Washington, D.C. 20549
FORM S-1
REGISTRATION STATEMENT
UNDER THE SECURITIES ACT OF 1933
AMERICAN BATTERY MATERIALS, INC.)
(Exact name of registrant as specified in its charter)
| Delaware | ||||
| (State or other jurisdiction of incorporation or organization) | (Primary Standard Industrial Classification Code | ( Identification No.) |
American Battery Materials, Inc.
500 West Putnam Avenue, Suite 400
Greenwich, Connecticut 06830
(800) 998-7962
(Address, including zip code, and telephone number,
Sebastian Lux and David Graber
Co-Chief Executive Officer
American Battery Materials, Inc.
500 West Putnam Avenue, Suite 400
Greenwich, Connecticut 06830
(800) 998-7962
(Name, address, including zip code, and telephone number, including area code, of agent for service)
Copy to:
| Spencer G. Feldman, Esq. Olshan Frome Wolosky LLP 1325 Avenue of the Americas, 15th Floor New York, New York 10019 (212) 451-2300 |
Approximate date of commencement of proposed sale to the public: From time to time
As soon as practicable after the effective date of this Registration Statement.registration statement.
If any of the securities being registered on this Form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933, as amended, check the following box. þ
If this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, please check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. ¨
If this Form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. ¨
If this Form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. ¨
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 the definitions of “large accelerated filer,” “accelerated filer”filer,” “smaller reporting company” and “smaller reporting“emerging growth company” in Rule 12b-2 of the Exchange Act.
Large Accelerated Filer | ☐ | Accelerated | ☐ | |||
| ☒ | Smaller | ☒ | ||||
| Emerging Growth Company | ☐ |
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided to Section 7(a)(2)(B) of the Securities Act. ☐
| Proposed | |||||
| Amount to | Proposed | Maximum | |||
| Title of Each Class | be | Maximum | Aggregate | Amount of | |
| of Securities to be | Registered | Offering Price | Offering Price | Registration | |
| Registered | (1) | per Share ($) | ($)(2) | Fee($) | |
| Shares of Common | |||||
| Stock, par value | 2,256,076 | $0.31 | $699,384 | $90.08 | |
| $0.001 | |||||
| 1 | 2,256,076 shares are being offered by a direct offering at the price of $0.31 per share. | ||||
| 2 | Estimated solely for purposes of calculating the registration fee in accordance with Rule 457(o) of the Securities Act, based upon the fixed price of the direct offering. | ||||
The registrantRegistrant hereby amends this registration statementRegistration Statement on such date or dates as may be necessary to delay its effective date until the registrantRegistrant shall file a further amendment which specifically states that this registration statementRegistration Statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act of 1933 as amended, or until the registration statementRegistration Statement shall become effective on such date as the Securities and Exchange Commission, acting pursuant to said Section 8(a), may determine.
The information in this preliminary prospectus is not complete and may be changed. WeThese securities may not sell these securities nor may offers to buy these securities be acceptedsold until the registration statementRegistration Statement filed with the Securities and Exchange Commission becomes effective. This preliminary prospectus is not an offer to sell these securities andnor does it is not solicitingseek an offer to buy these securities in any jurisdiction where the offer or sale is not permitted.
| PRELIMINARY PROSPECTUS | SUBJECT TO COMPLETION DATED FEBRUARY 12, 2024 |
__________ Shares
AMERICAN BATTERY MATERIALS, INC.)
Common Stock
This is a public offering of Common Stock
Investing in our common stock was $0.31.
| Per Share | Total | |||||||
| Public offering price | $ | $ | ||||||
| Underwriting discounts and commissions(1) | $ | $ | ||||||
| Proceeds to us, before expenses | $ | $ | ||||||
| (1) | Please see the section of this prospectus entitled “Underwriting’’ for additional information regarding compensation payable to the underwriters. |
We have granted a 30-day option to the underwriters to purchase up to ______ additional shares of our common stock, solely to cover over-allotments, if any, at the public offering price less underwriting discounts and commissions.
Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved of these securities or passed upon the adequacydetermined if this prospectus is truthful or accuracy of this prospectus.complete. Any representation to the contrary is a criminal offense.
The prospectus is not an offerunderwriters expect to sell these securities and it is not soliciting an offerdeliver the shares of our common stock to buy these securities in any state where the offerpurchasers on or sale is not permitted.about _____, 2024.
The date of this prospectus is November 5, 2014__________, 2024
American battery materials, INC.
Table of Contents
| Page | ||
| 1 | ||
| RISK FACTORS | 14 | |
| 23 | ||
| USE OF PROCEEDS | ||
| 24 | ||
| DIVIDEND POLICY | 25 | |
| 26 | ||
| DILUTION | 27 | |
| MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS | 28 | |
| BUSINESS | 35 | |
| MANAGEMENT | 46 | |
| EXECUTIVE COMPENSATION | 48 | |
| 51 | ||
| CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS | 52 | |
| DESCRIPTION OF CAPITAL STOCK | 53 | |
| 55 | ||
| UNDERWRITING | 56 | |
| LEGAL MATTERS | 62 | |
| EXPERTS | 62 | |
| 63 | ||
| INDEX TO FINANCIAL STATEMENTS | F-1 |
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About this Prospectus
Neither we filed withnor the Securities and Exchange Commission (the “SEC”) using the SEC’s registration rules for a delayedunderwriters have authorized anyone to provide any information or continuous offering and sale of securities. Under the registration rules, using this prospectus and, if required, one or more prospectus supplements, the selling stockholders named herein may distribute the shares of common stock covered by this prospectus. A prospectus supplement may add, update or change informationto make any representations other than those contained in this prospectus. We and the underwriters take no responsibility for, and can provide no assurance as to the reliability of, any other information that others may give you. This prospectus is an offer to sell only the securities offered hereby and only under circumstances and in jurisdictions where it is lawful to do so. No dealer, salesperson or other person is authorized to give any information or to represent anything not contained in this prospectus. You should assume that the information appearing in this prospectus is accurate only as of the date on the front of this prospectus only, regardless of the time of delivery of this prospectus, or any sale of a security. Our business, financial condition, results of operations and prospects may have changed since those dates.
We are not, and the underwriters are not, offering to sell or seeking offers to purchase these securities in any jurisdiction where the offer or sale is not permitted. We and the underwriters have not done anything that would permit this offering or possession or distribution of this prospectus in any jurisdiction where action for that purpose is required, other than in the United States. Persons outside the United States who come into possession of this prospectus must inform themselves about, and observe any restrictions relating to, the offering of the securities as to distribution of the prospectus outside of the United States.
The industry and market data and certain other statistical information used throughout this prospectus are from our own research, surveys or studies conducted by third parties and industry or general publications. Industry publications and third-party research, surveys and studies generally indicate that their information has been obtained from sources believed to be reliable, although they do not guarantee the accuracy or completeness of such information. We are responsible for all of the disclosure contained in this prospectus, contains “forward-looking statements.” These forward-lookingand we believe that these sources are reliable; however, we have not independently verified the information contained in such publications. While we are not aware of any misstatements regarding any third-party information presented in this prospectus, their estimates, in particular, as they relate to projections, involve numerous assumptions, are subject to risks and uncertainties, and are subject to change based on various factors, including those discussed under the section entitled “Risk Factors” and elsewhere in this prospectus. Some data are also based on our good faith estimates.
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PROSPECTUS SUMMARY
This summary highlights information contained in greater detail elsewhere in this prospectus. This summary is incomplete and does not contain all the information you should consider in making your investment decision. You should read the entire prospectus carefully before investing in our common stock. You should carefully consider, among other things, our financial statements are contained principally inand the related notes and the sections titledentitled “Risk Factors,” “ Management’s“Summary Consolidated Financial Information,” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and “Business,included elsewhere in this prospectus. Unless otherwise indicated or the context otherwise requires, the terms “we,” “us,” “our,” and are generally identifiable by use“our company” refer to American Battery Materials, Inc., a Delaware corporation.
Our Company
We operate as a U.S. based renewable energy company focused on the extraction, refinement and distribution of technical minerals in an environmentally responsible manner. In November 2021, we found ourselves with the unique opportunity to acquire mining claims that historically reported high levels of lithium and other technical minerals. We hired and affiliated ourselves with industry veterans that bring decades of experience, credibility and relationships.
On November 5, 2021, we acquired the rights to 102 federal mining claims located in the Lisbon Valley of Utah for $100,000 plus the future payment of royalties based on a percentage of the words “may,” “will,” “should,” “expect,” “anticipate,” “estimate,” “believe,” “intend”net revenue from the sale of lithium produced from a portion of the mining property. The acquisition was driven by historical mineral data from seven existing wells with brine aquifer access. We have not yet commenced any mining operations, and we are an exploration stage issuer, as defined in SEC Regulation S-K Item 1300 (“Regulation S-K 1300”). An independent third-party technical report indicated that further investment and development in the claims was warranted, although no determination has been made whether we have any reserves of minerals. Similarly, no determination has been made whether mineralization could be economically and legally produced or “project” orextracted. We have no mineral reserves as defined by Regulation S-K 1300 and we have had no mining revenue to date.
In July 2023, we acquired and staked additional lithium mining claims adjacent to our Lisbon Valley Project in Utah. The new claims have been registered with the negativeBureau of these words orLand Management (BLM). We now own a total of 743 placer claims over 14,320 acres, comprised of the 102 original claims held and the 641 new claims.
Our Growth Strategy
Our strategic goal is to become a producer of lithium in the United States. We believe that a strategy of employing advanced brine extractive technology methodologies for selective mineral extraction is the most cost-effective and environmentally friendly approach currently available. We believe that this approach is environmentally friendly because we would not deconstruct land structures which leave dirty tailings, but rather we would extract the desired minerals and metals from subsurface brines that re-inject the brines back down into the aquafer to maintain pressure after lithium extraction. We plan, as part of our sustainability goals within our overall environmental, social and governance (“ESG”) strategy, to develop sustainable production operations. Our plan is to develop our projects and strategic equity investments on a measured timeline to provide the potential for both near-term cash flow and long-term value maximization.
We have been executing the necessary steps to determine analytical results from our technical report, which should provide current results, analytical, geotech modeling, aquifer modeling, recharge, flows and depth. We have engaged RESPEC Company LLC as our geotech, engineering and resource management partner to assist in the exploration of the Lisbon Valley brine extraction project. Leveraging its expertise, we will focus on several initiatives, which include the following:
| ● | advancement of geotech, engineering, geology and fieldwork to complete technical reports on the Lisbon Project; |
| ● | understanding Lisbon Valley brines, on and around owned leases; |
| ● | develop a well plan to re-enter, sample and test the “Superior Well,” that has a historical lithium concentration of 340 ppm (parts per million); |
| ● | enter other prospective plugged and abandoned wells, taking brine samples and performing hydrological testing at each identified high potential zone to evaluate the properties of the clastic formation; |
| ● | as information is advanced, prepare technical reports following the Regulation S-K 1300 Standards of Disclosure for Mineral Projects, initially a Preliminary Economic Assessment (PEA) and longer term, a Preliminary Feasibility Study (PFS); |
| ● | test the collected brines for lithium, but also for previously identified high value elements such as cobalt, manganese, magnesium, and suites of metals in the alkaline earth metals, transition metals, and halogens group; and |
| ● | based on the results of the Superior well, develop area resource estimates. |
The Lisbon Valley of Utah also provides many added benefits:
| ● | historically rich industrial and natural resource extraction area; |
| ● | a developed infrastructure including high voltage electrical, proximity to major roadways and rail spurs; and |
| ● | state and local agency support through the Utah Division of Oil, Gas and Mining (UDOGM) and the Trust Land Administration (SITLA). |
We will also look to expand our holdings in the Lisbon Valley area with the acquisition of additional mineral claims and joint venture opportunities. We continue to explore and evaluate opportunities to further expand our resource base and production capacity through the possible acquisition of properties and projects in other variationsareas of the United States, as well as in South America, particularly Argentina.
As part of our strategy for growth, our projects and strategic investments will be developed on these words or comparable terminology.
To achieve our future operations;goal of becoming a producer of lithium, we will rely on our competitive advantages;strengths and experienced management team to explore and consider all opportunities to generate revenue and increase our brand image;projects, properties and assets, as well as all potential funding options. Some opportunities for growth may be in the form of (i) strategic partnerships, (ii) off-take agreements, (iii) diversification of projects and properties, (iv) acquisitions of companies and technologies, and (v) participation in related commercial development activities.
The Lithium Market
Lithium is on the list of the 35 minerals considered critical to the economic and national security of the United States, as first published by the U.S. Department of the Interior on May 18, 2018. In June 2021, the U.S. Department of Energy published a report titled “National Blueprint for Lithium Batteries 2021-2030” (the “NBLB Report”) which was developed by the Federal Consortium for Advanced Batteries (“FCAB”), a collaboration by the U.S. Departments of Energy, Defense, Commerce, and State. According to the Report, one of the main goals of this U.S. government effort is to “secure U.S. access to raw materials for lithium batteries.” In the NBLB Report, Jennifer M. Granholm, the U.S. Secretary of Energy, states: “Lithium-based batteries power our abilitydaily lives from consumer electronics to national defense. They enable electrification of the transportation sector and provide stationary grid storage, critical to developing the clean-energy economy.”
The NBLB Report summarizes the U.S. government’s views on the need for lithium and the expected growth of the lithium battery market as follows:
| ● | “A robust, secure, domestic industrial base for lithium-based batteries requires access to a reliable supply of raw, refined, and processed material inputs…” |
| ● | “The worldwide lithium battery market is expected to grow by a factor of 5 to 10 in the next decade.” |
The growth in electric vehicles (“EVs”) will provide the greatest needs for lithium-based batteries. The NBLB Report states: “Bloomberg projects worldwide sales of 56 million passenger electric vehicles in 2040, of which 17% (about 9.6 million EVs) will be in the U.S. market.” Source: NBLB Report (defined above). Original Source: Bloomberg NEF Long-Term Electric Vehicle Outlook 2019.
In a February 2021 report, Canalys, a global technology market analyst firm, states that global sales of EVs in 2020 increased by 39% year on year to 3.1 million units. This compares with a sales decline of 14% of the total passenger car market in 2020. Canalys forecasts that the number of EVs sold will rise to 30 million in 2028 and EVs will represent nearly half of all passenger cars sold globally by 2030.
Bloomberg’s Long-Term Electric Vehicle Outlook 2021 report states: “The outlook for EV adoption is getting much brighter, due to a combination of more policy support, further improvements in battery density and cost, more charging infrastructure being built, and rising commitments from automakers. Passenger EV sales are set to increase sharply in the next few years, rising from 3.1 million in 2020 to 14 million in 2025. Globally, this represents around 16% of passenger vehicle sales in 2025, but some countries achieve much higher shares. In Germany, for example, EVs represent nearly 40% of total sales by 2025, while China — the world’s largest auto market — hits 25%.”
Regarding the lithium battery growth derived from grid storage demands, the NBLB Report states: “In addition to the EV market, grid storage uses of advanced batteries are also anticipated to grow, with Bloomberg projecting total global deployment to reach over 1,095 GW by 2040, growing substantially from 9 GW in 2018;” and “Bloomberg forecasts 3.2 million EV sales in the U.S. for 2028, and over 200 GW of lithium-ion battery-based grid storage deployed globally by 2028. With an average EV battery capacity of 100 kWh, 320 GWh of domestic lithium-ion battery production capacity will be needed just to meet passenger EV demand.
On August 25, 2022, the Washington Post published an article titled “Did California just kill the gas-powered car?” and with the sub-heading “California’s decision to ban the sales of combustion engine cars is the latest victory in the transition to electric vehicles.” A particularly relevant passage from this article reads as follows:
“…the transition from gas-powered, internal combustion engine vehicles to electric vehicles no longer feels niche, or speculative. It feels inevitable. And this week, another profound development: California, which already leads the nation with 18 percent of new cars sold electric, is expected to approve a regulation to ban the sales of new gas-only powered vehicles by 2035. In addition to EVs, only a limited number of plug-in hybrids will be allowed to be sold. This is a big deal: California’s car market demands;is only slightly smaller than those of France, Italy and Britain — and while many countries have promised to phase out sales of gas cars by such-and-such date, few have concrete regulations like California. Sixteen states have traditionally followed California’s lead in setting its own independent fuel standards — they could soon follow.”
Although no assurance can be given, these recent developments, if left unchallenged, may potentially increase demand for lithium in the sufficiency of our resourcesUnited States, as well as globally. Benchmark Mineral Intelligence, a global consulting firm specializing in funding our operations; and our liquidity and capital needs.
| ● | demand for lithium-ion batteries is set to grow six-fold by 2032 as global automakers scale up production of EVs; and |
| ● | to meet the world’s lithium requirements would require 74 new lithium mines with an average size of 45,000 tonnes by 2035. |
While these figures are based on assumptions that may be incorrect, androbust relative to historical data, there can be no assuranceguarantee that ultimate consumer adoption for EVs and plug-in-hybrid vehicles (PHEV) will drive lithium demand as predicted.
Lithium Brine Deposits and Direct Lithium Extraction
Lithium is mined from three different deposit types: lithium brine deposits, pegmatite lithium deposits (also referred to as “hard rock”), and sedimentary lithium deposits (also referred to as clay deposits). Brine deposits are the most common, accounting for more than half of the world’s known lithium reserves. All our projects are in brine deposits.
As described by the U.S. Geological Survey, lithium brine deposits are accumulations of saline groundwater that are enriched in dissolved lithium. All producing lithium brine deposits share a number of first-order characteristics: (1) arid climate, (2) closed basin containing a playa or salar, (3) tectonically driving subsidence, (4) associated igneous or geothermal activity, (5) suitable lithium source-rocks, and (6) one or more adequate aquifers. South American countries Chile and Argentina are where the majority of the lithium produced from brines originates, as well as Nevada to a much smaller extent.
It is anticipated that we will use a direct lithium extraction (“DLE”), and reinjection of the processed brine back into the subsurface, rather than using evaporation ponds to recover the lithium and other potential mineral from brines, as the project advances to the production stage. This method has been gaining favor in the lithium industry over the last several years because it does not involve the use of evaporation ponds. DLE uses a much smaller footprint than evaporation ponds and is therefore more acceptable from an environmental standpoint. As yet, we have not done any projectionstesting for the possibility of using DLE and will not be able to do any testing until samples of brine are acquired from the target formations. See “Risk Factors – Our success as a company producing lithium and related products depends to a great extent on our research and development capabilities for direct lithium extraction and our ability to secure capital for the implementation of brine processing plants.”
DLE technologies precipitate lithium out of brine using filters, membranes, ceramic beads or other expectations includedequipment, which is often housed in any forward-looking statements will comea small warehouse, significantly shrinking the environmental footprint of evaporation ponds used to pass. Moreover,produce commercial quantities of lithium traditionally. In a DLE operation, brine is pumped to a processing unit where an adsorption, resin or membrane material is used to extract only the lithium from the brine, while spent brine can be reinjected into the basin aquifers. The more rapid production time frame and possible brine reinjection into the aquifer is a key environmental differentiator between the DLE process and traditional lithium process that uses evaporation ponds.
While there may still be challenges around scalability, water consumption, and the possible dilutive effects of brine reinjection, over the past decade many DLE technologies have arisen to separate lithium from brine. DLE has the potential to significantly impact the lithium industry, with implementation on the extraction of lithium brines potentially having a dramatic positive impact on production, capacity, timing, and environmental impact. Similar to the impact shale exploration had on the oil industry, DLE has the potential to significantly increase the supply of lithium from brine projects, nearly doubling lithium production/yield (taking recoveries from 40-60% to 70-90%+) and improving project returns. DLE should also offer lower perceived environmental risk and yield significant environmental benefits when compared to traditional brine ponds, offering sustainability benefits and ESG credentials. It is estimated that approximately 12% of the world’s lithium supply in 2019 was produced using DLE technology. DLE technologies are broadly grouped into three main categories: adsorption, ion exchange and solvent extraction.
| ● | Adsorption physically absorbs lithium chloride (LiCl) molecules onto the surface of a sorbent from a lithium loaded solution. The lithium is then stripped from the surface of the sorbent with water. |
| ● | Ion exchange takes lithium ions from the solution and replaces them with a different positively charged cation that is contained in the sorbent material. An acidic (or basic) solution is required to strip the lithium from the material and regenerate the sorbent material. |
| ● | Solvent extraction removes lithium ions from solution by contacting the solution with an immiscible fluid (i.e., oil or kerosene) that contains an extractant that attaches to lithium ions and brings them into the immiscible fluid. The lithium is then stripped from the fluid with water or chemical treatment. |
Our identification as an “environmentally friendly” business is evidenced by our forward-looking statementscommitment to deploy direct lithium extraction rather than the typical extraction techniques of hard-rock mining or underground brine water. Unlike those traditional methods for producing lithium, DLE uses filters, membranes, or resin materials to extract the mineral from brine water, resulting in:
| ● | usage of less water; |
| ● | recycling of the majority of the brine water used; |
| ● | consumption of less fossil fuels; |
| ● | reduction in the need for additional processing and alternative mining sources; and |
| ● | leaving a smaller environmental footprint. |
Traditionally, lithium produced from brine water is stored in evaporation ponds. As the water evaporates, the other elements of the brine such as magnesium or calcium precipitate out, leaving the brine more concentrated to produce lithium carbonate. The evaporation process can take from 9 to 18 months depending on the type of project and weather conditions. With DLE, that process can be shortened to days or even hours. DLE also reduces the amount of land required for the pond evaporation process, while the potential to reinject the remaining brine water after the process further reduces the environmental impact.
Our Market Opportunity
Our Lisbon Valley Lithium Project is located in San Juan County, Utah, approximately 35 miles southeast of the city of Moab, part of an area known as the Paradox Basin. The Project consists of 743 placer mining claims staked on U.S. government land administered by the BLM covering 14,300 acres, part of a semi-contiguous group named the LVL Group. The map below shows the approximate location of our claims:
Our original 102 placer claims were staked by Plateau Ventures LLC and sold to us have been assigned to our wholly owned subsidiary, Mountain Sage Minerals, LLC. Our additional 641 placer claims are subject to various known and unknown risks, uncertainties and other factors that may cause our actual results, performanceregistered or achievements to be materially different from future results, performance or achievements expressed or implied by any forward-looking statements.
The maps above are referenced with Professional Land Survey System (PLSS) and a latitude/longitude reference coordinate, accurate to 50 feet.
Our placer claims are plotted on the figures above, which is a Public Land Survey System (PLSS) map using Salt Lake City Prime Meridian. The claims are located in Southeast Utah in sections 17-18, 20-22, 25-29, 33-35 of Township 30 South and Range 25 East; sections 1, 3, 4, 8-15 of Township 31 South and Range 25 East; sections 31 of Township 30 South and Range 26 East and sections 5-9, 17 and 18 of Township 31 South and Range 26 East. The latitude and longitude of the southeast corner of Section 36, Township 30 South, 25 East is noted on the figure is accurate to +/- 50 feet.
There is a network of dirt and paved roads within the claims area, which service the oil and gas wells and the Lisbon Valley Copper Mine. Two existing natural gas pipelines traverse the claims. Power is supplied to the copper mine, also within the claim area, for use in their electrowinning copper recovery process. Nine wellbores (8 oil and gas and 1 potash) are available for re-entry and nearby water rights and private land are available for sale or lease.
Moab, Utah, the nearest population center to the property, is a city of 5,336 persons (2020 Census). It is located in a relatively remote portion of Utah but is easily accessed by U. S. Highway 191. Highway 191 intersects with Interstate 70 about 30 miles (48 kilometers) north of Moab, at Crescent Junction. Moab is a tourist destination and has numerous motels and restaurants. Moab would also be the nearest source of labor in the region.
The region has a history of mining, primarily uranium and vanadium that dates back as far as 1881. The Lisbon Valley Copper Mine is in the heart of the Lisbon Valley and is currently producing copper cathode. An all-weather road and electric power supply the mine. A few gravel roads cross the property. Oil and gas drilling and production, along with ranching have made the area relatively accessible.
There has been no exploration or drilling conducted on the property by us or our predecessors other than the gathering and assimilation of data from all materialavailable sources. It will be necessary for us to re-enter an oil and gas well or to drill a new well to obtain brine samples for analysis and metallurgical testing. Permits for such operations will be required from the BLM and the UDOGM. We are in the process of permitting two appraisal wells.
The BLM Permit Process
The flow charts below outline the permit process for exploration of minerals (lithium well drilling) which is regulated by the UDOGM and the BLM. It is anticipated that it will take 300-360 days for approval to drill once the initial application is filed and under review by each agency.
We believe there is abundant evidence from oil, gas and potash wells drilled in the Paradox Basin indicating a probability of identifying and producing super saturated brines from beneath the Project. The geology of the area of the Project and of the Paradox Basin as a whole is complex, although zones have been targeted and proven and they are mappable within and beyond the claims area. It is not likely that the same zones vary significantly in terms of reservoir quality and thickness as evidenced by log analysis; however, these parameters have not been confirmed by actual testing by us.
We have not calculated mineral and resource estimation and has no revenue being generated from the subject property. The only way to determine if the lithium enriched brines exist and can be economically produced from the target zones is to drill exploration wells to produce and test brine from the targeted zones. We through our wholly owned operating company Mountain Sage Minerals, LLC intends to drill two appraisal wells on the subject property to evaluate reservoir properties (porosity, permeability and pressure), flow rates and in situ mineral concentrations. Information from the two wells will be used to assess the resource potential and devise a detailed development plan. The subsurface data collected from the two wells will be used to refine our proprietary subsurface model. The development model will include a proprietary 3D seismic survey to refine the subsurface model and delineate reservoir(s) continuity below the subject property and allow the team to select optimal spacing of future well locations and the network of production and injection wells required to fully develop potential mineral (brine) resources. Based on a substantial number of studies with lithium analyses from the Paradox Basin, we believe there is a substantial indication that lithium mineralization in brines occurs beneath the Project.
We have retained a third-party consulting firm to assist with drilling, completion and review of test results for the two appraisal wells. Any extracted brines should be tested to determine lithium and other important mineral concentrations and to prove the economic viability of a pilot and permanent production program. We have identified an appraisal and development program that is proprietary. This information will be disclosed in an advanced technical report after the appraisal wells are drilled and individual zones are identified and fully evaluated. Cost estimates and authority for expenditures for both well tests and the 3D Survey are currently in process.
The Technical Report Summary on the Project prepared by Bradley C. Peek, MSc. of CPG Peek Consulting, Inc., in accordance with Regulation S-K 1300, is included as an exhibit to this registration statement, of which this prospectus forms a part. The effective date of the report is October 31, 2023.
Selected Risks Associated with Our Business
An investment in our common stock involves a high degree of risk. Our ability to execute on our growth strategies is also subject to certain risks. The risks described under the heading “Risk Factors” immediately following this prospectus summary may have an adverse effect on our business, cash flows, financial condition, and results of operations or may cause us to be unable to execute all or part of these strategies successfully. Below are the principal factors that make an investment in our company speculative or risky:
| ● | Our future performance is difficult to evaluate because we have a limited operating history in the lithium industry. |
| ● | We have a history of losses and expect to continue to incur losses in the future. |
| ● | There is substantial doubt about our ability to continue as a going concern. |
| ● | We are an exploration stage issuer and there is no guarantee that our development will result in the commercial extraction of mineral deposits. |
| ● | We face numerous risks related to exploration, construction and extraction of mineral deposits. |
| ● | The mineral and chemical processing industry is intensely competitive. |
| ● | Our long-term success will depend ultimately on our ability to generate revenues, achieve and maintain profitability, and develop positive cash flows from their lithium activities. |
| ● | Our growth strategy depends on their ability to successfully access the capital and financial markets. Any inability to access the capital or financial markets may limit their ability to meet our liquidity needs and long-term commitments, fund their ongoing operations, execute their business plan or pursue investments that we may rely on for future growth. |
| ● | We are dependent upon key management employees. |
| ● | Our ability to manage growth will have an impact on our business, financial condition, and results of operations. |
| ● | Lawsuits may be filed against us and an adverse ruling in any such lawsuit may adversely affect our business, financial condition or liquidity or the market price of our common stock. |
| ● | Our success as a company producing lithium and related products depends to a great extent on our research and development capabilities for direct lithium extraction and our ability to secure capital for the implementation of brine processing plants. |
| ● | The development of non-lithium battery technologies could adversely affect our company. |
| ● | Our business is subject to cybersecurity risks. |
| ● | Our operations may be further disrupted, and our financial results may be adversely affected by the novel coronavirus pandemic. |
| ● | An escalation of the current war in Ukraine, conflict in the Middle East, or the emergence of conflict elsewhere, may adversely affect our business. |
| ● | We will be required to obtain governmental permits and approvals in order to conduct development and extraction operations, a process that is often costly and time-consuming. There is no certainty that all necessary permits and approvals for our planned operations will be granted. |
| ● | Our operations face substantial regulation of health and safety. |
| ● | Compliance with environmental regulations and litigation based on environmental regulations could require significant expenditures. |
| ● | Lithium prices are subject to unpredictable fluctuations. |
| ● | Changes in technology or other developments could adversely affect demand for lithium compounds or result in preferences for substitute products. |
Corporate and Background Information
We are a Delaware corporation. Our corporate office is located at 500 West Putnam Avenue, Suite 400, Greenwich, Connecticut 06830. Our telephone number is (800) 998-7962. We maintain one active website, www.americanbatterymaterials.com, which serves as our corporate website and contains information about us and our business. Information contained inon our website is not a part of this prospectus. It does not contain all
We were originally incorporated in the information you should consider before making a decisionState of Delaware on March 26, 2007 under the name Internet Media Services, Inc. On April 9, 2010, we filed Form S-1 with the SEC in order to purchase the shares our selling stockholders are offering. You should very carefully and thoroughly read the more detailed information in this prospectus and review our financial statements appearing elsewhere in this prospectus.
Channels for Disclosure of Information
Investors and others should note that we use social media to communicate about our company, services, new business developments, and other matters with its wholly owned subsidiary, U-Vend USA LLC is in the business of developing, marketing and distributing co-branded self-serve electronic kiosks, mall/airport co-branding islands, and digital advertising solutions throughout North America.
The information contained on, line 24 hours a day/7 days a week, accepting traditional cash input as well as creditor that can be accessed through, our website is not incorporated by reference into this prospectus, and debit cards. Host locations and suppliers have been drawn to U-Vend’s concept of product vending basedyou should not consider any information contained on, the advantages of reduced labor and lower product theft as compared to non-kiosk merchandising platforms.
Summary of the overall concept.
Common stock offered | ||
| Common stock outstanding immediately before this offering | __________ shares. | |
| Common stock to be outstanding immediately after this offering | __________ shares (_______ shares if the underwriters’ option to purchase additional shares is exercised in full). | |
| Underwriters’ option to purchase additional shares | We have granted a 30-day option to the underwriters to purchase up to an aggregate of _______ additional shares of common | |
Use of proceeds | We We intend to use | |
Risk Factors | ||
| OTC Pink Open Market symbol | BLTH We intend to apply for the listing of our common stock | |
Unless otherwise indicated, all information as of June 30, 2014 and for the six month periods ended June 30, 2014 and 2013 have been derived from our unaudited condensed consolidated financial statements and as of and for the years ended December 31, 2013 and 2012, have been derived from our audited consolidated financial statements. The condensed consolidated financial information set forth below should be read in conjunction with “Management's Discussion and Analysis of Financial Condition and Results of Operations” and the financial statements and notes thereto included elsewherecontained in this prospectus.
| For the Years | ||||||||||||||||
For the Six Months Ended June 30, | Ended December 31, | |||||||||||||||
| 2014 | 2013 | 2013 | 2012 | |||||||||||||
| (unaudited) | (unaudited) | |||||||||||||||
| Consolidated Statement of Operations Data: | ||||||||||||||||
| Sales, net | $ | 95,636 | $ | - | $ | - | $ | - | ||||||||
| Operating loss | $ | (710,017) | $ | (178,991) | $ | (339,885 | ) | $ | (242,506 | ) | ||||||
| Other (expense) | $ | (455,473) | ) | $ | (20,193) | $ | (68,209 | ) | $ | (142,449 | ) | |||||
| Loss before income taxes | $ | (1,165,490) | $ | (199,184) | $ | (408,094 | ) | $ | (384,955 | ) | ||||||
| Income tax provision | $ | - | $ | - | $ | (2,200 | ) | $ | (4,185 | ) | ||||||
| Loss from continued operations | $ | (1,165,490) | $ | (199,184) | $ | (410,294 | ) | $ | (389,140 | ) | ||||||
| Income (loss) from discontinued operations | $ | - | $ | 23,013 | $ | 23,013 | $ | (37,858 | ) | |||||||
| Net loss | $ | (1,165,490) | $ | (176,171) | $ | (387,281 | ) | $ | (426,998 | ) | ||||||
| Loss per share, basic and diluted | $ | (0.15) | $ | (1.19) | $ | (1.09 | ) | $ | (3.51 | ) | ||||||
| Weighted average common shares outstanding | 7,672,590 | 148,597 | 356,869 | 121,570 | ||||||||||||
| June 30, | December 31, | |||||||||||
| 2014 | 2013 | 2012 | ||||||||||
| (unaudited) | ||||||||||||
| Balance Sheet Data: | ||||||||||||
| Cash | $ | 31,366 | $ | 14,620 | $ | 1,262 | ||||||
| Total assets | $ | 1,685,152 | $ | 197,603 | $ | 226,983 | ||||||
| Total liabilities | $ | 2,399,175 | $ | 526,690 | $ | 818,540 | ||||||
| Total stockholders’ deficiency | $ | (714,023) | $ | (329,087 | ) | $ | (591,557 | ) | ||||
| Total liabilities and stockholders’ deficiency | $ | 1,685,152 | $ | 197,603 | $ | 226,983 | ||||||
All shares and Stock Symbol Change
SUMMARY CONSOLIDATED FINANCIAL DATA
Our consolidated balance sheet data as of December 31, 2022 and December 31, 2021, consolidated statement of operations data and consolidated statement of cash flow data for the changeyears ended December 31, 2022 and December 31, 2021 are derived from our audited financial statements, included elsewhere in this prospectus. Our summary historical interim financial information as of September 30, 2023 and September 30, 2022 and for the nine months ended September 30, 2023 and 2022 are derived from the our corporate name to U-Vend, Inc., and obtaining a new stock symbol. These actions were approved by the holders of a majorityunaudited condensed consolidated interim financial statements included elsewhere in this prospectus. Our historical results are not necessarily indicative of the results that may be expected in the future. Per share data and shares outstanding sharesreflect an adjustment for the effect of our common stock. Thethe 1-for-300 reverse stock split change of the company name, and new stock symbol become effective on May 16, 2014. This Amendment 2 to Form S-1 document has been prepared giving effect to the 1-for-200 reverse split.
Nine Months Ended September 30, 2023 (unaudited) | Nine Months Ended September 30, 2022 (unaudited) | Year Ended December 31, 2022 | Year Ended December 31, 2021 | |||||||||||||
| Income Statement Data | ||||||||||||||||
| Revenue | $ | - | - | - | - | |||||||||||
| Loss from operations | $ | (2,462,799 | ) | (1,148,588 | ) | (1,135,088 | ) | $ | (393,376 | ) | ||||||
| Net income (loss) | $ | (2,462,799 | ) | (1,148,588 | ) | (1,486,848 | ) | $ | 1,762,466 | |||||||
| Loss per share, basic | $ | (0.00 | ) | (0.00 | ) | (0.00 | ) | $ | 0.01 | |||||||
| Loss per share, diluted | $ | (0.00 | ) | (0.00 | ) | (0.00 | ) | $ | (0.00 | ) | ||||||
| Weighted average common shares outstanding, basic | 3,324,638,012 | 382,019,948 | 335,778,778 | 210,477,658 | ||||||||||||
| Weighted average common shares outstanding, diluted | 3,324,638,012 | 382,019,948 | 335,778,778 | 374,389,986 | ||||||||||||
As of September 30, (unaudited) | As of December 31, 2022 | As Adjusted (1) | ||||||||||
| Balance Sheet Data | ||||||||||||
| Cash | $ | 338,982 | 42,582 | |||||||||
| Working capital | $ | (3,165,242 | ) | (1,400,412 | ) | |||||||
| Total assets | $ | 625,550 | 205,299 | |||||||||
| Total liabilities | $ | 3,584,792 | 1,505,711 | |||||||||
| Total stockholders’ equity (deficit) | $ | (2,959,242 | ) | (1,300,412 | ) | |||||||
| (1) | Reflects our sale of ________ shares of common stock offered by this prospectus at an assumed public offering price of $___ per share, after deducting the underwriting discount and the estimated offering expenses that we will pay. |
RISK FACTORS
You should carefully review and consider the Holders – At their optionrisk factors described below and the holders are entitledother information contained in this prospectus, including the financial statements and notes to redemption rights on all or any portion of the notes upon the occurrence of (a) a change of control of the Company or (b) certain triggering events constituting an event of default.
| % of Offering | Dates the underlying securities received | Dollar Value of the Shares Registered | Net Proceeds Received | Discount on underlying securities | |
| Cobrador Multi-Strategy Partners, LP | 89% | June 18, 2013 – June 3, 2014 | $2,114,000 | $100,000 | $2,014,000 |
| Automated Retail Leasing Partners, LLP | 11% | November 1, 2013 – June 1, 2014 | $588,979 | $254,762 | $334,217 |
| Types of Payment related to the Cobrador Notes | Total Payments Made | Total Potential Payments | ||
| Interest Payment | $ 19,038 | $ 28,992 | ||
Finder’s Fees or Commission (1) | $ 29,600 | $ 44,600 |
Market price per share @ issuance | Conversion price | Maximum shares @ $0.05 | Face Value | Market value | Discount to market | |
| June 18, 2013 | $ 1.42 | $ 0.05 | 1,000,000 | $ 50,000 | $ 1,420,000 | $ 1,370,000 |
| August 21, 2013 | $ 0.60 | $ 0.05 | 1,000,000 | $ 50,000 | $ 600,000 | $ 550,000 |
| October 17, 2013 | $ 0.28 | $ 0.05 | 1,000,000 | $ 50,000 | $ 280,000 | $ 230,000 |
| November 15, 2013 | $ 0.32 | $ 0.05 | 400,000 | $ 20,000 | $ 128,000 | $ 108,000 |
| December 26, 2013 | $ 0.14 | $ 0.05 | 600,000 | $ 30,000 | $ 84,000 | $ 54,000 |
| January 8, 2014 | $ 0.14 | $ 0.05 | 1,000,000 | $ 50,000 | $ 140,000 | $ 90,000 |
| February 19, 2014 | $ 0.16 | $ 0.05 | 500,000 | $ 25,000 | $ 80,000 | $ 55,000 |
| March 7, 2014 | $ 0.32 | $ 0.05 | 500,000 | $ 25,000 | $ 160,000 | $ 135,000 |
| April 1, 2014 | $ 0.32 | $ 0.05 | 500,000 | $ 25,000 | $ 160,000 | $ 135,000 |
| May 1, 2014 | $ 0.28 | $ 0.05 | 500,000 | $ 25,000 | $ 140,000 | $ 115,000 |
| June 3, 2014 | $ 0.30 | $ 0.05 | 400,000 | $ 20,000 | $ 120,000 | $ 100,000 |
| Total | 7,400,000 | $ 370,000 | $ 3,312,000 | $ 2,942,000 |
Market price per share @ issuance | Conversion price @ floor | Maximum shares @ $0.03 | Face Value | Market value | Discount to market | |
| June 18, 2013 | $ 1.42 | $ 0.03 | 1,666,667 | $ 50,000 | $ 2,366,667 | $ 2,316,667 |
| August 21, 2013 | $ 0.60 | $ 0.03 | 1,666,667 | $ 50,000 | $ 1,000,000 | $ 950,000 |
| October 17, 2013 | $ 0.28 | $ 0.03 | 1,666,667 | $ 50,000 | $ 466,667 | $ 416,667 |
| November 15, 2013 | $ 0.32 | $ 0.03 | 666,666 | $ 20,000 | $ 213,333 | $ 193,333 |
| December 26, 2013 | $ 0.14 | $ 0.03 | 1,000,000 | $ 30,000 | $ 140,000 | $ 110,000 |
| January 8, 2014 | $ 0.14 | $ 0.03 | 1,666,666 | $ 50,000 | $ 233,333 | $ 183,333 |
| February 19, 2014 | $ 0.16 | $ 0.03 | 833,333 | $ 25,000 | $ 133,333 | $ 108,333 |
| March 7, 2014 | $ 0.32 | $ 0.03 | 833,333 | $ 25,000 | $ 266,666 | $ 241,666 |
| April 1, 2014 | $ 0.32 | $ 0.03 | 833,333 | $ 25,000 | $ 266,666 | $ 241,666 |
| May 1, 2014 | $ 0.28 | $ 0.03 | 833,333 | $ 25,000 | $ 233,333 | $ 208,333 |
| June 3, 2014 | $ 0.30 | $ 0.03 | 666,666 | $ 20,000 | $ 200,000 | $ 180,000 |
| Total | 12,333,331 | $ 370,000 | $ 5,519,998 | $ 5,149,998 |
SERIES A WARRANTS | Market price per share @ issuance | Exercise price | Maximum shares @ $0.05 | Market value | Exercise cost of warrants | Possible Discount to market |
| June 18, 2013 | $ 1.42 | $ 0.05 | 1,500,000 | $ 2,130,000 | $ 75,000 | $ 2,055,000 |
| August 21, 2013 | $ 0.60 | $ 0.05 | 1,500,000 | $ 900,000 | $ 75,000 | $ 825,000 |
| October 17, 2013 | $ 0.28 | $ 0.05 | 1,500,000 | $ 420,000 | $ 75,000 | $ 345,000 |
| November 15, 2013 | $ 0.32 | $ 0.05 | 600,000 | $ 192,000 | $ 30,000 | $ 162,000 |
| December 26, 2013 | $ 0.14 | $ 0.05 | 900,000 | $ 126,000 | $ 45,000 | $ 81,000 |
| January 8, 2014 | $ 0.14 | $ 0.05 | 1,500,000 | $ 210,000 | $ 75,000 | $ 135,000 |
| February 19, 2014 | $ 0.16 | $ 0.05 | 750,000 | $ 120,000 | $ 37,500 | $ 82,500 |
| March 7, 2014 | $ 0.32 | $ 0.05 | 750,000 | $ 240,000 | $ 37,500 | $ 202,500 |
| April 1, 2014 | $ 0.32 | $ 0.05 | 750,000 | $ 240,000 | $ 37,500 | $ 202,500 |
| May 1, 2014 | $ 0.28 | $ 0.05 | 750,000 | $ 210,000 | $ 37,500 | $ 172,500 |
| June 3, 2014 | $ 0.30 | $ 0.05 | 600,000 | $ 180,000 | $ 30,000 | $ 150,000 |
| Total | 11,100,000 | $ 4,968,000 | $ 555,000 | $ 4,413,000 |
SERIES B WARRANTS | Market price per share @ issuance | Exercise price | Maximum shares @ $0.06 | Market value | Exercise cost of warrants | Possible Discount to market |
| June 18, 2013 | $ 1.42 | $ 0.06 | 1,500,000 | $ 2,130,000 | $ 90,000 | $ 2,040,000 |
| August 21, 2013 | $ 0.60 | $ 0.06 | 1,500,000 | $ 900,000 | $ 90,000 | $ 810,000 |
| October 17, 2013 | $ 0.28 | $ 0.06 | 1,500,000 | $ 420,000 | $ 90,000 | $ 330,000 |
| November 15, 2013 | $ 0.32 | $ 0.06 | 600,000 | $ 192,000 | $ 36,000 | $ 156,000 |
| December 26, 2013 | $ 0.14 | $ 0.06 | 900,000 | $ 126,000 | $ 54,000 | $ 72,000 |
| January 8, 2014 | $ 0.14 | $ 0.06 | 1,500,000 | $ 210,000 | $ 90,000 | $ 120,000 |
| February 19, 2014 | $ 0.16 | $ 0.06 | 750,000 | $ 120,000 | $ 45,000 | $ 75,000 |
| March 7, 2014 | $ 0.32 | $ 0.06 | 750,000 | $ 240,000 | $ 45,000 | $ 195,000 |
| April 1, 2014 | $ 0.32 | $ 0.06 | 750,000 | $ 240,000 | $ 45,000 | $ 195,000 |
| May 1, 2014 | $ 0.28 | $ 0.06 | 750,000 | $ 210,000 | $ 45,000 | $ 165,000 |
| June 3, 2014 | $ 0.30 | $ 0.06 | 600,000 | $ 180,000 | $ 36,000 | $ 144,000 |
| Total | 11,100,000 | $ 4,968,000 | $ 666,000 | $ 4,302,000 |
| Series A | Series B | |
| Range of market price of the Company’s common stock on the date issuance | $1.42 to $0.14 | $1.42 to $0.14 |
| Exercise price | $0.05 | $0.06 |
| Maximum underlying shares | 11,100,000 | 11,100,000 |
| Market price for underlying shares | $4,968,000 | $4,968,000 |
| Conversion cost of Cobrador warrants | $555,000 | $666,000 |
| Total possible discount to market price | $4,413,000 | $4,302,000 |
| Series A | Series B | |
| Range of market price of the Company’s common stock on the date issuance | $1.42 to $0.14 | $1.42 to $0.14 |
| Exercise price | $ 0.05 | $ 0.06 |
| Maximum underlying shares | 18,500,000 | 18,500,000 |
| Market price for underlying shares | $8,280,000 | $8,280,000 |
| Conversion cost of Cobrador warrants | $925,000 | $1,110,000 |
| Total possible discount to market price | $7,355,000 | $7,170,000 |
| November 1, 2013 | March 5, 2014 | June 1, 2014 | Total | |
| Market price of the Company’s common stock on the date issuance | $ 0.40 | $ 0.20 | $ 0.30 | |
| Exercise price | $ 0.12 | $ 0.20 | $ 0.18 | |
| Maximum underlying shares | 986,250 | 246,563 | 483,889 | 1,716,702 |
| Market price for underlying shares | $394,500 | $49,313 | $145,167 | $588,980 |
| Conversion cost of ARLP warrants | $118,350 | $49,313 | $87,100 | $254,763 |
| Total possible discount to market price | $276,150 | 0 | $58,067 | $334,217 |
Initial investment Cobrador Notes | Initial Investment Cobrador Notes and warrant exercise @ original prices | Initial Investment Cobrador Notes and warrants using floor @ $ 0.03 | |
| Gross proceeds paid | $ 370,000 | $ 370,000 | $ 370,000 |
| Exercise Series A warrant proceeds | - | $ 555,000 | $ 925,000 |
| Exercise Series B warrant proceeds | - | $ 666,000 | $ 1,110,000 |
| Less: required payments | $ 44,600 | $ 44,600 | $ 44,600 |
| Possible net proceeds | $ 325,400 | $ 1,546,400 | $ 2,360,400 |
| Combined possible profit from conversion | $ 2,942,000 | $ 11,657,000 | $ 19,674,998 |
| Potential payments | $ 73,592 | $ 73,592 | $ 73,592 |
| Total discount and potential payments | $,3,015,592 | $ 11,730,592 | $ 19,601,406 |
| Discount and potential payment as a % of net proceeds | 926% | 759% | 830% |
| Average discount and potential payment as a % of net proceeds over the term of the Cobrador notes | 926% | 759% | 830% |
Risks Related to any of these risks. In assessing these risks, you should also referOur Business
Our future performance is difficult to the other information contained or incorporated by reference in this Form S-1, including our financial statements. An investment in our securities should only be acquired by persons who can afford to lose their entire investment without adversely affecting their standard of living or financial security.
We entered the lithium industry in November 2021. We have not realized any revenues to date from the sale of lithium, and mayour operating cash flow needs have been financed primarily through issuances of debt and equity securities, and not through cash flows derived from our operations. As a result, we have little historical financial and operating information from our lithium business to help you evaluate our performance.
We have a history of losses and expect to continue to incur losses in the future.
We have an accumulated deficit of approximately $17,854,837 as of December 31, 2022, which increased to $20,317,636 as of September 30, 2023. We expect to continue to incur losses unless and until such time as our projects or one of our future acquired properties enters into commercial production and generates sufficient revenues to fund continuing operations and we are able to develop at least one economic deposit. We recognize that if we are unable to generate cash flows from our operations, we will not be able to achieve financialearn profits or operational success.
There is uncertainty regarding our ability to implement our business plan and to grow our operations with an early-stageour existing financial resources without additional financing. Our ability to implement our business plan is dependent on us generating cash from operations, the sale of our stock and/or obtaining debt financing. Historically, we have funded our operations primarily through the issuance of debt and equity securities. Management’s plan to fund our capital requirements and ongoing operations includes the generation of revenue from our lithium operations and projects. Management’s secondary plan to cover any shortfall is selling our equity securities and obtaining debt financing. There is no assurance that we will be successful in an evolving market.
There is substantial doubt as toabout our ability to continue as a going concern.
Our independent registered public accounting firm addedhas included an explanatory paragraph toin their audit opinion issuedreport in connection with our consolidatedaudited financial statements which statesfor the year ended December 31, 2022 to the effect that our financial conditionrecurring losses since inception and failure to achieve profitable operations raise substantial doubt as toabout our ability to continue as a going concern. The Company incurred net comprehensive losses of $ 387,281 and $ 426,998 for the years ended December 31, 2013 and 2012 and $1,165,490 and $176,171 for the six (6) months (unaudited) ended June 30, 2014 and 2013, respectively. As of December 31, 2013 and June 30, 2014 (unaudited), we had a total stockholders’ deficiency of $ 329,087 and $714,023, respectively. These factors, among others, indicate that the Company may be unable to continue as a going concern. The consolidatedOur financial statements do not include any adjustments that might result from the outcome of this uncertainty. Assurances cannot be given that adequate financing cannecessary should we be obtainedunable to meet our capital needs.
We are an exploration stage issuer and there is no guarantee that our development will result in the commercial extraction of mineral deposits.
As defined under Regulation S-K Item 1300, we are an exploration stage issuer as we have no known mineral reserves, and we have not yet conducted any mining operations. Accordingly, we cannot assure you that we will ever realize any profits. Any profitability in the future from our business will be dependent upon the development of an economic deposit of minerals and further exploration and development of other economic deposits of minerals, each of which is subject to numerous risk factors. Further, we cannot assure you that any of our property interests can be commercially mined or that any exploration programs will result in profitable commercial mining operations. The exploration and development of mineral deposits involves a high degree of financial risk over a significant period of time, which may or may not be reduced or eliminated through a combination of careful evaluation, experience, and skilled management. While discovery of additional ore-bearing deposits may result in substantial rewards, few properties that are explored are ultimately developed into producing mines. Major expenses may be required to construct processing facilities and to establish reserves.
Our exploration prospects may not contain any reserves and any funds spent on evaluation and exploration may be lost. We do not know with certainty that economically recoverable lithium exists on our properties. In addition, the quantity of any reserves may vary depending on commodity prices. Any material change in the quantity or grade of reserves may affect the economic viability of our properties.
Exploration and development projects like ours have no operating history upon which to base estimates of future operating costs and capital requirements. Actual operating costs and economic returns of any and all exploration projects may materially differ from the costs and returns estimated, and accordingly, our financial condition, results of operations, and cash flows may be negatively affected.
We face numerous risks related to exploration, construction, and extraction of mineral deposits.
Our level of profitability, if any, in future years will depend to a great degree on lithium prices and whether our properties can be brought into production. Exploration and development of lithium resources are highly speculative in nature, and it is impossible to ensure that any of our existing properties will establish reserves. Whether it will be economically feasible to extract lithium depends on a number of factors, including, but not limited to: (i) the particular attributes of the deposit, such as size, grade, and proximity to infrastructure; (ii) lithium prices; (iii) extraction, processing, and transportation costs; (iv) the willingness of lenders and investors to provide project financing; (v) labor costs and possible labor strikes; (vi) non-issuance of permits; and (vii) governmental regulations, including, without limitation, regulations relating to prices, taxes, royalties, land tenure, land use, importing and exporting materials, foreign exchange, environmental protection, employment, worker safety, transportation, and reclamation and closure obligations.
We are also subject to the risks normally encountered in the lithium industry, which include, without limitation:
| ● | the discovery of unusual or unexpected geological formations; |
| ● | accidental fires, floods, earthquakes, severe weather, seismic activity, or other natural disasters; |
| ● | unplanned power outages and water shortages; |
| ● | construction delays and higher than expected capital costs due to, among other things, supply chain disruptions, higher transportation costs, and inflation; |
| ● | the ability to obtain suitable or adequate machinery, equipment, or labor; |
| ● | shortages in materials or equipment and energy and electrical power supply interruptions or rationing; |
| ● | environmental liability; and |
| ● | other unknown risks involved in the conduct of lithium exploration and operations. |
The nature of these risks is such that liabilities could exceed any applicable insurance policy limits or could be excluded from coverage. There are also risks against which we cannot insure or against which we may elect not to insure. The potential costs, which could be associated with any liabilities not covered by insurance or in excess of insurance coverage, or compliance with applicable laws and regulations may cause substantial delays and require significant capital outlays, adversely affecting our future earnings, competitive position, and potentially our financial viability.
The mineral and chemical processing industry is intensely competitive.
The mineral and chemical processing industry is intensely competitive. We may be at a competitive disadvantage because we must compete with other individuals and companies, many of which have greater financial resources, operational experience and technical capabilities than we do. Increased competition could adversely affect our ability to attract necessary capital funding or acquire suitable exploration properties. We may also encounter increasing competition from other mineral and chemical processing companies in our efforts to locate acquisition targets, hire experienced mining professionals and acquire exploration resources.
Our quarterly and annual operating and financial results and our revenue are likely to fluctuate significantly in future periods.
Our quarterly and annual operating and financial results are difficult to predict and may fluctuate significantly from period to period. Our revenues, net income and results of operations may fluctuate as a result of a variety of factors that are outside our control including, but not limited to, lack of sufficient working capital, equipment malfunction and breakdowns, inability to timely find spare machines or parts to fix the broken equipment, regulatory or licensing delays and severe weather phenomena.
Our long-term success will depend ultimately on our ability to generate sufficientrevenues, achieve and maintain profitability, and develop positive cash flows from our lithium activities.
Our ability to (i) acquire additional lithium projects; and (ii) initiate and continue exploration, development, commissioning of lithium ultimately depends on our ability to generate revenues, achieve and maintain profitability, and generate positive cash flow from our operations. The economic viability of our future extraction activities has many risks and uncertainties including, but not limited to:
| ● | significant, prolonged decrease in the market price of lithium; |
| ● | significantly higher than expected construction and extraction costs; |
| ● | significantly lower than expected lithium extraction; |
| ● | significant delays, reductions, or stoppages in lithium extraction activities; |
| ● | significant shortages of adequate and skilled labor or a significant increase in labor costs; |
| ● | significantly more stringent regulatory laws and regulations; and |
| ● | significant difficulty in marketing and/or selling lithium or lithium hydroxide. |
It is common for a new lithium extraction operation to meet our obligations on a timely basisexperience unexpected costs, problems, and delays during construction, commissioning and start-up. Most similar projects suffer delays during these periods due to retain our current financing, to obtain additional financing and, ultimately, to attain profitability.
Our future successlithium extraction activities may change as a result of any one or more of these risks and uncertainties. We cannot assure you that any of our activities will dependresult in partachieving and maintaining profitability and developing positive cash flows.
We depend on our ability to modifysuccessfully access the capital and financial markets. Any inability to access the capital or enhancefinancial markets may limit our product offerings marketed through our vending kiosksability to meet users’ demands. our liquidity needs and long-term commitments, fund our ongoing operations, execute our business plan or pursue investments that we may rely on for future growth.
Until commercial production is achieved from our planned projects, we will continue to incur operating and investing net cash outflows associated with including, but not limited to, maintaining and acquiring exploration properties, undertaking exploration activities, and the development of our planned projects. As a result, we rely on access to capital markets as a source of funding for our capital and operating requirements. We require additional capital to meet our liquidity needs related to expenses for our various corporate activities, including the costs related to our status as a publicly traded company, fund our ongoing operations, explore and define lithium mineralization, and establish any future lithium operations. We cannot assure you that such additional funding will be available to us on satisfactory terms, or at all.
To finance our future ongoing operations, and future capital needs, we may require additional funds through the issuance of additional equity or debt securities. Depending on the type and terms of any financing we pursue, stockholders’ rights and the value of their investment in our common stock could be reduced. Any additional equity financing will dilute shareholdings. If the issuance of new securities results in diminished rights to holders of our common stock, the market price of our common stock could be negatively impacted. New or additional debt financing, if available, may involve restrictions on financing and operating activities. In addition, if we issue secured debt securities, the holders of the debt would have a claim to our assets that would be prior to the rights of stockholders until the debt is paid. Interest on such debt securities would increase costs and negatively impact operating results.
If we are unable to predict preferences or industry changes, or if we are unable to modify our product offerings in a timely manner, we may lose revenue. New products may be dependent uponobtain additional financing, as needed, at competitive rates, our ability to enter into new relationship with suppliers, whichfund our current operations and implement our business plan and strategy will be affected. These circumstances may require us to reduce the scope of our operations and scale back our exploration, development and extraction programs. There is, however, no guarantee that we may notwill be able to obtain in a timely manner, upon terms acceptablesecure any additional funding or be able to secure funding to provide us or at all. We spend significant resources developing and enhancing our product offerings. However, new or
We are dependent upon key management employees.
The increased security risksresponsibility of online advertisingoverseeing the day to day operations and e-commerce may cause us to incur significant expenses and may negatively impact our credibility and business.
Our ability to substantial federal, state, local and foreign laws and government regulation specific to our business.
Future growth may place strains on our financial, technical, operational, and administrative resources and cause us to rely more on project partners and independent contractors, thus, potentially adversely affecting our financial position and results of operations. Our ability to grow will depend on a number of factors, including, but not limited to:
| ● | our ability to develop existing prospects; |
| ● | our ability to identify and acquire or lease new exploratory prospects; |
| ● | our ability to maintain or enter into new relationships with project partners and independent contractors; |
| ● | our ability to continue to retain and attract skilled personnel; |
| ● | our access to capital; |
| ● | the market price for lithium products; and |
| ● | our ability to enter into agreements for the sale of lithium products. |
Lawsuits may be filed against us and an adverse ruling in any such lawsuit may adversely affect our business, financial condition or liquidity or the market price of our common stock.
We may become involved in, named as a party to, or be the subject of, various legal proceedings, including regulatory proceedings, tax proceedings, and legal actions relating to personal injuries, property damage, property taxes, land rights, the environment, and contract disputes. For additional information, refer to “Legal Proceedings”.
The outcome of future legal proceedings cannot be predicted with certainty and may be determined adversely to us and as a result, could have a material adverse effect on our assets, liabilities, business, financial condition, or results of operations. Even if we beginprevail in any such legal proceeding, the proceedings could be costly, time-consuming, and may divert the attention of management and key personnel from our business operations, which could adversely affect our financial condition.
Our success as a company producing lithium and related products depends to a great extent on our research and development capabilities for direct lithium extraction and our ability to secure capital for the implementation of brine processing plants.
Our success as a producer of lithium and related products is dependent on our ability to develop and implement more efficient production capabilities based on mineral rich brine and implementation of direct lithium extraction (DLE) technologies, which while having the potential to significantly increase the supply of lithium from brine projects, the technology for DLE remains subject to many questions. A number of DLE technologies are emerging and being tested at scale, with a handful of projects already in commercial construction. However, there remain challenges around scalability and water consumption/ brine reinjection. We expect to make significant investment in research and development of the DLE process, and we will need to continue to invest heavily to scale our businessmanufacturing to ultimately producing sufficient amounts of lithium. We cannot assure you that our future product research and development projects and financing efforts will be successful or be completed within the anticipated time frame or budget. There is no guarantee we will achieve anticipated sales target or in a profitable manner. In addition, we cannot assure you that our existing or potential competitors will not develop products which are similar or superior to our products or are more competitively priced. As it is often difficult to project the time frame for developing new products and the duration of market window for these products, there is a substantial risk that we may make errorshave to abandon a potential product that is no longer commercially viable, even after we have invested significant resources in predictingthe development of such product and reactingour facilities. If we fail in our product launching efforts, our business, prospects, financial condition and results of operations may be materially and adversely affected.
The development of non-lithium battery technologies could adversely affect us.
The development and adoption of new battery technologies that rely on inputs other than lithium compounds could significantly impact our prospects and future revenues. Current and next generation high energy density batteries for use in electric vehicles rely on lithium compounds as a critical input. Alternative materials and technologies are being researched with the goal of making batteries lighter, more efficient, faster charging and less expensive, and some of these could be less reliant on lithium compounds. We cannot predict which new technologies may ultimately prove to relevantbe commercially viable and on what time horizon. Commercialized battery technologies that use no, or significantly less, lithium could materially and adversely impact our prospects and future revenues.
Our business trends,is subject to cybersecurity risks.
Our operations depend on effective and secure information technology systems. Threats to information technology systems, such as cyberattacks and cyber incidents, continue to increase. Cybersecurity risks include, but are not limited to, malicious software, attempts to gain unauthorized access to our data and the unauthorized release, corruption or loss of our data and personal information, as well as interruptions in communication and operations. It is possible that our business, financial, and other systems could be compromised, which could go unnoticed for a prolonged period of time. We have not experienced a material breach of our information technologies. Nevertheless, we continue to take steps to mitigate these risks by employing a variety of measures, including employee training, technical security controls, and maintenance of backup and protective systems. Despite these mitigation efforts, cybersecurity attacks and other threats exist and continue to increase, any of which could have a material adverse effect on our business, results of operations, financial condition, and cash flows.
Risks Related to Regulation
We will be required to obtain governmental permits and approvals in order to conduct development and extraction operations, a process that is often costly and time-consuming. There is no certainty that all necessary permits and approvals for our planned operations will be granted.
We are required to obtain and renew governmental permits and approvals for our exploration and development activities and, prior to extracting any mineralization we discover, we will be required to obtain additional governmental permits and approvals that we do not currently possess. Obtaining and renewing any of these governmental permits is a complex, time consuming and uncertain process involving numerous jurisdictions, public hearings, and possibly costly undertakings. The timeliness and success of permitting efforts are contingent upon many variables not within our control, including the interpretation of approval requirements administered by the applicable governmental authority.
We may not be able to obtain or renew permits or approvals that are necessary to our planned operations, or we may discover that the cost and time required to obtain or renew such permits and approvals exceeds our expectations. Any unexpected delays, costs or conditions associated with the governmental approval process could delay our planned exploration, development and extraction operations, which in turn could materially adversely affect our prospects, revenues, and profitability. In addition, our prospects may be adversely affected by the revocation or suspension of permits or by changes in the scope or conditions to use of any permits obtained.
Private parties, such as environmental activist organizations, frequently attempt to intervene in the permitting process to persuade regulators to deny necessary permits or seek to overturn permits that have been issued. These third-party actions can materially increase the costs, cause delays in the permitting process, and could cause us to not proceed with the development or operation of a property. In addition, our ability to successfully obtain key permits and approvals to explore for, develop, operate, and expand operations will likely depend on our ability to undertake such activities in a manner consistent with the creation of social and economic benefits in the surrounding communities, which may or may not be required by law. Our ability to obtain permits and approvals and to successfully operate in particular communities may be adversely affected by real or perceived detrimental events associated with our activities.
Our operations face substantial regulation of health and safety.
Our operations are subject to extensive and complex laws and regulations governing worker health and safety across our operating regions and our failure to comply with applicable legal requirements can result in substantial penalties. Future changes in applicable laws, regulations, permits and approvals or changes in their enforcement or regulatory interpretation could substantially increase costs to achieve compliance, lead to the revocation of existing or future exploration or mining rights or otherwise have an adverse impact on our results of operations and financial position.
Our mining claims are inspected on a regular basis by government regulators who may issue citations and orders when they believe a violation has occurred under local mining regulations. If inspections result in an alleged violation, we may be subject to fines, penalties or sanctions and our mining operations could be subject to temporary or extended closures.
In addition to potential government restrictions and regulatory fines, penalties or sanctions, our ability to operate (including the effect of any impact on our workforce) and thus, our results of operations and our financial position (including because of potential related fines and sanctions), could be adversely affected by accidents, injuries, fatalities or events detrimental (or perceived to be detrimental) to the health and safety of our employees, the environment or the communities in which we operate.
Compliance with environmental regulations and litigation based on environmental regulations could require significant expenditures.
Environmental regulations mandate, among other things, the maintenance of air and water quality standards, land development, and land reclamation, and set forth limitations on the generation, transportation, storage, and disposal of solid and hazardous waste. Environmental legislation is evolving in a manner that may require stricter standards and enforcement, increased fines and penalties for non-compliance, more stringent environmental assessments of proposed projects, and a heightened degree of responsibility for mining companies and their officers, directors, and employees. We may incur environmental costs that could have a material adverse effect on financial condition and results of operations. For example, we may, among other things, over-install kiosks in certain geographic areas leadingAny failure to non-accretive installations, and we cannot be certain that historical revenue ramps for new kiosks will be sustainable in the future.
Moreover, governmental authorities and private parties may be requiredbring lawsuits based upon damage to deliver sharesproperty and injury to persons resulting from the environmental, health, and safety impacts of our common stock to a converting holder. If additional shares of our common stock are issued due to conversion of some or all of the outstanding Notes, the ownership interests of existing stockholders would be diluted. Further, any sales in the public market of any shares of common stock issued upon conversion or hedging or arbitrage trading activity that develops dueprior and current operations. These lawsuits could lead to the potential conversionimposition of the Notes could adversely affect prevailing market prices of our common stock.
Lithium prices are subject to unpredictable fluctuations.
We expect to derive revenues, if any, from the extraction and liquidity, as well assale of lithium. The prices of lithium may fluctuate widely and are affected by numerous factors beyond our business generally.
Changes in technology or other developments could adversely affect demand for lithium compounds or result in preferences for substitute products.
Lithium and commercialize new products and services, and our ability to successfully integrate acquisitions and other third-party relationships into our operations. Our operating results could fluctuate and may continue to fluctuate based upon many factors, including:
Risks Related to this Offering and integrationOwnership of assets and businesses acquired or invested in;Our Common Stock
An active trading market for our ability tocommon stock may not develop, and successfully commercialize, newyou may be unable to resell your shares at or enhanced products and services;
Our common stock trading over the counter has not been historically active. Although we intend to apply for listing our acquisitions and divestitures.
Our stock price may be unable to meet demand due to manufacturing limitations which could seriously harm our business, financial conditionvolatile, and resultsthe market price of operations.
The market price of our common stock could be subject to significant fluctuations after this offering, and it is more susceptible to extreme rises or declines in price, andmay decline below the public offering price. Market prices for securities of early-stage companies have historically been particularly volatile. As a result of this volatility, you may not be able to sell your sharescommon stock at or above the price paid.
| ● | fluctuations in our quarterly financial results or the quarterly financial results of companies perceived to be similar to our company; |
| ● | changes in estimates of our financial results or recommendations by securities analysts; |
| ● | failure of our business to achieve or maintain market acceptance in the lithium industry; |
| ● | changes in market valuations of similar companies; |
| ● | success of competitive service offerings or technologies; |
| ● | changes in our capital structure, such as future issuances of securities or the incurrence of debt; |
| ● | announcements by us or our competitors of significant services, contracts, acquisitions, or strategic alliances; |
| ● | regulatory developments in the United States, foreign countries, or both; |
| ● | litigation involving us; |
| ● | additions or departures of key personnel; |
| ● | investors’ general perception of us; and |
| ● | other events or factors, including those resulting from macroeconomic conditions, geopolitical crises, outbreak of hostilities or acts of war such as the Russian invasion of Ukraine, the Israeli-Hamas war, and Houthi rebel ship attacks in the Red Sea, incidents of terrorism, global pandemics such as the Covid-19 pandemic, natural disasters, and similar events, as well as responses to these and similar events. |
In addition, securities class action litigation has often been initiated following periods of volatility inif the market pricefor lithium and technology sector stocks or the stock market in general experiences a loss of a company’s securities. A securities class action suit against us could result in substantial legal fees, potential liabilities andinvestor confidence, the diversion of management’s attention and resources from our business. Moreover, our shares are currently traded on the OTC Pink and, further, are subject to the penny stock regulations. Price fluctuations in such shares are particularly volatile and subject to manipulation by market-makers, short-sellers and option traders.
Purchasers in this offering may experience substantial dilution in the common stock is limited because broker-dealers are required to providebook value of their customers with disclosure documents prior to allowing them to participateinvestment.
In the future, your percentage ownership in transactions involving the common stock. These disclosure requirements are burdensome to broker-dealers andus may discourage them from allowing their customers to participate in transactions involvingbe diluted if we issue additional shares of our common stock thereby further reducingor convertible debt securities in connection with acquisitions, capital market transactions, or other corporate purposes, including equity awards that we may grant to our directors, officers and employees.
Our officers and directors have significant voting power and may take actions that may not be in the liquiditybest interests of other stockholders.
Our executive officers and directors currently own or control 51.4% of our outstanding shares of common stock.
After the completion of this offering, we do not anticipate receiving cashexpect to declare any dividends on our common stock, thereby depriving investorsin the foreseeable future.
After the completion of yield on their investment.
Our indemnification of officers and directors and limitations on their liability could limit our recourse against them.
Our Certificatecertificate of Incorporationincorporation and Bylawsbylaws contain broad indemnification and liability limiting provisions regarding our officers, directors and employees, including the limitation of liability for certain violations of fiduciary duties. ShareholdersStockholders therefore will have only limited recourse against these individuals.
If we fail to implement and maintain proper and effective internal controls and disclosure controls and procedures, our ability to produce accurate and timely financial statements and public reports could be impaired, which could adversely affect our operating results, our ability to operate our business and investors’ views of us.
Section 404 of the Sarbanes-Oxley Act of 2002 requires the Companyour company to evaluate the effectiveness of itsour internal control over financial reporting as of the end of each year, and to include a management report assessing the effectiveness of the Company’sour internal control over financial reporting in each Annual Reportannual report on Form 10-K.
We have identified our disclosure controls and procedures were not effective and that material weaknesses existexists in our internal control over financial reporting. The material weaknesses consist of an insufficient complement of qualified accounting personnel and controls associated with segregation of duties and ineffective controls associated with identifying and accounting for complex and non-routine transactions in accordance with U.S. generally accepted accounting principles. Due to the material weaknesses in internal control over financial reporting and disclosure controls and procedures, there may be errors in the Company’sour consolidated financial statements and in the accompanying footnote disclosures that could require restatements. Investors may lose confidence in our reported financial information and disclosure, which could negatively impact our stock price.
We do not expect that our internal control over financial reporting will prevent all errors and all fraud. A control system, no matter how well designed and operated, can provide only reasonable, not absolute, assurance that the control system’s objectives will be met. Further, the design of a control system must reflect the fact that there are resource constraints, and the benefits of controls must be considered relative to their costs. Controls can be circumvented by the individual acts of some persons, by collusion of two or more people, or by management override of the controls. Over time, controls may become inadequate because changes in conditions or deterioration in the degree of compliance with policies or procedures may occur. Because of the inherent limitations in a cost-effective control system, misstatements due to error or fraud may occur and not be detected.
CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS
Information set forth therein. The third column lists the shares of common stock being offered by this prospectus by the selling stockholders and does not take in account any limitations on (i) conversion of the Notes set forth therein or (ii) exercise of the Warrants set forth therein.
Name of Selling Stockholder) | Number of Shares of Common Stock Beneficially Owned Prior to Offering | Maximum Number of Shares of Common Stock to be Sold Pursuant to this Prospectus | Number of Shares of Common Stock Owned After Offering | |||||||||||||||||
| Number | Percent | Number | Number | Percent | ||||||||||||||||
Cobrador Multi Strategy Partners, LP (1) | 481,027 | 4.99% | 2,000,000 | 0 | 0 | |||||||||||||||
Automated Retail Leasing Partners (2) | 481,027 | 4.99% | 256,076 | 0 | 0 | |||||||||||||||
Given these risks, uncertainties, and certain tax obligations. The fair value of consideration received for the stock of LegalStore.com was less than the carrying valueother factors, you should not place undue reliance on these forward-looking statements. Also, these forward-looking statements represent our estimates and assumptions only as of the assets. As a result, an impairment charge was recordeddate such forward-looking statements are made. You should read carefully this prospectus and any related free writing prospectuses that we have authorized for use in connection with this offering, completely and with the understanding that our actual future results may be materially different from what we expect. We hereby qualify all of our forward-looking statements by these cautionary statements. Except as of December 31, 2012required by U.S. federal securities law, we assume no obligation to update these forward-looking statements publicly or to update the reasons actual results could differ materially from those anticipated in these forward-looking statements, even if new information becomes available in the amount of approximately $35,000,future.
USE OF PROCEEDS
We estimate that the net of income tax effect.
The principal purposes of this offering are to obtain additional capital to support our business, financial condition and results ofmining operations, and our ability to achieve sufficient cash flow.
We currently intend to use the net proceeds from this offering, together with our existing cash and may not represent actual transactions:cash equivalents, as follows:
| ● | approximately $______ to fund the development and operation of our Lisbon Valley Project, including the drilling, permitting, claim re-registration and related geological work on the 14,260-acre land position; |
| High | Low | |||||||
| Year ending December 31, 2014 | ||||||||
First Quarter | $ | 0.36 | $ | 0.06 | ||||
Second Quarter | $ | 0.40 | $ | 0.14 | ||||
| Third Quarter | $ | 1.00 | $ | 0.15 | ||||
| ● | approximately $______ to fund potential expansion of our mineral rights through acquisitions of land and claims, and joint venture opportunities; and |
| High | Low | |||||||
| Year ending December 31, 2013 | ||||||||
First Quarter | $ | 1.90 | $ | 1.60 | ||||
Second Quarter | $ | 6.40 | $ | 0.80 | ||||
Third Quarter | $ | 1.60 | $ | 0.40 | ||||
Fourth Quarter | $ | 0.40 | $ | 0.20 | ||||
| ● | the remainder for working capital and general corporate purposes, including amounts required to pay for research and development expenses, salaries, professional fees, public reporting costs, office-related expenses and other corporate expenses. |
| High | Low | |||||||
| Year ending December 31, 2012 | ||||||||
First Quarter | $ | 30.00 | $ | 8.00 | ||||
Second Quarter | $ | 8.00 | $ | 4.00 | ||||
Third Quarter | $ | 2.00 | $ | 2.00 | ||||
Fourth Quarter | $ | 2.00 | $ | 2.00 | ||||
We currently have no commitments with respect to transactions in such securities is provided by the exchangeany acquisitions or system. The penny stock rules require a broker-dealer, prior to a transaction in a penny stock, to deliver a standardized risk disclosure document prepared by the SEC, that: (i) contains a descriptionjoint ventures.
Our expected use of net proceeds from this offering represents our current intentions based upon our present plans and business condition. As of the naturedate of this prospectus, we cannot predict with certainty all of the particular uses for the net proceeds to be received upon the closing of this offering, or the amounts that we will actually spend on the uses set forth above. The amounts and leveltiming of riskour actual use of the net proceeds will vary depending on numerous factors. We may find it necessary or advisable to use the net proceeds for other purposes, and our management will have broad discretion in the market for penny stocks in both public offerings and secondary trading; (ii) contains a descriptionapplication of the broker’s or dealer’s duties tonet proceeds, and investors will be relying on our judgment regarding the customer andapplication of the rights and remedies availablenet proceeds from this offering.
Pending these uses, we intend to invest the customer with respect to a violation to such duties or other requirements of securities’ laws; (iii) contains a brief, clear, narrative description of a dealer market, including bid and ask prices for penny stocks and the significance of the spread between the bid and ask price; (iv) contains a toll-free telephone number for inquiries on disciplinary actions; (v) defines significant termsnet proceeds from this offering in the disclosure document or in the conduct of trading in penny stocks; and; (vi) contains such other information and is in such form, including language, type, size and format, as the SEC shall require by rule or regulation.short-term, investment-grade, interest-bearing securities.
DIVIDEND POLICY
We did not pay dividends during 2014 to date, 2013 or 2012.the years ended December 31, 2023 and 2022. We have never declared or paid any cash dividends or distributions on our common stock and intend to retain future earnings, if any, to support our operations and to finance expansion. Therefore, we do not anticipate paying any cash dividends on the common stock in the foreseeable future.
CAPITALIZATION
The following table summarizes our own warrant agent for our outstanding warrants.
| As of December 31, 2023 | ||||||||
| Actual | As Adjusted | |||||||
| (unaudited) | ||||||||
| Cash | ||||||||
| Debt, current portion | ||||||||
| Long-term debt, net of current portion | ||||||||
| Stockholders’ equity (deficit) | ||||||||
| Common stock, $0.001 par value, ______ shares authorized, ______ shares issued and outstanding, actual; ______ shares issued and outstanding, | ||||||||
| Additional paid-in capital | ||||||||
| Accumulated deficit | ||||||||
| Total stockholders’ equity (deficit) | ||||||||
| Total capitalization | ||||||||
DILUTION
If you invest in our common stock in this offering, your ownership interest will be immediately diluted to the Company completed a tenth ($25,000 in May, 2014) trancheextent of financing. The senior convertible note issued in May, 2014 of $25,000 face value is convertible at $0.05the difference between the public offering price per share and include Series A warrants to purchase 750,000the pro forma, as adjusted net tangible book value per share of our common stock immediately after this offering. Net tangible book value per share is determined by dividing our total tangible assets less total liabilities by the number of outstanding shares of common stock and Series B warrants to purchase 750,000 sharesstock.
As of December 31, 2023, we had a net tangible book value of $________ (unaudited) or $____ per share of common stock. The Series A warrants granted have an exercise price of $0.05Our pro forma net tangible book value per share and have a 24 month term from daterepresents the amount of grant. The Series B warrants granted have an exercise price of $0.06 per share and have a five year term from date of grant. All terms are consistent with previous financing transactions previously disclosed in the Company’s previous SEC filings including a 4.99% beneficial ownership limit of the Company’s common stock.
Investors participating in this offering will incur immediate and substantial dilution. After giving effect to the issuance under the Plan is 5,000,000 shares. Awards may be granted to employees, officers, directors, consultants, agents, advisors and independent contractorssale of the Company and its related companies. Such options may be designated at the time_____ shares of grant as either incentiveour common stock options or nonqualified stock options. Stock based compensation includes expense charges related to all stock-based awards. Such awards include options, warrants and stock grants. Generally, the Company issues stock options that vest over three years and expire in 5 to 10 years.
| Amount | ||||
| Assumed public offering price per share of common stock | ||||
| Pro forma net tangible book value (deficit) before offering | ||||
| Increase in pro forma net tangible book value attributable to new investors | ||||
| Pro forma as adjusted net tangible book value after offering | ||||
| Dilution in pro forma net tangible book value to new investors | ||||
If the underwriters exercise their over-allotment option in full to purchase an additional ______ shares of common stock from us in this offering to cover over-allotments, if any, the pro forma as adjusted net tangible book value per share after the offering would be $____ per share, the increase in the pro forma net tangible book value per share to existing stockholders would be $____ per share and the dilution per share to new investors purchasing common stock in this offering would be $____ per share.
To the extent that new stock options are issued or we issue additional shares of October 31, 2014 regardingcommon stock in the future, there will be further dilution to investors participating in this offering. In addition, we may choose to raise additional capital because of market conditions or strategic considerations, even if we believe that we have sufficient funds for our current or future operating plans. If we raise additional capital through the sale of equity compensation plans under whichor convertible debt securities, the issuance of those securities could result in further dilution to our equity securities are authorized for issuance.stockholders.
Plan Category | Number of securities to be issued upon exercise of outstanding options, warrants and rights | Weighted average exercise price of outstanding options, warrants and rights | Number of securities remaining available for future issuance under equity compensation Plans (excluding securities reflected in column (a)) | |||||||||
| (a) | (b) | (c) | ||||||||||
| Equity compensation plans approved by securities holders (1) | 360,650 | $ | 2.04 | 4,639,350 | ||||||||
| Total | 360,650 | 4,639,350 | ||||||||||
MANAGEMENT’S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONOPERATIONS
The following discussion and analysis is intended to help you understand our results of operations and financial condition. This discussion and analysis is provided as a supplement to, and should be read in conjunction with, the section entitled “Our Selected Financial Information” and our consolidated financial statements and notes thereto included elsewhere in this prospectus. This discussion may contain forward-looking statements based upon current expectations that involve risks and uncertainties. Our actual results may differ materially from those anticipated in these forward-looking statements as a result of various factors, including those set forth under the sections entitled “Risk Factors” or “Cautionary Note Regarding Forward-Looking Statements” in other parts of this prospectus.
Cautionary Statement
The following discussion and analysis should be read in conjunction with our financial statements and related notes included elsewhere in this prospectus. Our actual results may differ materially from those anticipated in the following discussion, as a result of a variety of risks and uncertainties, including those described under “Risk Factors.”
Forward-Looking Statements
Certain statements contained herein constitute “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995 (the “1995 Reform Act”). U-Vend, Inc. (formerly Internet Media Services, Inc.) desires to avail itself of certain “safe harbor” provisions of the 1995 Reform Act and is therefore including this special note to enable us to do so.statements.” Except for the historical information contained herein, this report contains forward-looking statements (identified by the words "estimate," "project," "anticipate," "plan," "expect," "intend," "believe," "hope," "strategy"“estimate,” “project,” “anticipate,” “plan,” “expect,” “intend,” “believe,” “hope,” “strategy” and similar expressions), which are based on our current expectations and speak only as of the date made. These forward-looking statements are subject to various risks, uncertainties and factors that could cause actual results to differ materially from the results anticipated in the forward-looking statements, including, without limitation, those discussed under Part I, Item 1A “Risk Factors” in this Annual Report,our annual report on Form 10-K for the year ended December 31, 2022, as filed with the Securities and Exchange Commission on April 21, 2023, and those described herein that could cause actual results to differ materially from the results anticipated in the forward-looking statements, and the following:
| ● |
| ● |
| ● |
| ● |
| ● |
| ● | the failure of our products and services to achieve market |
| ● | the inability to compete in our market, especially against established industry competitors with greater market presence and financial resources. |
Objective
The objective of our Management’s Discussion and Analysis of Financial Condition and Results of Operations (“MD&A”) is to provide users of our financial statements with the following:
| ● | A narrative explanation from the perspective of management of our financial condition, results of operations, cash flows, liquidity and certain other factors that may affect future results; |
| ● | Useful context to the financial statements; and |
| ● | Information that allows assessment of the likelihood that past performance is indicative of future performance. |
This MD&A is a supplement to, and should be read together with, our financial statements, including notes, referenced elsewhere in this prospectus, and is provided to enhance your understanding of our operations and financial condition. Due to rounding, some parts of this discussion may not sum or calculate precisely to the totals and percentages provided in the tables.
The following discussion and analysis providesprovide information that our management believes is relevant to an assessment and understanding of our results of operations and financial condition, and should be read in conjunction with the consolidated financial statements and footnotes that appear elsewhere in this report.prospectus.
Overview and Outlook
We are a U.S. based renewable energy company focused on the extraction, refinement and distribution of technical minerals in an environmentally responsible manner. We formerly developed, marketed and distributed various self-serve electronic kiosks and mall/airport co-branded islands throughout North America. Due to the nationwide shutdown related to the Covid-19 pandemic, we spent a portion of 2020 restructuring and retiring certain corporate debt and obligations, and focusing on implementing a new operational direction.
Through the corporate reorganization and repositioning process, we found ourselves with the unique opportunity to acquire mining claims that historically reported high levels of lithium and other technical minerals. We hired and affiliated ourselves with industry veterans that bring decades of experience, credibility and relationships.
On November 5, 2021, we acquired the rights to 102 federal mining claims located in the Lisbon Valley of Utah for $100,000 plus the future payment of royalties based on a percentage of the net revenue from the sale of lithium produced from a portion of the mining property. The acquisition was driven by historical mineral data from seven existing wells with brine aquifer access. We have not yet commenced any mining operations, and we are an exploration stage issuer, as defined in SEC Regulation S-K, Item 1300 (“Regulation S-K 1300”). An independent third-party technical report indicated that further investment and development in the claims was warranted, although no determination has been made whether we have any reserves of minerals. Similarly, no determination has been made whether mineralization could be economically and legally produced or extracted. We have no mineral reserves as defined by Regulation S-K 1300 and have had no mining revenue to date.
On October 20, 2022 we, following receipt of written approval from stockholders acting without a meeting and holding at least the minimum number of votes that would be necessary to authorize or take such action at a meeting, filed an amendment to our certificate of incorporation to (i) change the name of our company to “American Battery Materials, Inc.” (the “Name Change”); and (ii) increase the total number of authorized shares of our common stock, par value $0.001 per share, from 600,000,000 to 4,500,000,000 (the “Authorized Share Increase”). The Name Change was processed by FINRA and was effective on May 1, 2023, at which time our trading symbol was also changed to BLTH. The Authorized Share Increase was effective as of October 20, 2022.
On October 20, 2022, in addition to the Name Change and the Authorized Share Increase, the holder of 63.86% of the outstanding shares of stock of our company entitled to vote took action by written consent and without a meeting, pursuant to Delaware General Corporate Law Section 228, and adopted and approved the following actions:
| 1. | Future amendment of our certificate of incorporation to implement a decrease in the authorized shares of our common stock from 4,500,000,000 to a number of not less than 10,000,000 and not more than 2,000,000,000 (the “Authorized Share Reduction”), at any time prior to October 20, 2023 (the “Anniversary Date”), with the Board having the discretion to determine whether or not the Authorized Share Reduction is to be effected, and if effected, the exact number of the Authorized Share Reduction within the above range. |
| 2. | Future amendment of our certificate of incorporation to implement a reverse stock split of our common stock by a ratio of not less than 1-for-10 and not more than 1-for-1,000 (the “Reverse Split”), at any time prior to the Anniversary Date, with the Board having the discretion to determine whether or not the Reverse Split is to be effected, and if effected, the exact ratio for the Reverse Split within the above range. |
On April 25, 2023, we formed Mountain Sage Minerals LLC, a Utah limited liability company. We were incorporatedwill look to expand our holdings in March 2007the Lisbon Valley area with the acquisition of additional mineral claims and joint venture opportunities through this new entity.
On June 1, 2023, we entered into an Agreement and Plan of Merger (the “Merger Agreement”) with Seaport Global Acquisition II Corp. (“SGII”), and Lithium Merger Sub, Inc., a wholly owned subsidiary of SGII. SGII is a blank check company, also referred to as a Delaware corporationspecial purpose acquisition company, formed for the purpose of effectuating a merger, capital stock exchange, asset acquisition, stock purchase, reorganization or other similar business combination with one or more businesses. SGII is an early stage and referemerging growth company. As a result of the transaction under the Merger Agreement, we would have become a wholly owned subsidiary of SGII. Following material changes to ourselves hereinthe transaction proposed by SGII making the transaction untenable to us, on November 20, 2023, SGII notified us that it had elected to terminate the Merger Agreement.
We have been moving forward with our strategy of employing advanced brine extractive technology methodologies and have been in talks with numerous extraction providers. Selective mineral extraction is clearly the most cost-effective and ESG friendly approach currently available. Technologies are being utilized that can extract the desired minerals and metals from the brine and then re-inject the brines back down into the aquafer. The prospective partners have been provided the analytical results from the technical reports, but will soon provide current results, analytical, geotech modeling, aquifer modeling, recharge, flows, and depth. We will need funding to support continuing operations and support our growth strategy, and we will need to finance operations by offering any combination of equity offerings, debt financing, collaborations, strategic alliances, or other licensing arrangements. There is no assurance we will be able to raise sufficient capital to finance our operations.
Results of Operations
Nine months Ended September 30, 2023 Compared to Nine months Ended September 30, 2022
Revenue
For the nine months ended September 30, 2023 and 2022, we had no revenue.
Operating Expenses
General and administrative expenses for the nine months ended September 30, 2023 were $2,165,494, an increase of $1,343,499 or 163%, compared to $821,995 for the nine months ended September 30, 2022. The increase in operating expenses was mainly due to an increase in professional fees, mining maintenance fees and stock compensation expenses. In the second quarter of 2022, we activated consulting teams to pursue additional land acquisitions, and to begin the State and Federal permitting process for project development work.
In addition, we initiated construction strategies based on reports from RESPEC, our engineering partner, for geological modeling and drill entry design and related planning.
Change in Fair Value of Derivative Liabilities
During the nine months ended September 30, 2022, we recorded a gain on the change in fair value of derivative liabilities of $211,345. The underlying convertible notes were converted during the fourth quarter of 2022, resulting in no derivative liabilities during the nine months ended September 30, 2023.
Gain on Settlement of Liabilities
During the nine months ended September 30, 2023, we recorded a gain on settlement of liabilities of $67,984, consisting of $7,008 in principal and $60,976 in interest forgiven by noteholders. No such transactions were noted during the nine months ended September 30, 2022.
Fair value of stock issued for note modification
During the nine months ended September 30, 2023, we recorded a fair value of stock issued for note modification of $168,856. No such transactions were noted during the nine months ended September 30, 2022.
Extension fees due to SPAC Sponsor
During the nine months ended September 30, 2023, we recorded $101,662 of extension fees due to SPAC Sponsor. No such transactions were noted during the nine months ended September 30, 2022.
Interest Expense
Interest expense for the nine months ended September 30, 2023 was $94,771, as “we”compared to $537,938 during the nine months ended September 30, 2022 due to the conversion of convertible notes payable during the fourth quarter of 2022.
Net Loss
As a result of the foregoing, the net loss for the nine months ended September 30, 2023, was $2,462,799 as compared to the net loss of $1,148,558 during the nine months ended September 30, 2022.
Year Ended December 31, 2022 Compared to Year Ended December 31, 2021
Revenue
For the year ended December 31, 2022 and 2021, we had no revenue.
Operating Expenses
General and administrative expenses for the year ended December 31, 2022 were $1,135,088, an increase of $741,712 or 189%, “us”,compared to $393,376 for the “Company” or “U-Vend, Inc.” Our corporate office is located at 1507 7th Street, #425, Santa Monica, CA 90401year ended December 31, 2021. The increase in operating expenses was mainly due to an increase in professional fees. In the second quarter of 2022, we activated consulting teams to pursue additional land acquisitions, and to begin the State and Federal permitting process for project development work.
In addition, we initiated construction strategies based on reports from RESPEC, our telephone number is (800) 467-1496. Our corporate website address is www.u-vend.com. Information containedengineering partner, for geological modeling and drill entry design and related planning.
Change in Fair Value of Derivative Liabilities
During the year ended December 31, 2022, we recorded a gain on the change in fair value of derivative liabilities of $211,345, as compared to a gain on the change in fair value of derivative liabilities of $2,871,910 during the year ended December 31, 2021.
Interest Expense
Interest expense for the year ended December 31, 2022 was $595,124, as compared to $760,663 during the year ended December 31, 2021.
Net Loss
As a result of the foregoing, the net loss for the year ended December 31, 2022 was $1,486,848 as compared to the net income of $1,762,466 during the year ended December 31, 2021.
Liquidity and Capital Resources
We require cash to fund our websites is not a part of this quarterly report.
Since we acquired our first mining claims in November 2021 we have faced an increasingly challenging liquidity situation that adequate financing can be obtained to meet our capital needs.
Sources of additional capital through various financing transactions or arrangements with third parties may include equity or debt financing, bank loans or revolving credit facilities. We may not includebe successful in locating suitable financing transactions in the time period required or at all, and we may not obtain the capital we require by other means. Unless we can attract additional investment, our operating as a going concern is in doubt.
If we are unable to obtain sufficient amounts of additional capital, we may have to cease filing the required reports and cease operations completely. If we obtain additional funds by selling any adjustments that mightof our equity securities or by issuing common stock to pay current or future obligations, the percentage ownership of our stockholders will be reduced, stockholders may experience additional dilution, or the equity securities may have rights preferences or privileges senior to the common stock.
Cash Flows
Nine months Ended September 30, 2023 Compared to Nine months Ended September 30, 2022
Operating Activities
During the nine months ended September 30, 2023, we used $1,911,600 of cash in operating activities as a result of our net loss of $2,462,799, increased by gain on debt settlement of $67,984 and amortization of debt discount of $89,876, and offset by fair value of options issued for note modification of $168,856, share-based compensation of $446,113, and net changes in operating assets and liabilities of $94,090.
During the nine months ended September 30, 2022, we used $720,338 of cash in operating activities as a result of our net loss of $1,148,588, offset by share-based compensation of $11,080, change in fair market value of derivative liability of $211,345, and net changes in operating assets and liabilities of $628,515.
Investing Activities
During the nine months ended September 30, 2023, we expended $106,000 for staking activities related to new federal mining claims located in the Lisbon Valley of Utah.
During the nine months ended September 30, 2022, we had no investing activities.
Financing Activities
During the nine months ended September 30, 2023, financing activities provided $2,314,000, resulting from $2,025,000 in proceeds from convertible notes, $100,000 in proceeds from promissory notes, and $189,000 in proceeds from the outcomeexercise of this uncertaintywarrants.
During the nine months ended September 30, 2022, financing activities provided $765,000, resulting from $590,000 in proceeds from convertible notes, $200,000 in proceeds from promissory notes, and $50,000 in proceeds from issuance of preferred stock, offset by $75,000 in repayments of convertible notes.
Year Ended December 31, 2022 Compared to Year Ended December 31, 2021
Operating Activities
During the year ended December 31, 2022, we used $910,709 of cash in operating activities as a result of our net loss of $1,486,848, offset by share-based compensation of $62,080, net changes in operating assets and liabilities of $757,423, and increased by gain on change in fair market value of derivative liability of $211,345 and gain on settlement of debt of $32,019.
During the year ended December 31, 2021, we used $392,445 of cash in operating activities as a result of our net income of $1,762,466, increased by share-based compensation of $6,296, write-off of assets of $17,500, and net changes in operating assets and liabilities of $755,297, and offset by change in fair market value of derivative liability of $2,871,910 and gain on settlement of liabilities of $62,095.
Investing Activities
During the year ended December 31, 2022, we had no investing activities.
During the year ended December 31, 2021, we purchased $100,000 in mineral claims.
Financing Activities
During the year ended December 31, 2022, financing activities provided $945,000, resulting from $590,000 in proceeds from convertible notes, $250,000 in proceeds from promissory notes, $130,000 in proceeds from the exercise of warrants, and $50,000 in proceeds from issuance of preferred stock, offset by $75,000 in repayments of convertible notes.
During the year ended December 31, 2021, financing activities provided $477,150, resulting from $885,000 in proceeds from convertible notes, offset by $82,000 in repayments of capital lease obligations, $300,850 in repayments of convertible notes, and $25,000 in repayments of promissory notes.
Off-Balance Sheet Arrangements
We do not have any off-balance sheet arrangements that have, or are reasonably likely to have, an effect on our financial condition, financial statements, revenues or expenses.
Impact of Inflation
Management continues to evaluate the impact of the existence of inflationary trends on the U.S. economy and the recent increase in interest rates. Although our operations are influenced by general economic conditions, we do not believe that inflation or rising interest rates had a material effect on our results of operations during the last three years as we are generally abletwo years. While it is reasonably possible that such uncertainties, and governmental and societal actions to passmanage them, could have a negative effect on our financial position in the increase in our material and labor costs to our customers, or absorb them as we improvefuture, the efficiency of our operations.specific impact is currently not readily determinable.
Critical Accounting Policies
The preparation of financial statements and related disclosures in conformity with accounting principles generally accepted in the United States requires management to make judgments, assumptions and estimates that affect the amounts reported in our consolidated financial statements and accompanying notes. The consolidated financial statements for the fiscal year ended December 31, 2013,as of June 30, 2023 describe the significant accounting policies and methods used in the preparation of the consolidated financial statements. Actual results could differ from those estimates and be based on events different from those assumptions. Future events and their effects cannot be predicted with certainty; estimating, therefore, requires the exercise of judgment. Thus, accounting estimates change as new events occur, as more experience is acquired or as additional information is obtained. The following critical accounting policies are impacted significantly by judgments, assumptions and estimates used in the preparation of our consolidated financial statements:
Fair Value of Financial Instruments
For certain of our financial instruments, includeincluding cash and equivalents, accounts receivable, accounts payable, accrued expenses, derivative warrant liabilities promissory notes payable, capital lease obligation, contingent consideration liability, revolving note from related party, convertible notes payables, and senior convertible notes payable. Fairshort-term debt, the carrying amounts approximate their fair values were assumeddue to approximate carrying values for these financial instruments, except for derivative warrant liabilities, contingent consideration liability, convertible notes payableour short maturities. ASC Topic 820, “Fair Value Measurements and senior convertible notes payable, since they are short term in nature or they are receivable or payable on demand. The senior convertible notes payable are recorded at face amount, net of any unamortized discounts. The convertible notes payable are measured at fair value each reporting period. The fair value was estimated using the trading price on June 30, 2014, since the underlying shares the debt could be converted into are trading in an active, observable market, and are considered similar to the debt itself, the fair value measurement qualifies as a Level 2 input. The determinationDisclosures,” requires disclosure of the fair value of the derivative warrant liabilitiesfinancial instruments held by us. ASC Topic 825, “Financial Instruments,” defines fair value, and contingent consideration liability include unobservable inputs and is therefore categorized asestablishes a Level 3 measurement.
| ● | Level |
| ● | Level 2: Quoted prices |
| ● | Level |
Derivative Financial Instruments
We evaluate our financial instruments to determine if such instruments are derivatives or contain features that qualify as embedded derivatives. Certain warrants issued by us contain terms that result in the warrants being classified as derivative liabilities for accounting purposes. For derivative financial instruments that are accounted for as liabilities, the derivative instrument is initially recorded at its fair market value and then is revalued at each reporting date, with changes in fair value reported in the consolidated statement of operations. We do not use derivative instruments to hedge exposures to cash flow, market or foreign currency risks.
Factors That May Adversely Affect our Results of Operations
Our results of operations may be adversely affected by various factors that could cause economic uncertainty and volatility in the financial markets, many of which are beyond our control. Our business could be impacted by, among other things, downturns in the financial markets or in economic conditions, increases in oil prices, inflation, increases in interest rates, supply chain disruptions, declines in consumer confidence and spending, any ongoing effects of the Covid-19 pandemic, including resurgences and the emergence of new variants, and geopolitical instability, such as the military conflict in Ukraine and the Middle East. We cannot at this time fully predict the likelihood of one or more of the above events, their duration, or magnitude, or the extent to which they may negatively impact our business.
BUSINESS
Overview of Our Company
We operate as a U.S. based renewable energy company focused on the extraction, refinement and distribution of technical minerals in an environmentally responsible manner. We formerly developed, marketed and distributed various self-serve electronic kiosks and mall/airport co-branded islands throughout North America. Due to the nationwide shutdown related to the Covid-19 pandemic, we spent a portion of 2020 restructuring and retiring certain corporate debt and obligations, and focusing on implementing a new operational direction.
Through the corporate reorganization and repositioning process, we found itself with the unique opportunity to acquire mining claims that historically reported high levels of lithium and other tech minerals. We hired and affiliated ourselves with industry veterans that bring decades of experience, credibility and relationships.
On November 5, 2021, we acquired the rights to 102 federal mining claims located in the Lisbon Valley of Utah for $100,000 plus the future payment of royalties based on a percentage of the net revenue from the sale of lithium produced from a portion of the mining property. The acquisition was driven by historical mineral data from seven existing wells with brine aquifer access. We have not yet commenced any mining operations, and we are an exploration stage issuer, as defined in SEC Regulation S-K Item 1300 (“Regulation S-K 1300”). An independent third-party technical report indicated that further investment and development in the claims was warranted, although no determination has been made whether we have any reserves of minerals. Similarly, no determination has been made whether mineralization could be economically and legally produced or extracted. We have no mineral reserves as defined by Regulation S-K 1300 and have had no mining revenue to date.
In July 2023, we acquired and staked additional lithium mining claims adjacent to our Lisbon Valley Project in Utah. The new claims have been registered with the Bureau of Land Management (BLM). We now own a total of 743 placer claims over 14,320 acres, comprised of the 102 original claims held and the 641 new claims.
Our Growth Strategy
Our strategic goal is to become a producer of lithium in the United States. We believe that a strategy of employing advanced brine extractive technology methodologies for selective mineral extraction is the most cost-effective and environmentally friendly approach currently available. We believe that this approach is environmentally friendly because we would not deconstruct land structures which leave dirty tailings, but rather we would extract the desired minerals and metals from subsurface brines that re-inject the brines back down into the aquafer to maintain pressure after lithium extraction. We plan, as part of our sustainability goals within our overall environmental, social and governance (“ESG”) strategy, to develop sustainable production operations. Our plan is to develop our projects and strategic equity investments on a measured timeline to provide the potential for both near-term cash flow and long-term value maximization.
We have been executing the necessary steps to determine analytical results from our technical report, which should provide current results, analytical, geotech modeling, aquifer modeling, recharge, flows and depth. We have engaged RESPEC Company LLC as our geotech, engineering and resource management partner to assist in the exploration of the Lisbon Valley brine extraction project. Leveraging its expertise, we will focus on several initiatives, which include the following:
| ● | advancement of geotech, engineering, geology and fieldwork to complete technical reports on the Lisbon Project; |
| ● | understanding Lisbon Valley brines, on and around owned leases; |
| ● | develop |
| ● | enter other prospective plugged and abandoned wells, taking brine samples and performing hydrological testing at each identified high potential zone to evaluate the properties of the clastic formation; |
| ● | as information is advanced, prepare technical reports following the Regulation S-K 1300 Standards of Disclosure for Mineral Projects, initially a Preliminary Economic Assessment (PEA) and longer term, a Preliminary Feasibility Study (PFS); |
| ● | test the collected brines for lithium, but also for previously identified high value elements such as |
| ● | based on the results of the Superior well, develop area resource estimates. |
The Lisbon Valley of Utah also provides many added benefits:
| ● | historically rich industrial and natural resource extraction area; |
| ● | a developed infrastructure including high voltage electrical, proximity to major roadways and rail spurs; and |
| ● | state and local agency support through the Utah Division of Oil, Gas and Mining (UDOGM) and the Trust Land Administration (SITLA). |
We will also look to expand our holdings in the Lisbon Valley area with the acquisition of additional mineral claims and joint venture opportunities. We continue to explore and evaluate opportunities to further expand our resource base and production capacity through the possible acquisition of properties and projects in other areas of the United States, as well as in South America, particularly Argentina.
As part of our strategy for growth, our projects and strategic investments will be developed on a measured timeline, and we will evaluate all opportunities to further expand our resource base and production capacity. We understand that our timelines are subject to a variety of risks and variables, including, without limitation, obtaining permits, approvals and funding. We are also focused on the implementation of direct lithium extraction (DLE) technologies, which we believe have the potential to significantly increase the supply of lithium from our brine projects, similar to the impact which shale did for oil.
To achieve our goal of becoming a producer of lithium, we will rely on our competitive strengths and experienced management team to explore and consider all opportunities to generate revenue and increase our projects, properties and assets, as well as all potential funding options. Some opportunities for growth may be in the form of (i) strategic partnerships, (ii) off-take agreements, (iii) diversification of projects and properties, (iv) acquisitions of companies and technologies, and (v) participation in related commercial development activities.
The Lithium Market
Lithium is on the list of the 35 minerals considered critical to the economic and national security of the United States, as first published by the U.S. Department of the Interior on May 18, 2018. In June 2021, the U.S. Department of Energy published a report titled “National Blueprint for Lithium Batteries 2021-2030” (the “NBLB Report”) which was developed by the Federal Consortium for Advanced Batteries (“FCAB”), a collaboration by the U.S. Departments of Energy, Defense, Commerce, and State. According to the Report, one of the main goals of this U.S. government effort is to “secure U.S. access to raw materials for lithium batteries.” In the NBLB Report, Jennifer M. Granholm, the U.S. Secretary of Energy, states: “Lithium-based batteries power our daily lives from consumer electronics to national defense. They enable electrification of the transportation sector and provide stationary grid storage, critical to developing the clean-energy economy.”
The NBLB Report summarizes the U.S. government’s views on the need for lithium and the expected growth of the lithium battery market as follows:
| ● | “A robust, secure, domestic industrial base for lithium-based batteries requires access to a reliable supply of raw, refined, and processed material inputs…” |
| ● | “The worldwide lithium battery market is expected to grow by a factor of 5 to 10 in the next decade.” |
The growth in electric vehicles (“EVs”) will provide the greatest needs for lithium-based batteries. The NBLB Report states: “Bloomberg projects worldwide sales of 56 million passenger electric vehicles in 2040, of which 17% (about 9.6 million EVs) will be in the U.S. market.” Source: NBLB Report (defined above). Original Source: Bloomberg NEF Long-Term Electric Vehicle Outlook 2019.
In a February 2021 report, Canalys, a global technology market analyst firm, states that global sales of EVs in 2020 increased by 39% year on year to 3.1 million units. This compares with a sales decline of 14% of the total passenger car market in 2020. Canalys forecasts that the number of EVs sold will rise to 30 million in 2028 and EVs will represent nearly half of all passenger cars sold globally by 2030.
Bloomberg’s Long-Term Electric Vehicle Outlook 2021 report states: “The outlook for EV adoption is getting much brighter, due to a combination of more policy support, further improvements in battery density and cost, more charging infrastructure being built, and rising commitments from automakers. Passenger EV sales are set to increase sharply in the next few years, rising from 3.1 million in 2020 to 14 million in 2025. Globally, this represents around 16% of passenger vehicle sales in 2025, but some countries achieve much higher shares. In Germany, for example, EVs represent nearly 40% of total sales by 2025, while China — the world’s largest auto market — hits 25%.”
Regarding the lithium battery growth derived from grid storage demands, the NBLB Report states: “In addition to the EV market, grid storage uses of advanced batteries are also anticipated to grow, with Bloomberg projecting total global deployment to reach over 1,095 GW by 2040, growing substantially from 9 GW in 2018;” and “Bloomberg forecasts 3.2 million EV sales in the U.S. for 2028, and over 200 GW of lithium-ion battery-based grid storage deployed globally by 2028. With an average EV battery capacity of 100 kWh, 320 GWh of domestic lithium-ion battery production capacity will be needed just to meet passenger EV demand.
On August 25, 2022, the Washington Post published an article titled “Did California just kill the gas-powered car?” and with the sub-heading “California’s decision to ban the sales of combustion engine cars is the latest victory in the transition to electric vehicles.” A particularly relevant passage from this article reads as follows:
“…the transition from gas-powered, internal combustion engine vehicles to electric vehicles no longer feels niche, or speculative. It feels inevitable. And this week, another profound development: California, which already leads the nation with 18 percent of new cars sold electric, is expected to approve a regulation to ban the sales of new gas-only powered vehicles by 2035. In addition to EVs, only a limited number of plug-in hybrids will be allowed to be sold. This is a big deal: California’s car market is only slightly smaller than those of France, Italy and Britain — and while many countries have promised to phase out sales of gas cars by such-and-such date, few have concrete regulations like California. Sixteen states have traditionally followed California’s lead in setting its own independent fuel standards — they could soon follow.”
Although no assurances can be given, these recent developments, if left unchallenged, may potentially increase demand for lithium in the U.S., as well as globally. Benchmark Mineral Intelligence, a global consulting firm specializing in the battery supply chain market, in a September 6, 2022 report, predicted that:
| ● | demand for lithium-ion batteries is set to grow six-fold by 2032 as global automakers scale up production of EVs; and |
| ● | to meet the world’s lithium requirements would require 74 new lithium mines with an average size of 45,000 tonnes by 2035. |
While these figures are robust relative to historical data, there can be no guarantee that ultimate consumer adoption for EVs and plug-in-hybrid vehicles (PHEV) will drive lithium demand as predicted.
Lithium Brine Deposits and Direct Lithium Extraction
Lithium is mined from three different deposit types: lithium brine deposits, pegmatite lithium deposits (also referred to as “hard rock”), and sedimentary lithium deposits (also referred to as clay deposits). Brine deposits are the most common, accounting for more than half of the world’s known lithium reserves. All our projects are in brine deposits.
As described by the U.S. Geological Survey, lithium brine deposits are accumulations of saline groundwater that are enriched in dissolved lithium. All producing lithium brine deposits share a number of first-order characteristics: (1) arid climate, (2) closed basin containing a playa or salar, (3) tectonically driving subsidence, (4) associated igneous or geothermal activity, (5) suitable lithium source-rocks, and (6) one or more adequate aquifers. South American countries Chile and Argentina are where the majority of the lithium produced from brines originates, as well as Nevada, to a much smaller extent.
It is anticipated that we will use a direct lithium extraction (“DLE”), and reinjection of the processed brine back into the subsurface, rather than using evaporation ponds to recover the lithium and other potential mineral from brines, should the project advance to the production stage. This method has been gaining favor in the lithium industry over the last several years because it does not involve the use of evaporation ponds. DLE uses a much smaller footprint than evaporation ponds and is therefore more acceptable from an environmental standpoint. As yet, we have not done any testing for the possibility of using DLE and will not be able to do any testing until samples of brine are acquired from the target formations.
DLE technologies precipitate lithium out of brine using filters, membranes, ceramic beads, or other equipment, which is often housed in a small warehouse, significantly shrinking the environmental footprint of evaporation ponds used to produce commercial quantities of lithium traditionally. In a DLE operation, brine is pumped to a processing unit where an adsorption, resin or membrane material is used to extract only the lithium from the brine, while spent brine can be reinjected into the basin aquifers. The more rapid production time frame and possible brine reinjection into the aquifer is a key environmental differentiator between the DLE process and traditional lithium process that uses evaporation ponds.
While there may still be challenges around scalability, water consumption, and the possible dilutive effects of brine reinjection, over the past decade many DLE technologies have arisen to separate lithium from brine. DLE has the potential to significantly impact the lithium industry, with implementation on the extraction of lithium brines potentially having a dramatic positive impact on production, capacity, timing, and environmental impact. Similar to the impact shale exploration had on the oil industry, DLE has the potential to significantly increase the supply of lithium from brine projects, nearly doubling lithium production/yield (taking recoveries from 40-60% to 70-90%+) and improving project returns. DLE should also offer lower perceived environmental risk and yield significant environmental benefits when compared to traditional brine ponds, offering sustainability benefits and ESG credentials. It is estimated that approximately 12% of the world’s lithium supply in 2019 was produced using DLE technology. DLE technologies are broadly grouped into three main categories: adsorption, ion exchange and solvent extraction.
| ● | Adsorption physically absorbs LiCl molecules onto the surface of a sorbent from |
| ● | Ion exchange takes lithium ions from the solution and replaces them with a different positively charged cation that is contained in |
| ● | Solvent extraction removes lithium ions from solution by contacting the solution with an immiscible fluid (i.e., oil or kerosene) that contains an extractant that attaches to lithium ions and brings them into the immiscible fluid. The lithium is then stripped from the fluid with water or chemical treatment. |
Our identification as an “environmentally friendly” business is evidenced by our commitment to deploy direct lithium extraction rather than the typical extraction techniques of hard-rock mining or underground brine water. Unlike those traditional methods for producing lithium, DLE uses filters, membranes, or resin materials to extract the mineral from brine water, resulting in:
| ● | usage of less water; |
| ● | recycling of the majority of the brine water used; |
| ● | consumption of less fossil fuels; |
| ● | reduction in the need for additional processing and alternative mining sources; and |
| ● | leaving a smaller environmental footprint. |
Traditionally, lithium produced from brine water is stored in evaporation ponds. As the water evaporates, the other elements of the brine such as magnesium or calcium precipitate out, leaving the brine more concentrated to produce lithium carbonate. The evaporation process can take 9-18 months depending on the type of project and weather conditions. With DLE, that process can be shortened to days or even hours. DLE also reduces the amount of land required for the pond evaporation process, while the potential to reinject the remaining brine water after the process further reduces the environmental impact.
Our Market Opportunity
Our Lisbon Valley Lithium Project (the “Project”) is located in San Juan County, Utah, approximately 35 miles southeast of the city of Moab, part of an area known as the Paradox Basin. The Project consists of 743 placer mining claims staked on U. S. government land administered by the BLM covering 14,300 acres, part of a semi-contiguous group named the LVL Group. The below map shows the approximate location of our claims:
Our original 102 placer claims were staked by Plateau Ventures LLC and sold to us have been assigned to our wholly owned subsidiary, Mountain Sage Minerals, LLC. Our additional 641 placer claims are registered or filed in the name of Mountain Sage Mineral, LLC. All such claims have been registered currently in good standing according to BLM records. All 743 Claims have been staked, recorded and are in good standing with BLM until next year’s maintenance fee renewal on September 1, 2024. No other mineral, land or water rights have been applied, granted or permitted to or by Mountain Sage Minerals LLC on the subject property. The following diagram is an overview of our claims which comprise our Lisbon Valley Lithium Project:
The maps above are referenced with Professional Land Survey System (PLSS) and a latitude/longitude reference coordinate, accurate to 50 feet.
Our placer claims are plotted on the figures above, which is a Public Land Survey System (PLSS) map using Salt Lake City Prime Meridian. The claims are located in Southeast Utah in sections 17-18, 20-22, 25-29, 33-35 of Township 30 South and Range 25 East; sections 1, 3, 4, 8-15 of Township 31 South and Range 25 East; sections 31 of Township 30 South and Range 26 East and sections 5-9, 17 and 18 of Township 31 South and Range 26 East. The latitude and longitude of the southeast corner of Section 36, Township 30 South, 25 East is noted on the figure is accurate to +/- 50 feet.
There is a network of dirt and paved roads within the claims area, which service the oil and gas wells and the Lisbon Valley Copper Mine. Two existing natural gas pipelines traverse the claims. Power is supplied to the copper mine, also within the claim area, for use in their electrowinning copper recovery process. Nine wellbores (8 oil and gas and 1 potash) are available for re-entry and nearby water rights and private land are available for sale or lease.
Moab, Utah, the nearest population center to the property, is a city of 5,336 persons (2020 Census). It is located in a relatively remote portion of Utah but is easily accessed by U. S. Highway 191. Highway 191 intersects with Interstate 70 about 30 miles (48 kilometers) north of Moab, at Crescent Junction. Moab is a tourist destination and has numerous motels and restaurants. Moab would also be the nearest source of labor in the region.
The region has a history of mining, primarily uranium and vanadium that dates back as far as 1881. The Lisbon Valley Copper Mine is in the heart of the Lisbon Valley and is currently producing copper cathode. An all-weather road and electric power supply the mine. A few gravel roads cross the property. Oil and gas drilling and production, along with ranching have made the area relatively accessible.
There has been no exploration or drilling conducted on the property by us or our predecessors other than the gathering and assimilation of data from all available sources. It will be necessary for us to re-enter an oil and gas well or to drill a new well to obtain brine samples for analysis and metallurgical testing. Permits for such operations will be required from the BLM and the UDOGM. We are in the process of permitting two appraisal wells.
The BLM Permit Process
The flow charts below outline the permit process for exploration of minerals (lithium well drilling) which is regulated by the UDOGM and the BLM. It is anticipated that it will take 300-360 days for approval to drill once the initial application is filed and under review by each agency.
We believe there is abundant evidence from oil, gas and potash wells drilled in the Paradox Basin indicating a probability of identifying and producing super saturated brines from beneath the Project. The geology of the area of the Project and of the Paradox Basin as a whole is complex, although zones have been targeted and proven and they are mappable within and beyond the claims area. It is not likely that the same zones vary significantly in terms of reservoir quality and thickness as evidenced by log analysis; however, these parameters have not been confirmed by actual testing by us.
We have not calculated mineral and resource estimation and has no revenue being generated from the subject property. The only way to determine if the lithium enriched brines exist and can be economically produced from the target zones is to drill exploration wells to produce and test brine from the targeted zones. We through our wholly owned operating company Mountain Sage Minerals, LLC intends to drill two appraisal wells on the subject property to evaluate reservoir properties (porosity, permeability and pressure), flow rates and in situ mineral concentrations. Information from the two wells will be used to assess the resource potential and devise a detailed development plan. The subsurface data collected from the two wells will be used to refine our proprietary subsurface model. The development model will include a proprietary 3D seismic survey to refine the subsurface model and delineate reservoir(s) continuity below the subject property and allow the team to select optimal spacing of future well locations and the network of production and injection wells required to fully develop potential mineral (brine) resources. Based on a substantial number of studies with lithium analyses from the Paradox Basin, we believe there is a substantial indication that lithium mineralization in brines occurs beneath the Project.
We have retained a third-party consulting firm to assist with drilling, completion and review of test results for the two appraisal wells. Any extracted brines should be tested to determine lithium and other important mineral concentrations and to prove the economic viability of a pilot and permanent production program. We have identified an appraisal and development program that is proprietary. This information will be disclosed in an advanced technical report after the appraisal wells are drilled and individual zones are identified and fully evaluated. Cost estimates and authority for expenditures for both well tests and the 3D Survey are currently in process.
The Technical Report Summary on the Project prepared by Bradley C. Peek, MSc. of CPG Peek Consulting, Inc., in accordance with Regulation S-K 1300, is included as an exhibit to the registration statement, of which this prospectus forms a part. The effective date of the report is October 31, 2023.
Internal Controls
Even though we have yet to establish mineral resource and reserve estimates, we have established internal controls for reviewing and documenting the information we intend to use to support mineral reserve and mineral resource estimates. We have engaged third party service providers and specialists in geosciences, and data and engineering for exploration and mine productivity and efficiency. A review of all progress on the development of our mineral resources and reserves estimates, including related assumptions, is undertaken and finalized by our qualified person (“QP”).
When determining resources and reserves, as well as the differences between resources and reserves, our QP will develop specific criteria, each of which must be met to qualify as a resource or reserve, respectively. The QP and our management must agree on the reasonableness of the criteria for the purposes of estimating resources and reserves. These criteria, such as demonstration of economic viability, points of reference, and grade, must be specific and attainable. All estimates require a combination of historical data and key assumptions and parameters. When possible, historical data and resources, data from public information, and generally accepted industry sources will be used to develop these estimations.
We have developed quality control and quality assurance (“QC/QA”) procedures at our Lisbon Valley property, which were reviewed by our QP to ensure the process for developing mineral resource and reserve estimates is sufficiently accurate. QC/QA procedures include independent checks on samples by third party laboratories, and duplicate sampling, among others. In addition, our QP will review the consistency of historical production as part of its analysis of the QC/QA procedures.
We recognize the risks inherent in mineral resource and reserve estimates, such as the geological complexity, interpretation and extrapolation of data, changes in operating approach, macroeconomic conditions and new data, among others. Overestimated resources and reserves resulting from these risks could have a material effect on future profitability.
Raw Materials
We do not have any material dependence on any raw materials or raw material suppliers. All the raw materials that we need are available from numerous suppliers and at market-driven prices.
Intellectual Property
We do not own or license any intellectual property which we consider to be material.
Sales and Marketing
We currently do not have commercial capabilities required to market and distribute lithium. There is no assurance that we will be able to attain the necessary sales and marketing capabilities or secure the services of a firm to provide those capabilities, to achieve our sales expectations.
Customers
As we are not yet in production, we have no customers and have no off-take agreements with customers.
Future Production and Sales
We expect the demand for our lithium, if and when in production, to be facilitated by increasing global demand for lithium. We intend on utilizing intermediaries for sales in order to focus on our core competencies of exploration and extraction.
Competition and Market Barriers
We compete with other mineral and chemical processing companies in connection with the acquisition of suitable exploration properties and the engagement of qualified personnel. Many of our competitors possess greater financial resources and technical facilities than we do. Although we aspire to be a leading lithium producer, the lithium mining and chemical industries are fragmented. We are one of many participants in these sectors. Many of our competitors, as compared to us, have been in business longer, have established more strategic partnerships and relationships, and have greater financial accessibility.
While we compete with other exploration companies in acquiring suitable properties, we believe there will be readily available purchasers of lithium chemical products or other industrial minerals if they are produced from any of our owned or leased properties. The price of our planned products may be affected by factors beyond our control, including fluctuations in the market prices for lithium, supplies of lithium, demand for lithium, and mining activities of others. If we identify lithium mineralization that is determined to be of economic grade and in sufficient quantity to justify production, additional capital would be required to develop, mine and sell that production.
Government Regulation
Exploration and development activities for our projects are subject to extensive laws and regulations, which are overseen and enforced by multiple U.S. federal, state and local authorities as well as foreign jurisdictions. These applicable laws govern exploration, development, production, exports, various taxes, labor standards, occupational and mine health and safety, waste disposal, protection and remediation of the environment, protection of endangered and protected species, and other matters. Various permits from government bodies are required for drilling, mining, or manufacturing operations to be undertaken, and we cannot be assured such permits will be received. Environmental laws and regulations may also, among other things:
| ● | require notice to stakeholders of proposed and ongoing exploration, drilling, environmental studies, mining, or production activities; |
| ● | require the installation of pollution control equipment; |
| ● | restrict the types, quantities and concentrations of various substances that can be released into the environment in connection with exploration, drilling, mining, lithium manufacturing, or other production activities; |
| ● | limit or prohibit drilling, mining, lithium manufacturing or other production activities on lands located within wetlands, areas inhabited by endangered species and other protected areas, or otherwise restrict or prohibit activities that could impact the environment, including water resources; |
| ● | impose substantial liabilities for pollution resulting from current or former operations on or for any preexisting environmental impacts from our projects; |
| ● | require significant |
| ● | require preparation of an environmental assessment or |
Compliance with environmental laws and regulations may impose substantial costs on us, subject us to significant potential liabilities, and have an adverse effect on our capital expenditures, results of operations, or competitive position. Violations and liabilities with respect to these laws and regulations could result in significant administrative, civil, or criminal penalties, remedial clean-ups, natural resource damages, permit modifications and/or revocations, operational interruptions and/or shutdowns, and other liabilities, as well as reputational harm, including damage to our relationships with customers, suppliers, investors, governments or other stakeholders. The costs of remedying such conditions may be significant, and remediation obligations could adversely affect our business, results of operations, and financial condition. Federal, state, and local legislative bodies and agencies frequently revise environmental laws and regulations, and any changes in these regulations, or the interpretations thereof, could require us to expend significant resources to comply with new laws or regulations or changes to current requirements and could have a material adverse effect on our business operations. As of December 31, 2023, we have not been required to spend material amounts on compliance regarding environmental regulations.
Permits
Obtaining and renewing governmental permits is a complex and time-consuming process and involves numerous jurisdictions, public hearings, and possibly costly undertakings. The timeliness and success of permitting efforts are contingent upon many variables not within our control, including the interpretation of permit approval requirements administered by the applicable permitting authority. We may not be able to obtain or renew permits that are necessary for our planned operations, or the cost and time required to obtain or renew such permits may exceed our expectations. Any unexpected delays or costs associated with the permitting process could delay the exploration, development and/or operation of our projects.
Environmental, Social and Governance
We are committed to ESG causes. As we start to hire employees for our projects, our hiring efforts will focus on hiring workers from communities near our project areas. Many such communities have high levels of unemployment.
Human Capital Management
As of February 9, 2024, we had two full-time employees, who are our Co-Chief Executive Officers. We also utilize four independent contractors, two to provide us with accounting support and two for geological expertise. We are committed to diversity, equity, and inclusion as part of our growth strategy. We will treat each employee and job applicant without regard to race, color, age, sex, religion, national origin, citizenship, sexual orientation, gender identity, ancestry, veteran status, or any other category protected by law. We believe in allocating resources and establishing, in an equitable manner, policies and procedures that are fair, impartial, and just. To provide a diverse and inclusive workplace, we will focus our efforts on creating a culture where all employees can contribute their skills and talents and be themselves.
Legal Proceedings
From time to time, we may become involved in various lawsuits and legal proceedings, which arise in the ordinary course of business. However, litigation is subject to inherent uncertainties, and an adverse result in these or other matters may arise from time to time that may harm our business. We are currently not aware of any such legal proceedings or claims that we believe will have a material adverse effect on our business, financial condition or operating results.
MANAGEMENT
Information about Executive Officers and Directors
The following table sets forth certain information regarding our executive officers and directors as of the date of this prospectus:
| Name | Age | Position | Director/Officer Since | |||
| David Graber | ||||||
| 52 | February 2017 | |||||
| Sebastian Lux | 52 | Co-CEO, President, CFO and Director | July 2022 | |||
| Dylan Glenn | ||||||
| 55 | ||||||
| Director | May 2023 | |||||
| 51 | ||||||
| Director | December 2018 | |||||
| Andrew Suckling | ||||||
| Director | August 2022 | |||||
| Justin Vorwerk | 64 | |||||
| Director | August 2022 | |||||
| Dr. Adam Lipson | 51 | Director | July 2022 |
The principal occupations for at least the past five years of each of our directors and executive officers are as follows:follows:
David Graber served as a result of his service as our Founder, President and Chief Executive Officer since inception, which adds historical knowledge, operational expertise and continuity to our board of directors, and his extensive corporate management experience, including serving as the chief executive officer of a publicly-held company, he provides the board with a deep understanding of all aspects of our business, both strategically and operationally, and therefore should serve on our board.
Sebastian Lux was appointed to serve as our CEO and interim CFO in July 2022 (becoming the Co-CEO in March 2023) and was appointed to our Board of Directors in March 2023. Mr. Lux has over 25 years’ experience working with multinational companies. Immediately prior to joining us, Mr. Lux served as co-founder of Blue Duck Data, a cloud-based analytical solutions provider for end-to-end supply chain analysis. Previously, Mr. Lux served from 2015 through 2020 as co-founder and director of supply chain logistics for Genuine Origin, a division of Volcafe & ED&F Man. He is a multilingual professional experienced in strategic planning for international operations, data analytics, financial modeling, logistics, purchasing, product development, supplier partnership management, process improvements, negotiations, e-business, and franchise development. Mr. Lux earned an MBA in Entrepreneurship from Babson’s F.W. Olin Graduate School of Business, an MSAS in E-Commerce from Boston University, and a B.A. in Economics from Roanoke College. In addition to his operational leadership of our company, Mr. Lux has experience in entrepreneurial ventures where he developed international supply chains for the distribution of coffee, food and non-food goods, as well as created multiple U.S. market entry programs and brand development projects for new and existing companies, making him well qualified as a member of the Board.
Dylan Glenn became a director of our company in May 2023. He has been a Senior Director at Eldridge, a diversified holding company headquartered in Greenwich, Connecticut, where he has been since October 2021. He is the former Chairman of Guggenheim KBBO Partners, Ltd., a Dubai-based joint venture partnership between the KBBO Group and Guggenheim Partners. Prior to this role, Mr. Glenn was Senior Managing Director of Guggenheim Partners, where he worked for nearly 15 years. While at Guggenheim Partners, Mr. Glenn worked mostly in two capacities. First, he coordinated the joint venture – Guggenheim KBBO Partners, Ltd., a merchant banking business which leveraged Guggenheim’s investment banking and asset management capabilities with an important strategic partner in the Middle East. Additionally, he led Guggenheim’s Government Relations effort in Washington and was a Member of the Guggenheim Partners Public Affairs Committee. Prior to joining Guggenheim, Mr. Glenn served as Deputy Chief of Staff to Governor Sonny Perdue of Georgia. As a Deputy Chief of Staff, Mr. Glenn was responsible for all External Affairs. Mr. Glenn also served in the White House in Washington, D.C. as Special Assistant for President George W. Bush for Economic Policy. He was a member of the National Economic Council team advising the President on various economic issues. Mr. Glenn is a director of the George W. Bush Presidential Center. Mr. Glenn is a Director of the Renewable Energy Group, a leading global producer and supplier of renewable fuels like biodiesel, renewable diesel, renewable chemicals and other products. He is also a Director of Intellicheck, Inc., a leading authentication services company, since March 2020. Additionally, he serves on the Board of Managers of Stonebriar Commercial Finance based onin Plano, Texas. Mr. Glenn is a Trustee of Davidson College, where he earned his B.A. degree and is also a Trustee of the Episcopal High School at Alexandria, Virginia. Mr. Glenn’s extensive experience in finance and economics, insight into regulatory affairs and his expertise in oversight and governance gained through service in the public sector, bring unique and valuable perspective to our Board and make him well qualified to be a member of the Board.
Jared Levinthal has served as a Director of our company since December 2018. Mr. Levinthal, an attorney, is a partner with Lightfoot Franklin & White, PLLC in Houston, Texas. Mr. Levinthal is a graduate, with Honors, Order of the Coif, from the University of Texas School of Law. Mr. Levinthal is a graduate of Tulane University with a BA and is a member of the Texas Bar. Mr. Levinthal is well qualified to serve as a director due to his substantial knowledge and working knowledge in corporate governance and controls.
Andrew Suckling has served as a director of our company since August 2022. Mr. Suckling has over 25 years’ experience in the publiccommodity industry and is currently the non-executive chairman of Cadence Minerals (AIM: KDNC), the non-executive director of Macarthur Minerals (TSX-V: MMS, ASX: MIO), and a board member of the privately held company IronMan Ltd. Mr. Suckling started his professional career in 1994 as a trader on the London Metal Exchange, and subsequently became a founding partner, research analyst and trader with the multibillion fund management group, Ospraie. Mr. Suckling is a graduate of Brasenose College, Oxford University, earning a B.A. (Hons) in Modern History and an MA in Modern History. Mr. Suckling’s in-depth knowledge of the mining industry and the broad range of mineral companies in the industry make him well qualified as a member of the Board.
Justin Vorwerk has served as a director of our company since August 2022. For more than the past five years, Mr. Vorwerk has had a distinguished career in finance and capital markets, holding positions as a managing director in investment banking with Goldman Sachs, The Royal Bank of Scotland and Deutsche Bank Securities, as well as Donaldson, Lufkin & Jenrette and Credit Suisse, where he co-headed the financial sponsors group. Mr. Vorwerk also served as head of investment banking and capital markets at CRT Capital Group, where he structured debt and equity products and advised on mergers and acquisitions. Mr. Vorwerk holds an MBA from The University of Pennsylvania (Wharton) and attended Princeton University, where he earned an A.B. degree in Economics. Mr. Vorwerk has extensive knowledge of capital markets, making his input invaluable to the Board’s discussions of our capital raising initiatives.
Dr. Adam Lipson was appointed to our Board of Directors in July 2022. Dr. Lipson is a world-renowned neurosurgeon, serving for more than the past five years as managing partner of IGEA Brain, Spine & Orthopedics in New York City and New Jersey, a private accountingmedical practice generating $30-40 million annual revenue with 75 employees. He has over a decade of experience as a private investor in over 20 biotechnology and finance sectors,biomedical device companies. He has co-founded several other companies, including IGEA Ventures and being Chief Financial OfficerSTRYDD. He is passionate about finding technologies that facilitate advances in energy transition, biomedical devices and cancer therapeutics. Dr. Lipson is a graduate of Dartmouth College with a B.A. degree in Chemistry and History and M.D. degree from Harvard Medical School, Honors Society in Neuroscience, and was a Fulbright Fellow at Karolinska Institute in Stockholm, Sweden. Dr. Lipson’s leadership of numerous medical and other technology growth companies and as an investor in many early-stage companies make him well qualified as a publicly traded company (DSS), which provides our boardmember of directors with insights into the areas of corporate finance, cash management, and SEC reporting requirements.
Term of Office
Directors are elected to hold office until the next annual meeting of shareholdersstockholders and until their successors are elected and qualified. Annual meetings of the shareholders,stockholders, for the selection of directors to succeed those whose terms expire, are held at such time each year as designated by the Board of Directors. Officers of the CompanyOur officers are elected by the Board of Directors, which is required to consider that subject at its first meeting after every annual meeting of shareholders. Each officer holds office until his successor is elected and qualified or until his earlier resignation or removal.
Committees of the Board of Directors
We do not currently have any committees of the Board of Directors. We consider a majority of our Board members (consisting of Messrs. Jones, Orlando,Glenn, Levinthal, Suckling and White)Vorwerk) to be independent directors under NYSE AMEXAmerican rules.
Corporate Governance
We do not currently have an audit committee, compensation committee, or nominating and corporate governance committee. To date, the functions of each such committee have been performed by the entire Board of Directors. As we grow and evolve as a SEC registrant,part of our application to have our shares of common stock trade on the NYSE American, our corporate governance structure will be enhanced by, among other things, forming required Board committees with qualified individuals.
EXECUTIVE COMPENSATION
Summary Compensation Table
The following table discloses compensation received by our Co-Chief Executive Officers, David Graber and Sebastian Lux, for the years ended December 31, 2023 and 2022.
The following table also sets forth information regarding all cash and non-cash compensation earned by or paid to our executive officers who served during the fiscal years ended December 31, 2022 and 2021 for services in all capacities to us.
| Name and Principal Position | Year | Salary ($) | Bonus ($) | Stock Awards ($) | Warrant Awards ($) | All Other Compensation ($) | Total ($) | |||||||||||||||||||
| Andrew Boutsikakis (1) | - | - | ||||||||||||||||||||||||
| Chief Executive Officer | 2022 | 70,000 | - | - | 6,296 | 53,550 | (3) | 123,550 | ||||||||||||||||||
| Pat Avery (2) | 2022 | 58,376 | - | - | - | - | 58,376 | |||||||||||||||||||
| Chief Operating Officer | ||||||||||||||||||||||||||
| David Graber | 2022 | - | - | - | - | - | - | |||||||||||||||||||
| Co-CEO | 2023 | 200,000 | 200,000 | |||||||||||||||||||||||
| Sebastian Lux | 2022 | 106,667 | - | - | - | - | 106,667 | |||||||||||||||||||
| Co-CEO, President, CFO | 2023 | 240,000 | 240,000 | |||||||||||||||||||||||
| 1) | Mr. Boutsikakis was appointed CEO effective February 1, 2020 and was granted a monthly salary of $12,500. During the year ended December 31, 2020, he earned $137,500 under this arrangement, of which $48,400 was paid during the year and remaining balance was earned but unpaid. Mr. Boutsikakis resigned from all positions on July 21, 2022. |
| 2) | Mr. Avery was appointed COO effective July 1, 2021 and was granted a monthly salary of $7,000. During the year ended December 31, 2021, he earned $42,000 under this arrangement, of which $35,000 was paid during the year and remaining balance was earned but unpaid. Mr. Avery resigned his position with us on November 9, 2022. |
| 3) | Amount paid to Mr. Boutsikakis pursuant to the Settlement Agreement executed with us. |
Employment Arrangements
We and Mr. Boutsikakis entered into an employment agreement, effective February 1, 2020, for a period of two years. Mr. Boutsikakis in his capacity as Chief Executive Officer was granted a monthly salary of $12,500, of which $7,500 payable in cash and $5,000 payable in a convertible note. Mr. Boutsikakis also received a five-year warrant to purchase 3,000,000 shares of common stock at $0.05 per share. The warrant has a two-year, quarterly vesting schedule. Mr. Boutsikakis resigned from all positions effective July 21, 2022. On or around September 25, 2022, we and Boutsikakis entered into a Settlement Agreement and Mutual Release, under which, among other things, we agreed to pay Mr. Boutsikakis a total of $63,000 in monthly installments over approximately six months.
Messrs. Graber and Lux, in consultation with our independent directors, have agreed to receive a monthly salary as our Co-Chief Executive Officers at a rate of $20,000. Of this amount, $15,000 is expectedpayable in cash and $5,000 is accrued until such time as we are able to be enhanced.make the payment. Both Messrs. Graber and Lux work full time for our company and there is no set term for their employment.
Directors Compensation
Our non-employee directors do not currently receive cash compensation for their services as directors although they are provided reimbursement for out-of-pocket expenses incurred in attending Board meetings. In order to attract and retain qualified persons to our Board, in July 2011, we granted our non-employee directors stock options through our Equity Incentive Plan. Each non-employee director received 2500 stock options at a strike price of $60.00, vesting equally over a three year period, and with an expiration date of ten years from date of grant.
| Name and Principal Position | Year | Salary | Bonus | Stock Awards | Option Awards | All Other Compensation | Total | |||||||||||||||||||
| Raymond J Meyers, | 2013 | $ | 180,000 | $ | - | $ | - | $ | - | $ | - | $ | 180,000 | |||||||||||||
| Chief Executive Officer, then acting Chief Financial Officer | 2012 | $ | - | $ | - | $ | - | $ | - | $ | - | $ | - | |||||||||||||
| Michael Buechler, | 2013 | $ | - | $ | - | $ | - | $ | - | $ | - | $ | - | |||||||||||||
| Former Executive Vice President | 2012 | $ | - | $ | - | $ | - | $ | - | $ | - | $ | - | |||||||||||||
| Name | Number of Securities Underlying Unexercised Options | Number of Securities Underlying Unexercised Options | Option Exercise Price | Option Expiration Date | ||||
| (Exercisable) | (Un-exercisable) | |||||||
| Raymond Meyers | 2,500 | - | $60.00 | 7/21/2016 | ||||
| Kathleen Browne | 350,000 | 100,000 | $0.30 | 9/10/2019 |
Equity Incentive Plan
On July 22, 2011, theour Board of Directors of the Company approved the Company’sour 2011 Equity Incentive Plan (the “Plan”) and, on July 26, 2011, shareholdersstockholders holding a majority of our shares of the Company approved, by written consent, the Plan. The Plan provides for the grant of options intended to qualify as “incentive stock options” and “non-statutory stock options” within the meaning of Section 422 of the Internal Revenue Code of 1986, together with the grant of bonus stock and stock appreciation rights, at the discretion of our Board of Directors. Incentive stock options are issuable only to our eligible officers, directors and key employees. Non-statutory stock options are issuable only to our non-employee directors and consultants. Upon stockholder approval of the Plan, a total of 5,000,000 shares of common stock or appreciation rights may be issued under the Plan. The Plan will be administered by our full Board of Directors. Under the Plan, the Board will determine which individuals shall receive options, grants or stock appreciation rights, the time period during which the rights may be exercised, the number of shares of common stock that may be purchased under the rights and the option price. The Company has 350,650As of December 31, 2023, we had no options outstanding under the Plan to employees, directors and outside consultants.
On November 22, 2017, stockholders of our company holding a majority of the outstanding shares of our common stock approved, by written consent, an increase in the number of shares reserved under the Plan by 10,000,000 shares. After this increase of 10,000,000 shares, the total number of shares of common stock reserved under the Plan totals 15,000,000 shares. On November 16, 2017, our Board of Directors approved the increase of the 10,000,000 shares reserved under the Plan.
Limitation on Liability and Indemnification of Officers and Directors
Our Certificatecertificate of Incorporation provides that liability of directors to us for monetary damages is eliminated to the full extent provided by Delaware law. Under Delaware law, ano director is not personallywill be liable to usour company or our stockholders for monetary damages for breach of fiduciary duty acting in his/her capacity as a director, except for liability (i) for any breach of the director’s duty of loyalty to us or our stockholders; (ii) for acts or omissions not in good faith or thatwhich involve intentional misconduct or a knowing violation of law; (iii) for authorizingunder Section 174 of the unlawful payment of a dividendDelaware General Corporation Law (the “DGCL”); or, other distribution on our capital stock or the unlawful purchases of our capital stock; (iv) a violation of Delaware law with respect to conflicts of interest by directors; or (v) for any transaction from which the director derived anyan improper personal benefit.
Our certificate of incorporation and bylaws provide that we will indemnify any director, officer, employee, fiduciary, or agent of our company (each a “Covered Person”) who was or is made or is threatened to be made a party to any action, suit or proceeding, whether civil, criminal, administrative or investigative (a “Proceeding”), other than a Proceeding by or in the right of our company, by reason of the fiduciary dutyfact that such person is or was a Covered Person, or, while a Covered Person, or is or was serving at the request of careour company as a directorCovered Person of another corporation, partnership, joint venture, trust or other enterprise, against all liability and loss suffered and expenses (including attorneys’ fees) actually and reasonably incurred by such person in connection with such Proceeding if such person acted in good faith and in a manner he reasonably believed to be in or not opposed to the best interests of our company and, with respect to any breach resulting from negligentcriminal action or grossly negligent behavior) exceptproceeding, had no reasonable cause to believe his conduct was unlawful. The termination of any Proceeding by judgment, order, settlement, conviction or upon a plea of nolo contendere or its equivalent, shall not, of itself, create a presumption that such person did not act in good faith and in a manner which such person reasonably believed to be in or not opposed to the best interests of our company and, with respect to any criminal action or proceeding, had reasonable cause to believe that such person’s conduct was unlawful. We will also have the power to indemnify our Covered Persons as set forth in the situations describedDGCL or other applicable law.
Our certificate of incorporation and bylaws also provide that we will indemnify any person who was or is made a party or is threatened to be made a party to any Proceeding by or in clauses (i) through (v) above. This provision doesthe right of our company to procure a judgment in its favor by reason of the fact that such person is or was a Covered Person of our company or is or was serving at the request of our company as a Covered Person of another corporation, partnership, joint venture, trust or other enterprise, against all liability and loss suffered and expenses (including attorneys’ fees) actually and reasonably incurred by such person in connection with the defense or settlement of such action or suit if such person acted in good faith and in a manner such person reasonably believed to be in or not limitopposed to the best interests of our company and except that no indemnification shall be made in respect of any claim, issue or eliminatematter as to which such person shall have been adjudged to be liable to our rightscompany unless and only to the extent that the Court of Chancery of the State of Delaware or the rightscourt in which such action or suit was brought shall determine upon application that, despite the adjudication of liability but in view of all the circumstances of the case, such person is fairly and reasonably entitled to indemnity for such expenses which the Court of Chancery of the State of Delaware or such other court shall deem proper. Notwithstanding the foregoing, our company shall be required to indemnify a person in connection with a Proceeding (or part thereof) commenced by such person only if the commencement of such Proceeding (or part thereof) by such person was authorized in the specific case by the Board.
Our bylaws further provide that, to the extent that a Covered Person has been successful on the merits or otherwise in defense of any Proceeding referred to above, or in defense of any claim, issue or matter therein, we will indemnify such person against expenses (including attorneys’ fees) actually and reasonably incurred by such person in connection therewith.
Expenses actually and reasonably incurred by a Covered Person in defending a civil or criminal Proceeding may be paid by our company in advance of the final disposition of such Proceeding upon receipt of an undertaking by or on behalf of such person to repay such amount if it shall ultimately be determined that such person is not entitled to be indemnified by our company. Such expenses may be so paid upon such terms and conditions, if any, as the Board deems appropriate.
We may purchase and maintain insurance on behalf of any person who is or was a Covered Person, or is or was serving at the request of our security holders to seek non-monetary relief, suchcompany as an injunctiona Covered Person of another corporation, partnership, joint venture, trust or rescission, in the event of a breach of a director’s duty of care orother enterprise against any liability for violationasserted against such person and incurred by such person in any such capacity, or arising out of his status as such, whether or not our company would have the federal securities laws.power to indemnify such person against such liability under the provisions of our bylaws.
PRINCIPAL STOCKHOLDERS
As of October 31, 2014,February 9, 2024, there are 9,639,829were 10,989,011 shares of common stock outstanding. This number and the table below do not include the shares that are contingently issuable to U-Vend shareholders subject to certain earn-out provisions. The following table sets forth certain information regarding the beneficial ownership of the outstanding common shares as of October 31, 2014February 9, 2024 by (i) each person who owns beneficially more than 5% of our outstanding common stock; (ii) each of our executive officers and directors; and (iii) all of our executive officers and directors as a group. The shares listed include as to each person any shares that such person has the right to acquire within 60 days from the date hereof. This table excludes people that have the right to common shares in excess of 5% but are limited to owning more than 4.99% of our outstanding common shares at any time. Except as otherwise indicated, each such person has sole investment and voting power with respect to such shares, subject to community property laws where applicable.
The addressfollowing table sets forth, as of February 9, 2024, certain information with regard to the record and beneficial ownership of our common stock by (i) each person known to us to be the record or beneficial owner of more than 5% of our common stock, (ii) each director of our company, (iii) each of the named executive officers, and (iv) all executive officers and directors is in care of us at 1507 7th Street, #425, Santa Monica, CA 90401.our company as a group:
| Number of Shares | Percentage of | |||||||
| Name and Address(1) | Beneficially Owned(2) | Outstanding Shares(3) | ||||||
| Executive Officers & Directors | ||||||||
| David Graber | 3,998,249 | (4) | 36.1 | % | ||||
| Sebastian Lux | 110,045 | 1.0 | % | |||||
| Dylan Glenn | 29,301 | * | ||||||
| Jared Levinthal | 1,000 | * | ||||||
| Andrew Suckling | 0 | * | ||||||
| Justin Vorwerk | 0 | * | ||||||
| Dr. Adam Lipson | 1,507,414 | (5) | 13.7 | % | ||||
| All Current Executive Officers and Directors as a Group (7 Persons) | 5,646,009 | 51.4 | % | |||||
| 5% Shareholders | ||||||||
| David Graber | 3,998,249 | (4) | 36.1 | % | ||||
| Dr. Adam Lipson | 1,507,414 | (5) | 13.7 | % | ||||
| Marilyn Kane | 1,577,821 | (6) | 14.3 | % | ||||
| Name of Beneficial Owner | Common Shares Beneficially Owned | Percentage Beneficially Owned | |||
Executive officers and directors | |||||
| Raymond J. Meyers (1) | 2,021,409 | 21.0 | % | ||
| Paul Neelin (2) | 259,162 | 2.7 | % | ||
| Patrick White (3) | 1,358,318 | 13.1 | % | ||
| Philip Jones (1) | 2,552 | * | |||
| Alexander A. Orlando (1) | 2,506 | * | |||
| Kathleen Browne (8) | 250,000 | 2.5 | % | ||
| All executive officers and directors | |||||
| as a group (six persons) | 3,893,947 | 36.6 | % | ||
| Greater than 5% stockholders | |||||
| Bohlen Enterprises LLC (4) | 525,564 | 5.4 | % | ||
| 2800 Middle Country Road | |||||
| Lake Grove, NY 11755 | |||||
| Kevin and Barb Brady (5) | 842,375 | 8.0 | % | ||
| 4214 Kane Crescent | |||||
| Burlington, Ontario, Canada L7M-5C1 | |||||
| QSR Group, Inc. (6) | 800,000 | 8.3 | % | ||
| 312 Grays Road, PO Box 56013, Fiesta RPO2 | |||||
| Stoney Creek, Ontario, Canada L8G-5C9 | |||||
| Dave Young (2) (7) | 480,000 | 5.0 | % | ||
| 312 Grays Road, PO Box 56013, Fiesta RPO2 | |||||
| Stoney Creek, Ontario, Canada L8G-5C9 | |||||
| *Less than 1% | |||||
| * | Represents less than 1% ownership. |
| (1) |
| (2) | Beneficial ownership is determined in accordance with the rules of the SEC and generally includes voting or investment power with respect to securities. Beneficial ownership also includes shares |
| (3) |
| (4) | Includes |
| (5) | Includes |
| Includes |
CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS
Given our small size and limited financial resources to date, we hadhave not adopted formal policies and procedures for the review, approval or ratification of transactions with our executive officers, directors and significant stockholders. However,While we satisfy the requirements of the DGCL for such related party transactions, we intend to establish additional formal policies and procedures in the future so that such transactions will on a going-forward basis, be subject to the review, approval or ratification of our boardBoard of directors,Directors, or an appropriate committee thereof.
Director Independence
As our common stock is currently quoted on the OTC Pink Open Market, we are not subject to the rules of any national securities exchange that requires a majority of a listed company’s directors and specified committees of the board of directors to meet independence standards prescribed by such rules. However, we consider a majority of our Board members (consisting of Messrs. Glenn, Levinthal, Suckling and Vorwerk) to be independent directors in accordance with NYSE American listing rules.
DESCRIPTION OF SECURITIESCAPITAL STOCK
The following description of our capital stock consistsis a summary only. This summary is subject to the General Corporation Law of 600,000,000the State of Delaware (the “DGCL”) and the complete text of our certificate of incorporation, amended (the “Certificate of Incorporation”), and our bylaws, as amended (the “Bylaws”).
General
Under our Certificate of Incorporation, we are authorized to issue up to 4,500,000,000 shares of common stock, par value $0.001 per share, and 10,000,000 shares of preferred stock, par value $0.001. As$0.001 per share.
In December 2023, we filed a certificate of October 31, 2014 , the Company had 9,639,829 sharesamendment of our Certificate of Incorporation to effect a 1-for-300 reverse stock split of our outstanding common stock. The stock and no shares of Preferred Stock are outstanding.split became effective on December 8, 2023.
Common Stock
Voting Rights. The shares of common stock presently outstanding are fully paid and non-assessable. Each holder of common stock is entitled to one vote for each share owned on all matters voted upon by stockholders, and a majority vote is required for all actions to be taken by stockholders. In the event we liquidate, dissolve or wind-up our operations, the holders of theour common stock are entitled to one vote per share equally and ratably inon all matters on which stockholders are generally entitled to vote; provided, however, that, except as otherwise required by law, holders of common stock, as such, are not entitled to vote on any amendment to our assets, if any, remaining afterCertificate of Incorporation that relates solely to the paymentterms of all our debts and liabilities and the liquidation preference of any sharesone or more outstanding series of preferred stock that may then be outstanding. Theif the holders of such affected series are entitled, either separately or together with the holders of one or more other such series, to vote thereon pursuant to our Certificate of Incorporation. Holders of our common stock has no preemptive rights, nodo not have cumulative voting rights and no redemption, sinking fund, or conversion provisions.in the election of directors. Accordingly, the holders of a majority of the combined voting power of our common stock could, if they so choose, elect all the directors.
Dividends. Subject to the rights of the holders of any outstanding series of preferred stock, holders of common stock are entitled to receive any dividends ifto the extent permitted by law when, as and whenif declared by our board of directors.
Liquidation. Upon our dissolution, liquidation or winding up, subject to the rights of the holders of any outstanding series of preferred stock, the holders of shares of common stock are entitled to receive the assets of our company available for distribution to its stockholders ratably in proportion to the number of shares held by them.
Other Matters. Our Certificate of Incorporation does not entitle holders of our common stock to preemptive or conversion rights or other subscription rights. There are no redemption or sinking fund provisions applicable to our common stock. The common stock may be subdivided or combined in any manner unless the other class is subdivided or combined in the same proportion. All outstanding shares of our common stock are fully paid and non-assessable.
Preferred Stock
We have authorization for “blank check” preferred stock, which could be issued with voting, liquidation, dividend and other rights superior to common stock. There are 10,000,000 shares of preferred stock, par value $0.001 per share, authorized for issuance. We have 50,000 shares of Series A preferred stock designated and authorized. No shares of Series A preferred stock are outstanding.
Our Certificate of Incorporation authorizes our board of directors outto establish from time-to-time the number of funds legally available for such purpose, subjectshares to the dividend and liquidation rightsbe included in each series of any preferred stock, that may then be outstanding.
The existence of such series. Whileunissued and unreserved common stock or preferred stock may enable our board of directors to issue shares to persons friendly to current management, which could render more difficult or discourage an attempt to obtain control of our company by means of a merger, tender offer, proxy contest or otherwise, and could thereby protect the continuity of our management and possibly deprive stockholders of opportunities to sell their shares of common stock at prices higher than prevailing market prices.
Anti-Takeover Effects of Delaware Law, Our Certificate of Incorporation and Our Bylaws
Certain provisions of DGCL, our Certificate of Incorporation, and bylaws do not contain any provisions that mayour Bylaws could make the acquisition of our company more difficult and could delay, defer or prevent a tender offer or other takeover attempt that a stockholder might consider to be in its best interest, including takeover attempts that might result in the payment of a premium to stockholders over the market price for their shares. These provisions also may promote the continuity of our management by making it more difficult for a person to remove or change in control,the incumbent members of our board of directors.
Authorized but Unissued Shares; Undesignated Preferred Stock
The authorized but unissued shares of our common stock are available for future issuance without stockholder approval except as required by law or by any stock exchange on which our common stock may be listed. These additional shares may be utilized for a variety of corporate purposes, including future public offerings to raise additional capital, acquisitions and employee benefit plans. In addition, our board of directors may authorize, without stockholder approval, the issuance of undesignated preferred stock with voting rights or other rights or preferences designated from time to time by our board of directors. The existence of authorized but unissued shares of common stock or preferred stock may have the effectenable our board of delayingdirectors to render more difficult or preventingto discourage an attempt to obtain control of us by means of a change in controlmerger, tender offer, proxy contest or make removalotherwise.
No Cumulative Voting
Holders of our managementcommon stock do not have cumulative voting rights in the election of directors.
Special Meetings of Stockholders
Under our Bylaws, special meetings of stockholders may be called at any time by the chairman of the Board of Directors, by a majority of the members of the Board of Directors or as otherwise provided by DGCL, or the Certificate of Incorporation. Our Bylaws further provide that the Board of Directors shall call a special meeting upon the written request of the record holders of at least 25%, in the aggregate, of the voting power of the outstanding shares of all classes of shares entitled to vote at such a meeting, subject to requirements and limitations set forth in our Bylaws. Under DGCL, written notice of any special meeting must be given not less than ten nor more difficult.
Requirements for Notice of Stockholder Director Nominations and Stockholder Business
| Face amount of notes | Interest rate | Maturity Dates | Debt Conversion price | Warrant coverage and terms | |
| Cobrador Senior Secured Convertible Notes | $370,000 | 7% | December 2014 – June 2015 | $0.05 | 11.1 million Series A with 2 year term and $0.05 exercise price and 11.1 million Series B with 5 year term and $0.06 exercise price |
| Convertible Promissory Note | $100,000 | 18% | Currently due and in discussion for revised due date | 80% VWAP at conversion | 416,667 warrants expiring September 2015 with an exercise price of $0.24 |
| Convertible Promissory Note | $25,000 | 18% | Currently due and in discussion for revised due date | 80% VWAP at conversion | 104,167 warrants expiring July 2015 with an exercise price of $0.24 |
| Subordinated Convertible Promissory Note | $50,000 | 10% | August 2015 | $0.30 | 83,334 warrants with a 5 year term and $0.35 exercise price |
| Subordinated Convertible Promissory Note | $75,000 | 10% | August 2015 | $0.30 | 125,000 warrants with a 5 year term and $0.35 exercise price |
Under our Bylaws, nominations for the election of directors may be made by the Board of Directors or by any stockholder entitled to vote for the election of directors who complies with the applicable notice and other requirements set forth in our Bylaws. If a stockholder wishes to bring any business before an annual or special meeting or nominate a person for election to our Board of Directors, our Bylaws contain certain procedures that must be followed for the advance timing required for delivery of stockholder notice of such nomination or other business and the information that such notice must contain.
Exchange Listing
We intend to apply for the listing of our common stock for trading on the NYSE American and expect such listing to occur concurrently with this offering. A NYSE American listing, however, is not a condition to completing this offering.
| Warrants | Exercise Price | Expiration | |||||||
| Warrants acquired in U-Vend merger 1/7/14 | 1,350,669 | $ | 0.24 | September 2015 – December 2016 | |||||
| 2011 Common share private placement warrants | 12,500 | $ | 60.00 | March 2018 | |||||
| 2012 Private placements warrants | 750 | $ | 30.00 | March - April 2015 | |||||
| 2013 Series A warrants Senior Convertible Notes | 6,000,000 | $ | 0.05 | June - December 2015 | |||||
| 2013 Series B warrants Senior Convertible Notes | 6,000,000 | $ | 0.06 | June - December 2018 | |||||
| 2013 Lease obligation warrants | 986,250 | $ | 0.20 | November 2016 | |||||
| 2014 Warrants for services | 888,760 | $ | 0.05 | July 2017 | |||||
| 2014 Warrants for services | 973,093 | $ | 0.06 | January 2019 | |||||
| 2014 Warrants for services | 35,000 | $ | 0.24 | January 2019 | |||||
| 2014 Warrants for services | 18,480 | $ | 0.01 | January 2019 | |||||
| 2014 Warrants for services | 20,000 | $ | 0.35 | August 2019 | |||||
| 2014 Series A warrants Senior Convertible Notes | 5,100,000 | $ | 0.05 | January 2016- June 2016 | |||||
| 2014 Series B warrants Senior Convertible Notes | 5,100,000 | $ | 0.06 | January 2019- June 2019 | |||||
| 2014 Lease obligation warrants | 246,563 | $ | 0.20 | March 2017 | |||||
| 2014 Lease obligation warrants | 483,889 | $ | 0.18 | May 2017 | |||||
| 2014 Issued with Promissory Note | 41,667 | $ | 0.24 | May 2016 | |||||
| 2014 Subordinated Convertible Notes | 208,334 | $ | 0.35 | July-August 2019 | |||||
| 2014 Issued in exchange for debt converted | 312,500 | $ | 0.24 | July 2017 | |||||
| 2014 Issued with Note Payable - Director | 208,333 | $ | 0.24 | February 2017 | |||||
| 2014 Issued with Equipment Lease Agreement | 200,000 | $ | 0.35 | October 21, 2017 | |||||
Transfer Agent
and RegistrarThe transfer agent and registrar for our common stock is Corporate Stock Transfer 3200 Cherry Creek South Drive, Suite 430, Denver, Colorado 80209,Online, Inc., 512 SE Salmon Street, Portland, Oregon 97214.
SHARES ELIGIBLE FOR FUTURE SALE
The sale, or availability for sale, of a substantial number of shares of common stock in the public market subsequent to this offering pursuant to Rule 144 of the Securities Act or otherwise could materially adversely affect the market price of our common stock and their telephonecould impair our ability to raise additional capital through the sale of equity securities or debt financing. Upon completion of this offering, there will be approximately ________ shares of common stock issued and outstanding. Of these shares, approximately _______ shares would be freely transferable. Our executive officers and directors would beneficially own approximately ______ shares, or ___% of our outstanding common stock after the completion of this offering, which would be eligible for resale subject to the volume and manner of sale limitations of Rule 144 of the Securities Act. An additional ______ shares are “restricted securities,” as that term is defined in Rule 144, and are eligible for sale under the provisions of Rule 144.
The shares of common stock outstanding that are deemed to be “restricted securities” (as that term is defined under Rule 144) or that are owned by our affiliates may only be sold pursuant to an effective registration statement under the Securities Act, in compliance with the exemption provisions of Rule 144 or pursuant to another exemption under the Securities Act. Restricted shares and shares of common stock held by our affiliates that are not “restricted” will be eligible for sale, under Rule 144, subject to certain volume and manner of sale limitations prescribed by Rule 144. In general, under Rule 144 as currently in effect, a person (or persons whose shares are required to be aggregated), including a person who may be deemed an “affiliate” of the company, who has beneficially owned restricted securities for at least six months may sell, within any three-month period, a number is (303) 282-4800.
Following this offering, we cannot predict the effect, if any, that the availability for sale of shares held by our current stockholders will have on the market price from time to time. Nevertheless, sales by our current stockholders of a substantial number of shares of common stock in the public market could materially and adversely affect the market price for our common stock. In addition, the availability for sale of a substantial number of shares of our common stock acquired through the exercise of outstanding stock options or warrants could materially adversely affect the market price of our common stock.
Lock-Up Agreements
All of the executive officers and directors and all of our stockholders have agreed that, without the prior written consent of the underwriter, we and they will not, during the period ending 90 days after the date of this prospectus:
| ● | offer, pledge, sell, contract to sell, sell any option or contract to purchase, purchase any option or contract to sell, grant any option, right or warrant to purchase, lend, or otherwise transfer or dispose of, directly or indirectly, any shares of our common stock or securities convertible into or exercisable or exchangeable for our common stock; or |
| ● | enter into any swap or other arrangement that transfers to another, in whole or in part, any of the economic consequences of ownership of our common stock; |
whether any transaction described above is to be settled by delivery of shares of our common stock or such other securities, in cash or otherwise. This agreement is subject to certain exemptions, as set forth in the section entitled “Underwriting.”
UNDERWRITING
Subject to the terms and conditions set forth in the underwriting agreement between us and the underwriters named below, for whom _________ is acting as the representative (the “Representative”), we have agreed to sell to the underwriters, and each underwriter has severally agreed to purchase, the number of shares of our common stock listed next to its name in the following table:
| Underwriter | Number of Shares | |||
| Total | ||||
Under the terms of the underwriting agreement, the underwriters are committed to purchase all of the shares offered hereby has been passed upon by the Law Office of Gary A. Agron, 5445 DTC Pkwy, Greenwood Village, Colorado 80111, and their telephone number is (303) 770-7254.
The underwriters initially propose to offer the common stock directly to the public at the public offering price set forth on the front cover page of this prospectus and auditing in giving said report.
We have been advised by the representative of the underwriters that the underwriters intend to make a market in our securities but that they are not obligated to do so and may discontinue making a market at any time without notice. In connection with the offering, the underwriters or certain of the securities dealers may distribute prospectuses electronically.
Over-Allotment Option
We have granted the underwriters an option to purchase up to ______ additional shares of our common stock at the same price per share as they are paying for the shares shown in the table above. The underwriters may exercise this option in whole or in part at any time within 30 days after the date of the underwriting agreement. To the extent the underwriters exercise this option, each underwriter will be committed, so long as the conditions of the underwriting agreement are satisfied, to purchase a number of additional shares proportionate to that underwriters’ initial commitment as indicated in the table at the beginning of this section plus, if any underwriter defaults in its obligation to purchase shares under the underwriting agreement, certain additional shares.
Discounts and Commissions
Except as disclosed in this prospectus, the underwriters have not received and will not receive from us any other item of compensation or expense in connection with this offering considered by the Financial Industry Regulatory Authority, Inc. (“FINRA”), to be underwriting compensation under its rule of fair price.
The underwriting discount is equal to the public offering price per share, less the amount paid by the underwriters to us per share. The underwriting discount was determined through an arms’ length negotiation between us and the underwriters. We have agreed to sell the shares of common stock in this offering to the underwriters at the offering price of $____ per share, less a ____% underwriting discount.
The following table shows the per share and total underwriting discounts and commissions we will pay to the underwriters. These amounts are shown assuming both no exercise and full exercise of the underwriters’ option to purchase additional shares of our common stock.
| Total | ||||||||||||
| Per Share | No Exercise | Full Exercise | ||||||||||
| Public offering price | $ | $ | $ | |||||||||
| Underwriting discounts and commissions to be paid by us | $ | $ | $ | |||||||||
| Total | $ | $ | $ | |||||||||
| Proceeds, before expenses, to us | $ | $ | $ | |||||||||
We estimate that the total expenses of the offering payable by us, excluding underwriting discounts and commissions, will be approximately $_____. We have agreed to reimburse the underwriters for certain of their expenses, including fees of counsel in connection with filing with FINRA, in an amount not to exceed $_____.
We have agreed to pay a non-accountable expense allowance to the underwriters equal to ____% of the gross proceeds received in this Offering. In addition, we have also agreed to pay or reimburse the underwriters for certain of the underwriters’ out-of-pocket expenses relating to the offering, including legal and financial due diligence fees associated with it. All fees already paid shall be reimbursable to us to the extent not actually incurred. Further, pursuant to the underwriting agreement, the underwriters’ obligations are subject to customary conditions, representations, and warranties contained in the underwriting agreement, such as receipt by the underwriters of officers’ certificates and legal opinions.
Stabilization
In accordance with Regulation M under the Exchange Act, the underwriters may engage in activities that stabilize, maintain or otherwise affect the price of our common stock, including short sales and purchases to cover positions created by short positions, stabilizing transactions, syndicate covering transactions, penalty bids, and passive market making.
| ● | Short positions involve sales by the underwriters of shares over the number of shares the underwriters are obligated to purchase, which creates a syndicate short position. The short position may be either a covered short position or a naked short position. In a covered short position, the number of shares involved in the sales made by the underwriters in over the number of shares they are obligated to purchase is not greater than the number of shares they may purchase by exercising their option to purchase additional shares. In a naked short position, the number of shares involved is greater than the number of shares in their option to purchase additional shares. The underwriters may close out any short position by either exercising their option to purchase additional shares or purchasing shares in the open market. |
| ● | Stabilizing transactions permit bids to purchase the underlying security as long as the stabilizing bids do not exceed a specific maximum price. |
| ● | Syndicate covering transactions involve purchases of our common stock in the open market after the distribution has been completed to cover syndicate short positions. In determining the source of shares to close out the short position, the underwriters will consider, among other things, the price of shares available for purchase in the open market compared to the price at which they may purchase shares through the underwriters’ option to purchase additional shares. If the underwriters sell more shares than could be covered by the underwriters’ option to purchase additional shares, thereby creating a naked short position, the position can only be closed out by buying shares in the open market. A naked short position is more likely to be created if the underwriters are concerned that there could be downward pressure on the price of the shares in the open market after pricing that could adversely affect investors who purchase in the offering. |
| ● | Penalty bids permit the representative to reclaim a selling concession from a syndicate member when the common stock originally sold by the syndicate member is purchased in a stabilizing or syndicate-covering transaction to cover syndicate short positions. |
| ● | In passive market making, market makers in our common stock who are underwriters or prospective underwriters may, subject to limitations, make bids for or purchase shares of our common stock until the time, if any, at which a stabilizing bid is made. |
These activities may have the effect of raising or maintaining the market price of our common stock or preventing or retarding a decline in the market price of our common stock. As a result of these activities, the price of our common stock may be higher than the price that might otherwise exist in the open market. These transactions may be effected on the NYSE American or otherwise and, if commenced, may be discontinued at any time.
Neither we nor any of the underwriters make any representation or prediction as to the direction or magnitude of any effect that the transactions described above may have on the price of our common stock. In addition, neither we nor any of the underwriters make any representation that the Representative will engage in these stabilizing transactions or that any transaction, once commenced, will not be discontinued without notice.
Indemnification
We and the underwriters have agreed to indemnify each other against certain liabilities, including liabilities under the Securities Act, or to contribute to payments the underwriters may be required to make in respect of such liabilities.
Discretionary Accounts
The underwriters have informed us that they do not expect to make sales to accounts over which they exercise discretionary authority in excess of 5% of the shares of our common stock being offered throughin this prospectus. offering.
Pricing
The public offering price has been negotiated between us and the Representative. Among the factors considered in these negotiations are: the history of, and prospects for, us and the industry in which we compete; our past and present financial performance; an assessment of our management; the present state of our development; the prospects for our future earnings; the prevailing conditions of the applicable United States securities market at the time of this offering; previous trading prices for our common stock in the private market, and market valuations of publicly traded companies that we and the Representative believe to be comparable to us.
Lock-up Agreements
We have agreed that for a period of 90 days after the date of the underwriting agreement, we will not, without the prior written consent of the Representative, which may be withheld or delayed in the Representative’s sole discretion:
| ● | offer, pledge, sell, contract to sell, sell any option or contract to purchase, purchase any option or contract to sell, grant any option, right or warrant for the sale of, lend or otherwise dispose of or transfer, directly or indirectly, any of our common stock or any securities convertible into or exercisable or exchangeable for our common stock, or file any registration statement under the Securities Act with respect to any of the foregoing; or |
| ● | enter into any swap or other arrangement that transfers to another, in whole or in part, directly or indirectly, any of the economic consequences of ownership of any of our common stock, |
whether any such transaction described above is to be settled by delivery of shares of our common stock or such other securities, in cash or otherwise. The prior sentence will not apply to (i) the shares to be sold pursuant to the underwriting agreement, (ii) any shares of our common stock issued by us upon the exercise of an option or other security outstanding on the date hereof, (iii) such issuances of options or grants of restricted stock or other equity-based awards under our Equity Incentive Plan and the issuance of shares issuable upon exercise of any such equity-based awards, and (iv) the filing by us of registration statements on Form S-8.
Each of our directors and our executive officers has agreed that for a period ending 90 days after the date of the underwriting agreement, none of them will, without the prior written consent of the Representative which may be withheld or delayed in the Representative’s sole discretion:
| ● | offer, pledge, sell, contract to sell, sell any option or contract to purchase, purchase any option or contract to sell, grant any option, right or warrant for the sale of, lend or otherwise dispose of or transfer, directly or indirectly, any shares of our common stock, or any securities convertible into or exercisable or exchangeable for our common stock owned directly by such director or executive officer or with respect to which such director or executive officer has beneficial ownership; or |
| ● | enter into any swap or other arrangement that transfers to another, in whole or in part, directly or indirectly, any of the economic consequences of ownership of our common stock, whether any such transaction described above is to be settled by delivery of our common stock or such other securities, in cash or otherwise. |
Notwithstanding the prior sentence, subject to applicable securities laws and the restrictions contained in our charter, our directors and executive officers may transfer our securities: (i) pursuant to the exercise or conversion of our securities, including, without limitation, options and warrants; (ii) as a bona fide gift or gifts, provided that the donee or donees thereof agree to be bound in writing by the restrictions set forth above; (iii) to any trust for the direct or indirect benefit of such director or executive officer or the immediate family of such director or executive officer, provided that the trustee of the trust agrees to be bound in writing by the restrictions set forth above; (iv) any transfer required under any benefit plans or our company’s charter or bylaws; (v) as required by participants in our Equity Incentive Plan to reimburse or pay federal income tax and withholding obligations in connection with vesting of restricted stock grants or the exercise of stock options or warrants; or (vi) in or in connection with any merger, consolidation, combination or sale of all or substantially all of our assets or in connection with any tender offer or other offer to purchase at least 50% of our common stock.
Notwithstanding the foregoing, nothing shall prevent our directors or executive officers from, or restrict their ability to, (i) purchase our securities in a public or private transaction, or (ii) exercise or convert any options, warrants or other convertible securities issued to or held by such director or executive officer.
Other Relationships
The Representative has provided, and may in the future provide, various investment banking and other financial advisory services for us and our affiliates for which services it has received, and may receive in the future, customary fees.
The Representative may release, or authorize us to release, as the case may be, the common stock and other securities subject to the lock-up agreements described above in whole or in part at any time with or without notice.
Electronic Distribution
A prospectus in electronic format may be made available on the websites maintained by one or more of the underwriters or selling group members, if any, participating in the offering. The Representative may allocate a number of shares to the underwriters and selling group members, if any, for sale to their online brokerage account holders. Any such allocations for online distributions will be made by the representative on the same basis as other allocations.
Listing
We intend to apply for the listing of our common stock for trading on the NYSE American and expect such listing to occur concurrently with this offering. There is no assurance, however, that our common stock will be listed on the NYSE American or any other national securities exchange. A NYSE American listing, however, is not a condition to completing this offering.
Transfer Agent and Registrar
The transfer agent and registrar for our common stock is Transfer Online, Inc., 512 SE Salmon Street, Portland, Oregon 97214.
Selling Restrictions
Canada
The securities may be sold in Canada only to purchasers purchasing, or deemed to be purchasing, as principal that are accredited investors, as defined in National Instrument 45 106 Prospectus Exemptions or subsection 73.3(1) of the Securities Act (Ontario), and are permitted clients, as defined in National Instrument 31 103 Registration Requirements, Exemptions and Ongoing Registrant Obligations. Any resale of the securities must be made in accordance with an exemption from, or in a transaction not subject to, the prospectus requirements of applicable securities laws.
Securities legislation in certain provinces or territories of Canada may provide a purchaser with remedies for rescission or damages if this prospectus (including any amendment or supplement thereto) contains a misrepresentation, provided that the purchaser exercises the remedies for rescission or damages within the time limit prescribed by the securities legislation of the purchaser’s province or territory. The purchaser should refer to any applicable provisions of the securities legislation of the purchaser’s province or territory for particulars of these rights or consult with a legal advisor.
Pursuant to section 3A.3 of National Instrument 33 105 Underwriting Conflicts (NI 33 105), the underwriter is not required to comply with the disclosure requirements of NI 33 105 regarding underwriter conflicts of interest in connection with this offering.
European Economic Area
In relation to each Member State of the European Economic Area which has implemented the Prospectus Directive, each, a Relevant Member State, an offer to the public of any shares of our common stock may not be made in that Relevant Member State, except that an offer to the public in that Relevant Member State of any shares of our common stock may be made at any time under the following exemptions under the Prospectus Directive, if they have been implemented in that Relevant Member State:
| ● | to any legal entity which is a qualified investor as defined in the Prospectus Directive; |
| ● | to fewer than 100 or, if the Relevant Member State has implemented the relevant provision of the 2010 PD Amending Directive, 150, natural or legal persons (other than qualified investors as defined in the Prospectus Directive), as permitted under the Prospectus Directive, subject to obtaining the prior consent of the representatives for any such offer; or |
| ● | in any other circumstances falling within Article 3(2) of the Prospectus Directive, provided that no such offer of shares of our common stock shall result in a requirement for the publication by us or any underwriter of a prospectus pursuant to Article 3 of the Prospectus Directive. |
For the purposes of this provision, the expression an “offer to the public” in relation to any shares of our common stock in any Relevant Member State means the communication in any form and by any means of sufficient information on the terms of the offer and any shares of our common stock to be offered so as to enable an investor to decide to purchase any shares of our common stock, as the same may be varied in that Member State by any measure implementing the Prospectus Directive in that Member State, the expression “Prospectus Directive” means Directive 2003/71/EC (and amendments thereto, including the 2010 PD Amending Directive, to the extent implemented in the Relevant Member State), and includes any relevant implementing measure in the Relevant Member State, and the expression “2010 PD Amending Directive” means Directive 2010/73/EU.
United Kingdom
The underwriter has represented and agreed that:
| ● | it has only communicated or caused to be communicated and will only communicate or cause to be communicated an invitation or inducement to engage in investment activity (within the meaning of Section 21 of the Financial Services and Markets Act 2000, or FSMA) received by it in connection with the issue or sale of the shares of our common stock in circumstances in which Section 21(1) of the FSMA does not apply to us; and |
| ● | it has complied and will comply with all applicable provisions of the FSMA with respect to anything done by it in relation to the shares of our common stock in, from or otherwise involving the United Kingdom. |
| Switzerland |
The shares may not be publicly offered in Switzerland and will not be listed on the SIX Swiss Exchange, or the SIX, or on any other stock exchange or regulated trading facility in Switzerland. This document has been prepared without regard to the disclosure standards for issuance prospectuses under art. 652a or art. 1156 of the Swiss Code of Obligations or the disclosure standards for listing prospectuses under art. 27 ff. of the SIX Listing Rules or the listing rules of any other stock exchange or regulated trading facility in Switzerland. Neither this document nor any other offering or marketing material relating to the shares or the offering may be publicly distributed or otherwise made publicly available in Switzerland.
Neither this document nor any other offering or marketing material relating to the offering, or the shares have been or will be filed with or approved by any Swiss regulatory authority. In particular, this document will not be filed with, and the offer of shares will not be supervised by, the Swiss Financial Market Supervisory Authority FINMA, and the offer of shares has not been and will not be authorized under the Swiss Federal Act on Collective Investment Schemes, or CISA. Accordingly, no public distribution, offering or advertising, as defined in CISA, its implementing ordinances and notices, and no distribution to any non-qualified investor, as defined in CISA, its implementing ordinances and notices, shall be undertaken in or from Switzerland, and the investor protection afforded to acquirers of interests in collective investment schemes under CISA does not extend to acquirers of shares.
Australia
No placement document, prospectus, product disclosure statement or other disclosure document has been lodged with the Australian Securities and Investments Commission, or the ASIC, in relation to the offering.
This prospectus does not constitute a prospectus, product disclosure statement or other disclosure document under the Corporations Act 2001, or the Corporations Act, and does not purport to include the information required for a prospectus, product disclosure statement or other disclosure document under the Corporations Act.
Any offer in Australia of the shares may only be made to persons, the Exempt Investors, who are “sophisticated investors” (within the meaning of section 708(8) of the Corporations Act), “professional investors” (within the meaning of section 708(11) of the Corporations Act) or otherwise pursuant to one or more exemptions contained in section 708 of the Corporations Act so that it is filed aslawful to offer the shares without disclosure to investors under Chapter 6D of the Corporations Act.
The shares applied for by Exempt Investors in Australia must not be offered for sale in Australia in the period of 12 months after the date of allotment under the offering, except in circumstances where disclosure to investors under Chapter 6D of the Corporations Act would not be required pursuant to an exemption under section 708 of the Corporations Act or otherwise or where the offer is pursuant to a partdisclosure document which complies with Chapter 6D of that registration statement, butthe Corporations Act. Any person acquiring shares must observe such Australian on-sale restrictions.
This prospectus contains general information only and does not take account of the investment objectives, financial situation or particular needs of any particular person. It does not contain all ofany securities recommendations or financial product advice. Before making an investment decision, investors need to consider whether the information contained in the registration statementthis prospectus is appropriate to their needs, objectives and exhibits. Statements made in the registration statement are summaries of the material terms of the referenced contracts, agreements or documents of the company. We refer you to our registration statementcircumstances, and, each exhibit attached to it for a more detailed description of matters involving the company. You may inspect the registration statement, exhibits and schedules filed with the SEC at the SEC’s principal office in Washington, D.C. Copies of all or any part of the registration statement may be obtained from the Public Reference Section of the SEC, 100 F Street, N.E. Washington, D.C. 20549. Please call the Commission at 1-800-SEC-0330 for further informationif necessary, seek expert advice on the operation of the public reference rooms. The SEC also maintains a web site at http://www.sec.gov that contains reports, proxy statements and information regarding registrants that files electronically with the SEC. Our registration statement and the referenced exhibits can also be found on this site.
INDEMNIFICATION FOR SECURITIES ACT LIABILITIES
Pursuant to our Articlescertificate of Incorporationincorporation and Bylaws,bylaws, we willmay indemnify an officer or director who is made a party to any proceeding, including a lawsuit, because of his or formerher position, if he or she acted in good faith and in a manner he or she reasonably believed to be in our best interest. In certain cases, we may advance expenses incurred in defending any such proceeding. To the extent that the officer or director is successful on the merits in any such proceeding as to the full extent permitted by law.which such person is to be indemnified, we must indemnify him or her against all expenses incurred, including attorney’s fees.
Insofar as indemnification for liabilities arising under the Securities Act of 1933 may be permitted to our directors, officers, andor persons controlling personsus pursuant to the foregoing provisions, or otherwise, we have been advised that in the opinion of the Securities and Exchange CommissionSEC, such indemnification is against public policy as expressed in the Securities Act of 1933 and is, therefore, unenforceable.
LEGAL MATTERS
The validity of the shares of common stock offered hereby will be passed upon for the issuer by Olshan Frome Wolosky LLP, New York, New York.
EXPERTS
The consolidated financial statements of American Battery Materials, Inc. as of December 31, 2022 and 2021 and for each of the two years in the period ended December 31, 2022 and 2021, included in this prospectus have been audited by Pinnacle Accountancy Group of Utah, a dba of Heaton & Company, PLLC, an independent registered public accounting firm, as stated in their report appearing herein and elsewhere in the Registration Statement to which this prospectus forms a part (which report expresses an unqualified opinion on the financial statements and includes explanatory paragraphs referring to conditions that raise substantial doubt about American Battery Materials, Inc.’s ability to continue as a going concern for one year from the issuance of the financial statements). Such financial statements have been so included in reliance upon the report of such firm given upon their authority as experts in accounting and auditing.
WHERE YOU CAN FIND ADDITIONAL INFORMATION
We have filed with the SEC a registration statement on Form S-1, which includes exhibits, schedules and amendments, under the Securities Act with respect to the common stock we are offering pursuant to this prospectus. The rules and regulations of the SEC allow us to omit certain information from this prospectus that is included in the registration statement. Statements made in this prospectus concerning the contents of any contract, agreement or other document are summaries of all material information about the contract, agreement or other document summarized, but are not complete descriptions of all terms of those contracts, agreements or other documents. If we filed any of those contracts, agreements or other documents as an exhibit to the registration statement, you may read the contract, agreement or other document itself for a complete description of its terms. When we complete this offering, we will also be required to file annual, quarterly and special reports, proxy statements and other information with the SEC.
You can read our SEC filings, including the registration statement, over the Internet at the SEC’s website at www.sec.gov. You may also read and copy any document we file with the SEC at its public reference facilities at 100 F Street, N.E., Room 1580, Washington, D.C. 20549. To receive copies of public records not posted to the SEC’s web site at prescribed rates, you may complete an online form at http://www.sec.gov, send a fax to (202) 772-9337 or submit a written request to the SEC, Office of FOIA/PA Operations, 100 F Street, N.E., Mail Stop 2736, Washington, D.C. 20549. Please call the SEC at 1-800-SEC-0330 for further information on their public reference room.
AMERICAN BATTERY MATERIALS, INC.
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
| PAGE | |
| FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2023 AND 2022 | |
| F-2 | |
| Statements of Operations for the nine months ended September 30, 2023 and 2022 (unaudited) | F-3 |
| Statements of Stockholders’ Deficit for the nine months ended September 30, 2023 and 2022 (unaudited) | F-4 |
| Statements of Cash Flows for the nine months ended September 30, 2023 and 2022 (unaudited) | F-5 |
| Notes to the Financial Statements | F-6 |
| FOR THE YEARS ENDED DECEMBER 31, 2022 AND 2021 | |
| Report of Independent Registered Public Accounting Firm | |
| F-16 | |
| Statements of Operations’ for the years ended December 31, | |
| Statements of | |
| Statements of Cash Flows for the | |
| Notes to | |
F-20 | |
AMERICAN BATTERY MATERIALS, INC.
Condensed Consolidated Balance Sheets
(Unaudited)
| September 30, | December 31, | |||||||
| 2023 | 2022 | |||||||
| Assets | ||||||||
| Current assets | ||||||||
| Cash | $ | 338,982 | $ | 42,582 | ||||
| Prepaid expenses and other assets | 80,568 | 62,717 | ||||||
| Total current assets | 419,550 | 105,299 | ||||||
| Noncurrent assets | ||||||||
| Mineral claims | 206,000 | 100,000 | ||||||
| Total assets | $ | 625,550 | $ | 205,299 | ||||
| Liabilities and Stockholders’ Deficit | ||||||||
| Current Liabilities: | ||||||||
| Accounts payable | $ | 362,427 | $ | 438,667 | ||||
| Accrued expenses | 560,430 | 482,881 | ||||||
| Accrued interest | 215,557 | 190,901 | ||||||
| Promissory notes payable, net of discount | 248,939 | 357,008 | ||||||
| Promissory notes payable – related party | 175,000 | - | ||||||
| Convertible notes payable, net of discount | 1,961,185 | - | ||||||
| Convertible notes payable – related party | 25,000 | - | ||||||
| Current capital lease obligation | 36,254 | 36,254 | ||||||
| Total current liabilities | 3,584,792 | 1,505,711 | ||||||
| Total Liabilities | 3,584,792 | 1,505,711 | ||||||
| Stockholders’ deficit | ||||||||
| Preferred stock, $0.0001 par value, 10,000,000 shares authorized, 0 and 50,000 shares issued and outstanding, respectively | - | 5 | ||||||
| Common stock, $0.001 par value, 4,500,000,000 shares authorized, 3,406,691,566 and 3,245,556,528 shares issued and outstanding, respectively | 3,406,689 | 3,245,555 | ||||||
| Additional paid in capital | 13,951,705 | 13,308,865 | ||||||
| Accumulated deficit | (20,317,636 | ) | (17,854,837 | ) | ||||
| Total stockholders’ deficit | (2,959,242 | ) | (1,300,412 | ) | ||||
| Total liabilities and stockholders’ deficit | $ | 625,550 | $ | 205,299 | ||||
| As of | ||||||||
| December 31, | December 31, | |||||||
| 2013 | 2012 | |||||||
| ASSETS | ||||||||
| Current assets: | ||||||||
Cash | $ | 14,620 | $ | 1,262 | ||||
Prepaid expenses and other assets | 4,114 | 10,169 | ||||||
Receivable from U-Vend, Canada, Inc. | 162,536 | - | ||||||
Current assets of discontinued operations | - | 116,460 | ||||||
Total current assets | 181,270 | 127,891 | ||||||
Deferred financing costs, net | 16,333 | - | ||||||
Non-current assets of discontinued operations | - | 99,092 | ||||||
Total assets | $ | 197,603 | $ | 226,983 | ||||
LIABILITIES AND STOCKHOLDERS' DEFICIENCY | ||||||||
Current liabilities: | ||||||||
Accounts payable | $ | 35,192 | $ | 39,026 | ||||
Accrued expenses | 28,032 | 61,340 | ||||||
Accrued salary - officer | 142,608 | - | ||||||
Note payable - director | 50,000 | - | ||||||
Senior convertible notes, net of discount of $143,751 | 56,249 | - | ||||||
Convertible notes payable | - | 280,034 | ||||||
Revolving note from related party | - | 281,228 | ||||||
Current liabilities of discontinued operations | - | 156,912 | ||||||
Total current liabilities | 312,081 | 818,540 | ||||||
Warrant liabilities | 214,609 | - | ||||||
Commitments and contingencies (Note 9) | - | - | ||||||
Stockholders' deficiency: | ||||||||
Common stock, $.001 par value, 600,000,000 shares | ||||||||
authorized, 489,255,193 shares issued and outstanding (24,637,893 - 2012) | 489,255 | 24,638 | ||||||
Additional paid-in capital | 955,920 | 770,786 | ||||||
Accumulated deficit | (1,774,262 | ) | (1,386,981 | ) | ||||
Total stockholders' deficiency | (329,087 | ) | (591,557 | ) | ||||
Total liabilities and stockholders' deficiency | $ | 197,603 | $ | 226,983 | ||||
The accompanying notes are an integral part of the condensed consolidated unaudited financial statements statements.
AMERICAN BATTERY MATERIALS, INC.
Condensed Consolidated Statements of Operations
(Unaudited)
| Nine Months Ended | Nine Months Ended | |||||||
| September 30, | September 30, | |||||||
| 2023 | 2022 | |||||||
| Operating Expenses | ||||||||
| General and administrative | $ | 2,165,494 | $ | 821,995 | ||||
| Total operating expenses | 2,165,494 | 821,995 | ||||||
| Operating loss | (2,165,494 | ) | (821,995 | ) | ||||
| Other Expenses / Income | ||||||||
| Gain on change in fair value of derivative liabilities | - | 211,345 | ||||||
| Gain on settlement of liabilities | 67,984 | - | ||||||
| Fair value of stock issued for note modification | (168,856 | ) | - | |||||
| Extension fees due to SPAC Sponsor | (101,662 | ) | - | |||||
| Interest expense | (94,771 | ) | (537,938 | ) | ||||
| Total other expenses / income | (297,305 | ) | (326,593 | ) | ||||
| Loss from operations before income taxes | (2,462,799 | ) | (1,148,588 | ) | ||||
| Provision for income taxes | - | - | ||||||
| Net Loss | $ | (2,462,799 | ) | $ | (1,148,588 | ) | ||
| Net loss per share – basic and diluted | $ | (0.00 | ) | $ | (0.00 | ) | ||
| Weighted average common shares – basic and diluted | 3,324,638,012 | 382,019,948 | ||||||
| For the Years Ended | ||||||||
| December 31, 2013 | December 31, 2012 | |||||||
Revenue | $ | - | $ | - | ||||
Operating expenses: | ||||||||
Salaries and benefits | 220,421 | 73,716 | ||||||
Professional fees | 65,780 | 47,219 | ||||||
Other | 53,684 | 121,571 | ||||||
339,885 | 242,506 | |||||||
Operating loss | (339,885 | ) | (242,506 | ) | ||||
Other income (expenses): | ||||||||
Loss from change in fair value of notes payable | - | (105,009 | ) | |||||
Amortization of debt discount and deferred financing costs | (63,417 | ) | - | |||||
Interest expense | (35,882 | ) | (37,440 | ) | ||||
Gain on extinguishment of debt | 31,090 | - | ||||||
(68,209 | ) | (142,449 | ) | |||||
Loss before income taxes | (408,094 | ) | (384,955 | ) | ||||
Income tax provision | (2,200 | ) | (4,185 | ) | ||||
Loss from continuing operations | (410,294 | ) | (389,140 | ) | ||||
Discontinued operations: | ||||||||
Gain from disposal of discontinued operations | 3,839 | - | ||||||
Net income (loss) from discontinued operations | 19,174 | (2,858 | ) | |||||
Write-down of assets associated with a discounted component, net of income tax effect | - | (35,000 | ) | |||||
23,013 | (37,858 | ) | ||||||
Net loss | $ | (387,281 | ) | $ | (426,998 | ) | ||
Net loss from continuing operations per share- basic and diluted | $ | (0.01 | ) | $ | (0.02 | ) | ||
Net income (loss) from discontinued operations per share- basic and diluted | 0.00 | (0.00 | ) | |||||
Net loss per share - basic and diluted | $ | (0.01 | ) | $ | (0.02 | ) | ||
Weighted average common shares | ||||||||
outstanding - basic and diluted | 71,373,884 | 24,313,958 | ||||||
The accompanying notes are an integral part of the condensed consolidated unaudited financial statements statements.
AMERICAN BATTERY MATERIALS, INC.
Consolidated Statements of Changes in Stockholders’ Deficit
Nine Months Ended September 30, 2023 and 2022
(Unaudited)
| Preferred stock | Common stock | Additional Paid in | Accumulated | Total Stockholders’ | ||||||||||||||||||||||||
| Shares | Amount | Shares | Amount | Capital | Deficit | Deficit | ||||||||||||||||||||||
| Balance as of December 31, 2021 | - | - | 335,778,778 | 335,778 | 6,989,540 | (16,367,989 | ) | (9,042,671 | ) | |||||||||||||||||||
| Preferred stock issued for cash | 50,000 | 5 | - | - | 49,995 | - | 50,000 | |||||||||||||||||||||
| Shares issued for note conversion | - | - | 49,789,365 | 49,789 | 139,411 | - | 189,200 | |||||||||||||||||||||
| Fair value of warrants | - | - | - | - | 11,080 | - | 11,080 | |||||||||||||||||||||
| Net loss | - | - | - | - | - | (1,148,588 | ) | (1,148,588 | ) | |||||||||||||||||||
| Balance as of September 30, 2022 | 50,000 | 5 | 385,568,143 | 385,567 | 7,190,026 | (17,516,577 | ) | (9,940,979 | ) | |||||||||||||||||||
| Balance as of December 31, 2022 | 50,000 | 5 | 3,245,556,528 | 3,245,555 | 13,308,865 | (17,854,837 | ) | (1,300,412 | ) | |||||||||||||||||||
| Shares issued for services | - | - | 54,916,669 | 54,917 | 318,733 | - | 373,650 | |||||||||||||||||||||
| Shares issued for warrant exercise | - | - | 49,736,843 | 49,736 | 139,264 | - | 189,000 | |||||||||||||||||||||
| Shares issued for cashless warrant exercise | - | - | 16,799,491 | 16,799 | (16,799 | ) | - | - | ||||||||||||||||||||
| Conversion of preferred stock to common stock | (50,000 | ) | (5 | ) | 10,000,000 | 10,000 | (9,995 | ) | - | - | ||||||||||||||||||
| Shares issued for note modification | - | - | 16,635,226 | 16,635 | 152,221 | - | 168,856 | |||||||||||||||||||||
| Shares issued with notes | - | - | 13,046,809 | 13,047 | 59,416 | - | 72,463 | |||||||||||||||||||||
| Net loss | - | - | - | - | - | (2,462,799 | ) | (2,462,799 | ) | |||||||||||||||||||
| Balance as of September 30, 2023 | - | - | 3,406,691,566 | 3,406,689 | 13,951,705 | (20,317,636 | ) | (2,959,242 | ) | |||||||||||||||||||
| Additional | Total | |||||||||||||||||||
| Shares | Common | Paid-in | Accumulated | Stockholders’ | ||||||||||||||||
| Outstanding | Stock | Capital | Deficit | Deficiency | ||||||||||||||||
Balance at December 31, 2011 | 23,821,000 | $ | 23,821 | $ | 685,317 | $ | (959,983 | ) | $ | (250,845 | ) | |||||||||
Issuance of common stock and warrants for cash | 200,000 | 200 | 10,300 | - | 10,500 | |||||||||||||||
Stock-based compensation expense | - | - | 24,796 | - | 24,796 | |||||||||||||||
Shares issued upon conversion of convertible notes and accrued interest | 616,893 | 617 | 50,373 | - | 50,990 | |||||||||||||||
Net loss | - | - | - | (426,998 | ) | (426,998 | ) | |||||||||||||
Balance at December 31, 2012 | 24,637,893 | 24,638 | 770,786 | (1,386,981 | ) | (591,557 | ) | |||||||||||||
Stock-based compensation expense | - | - | 23,496 | - | 23,496 | |||||||||||||||
Shares issued upon conversion of convertible notes and accrued interest | 464,617,300 | 464,617 | 130,533 | - | 595,150 | |||||||||||||||
Beneficial conversion feature on senior convertible notes | - | - | 31,105 | - | 31,105 | |||||||||||||||
Net loss | - | - | - | (387,281 | ) | (387,281 | ) | |||||||||||||
Balance at December 31, 2013 | 489,255,193 | $ | 489,255 | $ | 955,920 | $ | (1,774,262 | ) | $ | (329,087 | ) | |||||||||
The accompanying notes are an integral part of the condensed consolidated unaudited financial statementsstatements.
AMERICAN BATTERY MATERIALS, INC.
Condensed Consolidated Statements of Cash Flows
(Unaudited)
| For the Years Ended | ||||||||
| December 31, 2013 | December 31, 2012 | |||||||
| Cash flows from operating activities: | ||||||||
Net loss | $ | (387,281 | ) | $ | (426,998 | ) | ||
(Income) loss from discontinued operations | (23,013 | ) | 37,858 | |||||
Adjustments to reconcile net loss to netcash used by operating activities: | ||||||||
Stock based compensation | 23,496 | 24,796 | ||||||
Amortization of debt discount and deferred financing costs | 63,417 | - | ||||||
Gain on extinguishment of debt | (31,090 | ) | - | |||||
Change in provisions for deferred tax liability | - | 541 | ||||||
Impairment of property and equipment | - | 38,200 | ||||||
Loss from change in fair value of notes payable | - | 105,009 | ||||||
(Increase) decrease in assets: | ||||||||
Prepaid expenses and other assets | 6,055 | (222 | ) | |||||
Increase in liabilities: | ||||||||
Accounts payable and accrued expenses | 48,851 | 53,410 | ||||||
Accrued salary - officer | 142,608 | - | ||||||
Net cash used by continuing operations | (156,957 | ) | (167,406 | ) | ||||
Net cash provided by discontinued operations | 7,653 | 90,621 | ||||||
Net cash used by operating activities | (149,304 | ) | (76,785 | ) | ||||
Cash flows from investing activities: | ||||||||
Advances to U-Vend Canada, Inc. | (116,822 | ) | - | |||||
Net proceeds from sale of LegalStore.com | 74,000 | - | ||||||
Net cash used by investing activities | (42,822 | ) | - | |||||
Cash flows from financing activities: | ||||||||
Proceeds from sale of common stock | - | 10,500 | ||||||
Proceeds from senior convertible notes, net of financing costs | 176,500 | - | ||||||
Proceeds from notes payable - director | 50,000 | - | ||||||
Net (repayments) borrowings on revolving note from related party | (21,016 | ) | 66,739 | |||||
Net cash provided by financing activities | 205,484 | 77,239 | ||||||
Net increase in cash | 13,358 | 454 | ||||||
Cash - beginning of year | 1,262 | 808 | ||||||
Cash - end of year | $ | 14,620 | $ | 1,262 | ||||
Cash paid for : | ||||||||
Income taxes | $ | 2,200 | $ | 3,400 | ||||
Interest | $ | 1,711 | $ | - | ||||
Non-cash financing activities: | ||||||||
Note payable and accrued interest converted to shares of common stock | $ | 599,051 | $ | 50,990 | ||||
Debt discount related to warrant liability and beneficial conversion feature | $ | 200,000 | $ | - | ||||
Derivative warrant liability issued for equipment leasing | $ | 45,714 | $ | - | ||||
| Nine Months Ended | Nine Months Ended | |||||||
| September 30, | September 30, | |||||||
| 2023 | 2022 | |||||||
| Cash Flows from Operating Activities | ||||||||
| Net income (loss) | $ | (2,462,799 | ) | $ | (1,148,588 | ) | ||
| Adjustments to reconcile net loss to net cash used in operating activities: | ||||||||
| Stock based compensation | 446,113 | 11,080 | ||||||
| Gain on settlement of liabilities | (67,984 | ) | - | |||||
| Gain on change in fair value of debt and warrant liabilities | - | (211,345 | ) | |||||
| Fair value of stock issued for note modification | 168,856 | - | ||||||
| Amortization of debt discount | (89,876 | ) | - | |||||
| Changes in operating assets and liabilities: | ||||||||
| Prepaid expenses and other assets | (17,851 | ) | (88,099 | ) | ||||
| Accounts payable and accrued expenses | 65,424 | 241,124 | ||||||
| Accrued interest | 46,517 | 475,490 | ||||||
| Net cash used in operating activities | (1,911,600 | ) | (720,338 | ) | ||||
| Cash Flows from Investing Activities: | ||||||||
| Acquisition of mineral claims | (106,000 | ) | - | |||||
| Net cash provided by (used in) investing activities | (106,000 | ) | - | |||||
| Cash Flows from Financing Activities | ||||||||
| Proceeds from convertible notes | 2,025,000 | 590,000 | ||||||
| Proceeds from promissory notes | 100,000 | 200,000 | ||||||
| Proceeds from issuance of preferred stock | - | 50,000 | ||||||
| Proceeds from warrant exercises | 189,000 | - | ||||||
| Repayment of convertible note | - | (75,000 | ) | |||||
| Net cash provided by financing activities | 2,314,000 | 765,000 | ||||||
| Net increase (decrease) in cash | 296,400 | 44,662 | ||||||
| Cash, beginning of period | 42,582 | 8,291 | ||||||
| Cash, end of period | $ | 338,982 | $ | 52,953 | ||||
| Supplemental disclosures: | ||||||||
| Interest paid | $ | - | $ | - | ||||
| Supplemental disclosures of non-cash items: | ||||||||
| Convertible notes converted to common stock | $ | - | $ | 48,804 | ||||
| Accounts payable and accrued payable exchanged for convertible note | $ | - | $ | 140,396 | ||||
| Promissory notes converted to convertible notes | $ | - | $ | 170,000 | ||||
| Accrued interest on promissory notes converted to convertible notes | $ | - | $ | 57,372 | ||||
The accompanying notes are an integral part of the condensed consolidated unaudited financial statementsstatements.
AMERICAN BATTERY MATERIALS, INC.
Notes to Condensed Consolidated Financial Statements
For the Nine Months Ended September 30, 2023 and 2022
(Unaudited)
Note 1 - Nature of the Business
American Battery Materials, Inc. (the “Company”) is a US based renewable energy company focused on the extraction, refinement and distribution of technical minerals in an environmentally responsible manner.
The Company formerly developed, marketed and distributed various self-serve electronic kiosks and mall/airport co-branded islands throughout North America. Due to the nationwide shutdown related to the COVID-19 pandemic, the Company spent a portion of 2020 restructuring and retiring certain corporate debt and obligations, while focusing on implementing a new operational direction.
Through the corporate reorganization and repositioning process, the Company found itself with the unique opportunity to expand its management team and acquire mining claims that historically reported high levels of Lithium and other tech minerals. The Company hired and affiliated itself with industry veterans that bring decades of experience, credibility and relationships.
On January 7, 2014, Internet Media Services,November 5, 2021, the Company acquired the rights to 102 Federal Mining Claims located in the Lisbon Valley of Utah for $100,000. The acquisition was driven by historical mineral data from seven (7) existing wells with brine aquifer access. The independent third-party Technical Report indicated that further investment and development in the claims were warranted.
On April 25, 2023, the Company formed Mountain Sage Minerals LLC, a Utah limited liability company, of which it is the 100% owner. The Company will look to expand its holdings in the Lisbon Valley area with the acquisition of additional mineral claims and joint venture opportunities through this new LLC.
On May 1, 2023, FINRA completed the processing of our application for a name change, and our name was officially changed to American Battery Materials, Inc. (“Company”) entered into an Exchange of Securities Agreement (“Agreement”) by and between ourselves, U-Vend Canada, Inc. andAt the shareholders of U-Vend Canada, Inc. U-Vend Canada, Inc. together with its wholly owned subsidiary, U-Vend USA LLC (collectively, U-Vend), is insame time, the Company’s trading symbol was changed to BLTH. These changes better reflect the business of developing, marketing and distributing co-branded self-serve electronic kiosks, mall/airport co-branding islands, and digital advertising solutions throughout North America. As of December 31, 2013, U-Vend owned and operated 33 kiosks in the greater Chicago, IL area and markets products supplied by its co-branding partners. U-Vend expects to place 15 additional kiosks into service early in the second quarter of 2014. Pursuant to the Agreement, we have acquired all of the outstanding shares of U-Vend in exchange for 466,666,667 shares of our common stock. U-Vend Canada, Inc. will also have the ability to earn up to an additional 603,046,666 shares of our common stock subject to certain earn-out provisions more fully described in the Agreement. The Agreement was approved by a written consent by the majority of the Company's stockholders and by the Company’s Board of Directors. (See Note 10 Subsequent Events)
On March 13, 2013,June 1, 2023, the Company entered into a stock sale agreementan Agreement and Plan of Merger (the “Merger Agreement”) with Western Principal Partners LLC (“WPP”)Seaport Global Acquisition II Corp., a California Limited Liability Company.Delaware corporation (“SGII”), and Lithium Merger Sub, Inc., a Delaware corporation and wholly-owned subsidiary of SGII (“Merger Sub”). SGII is a blank check company, also referred to as a special purpose acquisition company, formed for the purpose of effectuating a merger, capital stock exchange, asset acquisition, stock purchase, reorganization or other similar business combination with one or more businesses. SGII is an early stage and emerging growth company. Pursuant to the Merger Agreement, WPP purchased fromMerger Sub will merge with and into the Company, with the Company surviving the merger. As a result of the transactions under the Merger Agreement, ABM will become a wholly-owned subsidiary of SGII. The stockholders of ABM will become stockholders of SGII under an exchange ratio in the Merger Agreement. The closing of the transactions under the Merger Agreement is expected to be consummated in 2023, after the required approval by the stockholders of SGII and the fulfillment of certain other conditions.
On July 14, 2023, the Company, SGII, and Merger Sub (collectively, the “Parties”) entered into Amendment No. 1 to Agreement and Plan of Merger (the “Amendment”). Pursuant to the Amendment, the Parties agreed to (i) reduce the value of the shares of SGII common stock to be paid as consideration to ABM’s stockholders from $160 million to $120 million; (ii) extend the Merger Agreement’s termination date from August 19, 2023 to February 19, 2024; and, (iii) amend the Merger Agreement to obligate the Company to fund one-half of the additional payment into trust (i.e., $0.015 per share by the Company) that SGII intends to make in connection with an extension to the date by which SGII must complete a business combination. If the Company fails to make any such contribution that is subsequently funded by SGII (each, a “Contribution Shortfall”), then the Company shall issue to SGII’s sponsor a number of shares with value equal to two times the amount of all Contribution Shortfalls either (a) if the transactions under the Merger Agreement close, of the post-business combination company; or, (b) if the transactions under the Merger Agreement do not close, of the Company.
On August 4, 2023, the Company filed an Amendment to the Certificate of Incorporation (the “Amendment”) in order to effect a reverse stock split in the ratio of 1-for-300 (the “Reverse Split”). The Company and its shareholders holding a majority of the issued and outstanding capitalshares of stock of the Company’s wholly-owned subsidiary, LegalStore.com,Company entitled to vote previously approved a Delaware Corporation. LegalStore.com was operatingreverse stock split for not less than 1-for-10 and not more than 1-for-1,000, at any time prior to October 20, 2023, with the Company’s e-commerce business. The Agreement wasBoard having the discretion to determine whether or not the Reverse Split is to be effected, and if effected, the exact ratio for the Reverse Split within the above range. On August 1, 2023, the Company’s unanimously approved by a written consent by the majorityReverse Split and authorized the filing of the Company's stockholders. In considerationAmendment. Although the Amendment has been filed, the Reverse Split will not be effective and will not be reflected (i) in the stock price of the sale, WPP agreedCompany; or, (ii) in the Company’s financials until the Revere Split is processed by FINRA. The Company has submitted an application to payFINRA for a corporate action in order to implement and effect the Reverse Split.
The Company total considerationhas been moving forward with its strategy of $210,000 including assumptionemploying advanced brine extractive technology methodologies and has been in talks with numerous extraction providers. Selective mineral extraction is clearly the most cost-effective and ESG friendly approach currently available. Technologies are being utilized that can extract the desired minerals and metals from the brine and then re-inject the brines back down into the aquafer. The prospective partners have been provided the analytical results from the technical reports, but will soon provide current results, analytical, geotech modeling, aquifer modeling, recharge, flows, and depth.
Note 2 - Summary of operating liabilities.Significant Accounting Policies
Basis of Presentation and Principles of Consolidation
The accompanying unaudited consolidated financial statements are condensed and have been prepared in accordance with U.S. generally accepted accounting principles (“GAAP”) for interim financial information and with the instructions to Form 10-Q. Accordingly, they do not include all the information and footnotes required by GAAP for complete financial statements. In the opinion of management, all adjustments consisting of normal recurring accruals considered necessary for a fair and non-misleading presentation of the financial statements have been included. Operating liabilities included, butresults for the nine months ended September 30, 2023 are not limited to existing operating agreements, trade payables and certain tax obligations. The fair valuenecessarily indicative of consideration receivedthe results that may be expected for the stock of LegalStore.com was less than the carrying value of the assets. As a result, an impairment charge was estimated as onyear ending December 31, 20122023. The balance sheet as of December 31, 2022 has been derived from the audited consolidated financial statements at that date but does not include all the information and footnotes required by GAAP for complete financial statements. These interim consolidated financial statements should be read in conjunction with the amount of $35,000, net of income tax effectDecember 31, 2022 audited consolidated financial statements and a gain of $3,839 was recorded duringthe notes thereto contained in our Annual Report on Form 10-K for the year ended December 31, 2013 (See Note 2 Discontinued Operations).
The accompanying consolidated financial statements have been prepared on a going concern basis. As shown in the accompanying consolidated financial statements, the Company incurred a loss of approximately $387,000 during the year ended December 31, 2013, has incurred accumulated losses totaling approximately $1,774,000, has a stockholders’ deficiency of approximately $329,000 and has a working capital deficit of approximately $131,000 at December 31, 2013. These factors, among others, indicate that the Company may be unable to continue as a going concern. The consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty.
Use of Estimates
The preparation of consolidated financial statements in conformity with accounting principles generally accepted in the United States (“U.S. GAAP”)GAAP requires management to make estimates and assumptions that affect amounts reported in the financial statements and accompanying notes. Actual results could differ from those estimates and be based on events different from those assumptions. Future events and their effects cannot be predicted with certainty; estimating, therefore, requires the exercise of judgment. Thus, accounting estimates change as new events occur, as more experience is acquired, or as additional information is obtained.
Property and Equipment
Property and equipment are stated at cost less depreciation. Depreciation is provided using the straight-line method over the estimated useful life of the assets. Equipment has estimated useful lives between three and seven years. Expenditures for income taxes withrepairs and maintenance are charged to expense as incurred.
Impairment of Long-lived Assets
Long-lived assets, such as property and equipment and intangible assets subject to amortization are reviewed for impairment whenever events or changes in circumstances indicate that the recognitioncarrying amount of estimated income taxes payable or refundable on income tax returns foran asset group may not be recoverable. Recoverability of assets to be held and used is measured by comparing the current year and forcarrying amount to the estimated future tax effect attributable to temporary differences and carryforwards. Measurement of deferred income items is based on enacted tax laws including tax rates, with the measurement of deferred income tax assets being reduced by available tax benefits notundiscounted cash flows expected to be realized ingenerated by the immediate future.
Mineral Rights and Properties
The Company capitalizes acquisition costs until the Company determines the economic viability of the property. Since the Company does not have proven and probable reserves as defined by Securities and Exchange Commission (“SEC”) regulation S-K 1300, exploration expenditures are expensed as incurred. The Company expenses mineral lease costs and repair and maintenance costs as incurred. The Company reviews tax positions taken to determine if it is more likely than not that the position would be sustained upon examination resulting in an uncertain tax position. The Company did not have any material unrecognized tax benefit at December 31, 2013 or 2012. The Company recognizes interest accrued and penalties related to unrecognized tax benefits in tax expense. During the years ended December 31, 2013 and 2012, the Company recognized no interest and penalties.
Earnings Per Common Share
The Company presents basic and diluted earnings per share.share in accordance with ASC 260, “Earnings per Share.” Basic earnings per share reflect the actual weighted average of shares issued and outstanding during the period. Diluted earnings per share are computed including the number of additional shares that would have been outstanding if dilutive potential shares had been issued. In a loss year,period, the calculation for basic and diluted earnings per share is considered to be the same, as the impact of potential common shares is anti-dilutive.
As of September 30, 2023 and December 31, 2013,2022, there were not adequate authorized shares to satisfy the current obligations upon conversion or exercise issued by the Company. As of December 31, 2013, there were 1,604,270,805 (36,704,425 - 2012)approximately 89 million and 96 million shares potentially issuable under convertible debt agreements, options, warrants and warrantspreferred stock that could dilute basic earnings per share in the futureif converted that were excluded from the calculation of diluted earnings per sharenine months ended September 30, 2023 and 2022 because their inclusion would have been anti-dilutive due to the Company’s losses during the year.
Derivative Financial Instruments
The Company does not use derivative instruments to hedge exposures to cash flow, market or foreign currency risks. We evaluate all of ourevaluates its financial instruments to determine if such instruments are derivatives or contain features that qualify as embedded derivatives. Certain warrants the Company has issued have a “down round provision” and further, the Company does not have adequate shares authorized to accommodate the exercise of all outstanding equity instruments. As a result, the warrants are classified as derivative liabilities for accounting purposes. For derivative financial instruments that are accounted for as liabilities, the derivative instrument is initially recorded at its fair market value and then is revalued at each reporting date, with changes in fair value reported in the consolidated statement of operations.
Net cash proceeds after brokerage fee of $21,000 | $ | 74,000 | ||
| LegalStore.com liabilities assumed | 136,241 | |||
Total purchase price | 210,241 | |||
LegalStore.com assets | 206,402 | |||
Gain on sale | $ | 3,839 |
Cash | $ | 379 | ||
Account receivable, net | 26,641 | |||
Inventory | 89,440 | |||
Current assets of discontinued operations | $ | 116,460 | ||
Property and equipment, net | $ | 1,532 | ||
Other intangibles, net | 97,560 | |||
Noncurrent assets of discontinued operations | $ | 99,092 | ||
Accounts payable | $ | 92,684 | ||
Accrued expenses | 64,228 | |||
$ | 156,912 |
| December 31, 2013 | December 31, 2012 | |||||||
Revenue | $ | 95,241 | $ | 511,283 | ||||
Cost of revenue | 40,535 | 276,617 | ||||||
Gross profit | 54,706 | 234,666 | ||||||
Operating expenses | 35,532 | 237,524 | ||||||
Net income (loss) from discontinued operations | 19,174 | (2,858 | ) | |||||
Write-down of assets associated with a discontinued component, net of taxes | - | (35,000 | ) | |||||
Gain on disposal of discontinued operations | 3,839 | - | ||||||
$ | 23,013 | $ | (37,858 | ) | ||||
Fair value as of December 31, 2011 | $ | 223,224 | ||
Changes in fair value and adjustment for default provision | 105,009 | |||
Adjustments for conversion | (48,199 | ) | ||
Fair value as of December 31, 2012 | 280,034 | |||
Adjustments for conversion | (280,034 | ) | ||
Fair value as of December 31, 2013 | $ | - |
Fair value as of December 31, 2012 | $ | - | ||
Derivative warrant liabilities issued | 214,609 | |||
Change in fair value | - | |||
Fair value as of December 31, 2013 | $ | 214,609 |
| Exercise | |||||||||
| Warrants | Price | Expiration | |||||||
2011 Common share private placement warrants | 2,500,000 | $ | 0.30 | March 2018 | |||||
2011 Convertible notes warrants | 16,667 | $ | 0.30 | June 2014 | |||||
2012 Private placements warrants | 150,000 | $ | 0.15 | March - April 2015 | |||||
| 2013 Series A warrants Senior Convertible Notes | 225,000,000 | $ | 0.001 | October-November 2014 | |||||
2013 Series A warrants Senior Convertible Notes | 300,000,000 | $ | 0.00025 | January 2014 - March 2015 | |||||
| 2013 Series B warrants Senior Convertible Notes | 225,000,000 | $ | 0.0012 | June-August 2018 | |||||
2013 Series B warrants Senior Convertible Notes | 300,000,000 | $ | 0.0003 | October - December 2018 | |||||
| 2013 Lease obligation with U-Vend | 197,250,000 | $ | 0.006 | November 2016 | |||||
1,249,916,667 | |||||||||
| Warrants | Exercise Price | Expiration | |||||||
2011 Common share private placement warrants | 2,500,000 | $ | 0.30 | March 2018 | |||||
2011 Convertible Notes warrants | 16,667 | $ | 0.30 | June 2014 | |||||
2012 Private Placements warrants | 150,000 | $ | 0.15 | March - April 2015 | |||||
2,666,667 | |||||||||
| Weighted Average | Weighted Average | Aggregate Intrinsic | ||||||||||
| Options | Exercise Price | Contractual life | Value | |||||||||
Outstanding at December 31, 2011 | 3,015,000 | $ | 0.27 | |||||||||
Options cancelled | (355,000) | 0.10 | ||||||||||
Outstanding at December 31, 2012 | 2,660,000 | 0.29 | ||||||||||
Options cancelled | (30,000) | 0.10 | ||||||||||
Outstanding at December 31, 2013 | 2,630,000 | 0.29 | 5.7 years | $ | - | |||||||
Exercisable at December 31, 2013 | 1,753,333 | $ | 0.29 | 5.7 years | $ | - | ||||||
| 2013 | 2012 | |||||||
| Current: | ||||||||
Federal | $ | - | $ | - | ||||
State | 2,200 | 3,644 | ||||||
Total current | 2,200 | 3,644 | ||||||
Deferred | ||||||||
Federal | (128,472 | ) | (119,282 | ) | ||||
State | (15,983 | ) | (37,514 | ) | ||||
Total deferred | (144,455 | ) | (156,796 | ) | ||||
Less increase in allowance | 144,455 | 157,337 | ||||||
Net deferred | - | 541 | ||||||
Total income tax provision | $ | 2,200 | $ | 4,185 | ||||
| 2013 | 2012 | |||||||
Deferred tax assets (liabilities): | ||||||||
Net operating loss carryforwards | $ | 499,696 | $ | 419,720 | ||||
Depreciable and amortizable assets | - | 20,938 | ||||||
Prepaid expense | (888 | ) | (1,001 | ) | ||||
Fair market value adjustments | - | 52,580 | ||||||
Stock based compensation | 15,769 | 9,437 | ||||||
Beneficial conversion feature | (8,623 | ) | - | |||||
Bad debt reserve | - | 766 | ||||||
Accrued salary | 54,519 | - | ||||||
Total | 560,473 | 502,440 | ||||||
Less valuation allowance | (560,473 | ) | (502,440 | ) | ||||
Net deferred tax (liabilities) | $ | - | $ | - | ||||
| 2013 | 2012 | ||
Statutory United States Federal rate | 34.0% | 34.0% | |
State income taxes net of federal benefit | 2.2% | 3.6% | |
Change in valuation reserves | (36.2%) | (40.5%) | |
Permanent differences | (0.6%) | (1.5%) | |
Other | - | 3.3% | |
Effective tax rate (provision) | (0.6%) | (1.1%) |
2014 | $ | 57,200 | ||
2015 | 57,200 | |||
2016 | 52,434 | |||
Total minimum lease payments | 166,834 | |||
Guaranteed residual value | 86,191 | |||
$ | 253,025 |
| 2013 | 2012 | |||||||
Revenue | $ | 23,592 | $ | 5,094 | ||||
Operating loss | $ | (683,615 | ) | $ | (345,120 | ) | ||
Net loss | $ | (808,354 | ) | $ | (509,160 | ) | ||
Basic and diluted earnings per share | $ | (0.00 | ) | $ | (0.00 | ) | ||
| U-VEND CANADA, INC. | ||||||||
| CONSOLIDATED BALANCE SHEETS | ||||||||
| (expressed in Canadian dollars) | ||||||||
| As of | ||||||||
| November 30, | November 30, | |||||||
| 2013 | 2012 | |||||||
| ASSETS | ||||||||
| Current assets: | ||||||||
Cash | $ | 9,763 | $ | 59 | ||||
Prepaid expenses and other assets | 274 | - | ||||||
Inventory (net) | 11,715 | - | ||||||
Total current assets | 21,752 | 59 | ||||||
Property and equipment (net) | 232,657 | - | ||||||
Security deposits | 6,631 | - | ||||||
Total noncurrent assets | 239,288 | - | ||||||
Total assets | $ | 261,040 | $ | 59 | ||||
LIABILITIES AND STOCKHOLDERS' DEFICIENCY | ||||||||
Current liabilities: | ||||||||
Accounts payable | $ | 54,329 | $ | 22,150 | ||||
Accrued expenses | 35,901 | 69,330 | ||||||
Convertible notes payable, net of unamortized discount | 164,370 | 31,979 | ||||||
Payable to Internet Media Services, Inc. | 147,323 | - | ||||||
Due to officers | 49,812 | 50,274 | ||||||
Current portion of capital lease obligations | 32,082 | - | ||||||
Total current liabilities | 483,817 | 173,733 | ||||||
Long term capital lease obligations (net of unamortized discount) | 117,238 | - | ||||||
Total liabilities | 601,055 | 173,733 | ||||||
Commitments and contingencies (Note 9) | - | - | ||||||
Stockholders' deficiency | ||||||||
Class A common stock, no par value, unlimited authorized shares; | ||||||||
11,117,737 issued and outstanding (10,329,404 at November 30, 2012) | ||||||||
Additional paid-in capital | 539,393 | 307,674 | ||||||
Accumulated deficit | (879,408 | ) | (481,348 | ) | ||||
Total stockholders' deficiency | (340,015 | ) | (173,674 | ) | ||||
Total liabilities and stockholders' deficiency | $ | 261,040 | $ | 59 | ||||
| U-VEND CANADA, INC. | ||||||||
| CONSOLIDATED STATEMENTS OF OPERATIONS | ||||||||
| (expressed in Canadian dollars) | ||||||||
| For the Years Ended | ||||||||
| November 30, | November 30, | |||||||
| 2013 | 2012 | |||||||
Revenue | $ | 14,308 | $ | 5,094 | ||||
Costs of revenue | 11,682 | 2,871 | ||||||
Gross profit | 2,626 | 2,223 | ||||||
Operating expenses: | ||||||||
Selling, general and administrative | 346,356 | 104,837 | ||||||
Operating loss | (343,730 | ) | (102,614 | ) | ||||
Other expenses: | ||||||||
Interest expense | 30,641 | 16,367 | ||||||
Other | 23,689 | 1,039 | ||||||
54,330 | 17,406 | |||||||
Loss before income tax provision | (398,060 | ) | (120,020 | ) | ||||
Income tax provision | - | - | ||||||
Net loss | $ | (398,060 | ) | $ | (120,020 | ) | ||
Net loss per share - basic and diluted | $ | (0.04 | ) | $ | (0.01 | ) | ||
Weighted average common shares | ||||||||
outstanding - basic and diluted | 10,673,737 | 10,272,338 | ||||||
| U-VEND CANADA, INC. | ||||||||||||||||
| CONSOLIDATED STATEMENTS OF STOCKHOLDERS' DEFICIENCY | ||||||||||||||||
| (expressed in Canadian dollars) | ||||||||||||||||
| For the Years Ended November 30, 2013 and 2012 | ||||||||||||||||
| Common Stock | Additional Paid-in | Accumulated | Total Stockholders | |||||||||||||
| Shares | Capital | Deficit | Deficiency | |||||||||||||
Balances at November 30, 2011 | 10,196,238 | 263,000 | (361,328 | ) | (98,328 | ) | ||||||||||
Sale of common stock and warrants | 87,333 | 24,000 | - | 24,000 | ||||||||||||
Stock based compensation | 45,833 | 11,000 | - | 11,000 | ||||||||||||
Warrants and beneficial conversion feature issued with convertible notes | - | 9,674 | - | 9,674 | ||||||||||||
Net loss | - | - | (120,020 | ) | (120,020 | ) | ||||||||||
Balances at November 30, 2012 | 10,329,404 | 307,674 | (481,348 | ) | (173,674 | ) | ||||||||||
Sale of common stock and warrants | 334,166 | 85,000 | - | 85,000 | ||||||||||||
Stock based compensation | 203,645 | 55,021 | - | 55,021 | ||||||||||||
Beneficial conversion feature issued with convertible notes | - | 31,573 | - | 31,573 | ||||||||||||
Common stock issued to settle accrued expenses | 250,522 | 60,125 | - | 60,125 | ||||||||||||
Net loss | - | - | (398,060 | ) | (398,060 | ) | ||||||||||
Balances at November 30, 2013 | 11,117,737 | $ | 539,393 | $ | (879,408 | ) | $ | (340,015 | ) | |||||||
| U-VEND CANADA, INC. | ||||||||
| CONSOLIDATED STATEMENTS OF CASH FLOWS | ||||||||
| (expressed in Canadian dollars) | ||||||||
| For the Years Ended | ||||||||
| November 30, | November 30, | |||||||
| 2013 | 2012 | |||||||
| Cash flows from operating activities: | ||||||||
Net loss | $ | (398,060 | ) | $ | (120,020 | ) | ||
Adjustments to reconcile net loss to net | ||||||||
cash used by operating activities: | ||||||||
Depreciation expense | 3,857 | - | ||||||
Stock based compensation | 55,021 | 11,000 | ||||||
Provision for inventory reserve | 2,000 | - | ||||||
Amortization of debt discounts | 11,526 | 5,653 | ||||||
Amortization of capital lease debt discount | 1,270 | - | ||||||
Change in fair value of convertible notes payable | 23,438 | - | ||||||
Changes in operating assets and liabilities: | ||||||||
Increase in prepaid and other assets | (274 | ) | - | |||||
Increase in inventory | (13,715 | ) | - | |||||
Increase in security deposit | (6,631 | ) | - | |||||
Increase in accounts payable and accrued expenses | 58,875 | 41,323 | ||||||
Net cash used by operating activities | (262,693 | ) | (62,044 | ) | ||||
Cash flows from investing activities: | ||||||||
Purchase of property and equipment | (40,284 | ) | - | |||||
Net cash used by investing activities | (40,284 | ) | - | |||||
Cash flows from financing activities: | ||||||||
Proceeds from sale of common stock and warrants | 85,000 | 24,000 | ||||||
Proceeds from issuance of convertible notes | 129,000 | 36,000 | ||||||
(Repayments) advances from officers | (462 | ) | 2,089 | |||||
Advances from Internet Media Services, Inc. | 101,609 | - | ||||||
Principal payments under lease obligations | (2,466 | ) | - | |||||
Net cash provided by financing activities | 312,681 | 62,089 | ||||||
Net increase in cash | 9,704 | 45 | ||||||
Cash - beginning of year | 59 | 14 | ||||||
Cash - end of year | $ | 9,763 | $ | 59 | ||||
Cash paid for: | ||||||||
Interest | $ | 10,663 | $ | 9,004 | ||||
Income taxes | $ | - | $ | - | ||||
Non-cash financing activities: | ||||||||
Issuance of debt discounts on convertible notes | $ | 31,573 | $ | 9,674 | ||||
Issuance of debt discounts on capital leases | $ | 45,714 | $ | - | ||||
Common stock used to settle accrued expenses | $ | 60,125 | $ | - | ||||
Property and equipment financed by capital leases | $ | 196,230 | $ | - | ||||
| Life | |||||
Electronic kiosks | 7 years | $ | 25,484 | ||
Freezers | 5 years | 14,800 | |||
Capitalized lease equipment | 7 years | 196,230 | |||
236,514 | |||||
Less: Accumulated depreciation | (3,857 | ) | |||
Property and equipment (net) | $ | 232,657 | |||
2014 | $ | 57,200 | ||
2015 | 57,200 | |||
2016 | 52,434 | |||
Total minimum lease payments | 166,834 | |||
Guaranteed residual value | 86,191 | |||
253,025 | ||||
Less: Amount represented interest | (59,261 | ) | ||
Present value of minimum lease payments and guaranteed residual value | 193,764 | |||
Less: Current portion of capital lease obligations | (32,082 | ) | ||
Long term capital lease obligations and guaranteed residual value | 161,682 | |||
Less: Unamortized debt discount on capital leases | (44,444 | ) | ||
Long term capital lease obligations and guaranteed residual value, net | $ | 117,238 |
| 2013 | 2012 | |||||||
Convertible notes payable outstanding 12/1 | $ | 31,979 | $ | - | ||||
Convertible notes issued during the year | 129,000 | 36,000 | ||||||
Change in fair value of convertible notes | 23,438 | - | ||||||
Debt discounts issued | (31,573 | ) | (9,674 | ) | ||||
Amortization of debt discounts | 11,526 | 5,653 | ||||||
Convertible notes payable outstanding 11/30 | $ | 164,370 | $ | 31,979 | ||||
| Exercise Price | 2013 | 2012 | Expiration | ||||
Class A Common Stock Warrant | $0.12 | 400,000 | 400,000 | May 20, 2015 | |||
Class A Common Stock Warrant | $0.24 | 104,167 | - | September 14, 2015 | |||
Class A Common Stock Warrant | $0.24 | 20,833 | 20,833 | December 22, 2015 | |||
Class A Common Stock Warrant | $0.24 | 909,001 | 132,667 | January 7, 2016 | |||
Class A Common Stock Warrant | $1.00 | 5,000 | 5,000 | September 16, 2015 | |||
Class A Common Stock Warrant | $1.00 | 16,000 | 16,000 | October 18, 2015 | |||
Class A Common Stock Warrant | $1.00 | 4,000 | 4,000 | December 8, 2015 | |||
1,459,001 | 578,500 |
| 2013 | 2012 | |||||||
| Current | ||||||||
Federal and provincial | $ | - | $ | - | ||||
Deferred | ||||||||
Federal | (26,629 | ) | (12,294 | ) | ||||
Provincial | (17,753 | ) | (8,195 | ) | ||||
Less increase in valuation allowance | 44,382 | 20,489 | ||||||
Net deferred | - | - | ||||||
Total income tax provision | $ | - | $ | - | ||||
| 2013 | 2012 | |||||||
Deferred tax assets (liabilities) | ||||||||
Net operating loss carryforwards | $ | 107,356 | $ | 62,974 | ||||
Less valuation allowance | (107,356 | ) | (62,974 | ) | ||||
Gross deferred tax assets (liabilities) | $ | - | $ | - | ||||
| 2013 | 2012 | |||||||
Statutory Federal rate | 15.0 | % | 15.0 | % | ||||
Provincial rate | 10.0 | % | 10.0 | % | ||||
Permanent difference | (12 | )% | (7.9 | )% | ||||
Change in valuation reserve | (13 | )% | (17.1 | )% | ||||
Effective tax rate | 0.0 | % | 0.0 | % | ||||
2014 | $ | 31,007 | ||
2015 | 29,095 | |||
2016 | 29,516 | |||
2017 | 28,602 | |||
2018 | 22,325 | |||
2019 | 8,280 | |||
$ | 148,825 |
| As of | ||||||||
| March 31, | December 31, | |||||||
| 2014 | 2013 | |||||||
| (Unaudited) | ||||||||
| ASSETS | ||||||||
| Current assets: | ||||||||
| Cash | $ | 17,899 | $ | 14,620 | ||||
| Accounts receivable | 1,385 | - | ||||||
| Inventory (net) | 15,692 | - | ||||||
| Prepaid expenses and other assets | 3,637 | 4,114 | ||||||
| Receivable from U-Vend, Canada, Inc. | - | 162,536 | ||||||
| Total current assets | 38,613 | 181,270 | ||||||
| Other assets: | ||||||||
| Property and equipment (net) | 326,144 | - | ||||||
| Security deposits | 6,631 | - | ||||||
| Deferred financing costs (net) | 20,208 | 16,333 | ||||||
| Intangible asset (net) | 412,300 | - | ||||||
| Goodwill | 732,260 | - | ||||||
| Total noncurrent assets | 1,497,543 | 16,333 | ||||||
| Total assets | $ | 1,536,156 | $ | 197,603 | ||||
| LIABILITIES AND STOCKHOLDERS' DEFICIENCY | ||||||||
| Current liabilities: | ||||||||
| Accounts payable | $ | 144,060 | $ | 35,192 | ||||
| Accrued expenses | 87,559 | 28,032 | ||||||
| Accrued salary - officer | 142,390 | 142,608 | ||||||
| Note payable - director | 121,070 | 50,000 | ||||||
| Convertible notes payable | 135,221 | - | ||||||
| Promissory notes payable | 55,770 | - | ||||||
| Senior convertible notes, net of unamortized discount | 124,999 | 56,249 | ||||||
| Warrant liabilities | 138,147 | - | ||||||
| Capital lease obligation, net of unamortized discount | 63,564 | - | ||||||
| Total current liabilities | 1,012,780 | 312,081 | ||||||
| Noncurrent liabilities: | ||||||||
| Capital Lease obligation net of unamortized discount | 172,753 | - | ||||||
| Liability for contingent consideration | 212,048 | - | ||||||
| Deferred tax liability | 164,920 | - | ||||||
| Warrant liabilities | 203,213 | 214,609 | ||||||
| Total noncurrent liabilities | 752,934 | 214,609 | ||||||
| Commitments and contingencies (Note 9) | - | - | ||||||
| Stockholders' deficiency: | ||||||||
| Common stock, $.001 par value, 600,000,000 shares | ||||||||
| authorized, 7,913,528 shares issued and outstanding | ||||||||
| (2,446,276 - 2013) | 7,914 | 2,446 | ||||||
| Additional paid-in capital | 2,127,166 | 1,442,729 | ||||||
| Accumulated deficit | (2,364,638 | ) | (1,774,262 | ) | ||||
| Total stockholders' deficiency | (229,558 | ) | (329,087 | ) | ||||
| Total liabilities and stockholders' deficiency | $ | 1,536,156 | $ | 197,603 | ||||
| For the Three Months Ended | ||||||||
| March 31, 2014 | March 31, 2013 | |||||||
| Revenue | $ | 33,628 | $ | - | ||||
| Cost of revenue | 41,710 | - | ||||||
| Gross loss | (8,082 | ) | - | |||||
| Operating expenses: | ||||||||
| Selling | 63,232 | - | ||||||
| General and administrative | 433,685 | 75,876 | ||||||
| 496,917 | 75,876 | |||||||
| Operating loss | (504,999 | ) | (75,876 | ) | ||||
| Other expenses: | ||||||||
| Gain on the fair market value of warrant liabilities | 38,687 | - | ||||||
| Amortization of debt discount and deferred financing costs | (103,779 | ) | - | |||||
| Interest expense | (20,285 | ) | (10,562 | ) | ||||
| (85,377 | ) | (10,562 | ) | |||||
| Loss from continuing operations | (590,376 | ) | (86,438 | ) | ||||
| Discontinued operations: | ||||||||
| Gain from disposal of discontinued operations | - | 3,839 | ||||||
| Net income from discontinued operations | - | 19,174 | ||||||
| Income from discontinued operations | - | 23,013 | ||||||
| Net loss | $ | (590,376 | ) | $ | (63,425 | ) | ||
| Net loss from continuing operations per share- basic and diluted | $ | (0.08 | ) | $ | (0.68 | ) | ||
| Net income from discontinued operations per share- basic and diluted | 0.00 | 0.18 | ||||||
| Net loss per share - basic and diluted | $ | (0.08 | ) | $ | (0.50 | ) | ||
| Weighted average common shares | ||||||||
| outstanding - basic and diluted | 7,351,933 | 127,675 | ||||||
| For the Three Months Ended | ||||||||
| March 31, 2014 | March 31, 2013 | |||||||
| Cash flows from operating activities: | ||||||||
| Net loss | $ | (590,376 | ) | $ | (63,425 | ) | ||
| (Income) loss from discontinued operations | - | (23,013 | ) | |||||
| Adjustments to reconcile net loss to net cash used by operating activities: | ||||||||
| Stock based compensation | 57,091 | 5,949 | ||||||
| Common shares issued for advisor fees | 189,575 | - | ||||||
| Warrants issued for advisor fees | 23,000 | - | ||||||
| Depreciation | 7,918 | - | ||||||
| Amortization of intangible assets | 21,700 | - | ||||||
| Amortization of debt discount and deferred financing costs | 103,780 | - | ||||||
| Gain on fair market value of warrant liabilities | (38,687 | ) | - | |||||
| Conversion of accrued interest to common stock | 500 | - | ||||||
| (Increase) decrease in assets: | ||||||||
| Accounts receivable | (1,385 | ) | - | |||||
| Inventory | (439 | ) | - | |||||
| Prepaid expenses and other assets | 825 | (407 | ) | |||||
| Increase (decrease) in liabilities: | ||||||||
| Accounts payable and accrued expenses | 73,412 | 38,121 | ||||||
| Accrued salary - officer | (218 | ) | - | |||||
| Net cash used by continuing operations | (153,304 | ) | (42,775 | ) | ||||
| Net cash provided by discontinued operations | - | 7,653 | ||||||
| Net cash used by operating activities | (153,304 | ) | (35,122 | ) | ||||
| Cash flows from investing activities: | ||||||||
| Purchase of property and equipment | (3,110 | ) | ||||||
| Net proceeds from sale of LegalStore.com | - | 74,000 | ||||||
| Acquisition of business | 11,130 | - | ||||||
| Net cash used by investing activities | 8,020 | 74,000 | ||||||
| Cash flows from financing activities: | ||||||||
| Proceeds from exercise of common stock warrants | 13,600 | - | ||||||
| Proceeds from senior convertible notes, net of financing costs | 87,000 | - | ||||||
| Proceeds from convertible note | 50,000 | - | ||||||
| Principal payments on promissory notes | (2,037 | ) | - | |||||
| Net cash provided by financing activities | 148,563 | - | ||||||
| Net increase in cash | 3,279 | 38,878 | ||||||
| Cash - beginning of period | 14,620 | 1,262 | ||||||
| Cash - end of period | $ | 17,899 | $ | 40,140 | ||||
| Cash paid for : | ||||||||
| Income taxes | $ | - | $ | 600 | ||||
| Non-cash investing and financing activities: | ||||||||
| Note payable and accrued interest converted to shares of common stock | $ | - | $ | 13,983 | ||||
| Acquisition of U-Vend for issuance of shares and effective settlement of inter-company | $ | 808,349 | $ | - | ||||
| Debt discount related to warrant liability and beneficial conversion feature | $ | 132,547 | $ | - | ||||
| Property and equipment financed by capital leases | $ | 98,117 | $ | - | ||||
| Issuance of promissory notes offsetting accrued expenses | $ | 57,807 | $ | - | ||||
Fair Value of Financial Instruments
For certain of the Company’s financial instruments, including cash and equivalents, prepaid expenses and other assets, accounts payable, accrued liabilities and short-term debt, the carrying amounts approximate their fair values due to their short maturities. ASC 820, “Fair Value Measurements and Disclosures,” requires disclosure of the fair value of financial instruments held by the Company. ASC 825, “Financial Instruments,” defines fair value, and establishes a three-level valuation hierarchy for disclosures of fair value measurement that enhances disclosure requirements for fair value measures. The three levels of valuation hierarchy are defined as follows:
| ● | Level 1: Unadjusted quoted prices in active markets that are accessible at the measurement date for identical, unrestricted assets or liabilities. The Company considers active markets as those in which transactions for the assets or liabilities occur in sufficient frequency and volume to provide pricing information on an ongoing basis. |
| ● | Level 2: Quoted prices in markets that are not active, or inputs which are observable, either directly or indirectly, for substantially the full term of the asset or liability. This category includes those derivative instruments that the Company values using observable market data. Substantially all of these inputs are observable in the marketplace throughout the term of the derivative instruments, can be derived from observable data, or supported by observable levels at which transactions are executed in the marketplace. |
| ● | Level 3: Measured based on prices or valuation models that require inputs that are both significant to the fair value measurement and less observable from objective sources (i.e. supported by little or no market activity). Level 3 instruments include derivative warrant instruments. The Company does not have sufficient corroborating evidence to support classifying these assets and liabilities as Level 1 or Level 2. |
Stock-Based Compensation
The Company accounts for stock-based compensation in accordance with ASC 718, “Compensation - Certain priorStock Compensation,” which requires all stock-based awards granted to employees, directors, and non-employees to be measured at grant date fair value of the equity instrument issued and recognized as expense. Stock-based compensation expense is recognized on a straight-line basis over the requisite service period amountsof the award, which is generally equivalent to the vesting period. The fair value of each stock option granted is estimated using the Black-Scholes option pricing model. The measurement date for the non-forfeitable awards to nonemployees that vest immediately is the date the award is issued.
Revenue Recognition
We recognize revenue under ASC 606, “Revenue from Contracts with Customers,” the core principle of which is that an entity should recognize revenue to depict the transfer of control for promised goods or services to customers in an amount that reflects the accompanying consolidatedconsideration to which the entity expects to be entitled in exchange for those goods or services. In applying the revenue recognition principles, an entity is required to identify the contract(s) with a customer, identify the performance obligations, determine the transaction price, allocate the transaction price to the performance obligations and recognize revenue as the performance obligations are satisfied (i.e., either over time or at a point in time). ASC 606 further requires that companies disclose sufficient information to enable readers of financial statements to understand the nature, amount, timing and uncertainty of revenue and cash flows arising from contracts with customers.
The Company recognized $0 revenue during the nine months ended September 30, 2023 and 2022.
Recent Accounting Pronouncements
On August 5, 2020, the FASB issued ASU 2020-06, Debt-Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging-Contracts in Entity’s Own Equity (Subtopic 815-40): Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity, which simplifies the accounting for certain financial instruments with characteristics of liabilities and equity, including convertible instruments and contracts on an entity’s own equity. This ASU is effective for public business entities, excluding smaller reporting companies, for fiscal years beginning after December 15, 2021, and for all other entities for fiscal years beginning after December 15, 2023. Early adoption is permitted for all entities no earlier than for fiscal years beginning after December 15, 2020. The Company is currently evaluating the effects this ASU will have been reclassified to current period presentation. These classifications had no effect on theits financial statements.
The Company has examined all other recent accounting pronouncements and determined that they will not have a material impact on its financial position, results of operations, or cash flows for the periods presented.
Note 3 -
| Consideration: | ||||
Fair value of 3,500,000 shares of IMS common stock issued at $0.14 on January 7, 2014 | $ | 490,000 | ||
Fair value of 4,522,850 shares of IMS common stock measured at $0.14, discounted for the probability of achievement | 246,568 | |||
| 736,568 | ||||
| Discount for restrictions | (103,118 | ) | ||
| Effective settlement of intercompany payable due to IMS | 174,899 | |||
| Total estimated purchase price | $ | 808,349 | ||
| Cash | $ | 11,132 | ||
| Inventory | 15,253 | |||
| Prepaid expense | 350 | |||
| Property and equipment | 232,835 | |||
| Security deposits | 6,631 | |||
| Intangible assets- Operating Agreement | 434,000 | |||
| Goodwill | 732,260 | |||
| Accounts payable and accrued expenses | (135,634 | ) | ||
| Notes payable | (170,517 | ) | ||
| Capital lease obligations | (153,041 | ) | ||
| Deferred tax liability | (164,920 | ) | ||
| Total purchase price | $ | 808,349 |
Unaudited Pro Forma Results | For the quarter ended March 31, 2014 | |||
| Revenues | $ | 33,628 | ||
| Gross loss | 8,082 | |||
| Net loss | (590,376 | ) | ||
| Basic and fully diluted loss per share | (0.08 | ) | ||
2014 | $ | 86,869 | ||
2015 | 85,801 | |||
2016 | 79,226 | |||
2017 | 5,506 | |||
Total minimum lease payments | 257,402 | |||
Guaranteed residual value | 130,185 | |||
387,587 | ||||
Less: Amount represented interest | (93,240 | ) | ||
Present value of minimum lease payments and guaranteed residual value | 294,347 | |||
Less: Current portion of capital lease obligations | (63,564 | ) | ||
Long term capital lease obligations and guaranteed residual value | 230,783 | |||
Less: Unamortized debt discount on capital leases | (58,030 | ) | ||
Long term capital lease obligations and guaranteed residual value, net | $ | 172,753 |
| Shares Outstanding | Common Stock | Additional Paid-in Capital | Accumulated Deficit | Total Stockholders’ Deficit | ||||||||||||||||
| Balance at December 31, 2013 | 2,446,276 | $ | 2,446 | $ | 1,442,729 | $ | (1,774,262 | ) | $ | (329,087 | ) | |||||||||
| Stock based compensation | 389,520 | 390 | 56,701 | - | 57,091 | |||||||||||||||
| Common shares issued for advisor fees | 1,354,111 | 1,354 | 188,221 | - | 189,575 | |||||||||||||||
| Shares issued in satisfaction of accrued interest | 8,621 | 9 | 491 | - | 500 | |||||||||||||||
| Warrants exercised | 215,000 | 215 | 13,385 | - | 13,600 | |||||||||||||||
| Debt discount related to beneficial conversion feature | - | - | 7,739 | - | 7,739 | |||||||||||||||
| Shares issued in acquisition of U-Vend | 3,500,000 | 3,500 | 417,900 | - | 421,400 | |||||||||||||||
| Net loss | - | - | - | (590,376 | ) | (590,376 | ) | |||||||||||||
| Balance at March 31, 2014 | 7,913,528 | $ | 7,914 | $ | 2,127,166 | $ | (2,364,638 | ) | $ | (229,558 | ) | |||||||||
| Exercise | |||||||||
| Warrants | Price | Expiration | |||||||
| 2011 Common share private placement warrants | 12,500 | $ | 60.00 | March 2018 | |||||
| 2011 Convertible notes warrants | 83 | $ | 60.00 | June 2014 | |||||
| 2012 Private placements warrants | 750 | $ | 30.00 | March - April 2015 | |||||
| 2013 Series A warrants Senior Convertible Notes | 1,125,000 | $ | 0.20 | October-November 2014 | |||||
| 2013 Series A warrants Senior Convertible Notes | 1,500,000 | $ | 0.05 | January 2014 - March 2015 | |||||
| 2013 Series B warrants Senior Convertible Notes | 1,125,000 | $ | 0.24 | June-August 2018 | |||||
| 2013 Series B warrants Senior Convertible Notes | 1,500,000 | $ | 0.06 | October - December 2018 | |||||
| 2013 Lease obligation warrants | 986,250 | $ | 1.20 | November 2016 | |||||
| 2014 Warrants for services | 920,000 | $ | 0.05 | July 2015 | |||||
| 2014 Warrants for services | 1,120,000 | $ | 0.05 | January 2019 | |||||
| 2014 Warrants for services | 35,000 | $ | 0.24 | January 2016 | |||||
| 2014 Warrants for services | 18,480 | $ | 0.01 | January 2016 | |||||
| 2014 Series A warrants Senior Convertible Notes | 3,000,000 | $ | 0.05 | April 2015- June 2015 | |||||
| 2014 Series B warrants Senior Convertible Notes | 3,000,000 | $ | 0.06 | January 2019- March 2019 | |||||
| 2014 Lease obligation warrants | 246,563 | $ | 0.20 | March 2017 | |||||
| Net cash proceeds after brokerage fee of $21,000 | $ | 74,000 | ||
| LegalStore.com liabilities assumed | 136,241 | |||
| Total purchase price | 210,241 | |||
| LegalStore.com assets | 206,402 | |||
| Gain on sale | $ | 3,839 |
2014 | $ | 31,007 | ||
2015 | 29,095 | |||
2016 | 29,516 | |||
2017 | 28,602 | |||
2018 | 22,325 | |||
2019 | 8,280 | |||
$ | 148,825 |
| As of | ||||||||
| June 30, | December 31, | |||||||
| 2014 | 2013 | |||||||
| (Unaudited) | ||||||||
| ASSETS | ||||||||
| Current assets: | ||||||||
| Cash | $ | 31,366 | $ | 14,620 | ||||
| Inventory (net) | 23,279 | - | ||||||
| Prepaid expenses and other assets | 2,211 | 4,114 | ||||||
| Receivable from U-Vend, Canada, Inc. | - | 162,536 | ||||||
| Total current assets | 56,856 | 181,270 | ||||||
| Noncurrent assets: | ||||||||
| Property and equipment (net) | 485,312 | - | ||||||
| Security deposits | 6,631 | - | ||||||
| Deferred financing costs (net) | 13,492 | 16,333 | ||||||
| Intangible asset (net) | 390,601 | - | ||||||
| Goodwill | 732,260 | - | ||||||
| Total noncurrent assets | 1,628,296 | 16,333 | ||||||
| Total assets | $ | 1,685,152 | $ | 197,603 | ||||
| LIABILITIES AND STOCKHOLDERS' DEFICIENCY | ||||||||
| Current liabilities: | ||||||||
| Accounts payable | $ | 124,924 | $ | 35,192 | ||||
| Accrued expenses | 108,938 | 28,032 | ||||||
| Accrued interest | 51,271 | - | ||||||
| Amounts due to officers | 209,311 | 142,608 | ||||||
| Note payable - director, net of discount | 139,402 | 50,000 | ||||||
| Convertible notes payable, net of discount | 142,847 | - | ||||||
| Promissory notes payable | 63,411 | - | ||||||
| Senior convertible notes, net of discount | 123,035 | 56,249 | ||||||
| Current capital lease obligation | 92,117 | - | ||||||
| Total current liabilities | 1,055,256 | 312,081 | ||||||
| Noncurrent liabilities: | ||||||||
| Capital lease obligation, net of discount | 306,653 | - | ||||||
| Liability for contingent consideration | 212,048 | - | ||||||
| Deferred tax liability | 164,920 | - | ||||||
| Warrant liabilities | 660,298 | 214,609 | ||||||
| Total noncurrent liabilities | 1,343,919 | 214,609 | ||||||
| Total liabilities | 2,399,175 | 526,690 | ||||||
| Commitments and contingencies (Note 10) | - | - | ||||||
| Stockholders' deficiency: | ||||||||
| Common stock, $.001 par value, 600,000,000 shares | ||||||||
| authorized, 8,346,076 shares issued and outstanding | ||||||||
| (2,446,276 - 2013) | 8,346 | 2,446 | ||||||
| Additional paid-in capital | 2,217,383 | 1,442,729 | ||||||
| Accumulated deficit | (2,939,752 | ) | (1,774,262 | ) | ||||
| Total stockholders' deficiency | (714,023 | ) | (329,087 | ) | ||||
| Total liabilities and stockholders' deficiency | $ | 1,685,152 | $ | 197,603 | ||||
The accompanying notes are an integral part of the financial statements.
| For the Three Months Ended | For the Six Months Ended | |||||||||||||||
| June 30, 2014 | June 30, 2013 | June 30, 2014 | June 30, 2013 | |||||||||||||
| Revenue | $ | 62,008 | $ | - | $ | 95,636 | $ | - | ||||||||
| Cost of revenue | 33,971 | - | 53,981 | - | ||||||||||||
| Gross profit | 28,037 | - | 41,655 | - | ||||||||||||
| Operating expenses: | ||||||||||||||||
| Selling | 104,392 | - | 189,324 | - | ||||||||||||
| General and administrative | 128,663 | 103,115 | 562,348 | 178,991 | ||||||||||||
| 233,055 | 103,115 | 751,672 | 178,991 | |||||||||||||
| Operating loss | (205,018 | ) | (103,115 | ) | (710,017 | ) | (178,991 | ) | ||||||||
| Other expenses: | ||||||||||||||||
| Loss on the fair market value of warrant liabilities | 316,361 | - | 277,674 | - | ||||||||||||
| Amortization of debt discount and deferred financing costs | 131,302 | - | 235,081 | - | ||||||||||||
| (Gain) on extinguishment of debt | (111,716 | ) | - | (111,716 | ) | - | ||||||||||
| Interest expense | 34,149 | 9,631 | 54,434 | 20,193 | ||||||||||||
| 370,096 | 9,631 | 455,473 | 20,193 | |||||||||||||
| Loss from continuing operations | (575,114 | ) | (112,746 | ) | (1,165,490 | ) | (199,184 | ) | ||||||||
| Discontinued operations: | ||||||||||||||||
| Gain from disposal of discontinued operations | - | - | - | 3,839 | ||||||||||||
| Net income from discontinued operations | - | - | - | 19,174 | ||||||||||||
| Income from discontinued operations | - | - | - | 23,013 | ||||||||||||
| Net loss | $ | (575,114 | ) | $ | (112,746 | ) | $ | (1,165,490 | ) | $ | (176,171 | ) | ||||
| Net loss from continuing operations per share- basic and diluted | $ | (0.07 | ) | $ | (0.67 | ) | $ | (0.15 | ) | $ | (1.34 | ) | ||||
| Net income from discontinued operations per share- basic and diluted | - | - | - | 0.15 | ||||||||||||
| Net loss per share - basic and diluted | $ | (0.07 | ) | $ | (0.67 | ) | $ | (0.15 | ) | $ | (1.19 | ) | ||||
| Weighted average common shares | ||||||||||||||||
| outstanding - basic and diluted | 7,989,722 | 169,353 | 7,672,590 | 148,597 | ||||||||||||
| For the Six Months Ended | ||||||||
| June 30, 2014 | June 30, 2013 | |||||||
| Cash flows from operating activities: | ||||||||
| Net loss | $ | (1,165,490 | ) | $ | (176,171 | ) | ||
| (Income) from discontinued operations | - | (23,013 | ) | |||||
| Adjustments to reconcile net loss to net cash used by operating activities: | ||||||||
| Gain on extinguishment of debt | (111,716 | ) | - | |||||
| Stock based compensation | 62,110 | 11,798 | ||||||
| Common shares issued for advisor fees | 189,575 | - | ||||||
| Warrants issued for advisor fees | 23,000 | - | ||||||
| Depreciation | 22,205 | - | ||||||
| Amortization of intangible assets | 43,399 | - | ||||||
| Amortization of debt discount and deferred financing costs | 235,081 | - | ||||||
| Common shares issued to satisfy loan from lessor | 10,000 | - | ||||||
| Loss on fair market value of warrant liabilities | 277,674 | - | ||||||
| Conversion of accrued interest and debt to common stock | 500 | - | ||||||
| (Increase) decrease in assets: | ||||||||
| Inventory | (8,026 | ) | - | |||||
| Prepaid expenses and other assets | 2,251 | (9,713 | ) | |||||
| Increase in liabilities: | ||||||||
| Accounts payable and accrued expenses | 149,015 | 101,021 | ||||||
| Amount due to officers | 54,340 | - | ||||||
| Net cash used by continuing operations | (216,082 | ) | (96,078 | ) | ||||
| Net cash provided by discontinued operations | - | 7,653 | ||||||
| Net cash used by operating activities | (216,082 | ) | (88,425 | ) | ||||
| Cash flows from investing activities: | ||||||||
| Purchase of property and equipment | (3,110 | ) | - | |||||
| Net proceeds from sale of LegalStore.com | - | 74,000 | ||||||
| Acquisition of business | 11,132 | - | ||||||
| Net cash provided by investing activities | 8,022 | 74,000 | ||||||
| Cash flows from financing activities: | ||||||||
| Proceeds from exercise of common stock warrants | 23,660 | - | ||||||
| Proceeds from senior convertible notes, net of deferred financing costs | 143,900 | - | ||||||
| Proceeds from note payable director | 50,000 | - | ||||||
| Issuance of promissory note | 10,000 | - | ||||||
| Principal payments on promissory notes | (2,754 | ) | - | |||||
| Net repayments from related party | - | (13,827 | ) | |||||
| Advance on bridge financing, net | - | 43,500 | ||||||
| Net cash provided by financing activities | 224,806 | 29,673 | ||||||
| Net increase in cash | 16,746 | 15,248 | ||||||
| Cash - beginning of period | 14,620 | 1,262 | ||||||
| Cash - end of period | $ | 31,366 | $ | 16,510 | ||||
| Cash paid for : | ||||||||
| Income taxes | $ | - | $ | 2,200 | ||||
| Interest | $ | 6,958 | $ | - | ||||
| Non-cash investing and financing activities: | ||||||||
| Note payable and accrued interest converted to shares of common stock | $ | - | $ | 95,768 | ||||
| Acquisition of U-Vend Canada for issuance of shares and effective settlement of inter-company | $ | 808,349 | $ | - | ||||
| Debt discount related to warrant liability and beneficial conversion feature | $ | 341,947 | $ | - | ||||
| Property and equipment financed by capital leases | $ | 271,572 | $ | - | ||||
| Issuance of promissory notes offsetting accrued expenses | $ | 57,807 | $ | - | ||||
| Issuance of common shares to satisfy capital lease obligation | $ | 23,923 | $ | - | ||||
Until the Company can generate significant cash from operations, its ability to continue as a going concern is dependent upon obtaining additional financing. The Company needshopes to raise additional financing, potentially through the sale of debt or equity instruments, or a combination, to fund the Company’sits operations for fiscal year 2014 tothe next 12 months and allow the Company to continue the development of its business plans and satisfy its obligations on a timely basis. Should additional financing not be available, the Company will have to negotiate with its lenders to extend the repayment dates of its indebtedness. There can be no assurance that the Company will be able to successfully restructure its debt obligations in the event it fails to obtain additional financing. These conditions have raised substantial doubt as to the Company’s ability to continue as a going concern for one year from the issuance of the financial statements, which has not been alleviated.
Note 4 - Debt
Promissory Notes Payable
In 2014 and 2016, the Company issued two promissory notes in the total principal amount of $70,000; a $40,000 Note issued Dec 19, 2014; and, a $30,000 Note issued on March 29, 2016. Each note had a one-year maturity date; was governed by California law; bears interest at 10% per annum; and, requires notice from the holder in order for the respective Note to be in default. The holder of each Note has failed to provide a notice of default under either Note. Further, enforceability of each Note is uncertain as California law has a 6-year statute of limitations (commences on the maturity date) to initiate a collection action on a note. At September 30, 2023 and December 31, 2022, neither of the Notes was in default, and the balance outstanding was $70,000.
During the year ended December 31, 2016, the Company issued two additional unsecured promissory notes and borrowed an aggregate amount of $80,000. $30,000 is represented by a note issued on Sept 23, 2016. This note had a one-year maturity date; was governed by California law; bears interest at 10% per annum; and, requires notice from the holder in order to be in default. The holder of this Note has failed to provide a notice of default. Further, enforceability of this Note is uncertain as California law has a 6-year statute of limitations (commences on the maturity date) to initiate a collection action on a note. At September 30, 2023 and December 31, 2022, this Note was not in default, and the balance outstanding was $30,000. $50,000 is represented by a note issued on Nov 20, 2016. During the year ended December 31, 2022, total principal and accrued interest in the amount of $50,000 of principal and $27,972 of interest were converted into a $95,088 convertible note dated September 23, 2022. The replacement note was converted in shares of our common stock during the quarter ended December 31, 2022. As of September 30, 2023 and December 31, 2022, the original $50,000 note was no longer issued and outstanding.
Accrued interest at September 30, 2023 and December 31, 2022 on these notes totaled $128,414 and $131,414, respectively.
During the year ended December 31, 2022, the Company entered into 5 promissory note agreements in the aggregate amount of $250,000, of which $175,000 with the related parties. The notes have a 1-year term, bear interest of 7% and 9% if paid in cash. During the nine months ended September 30, 2023, due dates of 4 promissory notes were extended for 7 – 9 months, of which 3 notes with related parties for $175,000. A total of 1,010,402 shares of common stock were issued to related party in connection with the agreement of the holder to extend the maturity date of a $100,000 note. The outstanding principal balance was $250,000 as of September 30, 2023. Accrued interest at September 30, 2023 and December 31, 2022 on these notes totaled $21,388 and $7,513, respectively.
During the nine months ended September 30, 2023, the Company entered into short-term promissory note agreement in the amount of $125,000. The note has a discount of $25,000. A total of 8,500,000 shares of common stock were issued as additional consideration for the issuance of the note evidencing the loan.
During the nine months ended September 30, 2023, $7,008 in principal and $60,976 in interest were forgiven by noteholders.
Convertible Notes Payable and Convertible Notes Payable – Related Party
In February 2023, the Company entered into a convertible promissory note agreement in the amount of $25,000 with a related party. The note has a 1 year term, bears interest of 9%, and has a conversion price equal to the lesser of (1) the most recent issuance price; or, (2) closing price for the common stock on the maturity date. The outstanding principal balance was $25,000 as of September 30, 2023. Accrued interest as of September 30, 2023 was $1,319.
During the nine months ended September 30, 2023, the Company entered into Note Purchase Agreements with seven investors not affiliated with the Company (the “Purchasers”) pursuant to which the Purchasers purchased from the Company convertible notes (the “Convertible Notes”) with an aggregate principal amount of $2,000,000. A total of 20,171,633 shares of common stock were issued according to the note agreements or as additional consideration for the issuance of the notes. The outstanding principal and accrued interest balances at September 30, 2023 were $2,000,000 and $61,646, respectively.
The Convertible Notes provide for a maturity of 12-months; 7.5% interest per annum; and, no right to prepay during the first 6-months after the date of issuance (the “Issuance Date”). The Convertible Notes are convertible into shares of common stock of the Company (the “Conversion Shares”) as follows:
(a) The Convertible Notes automatically convert into Conversion Shares upon the shares of the Company’s common stock being listed on a higher exchange due to the (i) pricing and funding of an S-1 registration statement; or, (ii) the closing of a transaction resulting in the uplist (either, a “Triggering Transaction”). The conversion price for the Conversion Shares in an automatic conversion shall be equal to:
(1) 75% of the price under the Triggering Transaction if within 120-days of the Issuance Date;
(2) 70% of the price under the Triggering Transaction if within 121 to 150-days of the Issuance Date;
(3) 65% of the price under the Triggering Transaction if more than 150-days of the Issuance Date.
(b) The Purchasers have the right to convert into Conversion Shares, in whole or in part, at any time after 180-days following the Issuance Date. The conversion price for the Conversion Shares in a voluntary conversion shall be equal to 65% of the volume weighted average price for the Company’s common stock during the 20-consecutive trading days preceding the conversion.
Scheduled maturities of debt remaining as of September 30, 2023 for each respective fiscal year end are as follows:
| 2023 | $ | 198,939 | ||
| 2024 | 2,211,185 | |||
| Total | $ | 2,410,124 |
The following table reconciles, for the nine months ended September 30, 2023 and 2022, the beginning and ending balances for financial instruments related to the embedded conversion features that are recognized at fair value in the consolidated financial statements.
| Nine months ended | ||||||||
| September 30, 2023 | September 30, 2022 | |||||||
| Balance of embedded derivative at the beginning of the period | $ | $ | 211,345 | |||||
| Change in fair value of conversion features | (211,345 | ) | ||||||
| Balance of embedded derivatives at the end of the period | $ | - | $ | - | ||||
Note 5 - Capital Lease Obligations
During the year ended December 31, 2018 the Company entered into various capital lease agreements. The leases expire at various points through the year ended December 31, 2023.
The following schedule provides minimum future rental payments required as of September 30, 2023.
| 2023 | $ | 36,692 | ||
| Total minimum lease payments | 36,692 | |||
| Less: Amount represented interest | (438 | ) | ||
| Present value of minimum lease payments and guaranteed residual value | $ | 36,254 |
Note 6 - Capital Stock
On JanuaryOctober 20, 2022 the Company , following receipt of written approval from stockholders acting without a meeting and holding at least the minimum number of votes that would be necessary to authorize or take such action at a meeting, filed an amendment to its Certificate of Incorporation to (i) change the name of the Company to “AMERICAN BATTERY MATERIALS, INC.” (the “Name Change”); and, (ii) increase the total number of authorized shares of the Company’s common stock, par value $0.001 per share, from 600,000,000 to 4,500,000,000 (the “Authorized Share Increase”). The Authorized Share Increase was effective as of October 20, 2022. The Name Change was processed by FINRA and was effective as of May 1, 2023, at which time the Company’s trading symbol was changed to BLTH
On October 20, 2022, in addition to the Name Change and the Authorized Share Increase, the holder of 63.86% of the issued and outstanding shares of stock of the Company entitled to vote took action by written consent and without a meeting, pursuant to Delaware General Corporate Law Section 228, and adopted and approved the following actions:
| 1. | Future amendment of the Company’s Certificate of Incorporation to implement a decrease in the authorized shares of the Company’s Common Stock from 4,500,000,000 to a number of not less than 10,000,000 and not more than 2,000,000,000 (the “Authorized Share Reduction”), at any time prior to October 20, 2023 (the “Anniversary Date”), with the Board having the discretion to determine whether or not the Authorized Share Reduction is to be effected, and if effected, the exact number of the Authorized Share Reduction within the above range. |
| 2. | Future amendment of the Company’s Certificate of Incorporation to implement a reverse stock split of the Company’s Common Stock by a ratio of not less than 1-for-10 and not more than 1-for-1,000, (the “Reverse Split”), at any time prior to the Anniversary Date, with the Board having the discretion to determine whether or not the Reverse Split is to be effected, and if effected, the exact ratio for the Reverse Split within the above range. |
Preferred Stock
The Company has authorization for “blank check” preferred stock, which could be issued with voting, liquidation, dividend and other rights superior to common stock. As of September 30, 2023 and December 31, 2022, there were 10,000,000 shares of preferred stock authorized, and 0 shares issued and outstanding.
On August 12, 2022, the Company effected with the Delaware Secretary of State a designation of 50,000 shares of Series A Super Voting Preferred Convertible Stock, having a par value of $0.001 per share and a purchase price of $1.00 per share (the “Series A Preferred”).
The Series A Preferred may vote on any action upon which holders of the Common Stock may vote, and they shall vote together as one class with voting rights equal to sixty percent (60%) of all of the issued and outstanding shares of Common Stock of the Company. The Series A Preferred shall automatically convert into shares of Common Stock upon the earlier of either a) the effectiveness of a Registration Statement under the Securities Act of 1933, or b) Twelve (12) months from the issuance of the Series A Preferred Stock at a ratio equal to the purchase prices per share of the Series A Preferred divided by $0.005.
During the nine months ended September 30, 2023, the Company converted 50,000 shares of its Series A Preferred stock into 10,000,000 shares of its common stock.
Common Stock
The Company has authorized 4,500,000,000 shares of common stock, with 3,406,691,566 and 3,245,556,528 shares issued and outstanding at September 30, 2023 and December 31, 2022, respectively.
During the nine months ended September 30, 2023, the Company issued 54,916,669 shares of common stock for services valued at $373,650; 49,736,843 shares of common stock upon warrant exercises for an aggregate exercise price of $189,000; 16,799,491 shares of common stock upon cashless warrant exercise; 10,000,000 shares of common stock upon conversion of 50,000 shares of its Series A Preferred stock, 16,635,226 shares of common stock for note modification, and 13,046,809 shares of common stock in relation to issuance of promissory and convertible notes.
During the nine months ended September 30, 2022, the Company issued 49,789,365 shares of its common stock, in conversion of $189,200 of convertible notes and accrued interest.
Note 7 2014, U-Vend,- Stock Options and Warrants
Warrants
As of September 30, 2023 the Company had the following warrant securities outstanding:
| Warrants | Exercise Price | Expiration | ||||||||
| 2018 Warrants – financing | 1,450,000 | $ | 0.07 | October - November 2023 | ||||||
| 2018 Warrants for services | 2,000,000 | $ | 0.07 | October - December 2023 | ||||||
| 2019 Warrants –financing | 10,500,000 | $ | 0.07 | March - October 2024 | ||||||
| 2019 Warrants for services | 1,250,000 | $ | 0.07 | March - April 2024 | ||||||
| 2020 Warrants for services | 3,000,000 | $ | 0.05 | February 2025 | ||||||
| 2022 Exchange warrants | 71,169,473 | $ | 0.0038 | September 2025 | ||||||
| Total | 89,369,473 | |||||||||
A summary of all warrant activity for the nine months ended September 30, 2023 is as follows:
| Number of Warrants | Weighted Average Exercise Price | Weighted Average Remaining Contractual Term | ||||||||||
| Balance outstanding at December 31, 2022 | 96,661,378 | $ | 0.02 | 2.32 | ||||||||
| Granted | - | - | - | |||||||||
| Exercised | (3,863,334 | ) | 0.07 | - | ||||||||
| Forfeited | - | - | - | |||||||||
| Cancelled | - | - | - | |||||||||
| Expired | (3,428,571 | ) | 0.07 | - | ||||||||
| Balance outstanding as of September 30, 2023 | 89,369,473 | $ | 0.01 | 1.76 | ||||||||
| Exercisable as of September 30, 2023 | 89,369,473 | $ | 0.01 | 1.76 | ||||||||
The intrinsic value of the outstanding warrants as of September 30, 2023 was $0, as the exercise prices exceeded the common stock’s fair market value per share on that date.
Equity Incentive Plan
On July 22, 2011, the Board of Directors of the Company approved the Company’s 2011 Equity Incentive Plan (the “Plan”) and on July 26, 2011, stockholders holding a majority of shares of the Company approved, by written consent, the Plan and the issuance under the Plan of 5,000,000 shares. On November 16, 2017, the Board of Directors approved an increase of 10,000,000 shares to be made available for issuance under the Plan. Accordingly, the total number of shares of common stock available for issuance under the Plan is 15,000,000 shares. Awards may be granted to employees, officers, directors, consultants, agents, advisors and independent contractors of the Company and its related companies. Such options may be designated at the time of grant as either incentive stock options or nonqualified stock options. Stock-based compensation includes expense charges related to all stock-based awards. Such awards include options, warrants and stock grants. Generally, the Company issues stock options that vest over three years and expire in 5 to 10 years. There are currently no awards issued and outstanding under the Plan.
Note 8 - Commitments and Contingencies
As disclosed and discussed and Note 1, above, the Merger Agreement was amended on July 14, 2023. Pursuant to the Amendment, the parties agreed, among other things, that the Company would fund one-half of the additional payment into trust (i.e., $0.015 per share by the Company) that SGII intends to make in connection with an extension to the date by which SGII must complete a business combination. If the Company fails to make any such contribution that is subsequently funded by SGII (each, a “Contribution Shortfall”), then the Company shall issue to SGII’s sponsor a number of shares with value equal to two times the amount of all Contribution Shortfalls either (a) if the transactions under the Merger Agreement close, of the post-business combination company; or, (b) if the transactions under the Merger Agreement do not close, of the Company. As of September 30, 2023, the Company owed Seaport Global SPAC II, LLC (which is referred to as the “Sponsor” under the Merger Agreement) $101,662 for extension payments.
Note 9 - Subsequent Events
The Company has evaluated events occurring subsequent to September 30, 2023 through the date of the issuance of these financial statements and noted the following:
On October 20, 2023, the Company issued 9,210,526 shares of its Common Stock upon the exercise of a Warrant, in exchange for the payment of $35,000.
On October 20, 2023, the Company issued 525,000 shares of its common stock as compensation for services rendered by an independent consultant.
On October 26, 2023, the Company dismissed Pinnacle Accountancy Group of Utah (a dba of Heaton & Company, PLLC) (“Pinnacle”) as the Company’s independent registered accountant.
On October 26, 2023, the Company engaged and executed an agreement with GreenGrowth CPAs (“GreenGrowth”), as the Company’s new independent registered accountant. This change in the Company’s independent registered public accounting firm was approved by the Company’s Board of Directors effective October 26, 2023.
Report of Independent Registered Public Accounting Firm
To the Board of Directors and Stockholders
American Battery Materials, Inc. (formerly Internet Media Services,Boxscore Brands, Inc. (“IMS”)
Greenwich, CT
Opinion on the Financial Statements
We have audited the accompanying consolidated balance sheets of American Battery Materials, Inc. (formerly Boxscore Brands, Inc.) entered into an Exchange(the Company) as of Securities Agreement with U-Vend Canada, Inc.,December 31, 2022 and 2021, and the shareholdersrelated consolidated statements of U-Vend Canada, Inc (“U-Vend Canada”)operations, changes in stockholders’ deficit, and cash flows for the years then ended, and the related notes (collectively referred to as the financial statements). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2022 and 2021, 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.
Going Concern Considerations
The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. The Company believes the merger with U-Vend Canada will provide it with businesshas suffered recurring losses since inception and has not achieved profitable operations, and also necessary working capital.which raise substantial doubt about its ability to continue as a going concern. Management’s plans in regard to these matters are described in Note 3. The Company is in discussion to raise additional capital to execute on its current business plans. There is no assurance that future financing arrangements will be successful or that the operating results of U-Vend, Inc. will yield sufficient cash flow to execute the Company’s business plans or satisfy its obligations. The accompanying consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty.
Basis for Opinion
These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits, we are required to obtain an understanding of internal control over financial reporting, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion.
Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.
Critical Audit Matter
The critical audit matter communicated below is a matter arising from the current period audits of the financial statements that was communicated or required to be communicated to the audit committee and that: (1) relates to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.
Going Concern – Disclosure
The financial statements of the Company are prepared on a going concern basis, which assumes that the Company will continue in operation for the foreseeable future and, accordingly, will be able to realize its assets and discharge its liabilities in the normal course of operations. As noted in “Going Concern Considerations” above, the Company has a history of recurring net losses, a significant accumulated deficit and currently has net working capital deficit. The Company has contractual obligations, such as commitments for repayments of accounts payable, accrued liabilities, notes payable, convertible notes payable, and amounts due under capital lease (collectively “obligations”). Currently, management’s forecasts and related assumptions illustrate their ability to meet the obligations through management of expenditures, implementation of a new operational direction, obtaining additional debt financing, and issuance of capital stock for additional funding to meet its operating needs. Should there be constraints on the ability to implement its new business operations or access financing through stock issuances, the Company will continue to manage cash outflows and meet the obligations through debt financing.
We identified management’s assessment of the Company’s ability to continue as a going concern as a critical audit matter. Management made judgments regarding its intent and ability to effectively implement its plans and provide the necessary cash flows to fund the Company’s obligations as they become due. Specifically, the judgments with the highest degree of impact and subjectivity surrounding the Company’s intent and ability to continue as a going concern include its ability to manage expenditures, its ability to access funding from the capital market, its ability to obtain debt financing, and the successful implementation of its new operational direction. Auditing the judgments made by management required a high degree of auditor judgment and an increased extent of audit effort.
Addressing the matter involved performing procedures and evaluating audit evidence in connection with forming our overall opinion on the financial statements. These procedures included the following, among others, evaluating the Company’s intent and ability to: (i) access funding from the capital market; (ii) manage expenditures (iii) obtain debt financing, and (iv) implement its new business operational direction.
| /s/ Pinnacle Accountancy Group of Utah |
We have served as the Company’s auditor since 2021.
Pinnacle Accountancy Group of Utah
(a dba of Heaton & Company, PLLC)
PCAOB#: 6117
Farmington, Utah
April 19, 2023
American Battery Materials, Inc. (formerly Boxscore Brands, Inc.)
Consolidated Balance Sheets
| December 31, | December 31, | |||||||
| 2022 | 2021 | |||||||
| Assets | ||||||||
| Current assets | ||||||||
| Cash | $ | 42,582 | $ | 8,291 | ||||
| Prepaid expenses and other assets | 62,717 | 1,763 | ||||||
| Total current assets | 105,299 | 10,054 | ||||||
| Noncurrent assets | ||||||||
| Mineral claims | 100,000 | 100,000 | ||||||
| Total assets | $ | 205,299 | $ | 110,054 | ||||
| Liabilities and Stockholders’ Deficit | ||||||||
| Current Liabilities: | ||||||||
| Accounts payable | $ | 438,667 | $ | 303,248 | ||||
| Accrued expenses | 482,881 | 348,217 | ||||||
| Accrued interest | 190,901 | 2,104,964 | ||||||
| Senior convertible notes | - | 95,804 | ||||||
| Promissory notes payable | 357,008 | 473,269 | ||||||
| Convertible notes payable | - | 4,664,624 | ||||||
| Current capital lease obligation | 36,254 | 36,254 | ||||||
| Total current liabilities | 1,505,711 | 8,026,380 | ||||||
| Noncurrent liabilities: | ||||||||
| Convertible notes payable | - | 915,000 | ||||||
| Derivative liabilities | - | 211,345 | ||||||
| Total noncurrent liabilities | - | 1,126,345 | ||||||
| Total Liabilities | 1,505,711 | 9,152,725 | ||||||
| Stockholders’ deficit | ||||||||
| Preferred stock, $0.0001 par value, 10,000,000 shares authorized, 50,000 and 0 shares issued and outstanding, respectively | 5 | - | ||||||
| Common stock, $0.001 par value, 4,500,000,000 shares authorized, 3,245,556,528 and 335,778,778 shares issued and outstanding, respectively | 3,245,555 | 335,778 | ||||||
| Additional paid in capital | 13,308,865 | 6,989,540 | ||||||
| Accumulated deficit | (17,854,837 | ) | (16,367,989 | ) | ||||
| Total stockholders’ deficit | (1,300,412 | ) | (9,042,671 | ) | ||||
| Total liabilities and stockholders’ deficit | $ | 205,299 | $ | 110,054 | ||||
The accompanying notes are an integral part of the consolidated financial statements.
American Battery Materials, Inc. (formerly Boxscore Brands, Inc.)
Consolidated Statements of Operations
| Year Ended | Year Ended | |||||||
| December 31, | December 31, | |||||||
| 2022 | 2021 | |||||||
| Operating Expenses | ||||||||
| General and administrative | $ | 1,135,088 | $ | 393,376 | ||||
| Total operating expenses | 1,135,088 | 393,376 | ||||||
| Operating loss | (1,135,088 | ) | (393,376 | ) | ||||
| Other Expenses (Income) | ||||||||
| Gain on change in fair value of derivative liabilities | 211,345 | 2,871,910 | ||||||
| Gain on settlement of liabilities | 32,019 | 62,095 | ||||||
| Write-off of assets | - | (17,500 | ) | |||||
| Interest expense | (595,124 | ) | (760,663 | ) | ||||
| Total other expenses (income) | (351,760 | ) | 2,155,842 | |||||
| Income (loss) from operations before income taxes | (1,486,848 | ) | 1,762,466 | |||||
| Provision for income taxes | - | - | ||||||
| Net Income (Loss) | $ | (1,486,848 | ) | $ | 1,762,466 | |||
| Net income (loss) per share – basic | $ | (0.00 | ) | $ | 0.01 | |||
| Net loss per share – diluted | $ | (0.00 | ) | $ | (0.00 | ) | ||
| Weighted average common shares – basic | 335,778,778 | 210,477,658 | ||||||
| Weighted average common shares – diluted | 335,778,778 | 374,389,986 | ||||||
The accompanying notes are an integral part of the consolidated financial statements.
American Battery Materials, Inc. (formerly Boxscore Brands, Inc.)
Consolidated Statements of Changes in Stockholders’ Deficit
Years ended December 31, 2022 and 2021
| Preferred stock | Common stock | Additional Paid in | Accumulated | Total Stockholders’ | ||||||||||||||||||||||||
| Shares | Amount | Shares | Amount | Capital | Deficit | Deficit | ||||||||||||||||||||||
| Balance as of December 31, 2020 | - | $ | - | 75,828,064 | $ | 75,828 | $ | 6,281,241 | $ | (18,130,455 | ) | $ | (11,773,386 | ) | ||||||||||||||
| Shares issued for note conversion | - | - | 259,950,714 | 259,950 | 702,003 | - | 961,953 | |||||||||||||||||||||
| Fair value of warrants | - | - | - | - | 6,296 | - | 6,296 | |||||||||||||||||||||
| Net income | - | - | - | - | - | 1,762,466 | 1,762,466 | |||||||||||||||||||||
| Balance as of December 31, 2021 | - | $ | - | 335,778,778 | $ | 335,778 | $ | 6,989,540 | $ | (16,367,989 | ) | $ | (9,042,671 | ) | ||||||||||||||
| Preferred stock issued for cash | 50,000 | 5 | - | - | 49,995 | - | 50,000 | |||||||||||||||||||||
| Shares issued for note conversion | - | - | 2,868,067,227 | 2,868,067 | 6,118,960 | - | 8,987,027 | |||||||||||||||||||||
| Shares issued for warrant exercise | - | - | 34,210,523 | 34,210 | 95,790 | - | 130,000 | |||||||||||||||||||||
| Shares issued for services | - | - | 7,500,000 | 7,500 | 43,500 | - | 51,000 | |||||||||||||||||||||
| Fair value of warrants | - | - | - | - | 11,080 | - | 11,080 | |||||||||||||||||||||
| Net loss | - | - | - | - | - | (1,486,848 | ) | (1,486,848 | ) | |||||||||||||||||||
| Balance as of December 31, 2022 | 50,000 | $ | 5 | 3,245,556,528 | $ | 3,245,555 | $ | 13,308,865 | $ | (17,854,837 | ) | $ | (1,300,412 | ) | ||||||||||||||
The accompanying notes are an integral part of the consolidated financial statements.
American Battery Materials, Inc. (formerly Boxscore Brands, Inc.)
Consolidated Statements of Cash Flows
For the Years Ended December 31, 2022 and 2021
| Year Ended | Year Ended | |||||||
| December 31, | December 31, | |||||||
| 2022 | 2021 | |||||||
| Cash Flows from Operating Activities | ||||||||
| Net income (loss) | $ | (1,486,848 | ) | $ | 1,762,466 | |||
| Adjustments to reconcile net loss to net cash used in operating activities: | ||||||||
| Stock based compensation | 62,080 | 6,296 | ||||||
| Gain on settlement of liabilities | (32,019 | ) | (62,095 | ) | ||||
| Gain on change in fair value of debt and warrant liabilities | (211,345 | ) | (2,871,910 | ) | ||||
| Write-off of assets | - | 17,500 | ||||||
| Changes in operating assets and liabilities: | ||||||||
| Prepaid expenses and other assets | (60,954 | ) | 2,000 | |||||
| Accounts payable and accrued expenses | 373,099 | 38,921 | ||||||
| Accrued interest | 445,278 | 714,376 | ||||||
| Net cash used in operating activities | (910,709 | ) | (392,445 | ) | ||||
| Cash Flows from Investing Activities: | ||||||||
| Acquisition of mineral claims | - | (100,000 | ) | |||||
| Net cash used in investing activities | - | (100,000 | ) | |||||
| Cash Flows from Financing Activities | ||||||||
| Proceeds from convertible notes | 590,000 | 885,000 | ||||||
| Proceeds from promissory notes | 250,000 | - | ||||||
| Proceeds from issuance of preferred stock | 50,000 | - | ||||||
| Proceeds from warrant exercise | 130,000 | - | ||||||
| Repayments of capital lease obligations | - | (82,000 | ) | |||||
| Repayments of convertible note | (75,000 | ) | (300,850 | ) | ||||
| Repayments of promissory notes | - | (25,000 | ) | |||||
| Net cash provided by financing activities | 945,000 | 477,150 | ||||||
| Net increase (decrease) in cash | 34,291 | (15,295 | ) | |||||
| Cash, beginning of period | 8,291 | 23,586 | ||||||
| Cash, end of period | $ | 42,582 | $ | 8,291 | ||||
| Supplemental disclosures: | ||||||||
| Interest paid | $ | - | $ | - | ||||
| Supplemental disclosures of non-cash items: | ||||||||
| Accounts payable and accrued payable exchanged for convertible note | $ | 46,667 | $ | 94,600 | ||||
| Convertible notes converted to common stock | $ | 6,627,686 | $ | 589,150 | ||||
| Accrued interest converted to common stock | $ | 2,359,341 | $ | 372,803 | ||||
The accompanying notes are an integral part of the consolidated financial statements.
American Battery Materials, Inc. (formerly Boxscore Brands, Inc.)
Notes to Consolidated Financial Statements
For the Years Ended December 31, 2022 and 2021
Note 1 - Nature of the Business
BoxScore Brands, Inc. (the “Company”) is a US based renewable energy company focused on the extraction, refinement and distribution of technical minerals in an environmentally responsible manner.
The Company formerly developed, marketed and distributed various self-serve electronic kiosks and mall/airport co-branded islands throughout North America. Due to the nationwide shutdown related to the COVID-19 pandemic, the Company spent a portion of 2020 restructuring and retiring certain corporate debt and obligations, while focusing on implementing a new operational direction.
Through the corporate reorganization and repositioning process, the Company found itself with the unique opportunity to expand its management team and acquire mining claims that historically reported high levels of Lithium and other tech minerals. The Company hired and affiliated itself with industry veterans that bring decades of experience, credibility and relationships.
On November 5, 2021, the Company acquired the rights to 102 Federal Mining Claims located in the Lisbon Valley of Utah for $100,000. The acquisition was driven by historical mineral data from seven (7) existing wells with brine aquifer access. The independent third-party Technical Report indicated that further investment and development in the claims were warranted.
The Company has been moving forward with its strategy of employing advanced brine extractive technology methodologies and has been in talks with numerous extraction providers. Selective mineral extraction is clearly the most cost-effective and ESG friendly approach currently available. Technologies are being utilized that can extract the desired minerals and metals from the brine and then re-inject the brines back down into the aquafer. The prospective partners have been provided the analytical results from the technical reports, but will soon provide current results, analytical, Geotech modeling, aquifer modeling, recharge, flows, and depth.
The Company will also look to expand its holdings in the Lisbon Valley area with the acquisition of additional mineral claims and joint venture opportunities.
Note 2 - Summary of Significant Accounting Policies
Basis of Presentation - and Principles of Consolidation
The accompanying unaudited consolidated financial statements have been prepared in accordance with U.S. generally accepted accounting principles for interim financial information. Accordingly, these statements do not include all of the information and footnotes required by U.S. generally accepted accounting principles for complete financial statements. In the opinion of management, the(GAAP). The Company’s fiscal year end is December 31.
The accompanying consolidated balance sheets and related consolidated interim statements of operations and cash flows include all adjustments, consisting only of normal recurring items necessary for their fair presentation in accordance with U.S. generally accepted accounting principles. Interim results are not necessarily indicative of results expected for a full year. For further information regarding the Company’s accounting policies, please refer to the audited consolidated financial statements and footnotes for the year ended December 31, 2013 included in the Company’s 10-K annual report filed with the SEC on April 15, 2014.
Use of Estimates
The preparation of consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect amounts reported in the financial statements and accompanying notes. Actual results could differ from those estimates and be based on events different from those assumptions. Future events and their effects cannot be predicted with certainty; estimating, therefore, requires the exercise of judgment. Thus, accounting estimates change as new events occur, as more experience is acquired, or as additional information is obtained.
American Battery Materials, Inc. (formerly Boxscore Brands, Inc.)
Notes to Consolidated Financial Statements
For the lower of cost or marketYears Ended December 31, 2022 and cost is determined by the average cost method. Inventory is made up of finished goods ice cream. The Company records inventory reserves for spoilage and product losses. The reserve for spoilage and product losses amounted to approximately $400 as of June 30, 2014.2021
Property and Equipment
Property and equipment are stated at cost.cost less depreciation. Depreciation is provided using the straight-line method over the estimated useful life of the assets. Equipment has estimated useful lives between three and seven years. Expenditures for repairs and maintenance are charged to expense as incurred. Depreciation
Impairment of Long-lived Assets
Long-lived assets, such as property and equipment and intangible assets subject to amortization are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset group may not be recoverable. Recoverability of assets to be held and used is provided usingmeasured by comparing the straight line method overcarrying amount to the estimated useful lifefuture undiscounted cash flows expected to be generated by the asset group. If it is determined that an asset group is not recoverable, an impairment charge is recognized for the amount by which the carrying amount of the assets. Electronic kiosksasset group exceeds its fair value.
Mineral Rights and related equipment have estimated useful lives between five and seven years.
The Company capitalizes acquisition costs until the excessCompany determines the economic viability of the purchase price paid overproperty. Since the fair market value of the net assets acquired from the merger with U-Vend Canada, Inc. on January 7, 2014. Goodwill is subject to annual impairment testing to determine whether there has been any impairment to the value of the goodwill or the intangible assets. IfCompany does not have proven and probable reserves as defined by Securities and Exchange Commission (“SEC”) regulation S-K 1300, exploration expenditures are expensed as incurred. The Company expenses mineral lease costs and repair and maintenance costs as incurred. The Company reviews the carrying value exceeds its estimated fair value, anof our properties for impairment, loss wouldincluding mineral rights, upon the occurrence of events or changes in circumstances that indicate the related carrying amounts may not be recognized. Net intangible assets at June 30, 2014 reflectrecoverable. The Company currently owns the fair market value of the operating agreement with Mini Melts USA acquiredrights to 102 Federal Mining Claims located in the mergerLisbon Valley of U-Vend CanadaUtah that it purchased on January 7, 2014 and is amortized in selling expense on the statement of operations over its estimated useful life of five years. (See Note 2.)
Earnings Per Share
The Company presents basic and diluted earnings per share.share in accordance with ASC 260, “Earnings per Share.” Basic earnings per share reflect the actual weighted average of shares issued and outstanding during the period. Diluted earnings per share are computed including the number of additional shares that would have been outstanding if dilutive potential shares had been issued. In a loss year,period, the calculation for basic and diluted earnings per share is considered to be the same, as the impact of potential common shares is anti-dilutive.
As of June 30, 2014,December 31, 2022 and 2021, there were approximately 40.796 million (235,000 at June 30, 2014)and 164 million shares potentially issuable under convertible debt agreements, options, warrants and contingent sharespreferred stock that could dilute basic earnings per share in the futureif converted that were excluded fromincluded in the calculation of diluted earnings per share for the year ended December 31, 2021. These if-converted shares were excluded from the year ended December 31, 2022 because their inclusion would have been anti-dilutive due to the Company’s losses duringnet loss.
American Battery Materials, Inc. (formerly Boxscore Brands, Inc.)
Notes to Consolidated Financial Statements
For the periods presented.Years Ended December 31, 2022 and 2021
| Year Ended | ||||
| December 31, | ||||
| 2021 | ||||
| Numerator: | ||||
| Net income (loss) | $ | 1,762,466 | ||
| Gain on change in fair value of derivatives | $ | (2,871,910 | ) | |
| Interest on convertible debt | $ | 760,663 | ||
| Net loss – diluted | $ | (348,781 | ) | |
| Denominator: | ||||
| Weighted average common shares outstanding | 210,477,658 | |||
| Effect of dilutive shares | 163,912,328 | |||
| Diluted | 374,389,986 | |||
| Net income (loss) per common share: | ||||
| Basic | $ | 0.01 | ||
| Diluted | $ | (0.00 | ) | |
Derivative Financial Instruments
The Company evaluates its financial instruments to determine if such instruments are derivatives or contain features that qualify as embedded derivatives. Certain warrants issued by the Company have a “down round provision” and as acontain terms that result in the warrants arebeing classified as derivative liabilities for accounting purposes. For derivative financial instruments that are accounted for as liabilities, the derivative instrument is initially recorded at its fair market value and then is revalued at each reporting date, with changes in fair value reported in the consolidated statement of operations. The Company does not use derivative instruments to hedge exposures to cash flow, market or foreign currency risks.
Fair Value of Financial Instruments
For certain of the Company’s financial instruments, including cash and equivalents, prepaid expenses and other assets, accounts payable, accrued liabilities and short-term debt, the carrying amounts approximate their fair values due to their short maturities. ASC 820, “Fair Value Measurements and Disclosures,” requires disclosure of the fair value of financial instruments held by the Company. ASC 825, “Financial Instruments,” defines fair value, and establishes a three-level valuation hierarchy for disclosures of fair value measurement that enhances disclosure requirements for fair value measures. The three levels of valuation hierarchy are defined as follows:
| ● | Level 1: Unadjusted quoted prices in active markets that are accessible at the measurement date for identical, unrestricted assets or liabilities. The Company considers active markets as those in which transactions for the assets or liabilities occur in sufficient frequency and volume to provide pricing information on an ongoing basis. |
| ● | Level 2: Quoted prices in markets that are not active, or inputs which are observable, either directly or indirectly, for substantially the full term of the asset or liability. This category includes those derivative instruments that the Company values using observable market data. Substantially all of these inputs are observable in the marketplace throughout the term of the derivative instruments, can be derived from observable data, or supported by observable levels at which transactions are executed in the marketplace. |
| ● | Level 3: Measured based on prices or valuation models that require inputs that are both significant to the fair value measurement and less observable from objective sources (i.e. supported by little or no market activity). Level 3 instruments include derivative warrant instruments. The Company does not have sufficient corroborating evidence to support classifying these assets and liabilities as Level 1 or Level 2. |
American Battery Materials, Inc. (formerly Boxscore Brands, Inc.)
Notes to Consolidated Financial Statements
For the Years Ended December 31, 2022 and 2021
Certain of the Company’s debt and equity instruments include embedded derivatives that require bifurcation from the host contract under the provisions of ASC 815-40, “Derivatives and Hedging.”
The following table sets forth by level within the fair value hierarchy our financial assets and liabilities that were accounted for at fair value on a recurring basis as of December 31, 2022 and 2021:
| Carrying | Fair Value Measurement at December 31, 2022 | |||||||||||||||
| Value | Level 1 | Level 2 | Level 3 | |||||||||||||
| Derivative liabilities | $ | - | - | - | $ | - | ||||||||||
| Fair Value Measurement at | ||||||||||||||||
| Carrying | December 31, 2021 | |||||||||||||||
| Value | Level 1 | Level 2 | Level 3 | |||||||||||||
| Derivative liabilities | $ | 211,345 | - | - | $ | 211,345 | ||||||||||
Stock-Based Compensation
The Company accounts for stock-based compensation in accordance with ASC 718, “Compensation - Stock Compensation,” which requires all stock-based awards granted to employees, directors, and non-employees to be measured at grant date fair value of the equity instrument issued, and recognized as expense. Stock-based compensation expense is recognized on a straight-line basis over the requisite service period of the award, which is generally equivalent to the vesting period. The fair value of each stock option granted is estimated using the Black-Scholes option pricing model. The measurement date for the non-forfeitable awards to nonemployees that vest immediately is the date the award is issued.
Gain on Liabilities Settlement
During the year ended December 31, 2021 creditors forgave an aggregate amount of $19,959 associated with accrued expenses and $26,062 related to notes payable. In addition, the Company recorded a gain on capital lease settlement of $16,074 as detailed in Note 6, resulting in total gain on settlement of liabilities of $62,095. During the year ended December 31, 2022, creditors forgave $32, 019 in notes payable, which has been recorded as a gain on settlement.
Revenue Recognition
We recognize revenue under ASC 606, “Revenue from Contracts with Customers,” the core principle of which is that an entity should recognize revenue to depict the transfer of control for promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. In applying the revenue recognition principles, an entity is required to identify the contract(s) with a customer, identify the performance obligations, determine the transaction price, allocate the transaction price to the performance obligations and recognize revenue as the performance obligations are satisfied (i.e., either over time or at a point in time). ASC 606 further requires that companies disclose sufficient information to enable readers of financial statements to understand the nature, amount, timing and uncertainty of revenue and cash flows arising from contracts with customers.
The Company recognized $0 revenue during the year ended December 31, 2022 and 2021.
American Battery Materials, Inc. (formerly Boxscore Brands, Inc.)
Notes to Consolidated Financial Statements
For the Years Ended December 31, 2022 and 2021
Recent Accounting Pronouncements
On August 5, 2020, the FASB issued ASU 2020-06, Debt-Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging-Contracts in Entity’s Own Equity (Subtopic 815-40): Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity, which simplifies the accounting for certain financial instruments with characteristics of liabilities and equity, including convertible instruments and contracts on an entity’s own equity. This ASU is effective for public business entities, excluding smaller reporting companies, for fiscal years beginning after December 15, 2021, and for all other entities for fiscal years beginning after December 15, 2023. Early adoption is permitted for all entities no earlier than for fiscal years beginning after December 15, 2020. The Company is currently evaluating the effects this ASU will have on its financial statements.
The Company has examined all other recent accounting pronouncements and determined that they will not have a material impact on its financial position, results of operations, or cash flows.
Note 3 - Going Concern
The accompanying consolidated financial statements have been reclassifiedprepared on a going concern basis. The Company had net loss of $1,486,848 during the year ended December 31, 2022, has accumulated losses totaling $17,854,837, and has a working capital deficit of $1,400,412 at December 31, 2022. These factors, among others, indicate that the Company may be unable to current period presentation. These classifications had no effect oncontinue as a going concern. The consolidated financial statements do not include any adjustments that might result from the resultsoutcome of these uncertainties.
Until the Company can generate significant cash from operations, its ability to continue as a going concern is dependent upon obtaining additional financing. The Company hopes to raise additional financing, potentially through the sale of debt or cash flowsequity instruments, or a combination, to fund its operations for the periods presented.
Note 4 - Debt
Senior Convertible Notes
During the year ended December 31, 2018, a par valueSenior Convertible Note in the aggregate principal amount of $0.001 per share. Certain shareholders$310,000 and a maturity date of U-Vend Canada willDecember 31, 2018 payable to Cobrador Multi-Strategy Partners, LP (“Cobrador 1”), was extended until December 31, 2019. The Company also haveextended the ability to earn up to an additional 4,522,850 sharesexpiration dates of the Company’s common stock subject to certain earn-out provisions based on targeted revenue achievement in 2014 and 2015. In addition, the CompanySeries A Warrants issued an aggregate of 1,354,111 shares of Common Stock and 2,308,480 warrants to financial advisors as compensation for their services in connection with the transaction contemplatedCobrador 1 by the merger agreement. The Company issued 389,520 shares of common stock to its Chief Executive Officer in connection with the merger agreement. The Company incurred approximately $287,000 in broker, advisory and professional fees associated with the merger.
| Consideration: | ||||
Fair value of 3,500,000 shares of common stock issued at $0.14 on January 7, 2014 | $ | 490,000 | ||
Fair value of 4,522,850 shares of common stock measured at $0.14, discounted for the probability of achievement | 246,568 | |||
736,568 | ||||
Discount for restrictions | (103,118 | ) | ||
Effective settlement of intercompany payable due to U-Vend, Inc. | 174,899 | |||
Total estimated purchase price | $ | 808,349 | ||
Cash | $ | 11,132 | ||
Inventory | 15,253 | |||
Prepaid expense | 350 | |||
Property and equipment | 232,835 | |||
Security deposits | 6,631 | |||
Intangible assets- Operating Agreement | 434,000 | |||
Goodwill | 732,260 | |||
Accounts payable and accrued expenses | (135,634 | ) | ||
Notes payable | (170,517 | ) | ||
Capital lease obligations | (153,041 | ) | ||
Deferred tax liability | (164,920 | ) | ||
Total purchase price | $ | 808,349 |
Unaudited Pro Forma Results | For the six months ended June 30, 2013 | For the six months ended June 30, 2014 | ||||||
Revenues | $ | - | $ | 95,636 | ||||
Gross profit | $ | - | $ | 41,655 | ||||
Net loss | $ | (332,592 | ) | $ | (1,165,490 | ) | ||
Basic and fully diluted loss per share | $ | (0.09 | ) | $ | (0.15 | ) | ||
American Battery Materials, Inc. (formerly Boxscore Brands, Inc.)
Notes to Consolidated Financial Statements
For the Years Ended December 31, 2022 and reissued2021
On December 31, 2016, the Company issued a Senior Convertible Note in the face amount of $108,804 to Cobrador (“Cobrador 2”) in settlement of previously accrued interest, additional interest, fees and penalties. The additional interest, fees and penalties was $72,734 and this amount was charged to operations as notesdebt discount amortization during the year ended December 31, 2016. The Senior Convertible Note was extended during the year ended December 31, 2018 and was due on December 31, 2019. It is convertible into 3,000,000 shares of the Company's common stock at a conversion price $0.05 per share and bears interest at 7% per annum. The Company determined that Cobrador 2 had a beneficial conversion feature based on the difference between the conversion price and the market price on the date of issuance and allocated $87,043 as debt discount representing the beneficial conversion feature which was fully amortized at December 31, 2017. As of December 31, 2020 the carrying value was $108,804. During the year ended December 31, 2021, total principal in the amount of $88,000 was converted into 23,157,894 shares of common stock resulting in carrying value of $20,804 as of December 31, 2021. During the year ended December 31, 2022, total principal and accrued interest in the amount of $20,804 of principal and $79,923 of interest were converted into 26,507,105 shares of common stock resulting in carrying value of $0 as of December 31, 2022.
During December 2017, the Company issued a Senior Convertible Note in the amount of $25,000 to Cobrador. The note bears interest at 7%, was due in December 2019, and is convertible into common shares at a conversion price of $0.05 per share, subjectshare. In addition, in conjunction with this note, the Company issued 500,000 warrants to an adjustmentpurchase common shares at $0.05 with a minimum adjusted conversion pricecontractual term of $0.03 per share. In connection with the reissued notes, the Company amended the warrants that had been granted in connection with the originally issued note agreements dated June 18, 2013, August 21, 2013 and October 17, 2013. Series A warrants totaling 1.125 million with an exercise price of $0.20 per share and Series B warrants totaling 1.125 million with an exercise price of $0.24 per shares were amended and reissued. The 4.5 million reissued Series A warrants have an exercise price of $0.05 per share and the 4.5 million reissued Series B warrants have an exercise price of $0.06 per share. For all 2013 and 2014 Cobrador notes the Series A warrants were amended to increase the term from 15 months to 24 months. The Series B term remained at 5 years. The amendment and reissuance of the three notes and warrants has been accounted for as an extinguishment of the original notes and warrants and the reissuance of the replacement notes and warrants.
Promissory Notes Payable
During 2014, the Company issued another $50,000 convertiblean unsecured promissory note to this director. This convertible note bears interest at 18% and is due and payable in February 2015. The Company issued warrants to acquire an aggregate of 208,333 shares of its common stock with an exercise price of $0.24 per share in connection with this debt. The warrants expire three years from the date of issuance and were determined to be detachable instruments. The carrying value of this note at June 30, 2014 was $50,000. Subsequent to June 30, 2014 the director exercised his rights to convert the principal of $50,000 in to 208,333 shares of the Company’s common stock.
Starting in 2015, the Company entered into a series of promissory notes from the same lender. All of the notes bear interest at a rate of 19% per annum and are payable together with interest over a period of six (6) months from the date of borrowing. As of December 31, 2015, note balance was $11,083. In 2016, the Company borrowed $76,500 and repaid $63,497. The balance outstanding on these notes was $24,116 at December 31, 2016. In 2017, the Company borrowed $36,400 and repaid $44,449. The balance outstanding on these notes was $16,067 at December 31, 2017. In 2018, the Company borrowed $143,908 and repaid $125,931. The balance outstanding on these notes was $34,044 at December 31, 2018. During the year ended December 31, 2019, the Company borrowed additional $38,325 and recorded additional original discount in the amount of $3,325 associated with the new borrowing. During the year ended December 31, 2019, the Company repaid $46,584 in principal and fully amortized $3,325 of debt discount. As of December 31, 2021, the balance outstanding on these notes was $25,784, which was settled during the year ended December 31, 2022, resulting in a $0 balance.
In June 2016, the Company issued a promissory note in the principal amount of $77,008. The promissory note bears interest at 10% per annum, with a provision for an increase in the interest rate upon an event of default, due on December 31, 2019. As of December 31, 2022 and 2021, the note was in default, and the balance outstanding was $77,008.
During the year ended December 31, 2016, the Company issued two unsecured promissory notes and borrowed an aggregate amount of $80,000. The promissory notes bear interest at June 30, 2014 was $55,053.
American Battery Materials, Inc. (formerly Boxscore Brands, Inc.)
Notes to Consolidated Financial Statements
For the Years Ended December 31, 2022 and 2021
In December 2017, the Company issued promissory notes in the aggregate principal balance of $28,000 to Cobrador. The notes accrue interest at 7% and have a two-year term. As of December 31, 2021, the balance outstanding on these notes was $28,000. During the year ended December 31, 2022, total principal and accrued interest in the amount of $28,000 of principal and $9,310 of interest were exchanged into new convertible note resulting in carrying value of $0 as of December 31, 2022.
On April 13, 2018, the Company issued a promissory note in the principal amount of $115,000. This note bears interest at the rate of 7% per annum, due on December 31, 2019. In 2019, the Company borrowed an additional $25,000 and repaid $60,000. The balance outstanding on this note as of December 31, 2021, was $80,000. During the year ended December 31, 2022, total principal and accrued interest in the amount of $80,000 of principal and $25,798 of interest were exchanged into new convertible note resulting in carrying value of $0 as of December 31, 2022.
On November 19, 2018, the Company issued a promissory note in the principal amount of $124,000 with net proceeds of $112,840. This note matures in 64 weeks. The Company recorded $11,160 to debt discount. During the year ended December 31, 2018, the Company repaid $9,784 in principal and amortized $872 of debt discount resulting in an unamortized debt discount of $10,288 and carrying value of $103,928 at December 31, 2018. During the year ended December 31, 2019, the Company repaid $48,154 in principal and amortized $9,744 of debt discount resulting in an unamortized debt discount of $544 and carrying value of $65,518 at December 31, 2019. During the year ended December 31, 2020, the Company repaid $15,000 in principal and fully amortized $544 of debt discount. As of December 31, 2020, the balance outstanding on this note was $51,062. During the year ended December 31, 2021, the Company fully repaid $25,000 in principal, remaining balance of the amount owed was released and recorded as a settlement of liability. As of December 31, 2022 and December 31, 2021, the balance outstanding on this note was $0.
During the year ended December 31, 2019, the Company issued two promissory notes in the aggregate principal amount of $135,000, bearing interest of 7% and mature on August 31, 2019. As of December 31, 2021, the balance outstanding on these notes was $135,000. During the year ended December 31, 2022, total principal and accrued interest in the amount of $135,000 of principal and $33,163 of interest were converted into a $161,261 convertible note and into 4,124,050 shares of common stock resulting in carrying value of $0 as of December 31, 2022.
On March 5, 2019, the Company issued a non-equity linked promissory note for $100,000 to an investor with an annual 10% rate of interest and a one (1) year maturity. This investor also received a warrant for 500,000 shares at June 30, 2014a strike price of $0.07 per share with a five (5) year maturity. The fair value of warrant was $5,592 which will be amortized tonot material. As of December 31, 2019, the outstanding balance was $100,000. On December 23, 2020, total principal and accrued interest expense throughin the maturityamount of $118,250 were converted into a new promissory note in the principal amount of $118,250 with an annual 10% rate of interest and mature on January 15, 2022. As of December 31, 2021, the notes which ranges from Julywere in default and the outstanding balance was $118,250. During the year ended December 31, 2022, total principal and accrued interest in the amount of $118,250 of principal and $20,957 of interest were exchanged into new convertible note resulting in carrying value of $0 as of December 31, 2022.
As of December 31, 2022, the above promissory notes were in default with an interest rate increased by 2% over the original interest rate.
American Battery Materials, Inc. (formerly Boxscore Brands, Inc.)
Notes to September 2014.Consolidated Financial Statements
For the merger on January 7, 2014,Years Ended December 31, 2022 and 2021
During the year ended December 31, 2022, the Company acquired the capital assets and outstanding lease obligations of U-Vend Canada. In 2013, the Company and U-Vend Canada jointly entered into a term sheet dated October 15, 2013 with a financing company (“Lessor”) to provide for equipment lease financing5 promissory note agreements in the aggregate amount of $1 million. All amounts borrowed under the lease financing agreement are secured by the leased equipment.$250,000. The Company will use this financing to acquire certain equipment to be usednotes have a 1 year term, bear interest of 7% and 9% if paid in direct income producing activities. Since the inceptioncash. The outstanding principal balance was $250,000 as of this lease financing agreement,December 31, 2022.
Convertible Notes Payable
2014 Stock Purchase Agreement
In 2014 and 2015 the Company has acquired leased equipment for $465,500entered into the 2014 Securities Purchase Agreement (the “2014 SPA”) pursuant to financing bywhich it issued eight (8) convertible notes in the Lessor. Asaggregate face amount of $146,000 due at various dates between August 2015 and March 2016. The principal on these notes is due at the holder’s option in cash or common shares at a conversion rate of $0.30 per the terms of the agreementshare. In connection with the Lessor,these borrowings the Company is obligated to pay annual lease payments as summarized below and also buy the equipment from the Lessor at the lease maturity in 2017. Accordingly, the lease has been treated asgranted a capital lease.
The Company and Cobrador held three yearsof the convertible notes in the aggregate face amount of $45,000 and agreed to extend the repayment date to November 17, 2020. The Company agreed to a revised conversion price of $0.05 per share and a revised warrant exercise price of $0.07 per share. As of December 31, 2021, outstanding balance of these notes was $45,000. During the year ended December 31, 2022, total principal and accrued interest in the amount of $45,000 of principal and $34,135 of interest were exchanged into new convertible note resulting in carrying value of $0 as of December 31, 2022.
2015 Stock Purchase Agreement
During the year ended December 31, 2015, the Company issued eleven subordinated convertible notes bearing interest at 9.5% per annum with an aggregate principal balance of $441,000 pursuant to the 2015 Stock Purchase Agreement (the “2015 SPA”). The notes were due in December 2017 and are payable at the noteholder’s option in cash or common shares at a conversion rate of $0.30 per share. The conversion rate was later revised to $0.05 due to down round provisions contained in the 2015 SPA, and the due date was extended to November 17, 2020. In connection with these borrowings, the Company issued a warrant to purchase 735,002 shares of the Company’s common stock at an exercise price of $0.40 per share and a 5 year contractual term. The exercise price was later revised to $0.22 per share pursuant to the down round provisions in the 2015 SPA. The Company allocated $8,113 of proceeds received to debt discount based on the computed fair value of the convertible notes and warrants issued. During the year ended December 31, 2016, the noteholder converted one note in the face amount of $35,000 into 700,000 shares of common stock. During the year ended December 31, 2021, principal in the amount of $100,000 and accrued interest in the amount of $138,245 were converted into 62,696,053 shares of common stock resulting in carrying value of $306,000 as of December 31, 2021. During the year ended December 31, 2022, total principal and accrued interest in the amount of $306,000 of principal and $214,188 of interest were exchanged into new convertible note resulting in carrying value of $0 as of December 31, 2022.
American Battery Materials, Inc. (formerly Boxscore Brands, Inc.)
Notes to Consolidated Financial Statements
For the Years Ended December 31, 2022 and 2021
2016 Stock Purchase Agreement
On September 30, 2016, the Company entered into the 2016 Stock Purchase Agreement (the “2016 SPA”) pursuant to which it issued four convertible notes in the aggregate principal amount of $684,589. The 2016 SPA notes were due in November 2020 and bear interest at 9.5% per annum. The notes are convertible into shares of common stock at a conversion price of $0.17 per share. With these notes, the Company satisfied its obligations for: previously issued promissory notes of $549,000, accrued interest of $38,615, lease principal installments of $47,466, previously accrued registration rights penalties of $22,156, due to a former officer of $81,250, and additional interest, expenses, fine and penalties of $23,110. The Company charged additional interest, expenses, fines and penalties $23,110 to operations as amortization of debt discount and deferred financing costs during the year ended December 31, 2016.
In connection with the 2016 SPA, the Company granted a total of 2,239,900 warrants with an exercise price of $0.30 per share which was later revised to $0.05 per share due to down round provisions, with a 5 year contractual life. The Company allocated $19,242 to debt discount based on the computed fair value of the convertible notes and warrants issued and classified the debt discount is as a warrant liability due to the down round provision in the warrants.
On July 11, 2019, $85,000 in principal were converted into 1,700,000 shares of common stock.
As of December 31, 2021, the 2016 SPA had a carrying value of $599,589. During the year ended December 31, 2022, total principal and accrued interest in the amount of $599,589 of principal and $392,405 of interest were partially exchanged into new convertible note and partially converted into 85,502,658 shares of common stock resulting in carrying value of $0 as of December 31, 2022.
During the year ended December 31, 2016, the Company issued four convertible notes (the “Cobrador 2016 Notes”) in the aggregate principal amount of $115,000. The Cobrador 2016 Notes have a 2 year term, bear interest at 9.5% per annum, and are convertible into shares of common stock at a conversion price of $0.17 per share. The conversion price was subsequently revised to $0.05 per the down round provisions and the maturity date was extended to September 26, 2021. In connection with the Cobrador 2016 Notes, the Company granted a total of 338,235 warrants with an exercise price of $0.30 per share which was subsequently revised to $0.05 per share due to down round provisions with a 5 year contractual term. The Company allocated $1,994 to debt discount based on the computed fair value of the convertible notes and warrants issued and classified the debt discount as a warrant liability due to the down round provision in the warrants. During the year ended December 31, 2019, $20,000 was converted into 400,000 shares. As of December 31, 2021, the Cobrador 2016 Notes had a carrying value of $95,000. During the year ended December 31, 2022, total principal and accrued interest in the amount of $95,000 of principal and $55,092 of interest were exchanged into new convertible note resulting in carrying value of $0 as of December 31, 2022.
During the fourth quarter of 2016, the Company issued three additional convertible notes in the aggregate principal amount of $250,000. The notes have a 2 year term, bear interest at 9.5% per annum and are convertible into shares of common stock at a conversion price of $0.05 per share. In connection with these borrowings, the Company granted warrants to purchase 5,000,000 shares of common stock with an exercise price of $0.07 per share. The Company allocated $27,585 to debt discount based on the computed fair value of the convertible notes and warrants issued, and the debt discount is classified as a warrant liability due to the down round provision in the warrants. As of December 31, 2020, the carrying value of the notes was $250,000. During the year ended December 31, 2021, principal in the amount of $47,000 was converted into 12,368,421 shares of common stock resulting in carrying value of $203,000 as of December 31, 2021. During the year ended December 31, 2022, principal and accrued interest in the amount of $28,000 of principal and $60,473 of interest were converted into 23,282,260 shares of common stock, principal and accrued interest in the amount of $175,000 of principal and $97,277 of interest were exchanged into new convertible note resulting in carrying value of $0 as of December 31, 2022.
American Battery Materials, Inc. (formerly Boxscore Brands, Inc.)
Notes to Consolidated Financial Statements
For the Years Ended December 31, 2022 and 2021
2017 Financings
During the year ended December 31, 2017, the Company entered into 19 separate convertible notes agreements (the “2017 Convertible Notes)” in the aggregate principal amount of $923,882. The 2017 Convertible Notes each have a 2 year term, bear interest at 9.5%, and are convertible into shares of common stock at a conversion price of $0.05 per share. In connection with the 2017 Convertible Notes, the Company issued a total of 16,537,926 warrants with an exercise price of $0.07 per share with a 5 year term. The Company allocated $59,403 to a debt discount based on the computed fair value of the convertible notes and warrants issued and classified the debt discount as a warrant liability due to the down round provision in the warrants. During the year ended December 31, 2018, the Company amortized $31,940 of debt discount resulting in unamortized debt discount of $13,278 and carrying value of $910,608 at December 31, 2018. During the year ended December 31, 2019, the Company fully amortized remaining $13,278 of debt discount. As of December 31, 2021, the carrying value of the notes was $924,282. During the year ended December 31, 2022, total principal and accrued interest in the amount of $924,282 of principal and $450,216 of interest were partially exchanged into new convertible note and partially converted into shares of common stock resulting in carrying value of $0 as of December 31, 2022.
2018 Financings
During the year ended December 31, 2018, the Company entered into seventeen separate convertible notes agreements (the “2018 Convertible Notes)” in the aggregate principal amount of $537,500. The 2018 Convertible Notes each have a 2 year term, bear interest at 9.5% if paid in cash, 15% if paid in common stock, and are convertible into shares of common stock at a conversion price of $0.05 per share. In connection with the 2018 Convertible Notes, the Company issued a total of 10,750,000 warrants with an exercise price of $0.07 per share with a 5 year term. The Company allocated $33,384 to a debt discount based on the computed fair value of the convertible notes and warrants issued and classified the debt discount as a warrant liability due to the down round provision in the warrants. During the year ended December 31, 2018, the Company amortized $12,803 of debt discount resulting in an unamortized debt discount of $20,581 and carrying value of $516,919 at December 31, 2018. During the year ended December 31, 2019, the Company amortized $16,692 of debt discount resulting in an unamortized debt discount of $3,889 and carrying value of $533,611 as of December 31, 2019. During the year ended December 31, 2020, the Company fully amortized $3,889 of debt discount resulting in carrying value of $537,500 as of December 31, 2020. During the year ended December 31, 2021, principal in the amount of $25,000 was converted into 6,578,947 shares of common stock resulting in carrying value of $512,500 as of December 31, 2021. During the year ended December 31, 2022, total principal and accrued interest in the amount of $512,500 of principal and $219,603 of interest were partially exchanged into new convertible note and partially converted into shares of common stock resulting in carrying value of $0 as of December 31, 2022.
On November 20, 2018, two officers converted $436,500 accrued compensation into two convertible note agreements in the principal amount of $436,500 in exchange. The notes have a 2 year term, bear interest at 9.5% if paid in cash, 15% if paid in common stock, and are convertible into shares of common stock at a conversion price of $0.05 per share. As of December 31, 2021, the carrying value of the notes was $436,500. During the year ended December 31, 2022, total principal and accrued interest in the amount of $436,500 of principal and $160,161 of interest were partially exchanged into new convertible note and partially converted into shares of common stock resulting in carrying value of $0 as of December 31, 2022.
American Battery Materials, Inc. (formerly Boxscore Brands, Inc.)
Notes to Consolidated Financial Statements
For the Years Ended December 31, 2022 and 2021
During the year ended December 31, 2018, the Company entered into three convertible notes agreements in the aggregate principal amount of $240,500 with a net proceed of $214,000. These notes had a 1-year term, and bear interest at 8%-12%. The notes are convertible into common stock at 60% to 61% multiplied by the lowest one to two trading price(s) during fifteen to twenty-five trading day period prior to the Conversion Date. The embedded conversion features were valued at $59,027, which were recorded as debt discount. In addition, the Company also recorded $26,500 as original debt discount. These notes were in default due to failure to comply with the reporting requirements of the Exchange Act, as the result, the Company recorded additional $120,250 penalty in principal as of December 31, 2018. During the year ended December 31, 2018, the Company amortized $21,382 of debt discount resulting in unamortized debt discount of $64,145 and carrying value of $296,605 at December 31, 2018. During the year ended December 31, 2019, the Company repaid $64,300 in principal and amortized $21,381 of debt discount, recorded $42,764 in accretion of debt discount, resulting in unamortized debt discount of $0 and carrying value of $296,450 at December 31, 2019. During the year ended December 31, 2020, total principal and accrued interest in the amount of $37,712 were converted into 9,924,132 shares of common stock resulting in carrying value of $281,250 as of December 31, 2020. During the year ended December 31, 2021, the Company repaid $206,250 in principal, $38,750 in accrued interest. Accrued interest in the amount of $31,860 was converted into 7,737,705 shares of common stock resulting in carrying value of $75,000 as of December 31, 2021. During the year ended December 31, 2022, the Company repaid $75,000 in principal resulting in carrying value of $0 as of December 31, 2022.
2019 Financings
On March 18, 2019, the Company issued a convertible promissory note for $85,250 with net proceeds of $75,000 to an investor with an 8.0% rate of interest and a one (1) year maturity. The Company has the option to pre-pay the note (principal and accrued interest) in cash within the 1st 90 days from issuance at a 25% premium, and 40% premium 91-180 days from the date of issuance. As a result of this financingissuance date. Subsequent to 181 days, the Company placed 22shall have no right of prepayment and the holder may convert at a 40% discount to the prevailing market price. The note matured on December 11, 2019. The note is convertible into shares of common stock at the lesser of 1) lowest trading price of twenty-five days prior to March 18, 2019 or 2) 60% of lowest trading price of twenty-five days prior to the Conversion Day. The embedded conversion features were valued at $0 due to default. In addition, the Company also recorded $10,250 as original debt discount. These notes were in default due to failure to comply with the reporting requirements of the Exchange Act, as the result, the Company recorded additional kiosks$42,625 penalty in principal as of December 31, 2019. During the year ended December 31, 2019, the Company fully amortized $23,384 of debt discount. During the year ended December 31, 2020, accrued interest in the amount of $24,508 was converted into service13,426,091 shares of common stock resulting in carrying value of $127,875 as of December 31, 2020. During the year ended December 31, 2021, total principal of $85,250 and accrued interest in the amount of $18,623 were converted into 34,811,689 shares of common stock resulting in carrying value of $0 as of December 31, 2021.
On March 14, 2019, the Company converted accounts payable of approximately $105,000 payables into a convertible note agreement in the principal amount of $60,000, remaining balance of the amount owed was released and recorded as a settlement of liability. The note has a 2 year term, bears interest at 9.5% if paid in cash, 15% if paid in common stock, and is convertible into shares of common stock at a conversion price of $0.05 per share. The outstanding principal balance was $60,000 as of December 31, 2021. During the year ended December 31, 2022, total principal and accrued interest in the amount of $60,000 of principal and $20,188 of interest were converted into 26,690,624 shares of common stock resulting in carrying value of $0 as of December 31, 2022.
On April 1, 2019, The Company converted an aggregate amount of principal and accrued interest of Perkins promissory note in the amount of $321,824 and accounts payable of $10,000 into two convertible notes. Both Notes have a 2 year term, bear interest at 9.5% if paid in cash, 15% if paid in common stock, and are convertible into shares of common stock at a conversion price of $0.05 per share. The outstanding principal balance was $331,824 as of December 31, 2021. During the year ended December 31, 2022, total principal and accrued interest in the amount of $331,824 of principal and $110,331 of interest were exchanged into new convertible note resulting in carrying value of $0 as of December 31, 2022.
American Battery Materials, Inc. (formerly Boxscore Brands, Inc.)
Notes to Consolidated Financial Statements
For the Years Ended December 31, 2022 and 2021
On April 15, 2019, The Company converted an accrued payable of $108,572, which was used to purchase vending machine, into a convertible note. The note has a 2 year term, bear interest at 9.5% if paid in cash, 15% if paid in common stock, and are convertible into shares of common stock at a conversion price of $0.07 per share. The outstanding principal balance was $108,572 as of December 31, 2021. During the year ended December 31, 2022, total principal and accrued interest in the amount of $108,572 of principal and $35,670 of interest were converted into 36,259,135 shares of common stock resulting in carrying value of $0 as of December 31, 2022.
On May 30, 2019, the Company issued a series of convertible notes under a $250,000 revolving Senior Secured credit facility to an investor, for working capital purposes. The notes carry an interest rate of 9.5% and a two-year term. The notes are convertible into common stock at $0.07 per share and are redeemable after one-year at the company’s option. The notes also contain a 4.99% limitation of ownership on conversion. The investor had consented to higher draws on the facility in excess of the limit per the initial agreement. On April 15, 2020, the Company issued a convertible note in the amount of $206,231. The note has a 2 year term, bears interest of 9.5% if paid in cash, 15% if paid in common stock, and is convertible into shares of common stock at a conversion price of $0.05 per share. On December 24, 2020, the Company issued a convertible promissory note in the amount of $147,000. The note has a 2 year term, bears interest of 9.5% if paid in cash, 15% if paid in common stock, and is convertible into shares of common stock at a conversion price of $0.03 per share and is redeemable at the principal amount plus accrued unpaid interest after one year, at the Company’s option. As of December 31, 2021, $603,231 was drawn under these agreements. During the year ended December 31, 2022, total principal and accrued interest in the amount of $603,231 of principal and $143,166 of interest were exchanged into new convertible note resulting in carrying value of $0 as of December 31, 2022.
During the year ended December 31, 2019, the Company entered into several convertible notes agreements in the amount of $68,000. The Notes have a 2 year term, bear interest at 9.5% if paid in cash, 15% if paid in common stock, and are convertible into shares of common stock at a conversion price of $0.07 per share. The outstanding principal balance was of $68,000 as of December 31, 2021. During the year ended December 31, 2022, total principal and accrued interest in the amount of $68,000 of principal and $21,470 of interest were exchanged into new convertible note resulting in carrying value of $0 as of December 31, 2022.
During the year ended December 31, 2019, the Company entered into a convertible notes agreement in the amount of $50,000. The Note has a 6 month term, bears interest at 9.5% if paid in cash, 15% if paid in common stock, and is convertible into shares of common stock at a conversion price of $0.01 per share. In connection with the Note, the Company issued 10,000,000 warrants with an exercise price of $0.02 per share with a 5 year term. The outstanding balance was of $50,000 as of December 31, 2021. During the year ended December 31, 2022, total principal and accrued interest in the amount of $50,000 of principal and $14,250 of interest were converted into 15,639,868 shares of common stock resulting in carrying value of $0 as of December 31, 2022.
2020 Financings
During the year ended December 31, 2020, the Company entered into several convertible notes agreements in the amount of $73,118. The notes have a 2 year term, bear interest of 9.5% if paid in cash, 15% if paid in common stock, and are convertible into shares of common stock at a conversion price of $0.05 per share. The outstanding principal balance was $73,118 as of December 31, 2021. During the year ended December 31, 2022, total principal and accrued interest in the amount of $73,118 of principal and $14,522 of interest were partially exchanged into new convertible note and partially converted into shares of common stock resulting in carrying value of $0 as of December 31, 2022.
American Battery Materials, Inc. (formerly Boxscore Brands, Inc.)
Notes to Consolidated Financial Statements
For the Years Ended December 31, 2022 and 2021
2021 Financings
During the nine months ended September 30, 2021, the Company entered into several convertible notes agreements in the amount of $365,000. The notes have a 2 year term, bear interest of 9.5% if paid in cash, 15% if paid in common stock, and are convertible into shares of common stock at a conversion price of $0.05 per share. The outstanding principal balance was $365,000 as of December 31, 2021. During the year ended December 31, 2022, total principal and accrued interest in the amount of $365,000 of principal and $54,986 of interest were exchanged into new convertible note resulting in carrying value of $0 as of December 31, 2022.
On July 13, 2021, the Company issued a convertible note in the amount of $150,000. The note has a 3 year term, bears interest of 9.5% if paid in cash, 15% if paid in common stock, and is convertible into shares of common stock at a conversion price of $0.05 per share. The outstanding principal balance was $150,000 as of December 31, 2021. During the year ended December 31, 2022, total principal and accrued interest in the amount of $150,000 of principal and $17,377 of interest were exchanged into new convertible note resulting in carrying value of $0 as of December 31, 2022.
On September 21, 2021, the Company issued a convertible note in the amount of $100,000. The note has a 2 year term, bears interest of 9.5% if paid in cash, 15% if paid in common stock, and is convertible into shares of common stock at a conversion price of $0.03 per share. The outstanding principal balance was $100,000 as of December 31, 2021. During the year ended December 31, 2022, total principal and accrued interest in the amount of $100,000 of principal and $9,738 of interest were exchanged into new convertible note resulting in carrying value of $0 as of December 31, 2022.
On March 1, 2021, the Company issued a convertible note for deferred compensation in the principal amount of $94,600. The note bears interest at the rate of 9.5% per annum and is due and payable in two years. The note was convertible into shares of the Company’s common stock at $0.05 per share and was redeemable at the principal amount plus accrued unpaid interest after one year, at the Company’s option. During the year ended December 31, 2021, the Company fully repaid $94,600 in principal and recorded additional principal of $30,000 for deferred compensation under the same terms, resulting in carrying value of $30,000 at December 31, 2021. During the year ended December 31, 2022, the Company recorded additional principal of $16,667 and reclassified total principal of $46,667 to accrued expenses, resulting in carrying value of $0 as of December 31, 2022.
On October 14, 2021, the Company issued a convertible note in the amount of $20,000. The note has a 2 year term, bears interest of 9.5% if paid in cash, 15% if paid in common stock, and is convertible into shares of common stock at a conversion price of $0.03 per share. The outstanding principal balance was $20,000 as of December 31, 2021. During the year ended December 31, 2022, total principal and accrued interest in the amount of $20,000 of principal and $1,837 of interest were exchanged into new convertible note resulting in carrying value of $0 as of December 31, 2022.
On November 2, 2021, the Company issued 2 convertible notes - $150,000, $100,000 - to fund an asset acquisition, continue funding operations and reconciling a debt. The notes bear interest at the rate of 9.5% per annum and are due and payable in two years. The notes are convertible into shares of the Company’s common stock at $0.03 per share and are redeemable at the principal amount plus accrued unpaid interest after one year, at the Company’s option. The notes also contain a 4.99% limitation on the investor’s beneficial ownership of the Company’s outstanding common stock upon conversion. The outstanding principal balance was $250,000 as of December 31, 2021. During the year ended December 31, 2022, total principal and accrued interest in the amount of $250,000 of principal and $21,705 of interest were partially exchanged into new convertible note and partially converted into shares of common stock resulting in carrying value of $0 as of December 31, 2022.
2022 Financings
During the nine months ended September 30, 2022, the Company entered into several convertible note agreements in the aggregate amount of $590,000. The $50,000 note has a 2 year term, bears interest of 9.5% if paid in cash, 15% if paid in common stock, and is convertible into shares of common stock at a conversion price of $0.03 per share. Other notes have a 1-year term, bear interest of 15%, and are convertible into shares of common stock at a conversion price of $0.01 per share. On December, 14, 2022, total principal and accrued interest in the amount of $590,000 of principal and $44,188 of interest were partially exchanged into new convertible note and partially converted into shares of common stock resulting in carrying value of $0 as of December 31, 2022.
American Battery Materials, Inc. (formerly Boxscore Brands, Inc.)
Notes to Consolidated Financial Statements
For the Years Ended December 31, 2022 and 2021
On September, 1, 2022, the Company converted 2 promissory notes into 2 convertible notes in the aggregate amount of $256,349. The notes have 4 month term, bear interest of 7% and 10%, and are convertible into shares of common stock at a conversion price of $0.005 per share. On December, 14, 2022, total principal and accrued interest in the amount of $256,349 of principal and $1,675 of interest were exchanged into new convertible note resulting in carrying value of $0 as of December 31, 2022.
On December, 14, 2022, the Company issued 6 convertible notes in the aggregate amount of $8,503,850 in exchange of outstanding principal and accrued interest of existing promissory notes and convertible notes. Then, on December, 14, 2022, these convertible notes were converted into shares of common stock. In total, the Company converted principal of $6,627,686 and $589,150, and accrued interest of $2,359,341 and $372,803, into 2,868,067,227 and 259,950,714 shares of common stock during the second quarteryears ended December 31, 2022 and 2021, respectively.
Scheduled maturities of 2014.debt remaining as of December 31, 2022 for each respective fiscal year end are as follows:
| 2023 | 357,008 | |||
| Total | $ | 357,008 |
The following table reconciles, for the year ended December 31, 2022 and 2021, the beginning and ending balances for financial instruments related to the embedded conversion features that are recognized at fair value in the consolidated financial statements.
| Year Ended | ||||||||
| December 31, 2022 | December 31, 2021 | |||||||
| Balance of embedded derivative at the beginning of the period | $ | 211,345 | $ | 3,083,255 | ||||
| Change in fair value of conversion features | (211,345 | ) | (2,871,910 | ) | ||||
| Balance of embedded derivatives at the end of the period | $ | - | $ | 211,345 | ||||
Note 5 - Capital Lease Obligations
The Company acquired capital assets under capital lease obligations. Pursuant to the agreement with the lessor, the Company makes quarterly lease payments and will make a guaranteed residual payment at the end of the lease as summarized below. At the end of the lease, the Company will own the equipment.
During the year ended December 31, 2018 the Company entered into various capital lease agreements. The leases expire at various points through the year ended December 31, 2023.
The following schedule provides minimum future rental payments required as of June 30, 2014, under capital leases which have a remaining non-cancelable lease term in excess of one year:
2014 | $ | 103,329 | ||
2015 | 136,354 | |||
2016 | 129,779 | |||
2017 | 30,782 | |||
Total minimum lease payments | 400,244 | |||
Guaranteed residual value | 206,833 | |||
607,077 | ||||
Less: Amount represented interest | (153,038 | ) | ||
Present value of minimum lease payments and guaranteed residual value | 454,039 | |||
Less: Current portion of capital lease obligations | (92,117 | ) | ||
Long term capital lease obligations and guaranteed residual value | 361,922 | |||
Less: Unamortized debt discount on capital leases | (55,269 | ) | ||
Long term capital lease obligations and guaranteed residual value, net | $ | 306,653 |
| 2022 | $ | 36,692 | ||
| Total minimum lease payments | 36,692 | |||
| Less: Amount represented interest | (438 | ) | ||
| Present value of minimum lease payments and guaranteed residual value | $ | 36,254 |
Note 6 - Capital Stock
On October 20, 2022 the Company, following receipt of written approval from stockholders acting without a meeting and holding at least the minimum number of votes that would be necessary to authorize or take such action at a meeting, filed an amendment to its Certificate of Incorporation to (i) change the discretion of Mr. Meyers.
| Shares Outstanding | Common Stock | Additional Paid-in Capital | Accumulated Deficit | Total Stockholders’ Deficit | ||||||||||||||||
| Balance at December 31, 2013 | 2,446,276 | $ | 2,446 | $ | 1,442,729 | $ | (1,774,262) | $ | (329,087) | |||||||||||
| Stock based compensation | 389,520 | 389 | 61,721 | - | 62,110 | |||||||||||||||
| Common shares issued for advisor fees | 1,354,111 | 1,354 | 188,221 | - | 189,575 | |||||||||||||||
| Shares issued in satisfaction of accrued interest | 8,621 | 9 | 491 | - | 500 | |||||||||||||||
| Common shares issued for services | 41,667 | 42 | 9,958 | - | 10,000 | |||||||||||||||
| Common shares issued for capital lease debt | 208,881 | 209 | 33,896 | - | 34,105 | |||||||||||||||
| Warrants exercised | 397,000 | 397 | 23,263 | - | 23,660 | |||||||||||||||
| Debt discount related to beneficial conversion | - | - | 54,424 | - | 54,424 | |||||||||||||||
| Warrant liability reclassified to equity as a result of reverse stock split – adequate authorized shares available | - | - | 52,833 | - | 52,833 | |||||||||||||||
| Warrants granted for debt obligations | - | - | 21,947 | - | 21,947 | |||||||||||||||
| Repurchase of beneficial conversion feature in connection with debt extinguishment | - | - | (90,000) | - | (90,000) | |||||||||||||||
| Shares issued in acquisition of U-Vend Canada | 3,500,000 | 3,500 | 417,900 | - | 421,400 | |||||||||||||||
| Net loss | - | - | - | (1,165,490) | (1,165,490) | |||||||||||||||
| Balance at June 30, 2014 | 8,346,076 | $ | 8,346 | $ | 2,217,383 | $ | (2,939,752) | $ | (714,023) | |||||||||||
| Exercise | |||||||||
| Warrants | Price | Expiration | |||||||
| Warrants acquired in U-Vend merger 1/7/14 | 1,750,669 | $ | 0.24 | September 2015 – December 2016 | |||||
| 2011 Common share private placement warrants | 12,500 | $ | 60.00 | March 2018 | |||||
| 2012 Private placements warrants | 750 | $ | 30.00 | March - April 2015 | |||||
| 2013 Series A warrants Senior Convertible Notes | 6,000,000 | $ | 0.05 | June - December 2015 | |||||
| 2013 Series B warrants Senior Convertible Notes | 6,000,000 | $ | 0.06 | June - December 2018 | |||||
| 2013 Lease obligation warrants | 986,250 | $ | 0.20 | November 2016 | |||||
| 2014 Warrants for services | 834,000 | $ | 0.05 | July 2015 | |||||
| 2014 Warrants for services | 1,024,000 | $ | 0.06 | January 2019 | |||||
| 2014 Warrants for services | 35,000 | $ | 0.24 | January 2016 | |||||
| 2014 Warrants for services | 18,480 | $ | 0.01 | January 2016 | |||||
| 2014 Series A warrants Senior Convertible Notes | 5,100,000 | $ | 0.05 | January 2016- June 2016 | |||||
| 2014 Series B warrants Senior Convertible Notes | 5,100,000 | $ | 0.06 | January 2019- June 2019 | |||||
| 2014 Lease obligation warrants | 246,563 | $ | 0.20 | March 2017 | |||||
| 2014 Lease obligation warrants | 483,889 | $ | 0.18 | May 2017 | |||||
| 2014 Issued with Promissory Note | 41,667 | $ | 0.24 | May 2016 | |||||
| 2014 Issued with Note Payable - Director Warrants | 208,333 | $ | 0.24 | February 2017 | |||||
Balance at January 1, 2014 | $ | 214,609 | ||
Allocation of proceeds related to senior convertible notes as derivative liabilities due to “down-round provision” | 255,936 | |||
Extinguishment of June 18, 2013, August 21, 2013 and October 17, 2013 senior convertible notes | (87,921) | |||
Warrants classified as derivative liabilities due to inadequate shares authorized to accommodate the exercise of all outstanding equity instruments | 52,833 | |||
Adjustment of warrants classified as derivative liabilities to additional paid-in capital as a result adequate shares authorized due to reverse stock split on May 16, 2014 | (52,833) | |||
Unrealized loss on fair market value adjustment | 277,674 | |||
Balance at June 30, 2014 | $ | 660,298 |
Net cash proceeds after brokerage fee of $21,000 | $ | 74,000 | ||
LegalStore.com liabilities assumed | 136,241 | |||
Total purchase price | 210,241 | |||
LegalStore.com assets | 206,402 | |||
Gain on sale | $ | 3,839 |
2014 | $ | 31,007 | ||
2015 | 29,095 | |||
2016 | 29,516 | |||
2017 | 28,602 | |||
2018 | 22,325 | |||
2019 | 8,280 | |||
$ | 148,825 |
American Battery Materials, Inc. (formerly Boxscore Brands, Inc.)
Notes to Consolidated Financial Statements
For the Company.Years Ended December 31, 2022 and 2021
On October 20, 2022, in addition to the dealers’ obligationName Change and the Authorized Share Increase, the holder of 63.86% of the issued and outstanding shares of stock of the Company entitled to delivervote took action by written consent and without a prospectus when actingmeeting, pursuant to Delaware General Corporate Law Section 228, and adopted and approved the following actions:
| 1. | Future amendment of the Company’s Certificate of Incorporation to implement a decrease in the authorized shares of the Company’s Common Stock from 4,500,000,000 to a number of not less than 10,000,000 and not more than 2,000,000,000 (the “Authorized Share Reduction”), at any time prior to October 20, 2023 (the “Anniversary Date”), with the Board having the discretion to determine whether or not the Authorized Share Reduction is to be effected, and if effected, the exact number of the Authorized Share Reduction within the above range. |
| 2. | Future amendment of the Company’s Certificate of Incorporation to implement a reverse stock split of the Company’s Common Stock by a ratio of not less than 1-for-10 and not more than 1-for-1,000, (the “Reverse Split”), at any time prior to the Anniversary Date, with the Board having the discretion to determine whether or not the Reverse Split is to be effected, and if effected, the exact ratio for the Reverse Split within the above range. |
Preferred Stock
The Company has authorization for “blank check” preferred stock, which could be issued with voting, liquidation, dividend and other rights superior to common stock. As of December 31, 2022 and 2021, there are 10,000,000 shares of preferred stock authorized, and 50,000 and 0 shares issued or outstanding, respectively.
On August 12, 2022, the Company effected with the Delaware Secretary of State a designation of 50,000 shares of Series A Super Voting Preferred Convertible Stock, having a par value of $0.001 per share and a purchase price of $1.00 per share (the “Series A Preferred”).
The Series A Preferred may vote on any action upon which holders of the Common Stock may vote, and they shall vote together as underwriters.
During the year ended December 31, 2022, the Company issued 50,000 shares of Series A Preferred Stock pursuant to a Stock Purchase Agreement by and between the Company and Adam Lipson, a member of the Board of the Company, for the purchase price of $50,000.
Common Stock
The Company has authorized 4,500,000,000 shares of common stock, with 3,245,556,528 and 335,778,778 shares issued and outstanding at December 31, 2022 and 2021, respectively.
American Battery Materials, Inc. (formerly Boxscore Brands, Inc.)
Notes to Consolidated Financial Statements
For the Years Ended December 31, 2022 and 2021
During the year ended December 31, 2022, the Company issued 2,909,777,750 shares of its common stock, including:
| ● | 2,868,067,227 shares upon the conversion of $8,987,027 of convertible notes and accrued interest; |
| ● | 34,210,523 178,395 shares upon warrant exercises for an aggregate exercise price of $130,000; and |
| ● | 7,500,000 shares for services valued at $51,000 issued pursuant to an Investors Relations Consulting Agreement with a third party dated December 12, 2022. |
During the year ended December 31, 2021, the Company issued 259,950,714 shares of its common stock upon the conversion of $961,953 of convertible notes and accrued interest.
Note 7 - Stock Options and Warrants
Warrants
At December 31, 2022 the Company had the following warrant securities outstanding:
| Warrants | Exercise Price | Expiration | ||||||||
| 2018 Warrants – financing | 8,491,905 | $ | 0.07 | January - November 2023 | ||||||
| 2018 Warrants for services | 2,250,000 | $ | 0.07 | October - December 2023 | ||||||
| 2019 Warrants –financing | 10,500,000 | $ | 0.07 | March - October 2024 | ||||||
| 2019 Warrants for services | 3,500,000 | $ | 0.07 | March - April 2024 | ||||||
| 2020 Warrants for services | 750,000 | $ | 0.05 | February 2025 | ||||||
| 2022 Exchange warrants | 71,169,473 | $ | 0.0038 | September 2025 | ||||||
| Total | 96,661,378 | |||||||||
During the year ended December 31, 2020, the Company issued warrants exercisable into 3,000,000 shares of common stock to its officer. The fair value of warrants was estimated using the Black-Scholes-Merton option-pricing model with the following assumptions: expected volatility of 339%, risk-free interest rate 1.35%, expected dividend yield of 0%. During the year ended December 31, 2022 and 2021, the Company recorded $525 and $4,722, respectively, in warrant expense related to vesting of these warrants.
During the year ended December 31, 2022, the Company issued warrants exercisable into 71,169,473 shares of common stock. The warrants immediately vest, have an exercise price of $0.0038 per share, and a maturity date of three years. The fair value of warrants was estimated using the Black-Scholes-Merton option-pricing model with the following assumptions: expected volatility of 189%; risk-free interest rate 3.96%; expected dividend yield of 0%. During the year ended December 31, 2022 and 2021, the Company recorded $10,555 and $0, respectively, in warrant expense related to vesting of these warrants.
American Battery Materials, Inc. (formerly Boxscore Brands, Inc.)
Notes to Consolidated Financial Statements
For the Years Ended December 31, 2022 and 2021
A summary of all warrants activity for the year ended December 31, 2022 and 2021 is as follows:
| Number of Warrants | Weighted Average Exercise Price | Weighted Average Remaining Contractual Term | ||||||||||
| Balance outstanding at December 31, 2020 | 52,979,485 | $ | 0.06 | 2.34 | ||||||||
| Granted | - | - | - | |||||||||
| Exercised | - | - | - | |||||||||
| Forfeited | - | - | - | |||||||||
| Cancelled | - | - | - | |||||||||
| Expired | (3,628,226 | ) | 0.05 | - | ||||||||
| Balance outstanding at December 31, 2021 | 49,351,259 | $ | 0.06 | 1.96 | ||||||||
| Exercisable at December 31, 2021 | 49,351,259 | $ | 0.06 | 1.96 | ||||||||
| Number of Warrants | Weighted Average Exercise Price | Weighted Average Remaining Contractual Term | ||||||||||
| Balance outstanding at December 31, 2021 | 49,351,259 | $ | 0.06 | 1.53 | ||||||||
| Granted | 71,169,473 | 0.0038 | 2.98 | |||||||||
| Exercised | (1,857,143 | ) | 0.054 | - | ||||||||
| Forfeited | - | - | - | |||||||||
| Cancelled | - | - | - | |||||||||
| Expired | (22,002,211 | ) | - | - | ||||||||
| Balance outstanding at December 31, 2022 | 96,661,378 | $ | 0.02 | 2.32 | ||||||||
| Exercisable at December 31, 2022 | 96,661,378 | $ | 0.02 | 2.32 | ||||||||
The intrinsic value of the outstanding warrants at December 31, 2022 was $0, as the exercise prices exceeded the common stock’s fair market value per share on that date.
Equity Incentive Plan
On July 22, 2011, the Board of Directors of the Company approved the Company’s 2011 Equity Incentive Plan (the “Plan”) and on July 26, 2011, stockholders holding a majority of shares of the Company approved, by written consent, the Plan and the issuance under the Plan of 5,000,000 shares. On November 16, 2017, the Board of Directors approved an increase of 10,000,000 shares to be made available for issuance under the Plan. Accordingly, the total number of shares of common stock available for issuance under the Plan is 15,000,000 shares. Awards may be granted to employees, officers, directors, consultants, agents, advisors and independent contractors of the Company and its related companies. Such options may be designated at the time of grant as either incentive stock options or nonqualified stock options. Stock-based compensation includes expense charges related to all stock-based awards. Such awards include options, warrants and stock grants. Generally, the Company issues stock options that vest over three years and expire in 5 to 10 years.
American Battery Materials, Inc. (formerly Boxscore Brands, Inc.)
Notes to Consolidated Financial Statements
For the Years Ended December 31, 2022 and 2021
A summary of all stock option activity for the year ended December 31, 2022 and 2021 is as follows:
| Number of Options | Weighted Average Exercise Price | Weighted Average Remaining Contractual Term | ||||||||||
| Balance outstanding at December 31, 2020 | 2,500 | $ | 60 | 0.5 | ||||||||
| Granted | - | - | - | |||||||||
| Exercised | - | - | - | |||||||||
| Cancelled or expired | (2,500 | ) | - | - | ||||||||
| Balance outstanding at December 31, 2021 | - | $ | - | - | ||||||||
| Exercisable at December 31, 2021 | - | $ | - | - | ||||||||
| Number of Options | Weighted Average Exercise Price | Weighted Average Remaining Contractual Term | ||||||||||
| Balance outstanding at December 31, 2021 | - | $ | - | - | ||||||||
| Granted | - | - | - | |||||||||
| Exercised | - | - | - | |||||||||
| Cancelled or expired | - | - | - | |||||||||
| Balance outstanding at December 31, 2022 | - | $ | - | - | ||||||||
| Exercisable at December 31, 2022 | - | $ | - | - |
| Total Deferred | (322,003 | ) | (68,793 | ) | ||||
| Less Increase in Allowance | 322,003 | 68,793 | ||||||
| Net Deferred | $ | - | $ | - | ||||
| Total Income Tax Provision | $ | 659 | $ | 3,285 |
American Battery Materials, Inc. (formerly Boxscore Brands, Inc.)
Notes to Consolidated Financial Statements
For the Years Ended December 31, 2022 and 2021
Note 8 - Income Taxes
Loss from operations before provision (benefit) for income taxes and associated tax provision (benefit) are summarized in the following table:
| Years ended December 31, | ||||||||
| Net Income (Loss) | 2022 | 2021 | ||||||
| Domestic | $ | (1,486,848 | ) | $ | (263,180 | ) | ||
| Foreign | - | - | ||||||
| $ | (1,486,848 | ) | $ | (263,180 | ) | |||
| Current | ||||||||
| Federal | $ | - | $ | - | ||||
| State | 659 | 3,285 | ||||||
| Foreign | - | - | ||||||
| Total Current | $ | 659 | $ | 3,285 | ||||
| Deferred | ||||||||
| Federal | $ | (270,482 | ) | $ | (54,817 | ) | ||
| State | (51,521 | ) | (13,976 | ) | ||||
| Foreign | - | - | ||||||
The significant components of the deferred tax assets and liabilities are summarized below:
| Years ended December 31, | ||||||||
| 2022 | 2021 | |||||||
| Deferred Tax Assets (Liabilities): | ||||||||
| Net Operating Loss Carry-Forwards | $ | 3,677,645 | $ | 3,319,927 | ||||
| Depreciable and Amortizable Assets | (20,520 | ) | (20,520 | ) | ||||
| Stock Based Compensation | 67,477 | 51,957 | ||||||
| Beneficial Conversion Feature | 556,265 | 609,101 | ||||||
| Loss Reserve | 457 | 457 | ||||||
| Accrued Compensation | 35,146 | 35,146 | ||||||
| Other | 31,509 | 29,908 | ||||||
| Total | 4,347,979 | 4,025,976 | ||||||
| Less Valuation Allowance | (4,347,979 | ) | (4,025,976 | ) | ||||
| Net Deferred Tax Assets (Liabilities) | $ | - | $ | - | ||||
American Battery Materials, Inc. (formerly Boxscore Brands, Inc.)
Notes to Consolidated Financial Statements
For the Years Ended December 31, 2022 and 2021
At December 31, 2022 and 2021, the Company has available net operating loss carry-forwards for federal and state income tax purposes of approximately $12.8 million and $11.4 million, respectively. Of the federal net operating loss carryforward, $9.5 million, if not utilized earlier, expires through 2038 and $3.3 million will carry-forward indefinitely. The state net operating loss carryforwards expire through 2041, if not utilized earlier. Due to the uncertainty as to the Company’s ability to generate sufficient taxable income in the future and utilize the net operating loss carry-forwards before they expire, the Company has recorded a valuation allowance to fully offset the net operating loss carry-forwards, as well as the total net deferred tax assets.
Internal Revenue Code Section 382 (“Section 382”) imposes limitations on the availability of a company’s net operating losses and other corporate tax attributes as certain significant ownership changes occur. As a result of the historical equity instrument issuances by the Company, a Section 382 ownership change may have occurred and a study will be required to determine the date of the ownership change, if any. The amount of the Company’s net operating losses and other tax attributes incurred prior to any ownership change may be limited based on the Company’s value. A full valuation allowance has been established for the Company’s deferred tax assets, including net operating losses and any other corporate tax attributes.
During the years ended December 31, 2022 and 2021, the Company had no unrecognized uncertain tax positions. The Company’s policy is to recognize interest accrued and penalties related to unrecognized uncertain tax positions in tax expense.
The Company files income tax returns in the U.S. federal jurisdiction, as well as the states of California, Florida, Illinois and New York. The tax years 2018-2022 generally remain open to examination by the U.S. federal and state taxing authorities.
A reconciliation of the income tax provision using the statutory U.S. income tax rate compared with the actual income tax provision reported on the consolidated statements of operations is summarized in the following table:
| Years ended December 31, | ||||||||
| 2022 | 2021 | |||||||
| Statutory United States federal rate | 21.00 | % | 21.00 | % | ||||
| State income tax, net of federal benefit | 4.00 | 5.31 | ||||||
| Change in valuation allowance | (22.50 | ) | (26.14 | ) | ||||
| Stock based compensation | 1.3 | |||||||
| Other | (3.69 | ) | - | |||||
| Permanent differences | (0.11 | ) | (0.17 | ) | ||||
| Effective tax rate benefit (provision) | 0.00 | % | (0.00 | )% | ||||
American Battery Materials, Inc. (formerly Boxscore Brands, Inc.)
Notes to Consolidated Financial Statements
For the Years Ended December 31, 2022 and 2021
Note 9 - Subsequent Events
The Company has evaluated events occurring subsequent to December 31, 2022 through the date these financial statements were issued and determined the following significant events require disclosure:
| ● | On January 5, 2023, the Company issued 3,684,211 shares of its Common Stock upon the exercise of a Warrant. |
| ● | On January 31, 2023, the Company issued 18,421,053 shares of its Common Stock upon the exercise of a Warrant. |
| ● | On January 31, 2023, the Company issued 18,421,053 shares of its Common Stock upon the exercise of a Warrant. The issuance was exempt under Section 4(a)(2) of the Securities Act. |
| ● | On February 28, 2023, the Company issued 5,526,316 shares of its Common Stock upon the exercise of a Warrant. |
| ● | On March 27, 2023, the Company issued 9,210,526 shares of its Common Stock upon the exercise of a Warrant. |
| ● | On April 5, 2023, the Company closed transactions with four (4) investors under which the Company issued convertible promissory notes with an aggregate principal amount of $1,500,000. |
| ● | On April 8, 2023, the Company issued 18,421,053 shares of its Common Stock upon the exercise of a Warrant. |
__________ Shares
AMERICAN BATTERY MATERIALS, INC.
Common Stock
Preliminary Prospectus
__________, 2024
PART II
INFORMATION NOT REQUIRED IN
ITEM 13. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
The following table sets forth the fees and expenses, other than underwriting discounts and commissions, payable in connection with the registration of the common stock hereunder. All amounts are estimates except the SEC registration fee.
| Item | be Paid | |||
| SEC registration fee | $ | |||
| FINRA filing fee | ||||
| NYSE American listing fee | ||||
| Printing and mailing expenses | ||||
| Legal fees and expenses | ||||
| Accounting fees and expenses | ||||
| Transfer agent and registrar fees and expenses | ||||
| Miscellaneous expenses | ||||
| Total | $ | |||
ITEM 14. INDEMNIFICATION OF DIRECTORS AND OFFICERS
| Registration Fees | $ | 484 | ||
| Accounting Fees and Expenses | 10,000 | |||
| Legal Fees and Expenses | 10,000 | |||
| Miscellaneous Fees and Expenses | 7,500 | |||
| TOTAL | $ | 27,984 |
Under the General Corporation Law of the offering listed above. No portionState of these expenses will be borne byDelaware, we can indemnify our directors and officers against liabilities they may incur in such capacities, including liabilities under the selling stockholders. The selling stockholders, however, will pay any other expenses incurred in selling their common stock, including any brokerage commissions or costsSecurities Act of sale.
Our bylaws provide for the indemnification of this provisionour directors and officers to the fullest extent permitted by the Delaware General Corporation Law. We are not, however, required to indemnify any director or officer in our Certificateconnection with any (a) willful misconduct, (b) willful neglect, or (c) gross negligence toward or on behalf of Incorporation is to eliminate our rights and our stockholders’ rights (through stockholders’ derivative suits) to recover monetary damages from a director for breachus in the performance of the fiduciary duty of carehis or her duties as a director (including any breach resulting from negligent or grossly negligent behavior) except in the situations described in clauses (i) through (v) above. This provision does not limit or eliminate our rights or the rights of our security holdersofficer. We are required to seek non-monetary relief, such as an injunction or rescission, in the event of a breach of a director’s duty of care or any liability for violation of the federal securities laws.
We have been advised that, in the opinion of the foregoing securities were issued without registrationSEC, any indemnification for liabilities arising under the Securities Act of 1933 is against public policy, as expressed in the Securities Act, and is, therefore, unenforceable.
ITEM 15. RECENT SALES OF UNREGISTERED SECURITIES
The following information represents securities sold by reasonthe Company During the past three years which were not registered under the Securities Act. Included are sales of reacquired securities, as well as new issues, securities issued in exchange for property, services, or other securities, and new securities resulting from the modification of outstanding securities. All issuances were exempt under Section 4(a)(2) of the exemption from registration afforded by Section 4(2) promulgated thereunder. With respect to each issuance, the shares delivered to the Company appropriate investment representations, including an affirmation of “accredited investor” status. Each party being issued shares had an opportunity to ask questions of the Company and acknowledge that such party understood the risks of an investment in the Company.
Securities Act unless otherwise noted.
| ● | On April 5, 2023, the Company closed transactions with four (4) investors under which the Company issued identified convertible promissory notes with an aggregate principal amount of One Million Five Hundred Thousand Dollars ($1,500,000). The Company received net proceeds of $1,447,500. | |
| ● | On March 27, 2023, in consideration of the payment of $35,000, the Company issued 9,210,526 shares of its Common Stock upon the exercise of a Warrant. | |
| ● | On February 28, 2023, the Company issued 2,688,478 shares of its Common Stock upon the cashless exercise of a Warrant. | |
| ● | On January 31, 2023, in consideration of the payment of $70,000, the Company issued 18,421,053 shares of its Common Stock upon the exercise of a Warrant. | |
| ● | On January 31, 2023, in consideration of the payment of $70,000, the Company issued 18,421,053 shares of its Common Stock upon the exercise of a Warrant. | |
| ● | On January 5, 2023, in consideration of the payment of $14,000, the Company issued 3,684,211 shares of its Common Stock upon the exercise of a Warrant. |
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| ● | On December 29, 2022, in consideration of the payment of $45,000, the Company issued 11,842,103 shares of its Common Stock upon the exercise of a Warrant. | |
| ● | On December 26, 2022, the Company issued 7,500,000 shares to MZHCI in exchange for services rendered. | |
| ● | On December 14, 2022, the Company converted a total of $8,987,027 held by noteholders under 99 convertible promissory notes into a total of 2,818,277,866 shares of Common Stock as follows: | |
| ● | 119,284,531 shares were issued to six holders as voluntary conversions by each holder under each of the respective convertible promissory notes. | |
| ● | 655,868,191 shares were issued to 20 holders under the forced conversion provision under each of the respective convertible promissory notes. | |
| ● | 2,043,125,140 shares were issued to six holders under settlement agreements with each of the noteholders. | |
| ● | On December 14, 2022, in consideration of the payment of $25,000, the Company issued 6,578,947 shares of its common stock upon the exercise of a Warrant. | |
| ● | On December 2, 2022, in consideration of the payment of $35,000, the Company issued 9,210,526 shares of its Common Stock upon the exercise of a Warrant. | |
| ● | On November 21, 2022, in consideration of the payment of $25,000, the Company issued 6,578,947 shares of its Common Stock upon the exercise of a Warrant. | |
| ● | On August 23, 2022, the Company issued fifty thousand (50,000) shares of its Series A Preferred Convertible Stock in exchange for $50,000 of net proceeds from Adam Lipson, who is one of our Directors. | |
| ● | On February 10, 2022, a noteholder converted convertible debt into 10,650,681 shares of Common Stock. | |
| ● | On February 4, 2022, a noteholder converted convertible debt into 11,295,526 shares of Common Stock. | |
| ● | On January 6, 2022, a noteholder converted convertible debt into 12,631,579 shares of Common Stock. | |
| ● | On January 4, 2022, a noteholder converted convertible debt into 15,211,579 shares of Common Stock. |
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ITEM 16. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES.
| (a) | Exhibits. |
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| 101.INS | ||
| 101.SCH | Inline XBRL Taxonomy Extension Schema Document. | |
| 101.CAL | Inline XBRL Taxonomy Extension Calculation Linkbase Document. | |
| 101.DEF | Inline XBRL Taxonomy Extension Definition Linkbase Document. | |
| 101.LAB | Inline XBRL Taxonomy Extension Label Linkbase Document. | |
| 101.PRE | Inline XBRL Taxonomy Extension Presentation Linkbase Document. | |
| 104 | Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101). |
| * | To be filed by amendment. |
| # | Indicates management contract or compensatory plan. |
(b) Financial statements schedules.
The undersigned registrant hereby undertakes:
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ITEM 17. UNDERTAKINGS
Insofar as indemnification for liabilities arising under the Securities Act of 1933 may be permitted to directors, officers and controlling persons of the registrant pursuant to the foregoing provisions, or otherwise, the registrant has been advised that in the opinion of the SEC such indemnification is against public policy as expressed in the Act and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by the registrant of expenses incurred or paid by a director, officer, or controlling person of the registrant in the successful defense of any action, suit or proceeding) is asserted by such director, officer or controlling person in connection with the securities being registered, the registrant will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in the Act and will be governed by the final adjudication of such issue.
The undersigned registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being made, a post-effective amendment to this registration statement:
(i) To include any prospectus required by Section 10(a)(3) of the Securities Act of 1933;
(ii) To reflect in the prospectus any facts or events arising after the effective date of the registration statement (or the most recent post-effective amendment thereof) which, individually or in the aggregate, represent a fundamental change in the information set forth in the registration statement. Notwithstanding the foregoing, any increase or decrease in volume of securities offered (if the total dollar value of securities offered would not exceed that which was registered) and any deviation from the low or high end of the estimated maximum offering range may be reflected in the form of prospectus filed with the Commission pursuant to Rule 424(b) if, in the aggregate, the changes in volume and price represent no more than 20 percent change in the maximum aggregate offering price set forth in the “Calculation of Registration Fee” table in the effective registration statement; and
(iii) To include any material information with respect to the plan of distribution not previously disclosed in the registration statement or any material change to such information in the registration statement.
(2) That, for the purpose of determining any liability under the Securities Act treat the information omitted from the form of prospectus filed as part of this1933, each such post-effective amendment shall be deemed to be a new registration statement in reliance upon Rule 430Arelating to the securities offered therein, and contained inthe offering of such securities at that time shall be deemed to be the initial bona fide offering thereof.
(3) To remove from registration by means of a formpost-effective amendment any of prospectus filed by the small business issuer under Rule 424(b) (1), or securities being registered which remain unsold at the termination of the offering.
(4), or 497(h) Intentionally omitted.
(5) That, for the purpose of determining liability under the Securities Act of 1933 to any purchaser:
(i) Intentionally omitted.
(ii) If the registrant is subject to Rule 430C, each prospectus filed pursuant to Rule 424(b) as part of thisa registration statement relating to an offering, other than registration statements relying on Rule 430B or other than prospectuses filed in reliance on Rule 430A, shall be deemed to be part of and included in the registration statement as of the date it is first used after effectiveness. Provided, however, that no statement made in a registration statement or prospectus that is part of the registration statement or made in a document incorporated or deemed incorporated by reference into the registration statement or made in a document incorporated or deemed incorporated by reference into the registration statement or prospectus that is part of the registration statement will, as to a purchaser with a time of contract of sale prior to such first use, supersede or modify any statement that was made in the Commission declared it effective.registration statement or prospectus that was part of the registration statement or made in any such document immediately prior to such date of first use.
(6) That, for the purpose of determining any liability of the registrant under the Securities Act treat each post-effective amendmentof 1933 to any purchaser in the initial distribution of the securities:
The undersigned registrant undertakes that containsin a formprimary offering of prospectus as a newsecurities of the undersigned registrant pursuant to this registration statement, forregardless of the underwriting method used to sell the securities to the purchaser, if the securities are offered or sold to such purchaser by means of any of the following communications, the undersigned registrant will be a seller to the purchaser and will be considered to offer or sell such securities to such purchaser:
(i) Any preliminary prospectus or prospectus of the undersigned registrant relating to the offering required to be filed pursuant to Rule 424.
(ii) Any free writing prospectus relating to the offering prepared by or on behalf of the undersigned registrant or used or referred to by the undersigned registrant;
(iii) The portion of any other free writing prospectus relating to the offering containing material information about the undersigned registrant or its securities provided by or on behalf of the undersigned registrant; and
(iv) Any other communication that is an offer in the registration statement, and that offering ofmade by the securities at that time asundersigned registrant to the initial bona fide offering of those securities.
purchaser.
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SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the registrant certifies that it has reasonable grounds to believe that it meets all of the requirements for filingduly caused this Registration Statement on Form S-1 and authorized this registration statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the cityCity of Santa Monica, California,Greenwich, State of Connecticut, on September 11, 2014.February 12, 2024.
| By: | /s/ | |||
| David Graber | ||||
| Co-Chief Executive Officer and | ||||
| Chairman | ||||
KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature appears below hereby constitutes and appoints David Graber and Sebastian Lux, and each of them, his or her true and lawful attorney in fact and agent, with full power of substitution and re-substitution, for him or her and in his or her name, place and stead, in any and all capacities, to sign any and all amendments, including post-effective amendments, to this registration statement and any registration statement relating to the offering covered by this registration statement and filed pursuant to Rule 462(b) under the Securities Act of 1933 and to file the same, with exhibits thereto and other documents in connection therewith, with the Securities and Exchange Commission, granting unto said attorney-in-fact and agent, full power and authority to do and perform each and every act and thing requisite and necessary to be done, as fully to all intents and purposes as he or she might or could do in person, hereby ratifying and conforming all that said attorney in fact and agent or his substitute or substitutes may lawfully do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, as amended, this Registration Statement on Form S-1 has been signed below by the following person on their own behalfpersons in the capacities and on the dates stated.indicated.
| Date | |||||
| /s/ | |||||
| ( | |||||
| /s/ Sebastian Lux | Co-Chief Executive Officer, President, Chief Financial Officer and Director | February 12, 2024 | |||
| Sebastian Lux | (principal financial and accounting officer) | ||||
| /s/ Dylan Glenn | Director | February 12, 2024 | |||
| Dylan Glenn | |||||
| /s/ | |||||
| /s/ Andrew Suckling | Director | February 12, 2024 | |||
| Andrew Suckling | |||||
| /s/ Justin Vorwerk | Director | February 12, 2024 | |||
| Justin Vorwerk | |||||
| /s/ | |||||
| Director | |||||
| Dr. Adam Lipson |
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