 2023, the Company began a third exploration program to advance its Tonopah NV,Flats Lithium Project. This drill program includes core infill and step out drilling to support the major commercial centerevolution of its domestic resource with the goal of upgrading to a ‘measured and indicated’ resource classification. The company selected and engaged KB Drilling for the region; 56 miles southwestcollection of the towninfill and step out samples for this latest drill program, which consists of Ely, NVsample collections from 8 additional drill holes and 120 miles northeastincludes 6,500 feet of the village of Silver Peak the only currently operatingtotal drilling.
Geology, Infrastructure, and Permitting
The area where Tonopah Flats Lithium producer in the State.
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Figure 1. Location Map. The Western Nevada BasinExploration Project is located withinis known for its unique sedimentary claystone resources. The Company is conducting geological mapping, sampling, geochemical analysis, and proprietary extraction trials to characterize these resources and to quantify the central portionperformance of the Railroad Valley playa about approximately 169 miles north-northwest of Las Vegas, NVlithium extraction and 234 miles east-southeast of Reno, NV.manufacturing operations.
(Figure 2). The Western Nevada Basin Property covers just over 6,000 acres. It consists of a total of two hundred sixty (260) placerproject claims (Figure 2). Each claim covers approximately 20 acres and was laid out by aliquot parts as requiredare located on land that is administered by the Bureau of Land Management.
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Lithium is a locatableManagement (“BLM”). The Company will retain the surface and mineral according to the Code of Federal Regulations. Rights to Lithium are to be held by lode claims where it occurs in bedrock and by placer claims where it occurs in sediments. A body of legal precedence set during the original development of lithium brines in the area provides that lithium in valley sediments by nature of the unconsolidated host rock are staked by and produced from placer claims.
The WNB project is held by 260, 20 acre placer claims, which are located on public Federal lands managed by the Bureau of Land Management. The placer claims are located on U.S. Surveyed lands and fit to aliquot parts.
In Nevada the claim staking procedure requires recording documents with both the county Recorder’s Office and then with the state Bureau of Land Management office. Claims must be held by posts at the claims four corners and Notice of Location which describe the claims legal description of location and owner. The claims are required to be recorded at the county courthouse within the proper jurisdiction within 90 days from the staking date.
Placer claims on Federal lands are held to a September 1 to August 31 assessment year when Intent to Hold or Proof of Labor documents need to be filed with the county for the annual assessment work. The pertinent documents are filed with the Nye County Recorder’s Office.
The claims were staked by the third Party, Plateau Ventures LLC of Moab Utah and official rights to the claims by Oroplata is subject to Quit Claim Deed Transfer Approval by BLM. Oroplata, through its 100% owned subsidiary, Lithortech Resources, Inc., received full entitlement to the Western Nevada Basin property by way of the Quit Claim Deed on January 2, 2017. The signed and approved Quit Claim Deed document is attached.
The current annual maintenance fee is $155 per 20 acre (or a portion thereof) placer claim (http://www.blm.gov/ca/st/en/info/iac/miningfacts.html). Payment of those fees allows the claim to stay on the BLM active data base. Non-payment results inif the claims moving to ‘closed’ status. Before August 31st each year, a payment of $155 per claims is made to the BLM to hold the claimsremain in good standing forwith the following assessment year. BLM through the payment of annual maintenance fees.
The total cost forproject is located near the 260 WNBtown of Tonopah, Nevada and is intersected by Highway 6. The project has other necessary infrastructure nearby including access to power, additional road access, and water. In addition, there is an available workforce in Tonopah and the surrounding area.
A map of the project is included in Figure 1 below.
Figure 1: Tonopah Flats Lithium Exploration Project
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Other Mining Claims was $42,060. In August 2017,
As of June 30, 2023, the Company paid $42,060 to the BLM for 260 Claims.
When fees are paid a claim is deemed ‘active’. Active and approvedno longer held any placer mining claims are listed and can be viewed on the BLM interactive website LR2000 (http://www.blm.gov/lr2000/)
Before October 31st of each year, it is necessary to make a payment to the county of $10 per claim to file an affidavit of assessment fees paid and notice of intent to hold the claims into the next assessment year. The total cost for the current 260 WNB claims is $2,600.
As public lands, there is right of free access and both surface and mineral rights are held by the Federal government. Public records (Management, Bureau of Land) show no military withdrawals or Areas of Critical Environmental Concern. The Railroad Valley Wildlife Management Area is located to the west of the WNB claim boundary and has no effect on any planned work on the WNB claim area.
There is free access to the Federal land in Railroad Valley in Nye County, Nevada, USA. The Company has conducted various sampling programs on the claims and therehas determined that no economically recoverable quantities of lithium or other critical battery materials are no restrictions on casual prospecting. New exploration drilling will trigger a permitting process. There are two major levels of permitting: Notice of Intent (NOI) and Plan of Operations (POO). Historically, if the proposed disturbance was less than 5 acres or 1,000 tons, then the work can proceed under a NOI if there are no complications such as ancient ruins or endangered species. Application for a NOI is relatively simple with requirements like bonding the access route and re-seeding afterwards. A NOI is valid for two years and may be renewed on a two year basis. Maintaining it requires maintaining bonds and seeding disturbed areas when the work is complete. A POO is more complicated with requirements like an archeological survey, environmental assessment, etc. The BLM may respond within 15 days to a NOI application whereas a POO may require several months to years for final acceptance.
Any drilling planned will require a NOI filed with the Tonopah officepresent. As of the BLM. Todate of this report, the best of the Company’s knowledge, there areCompany no known environmental liabilities to which the property is subject or other significant factors and risks that may affect access, title, or the right or ability to perform work on the property.
Accessibility
The main route of access to the WNB project is Nevada State U.S. Route 6 which provides all year access to Railroad Valley and the project area. U.S. Route 6 provides direct access to the two nearby commercial centers; Tonopah, located southwest of the project at the junction of Routes 6 and 95, approximately 90 minutes away, and Ely, a slightly larger commercial center with a population of over 4,200 approximately, located northeast of the project approximately 60 minutes away. US Highway 95 is the main highway linking Las Vegas and Reno, the two largest metropolitan areas in Nevada.
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Climate
Railroad Valley islonger holds Placer mining claims in the rain shadowPanamint mining district of the Sierra Nevada Mountains. The region is arid to almost semiarid. Winters are cold while summers are hot. Average annual precipitation is approximately 5 inches; however, variations occur at differing altitudes.
Exploration can be conducted year around.
Local Resources
The Railroad Valley contains several small communities; which include Currant, Crows Nest, Green Springs, Lockes, and Nyala. Electrical power is available within the valley area.
The larger population centers of Ely and Tonopah are connected via U.S. Route 6 to the project area. Tonopah has a population of approximately 2,500 and is the governmental center for the region. Ely has a population of approximately 4,250 and is the closest commercial center. Groceries, hardware, a bank and a choice of motels and restaurants are available in both Ely and Tonopah.
The area has a long history of mining. Mining personnel can be sourced mostly from the larger towns of Tonopah or Ely.
Infrastructure
A reasonable network of 4x4, graded and paved roads connects the claim area to the rest of Nevada. Electrical power is available at several sites throughout the valley and could easily provide power to any operation at the project area. The nearest rail and large commercial airline service is to Las Vegas, NV approximately 169 miles to the south.
Railroad Valley is one of the longest topographically closed drainage basins in Nevada, extending more than 110 miles in a north-south direction and up to 20 miles wide. The Valley is one of the Central Nevada Desert Basins in the Tonopah Basin. The southern end of the valley begins near Gray Top Mountain (7,036 feet) and stretches north all the way to Mount Hamilton (10,745 feet). The mountain masses are dominated by the White Pine, Grant and Quinn Canyon ranges east of the valley.California.
Railroad Valley comprises and an area of approximately 2,750 square miles. Two playa areas occur within the valley. The Property is located on the huge Northern Playa on the valley floor at elevations generally of 4400 – 4700 feet. The valley floor is characterized by subdued topography with washes eroding into slightly older valley-fill sediments.
The claims are located on the playa and vegetation is scarce. There is sufficient surface area for recovery facilities within the claim group. Water in the basin is unallocated, which is an advantage for processing in the future.
Geologic Setting
The claims are located in the Basin and Range physiographic province which stretches from southern Oregon and Idaho to Mexico. It is characterized by extreme elevation changes between mountains and flat intermountain valleys or basins.
Plate tectonics powered by crustal spreading broadly generates two types of forces: compression as plates are moved together and extension as those forces relax. Compression was the dominant geologic force affecting the western United States beginning about 200 million years ago as the Pacific Ocean plate moved eastward under the North American continent. Those forces compressed the overlying pile of sedimentary rocks accumulated over hundreds of millions of years into a thick stack reaching up to elevations of 10 – 14,000 feet, similar to the altiplano of Mexico and South America which formed at the same time from similar forces. That highland plateau stretched west – east from the Sierra Nevada Mountains in California to the Wasatch Range in Utah.
Extension became the dominant force beginning in the Eocene - Oligocene epochs approximately 55 to 25 million years ago. Also, the relative movement of the tectonic plates changed about 30 million years ago with the movement becoming more oblique to the continent. That relaxed the compressional forces and also tended to ‘tear’ the crust apart, creating diagonal extensions.
The resulting compressional and extensional tectonics have created throughout Nevada a classical Basin and Range province consisting of narrow, N- to NE-trending, fault block mountain chains separated by flat, linear valleys. This geological pattern is repeated across the State and has created a number of currently arid, ‘trapped’ or closed basins with respect to drainage that have the potential of containing Lithium Brine deposits.
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Geology of Lithium Brines
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 salt flat (Playa or Salar); (3) tectonically driven subsidence; (4) associated igneous or geothermal activity; (5) suitable lithium source-rocks; (6) one or more adequate aquifers; and (7) sufficient time to concentrate a brine.
The single most important factor determining if a nonmarine basin can accumulate lithium brine is whether or not the basin is closed.
Lithium enriched brines are formed by complex and multiple processes of evaporation, re-mobilization, and salt and lithium clay dissolution and precipitation. In essence, lithium is liberated by weathering or derived from hydrothermal fluids from a variety of rock sources within a closed basin where Lithium, a lightweight element, cannot escape.
Lithium is highly soluble and, unlike sodium (Na), potassium (K), or calcium (Ca), does not readily produce evaporite minerals when concentrated by evaporation. Instead it ends up in residual brines in the shallow subsurface. Economic brines have Li concentrations in the range of 200 to 4,000 milligrams per liter (mg/l). 1 mg/l = 1 ppm.
Clayton Valley contains the only currently producing Lithium Brine project in Nevada. Production has been on-going since 1967. The production at Clayton Valley is located approximately 120 miles west of the Railroad Valley. Evidence from Clayton Valley suggests that felsic vitric tuffs are a particularly favorable primary source of Lithium as well, uplifted Neogene lake beds from earlier in the basin’s history, which have been altered to hectorite, may provide a source of Lithium.
Railroad Valley has produced about 44 million barrels of oil (MMBO) from nine fields and has been extensively studied to determine relations between structure and oil production. Several interpretations of basin configuration have evolved, based on improved seismic acquisition and processing and better understanding of deformation styles and kinetics.
Oil was first discovered at Railroad Valley by Shell Oil in 1954. The discovery well reached a depth of 10,360 feet before being completed at a productive interval between 6,450 and 6,730 feet. The valley fill is essentially wedge shaped with the wedge increasing in thickness from west to east. A low-angle attenuation fault has been reported to underlie Railroad Valley which has been interpreted to be a result of asymmetric arching rather than a series of down-to-the-west high-angle normal faults.
The stratigraphy of the valley is known to contain Paleozoic platform carbonate rocks, Tertiary volcanic rocks, and Tertiary lacustrine sediments. In comparison to Clayton Valley, the Railroad Valley has a large endowment of Neogene volcanic flows and tuffaceous rocks.
Oil exploration has reported a number of laterally continuous thick Brine horizons throughout Railroad Valley. Sampling for Lithium from the brines was not conducted by the oil industry. Good reservoir rocks for oil may not represent good reservoir hosts for Lithium. The underlying brine-waters of the Railroad Valley were at one time examined as a potential reservoir for Las Vegas.
Volcanic rocks form a large part of the Neogene rock sequence: ash-flow tuffs and basalt flows from major calderas in eastern and central Nevada. Thickness of the volcanic section can vary greatly because of Neogene erosion and faulting. The thickness of ash flow tuffs in Railroad Valley can range from less than 1,000 ft to more than 3,000 ft. These rocks have shown good porosity and may represent an enormous source for Lithium.
Tertiary lacustrine formations consist of varying proportions of fresh-water carbonate, shale, sandstone, and volcanic debris. To date, oil production from Tertiary lacustrine reservoirs is limited, but there is production from the Sheep Pass Formation in the Eagle Springs field, and formerly there was production from Currant field; both in Railroad Valley.
The northern Playa area of Railroad Valley contained a large lake during the Pleistocene Epoch, more than 7,000 years ago. The lake has subsequently evaporated within the valley; however, at one point it reportedly covered an area of over 525 square miles and attained a maximum depth of 315 feet.
The large Railroad Valley north playa today is partly covered by young erosional alluvium.
Mineral Resources and Mineral Reserves
The Railroad Valley has demonstrated enrichment in lithium in the nearby dry sediments as evidenced from the NURE sample database from the U.S. Geologic Survey. However, the project is at an exploration stage. There are no lithium brine mineral resources or reserves for the property.
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Exploration and Development
A proposed budget of US$2,895,000 for a 2018 Phase One exploration program is shown in the following table. Any subsequent work would be contingent upon favorable results from the program and would fall under a separate future budget.
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The work would consist of direct sampling and analysis of Lithium both laterally and vertically across the project area from both volcanic horizons and underground Brines contained within the Playa. Drilling and mobilization represent the largest costs of the program. Every effort would be made to minimize costs and maximize the sampling of brine from either re-entry and perforation of ‘shut-in’ oil wells or testing of current water wells in the project area.
Exploration Time Table
The work for the Phase One exploration program will be designed over the following 4 to 5 months. Surficial sampling will be performed from February to March and Drilling and sampling from April to June. Analytical analysis will follow each program.
Other Mineral Properties
We are not contemplating any other mineral properties at this time.
Item 3. Legal Proceedings
We are currently not involvedOn August 22, 2022, John Lukrich, former Chief of Staff at the Company, filed a complaint against the Company in any litigation that we believe could have a materially adverse effectCalifornia state court. The Company removed the action to federal court on our financial condition or resultsdiversity grounds, and the case is now pending in the United States District Court for the Northern District of operations. ThereCalifornia, Case No. 3:22-cv-06690. Lukrich asserts claims for: (1) Breach of Contract; (2) Failure to Timely Pay Wages; and (3) Violation of Labor Code Section 925, all related to his previous employment and associated compensation. Lukrich seeks general damages to recover the compensation he alleges is no action, suit, proceeding, inquiry or investigation before or by any court, public board, government agency, self-regulatory organization or body pending or,owed to him, declaratory relief related to the knowledgeterms of our executivehis Offer Letter, attorneys’ fees, and costs. On November 7, 2022, the Company filed its answer to the complaint denying the allegations and demanding a jury trial. Discovery is ongoing, and there have been no further material actions in the case since the filing of the Company’s answer. The Company believes the claims are without merit and intends to vigorously contest the allegations in the complaint.
On November 22, 2022, Peter Schultz, individually and as trustee of the Sunshine and Rain Asset Management Irrevocable Trust (collectively, “Plaintiffs”), filed a complaint against the Company and Action Stock Transfer Company, Inc, in the United States District Court for the District of Nevada, Case No. 2:22-cv-01965, alleging claims against the Company for (1) Violation of Duty to Register Certificated shares under NRS 104-8401 et seq.; (2) Breach of Contract; (3) Conversion; (4) Breach of the Implied Covenant of Good Faith and Fair Dealing; and (5) Injunctive Relief. Based on the complaint, this action relates to certain consulting agreements entered into by and between the Company and Plaintiffs. Plaintiffs sought, inter alia, compensatory damages in excess of $75,000 according to proof, punitive damages, a permanent injunction directed the Company to register certain shares, and attorneys’ fees and costs. The parties entered into a settlement agreement, agreeing to dismiss the case, without monetary compensation or attorneys’ fees, and the Company agreed that shares previously issued to Plaintiffs are eligible for removal of the restrictive legend. On July 11, 2023, an Order Granting Stipulation of Dismissal with Prejudice was filed with the court.
On July 27, 2023, the U.S. Department of Labor Occupational Safety and Health Administration (“OSHA”) notified the Company that Kimberly Eckert, former Chief Financial Officer, filed a complaint with case number 201018556 against the Company, alleging unlawful retaliation. Ms. Eckert alleges that she was unlawfully terminated by the Company. Specifically, Ms. Eckert alleges that the Company’s board of directors terminated her in retaliation for complaining about other officers or any of our subsidiaries, threatened against or affecting us, our common stock, anythe Company allegedly withholding financial information from her. The Company served its response to the complaint on August 16, 2023, in order to provide OSHA with a written account of our subsidiaries or our officers or directors ofthosethe facts and a statement of our subsidiaries’the Company’s position. The Company believes the claims are without merit and intends to vigorously contest the allegations in their capacities as such, in which an adverse decision could have a material adverse effect.the complaint.
Item 4. Mine Safety Disclosures
Not applicable.Our company is engaged in exploration activities that currently do not require a Mine Safety and Health Administration ID. We employ Best Management Practices in regard to our employee and contractor’s safety.
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PART II
Item 5. Market for Common Equity and Related Stockholder Matters
Market Information
Market Information
OurAs of September 21, 2023, our shares of common stock are eligible for quotation on the OTC Markets Grouptraded under the symbol “ORRP.” However, our shares do not trade other than on an extremely limited and sporadic basis. The following table sets forth for the periods indicated the range of high and low bid quotations per share as reported“ABAT” on the OTC Markets Group since the first periodNasdaq Capital Market. “The transfer agent and registrar for which figures are available. These quotations represent inter-dealer prices, without retail markups, markdowns or commissions and may not necessarily represent actual transactions. Our shares ofour common stock first began trading on February 1, 2016.is Securities Transfer Corporation, 2901 N. Dallas Parkway, Suite 380, Plano, Texas 75093.
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Year 2017 |
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Fourth Quarter | $ | 0.18 | $ | 0.095 |
Third Quarter | $ | 0.335 | $ | 0.095 |
Second Quarter | $ | 0.35 | $ | 0.1586 |
First Quarter | $ | 0.55 | $ | 0.16 |
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Fourth Quarter | $ | 1.90 | $ | 0.21 |
Third Quarter | $ | 1.65 | $ | 0.25 |
Second Quarter (beginning February 1, 2016) | $ | 0.50 | $ | 0.35 |
First Quarter | $ | - | $ | - |
On January 12, 2018,September 26, 2023, the closing price of our Common Stock as reported by the OTC Markets GroupNasdaq Capital Market was $0.091$9.18 per share.
Holders
As of January 12, 2018,September 26, 2023, we havehad approximately 41150 shareholders of record, including our directors and officers. One such holder is Cede & Co., a nominee for Depository Trust Company, or DTC. Shares of Common Stock that are held by financial institutions as nominees for beneficial owners are deposited into participant accounts at DTC, and are considered to be held of record by Cede & Co. as one stockholder.
Dividends
We have never declared or paid any cash dividends on our capitalcommon stock. We currently intend to retain all available funds and any future earnings to support our operations and finance the growth and development of our business. We do not intend to pay cash dividends on our common stock for the foreseeable future. Any future determination related to the Company’s dividend policy will be made at the discretion of our Board of Directors. The Nevada Revised Statutes, however, prohibits us from declaring dividends where, after giving effect to the distribution of the dividend:
we would not be able to pay our debts as they become due in the usual course of business; or
our total assets would be less than the sum of our total liabilities plus the amount that would be needed to satisfy the rights of stockholders who have preferential rights superior to those receiving the distribution, unless otherwise permitted under our Articles of Incorporation.
Stock Options,Awards, Warrants and Rights
As at Septemberof June 30, 2017, Oroplata2023, the Company has 6,454,5457,465,736 potentially issuable shares of common stock including:
2,742,000 potentially issuable shares of common stock from share purchase warrants issued with an exercise price that ranges from $0.001 to $0.50 per share; and
3,712,545 potentially issuable shares of common stock from convertible debt instruments that were issued and are convertible into common shares at the Company at $0.10 to $0.11 per share, at any time at the option of the note holder.
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Penny Stock
Our common stock is subjectpursuant to the provisions of Section 15(g) of the Exchange Act and Rule 15g-9 thereunder, commonly referred to as the “penny stock rule”. Section 15(g) sets forth certain requirements for transactions in penny stock, and Rule 15g-9(d) incorporates the definition of “penny stock” that is found in Rule 3a51-1 of the Exchange Act. The SEC generally defines a penny stock to be any equity security that has a market price less than US$5.00 per share, subject to certain exceptions. We are subject to the SEC’s penny stock rules. Since our common stock is deemed to be penny stock, trading in the shares of our common stock is subject to additional sales practice requirements on broker dealers who sell penny stock to persons other than established customers and accredited investors. “Accredited investors” are generally persons with assets in excess of US$1,000,000 or annual income exceeding US$200,000 or US$300,000 together with their spouse. For transactions covered by these rules, broker dealers must make a special suitability determination for the purchase of securities and must have the purchaser’s written consent to the transaction prior to the purchase. Additionally, for any transaction involving a penny stock, unless exempt, the rules require the delivery, prior to the first transaction, of a risk disclosure document prepared by the SEC relating to the penny stock market. A broker-dealer also must disclose the commissions payable to both the broker-dealer and the registered representative and current quotations for the securities. Finally, monthly statements must be sent disclosing recent price information for penny stocks held in an account and information to the limited market in penny stocks. Consequently, these rules may restrict the ability of broker-dealer to trade and/or maintain a market in our common stock and may affect the ability of our stockholders to sell their shares.dilutive factors listed below:
| ● | 5,729,360 shares of common stock issuable upon exercise of warrants with a weighted-average exercise price of $14.53 per share; and | |
| ● | 1,736,376 unvested restricted share awards issued under the Company’s 2021 Retention Plan (“the Retention Plan” |
Securities Authorized for Issuance under Equity Compensation Plans
As of the date of this Report, we do not have any compensation plans under which our equity securities are authorized for issuance. We intend to adopt an equity compensation plan in which our directors, officers, employees and consultants will be eligible to participate. However, no formal steps have yet been taken to adopt such a plan.
Recent Sales of Unregistered Securities
Other than as disclosed in previous quarterly reports on Form 10-Q or current reports on Form 8-K, we did not issue any equity securities that were not registered under the Securities Act during the fiscal year ended September 30, 2017.None.
Purchases of Equity Securities by the Issuer and “Affiliated Purchasers”
We did not purchase any shares of our common stock or other securities during the year ended SeptemberJune 30, 2017.2023.
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ItemITEM 6. Selected Financial Data[Reserved.]
Not required.ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITIONS AND RESULTS OF OPERATIONS.
Item 7.Forward-Looking StatementsManagement's Discussion and Analysis of Financial Conditions and Results of Operations.
You should read the following discussion of our financial condition and results of operations in conjunction with the consolidated financial statements and the notes thereto included elsewhere in thethis Form 10-K. The followinginformation in this discussion contains forward-looking statements that reflectand information within the meaning of Section 27A of the Securities Act and Section 21E of the Exchange Act. These forward-looking statements include, but are not limited to, statements concerning our strategy, future operations, future financial position, future revenues, projected costs, prospects and plans estimates and beliefs. Our actualobjectives of management. The words “anticipates,” “believes,” “estimates,” “expects,” “intends,” “may,” “plans,” “projects,” “will,” “would” and similar expressions are intended to identify forward-looking statements, although not all forward-looking statements contain these identifying words. We may not actually achieve the plans, intentions, or expectations disclosed in our forward-looking statements and you should not place undue reliance on our forward-looking statements. Actual results or events could differ materially from those discussedthe plans, intentions and expectations disclosed in the forward-looking statements. Factorsstatements that we make. These forward-looking statements involve risks and uncertainties that could cause or contributeour actual results to these differences includediffer materially from those discussed belowin the forward-looking statements, including, without limitation, the risks set forth in our filings with the SEC. The forward-looking statements are applicable only as of the date on which they are made, and elsewhere in this Form 10-K.we do not assume any obligation to update any forward-looking statements except as required by applicable securities laws.
ResultsOverview
American Battery Technology Company (the “Company”) is a new entrant in the lithium–ion battery industry that is working to increase the domestic US production of battery materials, such as lithium, nickel, cobalt, and manganese through its exploration of new primary resources of battery metals, development and commercialization of new technologies for the extraction of these battery metals from primary resources, and commercialization of an internally developed integrated process for the recycling of lithium–ion batteries. Through this three–pronged approach the Company is working to both increase the domestic production of these battery materials, and to ensure spent batteries have their elemental battery metals returned to the domestic manufacturing supply chain in an economical, environmentally-conscious, closed–loop fashion.
To implement this business strategy, the Company is currently constructing and commissioning its first integrated lithium–ion battery recycling facility, which will take in waste and end–of–life battery materials from the electric vehicle, stationary storage, and consumer electronics industries. The construction, commissioning, and operation of this facility are of the highest priority to the Company, and as such it has significantly increased the resources devoted to its execution including the further internal hiring of technical staff, expansion of laboratory facilities, and purchasing of equipment. The Company has been awarded a competitively bid $2M grant from the US Advanced Battery Consortium to accelerate the development and demonstration of this pre–commercial scale integrated lithium–ion battery recycling facility, and the Company has been selected for an additional $20M grant award under the Bipartisan Infrastructure Law to validate, test, and deploy three disruptive advanced separation and processing technologies.
Additionally, the Company is accelerating the demonstration and commercialization of its internally developed low–cost and low–environmental impact processing train for the manufacturing of battery grade lithium hydroxide from Nevada–based sedimentary claystone resources. The Company has been awarded a $4.5M grant cooperative agreement from the US Department of Energy’s Advanced Manufacturing Office through the Critical Materials Innovation program to support the construction and operation of a multi–ton per day integrated continuous demonstration system to support the scale–up and commercialization of these technologies. The Company has been awarded an additional $115M grant award under the Bipartisan Infrastructure Law to design, construct, and commission a first-of-kind commercial manufacturing facility to produce battery-grade lithium hydroxide from this resource.
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2023 Financial Highlights:
| ● | During the period, the Company made several installments towards the acquisition of its new recycling facility. As of June 30, 2023, the Company paid $21.0 million of cash along with committing 605,129 common shares for an estimated $5.9 million towards the purchase price. Together the cash and shares combine for a total purchase price of $26.9 million. On August 11, 2023, the Company closed on the acquisition and will present these deposits as property, plant and equipment for the fiscal quarter ending September 30, 2023. | |
| ● | As of June 30, 2023, the Company had total cash on hand of $2.3 million. | |
| ● | During the first half of the fiscal year, the Company acquired mineral rights in central Nevada for $8.2 million, paid in cash. | |
| ● | Cash from financing activities for the fiscal year ended June 30, 2023 decreased by $18.0 million from the prior fiscal year to $23.4 million. | |
| ● | Cash used for investing activities for the fiscal year ended June 30, 2023 totaled $36.7 million, an increase of $21.6 million when compared to the prior fiscal year. Investing activities include $21.9 million of cash used for the purchase of its new recycling facility and additional equipment in northern Nevada. | |
| ● | Cash used in operations for the fiscal year ended June 30, 2023 increased by $3.2 million from the prior fiscal year to $13.4 million. | |
| ● | Expenses recognized for shares issued for services during the fiscal year ended June 30, 2023 decreased by $12.4 million from the prior fiscal year to $9.3 million. | |
| ● | The Company recorded $7.7 million in research and development costs for the fiscal year ended June 30, 2023, an increase of $6.7 million when compared to the prior fiscal year. The Company recorded an offset to research and development costs of $0.9 million and $0.1 million for federal grant funds recognized for the fiscal years ended June 30, 2023 and 2022, respectively. | |
| ● | The Company recognized other income for the fiscal year ended June 30, 2023 of $0.2 million, consisting of land lease income, unrealized losses on securities held, and a gain on sale of mining claim rights. |
Components of Statements of Operations
Working Capital
| September 30, 2017 $ |
| September 30, 2016 $ |
Current Assets | 61,641 |
| 90,040 |
Current Liabilities | 1,327,646 |
| 634,033 |
Working Capital (Deficit) | (1,266,005) |
| (543,993) |
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Cash Flows
| September 30, 2017 $ |
| September 30, 2016 $ |
Cash Flows used in Operating Activities | (484,899) |
| (199,402) |
Cash Flows used in Investing Activities | - |
| - |
Cash Flows from Financing Activities | 404,000 |
| 279,496 |
Net increase (decrease) in Cash During Period | (80,899) |
| 80,094 |
Operating RevenuesExpenses
During the fiscal year ended June 30, 2023, the Company incurred $21.6 million of operating expenses compared to $33.7 million of operating expenses during the fiscal year ended June 30, 2022. The decrease is primarily due to the items described below.
General and administrative expenses consist of stock-based compensation, office expenses, legal, recruitment, business development, public relations, and general facility expenses. The Company recognizes stock-based compensation for its employees using over the requisite service period of the employee, these costs help retain key employees while preserving cash on hand. The Company has reduced the number of common shares it directly issues to non-employees for professional services, and thus, has recognized a $12.4 million reduction to the non-cash compensation components on the statement of operations and statement of cash flows for the fiscal year ended June 30, 2023.
Research and development expenditures are charged to operations as incurred. These costs consist primarily of laboratory leases, supplies, salaries, stock-based compensation, and benefits. Research and development costs for the years ended SeptemberJune 30, 20172023 and 2016,2022 were $7.7 million and $1.0 million, respectively. The increase in 2023 is attributed to increased headcount and related compensation. These costs are offset by federal grant funds it receives for grant awards that it has contracted with various federal agencies. The Company recognized an offset to its research and development costs of $0.9 million and $0.1 million for the fiscal years ended June 30, 2023 and 2022, respectively.
Exploration costs consist primarily of drilling, assay, claim fees, field office lease and warehouse costs, personnel, stock-based compensation, travel and other costs related to exploration of claims in central Nevada as it pursues critical battery metals in the region.
Other Income (Expense)
During the fiscal years ended June 30, 2023 and 2022, the Company did not record any revenues from operations.
Operating Expensesrecognized gains of $0.3 million and Net Loss
During the year ended September 30, 2017, the Company incurred operating expenses of $2,198,907 compared to $2,398,931 during the year ended September 30, 2016. The decrease in operating expenses is due to an impairment charged against the acquisition of the Nye Claims during the year ended September 30, 2016 of $1,231,848. The one-time items from fiscal 2016 were offset by an increase in general and administrative expense of $469,024 relating primarily to stock-based compensation expense for issuance of share purchase warrants as bonus compensation for debt financing and issuance of common shares for services. Furthermore, there was an increase of $562,800 in exploration costs as the Company issued 2,000,000 common shares with a fair value of $600,000 as part of the settlement agreement$0.2 million, respectively, related to the purchasesale of mining claims. The Company records in other income the mineral claimsmoney receives from a land lease and unrealized loss on the Nye County properties which was offset by payment of $77,500 for Nye County in 2016. Finally, the Company also recorded a payroll costs of $57,200 relatinginvestment, though immaterial to payroll expense incurred for staffing at Lithortech Resources (“Lithortech”), the Company’s wholly-owned subsidiary, compared to $0 in 2016.operations.
Net loss forLoss
During the fiscal year ended SeptemberJune 30, 2017 was $2,690,342 compared to $28,356,180 during the year ended September 30, 2016. The decrease is due to the Company recording a one-time charge to other expense for $25,920,000 relating to the issuance of 16,000,000 common shares of the Company for no consideration. The Company also recorded accretion and interest expense of $497,269 during the year ended September 30, 2017 compared to accretion and interest expense of $37,249, as2023, the Company incurred a full yearnet loss of accretion costs relating to the beneficial conversion feature of the conversion options on the convertible debentures issued, and a full year of interest expense for convertible debentures that were issued in the prior year. $36,000 loss on settlement of debt relating to the issuance of common shares to settle outstanding accounts payable and a gain on extinguishment of debt of $41,834 related to settlement of the Nye County mineral claims of $25,000 and $16,834 of accounts payable being written off by a prior vendor.
For the year ended September 30, 2017, the Company recorded a$21.3 million or $0.49 loss per share compared to a net loss of $0.05 per share compared with a$33.5 million or $0.80 loss per share of $0.66 per share forduring the fiscal year ended SeptemberJune 30, 2016.2022.
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Liquidity and Capital Resources
As of SeptemberAt June 30, 2017,2023, the Company had cash of $9,141$2.3 million and total assets of $61,641$74.7 million compared to cash of $29.0 million and total assets of $90,040$52.9 million at SeptemberJune 30, 2016.2022. The decrease in cash is due to the fact that the Company used more cash availablehaving received net proceeds of $23.4 million from financing activities, offset by $8.1 million to them, as the Company had more operating expensesacquire claims in fiscal 2017 comparedTonopah, Nevada, $21.9 million of deposits towards its building and related equipment and $6.8 million towards other property and equipment related to fiscal 2016.its core business objectives.
As of September 30, 2017, the
The Company had total current liabilities of $1,327,646$13.4 million at June 30, 2023, compared to $634,033 as$3.1 million at SeptemberJune 30, 2016.2022. The increase in totalcurrent liabilities was attributedis primarily due to an increase of $664,258 of convertible debentures, as the Company financedcosts necessary to equip its continued growthrecycling facility and operationsprepare the facility for its intended use. Current liabilities at June 30, 2023 includes a $6.0 million financing instrument to assist with the issuancetransportation and commissioning of convertible notes, $40,100 increase in amounts due to related parties, and a decrease of $10,745 for accounts payable and accrued liabilities as the Company had the $41,834 in forgiveness of accounts payable and accrued liabilities and settled significant amounts of outstanding payables through the issuance of common shares.its recycling facility.
As of SeptemberJune 30, 2017,2023 the Company had a working capital deficitdeficiency of $1,266,005$8.6 million compared withto a positive working capital deficit of $543,993 as of September$26.8 million at June 30, 2016.2022. The increasedecrease in working capital deficit is dueattributed to additional long-term funding received fromacquisitions of property and equipment, increased operating activities and a loan holder which was used for operating activities.
Duringdecrease to financing activities during the fiscal year ended SeptemberJune 30, 2016,2023. The Company believes its cash holdings and subsequent financing will be sufficient to meet its future working capital needs.
Grant Awards
On August 16, 2021, the Company issued 636,934 common sharesreceived a contract award for a 30-month project with a fair valuetotal budget of $1,031,848$2.0 million from the US Advanced Battery Consortium (the “USABC grant”) as part of a competitively bid project, through which the acquisition costsCompany will receive reimbursement for up to $500,000 of eligible expenditures. The objective of the Nye Claims, 16,000,000 common sharescontract award is for the commercial-scale development and demonstration of an integrated lithium-ion battery recycling system, the production of battery cathode grade metal products, the synthesis of high energy density active cathode material from these recycled battery metals, and the fabrication of large format automotive battery cells from these recycled materials and the testing of these cells against otherwise identical cells made from virgin sourced metals. The Company began receiving funds related to this award during the fiscal year ended June 30, 2022.
On January 20, 2021, the US DOE announced that the Company had been selected for award negotiation for a three-year project with a fair valuetotal budget of $25,920,000$4.5 million for no consideration tothe field demonstration of its selective leaching, targeted purification, and electro-chemical production of battery grade lithium hydroxide from domestic claystone resources technology. Through this grant award the Company and 500,000 common sharesis eligible to receive reimbursement of up to 50% of eligible expenditures, or up to $2.3 million. The prime agreement contract for this grant (“AMO grant”) was issued with a fair valueproject start date of $425,000 for consulting services. DuringOctober 1, 2021. The Company began receiving funds related to this award during the fiscal year ended SeptemberJune 30, 2017,2022.
On October 21, 2022, the US DOE announced that the Company issued 400,000 common shareshas been selected for award negotiation for a five-year project with a fair valuetotal budget of $96,000$115.5 million to settle outstanding accounts payables,expand domestic manufacturing of battery grade lithium hydroxide for lithium-ion batteries for electric vehicles, a focus on domestic processing of materials and 1,600,000 common sharescomponents that are currently imported from foreign countries. Through this grant award the Company is eligible to receive reimbursement of up to 50% of eligible expenditures, or up to $57.7 million. The prime agreement contract for this grant was issued with a fair valueproject start date of $357,000 for consulting and professional services. Furthermore,September 1, 2023. The Company is expected to begin receiving funds associated with this during the fiscal year ended June 30, 2024.
On November 17, 2022, the US DOE announced that the Company also received 636,943 common shares that were previously issuedhas been selected for award negotiation for a three-year project with a total budget of $20.0 million to demonstrate and commercialize next generation techniques for its lithium-ion battery recycling processes to produce low-cost and low-environmental impact domestic battery materials. Through this grant award the Nye County property andCompany is eligible to receive reimbursement of up to 50% of eligible expenditures, or up to $10.0 million. The Company is expected to begin receiving funds associated with this during the shares were returned to treasury.fiscal year ended June 30, 2024.
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Cashflows from Operating ActivitiesCash Flows
For the fiscal years ended June 30:
| 2023 | 2022 | |||||||
| Cash Flows used in Operating Activities | $ | (13,367,982 | ) | $ | (10,177,994 | ) | ||
| Cash Flows used in Investing Activities | $ | (36,716,761 | ) | $ | (15,082,714 | ) | ||
| Cash Flows provided by Financing Activities | $ | 23,415,724 | $ | 41,406,372 | ||||
| Net (Decrease) Increase in Cash During the Period | $ | (26,669,019 | ) | $ | 16,145,664 | |||
Cash from Operating Activities.
During the fiscal year ended SeptemberJune 30, 2017,2023, the Company used $484,899$13.4 million of cash for operating activities as compared to $199,402$10.2 million used during the fiscal year ended SeptemberJune 30, 2016.2022. The increase included cash costs for engineering, research and development as well as increased exploration expenses. Increased research and development costs were to support the development of the Company’s process for the recycling of lithium-ion batteries and for the extraction of lithium from the Company’s lithium claystone mining claims. The Company has also seen a steady increase in exploration activity expenses as it continues to evaluate its claims in the Tonopah, Nevada region. The Company also continues to see a stable increase in its general administrative function to further support its business objectives.
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Cash from Investing Activities
During the fiscal year ended June 30, 2023, the Company used cash for investing activities of $36.7 million, including acquisition costs of $28.6 million of property and equipment for its recycling facilities and $8.1 million for mineral rights acquired in Tonopah, Nevada. This is in comparison to cash used for operatinginvesting activities was due toof $15.1 million for the fact that the Company raised $347,912 of cash from financing activities which was used to further the Company’s organizational and strategic objectives.
Cashflows from Investing Activities
During thefiscal year ended SeptemberJune 30, 20172022, consisting primarily of $12.9 million for construction and 2016,equipment and $2.2 million for water rights.
As of June 30, 2023, the Company had norecorded specific deposits of $26.9 million, consisting of $21.0 million of cash and $5.9 million of common stock to acquire its new recycling facility located in McCarran, NV. On August 11, 2023, the Company closed on the acquisition and will present these deposits as property, plant and equipment for the fiscal quarter ending September 30, 2023.
As of June 30, 2023, the Company had total non-current assets of $69.9 million compared to $23.0 million at June 30, 2022. The Company will continue to see an increase in investing activities as it continues to invest heavily in its recycling and primary resource extraction activities.
CashflowsCash from Financing Activities
During the fiscal year ended SeptemberJune 30, 2016,2023, the Company received $404,000 fromhad net cash provided by financing activities fromof $23.4 million compared to $41.4 million for the fiscal year ended June 30, 2022. The decrease represents a decrease in the need for capital requirements while the Company nears completion of its revenue-generating recycling facility.
During the period, the Company issued 433,333 shares of common stock pursuant to purchase agreements for net proceeds of $3.9 million, of which, $0.4 million was received after June 30, 2023.
In March 2023, the Company entered into a share purchase agreement for the purchase and sale of 952,381 shares of common stock at an issuance price of $10.50 per share. In addition to the issuance of convertible notes. During the year ended September 30, 2016,common shares, the Company issued 952,381 Series A warrants that are each exercisable into one common share of the Company at $12.00 per share for a period of five years from the date of issuance and 952,381 Series B warrants that are each exercisable into one common share of the Company at $10.50 per share for a period of eighteen months from the date of issuance. As part of the financing, the Company engaged a placement agent in connection with the offering and agreed to pay the placement agent a cash fee of 7.5% of the gross proceeds of the offering, a 1% expense allowance, and other reimbursable expenses. In addition, the Company issued 57,143 warrants to the placement agent as a commission fee, which are exercisable at $13.13 per share for a period of five years from the date of issuance. The Company received $279,496net proceeds under this share purchase agreement of cash from financing activities, which included $231,000 from$8.9 million.
In May 2023, the Company entered into multiple share purchase agreements for the purchase and sale of 476,187 common shares at an issuance price of $10.50 per share. In addition to the issuance of convertible debenturescommon shares, the Company issued 476,187 Series A warrants that are exercisable into one common share of the Company at $12.00 per share for a period of five years from the date of issuance and $48,496 advanced476,187 Series B warrants that are exercisable into one common share of the Company at $10.50 per share for a period of eighteen months from related parties.the date of issuance. The Company received net proceeds under this share purchase agreement of $5.0 million. The Company’s offering of the Units was made in reliance on the exemption from registration provided by Section 4(a)(2) of the Securities Act. The Company relied on this exemption from registration based in part on representations made by the purchasers, including that such purchasers are “accredited investors” (as defined under the Securities Act) and will resell such securities only if registered under the Securities Act or pursuant to an applicable exemption from registration requirements.
Going ConcernOn May 17, 2023, the Company entered into a Credit Agreement (the “Credit Agreement”) with Mercuria Investments US, Inc. for pre-payment on the purchase of the Company’s recycled battery metal products. The Credit Agreement provides for an aggregate loan amount of up to $20.0 million, comprised of (i) an initial term loan in the aggregate principal amount of $6.0 million and (ii) delayed draw term loan commitments in an aggregate amount equal to $14.0 million. Borrowings under the Credit Agreement carry interest calculated as the secured overnight financing rate published on the Federal Reserve Bank of New York’s website, plus the applicable credit spread adjustment, based on the elected interest period, plus an applicable margin rate of 6%. On August 30, 2023, the Company caused the repayment in full of all indebtedness, liabilities and other obligations under, and terminated, the Credit Agreement.
We have not attained profitable operations and are dependent upon obtaining financing to pursue any extensive acquisitions and activities. For these reasons, our auditors stated in their report on our audited financial statements that they have substantial doubt that we will be able to continue as a going concern without further financing.
Off-Balance Sheet Arrangements
We haveAs of June 30, 2023, we had no significant off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expendituresexpenses or capital resources that are material to stockholders.
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Working Capital
| June 30, 2023 | June 30, 2022 | |||||||
| Current Assets | $ | 4,753,588 | $ | 29,888,992 | ||||
| Current Liabilities | $ | 13,389,864 | $ | 3,052,141 | ||||
| Working Capital | $ | (8,636,276 | ) | $ | 26,836,851 | |||
Future Financings
We will continue to rely on equity sales of our common shares, in order to continuedebt, or other financing to fund our business operations. Issuances of additional shares will result in dilution to existing stockholders. There is no assurance that we will achieve any additional sales of the equity securities or arrange for debt or other financing to fund planned operating activities, acquisitions and exploration activities.
Critical Accounting PoliciesGoing Concern
OurAt the Company’s current operating levels and capital usage, we believe that without any further acquisition or investments our aggregate cash, cash equivalents, and funds raised during August 2023, would allow us to fund our operations through at least 12 months from issuance of these financial statements and accompanying notes have been prepared in accordance with United States generally accepted accounting principles applied on a consistent basis.statements. The preparation of financial statements in conformity with U.S. generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the datecontinuation of the financial statementsCompany as a going concern is dependent upon generating profit from operations and its ability to identify future investment opportunities and obtain any necessary debt or equity financing. In our filing for the reported amounts of revenuesperiod ended March 31, 2023, it was noted that uncertainties raise substantial doubt as to the Company’s ability to continue as a going concern for 12 months. Considering the recycling plant has since progressed and expenses duringis near operational, the reporting periods.
We regularly evaluate the accounting policies and estimates that we use to prepare our financial statements. A complete summary of these policies is included in the notes to our financial statements. In general, management's estimates are based on historical experience, on information from third party professionals, and on various other assumptions that are believed to be reasonable under the facts and circumstances. Actual results could differ from those estimates made by management.
Recently Issued Accounting Pronouncements
The Company has implemented all new accounting pronouncements thatsince obtained financing, and additional financing options are in effect. These pronouncements did not have any material impact on the financial statements unless otherwise disclosed, andavailable, the Company does not believehas concluded that there are any other new accounting pronouncements that havethe substantial doubt of its ability to continue as a going concern has been issued that might have a material impact on its financial position or results of operations.alleviated.
Item 7a. Quantitative and Qualitative Disclosures About Market Risk
Not Applicable.
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15
Item 8.Financial Statements and Supplementary Data.
OROPLATA RESOURCES, INC.AMERICAN BATTERY TECHNOLOGY COMPANY
Financial Statements
For the Years Ended September 30, 2017 and 2016 (Restated)
Report of Independent Registered Public Accounting FirmF-1
Consolidated Balance SheetsF-2
Consolidated Statements of OperationsF-3
Consolidated Statement of Stockholders’ DeficitF-4
Consolidated Statements of Cash FlowsF-5
Notes to the Consolidated Financial StatementsF-6
16
For the fiscal years ended June 30, 2023, and June 30, 2022
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REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To Thethe Shareholders and Board of Directors and Stockholders of Oroplata Resources, Inc.
American Battery Technology Company
Opinion on the Financial Statements
We have audited the accompanying consolidated balance sheets of Oroplata Resources, Inc.American Battery Technology Company (the Company)“Company”) as of SeptemberJune 30, 20172023 and 2016 (restated), and2022, the related consolidated statements of operations, stockholders’ equity (deficit) and cash flows for each of the two years then ended. in the period ended June 30, 2023, 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 June 30, 2023 and 2022, and the results of its operations and its cash flows for each of the two years in the period ended June 30, 2023, in conformity with accounting principles generally accepted in the United States of America.
Basis for Opinion
These consolidated financial statements are the responsibility of the Company'sCompany’s management. Our responsibility is to express an opinion on thesethe Company’s financial statements based on our audits.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 Public Company Accounting Oversight Board (United States of America).PCAOB. Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements are free of material misstatement.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. OurAs part of our audits included considerationwe are required to obtain an understanding of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company'sCompany’s internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes
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 supportingregarding the amounts and disclosures in the financial statements, assessingstatements. 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 statement presentation.statements. We believe that our audits provideprovides a reasonable basis for our opinion.
In our opinion,Critical Audit Matters
Critical audit matters are matters arising from the consolidatedcurrent period audit of the financial statements referredthat were communicated or required to above present fairly, in allbe communicated to the audit committee and that: (1) relate to accounts or disclosures that are material respects,to the financial position of Oroplata Resources, Inc.statements and (2) involved our especially challenging, subjective, or complex judgments. We determined that there are no critical audit matters.
/s/ Marcum LLP
Marcum LLP
PCAOB ID # 688
We have served as of September 30, 2017 and 2016 (restated), and the results of its operations and its cash flows for the years then ended, in conformity with accounting principles generally accepted in the United States of America.
The accompanying consolidated financial statements have been prepared assuming the Company will continue as a going concern. As discussed in Note 1 to the consolidated financial statements, the Company has negative working capital and has not generated revenues to cover operating expenses. These factors, among others, raise substantial doubt about the Company’s ability to continue as a going concern. Management’s plans in regard to this matter are also described in Note 1. The consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty.auditor since 2021.
/s/Pinnacle Accountancy Group of UtahCosta Mesa, CA
Pinnacle Accountancy Group of UtahSeptember 27, 2023
Farmington, Utah
| F-1 |
January 16, 2018
1
OROPLATA RESOURCES, INC.AMERICAN BATTERY TECHNOLOGY COMPANY
Consolidated Balance Sheets
| September 30, 2017 $ |
| September 30, 2016 $ |
|
|
| (Restated) |
ASSETS |
|
|
|
|
|
|
|
Current assets |
|
|
|
|
|
|
|
Cash | 9,141 |
| 90,040 |
Prepaid expense | 52,500 |
| - |
|
|
|
|
Total current assets | 61,641 |
| 90,040 |
|
|
|
|
Total assets | 61,641 |
| 90,040 |
|
|
|
|
LIABILITIES |
|
|
|
|
|
|
|
Current liabilities |
|
|
|
|
|
|
|
Accounts payable and accrued liabilities | 412,463 |
| 423,208 |
Due to related parties | 218,246 |
| 178,146 |
Notes payable, net of unamortized discount of $13,063 and $198,321, respectively | 696,937 |
| 32,679 |
|
|
|
|
Total current liabilities | 1,327,646 |
| 634,033 |
|
|
|
|
STOCKHOLDERS’ DEFICIT |
|
|
|
|
|
|
|
Common Stock Authorized: 500,000,000 common shares with a par value of $0.001 per share |
|
|
|
Issued and outstanding: 58,500,000 and 57,136,934 common shares, respectively | 58,500 |
| 57,137 |
|
|
|
|
Additional paid-in capital | 29,892,737 |
| 27,925,770 |
|
|
|
|
Deficit | (31,217,242) |
| (28,526,900) |
|
|
|
|
Total stockholders’ deficit | (1,266,005) |
| (543,993) |
|
|
|
|
Total liabilities and stockholders’ equity (deficit) | 61,641 |
| 90,040 |
| June 30, 2023 | June 30, 2022 | |||||||
| ASSETS | ||||||||
| Current assets | ||||||||
| Cash | $ | 2,320,149 | $ | 28,989,166 | ||||
| Investments | 11,250 | 21,013 | ||||||
| Inventory (Note 3) | 125,204 | – | ||||||
| Grants receivable (Note 4) | 320,457 | – | ||||||
| Prepaid expenses and deposits | 1,625,980 | 878,813 | ||||||
| Subscription receivable | 350,550 | – | ||||||
| Total current assets | 4,753,590 | 29,888,992 | ||||||
| Other deposits (Note 5) | 27,740,587 | – | ||||||
| Property and equipment, net (Note 6) | 29,946,099 | 18,876,895 | ||||||
| Mining properties (Note 7) | 8,223,323 | – | ||||||
| Intangible assets (Note 8) | 3,851,899 | 3,851,899 | ||||||
| Right-of-use asset (Note 11) | 143,154 | 244,203 | ||||||
| Total assets | $ | 74,658,652 | $ | 52,861,989 | ||||
| LIABILITIES & STOCKHOLDERS’ EQUITY | ||||||||
| Current liabilities | ||||||||
| Accounts payable and accrued liabilities (Note 9) | $ | 7,389,864 | $ | 3,052,141 | ||||
| Notes payable (Note 10) | 6,000,000 | – | ||||||
| Total current liabilities | 13,389,864 | 3,052,141 | ||||||
| Long-term liabilities (Note 11) | 54,304 | 175,789 | ||||||
| Total liabilities | 13,444,168 | 3,227,930 | ||||||
| Commitments and contingencies (Note 17) | - | - | ||||||
| STOCKHOLDERS’ EQUITY | ||||||||
| Series A Preferred Stock Authorized: preferred shares, par value of $ per share; Issued and outstanding: preferred shares | – | – | ||||||
| Series B Preferred Stock Authorized: preferred shares, par value of $ per share; Issued and outstanding: preferred shares | – | – | ||||||
| Series C Preferred Stock Authorized: preferred shares, par value of $ per share; Issued and outstanding: preferred shares | – | – | ||||||
| Preferred Stock | ||||||||
| Common Stock Authorized: common shares, par value of $ per share; Issued and outstanding: and common shares as of June 30, 2023 and June 30, 2022, respectively | 45,887 | 42,943 | ||||||
| Additional paid-in capital | 222,626,865 | 188,151,484 | ||||||
| Common stock issuable | (1,484,693 | ) | 75,000 | |||||
| Accumulated deficit | (159,973,575 | ) | (138,635,368 | ) | ||||
| Total stockholders’ equity | 61,214,484 | 49,634,059 | ||||||
| Total liabilities and stockholders’ equity | $ | 74,658,652 | $ | 52,861,989 | ||||
(The accompanying notes are an integral part of these consolidated financial statements)
F-2
OROPLATA RESOURCES, INC.
| F-2 |
AMERICAN BATTERY TECHNOLOGY COMPANY
Consolidated Statements of Operations
| For the year ended September 30, 2017 $ |
| For the year ended September 30, 2016 $ |
|
|
| (Restated) |
Expenses |
|
|
|
|
|
|
|
Exploration costs | 640,300 |
| 77,500 |
General and administrative | 1,558,607 |
| 1,089,583 |
Impairment of mineral property | – |
| 1,231,848 |
|
|
|
|
Net loss before other expenses | (2,198,907) |
| (2,398,931) |
|
|
|
|
Other expenses |
|
|
|
|
|
|
|
Accretion and interest expense | (497,269) |
| (37,249) |
Gain on forgiveness of debt | 41,834 |
|
|
Loss on settlement of debt | (36,000) |
| – |
Other expense | – |
| (25,920,000) |
|
|
|
|
Total other expenses | (491,435) |
| (25,957,249) |
|
|
|
|
Net loss | (2,690,342) |
| (28,356,180) |
Net loss per share, basic and diluted | (0.05) |
| (0.66) |
Weighted average shares outstanding | 58,337,070 |
| 43,239,306 |
|
|
|
|
| Fiscal year ended June 30, 2023 | Fiscal year ended June 30, 2022 | |||||||
| Operating expenses | ||||||||
| General and administrative | $ | 11,960,831 | $ | 31,698,072 | ||||
| Research and development | 7,703,895 | 963,390 | ||||||
| Exploration | 1,910,548 | 887,919 | ||||||
| Impairment of assets (Note 6) | – | 186,779 | ||||||
| Total operating expenses | 21,575,274 | 33,736,160 | ||||||
| Net loss before other income (expense) | (21,575,274 | ) | (33,736,160 | ) | ||||
| Other income (expense) | ||||||||
| Accretion and interest expense | (128,560 | ) | (20 | ) | ||||
| Unrealized loss on investment | (9,764 | ) | (28,987 | ) | ||||
| Gain on sale of mining claims | 298,391 | 153,393 | ||||||
| Other income | 77,000 | 71,812 | ||||||
| Total other income | 237,067 | 196,198 | ||||||
| Net loss attributable to common stockholders | $ | (21,338,207 | ) | $ | (33,539,962 | ) | ||
| Net loss per share, basic and diluted | $ | ) | $ | ) | ||||
| Weighted average shares outstanding | ||||||||
(The accompanying notes are an integral part of these consolidated financial statements)
F-3
OROPLATA RESOURCES, INC.
| F-3 |
AMERICAN BATTERY TECHNOLOGY COMPANY
Consolidated StatementStatements of Stockholders’ DeficitEquity
| Common Shares | Additional Paid-In Capital $ | Deficit $ | Total $ | |
| Number | Amount $ | |||
|
|
|
|
|
|
Balance, September 30, 2015 | 40,000,000 | 40,000 | 40,000 | (170,720) | (90,720) |
|
|
|
|
|
|
Shares issued to acquire mineral property | 636,943 | 637 | 1,031,211 | – | 1,031,848 |
|
|
|
|
|
|
Shares issued for other expenses | 16,000,000 | 16,000 | 25,904,000 | – | 25,920,000 |
|
|
|
|
|
|
Shares issued for services | 500,000 | 500 | 424,500 | – | 425,000 |
|
|
|
|
|
|
Fair value of share purchase warrants | – | – | 295,059 | – | 295,059 |
|
|
|
|
|
|
Fair value of beneficial conversion feature | – | – | 231,000 | – | 231,000 |
|
|
|
|
|
|
Net loss for the year | – | – | – | (28,356,180) | (28,356,180) |
|
|
|
|
|
|
Balance, September 30, 2016 (Restated) | 57,136,943 | 57,137 | 27,925,770 | (28,526,900) | (543,993) |
|
|
|
|
|
|
Shares issued for settlement agreement | 2,000,000 | 2,000 | 598,000 | – | 600,000 |
|
|
|
|
|
|
Shares issued for accounts payable | 400,000 | 400 | 95,600 | – | 96,000 |
|
|
|
|
|
|
Shares issued for services | 1,600,000 | 1,600 | 355,400 | – | 357,000 |
|
|
|
|
|
|
Share cancellation | (2,636,943) | (2,637) | 2,637 | – | – |
|
|
|
|
|
|
Fair value of share purchase warrants | – | – | 652,977 | – | 652,977 |
|
|
|
|
|
|
Fair value of beneficial conversion feature | – | – | 262,353 | – | 262,353 |
|
|
|
|
|
|
Net loss for the year | – | – | – | (2,690,342) | (2,690,342) |
|
|
|
|
|
|
Balance, September 30, 2017 | 58,500,000 | 58,500 | 29,892,737 | (31,217,242) | (1,266,005) |
| Number | Amount | Number | Amount | Number | Amount | Capital | Issuable | Deficit | Total | |||||||||||||||||||||||||||||||
Series A Preferred Shares | Series C Preferred Shares | Common Shares | Additional Paid-In | Common Stock | Accumulated | |||||||||||||||||||||||||||||||||||
| Number | Amount | Number | Amount | Number | Amount | Capital | Issuable | Deficit | Total | |||||||||||||||||||||||||||||||
| Balance, June 30, 2022 | - | $ | - | - | $ | - | 42,942,576 | $ | 42,943 | $ | 188,151,484 | $ | 75,000 | $ | (138,635,368 | ) | $ | 49,634,059 | ||||||||||||||||||||||
| Shares issued for services | - | - | - | - | 10,009 | 10 | 103,579 | (59,693 | ) | - | 43,895 | |||||||||||||||||||||||||||||
| Shares issued upon vesting of share-based awards | - | - | - | - | 399,024 | 399 | (399 | ) | - | - | - | |||||||||||||||||||||||||||||
| Stock-based compensation expense | - | - | - | - | - | - | 9,249,462 | - | - | 9,249,462 | ||||||||||||||||||||||||||||||
| Shares issued pursuant to share purchase agreement | - | - | - | - | 433,333 | 433 | 3,908,490 | - | - | 3,908,9234 | ||||||||||||||||||||||||||||||
| Shares issued towards plant acquisition | - | - | - | - | 733,333 | 733 | 7,358,267 | (1,500,000 | ) | - | 5,859,000 | |||||||||||||||||||||||||||||
| Shares issued pursuant to registration statement | - | - | - | - | 952,381 | 952 | 8,856,399 | - | - | 8,857,351 | ||||||||||||||||||||||||||||||
| Shares issued from private placement, net of issuance costs | - | - | - | - | 476,187 | 476 | 4,999,524 | - | - | 5,000,000 | ||||||||||||||||||||||||||||||
| Shares reclaimed from former service provider | - | - | - | - | (58,712 | ) | (59 | ) | 59 | - | - | - | ||||||||||||||||||||||||||||
| Net loss for the period | - | - | - | - | - | - | - | - | (21,338,207 | ) | (21,338,207 | ) | ||||||||||||||||||||||||||||
| Balance, June 30, 2023 | - | $ | - | - | $ | - | 45,888,131 | $ | 45,888 | $ | 222,626,865 | $ | (1,484,693 | ) | $ | (159,973,575 | ) | $ | 61,214,484 | |||||||||||||||||||||
(The accompanying notes are an integral part of these consolidated financial statements)
F-4
OROPLATA RESOURCES, INC.
| F-4 |
AMERICAN BATTERY TECHNOLOGY COMPANY
Consolidated Statements of Cash FlowsStockholders’ Equity (Deficit)
| Year ended September 30, 2017 $ |
| Year ended September 30, 2016 $ |
|
|
| (Restated) |
Operating Activities |
|
|
|
Net loss | (2,690,342) |
| (28,356,180) |
Adjustments to reconcile net loss to net cash used in operating activities: |
|
|
|
Accretion expense | 447,611 |
| 32,679 |
Fair value of share purchase warrants issued | 652,977 |
| 295,059 |
Impairment loss on mineral property | – |
| 1,231,848 |
Shares issued for other expenses |
|
| 25,920,000 |
Convertible note issued for commitment fee | 75,000 |
| – |
Gain of forgiveness of debt | (41,834) |
| – |
Loss on settlement of debt | 36,000 |
| – |
Shares issued for settlement agreement | 600,000 |
| – |
Shares issued for services | 357,000 |
| 425,000 |
Changes in operating assets and liabilities: |
|
|
|
Prepaid expenses | (52,500) |
| 1,000 |
Accounts payable and accrued liabilities | 91,089 |
| 203,192 |
Due to related parties | 40,100 |
| 48,000 |
Net Cash Used In Operating Activities | (484,899) |
| (199,402) |
Investing Activities | – |
| – |
Net Cash Used In Investing Activities | – |
| – |
Financing Activities |
|
|
|
Advances from related parties | – |
| 48,496 |
Proceeds from issuance of convertible debentures | 404,000 |
| – |
Proceeds from issuance of notes payable | – |
| 231,000 |
Net Cash Provided By Financing Activities | 404,000 |
| 279,496 |
Increase (Decrease) in Cash | (80,899) |
| 80,094 |
Cash – Beginning of Period | 90,040 |
| 9,946 |
Cash – End of Period | 9,141 |
| 90,040 |
Non-cash investing and financing activities: |
|
|
|
Shares issued for acquisition of mineral properties | - |
| 1,031,848 |
Shares issued for other expenses | – |
| 25,920,000 |
Mineral property acquisition costs in accounts payable | - |
| 200,000 |
Original issue discount on convertible debentures | 37,080 |
| – |
Shares issued to settle accounts payable | 60,000 |
| – |
Discount on convertible debenture | 13,063 |
| 198,321 |
Supplemental Disclosures |
|
|
|
Interest paid | – |
| – |
Income tax paid | – |
| – |
Series A Preferred Shares | Series C Preferred Shares | Common Shares | Additional Paid-In | Common Stock | Accumulated | |||||||||||||||||||||||||||||||||||
| Number | Amount | Number | Amount | Number | Amount | Capital | Issuable | Deficit | Total | |||||||||||||||||||||||||||||||
| Balance, June 30, 2021 | 33,334 | $ | 33 | 13,847 | $ | 138,470 | 38,217,844 | $ | 38,218 | $ | 124,089,785 | $ | 247,750 | $ | (105,073,651 | ) | $ | 19,440,605 | ||||||||||||||||||||||
| Balance | 33,334 | $ | 33 | 13,847 | $ | 138,470 | 38,217,844 | $ | 38,218 | $ | 124,089,785 | $ | 247,750 | $ | (105,073,651 | ) | $ | 19,440,605 | ||||||||||||||||||||||
| Shares issued for services | – | – | – | – | 958,581 | 959 | 20,582,985 | (154,000 | ) | – | 20,429,944 | |||||||||||||||||||||||||||||
| Shares issued upon vesting of share-based awards | – | – | – | – | 126,129 | 126 | (126 | ) | – | – | – | |||||||||||||||||||||||||||||
| Stock-based compensation expense | – | – | – | – | – | – | 1,233,155 | – | – | 1,233,155 | ||||||||||||||||||||||||||||||
| Shares withheld from employees for tax remittance | – | – | – | – | (28,932 | ) | (29 | ) | (313,305 | ) | – | – | (313,334 | ) | ||||||||||||||||||||||||||
| Shares reclaimed from former executive | (66,667 | ) | (67 | ) | 67 | – | – | - | ||||||||||||||||||||||||||||||||
| Net shares reclaimed as part of legal settlements | – | – | – | (280,000 | ) | (280 | ) | 560,280 | – | – | 560,000 | |||||||||||||||||||||||||||||
| Shares issued for exercise of warrants | – | – | – | – | 1,015,247 | 1,015 | 936,485 | (18,750 | ) | – | 918,750 | |||||||||||||||||||||||||||||
| Shares issued from private placement, net of issuance costs | – | – | – | – | 1,692,641 | 1,693 | 36,936,958 | – | – | 36,938,651 | ||||||||||||||||||||||||||||||
| Shares issued pursuant to Series C preferred shares conversion | – | – | (13,847 | ) | (138,470 | ) | 1,107,733 | 1,108 | 137,362 | – | – | – | ||||||||||||||||||||||||||||
| Redemption of Series A preferred shares | (33,334 | ) | (33 | ) | – | – | – | – | 33 | – | – | – | ||||||||||||||||||||||||||||
| Shares issued pursuant to share purchase agreement | – | – | – | – | 200,000 | 200 | 3,987,805 | – | – | 3,988,005 | ||||||||||||||||||||||||||||||
| Net loss for the period | – | – | – | – | – | – | – | – | (33,539,962 | ) | (33,539,962 | ) | ||||||||||||||||||||||||||||
| Dividends declared | – | – | – | – | – | – | – | – | (21,755 | ) | (21,755 | ) | ||||||||||||||||||||||||||||
| Balance, June 30, 2022 | – | $ | – | – | $ | – | 42,942,576 | $ | 42,943 | $ | 188,151,484 | $ | 75,000 | $ | (138,635,368 | ) | $ | 49,634,059 | ||||||||||||||||||||||
| Balance | – | $ | – | – | $ | – | 42,942,576 | $ | 42,943 | $ | 188,151,484 | $ | 75,000 | $ | (138,635,368 | ) | $ | 49,634,059 | ||||||||||||||||||||||
(The accompanying notes are an integral part of these consolidated financial statements)
F-5
OROPLATA RESOURCES, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
| F-5 |
AMERICAN BATTERY TECHNOLOGY COMPANY
Consolidated Statements of Cash Flows
| Fiscal year ended June 30, 2023 | Fiscal year ended June 30, 2022 | |||||||
| Operating Activities | ||||||||
| Net loss attributable to stockholders | $ | (21,338,207 | ) | $ | (33,539,962 | ) | ||
| Adjustments to reconcile net loss to net cash used in operating activities: | ||||||||
| Depreciation expense | 96,681 | 47,262 | ||||||
Amortization of right-of-use asset | 101,049 | 67,367 | ||||||
| Unrealized loss on investment | 9,764 | 28,987 | ||||||
| Loss on impairment | - | 186,779 | ||||||
| Stock-based compensation | 9,249,462 | 1,233,155 | ||||||
| Shares issued for professional services | 43,895 | 20,429,944 | ||||||
| Expense recognized pursuant to legal action | - | 560,000 | ||||||
| Shares issued to settle mining claims | - | (50,000 | ) | |||||
| Changes in operating assets and liabilities: | ||||||||
| Inventory | (125,204 | ) | - | |||||
| Other receivables | (320,457 | ) | - | |||||
| Prepaid expenses and deposits | (897,167 | ) | 413,403 | |||||
| Accounts payable and accrued liabilities | (187,796 | ) | 650,717 | |||||
| Due to related parties | - | (205,646 | ) | |||||
| Net Cash Used in Operating Activities | (13,367,980 | ) | (10,177,994 | ) | ||||
| Investing Activities | ||||||||
| Other acquisition deposits | (21,881,587 | ) | - | |||||
| Acquisition of property and equipment | (6,761,851 | ) | (12,873,975 | ) | ||||
| Purchase of mining properties | (8,073,323 | ) | - | |||||
| Purchase of water rights/intangible assets | - | (2,208,739 | ) | |||||
| Net Cash Used in Investing Activities | (36,716,761 | ) | (15,082,714 | ) | ||||
| Financing Activities | ||||||||
| Dividends paid | - | (125,700 | ) | |||||
| Purchase of shares from employees | - | (313,334 | ) | |||||
| Proceeds from exercise of share purchase warrants | - | 918,750 | ||||||
| Principal paid on notes payable | 6,000,000 | - | ||||||
| Proceeds from issuance of common shares, net of issuance costs | 13,857,351 | 36,938,651 | ||||||
| Proceeds from share purchase agreements | 3,558,373 | 3,988,005 | ||||||
| Net Cash Provided by Financing Activities | 23,415,724 | 41,406,372 | ||||||
| Change in Cash | (26,669,017 | ) | 16,145,664 | |||||
| Cash – Beginning of Period | 28,989,166 | 12,843,502 | ||||||
| Cash – End of Period | $ | 2,320,149 | $ | 28,989,166 | ||||
| Supplemental disclosures (Note 15) | ||||||||
(The accompanying notes are an integral part of these consolidated financial statements)
| F-6 |
AMERICAN BATTERY TECHNOLOGY COMPANY
Notes to the Consolidated Financial Statements
For the fiscal years ended June 30, 2023 and June 30, 2022
1.Organization and Nature of Operations
Oroplata Resources Inc. (the “Company”American Battery Technology Company (“the Company”) is a new entrant in the lithium-ion battery industry that is working to increase the domestic US production of battery materials, such as lithium, nickel, cobalt and manganese through its engagement in the exploration of new primary resources of battery metals, in the development and commercialization of new technologies for the extraction of these battery metals from primary resources, and in the commercialization of an internally developed integrated process for the recycling of lithium-ion batteries. Through this three-pronged approach the Company is working to both increase the domestic production of these battery materials, and to ensure that as these materials reach their end of lives that the constituent elemental battery metals are returned to the domestic manufacturing supply chain in a closed-loop fashion.
The Company was incorporated under the laws of the stateState of Nevada on October 6, 2011, for the purpose of acquiring rights to mineral properties with the eventual objective of being a producing mineral company. We have a limited operating history and developing mineral properties. The Company has a wholly-owned subsdiary called Oroplata Exploraciones E Ingenieria SRL, which was incorporated inhave not yet generated or realized any revenues from our activities. Our principal executive offices are located at 100 Washington Ave., Suite 100, Reno, NV 89503.
Liquidity and Capital Resources
During the Dominican Republic on January 10, 2012. On July 26, 2016,fiscal year ended June 30, 2023, the Company incorporated Lithortech Resources Inc.,incurred a Nevada company, as a wholly-owned subsidiary. The Company currently holds mineral rights in the Dominican Republicnet loss of $21.3 million and in the Western Nevada Basinused cash of Nye County in the state of Nevada.
Going Concern
These consolidated financial statements have been prepared on a going concern basis, which implies that the Company will continue to realize its assets and discharge its liabilities in the normal course of business. As at September$13.4 million for operating activities. At June 30, 2017,2023, the Company has not earned revenue, has negative cash flows from operations, has a working capital deficit of $1,266,005 and an accumulated deficit of $31,217,242. $160.0 million.
The continuationCompany believes its cash holdings and subsequent funds raised, as further described in Note 18, will be sufficient to meet its future working capital needs. The Company cannot give assurance that it can increase its cash balances or limit its cash consumption and thus maintain sufficient cash balances for its planned operations. The Company may need to raise additional capital in the future. However, the Company cannot assure that it will be able to raise additional capital on acceptable terms, or at all. Management believes that the Company has sufficient capital and liquidity to fund its operations for at least one year from the date of issuance of the Company as a going concern is dependent upon the continuedaccompanying financial support from its management, and its ability to identify future investment opportunities and obtain the necessary debt or equity financing, and generating profitable operations from the Company’s future operations. If the Company is able to obtain financing, there is no certainty that terms will be favorable to the Company. These factors raise substantial doubt regarding the Company’s ability to continue as a going concern. These consolidated financial statements do not include any adjustments to the recoverability and classification of recorded asset amounts and classification of liabilities that might be necessary should the Company be unable to continue as a going concern.statements.
2.Summary of Significant Accounting Policies
(a)a) Basis of Presentation and Principles of Consolidation
The consolidated financial statements of the Company have been prepared in accordance with accounting principles generally accepted in the United States (“US GAAP”) and are expressed in U.S. dollars. The Company’s fiscal year end is SeptemberJune 30.
These consolidated financial statements include the accounts of the Company and its wholly owned subsidiaries, Oroplata Exploraciones E Ingenieria SRL (inactive) and LithiumOre Corporation (formerly Lithortech Resources Inc) and ABMC AG, LLC (inactive). All inter-company accounts and transactions have been eliminated upon consolidation.
Certain prior year amounts have been reclassified for consistency with the current year presentation. These reclassifications had no effect on the reported results of operations and cash flows for the year ended June 30, 2022.
(b)CashOn September 11, 2023, the Company effected a one-for-fifteen reverse stock split with respect to the issued and Cash Equivalents outstanding shares of common stock. All share and per-share amounts included in this Form 10-K are presented as if the stock split had been effective from the beginning of the earliest period presented.
The Company considers all highly liquid instruments with a maturity
| F-7 |
AMERICAN BATTERY TECHNOLOGY COMPANY
Notes to the Consolidated Financial Statements
For the fiscal years ended June 30, 2023 and June 30, 2022
2. Summary of three months or less at the time of issuance to be cash equivalents. As of September 30, 2017 and 2016, there were no cash equivalents.Significant Accounting Policies (continued)
(c)b) Use of Estimates
The preparation of these consolidated financial statements in conformity with US GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period.periods. The Company regularly evaluates estimates and assumptions related to the fair value of stock-based compensation, recoverability of long-lived assets and deferred income tax asset valuation allowances.
The Company bases its estimates and assumptions on current facts, historical experience, and various other factors that it believes to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities and the accrual of costs and expenses that are not readily apparent from other sources. The actual results experienced by the Company may differ materially and adversely from the Company’s estimates. To the extent there are material differences between the estimates and the actual results, future results of operations willmay be affected.
(d)c) Long-Lived Assets
Long-lived assets, such as property and equipment, mineral properties, and purchased intangibles, with finite lives (subject to amortization), are evaluated for impairment whenever events or changes in circumstances indicate that the carrying amount of the asset may not be recoverable in accordance with Accounting Standards Codification (“ASC”) topic 360, “Property,Property, Plant, and Equipment”.Equipment. Circumstances which could trigger a review include, but are not limited to: significant decreases in the market price of the asset; significant adverse changes in the business climate or legal factors; accumulation of costs significantly in excess of the amount originally expected for the acquisition or construction of the asset; current period cash flow or operating losses combined with a history of losses or a forecast of continuing losses associated with the use of the asset; and current expectation that the asset will more likely than not be sold or disposed significantly before the end of its estimated useful life.
F-6
OROPLATA RESOURCES, INC. The Company’s long-lived assets consist of vehicles, equipment, and land. Vehicles and equipment are depreciated on a straight-line basis over their estimated value lives ranging between three and seven years.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
2. Summary of Significant Accounting Policies(continued)
(d)Long-Lived Assets (continued)
RecoverabilityThe recoverability of assets is measured by a comparison of the carrying amount of an asset to estimated undiscounted future cash flows expected to be generated by an asset. If the carrying amount of an asset exceeds its estimated future cash flows, an impairment charge is recognized as the amount by which the carrying amount exceeds the estimated fair value of the asset. The estimated fair value is determined using a discounted cash flow analysis. Any impairment in value is recognized as an expense in the period when the impairment occurs. Asset Retirement Obligations
Expenses for major repairs and maintenance which extend the useful lives of property and equipment are capitalized. All other maintenance expenses, including planned major maintenance activities, are expensed as incurred. Gains or losses from property disposals are included in income or loss from operations.
d) Mining Properties
Costs of lease, exploration, carrying and retaining unproven mineral properties are expensed as incurred. The Company followsexpenses all mineral exploration costs as incurred as it is still in the provisionsexploration stage. If the Company identifies proven and probable reserves in its investigation of its properties and upon development of a plan for operating a mine, it will enter the development stage and capitalize future costs until production is established. When a property reaches the production stage, the related capitalized costs are amortized on a units-of-production basis over the proven and probable reserves following the commencement of production. Interest expense allocable to the cost of developing mining properties and to construct new facilities is capitalized until assets are ready for their intended use.
To date, the Company has not established the commercial feasibility of any exploration prospects; therefore, all exploration costs are being expensed.
| F-8 |
AMERICAN BATTERY TECHNOLOGY COMPANY
Notes to the Consolidated Financial Statements
For the fiscal years ended June 30, 2023 and June 30, 2022
2. Summary of Significant Accounting Policies (continued)
d) Mining Properties (continued)
ASC 410,Asset Retirement930-805, “Extractive Activities-Mining: Business Combinations,” states that mineral rights consist of the legal right to explore, extract, and Environmental Obligations,retain at least a portion of the benefits from mineral deposits. Mining assets include mineral rights which establishes standards forare considered tangible assets under ASC 930-805. ASC 930-805 requires that mineral rights be recognized at fair value as of the initial measurement and subsequent accounting for obligationsacquisition date. As a result, the direct costs to acquire mineral rights are initially capitalized as tangible assets. Mineral rights include costs associated with acquiring patented and unpatented mining claims.
e) Intangible Assets
Intangible assets that have indefinite useful lives are tested annually for impairment, or more frequently if events and circumstances indicate that the sale, abandonment orasset might be impaired. An impairment loss is recognized to the extent that the carrying amount of the asset group exceeds its fair value.
other disposal of long-lived tangible assets arising from the acquisition, construction or development and for normal operations of such assets.
(e)f) Loss per Share
The Company computes net income (loss) per share in accordance with ASC 260,Earnings “Earnings per ShareShare”. ASC 260 requires presentation of both basic and diluted earnings per share (“EPS”) on the face of the income statement. Basic EPS is computed by dividing net income (loss) available to common shareholders (numerator) by the weighted average number of shares outstanding (denominator) during the period. Diluted EPS gives effect to all dilutive potential common shares outstanding during the period using the treasury stock method and convertible preferred stock using the if-converted method. In computing diluted EPS, the average stock price for the period is used in determining the number of shares assumed to be purchased from the exercise of stock options, or warrants.warrants and awards. Diluted EPS excludes all dilutive potential shares if their effect is anti-dilutive. At SeptemberJune 30, 2017,2023, the Company has 9,196,545 (2016 – 1,584,000)had 7,465,736 potentially dilutive shares.shares outstanding, consisting of warrants and share awards outstanding.
The Company’s functional and reporting currency is the United States dollar. Foreign currency transactions are primarily undertaken in Canadian dollars. Foreign currency transactions are translated to United States dollars in accordance with ASC 830,Foreign Currency Translation Matters, using the exchange rate prevailing at the balance sheet date. Gains and losses arising on translation or settlement of foreign currency denominated transactions or balances are included in the determination of income.
(g)Comprehensive Loss
ASC 220,Comprehensive Income, establishes standards for the reporting and display of comprehensive loss and its components in the financial statements. As at September 30, 2017 and 2015, the Company has no items representing comprehensive income or loss.
(h)Revenue Recognition
Revenue from the sale of minerals will be recognized when a contract is in place and minerals are delivered to the customer.
(i)Financial Instruments
Pursuant to ASC 820,Fair Value Measurements and Disclosures, an entity is required to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. ASC 820 establishes a fair value hierarchy based on the level of independent, objective evidence surrounding the inputs used to measure fair value. A financial instrument’s categorization within the fair value hierarchy is based upon the lowest level of input that is significant to the fair value measurement. ASC 820 prioritizes the inputs into three levels that may be used to measure fair value:
Level 1
Level 1 applies to assets or liabilities for which there are quoted prices in active markets for identical assets or liabilities.
F-7
OROPLATA RESOURCES, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
2. Summary of Significant Accounting Policies(continued)
(i)Financial Instruments (continued)
Level 2
Level 2 applies to assets or liabilities for which there are inputs other than quoted prices that are observable for the asset or liability such as quoted prices for similar assets or liabilities in active markets; quoted prices for identical assets or liabilities in markets with insufficient volume or infrequent transactions (less active markets); or model-derived valuations in which significant inputs are observable or can be derived principally from, or corroborated by, observable market data.
Level 3
Level 3 applies to assets or liabilities for which there are unobservable inputs to the valuation methodology that are significant to the measurement of the fair value of the assets or liabilities.
The Company’s financial instruments consist principally of cash, accounts payable and accrued liabilities, and amounts due to related parties. Pursuant to ASC 820, the fair value of cash is determined based on “Level 1” inputs, which consist of quoted prices in active markets for identical assets. The recorded values of all other financial instruments approximate their current fair values because of their nature and respective maturity dates or durations.
(j)Income Taxes
The Company accounts for income taxes using the asset and liability method in accordance with ASC 740,Accounting for Income Taxes. The asset and liability method provides that deferred tax assets and liabilities are recognized for the expected future tax consequences of temporary differences between the financial reporting and tax bases of assets and liabilities, and for operating loss and tax credit carryforwards. Deferred tax assets and liabilities are measured using the currently enacted tax rates and laws that will be in effect when the differences are expected to reverse. The Company records a valuation allowance to reduce deferred tax assets to the amount that is believed more likely than not to be realized.
Due to the Company’s net loss position from inception on October 6, 2011 to September 30, 2017, there was no provision for income taxes recorded. As a result of the Company’s losses to date, there exists doubt as to the ultimate realization of the deferred tax assets. Accordingly, a valuation allowance equal to the total deferred tax assets has been recorded at September 30, 2017.
(k)g) Stock-based Compensation
The Company records stock-based compensation in accordance with ASC 718,Compensation – Stock Compensation “Stock Compensation”, using the fair value method. All transactions in which goods or services are the consideration received for the issuance of equity instruments are accounted for based on the fair value of the consideration received or the fair value of the equity instrument issued, whichever is more reliably measurable. Equity instruments issued to employees and the cost of the services received as consideration are measured and recognized based on the fair value of the equity instruments issued. As at SeptemberAt June 30, 20172023 and 2016,2022, the Company did not grant any stock options. The Company utilizes the Black Scholes method when calculating stock-based compensation expense relating to stock option awards and warrants.
(l)Mineral PropertyThe Company records the expense attributed to share awards in accordance with US GAAP using the graded-vesting method whereby the Company amortizes the grant date fair value over the respective vesting period, beginning with the grant date.
h) Exploration Costs
Mineral property acquisition costs are capitalized as incurred. Exploration and evaluation costs are expensed as incurred until proven and probable reserves are established. The Company assesses the carrying costs for impairment under ASC 360 “Property,– Property, Plant, and Equipment”Equipment at each fiscal quarter end. When it has been determined that a mineral property can be economically developed as a result of establishing proven and probable reserves, the costs then incurred to develop such property, are capitalized. Such costs will be amortized using the units-of-production method over the estimated life of the probable reserve. If mineral properties are subsequently abandoned or impaired, any capitalized costs will be charged to operations.
F-8
OROPLATA RESOURCES, INC. As of June 30, 2023 and 2022, the Company has not capitalized any such mineral property costs.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
| F-9 |
AMERICAN BATTERY TECHNOLOGY COMPANY
Notes to the Consolidated Financial Statements
For the fiscal years ended June 30, 2023 and June 30, 2022
2. Summary of Significant Accounting Policies (continued)(continued)
i) Research and Development Costs
Research and development (“R&D”) costs are accounted for in accordance with ASC 730, “Research and Development.” ASC 730-10-25 requires that all R&D costs be recognized as an expense as incurred. However, some costs associated with R&D activities that have an alternative future use (e.g., materials, equipment, facilities) may be capitalizable.
The Company has been awarded federal grant awards for specific R&D programs. Under ASU No. 2021-10 “Government Assistance,” the Company recognizes invoiced government funds as an offset to R&D costs in the period the qualifying costs are incurred. The Company believes this best reflects the expected net expenditures associated with these programs.
j) Leases
The Company follows the guidance of ASC 842 – Leases, which requires an entity to recognize a right-of-use (ROU”) asset and a lease liability for virtually all leases. Operating lease ROU assets and liabilities are recognized at commencement date based on the present value of lease payments over the lease term. ROU assets represent the Company’s right to use an underlying asset for the lease term and lease liabilities represent the Company’s obligation to make lease payments arising from the lease. The Company uses an implicit rate of interest to determine the present value of lease payments utilizing its incremental borrowing rate, as the implicit rate of interest in the respective leases is not readily determinable. The Company’s incremental borrowing rate is a hypothetical rate based on its understanding of what its credit rating would be.
k) Income Taxes
The Company accounts for income taxes using the asset and liability method in accordance with ASC 740 – Income Taxes. The asset and liability method provides that deferred tax assets and liabilities are recognized for the expected future tax consequences of temporary differences between the financial reporting and tax bases of assets and liabilities, and for operating loss and tax credit carry-forward.
Deferred tax assets and liabilities are measured using the currently enacted tax rates and laws that will be in effect when the differences are expected to reverse. The Company records a valuation allowance to reduce deferred tax assets to the amount that is believed more likely than not to be realized.
Any uncertain tax position liabilities have been applied against the deferred tax balance given that there is a sufficient net operating loss to cover any penalties and fees associated with the uncertain tax position. The Company assesses each of its identified uncertain positions and determines whether any potential penalties and interest liability should be accrued at the balance sheet dates.
Due to the Company’s net loss position from inception to June 30, 2023, no provision for income taxes has been recorded. As a result of the Company’s cumulative losses to date, there exists little assurance as to the realization of the deferred tax asset. Accordingly, a valuation allowance equal to the total deferred tax asset has been recorded at June 30, 2023 and 2022.
l) Accounting Pronouncements
In November 2021, FASB issued ASU No. 2021-10 – Government Assistance (Topic 832) – Disclosures by Business Entities about Government Assistance. This ASU will improve the transparency of government assistance received by most business entities by requiring the disclosure of: (1) the types of government assistance received; (2) the accounting for such assistance; and (3) the effect of the assistance on a business entity’s financial statements. ASU No. 2021-10 is effective for financial statements issued for annual periods beginning after December 15, 2021, with early application permitted. This ASU is applicable to the Company’s fiscal year beginning July 1, 2022. The Company recognizes government assistance as a cost-offset to its research and development costs under IAS 20 – Accounting for Government Grants and Disclosures of Government Assistance.
m) Derivative Financial Instruments
The Company evaluates its financial instruments to determine if such instruments are derivatives or contain features that qualify as embedded derivatives in accordance with ASC 815. For derivative financial instruments that are accounted for as liabilities, the derivative instrument is initially recorded at its fair value on the issuance date and is then re-valued at each reporting date, with changes in the fair value reported in the statements of operations. The fair value of any assets or liabilities that are short-term in nature and qualify as financial instruments under ASC 820, “Fair Value Measurement”, approximate the carrying amounts represented in the Company’s balance sheet.
| F-10 |
(m)Advertising
AMERICAN BATTERY TECHNOLOGY COMPANY
Notes to the Consolidated Financial Statements
For the fiscal years ended June 30, 2023 and Marketing Costs June 30, 2022
3. Inventories
The Company’s inventory as of June 30, 2023 was comprised of raw materials in the form of end-of-life battery feedstock. Inventories are valued at the lower of average cost or net realizable value. Cost includes applicable taxes and freight. The table below presents total inventory at June 30:
Schedule of Inventories
| 2023 | 2022 | |||||||
| Raw materials | $ | 125,204 | $ | - | ||||
4. Grants Receivable
Grants receivable represent qualifying costs incurred where there is reasonable assurance that the conditions of the grant have been met but the corresponding funds have not been received as of the reporting date. Accordingly, no allowance for doubtful accounts has been established. If amounts become uncollectible, they are charged to operations. Grants receivable balances were $320,457 as of June 30, 2023 and $21,013 as of June 30, 2022.
5. Other Deposits
On March 1, 2023, the Company and Linico Corporation (“Linico”) entered into, and consummated, an Asset Purchase Agreement (“APA”) whereby the Company acquired specific tangible equipment and personal property for an aggregate purchase price of $6.0 million. Contemporaneously with the signing of the APA, the Company and Linico entered into another agreement, the Membership Interest Purchase Agreement (“MIPA”), whereby the Company would acquire 100% of the membership interests in Aqua Metals Transfer, LLC, principally real property consisting of land and building for an aggregate purchase price of $21.6 million. Once completed, the aggregate total of $27.6 million worth of deposits will be bifurcated into both real and personal property categories, inclusive of both agreements. As of June 30, 2023, the Company has made payments of $21.0 million in cash and issued shares of common stock as part of the purchase price under the agreement.
On June 30, 2023, the Company and Seller entered into an amendment to the MIPA. Pursuant to the terms of the amended agreement, the parties agreed to (i) remove the requirement that $1.5 million of the purchase price be held in escrow for the settlement of indemnification claims, (ii) transfer back to the Company common shares, previously issued by the Company, in exchange for the elimination of such indemnification escrow, (iii) add a purchase price adjustment to the extent that, as of a specified value test date, the value of the portion of the purchase price comprised of shares does not equal at least $6 million, (iv) provide for an interim water rights agreement through the final purchase price payment date, (iv) advance the closing date to as soon as practicable after the declaration of effectiveness of the resale registration statement on Form S-3 filed by the Company for the resale of shares by Seller or its affiliates, and (v) remove the deadline to close the acquisition by June 30, 2023.
The Company expenses advertisingevaluated the purchase price adjustment under ASC 815, Derivatives and marketing development costs as incurred.Hedging, and determined it to be a make-whole provision, which is an embedded derivative within the host instrument. As the economic characteristics are dissimilar to the host instrument, the value of the guarantee was bifurcated from the host instrument.
(n)Recent Accounting Pronouncements
TheAs of June 30, 2023, the Company has implemented all new accounting pronouncements that are in effect. These pronouncements did not have any material impactrecorded $27.7 million for deposits its made towards both real and personal property acquired during the first fiscal quarter of 2024. This amount has been presented as investing activities on the financialconsolidated statements unless otherwise disclosed,of cash flows for the year ended June 30, 2023.
| F-11 |
AMERICAN BATTERY TECHNOLOGY COMPANY
Notes to the Consolidated Financial Statements
For the fiscal years ended June 30, 2023 and June 30, 2022
6. Property and Equipment
The table below presents the property, plant and equipment as of June 30, 2023 and 2022:
Schedule of Property and Equipment
| Building | Equipment | Land | Total | |||||||||||||
| Cost: | ||||||||||||||||
| Balance, June 30, 2022 | $ | 10,798,780 | $ | 1,414,317 | $ | 6,728,838 | $ | 18,941,935 | ||||||||
| Additions | 6,709,706 | 4,456,179 | - | 11,165,885 | ||||||||||||
| Balance, June 30, 2023 | $ | 17,508,486 | $ | 5,870,496 | 6,728,838 | $ | 30,107,820 | |||||||||
| Accumulated Depreciation: | ||||||||||||||||
| Balance, June 30, 2022 | $ | - | $ | 65,040 | $ | - | $ | 65,040 | ||||||||
| Additions | - | 96,681 | - | 96,681 | ||||||||||||
| Balance, June 30, 2023 | $ | - | $ | 161,721 | - | $ | 161,721 | |||||||||
| Carrying Amounts: | ||||||||||||||||
| Balance, June 30, 2022 | $ | 10,798,780 | $ | 1,349,277 | $ | 6,728,838 | $ | 18,876,895 | ||||||||
| Balance, June 30, 2023 | $ | 17,508,486 | $ | 5,708,775 | 6,728,838 | $ | 29,946,099 | |||||||||
The building and equipment expenditures are primarily associated with assets under construction and are not commissioned for use as of June 30, 2023.
In February 2021, the Company doesentered into an agreement to purchase land with a fair value of $85,000 located in Tonopah, NV in exchange for an agreed-upon number of common shares though the transaction had not believe that there are any other new accounting pronouncements that have beencleared escrow. In September 2021, the Company later issued that might have a material impact on its financial position or resultsthe shares whereby the stock price had increased. To correct the carrying value, the Company recognized impairment expense of operations.$186,779 for the fiscal year ended June 30, 2022 once title transfer occurred.
| F-12 |
3.AMERICAN BATTERY TECHNOLOGY COMPANYMineral Property
(a)The Company has acquired the mineral rightsNotes to the Mogollon claim located inConsolidated Financial Statements
For the Province of San Juan nearfiscal years ended June 30, 2023 and June 30, 2022
7. Mining Properties
During the villages of Solorin and El Toro in the Dominican Republic for $10,000 which included the cost of a geological report.
(b)Onfiscal year ended June 15, 2016,30, 2023, the Company acquired the mineral rights to 500 lithium claims, with anexercised its option to purchase an additional 600 lithiumunpatented mining claims situated in the Railroad Valley in the WesternTonopah, Nevada, BasinUSA for total costs of Nye County, Nevada in exchange for $277,500.
Of the $277,500 payable, $100,000$8.2 million, of which $0.2 million was due immediately upon signing of the agreement and could be paid within 10 days, $100,000 was due after confirmation of the claims being free from all liens, encumbrances, and mortgages (within 30 days of signing the agreement), and $77,500 upon registration with the BLM for the claims that are due (to be completed on or before July 31, 2016).
The entire amount of $277,500 was advanced by various individuals and is recorded in Prepaid expenses and deposits at June 30, 2022.
8. Intangible Assets
As of June 30, 2023, the Company has purchased water rights for approximately $3.9 million. The water rights are treated in accordance with ASC 350, Intangible Assets, and have an unlimited useful life upon assignment to a property through use of a will-serve, which has no expiration date. The table below presents total intangible assets at June 30:
Schedule of Intangible Assets
| 2023 | 2022 | |||||||
| Water rights | $ | 3,851,899 | $ | 3,851,899 | ||||
9. Accounts payable and accrued liabilities
The table below presents total accounts payable and accrued liabilities on the balance sheet. Due to payments being lateat June 30:
Schedule of Accounts Payable and not paid on-time per the agreement,Accrued Liabilities
| 2023 | 2022 | |||||||
| Trade payables | $ | 1,831,686 | $ | 344,071 | ||||
| Accrued fixed assets | 4,404,034 | 752,736 | ||||||
| Accrued expenses | 1,032,660 | 1,855,559 | ||||||
| Right-of-use liability, current | 121,484 | 99,775 | ||||||
| Total accounts payable and accrued liabilities | $ | 7,389,864 | $ | 3,052,141 | ||||
As of June 30, 2023, the Company agreed to issue 636,943 restricted shareshad a significant construction supplier that accounted for 28% of common stock. In November 2016,the total accounts payable and accrued liabilities balance.
10. Notes Payable
On May 17, 2023, the Company entered into a settlement agreement related toCredit Agreement (the “Credit Agreement”) with Mercuria Investments US, Inc. for pre-payment on the purchase of the Nye County properties was reached,Company’s recycled battery metal products. As such, inventory serves as collateral for outstanding balances. The Credit Agreement provides for an aggregate loan amount of up to $20 million, comprised of (i) an initial term loan in which, the parties settledaggregate principal amount of $6 million and (ii) delayed draw term loan commitments in an aggregate amount equal to $14 million. Borrowings under the Credit Agreement carry interest calculated as the secured overnight financing rate published on paymentthe Federal Reserve Bank of $252,500,New York’s website, plus the returnapplicable credit spread adjustment, based on the elected interest period, plus an applicable margin rate of 6%. The agreement contains provisions that allow the Company to remit principal and interest payments via future delivery of its initial recycling byproduct, black mass.
The entirety of the previouslynote and related interest was paid in full pursuant to its new financing agreement entered into subsequent to June 30, 2023, as further described in Note 18.
| F-13 |
AMERICAN BATTERY TECHNOLOGY COMPANY
Notes to the Consolidated Financial Statements
For the fiscal years ended June 30, 2023 and June 30, 2022
11. Leases
A lease provides the lessee the right to control the use of an identified asset for a period in exchange for consideration. Operating lease right-of-use assets (“ROU assets”) are presented within the asset section of the Company’s Consolidated Balance Sheets, while lease liabilities are included within the liability section of the Company’s Consolidated Balance Sheets at June 30, 2023.
ROU assets represent the Company’s right to use an underlying asset for the lease term and operating lease liabilities represent the Company’s obligation to make lease payments arising from the lease. The Company determines if an arrangement is a lease at inception. ROU assets and liabilities are recognized at the lease commencement date based on the present value of lease payments over the lease term. Most operating leases contain renewal options that provide for rent increases based on prevailing market conditions. The terms used to calculate the ROU assets for certain properties include the renewal options that the Company is reasonably certain to exercise.
The discount rate used to determine the commencement date present value of lease payments is the interest rate implicit in the lease, or when that is not readily determinable, the Company estimates a rate of 8% for the period ending June 30, 2023, based primarily on historical lending agreements. ROU assets include lease payments required to be made prior to commencement and exclude lease incentives. Both ROU assets and the related lease liability exclude variable payments not based on an index or rate, which are treated as period costs. The Company’s lease agreements do not contain significant residual value guarantees, restrictions, or covenants.
The Company occupies office facilities under lease agreements that expire at various dates, many of which do not exceed a year in length. Total operating lease costs for the fiscal year ended June 30, 2023, were approximately $101,050 and $213,000. The Company does not have any finance leases as of June 30, 2023 and 2022.
As of June 30, 2023, short term lease liabilities of $121,484 are included in “Accounts payable and accrued liabilities” on the consolidated balance sheets. The table below presents total operating lease ROU assets and lease liabilities at June 30:
Schedule of Operating Lease ROU Assets and Lease Liabilities
| 2023 | 2022 | |||||||
| Operating lease right-of-use asset | $ | 143,154 | $ | 244,203 | ||||
| Operating lease liabilities | $ | 175,788 | $ | 274,794 | ||||
The table below presents the maturities of operating lease liabilities as of June 30, 2023:
Schedule of Maturity of Operating Lease Liabilities
| June 30, 2024 | $ | 131,197 | ||
| June 30, 2025 | 55,395 | |||
| Total lease payments | 186,592 | |||
| Less: discount | (10,804 | ) | ||
| Total operating lease liabilities | $ | 175,788 | ||
| Short-term operating lease liability | $ | 121,484 | ||
| Long-term operating lease liability | $ | 54,304 |
The table below presents the weighted average remaining lease term for operating leases and weighted average discount rate used in calculating operating lease right-of-use asset as of June 30, 2023.
Schedule of Weighted Average Remaining Lease Term for Operating Leases and Weighted Average Discount Rate
| Weighted average lease term (years) | 1.33 | |||
| Weighted average discount rate | 8.00 | % |
| F-14 |
AMERICAN BATTERY TECHNOLOGY COMPANY
Notes to the Consolidated Financial Statements
For the fiscal years ended June 30, 2023 and June 30, 2022
12. Stockholders’ Equity
Preferred Stock
Our amended and restated articles of incorporation authorize shares of preferred stock and provide that shares of preferred stock may be issued 636,943 restricted from time to time in one or more series. Our board of directors will be authorized to fix the voting rights, if any, designations, powers, preferences, the relative, participating, optional or other special rights and any qualifications, limitations and restrictions thereof, applicable to the shares of each series. Our board of directors will be able to, without stockholder approval, issue shares of preferred stock with voting and other rights that could adversely affect the voting power and other rights of the holders of the common stock and could have anti-takeover effects. The ability of our board of directors to issue shares of preferred stock without stockholder approval could have the effect of delaying, deferring or preventing a change of control of us or the removal of existing management.
To date, the Company has authorized a total of shares of preferred stock. Of this amount the Company has designated a total of shares to three classes of preferred stock, Series A Preferred Stock, Series B Preferred Stock and Series C Preferred Stock. A description of each class of preferred stock is listed below.
Series A Preferred Stock
The Company has shares of Series A Preferred Stock authorized with a par value of $. The shares allow the holder to vote the equivalent of 67 common shares for each share of Series A share in any vote of the shareholders of the Company and the Board is authorized to issue such shares as is necessary. On August 25, 2021, the Board approved a resolution to retire all the outstanding Series A Preferred Stock. On January 27, 2022, the Company redeemed all outstanding shares of Series A Preferred Stock. The Company had shares of Series A Preferred Stock issued and outstanding at June 30, 2023 and 2022.
Series B Preferred Stock
At June 30, 2023 and 2022, the Company has shares of Series B Preferred Stock authorized with a par value of $. The Company had shares of Series B Preferred Stock issued and outstanding at June 30, 2023 and 2022.
Series C Preferred Stock
At June 30, 2023 and 2022, the Company has shares of Series C Preferred Stock authorized with a par value of $. The Company had shares of Series C Preferred Stock issued and outstanding at June 30, 2023 and 2022.
On December 18, 2020, the Company issued 48.29 units of Series C Preferred Stock (shares of Series C Preferred Stock) at $50,000 per unit for proceeds of approximately $2.4 million. Each unit is comprised of approximately shares of Series C Preferred Stock, each convertible into approximately shares of common stock, and the issuance of 2,000,000 unrestricted shares of common stock. The $25,000 reduction in the required payment was recorded as a gain on extinguishment of debt on the statement of operations.
The total consideration given for the mineral rights was $1,231,848 which includes the $200,000 payment ($77,500 was recorded as exploration expense) and the 636,943 shares of common stock valued at $1,031,848. The total amount of $1,231,848 was impaired and recorded as an impairment loss during the year ended September 30, 2016.
4.Convertible Notes Payable
(a)On July 18, 2016, the Company entered into a convertible note agreement, as amended, with a non-related party for proceeds of $75,000. The terms of the convertible note became effective on February 15, 2017. The amount owing is secured, bears interest at 10%, is convertible into warrant to purchase approximately 26,667common shares of the Company at $0.24 $3.75per share and is due onuntil June 30, 2023. On February 18, 2017. In September 2017, the conversion price was amended to $0.11 per share and the due date extended to December 31, 2017. The initial amortized discount was $9,375 and as at September 30, 2017, the carrying value of the note payable is $75,000 (September 30, 2016 - $nil), the unamortized discount on the note is $nil (September 30, 2016 - $nil), and accrued interest of $4,685 (September 30, 2016 - $nil) has been recorded in accounts payable and accrued liabilities.
(b)On July 18, 2016, the Company entered into a loan agreement, as amended, with a non-related party for proceeds of $121,000. The amount owing is secured, bears interest at 10%, is convertible into common shares of the Company at $0.50 per share, and is due on April 18, 2017. On January 31, 2017, the due date was extended to December 31, 2017. During the year ended September 30, 2016, the Company recorded a beneficial conversion feature of $121,000. In September 2017, the conversion price was amended to $0.11 per share. As at September 30, 2017, the carrying value of the note payable is $121,000 (2016 - $32,679), the unamortized discount on the note is $nil (2016 - $88,321), and accrued interest of $15,382 (2016 - $3,282) has been recorded in accounts payable and accrued liabilities.
F-9
OROPLATA RESOURCES, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
4.Convertible Notes Payable (continued)
As an incentive for the loan,2, 2022, the Company issued 121,000 cashless warrantsa Mandatory Conversion Notice to the note holder as a bonus incentive, which has an exercise price of $0.50 per warrant until July 18, 2021.remaining Series C Preferred stockholders. The fair value of the cashless warrants was $229,069, and was calculated using the Black-Scholes option pricing model assuming no expected dividends, volatility of 239%, and risk-free rate of 1%.
(c)On September 28, 2016, the Company entered into a loan agreement, as amended with a non-related party for proceeds up to $550,000. On September 30, 2016, the Company received proceeds of $110,000, net of issuance fees of $10,000. The amount owing is secured, bears interest at 10%, and is due on September 30, 2017, and is convertible into commonnotice converts all outstanding shares of the CompanySeries C Preferred Stock to common stock at $0.10 per share. During the year ended September 30, 2016, the Company recorded a beneficial conversion featureratio of $110,000. In September 2017, the conversion price was amended to $0.11 per share and the due date extended to December 31, 2017. As at September 30, 2017, the carrying value of the note payable is $110,000 (2016 - $nil), the unamortized discount on the note is $nil (2016 - $110,000), and accrued interest of $11,000 (2016 - $nil) has been recorded in accounts payable and accrued liabilities.
As an incentive for the loan, the Company issued 121,000 cashless warrants to the note holder as a bonus incentive, which has an exercise price of $0.50 per warrant until September 30, 2021. The fair value of the cashless warrants was $65,990, and was calculated using the Black-Scholes option pricing model assuming no expected dividends, volatility of 233%, and risk-free rate of 1%.
(d)On February 16, 2017, the Company entered into a loan agreement with a non-related party for proceeds up to $250,000. On February 16, 2017, the Company received proceeds of $32,428, net of issuance fees of $2,948. On February 24, 2017, the Company received proceeds of $77,000, net of issuance fees of $7,000. On April 17, 2017, the Company received proceeds of $13,750, net of issuance fees of $1,250. On April 26, 2017, the Company received proceeds of $88,000, net of issuance fees of $8,000. On June 13, 2017, the Company received proceeds of $38,822 net of issuance fees of $3,882. The aggregate principal amount owed of $250,000 is secured, bears interest at 10%, is due one year after the date of funding for each tranche, and is convertible into common shares of the Company at $0.10 per share. In September 2017, the conversion price was amended to $0.11 per share. During the year ended September 30, 2017, the Company recorded a beneficial conversion feature of $262,353. As at September 30, 2017, the carrying value of the note payable is $250,000 (2016 - $nil), the unamortized discount on the note is $nil (2016 - $nil), and accrued interest of $12,236 (2016 - $nil) has been recorded in accounts payable and accrued liabilities.
(e)On July 25, 2017, the Company entered into a loan agreement with a non-related party for proceeds up to $550,000. On July 25, 2017 the Company received proceeds of $44,000, net of issuance fees of $4,000. On August 17, 2017, the Company received proceeds of $110,000, net of issuance fees of $10,000. The aggregate principal amount owed of $154,000 is secured, bears interest at 10%, is due one year after the date of funding for each tranche, and is convertible into common shares of the Company at $0.10 per share. During the year ended September 30, 2017, the Company recorded a beneficial conversion feature of $16,000. As at September 30, 2017, the carrying value of the note payable is $140,937 (2016 - $nil), the unamortized discount on the note is $13,063 (2016 - $nil), and accrued interest of $2,507(2016 - $nil) has been recorded in accounts payable and accrued liabilities.
5.Related Party Transactions
(a)As of September 30, 2017, the Company owes $120,146 (2016 - $120,146) to the former Chief Executive Officer and Director of the Company for advances to the Company to fund day-to-day operations. The amounts owing are unsecured, non-interest bearing, and due on demand.
(b)As of September 30, 2017, the Company owes $85,500 (2016 - $33,000) to the former Chief Executive Officer and Director of the Company for advances to the Company to fund day-to-day operations and accrued management fees. The amounts owing are unsecured, non-interest bearing, and due on demand. During the year ended September 30, 2017, the Company accrued $60,000 (2016 - $30,000) of management fees, received advances of $nil (2016 - $10,000), and repaid $7,500 (2016 - $7,000) to the former Chief Executive Officer of the Company.
F-10
OROPLATA RESOURCES, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
5.Related Party Transactions (continued)
(c)As of September 30, 2017, the Company owes $12,500 (2016 - $25,000) to directors of the Company for accrued management fees. The amounts owing are unsecured, non-interest bearing, and due on demand. During the year ended September 30, 2017, the Company recorded management fees of $nil and repaid $12,500 to the directors of the Company.
(d) As of September 30, 2017, the Company owes $100 (2016 - $nil) to the Secretary and director of the Company for cash advance for the Company’s new bank account. The amounts owing are unsecured, non-interest bearing, and due on demand.
6.Common Shares
Authorized: 500,000,000 approximately shares of common stock for each share of Series C Preferred Stock. Each holder of Series C Preferred Stock was entitled to receive a non-cumulative dividend at an 8% rate per share, per annum. On February 8, 2022, the Company issued $0.1million in dividend payments to Series C stockholders that held shares from date of issuance to conversion.
Common Stock
At June 30, 2023 and 2022, million shares of common stock are authorized, with a par value of $0.001.$, per share.
| F-15 |
Year Ended SeptemberAMERICAN BATTERY TECHNOLOGY COMPANY
Notes to the Consolidated Financial Statements
For the fiscal years ended June 30, 20162023 and June 30, 2022
(a)On May 31, 2016,12. Stockholders’ Equity (continued)
Common Stock (continued)
Fiscal year ended June 30, 2023
During the former Chief Executive Officer and Director ofperiod, the Company sold 25,000,000issued common shares of the Company to the Chief Executive Officer and Director of the Company for proceeds of $25,000 in a private sale. The transaction has no impact on the issued and outstanding common shares of the Company.
(b)On June 15, 2016, the Company acquired mineral properties in Nye County, Nevada from Plateau Ventures LLC (“Plateau”), a non-related party, in exchange for thewith an issuance of 636,943 common shares of the Company with adate fair value of $1,031,848, which is the end of day trading price of$4.2 million to executives, directors and employees pursuant to share award service and performance achievements. These common shares were under the Company’s common shares onRetention Plan.
During the date of the agreement which was the date that the shares became issuable. In addition,period, the Company issued 16,000,000 common shares with a fair value of $25,920,000approximately $7.4 million towards the acquisition of its new recycling facility. These shares have recently been registered to individuals for no consideration received.
(c)Onbe sold under the Company’s shelf S-3, effective August 19, 2016,8, 2023. Considering the lack of marketability at the time of issuance, the shares were issued with approximately a % discount. This was in line with the Company’s fair value analysis, given that the shares were restricted at the time of issuance. Pursuant to the terms of the agreement, the Company issued 500,000agreed to acquire 100% of the ownership interests in Aqua Metals Transfer, LLC, a legal entity to transfer real property and equipment, in exchange for a combination of cash and common shares of our common stock. We also agreed to prepare and file a registration statement with a fair value of $425,000the SEC to a consultant for services. The fair valueregister the resale of the common shares is based onissued, which will be held by an affiliate of LiNiCo, Comstock Inc., a Nevada corporation, the endseller. Pursuant to the original purchase agreement, LiNiCo had an obligation to indemnify us for certain matters and to fund an escrow account for the purposes in the event such indemnification events arise. The seller was required to contribute $ million of day tradingthe net proceeds it receives from its sale of shares to fund the indemnification escrow account. On June 30, 2023, the Company modified the agreement to nullify the $1.5 million indemnification requirement and reclaim shares that it had previously issued to the Selling Stockholder, which it received after June 30, 2023. The Company has recognized a $1.5 million reduction to the carrying value of its long-term deposits and a respective reduction to stockholders’ equity, at June 30, 2023.
In March 2023, the Company entered into a share purchase agreement for the purchase and sale of common shares at an issuance price of $ per share. In addition to the Company’sissuance of common shares, on the date of issuance.
Year Ended September 30, 2017
(a)On November 8, 2016, the Company issued 2,000,000 shares of Series A warrants that are exercisable into one common stock with a fair value of $600,000. The shares were issued as part of a settlement agreement related to the purchaseshare of the Nye County properties, in which, the parties settled on payment of $252,500 and the return of the previously issued 636,943 shares of common stock. Refer to Note 3.
(b)On January 31, 2017, the Company issued 300,000 shares of common stock with a fair value of $87,000 for consulting services.
(c)On February 8, 2017, the Company issued 400,000 shares of common stock with a fair value of $96,000 to settle outstanding accounts payable of $60,000 resulting in a $36,000 loss on settlement of debt.
(d)On February 16, 2017, the Company received 2,000,000 common shares which were cancelled and returned to treasury. Refer to Note 7.
(e)On February 16, 2017, the Company issued 500,000 common shares with a fair value of $130,000 for services.
(f)On February 23, 2017, the Company issued 300,000 common shares with a fair value of $75,000 for legal services.
(g)On February 24, 2017, the Company received 636,943 common shares which were cancelled and returned to treasury. Refer to Note 3.
(h)On July 31, 2017, the Company issued 500,000 common shares with a fair value of $65,000 for professional services.
F-11
OROPLATA RESOURCES, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
7.Share Purchase Warrants
On February 15, 2017, the Company issued 500,000 share purchase warrants as bonus compensation for debt financing with an exercise price of $0.15at $ per share of common stock for a period of five years. The fair value of the share purchase warrants was $133,295, calculated using the Black-Scholes option pricing model assuming no expected dividends, volatility of 212%, expected life of 5 years, and a risk-free rate of 1%.
On February 16, 2017, the Company issued 2,000,000 share purchase warrants with an exercise price of $0.001 per share of common stock for a period of five years from the date of issuance and Series B warrants that are exercisable into one common share of the Company at $ per share for a period of eighteen months from the date of issuance. As part of the financing, the Company engaged a placement agent in connection with the offering and agreed to replace 2,000,000pay the placement agent a cash fee of 7.5% of the gross proceeds of the offering, a 1% expense allowance, and other reimbursable expenses. In addition, the Company issued 57,143 warrants to the placement agent as a commission fee, which are exercisable at $ per share for a period of five years from the date of issuance. The Company received net proceeds under this share purchase agreement of $ million.
In May 2023, the Company entered into multiple share purchase agreements for the purchase and sale of million common shares at an issuance price of $per share. In addition to the issuance of common shares, the Company issued Series A warrants that are exercisable into one common share of the Company at $per share for a period of five years from the date of issuance and Series B warrants that are exercisable into one common share of the Company at $per share for a period of eighteen months from the date of issuance. The Company received net proceeds under this share purchase agreement of $million.
On May 12, 2023, the Company entered into the First Amendment to Second Amended and Restated Membership Interest Purchase Agreement (the “Amendment”), which amended the Purchase Agreement, for the purchase of the Recycling Facility. Under the Amendment, the Selling Stockholder required the Company to deliver an additional common shares of the Company to LiNiCo, resulting in the Company issuing a total of shares of common stock whichas part of the purchase price under the Agreements and Amendment, though.
On April 2, 2021, the Company entered into a common share purchase agreement with Tysadco Partners, LLC (“Tysadco Agreement”). Pursuant to the . Under this agreement and during the period, the Company issued common shares for aggregate proceeds of $ million.
| F-16 |
AMERICAN BATTERY TECHNOLOGY COMPANY
Notes to the Consolidated Financial Statements
For the fiscal years ended June 30, 2023 and June 30, 2022
12. Stockholders’ Equity (continued)
Common Stock (continued)
Fiscal year ended June 30, 2023
On June 26, 2023, the Company filed a prospectus supplement related to the offer and sale from time to time of up to common shares directly by the Company at market prices, or to Tysadco Partners, LLC, a Delaware limited liability company, pursuant to the terms of written sales agreement(s) (“June Prospectus”). During the period, the Company issued common shares. Proceeds of $ million were cancelled and returnedreceived after the consolidated balance sheet date of June 30, 2023.
During the period, the Company issued shares to treasury (refer to Note 6). Theprofessional service providers with a fair value of approximately $104,000, however, $60,000 relates to services performed during the share purchase warrants was $519,682, calculated usingfiscal year ended June 30, 2022.
On May 17, 2023, the Black-Scholes option pricing model assuming no expected dividends, volatility of 212%, expected life of 5 years, andCompany reclaimed common shares from a risk-free rate of 1% and was recorded as an expense.
| Number of cashless warrants |
| Weighted average exercise price $ |
|
|
|
|
Balance, September 30, 2016 | 242,000 |
| 0.50 |
|
|
|
|
Issued | 2,500,000 |
| 0.03 |
|
|
|
|
Balance, September 30, 2017 | 2,742,000 |
| 0.07 |
Additional information regarding share purchase warrants as of September 30, 2017, is as follows:
| Outstanding and exercisable | |
Range of Exercise Prices $ | Number of Warrants | Weighted Average Remaining Contractual Life (years) |
|
|
|
0.001 | 2,000,000 | 4.6 |
0.15 | 500,000 | 4.6 |
0.50 | 242,000 | 4.0 |
|
|
|
| 2,742,000 | 4.5 |
8.Income Taxes
former professional service provider. The Company has $2,588,674recorded an adjustment to stockholders’ equity for the par value of net operating losses carried forward to offset taxable income in future years which expire commencing in fiscal 2032. The income tax benefit differs fromthese shares.
Fiscal year ended June 30, 2022
During the amount computed by applying the US federal income tax rate of 30% to net loss before income taxes. As at September 30, 2017 and 2016,period, the Company had no uncertain tax positions. The Company’s last three yearsissued common shares pursuant to the conversion of tax returns are open shares of Series C Preferred Stock at a conversion ratio of 80 shares of common stock for examination by taxing authorities.
| September 30, 2017 $ |
| September 30, 2016 $ |
|
|
|
|
Net loss before taxes | 2,690,342 |
| 28,356,180 |
Statutory rate | 30% |
| 30% |
|
|
|
|
Computed expected tax recovery | 807,103 |
| 8,506,854 |
Permanent differences and other | (340,177) |
| (8,221,376) |
Change in valuation allowance | (466,926) |
| (285,478) |
Income tax provision | – |
| – |
F-12
OROPLATA RESOURCES, INC.each preferred share of Series C Preferred Stock.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
8.Income Taxes (continued)
The significant componentsDuring the period, the Company issued units for proceeds of deferred income tax assets and liabilities as$39.1 million pursuant to a private placement issuance at September 30, 2017 and 2016 after applying enacted corporate income tax rates are as follows:
| 2017 $ |
| 2016 $ |
|
|
|
|
Net operating losses carried forward | 776,602 |
| 336,694 |
Valuation allowance | (776,602) |
| (336,694) |
|
|
|
|
Net deferred tax asset | – |
| – |
9. Restatement
The Company has restated its consolidated financial statements as at September 30, 2016 and for the year then ended to reflect adjustments related to notes payable that were not valid obligations$ per share. Each unit is comprised of one common share of the Company and issuance of common shares for the acquisition of mineral properties that were not issued for proper consideration. This restatement resulted in an increase to net loss of $25,000 and no change to net loss per share.
The impact of the restatement as at September 30, 2016 and for the year then ended is summarized below:
Consolidated Balance Sheet
| As at September 30, 2016 | ||
| As reported $ | Adjustment $ | As restated $ |
|
|
|
|
LIABILITIES AND STOCKHOLDERS’ EQUITY |
|
|
|
|
|
|
|
Current Liabilities |
|
|
|
|
|
|
|
Accounts payable and accrued liabilities | 95,208 | 328,000 | 423,208 |
|
|
|
|
Total Current Liabilities | 306,033 | 328,000 | 634,033 |
|
|
|
|
Notes payable | 303,000 | (303,000) | – |
|
|
|
|
Total Liabilities | 609,033 | 25,000 | 634,033 |
|
|
|
|
Stockholders’ Equity |
|
|
|
|
|
|
|
Deficit | (28,501,900) | (25,000) | (28,526,900) |
|
|
|
|
Total Stockholders’ Equity | (518,993) | (25,000) | (543,993) |
F-13
OROPLATA RESOURCES, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
9. Restatement (continued)
Consolidated Statement of Operations
| Year ended September 30, 2016 | ||
| As reported $ | Adjustment $ | As restated $ |
|
|
|
|
Expenses |
|
|
|
|
|
|
|
Exploration costs | 152,500 | (75,000) | 77,500 |
Impairment of mineral property | 27,051,848 | (25,820,000) | 1,231,848 |
|
|
|
|
Net loss before other expense | (28,293,931) | 25,895,000 | (2,398,931) |
|
|
|
|
Other expenses | – | (25,920,000) | (25,920,000) |
|
|
|
|
Total other income (expense) | (37,249) | (25,920,000) | (25,957,249) |
|
|
|
|
Net loss for the year | (28,331,180) | (25,000) | (28,356,180) |
Consolidated Statement of Stockholders’ Equity (Deficit)
| Year ended September 30, 2016 | ||
| As reported $ | Adjustment $ | As restated $ |
|
|
|
|
Deficit | (28,501,900) | (25,000) | (28,526,900) |
F-14
OROPLATA RESOURCES, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
9. Restatement (continued)
Consolidated Statement of Cash Flows
| Year ended September 30, 2016 | ||
| As reported $ | Adjustment $ | As restated $ |
|
|
|
|
Operating Activities |
|
|
|
|
|
|
|
Net loss for the year | (28,331,180) | (25,000) | (28,356,180) |
|
|
|
|
Adjustments to reconcile net loss to net cash used in operating activities: |
|
|
|
|
|
|
|
Impairment loss on mineral property | 27,051,848 | (25,820,000) | 1,231,848 |
Shares issued for other expenses | – | 25,920,000 | 25,920,000 |
|
|
|
|
Changes in operating assets and liabilities: |
|
|
|
|
|
|
|
Accounts payable and accrued liabilities | 75,192 | 128,000 | 203,192 |
|
|
|
|
Net Cash Used In Operating Activities | (402,402) | 203,000 | (199,402) |
|
|
|
|
Investing Activities |
|
|
|
|
|
|
|
Mineral property acquisition costs | (100,000) | 100,000 | – |
|
|
|
|
Net Cash Used in Investing Activities | (100,000) | 100,000 | – |
|
|
|
|
Changes in financing activities |
|
|
|
|
|
|
|
Proceeds from issuance of notes payable | 534,000 | (303,000) | 231,000 |
|
|
|
|
Net Cash Provided by Financing Activities | 582,496 | (303,000) | 279,496 |
F-15
OROPLATA RESOURCES, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
10. Subsequent Events
We have evaluated subsequent events through to the date of issuance of the consolidated financial statements, and did not have any material recognizable subsequent events after September 30, 2017 with the exception of the following:
(a)On December 4, 2017, the Company granted 1,000,000one share purchase warrants to a non-related party for professional services. Eachwarrant, where each share purchase warrant is exercisable into one common share of the Company at $0.10$26.25 per share, exercisable for a period of one yearfive years from the dateissuance date. As part of issuance.
(b)On December 5, 2017,the financing, the Company paid $2.2 million of share issuance costs and issued 578,696 shares of130,334 warrants as a commission fee, which are exercisable at $23.10 per common stock for the conversion of $66,550 of convertible notes payable.
(c)On December 29, 2017, the Company issued 10,700,000 common shares to consultants of the Company for services rendered. In addition, the Company cancelled and reissued 1,000,000 common shares to the Chief Executive Officer of the Company (“CEO”).
(d)On December 29, 2017, the Company issued 6,000,000 restricted common shares to directors of the Company for services rendered. In addition, the Company entered into consulting agreements with each director of the Company for $5,000 per monthshare for a period of three years from the date of the issuance. The fair value of the commission warrants was $2.7 million and an additional issuance of 1,000,000 common shares per directorwas determined based on the firstBlack-Scholes option pricing model assuming volatility of %, risk-free rate of %, expected life of , and second anniversary ofno expected forfeitures or dividends.
During the consulting agreement.
(e)On December 29, 2017,period, the Company issued 4,000,000 common shares pursuant to the CEO upon finalizationaforementioned Tysadco Agreement, entered into on April 2, 2021, for aggregate proceeds of $ million. The Tysadco Agreement expired March 31, 2023.
During the period, the Company issued million common shares pursuant to the exercise of million share purchase warrants for proceeds of $0.9 million.
During the period, the Company issued common shares for professional services with a formal employment agreement (the “Agreement”fair value of $20.4 million, including common shares with a fair value of $8.7 million to former officers and directors of the Company and common shares with a fair value of $4.8 million to current officers and directors of the Company. At June 30, 2022, the Company had shares of common stock with a fair value of $ million for professional services due to non-employees and an executive of the Company.
During the period, the Company issued shares with an issuance date fair value of $1.3 million to employees under the Retention Plan.
During the period, the Company and a former executive agreed to reclaim common shares, for no consideration. The Company recorded an adjustment to stockholders’ equity for the par value of these shares.
During the period, the Company reclaimed common shares from a former executive of the Company, for no consideration. These shares were previously issued via an arms-length transaction between former executives of the Company. The Company recorded an adjustment to stockholders’ equity for the par value of these shares. Contemporaneously, the Company issued shares with a fair value of $0.6 million pursuant to a legal settlement with the former executive. The Company has recorded an adjustment to stockholders’ equity for the fair market value at the time of issuance.
During the period, the Company reclaimed common shares, pursuant to a legal settlement from a prior year. The share certificate was received and remitted to the transfer agent during the fiscal year ended June 30, 2022. The Company recorded an adjustment to stockholders’ equity for the par value of these shares.
| F-17 |
AMERICAN BATTERY TECHNOLOGY COMPANY
Notes to the Consolidated Financial Statements
For the fiscal years ended June 30, 2023 and June 30, 2022
During the fiscal year ended June 30, 2023, the Company received cashless warrant exercises of , however the resulting common shares were issued after year-end, during the first fiscal quarter ending September 30, 2023.
Schedule of Share Purchase Warrants Activity
| Number of Warrants | Weighted Average Exercise Price | |||||||
| Balance, June 30, 2022 | 2,680,708 | $ | 18.15 | |||||
| Granted | 3,098,652 | $ | 11.25 | |||||
| Exercised | (50,000 | ) | $ | (1.20 | ) | |||
| Expired | - | $ | - | |||||
| Balance, June 30, 2023 | 5,729,360 | $ | 14.53 | |||||
Schedule of Additional Information Regarding Share Purchase Warrants
| Outstanding and Exercisable | ||||||||
| Range of Exercise Prices | Number of Warrants | Weighted Average Remaining Contractual Life (years) | ||||||
| $ - $ | 807,744 | |||||||
| $ - $ | 3,098,641 | |||||||
| $ - $ | 1,822,975 | |||||||
| 5,729,360 | 2.66 | |||||||
The Company has established the 2021 Retention Plan (“the Retention Plan”) to issue shares in the effort to retain key executives, directors, and employees. The Retention Plan allows for several different types of awards to be granted, including but not limited to, restricted share units and restricted share awards, collectively referred to as “share awards”. Share awards generally have the same expense characteristics under US GAAP and generally all vest over a -year period at a rate of % per annum.
Under the termsRetention Plan, the Company is authorized to issue shares of common stock to employees and non-employees up to ten percent () of the Agreement,total number of shares of common stock outstanding as of December 31, 2022, on a fully diluted basis.
The Company granted and share awards under the Retention Plan for the fiscal years ended June 30, 2023 and 2022, respectively. The grant date fair value of the share awards granted were $ million and $ million for the fiscal years ended June 30, 2023 and 2022, respectively. Of these amounts, and share awards with a fair value of $ million and $ million were granted to officers and directors of the Company for the fiscal years ended June 30, 2023 and 2022 respectively. As of June 30, 2023 additional performance targets have been defined, though not achieved, therefore the Company has deferred any expense recognition until such performance achievement and also been approved by the board of directors.
| F-18 |
AMERICAN BATTERY TECHNOLOGY COMPANY
Notes to the Consolidated Financial Statements
For the fiscal years ended June 30, 2023 and June 30, 2022
14. Share Awards (continued)
Schedule of Restricted Shares and Restricted Share Units Non-vested
| Units | Weighted- Average Grant Date Fair Value per Unit | |||||||
| Unvested share awards at June 30, 2022 | 23,334 | $ | 12.30 | |||||
| Granted | 2,152,232 | $ | 8.25 | |||||
| Vested | (435,857 | ) | $ | (8.25 | ) | |||
| Forfeitures | (3,333 | ) | $ | (7.50 | ) | |||
| Unvested awards at June 30, 2023 | 1,736,376 | $ | 8.25 | |||||
As awards are granted, stock-based compensation equivalent to the fair market value on the date of grant is expensed over the requisite service period, using the graded vesting attribution method as acceptable under ASC 718, “Stock-Based Compensation.”
The Company recognized stock-based compensation expense of $million and $million for the fiscal years ended June 30, 2023 and 2022, respectively. Of these amounts, $million and $ million of expense was recognized on behalf of awards held by officers and directors of the Company for the fiscal years ended June 30, 2023 and 2022, respectively.
As of June 30, 2023 and 2022, there were approximately $8.7 million and $0.2 million of unamortized expenses relating to outstanding share awards to be recognized over a remaining weighted-average period of years and years, respectively.
Schedule of Stock-Based Compensation Expense
| June 30, 2023 | June 30, 2022 | |||||||
| General and administrative | $ | 4,817,645 | $ | 1,233,155 | ||||
| Research and development | 3,735,528 | - | ||||||
| Exploration | 696,289 | - | ||||||
| Stock-based compensation expense | $ | 9,249,462 | $ | 1,233,155 | ||||
Executive officers and selected other key employees are eligible to receive common share performance-based awards, as determined by the board of directors. The payouts, in the form of share awards, vary based on the degree to which corporate operating objectives are met. These performance-based awards typically include a service-based requirement, which a generally four-years. No granting of these awards occurs until performance thresholds are achieved. The Company has granted million and performance-based awards to officers and employees of the Company for the fiscal years ended June 30, 2023 and 2022, respectively. The Company grants awards at the time of reaching such performance targets.
15. Supplemental Statement of Cash Flow Disclosures
Schedule of Statement of Cash Flow Disclosures
| June 30, 2023 $ | June 30, 2022 $ | |||||||
| Supplemental disclosures: | ||||||||
| Interest paid (income) | 128,560 | (20 | ) | |||||
| Non-cash investing and financing activities: | ||||||||
| Current liabilities associated with investing activities | 4,404,034 | 752,736 | ||||||
| Deposits capitalized to investing activities | 150,000 | – | ||||||
| Fair value of common shares issued for investing activities | 5,859,000 | – | ||||||
| Other receivables recognized as financing activities | 350,550 | – | ||||||
| Fair value of lease liabilities capitalized during period | – | 311,570 | ||||||
| F-19 |
AMERICAN BATTERY TECHNOLOGY COMPANY
Notes to the Consolidated Financial Statements
For the fiscal years ended June 30, 2023 and June 30, 2022
16. Income Taxes
The Company has not recognized any income tax provisions for the fiscal years ended June 30, 2023 and 2022. The U.S. federal corporate statutory rate of 21.0% is the only applicable corporate tax rate used for fiscal years ended June 30, 2023 and 2022. The statutory rate differs from the Company’s computed expected tax recovery rate due to the following adjustments for the fiscal years ended June 30:
Schedule of Federal Income Tax provision
| 2023 | 2022 | |||||||
| Net loss before taxes | $ | (21,338,207 | ) | $ | (33,539,962 | ) | ||
| Statutory rate | 21 | % | 21 | % | ||||
| Computed expected tax recovery | (4,481,024 | ) | (7,043,392 | ) | ||||
| Section 162(m) adjustments | – | 2,264,757 | ||||||
| Other permanent tax differences | (5,107 | ) | 83,623 | |||||
| Adjustments to net operating loss | 113,966 | (2,832,937 | ) | |||||
| Change in unrecognized tax benefits | (8,495,803 | ) | 6,164,291 | |||||
| Change in valuation allowance | 12,867,968 | 1,382,301 | ||||||
| Income tax provision | $ | – | $ | – | ||||
As of June 30, 2023, the Company had accumulated $93.3 million of net operating loss (NOL) carryforwards offset taxable income in future years. The Company currently has $7.1 million of unused NOL carryforwards that are set to begin to expire in 2036 to 2038, with the remainder of $86.2 million do not have an expiration date. The Company files U.S. income tax returns with varying statutes of limitations. The tax returns for fiscal years ended September 30, 2016, to June 30, 2023, remain open to examination due to the Company’s NOL carryforward deferred tax asset. The Company is not under examination by any tax authority as of June 30, 2023.
We believe that it is more likely than not that the benefit from certain NOL carryforwards will not be realized. At June 30, 2023 and 2022, respectively, we have provided a valuation allowance of $21.0 and $8.2 million on the deferred tax assets recorded to date. If our assumptions change and we determine that we will be able to realize these NOL carryforward amounts, the Company will pay $70,000adjust its disclosures appropriately.
The significant components of deferred income tax assets and liabilities at June 30, after applying the statutory corporate income tax rate, are as compensationfollows for past servicesthe fiscal years ended June 30:
Schedule of Deferred Income Tax Assets and receive future monthly paymentsLiabilities
| 2023 | 2022 | |||||||
| Net operating losses | $ | 19,365,174 | $ | 8,174,021 | ||||
| Stock-based compensation | 982,521 | – | ||||||
| Section 174 capitalization | 679,037 | – | ||||||
| Other temporary differences | 15,258 | – | ||||||
| Valuation allowance | (21,041,989 | ) | (8,174,021 | ) | ||||
| Net deferred tax asset | $ | – | $ | – | ||||
Under the Tax Cuts and Jobs Act of $20,833 per month. Furthermore,2017, research and development costs are no longer fully deductible and are required to be capitalized and amortized for U.S. tax purposes effective for fiscal years beginning after January 1, 2022. The mandatory capitalization requirement increases our deferred tax assets and is fully offset with the valuation allowance.
The Company has recorded uncertain tax positions (“UTP”) that result in unrecognized tax benefits recorded on the books of the Company. The unrecognized tax benefits for the Company will also issueare as follows as of June 30:
Schedule of Unrecognized Tax Benefits
2023 | 2022 | |||||||
| Unrecognized tax benefits, beginning of period | $ | 8,715,253 | $ | 2,550,962 | ||||
| Decrease during the period | (8,715,253 | ) | – | |||||
| Increase during the period | 219,450 | 6,164,291 | ||||||
| Unrecognized tax benefits, end of period | $ | 219,450 | $ | 8,715,253 | ||||
At June 30, 2022, the Company recorded an additional 1,000,000 commonUTP related to shares on August 7, 2018issued to service providers during open tax years. The Company has since filed all necessary tax returns and 2019 as long ashas paid approximately $75,000 in penalties and interest remediating past-due payroll tax requirements, for which the CEO is still providing servicesCompany had accrued at June 30, 2022. At June 30, 2023, the Company has no remaining UTP recorded in relation to shares issued for services.
| F-20 |
AMERICAN BATTERY TECHNOLOGY COMPANY
Notes to the Consolidated Financial Statements
For the fiscal years ended June 30, 2023 and June 30, 2022
16. Income Taxes (continued)
The Company recognizes that it may be subject to provisions of Section 162(m) of the Internal Revenue Code, which limits the deductibility of compensation paid to certain executive officers in excess of $1.0 million in any fiscal year. The Company continues to evaluate whether any amended income tax returns are necessary for fiscal years for which it has already filed. The Company intends to immediately remedy any such uncertainty of tax benefit in the coming fiscal year. The Company has not accrued for any penalties or interest in relation to any potential 162(m) UTP adjustment at June 30, 2023 and 2022.
Under Section 382 and 383 of the Internal Revenue Code of 1986, as amended, the Company’s ability to utilize carryforwards and other tax attributes such as foreign tax credits, in any taxable fiscal year may be limited if the Company experiences, or has experienced, an “ownership change.” A Section 382 “ownership change” generally occurs if one or more stockholders or groups of stockholders, who own at least 5% of the Company’s stock, increase their ownership percentage by more than 50 percentage points over their lowest ownership percentage within a rolling three-year period. Similar rules may apply under state tax laws. The Company may, in the future experience one or more additional Section 382 “ownership changes.
The Company files U.S. and state income tax returns with varying statutes of limitations. The tax returns for fiscal years ended September 30, 2016, to June 30, 2023, remain open to examination due to the carryover of unused NOL carryforwards and tax credits. The Company is not under examination by any tax authority as of June 30, 2023.
17. Commitments and Contingencies
From time to time, the Company may become involved in various lawsuits and legal proceedings, which arise in the ordinary course of business. Litigation is subject to inherent uncertainties, and an adverse result in these or other matters may arise from time to time that may harm business. Except as otherwise identified herein, management is currently not aware of any such legal proceedings or claims that could have, individually or in aggregate, a material adverse effect on our business, financial condition, or operating results.
Operating Leases
The Company leases its principal office location in Reno, Nevada. It also leases two adjacent Lab spaces in the University of Nevada, Reno on short term leases. The principal office location lease expires on November 30, 2024 and the Lab leases expire on November 30, 2024. Consistent with the guidance in ASC 842, The Company has recorded the principal office lease in its consolidated balance sheet as an operating lease. For further information on operating lease commitments, refer to Note 6 – Leases.
Financial Assurance:
Nevada and other states, as well as federal regulations governing mine operations on federal land, require financial assurance to be provided for the estimated costs of mine reclamation and closure, including groundwater quality protection programs. The Company has satisfied financial assurance requirements using a combination of cash bonds and surety bonds. The amount of financial assurance The Company is required to provide will vary with changes in laws, regulations, reclamation and closure requirements, and cost estimates. At June 30, 2023, The Company’s financial assurance obligations associated with U.S. mine closure and reclamation/restoration cost estimate totaled $20,000, for which the Company is legally required to satisfy its financial assurance obligations for its mining properties in Tonopah, Nevada. The Company was previously released of all of its liability in the Railroad Valley region of Nevada.
| F-21 |
AMERICAN BATTERY TECHNOLOGY COMPANY
Notes to the Consolidated Financial Statements
For the fiscal years ended June 30, 2023 and June 30, 2022
18. Subsequent Events
On August 21, 2023, the Company finalized the purchase of its commercial-scale battery recycling facility located in the Tahoe-Reno Industrial Center (TRIC) at 2500 Peru Drive, McCarran, Nevada. In March 2023, the Company entered into agreements to acquire the existing facility and the installed industrial utility equipment in order to accelerate the first commercial scale implementation of its internally-developed first-of-kind lithium-ion battery recycling technologies.
On August 25, 2023, the Company and Bow River Capital RE III LLC (“Bow River”) terminated the previously-announced contingent sales-leaseback arrangement, pursuant to which the Company would have sold certain real property to Bow River, while leasing the same property from Bow River and retaining an option to repurchase the property.
On August 29, 2023, American Battery Technology Company (the “Company”) and an institutional investor (collectively, the “Buyers”) entered into a Securities Purchase Agreement (the “Purchase Agreement”), pursuant to which the Company sold to the Buyers up to $51 million of a new series of senior secured convertible notes (the “Notes”). To date, $25 million has been received. Buyers may request partial redemptions of up to an aggregate of $1,800,000 on the 15th of each month or may convert the Notes into shares of common stock of the Company (“Conversion Shares”) at a conversion rate of 110% of the last reported sales price on the date of the agreement to acquire such Notes.The Notes bear zero coupon, mature on September 1, 2025, and are secured by certain real property and cash and investment accounts of the Company.
On August 30, 2023, the Company caused the repayment in full of all indebtedness, liabilities and other obligations under, and terminated, the Credit Agreement, dated as of May 17, 2023 (the “Credit Agreement”), by and among the Company, as Borrower, the Several Lenders from time-to-time parties thereto and Mercuria Investments US, Inc., as Agent. The Company did not incur any material early termination penalties as a result of such termination of the Credit Agreement.
On September 6, 2023, the Company and the Thomas C. Woodward Living Trust entered into a vacant land offer and acceptance agreement for the Company’s acquisition of certain real property and water rights, including but not limited to the real property at 700 San Antone Road, Tonopah, NV and approximately 40.52 acre feet of water rights.
On September 1, 2023, the Company finalized its grant award agreement with the U.S. Department of Energy (DOE) marking the official launch of the multi-year grant aimed at providing a domestic source of battery-grade lithium hydroxide. The Project kick off marks a major milestone in the commercialization of the Company’s Tonopah Flats Lithium Project, which will help provide a domestic supply of critical battery materials needed for the U.S. energy transition.
On September 11, 2023, in preparation for listing on the Nasdaq Capital Market, the Company implemented a one-for-fifteen (1-for-15) reverse split of our common stock. Prior to the reverse stock split the Company had shares of common stock issued and outstanding, and after the reverse stock split, the Company had approximately shares of common stock issued and outstanding. Immediately after the reverse stock split, each stockholder’s percentage ownership interest in the Company and proportional voting power remained unchanged aside from rounding fractional shares into whole shares. The reverse stock split did not change the par value of the common stock or preferred stock.
F-16
On September 21, 2023, the Company’s common stock began trading on the Nasdaq Capital Market under the symbol “ABAT.” The Company was previously traded on the OTCQX Markets under the symbol “ABML.”
| F-22 |
Item 9. Changes Inin and Disagreements with Accountants on Accounting and Financial Disclosure
None.
Item 9A. Controls and Procedures
a)Controls and Procedures
Evaluation of Disclosure Controls and ProceduresProcedures.
The Company maintainsWe maintain disclosure controls and procedures, as defined in Rules 13a-15€ and 15d-15(e) under the Exchange Act. Disclosure controls and procedures are controls and other procedures designed to provide reasonable assuranceensure that the information required to be disclosed by us in the reports filed pursuant tothat we file or submit under the Securities Exchange Act of 1934 is recorded, processed, summarized, and reported within the time periods specified in the SEC’s rules and forms,forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that such information required to be disclosed by us in the reports that we file or submit under the Exchange Act is accumulated and communicated to our management, including our principal executive officer and our principal financial officer, as appropriate, to allow timely decisions regarding required disclosure. In designing and evaluating the disclosure controls and procedures, management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable and not absolute assurance of achieving the desired control objectives, and management necessarily applies its judgment in evaluating the cost-benefit relationship of possible controls and procedures.
The Company’s management, with the participation of the Chief Executive Officer and Chief Financial Officer of the Company, carried out an evaluation of the effectiveness of the design and operation of the Company’s disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”)) as of June 30, 2023, the end of the period covered by this report. Based on such evaluation, the Company’s Chief Executive Officer and Chief Financial Officer have concluded that, as of June 30, 2023, the Company’s disclosure controls and procedures are effective to ensure that information required to be disclosed by the Company in reports that it files or submits under the Exchange Act is recorded, processed, summarized and reported within the required time periods and are designed to ensure that information required to be disclosed in its reports is accumulated and communicated to the Company’s management, including the Chief Executive Officer and Chief Financial Officer, as appropriate to allow timely decisions regarding required disclosure. In addition, The Company contracts with an independent firm to review and test its internal controls. A control system, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met.
As of September 30, 2017, the Company’s management carried out an evaluation of the effectiveness of our disclosure controls and procedures as such term is defined in Rule 13a-15(e) under the Securities and Exchange Act of 1934. Based on that evaluation, it was concluded the disclosure controls and procedures were not effective as of September 30, 2017.
(b)Management’s Report of Management on Internal Control over Financial ReportingReporting.
ManagementOur management is responsible for establishing and maintaining adequate internal control over financial reporting as(as defined in Rules 13a-15(e)13a-15(f) and 15d-15(f) of the Exchange Act. The Company hasAct). Internal control over financial reporting is a process designed internal controlsunder the supervision and with the participation of our management, including the individuals serving as our principal executive officer and principal financial officer, to provide reasonable but not absolute, assurance thatregarding the reliability of financial reporting and the preparation of financial statements are preparedfor external purposes in accordance with U.S. GAAP. The Company assessesaccounting principles generally accepted in the United States of America.
A material weakness is a deficiency, or combination of deficiencies, in internal controls over financial reporting, such that there is a reasonable possibility that a material misstatement of annual or interim financial statements will not be prevented or detected on a timely basis.
Management assessed the effectiveness of our internal controls over financial reporting based on the criteria set forth in the 2013 Internal Control - Integrated Framework developed by the Committee of Sponsoring Organizations of the Treadway Commission.Commission in Internal Control-Integrated Framework (2013 Framework). Based on this evaluation,assessment, management hasconcluded that, as of June 30, 2023, our internal control over financial reporting was deemed not to be effective, based on the criteria therein. Material weaknesses presiding over our internal controls as it relates to financial reporting are described below.
Material Weakness in Internal Control over Financial Reporting
We did not maintain appropriate segregation of duties related to accounting processes.
This material weakness creates a reasonable possibility that a material misstatement to the financial statements will not be prevented or detected on a timely basis, and we concluded that the Company’sdeficiencies represent material weaknesses in our internal controlscontrol over financial reporting and our internal control over financial reporting was not effective as of SeptemberJune 30, 2017.2023.
Because of its inherent limitations,Remediation Plan
During the year ended June 30, 2023, we enhanced our internal control over financial reporting may not prevent or detect misstatements. It should be notedand have remediated the material weaknesses of adequate documentation evidencing operating effectiveness and supervision and review of complex accounting matters. These material weaknesses were presented in our financial statements for the fiscal years ended June 30, 2022 and 2021.
As previously disclosed, the steps below were being implemented, and as a result we have remediated the material weaknesses, aside from segregation of duties.
| ● | Successful hiring of additional personnel with the expertise necessary to improve the financial reporting function | |
| ● | Complete the implementation of SAP ByDesign, an Enterprise Resource Planning (ERP) solution that will provide the necessary permissions and roles to mitigate control weaknesses in key accounting processes and procedures | |
| ● | Provide additional guidance, education and training to employees relating to our accounting procedures with a continued focus on its segregation-of-duties as the Company hires more accounting personnel | |
| ● | Further develop and document detailed accounting policies for significant accounts, accounting estimates and presentation of complex items, as is required by US GAAP | |
| ● | Establishing effective general controls over IT systems to ensure that information produced can be relied upon by process level controls | |
| ● | We have engaged a firm that specializes in Cyber and IT protection to further enhance the protection of our financial information, employee information, proprietary methods, and strategic partnerships |
We are committed to ensuring that any system ofour internal control however wellover financial reporting is designed and operated, can provide only reasonable, and not absolute, assuranceoperating effectively. While procedures in place as of June 30, 2023 addressed the remaining material weakness regarding segregation of duties, remediation steps are required to be in place for an adequate period of time. We expect to remediate this material weakness during the period ending December 31, 2023. However, there is no guarantee that the objectives of the systemsuch material weaknesses will be met. Also, projections of any evaluation of effectivenessremediated during the year, and we may discover additional material weaknesses that may require additional time and resources 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.remediate.
Item 9B. Other Information
Extension of NotesNone.
On December 14, 2017, the Company announcedItem 9C. Disclosure Regarding Foreign Jurisdictions that it has received financial support and commitment from its primary financial partner, Tangiers Capital. Tangiers Capital has extended the maturity of their current Notes for one year and has agreed to waive all potential default fees. This flexibility and commitment to provide additional capital demonstrated their faith in the Company’s new management team and land assets.Prevent Inspections
RestatementsNot applicable.
| 28 |
On December 27, 2017, the Board of Directors (the “Board”) of Oroplata Resources, Inc., after considering the recommendations of management and its Auditor, Heaton & Company, PLLC, concluded that the Company’s consolidated financial statements as of and for the twelve months ended September 30, 2016 and the quarters therein and its condensed consolidated financial statements for the three months ended December 31, 2016, the three months and six months March 31, 2017, and the three months and nine months ended June 30, 2017 (collectively, the “Non-Reliance Periods”), should not be relied upon because of information that has become available to the Company that affects the accuracy of the statements and data therein (the “Inaccurate Information” as discussed further below). Accordingly, investors, analysts and other persons should not rely upon the Company’s previously released financial statements and other financial data for the Non-Reliance Periods or any press releases, investor presentations or other communications that relate to that information.
17
As known to the Board as of December 27, 2017, the Inaccurate Information relates solely to accounting for certain common shares issued by the Company in 2016 which the Board has information to believe were not issued for proper consideration and for certain alleged liabilities of the Company (alleged to occur in 2016) that were not valid obligations of the Company. Accordingly, the Company announced that it will restate its historical financial results for the Non-Reliance Periods to reflect the removal of the Inaccurate Information. While the Company is continuing to perform a detailed review of its previously reported financial information, the Company currently anticipates that, when all of the necessary adjustments are aggregated, the net cumulative effect on each of its financial statements for the Non-Reliance Periods will be material but will be a non-cash item on the Company’s financial statements and will not affect the Company’s cash position or cause any potential dilution to the Company’s stockholders or affect any future cash flows of the Company except in the case of a change of control of the Company and even then in only certain circumstances.
Mogollan Rights
In December 2017, the Company determined that the previously reported mineral rights to the Mogollon concession located in the Dominican Republic are no longer valid and the Company has determined that it has no further interest in pursuing any mineral claims in the Dominican Republic.
Executive Employment Agreement
On December 29, 2017, the Company entered into an Executive Employment Agreement (the “Employment Agreement”) with Douglas Cole (“Executive”) as Chief Executive Officer of the Company. The term of the Employment Agreement is three years.
Pursuant to the Employment Agreement, the Executive is entitled to receive compensation equal to $70,000 for consulting services provided to the Company from March 1, 2017 until August 7, 2017. During such period Executive assisted the prior chief executive officer providing services similarly provided by a chief operating officer and chief financial officer as well as serving as controller and secretary of the Company.
In addition, Executive shall receive month cash compensation equal to $20,833 retroactive to August 7, 2017, the date he was appointed Chief Executive Officer. Executive received 3,000,000 restricted common shares upon the execution of the Employment Agreement and shall receive additional grants of one million shares on each of August 7, 2018 and August 7, 2019 provided Executive is still providing services to the Company on such dates.
Executive also received on December 29, 2017, 1,000,000 restricted common shares as a replacement for 1,000,000 shares previously issued to him in 2016 for consulting work provided to the Company by the Executive but were canceled by the Company because they were not issued properly. These 1,000,000 shares are not related to any compensation as an officer but are being received by the Executive while he is currently serving as an officer.
18
PART III
Item 10. Directors, Executive Officers, and Corporate Governance
The following table sets forth the names and ages of our current directors and executive officers, the principal offices and positions held by each person:
Name | Age | Positions | ||
|
| Chief Executive Officer, Chief Technology Officer, Director | ||
|
| Director | ||
|
| Director | ||
| Elizabeth Lowery2,3 | 67 | Director | ||
| Sherif Marakby1,2 | 57 | Director | ||
| Jesse Deutsch | 59 | Chief Financial Officer | ||
| Andres Meza | 43 | Chief Operating Officer | ||
| Scott Jolcover | 72 | Chief Resource Officer |
| 1) | Member of Audit Committee | |
| 2) | Member of Nomination & Governance Committee | |
| 3) | Member of Compensation Committee |
William HunterRyan Melsert, ,CEO, CTO, Director
Mr. Hunter,Melsert, age 47, received his B.Sc. from DePaul University41, is the Chief Executive Officer and Chief Technology Officer at American Battery Technology Company, overseeing all aspects of the Company’s battery metal extraction and lithium-ion battery recycling divisions. Mr. Melsert specializes in Chicagothe development and scale-up of highly innovative first-of-kind systems. This development process consists of fundamental conceptual design, rigorous thermodynamic and process modeling, design and fabrication of bench-scale prototypes, construction and operation of integrated pilot systems, and implementation of commercial-scale systems. Joining the Company in September 2019, Mr. Melsert has been accelerating the development and implementation of the Company’s proprietary battery metal extraction technologies and battery recycling programs with the planning and construction of a multi-functional facility.
From May 2015 to March 2019 Mr. Melsert worked at Tesla as one of the founding members of the battery manufacturing Gigafactory design team, and subsequently as an R&D Manager for the Battery Materials Processing group. He founded and led this cross-functional team of mechanical and chemical engineers who implemented first-principles design to develop novel first-of-kind systems for the extraction, purification, and synthesis of precursor and active battery materials. This development scope included the fundamental conceptual design, rigorous thermodynamic and process modeling, design and fabrication of bench-scale prototypes, construction and operation of integrated pilot systems, and implementation of commercial scale systems for the processing of battery materials. From April 2013 to May 2015 Mr. Melsert served as R&D Manager, Advanced Energy & Transportation Technologies for Southern Research where he led a project team of 5-10 chemical/mechanical engineers in fundamental design of first-of-kind systems throughout energy systems field. While there, Mr. Melsert wrote and won several DOE grants in addition to winning the company-wide “Invention of the Year” 2015, presented at ARPA-E Innovation Summit. His education includes an MS in Mechanical Engineering and an MBA from Georgia Tech awarded in 2007 and 2011, respectively, and a BS in Mechanical Engineering with distinctionMinors in Engineering Mechanics, French, and International Studies from Penn State University awarded in 2004.
| 29 |
Julie Blunden, Director
For 35 years, Julie Blunden, age 57, has rapidly grown emerging energy companies to leaders in their sectors from power generation to retail power, solar, energy storage, and EV fast charging. She now focuses on Board work related to batteries for both mobility and stationary storage as well as their supply chains. She was elected the Kellstadtfirst independent Director on the Board ZincFive, where she chairs the Compensation Committee. In addition, at Plus Power, she is actively engaged through the Board of Advisors, where she also served as the Chief Operating Officer. At New Energy Nexus Ms. Blunden serves as Board Chair as well as serving on Audit, Executive and Finance Committees where she supports diverse energy entrepreneurs around the world to achieve a 100% clean energy economy for 100% of the population.
Ms. Blunden’s global experience includes executive roles at six organizations, including two publicly listed companies as well as the turnaround Chief Commercial Officer at EVgo through the completion of its sale to LS Power in 2020. Ms. Blunden has had P&L responsibility, extensive board engagement as an executive, served as Vice Chair at the Solar Energy Industries Association, a member of the Board of Directors at the national Energy Storage Association, and as a member of four other NGO Boards of Directors as well as two Advisory Boards. While Vice Chair at SEIA she led PV Now’s integration into SEIA as well as a refresh of Executive Compensation and Evaluation.
Additionally, she has served as Vice Chair of the Solar Energy Industries Association, a member of the Board of Directors at the National Energy Storage Association and was a former Executive in Residence for the Global Energy Management Program at the University of Colorado Denver’s Business School. Blunden has an engineering and environmental studies degree from Dartmouth College and a Master of Business Administration degree from Stanford’s Graduate School of Business.
D. Richard (Rick) Fezell, Director
Spanning a distinguished 35-year career as a former auditor, senior partner, and Vice Chairman at Ernst & Young (EY), Mr. Fezell, age 63, held multiple leadership roles at the industry, regional, and executive committee levels for EY, providing deep knowledge of financial reporting, risk management, and market-leading growth strategies to large public multinationals as well as emerging growth and newly public companies.
He was Vice Chair and Managing Partner of the firm’s Central Region, responsible for a $3 billion business across all service lines that included over 7,000 professionals in 17 offices. While serving as the Americas Vice Chair for Markets, Mr. Fezell oversaw growth for a $15 billion practice. Prior to his retirement from EY in 2020, Mr. Fezell served as the Americas Leader for EY’s alliance with Microsoft, at the forefront of transformation and digitalization and responsible for product development, investment allocations and joint go-to-market strategies to help drive digital platform services growth at both EY and Microsoft.
Mr. Fezell has served on the board of many community and higher education organizations including The United Way, the Civic Committee of The Commercial Club of Chicago, the Markkula Center for Applied Ethics at Santa Clara University, the Orfalea School of Business at DePaul University. Mr. HunterCal Poly San Luis Obispo and Perspectives Charter Schools in Chicago. He is a seasoned financialCPA and graduate of Westminster College in Pennsylvania.
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Elizabeth Lowery, Director
Elizabeth Lowery, age 67, is a Senior Advisor, Sustainable Finance and ESG with ERM, a sustainability consulting firm. She is also a Senior Executive Advisor with GI Partners and Piva. She was formerly the Managing Director of Sustainability and ESG at TPG. Ms Lowery joined TPG after a 20-year career with General Motors Company where she was a member of GM’s Senior Leadership Group as Corporate Vice President, Environment, Energy & Safety Policy and Secretary to the Public Policy Committee of the GM Board of Directors. She also served as General Counsel for GM—North America. Ms. Lowery has held various executive positions, including Senior Knowledge Leader and a Principal of GreenOrder at LRN, where she was focused on working with over 20 yearsglobal enterprises to develop sustainability strategies and initiatives. She was also a partner at Honigman Miller Schwartz and Cohn and a law clerk to Michigan Supreme Court Justice G. Mennen Williams. She has served on several non-profit boards including the World Environment Center, InForum Center for Leadership, Keystone Center and the Alliance for Automobile Manufacturers. Her primary responsibilities within TPG included leading the Sustainability and ESG program development, strategy and deployment across the Firm, engaging with portfolio companies to build sustainable businesses, and assisting deal teams on due diligence matters. Ms. Lowery was a member of advisorythe PRI Private Equity Advisory Committee, and capital markets experience. Bill has been involvedshe is currently a Board Member of Denali Water Solutions, Keter Environmental Services, Sagard Holdings, and American Battery Technology Company. She is also a member of the Caesars Entertainment CSR External Advisory Board and on the Corporate Eco Forum Advisory Board. She graduated Magna Cum Laude with a Juris Doctorate from Wayne State University and a B.B.A from Eastern Michigan University.
Sherif Marakby, Director
Sherif Marakby, age 57, brings significant operating experience in over $20 billion of transactions throughout histhe automotive OEM industry from a 31-year career in the natural resourcestransformation, electrification, and industrial industries. Bill ledtechnology innovation and AV development fields. Mr. Marakby currently serves on the Americas Banking teamboard of directors of Lucid Group, Inc., an electric vehicle manufacturer, as an advisor to MemryX Inc., an automotive and consumer products company, and as a senior advisor at NomuraBoyden, an executive search firm. Prior to joining the Company, Mr. Marakby served as Executive Vice President, Corporate R&D of Magna International, one of the largest Tier 1 suppliers to the automotive industry in the world. Previously, he served as Uber’s Vice President of Global Vehicle Programs where he advised Mitsuibuilt a team that integrated self-driving technology into vehicles, partnered with Volvo cars for an autonomous vehicle program, and was responsible for business development with OEM partners.
During a close to 30-year career at Ford Motor Company, Mr. Marakby held a variety of product development positions, beginning with Chief Engineer and rising to President & CEO of Ford’s Autonomous Vehicle LLC, where he oversaw the development and launch of five new vehicles, including the all-electric Ford Mustang Mach-E and the Ford Fusion Hybrid. Additionally, during his tenure at Ford, Mr. Marakby served as the Director of Small Cars & SUVs globally overseeing two million vehicles and more than $40 billion of annual revenue in over 70 countries. In his role as Vice President of Electrification and Autonomous Vehicles, he was responsible for over $11 billion of electrification and $4 billion of autonomous vehicle development.
Mr. Marakby has a Master in Electronics Engineering from the University of Maryland College Park, and a Master of Business Administration from the University of Michigan.
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Jesse Deutsch, Chief Financial Officer
Jesse Deutsch, age 59, has over 25 years of finance experience in world-class multinational corporations in the U.S. and abroad. He has led several businesses through transformative high-growth phases and has completed more than 75 M&A transactions with strategic partners. He joins the Company with nearly 20 years serving in the role as Chief Financial Officer with global brands such as Kraft Foods and Aramark Inc., and over the course of his tenure has served in executive financial leadership roles at companies such as Visa, and Philip Morris. Mr. Deutsch has in-depth experience in establishing transformative finance processes and has led large systems implementations. He has an MBA from New York University and a Bachelor of Science in economics from The Wharton School of the University of Pennsylvania.
Andres Meza, Chief Operating Officer
Mr. Meza, age 43, has an undergraduate degree in chemical engineering and started his professional career at Georgia Pacific working as a process engineer at a paper mill. After working to gain direct hands-on chemical manufacturing expertise throughout the processing plant, he was promoted to a shift team leader. To further enhance his management and leadership skills, he attended the Harvard Business School. After receiving his MBA, he worked for Apple as a global supply manager focusing on commissioning and scaling up of manufacturing facilities across Asia and the implementation of cost efficiencies throughout their supply chain. After four years optimizing high-volume manufacturing at Apple, Mr. Meza worked for the management consultancy firm McKinsey and Company as an engagement manager. In this role, he analyzed the manufacturing operations of global corporations and developed strategic assessments for executives to implement operational efficiencies in their acquisitionfacilities and business units. Mr. Meza subsequently joined the private equity firm Transom Capital as the Vice President of Operations working with a minority interestsuite of portfolio companies in which the Moatize Coalfirm had invested. At Transom Capital, Mr. Meza used his extensive expertise in operational leadership and manufacturing to establish the required procedures and frameworks to help grow these early-stage companies into mature and stable corporations.
Scott Jolcover, Chief Resource Officer
Mr. Jolcover, age 72, has development expertise spanning five decades including expertise in construction, mining and land development, water resource, claims management, economic and environmental solutions. Prior to joining the Company, he served as the Director of Development and General Site Manager for Comstock Mining complex from ValeInc., where he managed all commercial transactions, including land, water and Globe Specialty Metals inother major capital expenses and acquisitions and served two years on their $3.1 billion ‘mergerBoard of equals’ transactionDirectors. Other roles include President and CEO for Virginia City Ventures, which established the Comstock Gold Mill and partnered with FerroAtlantica. Before Nomura he led the team at JefferiesTri-County Railway Commission. Mr. Jolcover has board and did numerous transactions for companies like Alpha Natural Resources, Fortescue Metals Groupleadership roles with Nevada Works; Northern Nevada Development Authority (NNDA), Design and Murray Energy.Construction Committee; and a 20-year relationship with Virginia City Tourism Commission (VCTC), including Chair and Vice-Chair roles.
There have been no transactions since the beginning of the Company'sCompany’s last fiscal year, and there are no currently proposed transactions, in which the Company was or is to be a participant and in which Mr. Hunterthe Company’s directors or officers (or any member of histheir immediate family) had or will have any interest, that are required to be reported under Item 404(a) of Regulation S-K. The appointment of Mr. Hunter was not pursuant to any arrangement or understanding between him and any person, other than a director or executive officer of the Company acting in his or her official capacity.
Douglas MacLellan, Director
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Mr. MacLellan, age 61, currently serves as Chairman of the Board of eWellness Corporation since May 2013. From November 2009 to present Mr. MacLellan has been an independent director of ChinaNet Online Holdings, Inc. (NASDAQ: CNET) a media development, advertising and communications company. From June 2011 to present Mr. MacLellan has been Chairman of Innovare Products, Inc., a privately held company that develops innovative consumer products. In May 2014, Mr. MacLellan joined the Board as an independent director of Jameson Stanford Resources Corporation (OTCBB: JMSN) an early stage mining company. Until April 2014, Mr. MacLellan was Chairman and chief executive officer at Radient Pharmaceuticals Corporation. (OTCQB: RXPC.PK), a vertically integrated specialty pharmaceutical company. He also continues to serve as president and chief executive officer for the MacLellan Group, an international financial advisory firm since 1992. From August 2005 to May 2009, Mr. MacLellan was co-founder and vice chairman at Ocean Smart, Inc., a Canadian based aquaculture company. From February 2002 to September 2006, Mr. MacLellan served as chairman and cofounder at Broadband Access MarketSpace, Ltd., a China based IT advisory firm, and was also co-founder at Datalex Corp., a software and IT company specializing in mainframe applications, from February 1997 to May 2002. Mr. MacLellan was educated at the University of Southern California in economics and international relations.
There have been no transactions since the beginning of the Company's last fiscal year, and there are no currently proposed transactions, in which the Company was or is to be a participant and in which Mr. MacLellan (or any member of his immediate family) had or will have any interest, that are required to be reported under Item 404(a) of Regulation S-K. The appointment of Mr. MacLellan was not pursuant to any arrangement or understanding between him and any person, other than a director or executive officer of the Company acting in his or her official capacity.
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Douglas Cole, Director, CEO, CFO, Controller, Secretary
Mr. Cole, age 62, has been a Partner overseeing all ongoing deal activities with Objective Equity LLC since 2005, a boutique investment bank focused on the high technology, data analytics and the mining sector. Mr. Cole currently serves on the Board of Directors of eWellness Healthcare Corporation (EWLL). Since 1977 Mr. Cole has held various executive roles, including Chairman, Executive Vice Chairman, Chief Executive Officer and President of multiple public corporations. From May 2000 to September 2005, he was also the Director of Lair of the Bear, The University of California Family Camp located in Pinecrest, California. During the period between 1991 and 1996 he was the CEO of HealthSoft and he also founded and operated Great Bear Technology, which acquired Sony Image Soft and Starpress, then went public and eventually sold to Graphix Zone. In 1995 Mr. Cole was honored by NEA, a leading venture capital firm, as CEO of the year. In 1997 Mr. Cole became CEO of NetAmerica until merging in 1999. Since 1982 he has been very active with the University of California, Berkeley mentoring early-stage technology companies. Mr. Cole has extensive experience in global M&A and global distributions. He obtained his BA in Social Sciences from UC Berkeley in 1978.
There have been no transactions since the beginning of the Company's last fiscal year, and there are no currently proposed transactions, in which the Company was or is to be a participant and in which Mr. Cole (or any member of his immediate family) had or will have any interest, that are required to be reported under Item 404(a) of Regulation S-K. The appointment of Mr. Cole was not pursuant to any arrangement or understanding between him and any person, other than a director or executive officer of the Company acting in his or her official capacity.
Director Qualifications
We believe that our directors should have the highest professional and personal ethics and values, consistent with our longstanding values and standards. They should have broad experience at the policy-making level in business or banking. They should be committed to enhancing stockholder value and should have sufficient time to carry out their duties and to provide insight and practical wisdom based on experience. Their service on other boards of public companies should be limited to a number that permits them, given their individual circumstances, to perform responsibly all director duties for us. Each director must represent the interests of all stockholders. When considering potential director candidates, the Board also considers the candidate’s character, judgment, diversity, age and skills, including financial literacy and experience in the context of our needs and the needs of the Board.
Family RelationshipsBoard Committees
Involvement in Certain Legal Proceedings
Our directorsBoard has established Audit, Nominating and executive officers have not been involved in anyCorporate Governance, and Compensation Committees. Our Board may establish other committees to facilitate the management of our business. The composition and functions of the following events duringaudit committee, compensation committee and nominating and corporate governance committee are described below. Members will serve on committees until their resignation or removal from the past ten years:Board or until otherwise determined by our Board.
Any bankruptcy petition filed by or against such person or any businessAudit Committee
Our audit committee consists of which such person was a general partner or executive officer either atRick Fezell, Julie Blunden, and Sherif Marakby, with Mr. Fezell serving as the timechairman. Our Board has determined that Mr. Fezell is an “audit committee financial expert” within the meaning of the bankruptcy or within two years prior toSEC regulations. Our Board has also determined that time;
Any convictioneach member of our audit committee can read and understand fundamental financial statements in a criminal proceeding or being subject to a pending criminal proceeding (excluding traffic violations and other minor offenses);
Being subject to any order, judgment, or decree, not subsequently reversed, suspended or vacated,accordance with applicable requirements. In arriving at these determinations, the Board has examined each audit committee member’s scope of any court of competent jurisdiction, permanently or temporarily enjoining him from or otherwise limiting his involvement in any type of business, securities or banking activities or to be associated with any person practicing in banking or securities activities;
Being found by a court of competent jurisdiction in a civil action, the SEC or the Commodity Futures Trading Commission to have violated a Federal or state securities or commodities law,experience and the judgment has not been reversed, suspended, or vacated; nature of their employment in the corporate finance sector. The functions of this committee include:
Being subject
| ● | selecting a qualified firm to serve as the independent registered public accounting firm to audit our financial statements; | |
| ● | helping to ensure the independence and performance of the independent registered public accounting firm; | |
| ● | discussing the scope and results of the audit with the independent registered public accounting firm, and reviewing, with management and the independent accountants, our interim and year-end operating results; | |
| ● | developing procedures for employees to submit concerns anonymously about questionable accounting or audit matters; | |
| ● | reviewing our policies on risk assessment and risk management; | |
| ● | reviewing related party transactions; | |
| ● | obtaining and reviewing a report by the independent registered public accounting firm at least annually, that describes our internal quality-control procedures, any material issues with such procedures, and any steps taken to deal with such issues when required by applicable law; and | |
| ● | approving (or, as required, pre-approving) all audit and all permissible non-audit services, other than de minimis non-audit services, to be performed by the independent registered public accounting firm. |
Nominating and Corporate Governance Committee
Our nominating and corporate governance committee consists of or a party to, any Federal or state judicial or administrative order, judgment decree, or finding, not subsequently reversed, suspended or vacated, relating to an alleged violationElizabeth Lowery, Sherif Marakby, and Julie Blunden, with Ms. Lowery serving as the chairman. The functions of any Federal or state securities or commodities law or regulation, any law or regulation respecting financial institutions or insurance companies, or any law or regulation prohibiting mail or wire fraud or fraudthe nominating and corporate governance committee will include:
| ● | identifying and recommending candidates for membership on our Board; | |
| ● | including nominees recommended by stockholders; | |
| ● | reviewing and recommending the composition of our committees; | |
| ● | overseeing our code of business conduct and ethics, corporate governance guidelines and reporting; and | |
| ● | making recommendations to our Board concerning governance matters. |
The nominating and corporate governance committee also annually reviews the nominating and corporate governance committee charter and the committee’s performance.
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Compensation Committee
Our compensation committee consists of Julie Blunden, Rick Fezell, and Elizabeth Lowery, with Ms. Blunden serving as the chairman. The functions of the compensation committee include:
| ● | reviewing and approving, or recommending that our Board approve, the compensation of our executive officers; | |
| ● | reviewing and recommending that our Board approve the compensation of our directors; | |
| ● | reviewing and approving, or recommending that our Board approve, the terms of compensatory arrangements with our executive officers; | |
| ● | administering our stock and equity incentive plans; | |
| ● | selecting independent compensation consultants and assessing conflict of interest compensation advisers; | |
| ● | reviewing and approving, or recommending that our Board approve, incentive compensation and equity plans; and | |
| ● | reviewing and establishing general policies relating to compensation and benefits of our employees and reviewing our overall compensation philosophy. |
Board Leadership Structure and Role in connectionRisk Oversight
Our Board is primarily responsible for overseeing our risk management processes. Our Board receives and reviews periodic reports from management, auditors, legal counsel, and others, as considered appropriate regarding our assessment of risks. Our Board focuses on the most significant risks we face our general risk management strategy, and also ensures that risks we undertake are consistent with any business entity; or our Board’s appetite for risk. While our Board oversees our risk management, management is responsible for day-to-day risk management processes. We believe this division of responsibilities is the most effective approach for addressing the risks we face and that our Board leadership structure supports this approach.
Being subject of or party to any sanction or order, not subsequently reversed, suspended, or vacated, of any self-regulatory organization, any registered entity or any equivalent exchange, association, entity or organization that has disciplinary authority over its members or persons associated with a member.
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Code of Ethics
The Company has not
We have adopted a Code of Ethics and Businessentitled Code of Conduct. Management intends to adopt aA copy of the Code of Ethics and Business Conductwill be provided without charge upon request at 100 Washington Street, Suite 100, Reno, NV 89503. We intend to disclose any amendments to or waivers of certain provisions of our Code of Ethics in the near future.a Current Report on Form 8-K.
Term of Office
Our directors are appointed to hold office until the next annual general meeting of our stockholders or until removed from office in accordance with our Bylaws. Our officers are appointed by our Board and hold office until removed by the Board, absent an employment agreement.
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Conflicts of Interest
Since we do not have an audit or compensation committee comprised of independent directors, the functions that would have been performed by such committees are performed by our directors. The Board has not established an audit committee and does not have an audit committee financial expert, nor has the Board established a nominating committee. The Board is of the opinion that such committees are not necessary since the Company is the early stages of operations. The Company has one director, and to date, such director has been performing the functions of such committees. Thus, there is a potential conflict of interest in that our sole director and officer has the authority to determine issues concerning management compensation, nominations, and audit issues that may affect management decisions.
Delinquent Section 16(a) Beneficial Ownership Compliance ReportingReports
Section 16(a) of the Securities Exchange Act requires a company’sthat our directors and executive officers and persons who beneficially own more than 10% of any class of a company’s equity securities which are registered under Section 12 ofour common stock (referred to herein as the Exchange Act, to“reporting persons”) file with the SEC various reports as to their ownership of ownership on Form 3 and reports of changes in ownership on Forms 4and 5. Such officers, directors and 10% stockholders are also requiredactivities relating to furnish the company with copies of all Section 16(a) reports they file.our common stock. Based solely on our review of the copies of such forms received by usthe reports filed with the SEC and onthe written representations from certain reporting persons as September 30, 2017,of our directors and executive officers, we do not believe that all Section 16(a) reports applicable to our officers, directors and 10% stockholders with respect to ourreporting requirements for the fiscal year ended SeptemberJune 30, 2017 have been filed.2023, were complied with by each person who at any time during the fiscal year was a director or an executive officer or held more than 10% of our common stock, except for the following: Andres Meza filed: (i) a late Form 4 report on October 26, 2022, related to the vesting of restricted stock units and award of common stock on October 18, 2022, and (ii) a late Form 4 report on November 2, 2022, related to the vesting of restricted stock units on October 26, 2022 and Ryan Melsert filed (iii) a late Form 4 report on November 2, 2022, related to an award of common stock on October 18, 2022.
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Item 11. Executive Compensation
Summary Compensation Table – Independent Members of the Board of Directors
Name and Principal Position | Fiscal Year Ended 9/30 | Salary ($) | Bonus ($) | Stock Awards ($) | Option Awards ($) | Non-Equity Incentive Plan Compensation ($) | Nonqualified Deferred Compensation Earnings ($) | All Other Compensation ($) | Total ($) | |
Douglas Cole CEO, CFO, and Chairman of the Board | 2016 | - | - | - | - | - | - | - | - | |
2017 | 59,500 | - | - | - | - | - | - | 59,500 | ||
Douglas MacLellan Director | 2016 | - | - | - | - | - | - | - | - | |
2017 | - | - | - | - | - | - | - | - | ||
William Hunter Director | 2016 | 15,000 | - | - | - | - | - | - | 15,000 | |
2017 | 15,000 | - | - | - | - | - | - | 15,000 | ||
Craig Alford Former President, CEO, CFO, and Director | 2016 | 30,000 | - | - | - | - | - | - | 30,000 | |
2017 | 60,000 | - | - | - | - | - | - | 60,000 | ||
Greg Kuzma Former Director | 2016 | 15,000 | - | - | - | - | - | - | 15,000 | |
2017 | - | - | - | - | - | - | - | - | ||
Michael Mason Former Director | 2016 | - | - | - | - | - | - | - | - | |
2017 | - | - | - | - | - | - | - | - | ||
| Name and Principal Position | Fiscal Years Ended 6/30/2023 and 6/30/2022 | Fees Earned or Paid in Cash ($) | Bonus ($) | Stock Awards ($) | Option Awards ($) | Non-Equity Incentive Plan Compensation ($) | Nonqualified Deferred Compensation Earnings ($) | All Other Compensation ($) | Total ($) | |||||||||||||||||||||||||||
| Elizabeth Lowery | ||||||||||||||||||||||||||||||||||||
| Director | 2023 | 35,000 | — | 132,942 | — | — | — | — | 167,942 | |||||||||||||||||||||||||||
| Julie Blunden | ||||||||||||||||||||||||||||||||||||
| Director | 2023 | — | — | 170,188 | — | — | — | — | 170,188 | |||||||||||||||||||||||||||
| D. Richard (Rick) Fezell | ||||||||||||||||||||||||||||||||||||
| Director | 2023 | — | — | 175,509 | — | — | — | — | 175,509 | |||||||||||||||||||||||||||
| Sherif Marakby | ||||||||||||||||||||||||||||||||||||
| Director | 2023 | 25,000 | — | 132,942 | — | — | — | — | 157,942 | |||||||||||||||||||||||||||
Note:
Elizabeth Lowery, Julie Blunden, Rick Fezell, and Sherif Marakby were appointed to the Board effective March 1, 2022. Director compensation includes $25,000 annually, paid in pro rata portions on a quarterly basis, in addition to an annual equity award of Restricted Stock Units (RSUs) equal to $150,000 divided by the volume weighted average price (VWAP) of the Company’s common stock during the twenty (20) trading days prior to the applicable grant day. The Directors may also be eligible to receive additional compensation if they chair certain Board committees.
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Summary Compensation Table – Executive Officers
| Name and Principal Position | Fiscal Years Ended June 30 | Salary ($) | Bonus ($) | Stock Award Grant Date Fair Value ($) | Option Awards ($) | Non-Equity Incentive Plan Compensation ($) | Nonqualified Deferred Compensation Earnings ($) | All Other Compensation ($) | Total ($) | |||||||||||||||||||||||||||
| Ryan Melsert | 2022 | 360,000 | — | 1,555,000 | — | — | — | — | 1,915,000 | |||||||||||||||||||||||||||
| Chief Executive Officer, Chief Technology Officer (1) | 2023 | 358,750 | — | 3,020,105 | — | — | — | — | 3,378,855 | |||||||||||||||||||||||||||
| Andres Meza | 2022 | 225,000 | — | — | — | — | — | — | 225,000 | |||||||||||||||||||||||||||
| Chief Operating Officer (2) | 2023 | 247,917 | — | 1,842,427 | — | — | — | — | 2,090,344 | |||||||||||||||||||||||||||
| Jesse Deutsch | 2022 | — | — | — | — | — | — | — | — | |||||||||||||||||||||||||||
| Chief Financial Officer (3) | 2023 | 27,778 | — | 373,300 | — | — | — | — | 401,078 | |||||||||||||||||||||||||||
| Scott Jolcover | 2022 | 225,000 | — | 3,290,000 | — | — | — | 11,000 | 3,526,000 | |||||||||||||||||||||||||||
| Chief Resource Officer (4) | 2023 | 231,875 | — | 1,131,035 | — | — | — | — | 1,362,910 | |||||||||||||||||||||||||||
Note:
| (1) | Ryan Melsert was appointed as the Chief Executive Officer of the Company on August 27, 2021. The compensation disclosed above reflects amounts earned in his roles both as a board member and officer of the Company. Pursuant to his employment agreement as Chief Executive Officer, Chief Technology Officer, and Director, Ryan Melsert is entitled to receive an annual salary of $425,000, which at Mr. Melsert’s election could be reduced to $325,000 per year through December 31, 2022, in exchange for 4,000 restricted stock units (“RSUs”) that shall fully vest on January 1, 2023. Mr. Melsert is also eligible to receive performance-based bonuses tied to specific strategic milestones at 75% of his annual salary, $1,000,000 in RSUs and $3,000,000 in warrants with a five-year expiration and exercise price as calculated by Black-Scholes at the time of the grant. The performance-based bonuses will be pro-rated according to the specific weight of each milestone. Additionally, Mr. Melsert may receive additional cash or equity compensation based on annual performance reviews or under the Company’s equity incentive plan. |
| (2) | Pursuant to his employment agreement as Chief Operating Officer, Andres Meza is entitled to receive an annual salary of $275,000. In addition, subject to approval by the Board and upon achieving certain performance milestones, Mr. Meza is eligible to receive bonus compensation of (i) bonus cash set at 75% of his base salary; (ii) $500,000 in RSUs divided by the 20-day trailing volume-weighted average price prior to the effective date; and (iii) $1,000,000 worth of warrants with a five-year expiration of a quantity and exercise price as calculated by Black-Scholes. Both the RSUs and warrants will vest over a four-year vesting schedule. Additionally, Mr. Meza may receive additional cash or equity compensation based on annual performance reviews or under the Company’s equity incentive plan. |
| (3) | On May 19, 2023, Jesse Deutsch was appointed as Chief Financial Officer of the Company. Pursuant to his employment agreement as Chief Financial Officer, Jesse Deutsch is entitled to receive an annual salary of $250,000. In addition, Mr. Deutsch is eligible to receive a one-time signing bonus of 33,334 RSUs, which will vest on the last day of the fiscal quarter following the first-year anniversary of his employment. Mr. Deutsch is eligible to receive bonus equity compensation, subject to achieving certain performance milestones, of (i) bonus cash set at 75% of his base salary and (ii) 33,334 RSUs with a four-year vesting schedule. Additionally, Mr. Deutsch may receive additional cash or equity compensation based on annual performance reviews or under the Company’s equity incentive plan. |
| (4) | Pursuant to his employment agreement as Chief Resource Officer, Scott Jolcover is entitled to receive an annual salary of $240,000. In addition, subject to approval by the Board, and upon achieving certain performance milestones, Mr. Jolcover is eligible to receive bonus equity compensation of (i) bonus cash set at 75% of his base salary; (ii) $300,000 in RSUs divided by the 20-day trailing volume-weighted average price prior to the effective date; and (iii) $500,000 worth of warrants with a three-year expiration of a quantity and exercise price as calculated by Black-Scholes. Mr. Jolcover’s bonus equity compensation awards will vest 1/12th quarterly beginning on the last quarter following the issuance of the award until fully vested. Additionally, Mr. Jolcover may receive additional cash or equity compensation based on annual performance reviews or under the Company’s equity incentive plan. |
Outstanding Equity Awards at Fiscal Year End
| Option Awards | Stock Awards | |||||||||||||||||||||||||||||||||||||||
| Name and Principal Position | Number of securities underlying unexercised options (#) exercisable | Number of securities underlying unexercised options (#) unexercisable | Equity incentive plan awards: number of securities underlying unexercised unearned options (#) | Option exercise price ($) | Option Awards ($) | Option expiration date | Number of shares or units of stock that have not vested (#) | Market value of shares or units of stock that have not vested ($) | Equity incentive plan awards: number of unearned shares, units or other rights that have not vested (#) | Equity incentive plan awards: market or payout value of unearned shares, units or other rights that have not vested ($) | ||||||||||||||||||||||||||||||
| Ryan Melsert | — | — | — | — | — | — | — | 270,833 | 1,652,081 | |||||||||||||||||||||||||||||||
| Chief Executive Officer, Chief Technology Officer (1) | — | — | — | — | — | — | — | 38,597 | 235,442 | |||||||||||||||||||||||||||||||
| 32,693 | 98,079 | — | $ | 6.60 | 797,709 | — | June 19, 2028 | — | — | — | ||||||||||||||||||||||||||||||
| Andres Meza | — | — | — | — | — | — | — | 18,750 | 114,375 | |||||||||||||||||||||||||||||||
| Chief Operating Officer (2) | — | — | — | — | — | — | — | 135,417 | 826,044 | |||||||||||||||||||||||||||||||
| — | — | — | — | — | — | — | 27,788 | 169,507 | ||||||||||||||||||||||||||||||||
| — | 40,859 | — | $ | 6.60 | 249,240 | — | June 19, 2028 | — | — | — | ||||||||||||||||||||||||||||||
| Jesse Deutsch2 | ||||||||||||||||||||||||||||||||||||||||
| Chief Financial Officer (3) | — | — | — | — | — | — | — | 33,334 | 203,337 | |||||||||||||||||||||||||||||||
| Scott Jolcover | — | — | — | — | — | — | — | 108,333 | 660,831 | |||||||||||||||||||||||||||||||
| Chief Resource Officer | — | — | — | — | — | — | — | 10,421 | 63,568 | |||||||||||||||||||||||||||||||
| — | 12,717 | — | $ | 6.60 | 77,574 | — | June 19, 2028 | — | — | — | ||||||||||||||||||||||||||||||
Since incorporation on October 6, 2011 to September 30, 2017, we have not granted any stock options or stock appreciation rights to our executive officer or directors.Note:
Compensation of Directors and Officers
| (1) | As Chief Executive Officer, Chief Technology Officer, and Director, Ryan Melsert received multiple awards under the 2021 Retention Plan (“Retention Plan”) for his continued service. As of June 30, 2023, Mr. Melsert has 270,833 retention RSUs that vest quarterly, over a four-year period, 38,597 RSUs that vest quarterly over a four-year period and 130,772 share purchase warrants with an exercise price of $10.50 and an expiration date of June 19, 2028. | |
| (2) | As Chief Operating Officer, Andres Meza received multiple awards under the Retention Plan for his initial employment and continued service. As of June 30, 2023, Mr. Meza has 18,750 employment RSUs that vest over a four-year period, 25% upon initial one-year anniversary, 135,417 RSUs outstanding that vest over a four-year period, with quarterly issuances beginning on the grant date, 27,788 RSUs earned pursuant to Mr. Meza’s existing employment agreement that vest over a remaining four-year period, 25% vesting January 2024 and each fiscal quarter thereafter and 40,859 share purchase warrants with an exercise price of $6.60 and an expiration date of June 19, 2028. | |
| (3) | As Chief Financial Officer, Jesse Deutsch received 33,334 RSUs that vest over a one-year period, issuable May 2024. | |
| (4) | As Chief Resource Officer, Scott Jolcover received multiple awards under the Retention Plan for his continued service. As of June 30, 2023, Mr. Jolcover has 108,333 RSUs that vest over a four-year period, 12,717 RSUs outstanding that vest over a remaining four-year period, 25% vesting January 2024, then each subsequent fiscal quarter thereafter and 130,772 share purchase warrants with an exercise price of $6.60 and an expiration date of June 19, 2028. |
As of September 30, 2017 we had no standard arrangement to compensate our directors for their services in the capacity as a director. On December 29, 2017, the Company entered in consulting agreements which each of the directors and entered into an employment agreement with its sole executive officer, Douglas Cole (see Item 9B). All travel and lodging expenses associated with corporate matters are reimbursed by us, if and when incurred.
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Item 12. Security Ownership of Certain Beneficial Owners and Management
The following table sets forth certain information as of January 12, 2018September 26, 2023, regarding the beneficial ownership of our common stock, is based on 78,778,695shares46,254,354 shares of Common Stock issued and outstanding by (i) each person or entity who, to our knowledge, owns more than 5%5.00% of our common stock or preferred stock and (ii) each executive officer and director. Unless otherwise indicated in the footnotes to the following table, each person named in the table has sole voting and investment power and that person’s address is deemed to be the address of our principal executive offices.offices at 100 Washington Street, Suite 100, Reno, NV 89503.
22
Shares of common stock subject to options, warrants or other rights currently exercisable or exercisable within 60 days of January 12, 2018,September 26, 2023, are deemed to be beneficially owned and outstanding for computing the share ownership and percentage of the stockholder holding such options, warrants or other rights, but are not deemed outstanding for computing the percentage of any other stockholder.
Name of Beneficial Owner |
| Number of Shares Beneficially Owned |
| Percentage Beneficially Owned |
|
|
|
|
|
Craig Alford |
| 4,000,000 |
| 5.1% |
William Hunter |
| 3,000,000 |
| 3.8% |
Douglas Cole |
| 6,000,000 |
| 7.6% |
Douglas MacLellan |
| 2,000,000 |
| 2.5% |
| Name of Beneficial Owner | Number of Shares of Common Stock Beneficially Owned | Percentage of Common Stock Beneficially Owned | ||||||
| Ryan Melsert | 1,387,926 | 2.974 | % | |||||
| Scott Jolcover | 252,523 | 0.546 | % | |||||
| Andres Meza | 130,252 | 0.281 | % | |||||
| Jesse Deutsch | 28,572 | 0.062 | % | |||||
| Julie Blunden | 16,956 | 0.037 | % | |||||
| D. Richard (Rick) Fezell | 17,232 | 0.037 | % | |||||
| Elizabeth Lowery | 15,027 | 0.032 | % | |||||
| Sherif Marakby | 15,027 | 0.032 | % | |||||
| All directors and officers as a group (8 persons) | 1,863,515 | 3.982 | % | |||||
There are no arrangements known to the Company which may, at a subsequent date, result in a change-in-control.
Securities Authorized for Issuance under Equity Compensation Plans
The Company, under its 2021 Retention Plan (“the Retention Plan”), is authorized to issue shares of common stock to employees and non-employees up to ten percent (10%) of the total number of shares of common stock outstanding as of December 31, 2022, on a fully diluted basis.
Item 13.Certain Relationships and Related Party Transactions and Director Independence
Related Party Transactions
Except as described below, during the past two fiscal years, there have been no transactions, whether directly or indirectly, between us and any of our respective officers, directors, beneficial owners of more than 5% of our outstanding Common Stock or their family members, that exceeded the lesser of $120,000 or 1% of the average of our total assets at year-end for the last two completed fiscal years.
Director Independence
William Hunter, Douglas MacLellan and Douglas Cole areRyan Melsert is not an independent director within the meaning of Section 5605 of NASDAQ. Douglas Cole, who served as Chairman of the Board until his resignation on February 25, 2022, was not considered an independent director within the meaning of Section 5605 of NASDAQ as he was not more than three years removed from his role as CEO of the Company.
The Board has adopted a policy that covers any related party transaction that meets the minimum threshold for disclosure in the Company’s proxy statement under the relevant SEC rules. The Audit Committee is responsible for reviewing and, if appropriate, approving or ratifying any related party transactions. Any related party transactions entered into before this policy was adopted were approved by the Board or the Audit Committee.
Item 14. Principal Accounting Fees and Services
The aggregate fees billed for the two most recently completed fiscal years for professional services rendered by the principal accountant for the audit of our annual financial statements and review of the financial statements that are normally provided by the accountant in connection with statutory and regulatory filings or engagements for those fiscal periods were as follows:
| Fiscal year ended June 30, 2023 | Fiscal year ended June 30, 2022 | |||||||
| Audit fees | $ | 130,000 | $ | 155,000 | ||||
| Audit-related fees | 105,443 | 71,585 | ||||||
| Tax fees | 21,700 | 34,327 | ||||||
| All other fees | 52,725 | 6,953 | ||||||
| Total | $ | 309,868 | $ | 267,865 | ||||
|
| Year Ended September 30, 2017 |
| Year Ended September 30, 2016 |
Audit Fees | $ | 10,500 | $ | 8,500 |
Audit-Related Fees |
| - |
| - |
Tax Fees |
| - |
| - |
All Other Fees |
| - |
| - |
Total | $ | 10,500 | $ | 8,500 |
23The Audit Committee reviews audit and non-audit services performed by Marcum as well as the fees charged by Marcum for such services. The Audit Committee has delegated to its Chair the authority to pre-approve such services. When pre-approving and reviewing non-audit service fees, consideration is given to the possible effect of the performance of such services on the auditors’ independence. All services provided by Marcum for the fiscal years ended June 30, 2022 and June 30, 2023 were permissible under applicable laws, rules and regulations and were pre-approved by the Audit Committee in accordance with its procedures. The Audit Committee considered the amount of non-audit services provided by Marcum in assessing its independence.
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PART IV
Item 15.Exhibits and Financial Statement Schedules.
The following exhibits are either provided with this Annual Report or are incorporated herein by reference:
Item 16. Form 10-K Summary.
SIGNATURES
None.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
| AMERICAN BATTERY TECHNOLOGY COMPANY (Registrant) | ||||
| Date: September 27, 2023 | By: | /s/ Ryan Melsert | ||
| Name: | Ryan Melsert | |||
| Title: | Chief Executive Officer, Chief Technology Officer, & Director | |||
| (Principal Executive Officer) | ||||
| /s/ Jesse Deutsch | ||||
| Name: | Jesse Deutsch | |||
| Title: |
| |||
| (Principal Accounting Officer) | ||||
|
| |||
| /s/ | ||||
| Name: |
| Elizabeth Lowery | ||
| Title: |
| Independent Director | ||
| /s/ Julie Blunden | ||||
| Name: | Julie Blunden | |||
| Title: | Independent Director | |||
| /s/ D. Richard Fezell | ||||
| Name: | D. Richard Fezell | |||
| Title: | Independent Director | |||
| /s/ Sherif Marakby | ||||
| Name: | Sherif Marakby | |||
| Title: | Independent Director | |||
24
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