UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

FORM 10-K

 

☒ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 

For the fiscal year ended June 30, 2021

 

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE EXCHANGE ACT OF 1934

 

Commission File number: 000-55088

 

AMERICAN BATTERY METALS CORPORATION
(Exact name of registrant as specified in its charter)

 

Nevada   33-1227980

(State or other jurisdiction

of incorporation or organization)

 

(I.R.S. Employer

Identification No.)

 

401 S Ryland Street, Suite 138, Reno, NV 89502
(Address of principal executive offices)

 

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

 

 

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

 

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

 

Title of each class   Trading Symbol(s)   Name of each exchange on which registered
         

 

Securities registered pursuant to Section 12(g) of the Act: Common Stock, par value $0.001

 

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes ☐ No ☒

 

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act.

 

Yes ☐ No ☒

 

Indicate by check mark whether the registrant (1) filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the past 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

 

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

 

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See definition of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

 

Large accelerated filer Accelerated filer
Non-accelerated filer Smaller reporting company
Emerging growth company    

 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act ☐

 

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act) Yes ☐ No ☒

 

State the aggregate market value of the voting and non-voting common equity held by non-affiliates computed by reference to the price at which the common equity was last sold, or the average bid and asked price of such common equity, as of the last business day of the registrant’s most recently completed second fiscal quarter. $630,066,844 as of December 31, 2020

 

Indicate the number of shares outstanding of each of the registrant’s classes of common stock, as of the latest practicable date: 630,787,717 shares of common stock as of October 7, 2021

 

 

 

 
 

 

CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS

 

This annual report on Form 10-K (this “Report”) contains forward-looking statements. The forward-looking statements are contained principally in the “Business” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” sections of this Report. These statements involve known and unknown risks, uncertainties and other factors which may cause our actual results, performance or achievements to be materially different from any future results, performances or achievements expressed or implied by the forward-looking statements. In some cases, you can identify forward-looking statements by terms such as “anticipates”, “believes”, “seeks”, “could”, “estimates”, “expects”, “intends”, “may”, “plans”, “potential”, “predicts”, “projects”, “should”, “would” and similar expressions intended to identify forward-looking statements. Forward-looking statements reflect our current views with respect to future events and are based on assumptions and subject to risks and uncertainties. Given these uncertainties, you should not place undue reliance on these forward-looking statements. Such statements may include, but are not limited to, information related to: anticipated operating results; relationships with our customers; consumer demand; financial resources and condition; changes in revenues; changes in profitability; changes in accounting treatment; cost of sales; selling, general and administrative expenses; interest expense; the ability to produce the liquidity or enter into agreements to acquire the capital necessary to continue our operations and take advantage of opportunities; legal proceedings and claims. Also, forward-looking statements represent our estimates and assumptions only as of the date of this Report. You should read this Report and the documents that we reference and file or furnish as exhibits to this Report completely and with the understanding that our actual future results may be materially different from what we expect. Except as required by law, we assume no obligation to update any forward-looking statements publicly, or to update the reasons actual results could differ materially from those anticipated in any forward-looking statements, even if new information becomes available in the future.

 

PRESENTATION OF INFORMATION

 

Except as otherwise indicated by the context, references in this Report to “ABMC”, “we”, “us”, “our” and the “Company” are to the combined business of American Battery Metals Corporation and its consolidated subsidiaries.

 

This Report includes our audited consolidated financial statements as at and for the year ended June 30, 2021 and nine months ended June 30, 2020. These financial statements have been prepared in accordance with generally accepted accounting principles in the United States (“US GAAP”). All financial information in this Report is presented in US dollars, unless otherwise indicated, and should be read in conjunction with our audited consolidated financial statements and the notes thereto included in this Report.

 

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TABLE OF CONTENTS

 

PART I  
     
Item 1. Business 4
Item 1A. Risk Factors 9
Item 1B. Unresolved Staff Comments 9
Item 2. Properties 9
Item 3. Legal Proceedings 15
Item 4 Mine Safety Disclosures 15
     
PART II  
     
Item 5. Market for Registrant’s Common Equity and Related Stockholder Matters and Issuer Purchases of Equity Securities 16
Item 6. Selected Financial Data 17
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations 17
Item 7A. Quantitative and Qualitative Disclosures about Market Risk 21
Item 8. Financial Statements and Supplementary Data 21
Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure 23
Item 9A Control and Procedures 23
Item 9B. Other Information 24
     
PART III  
     
Item 10. Directors, Executive Officers and Corporate Governance 25
Item 11. Executive Compensation 29
Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters 30
Item 13. Certain Relationships and Related Transactions, and Director Independence 30
Item 14. Principal Accounting Fees and Services 30
     
PART IV  
     
Item 15. Exhibits, Financial Statement Schedules 31
Item 16. Form 10-K Summary 31
  Signatures 32

 

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PART I

 

Item 1. Business

 

Background

 

The lithium-ion battery manufacturing supply chain is organized into four industries that operate in series: battery feedstock providers, material refiners, cell manufacturers, and end-use product (electric vehicle, stationary storage, consumer electronics, etc.) manufacturers. While the scale of manufacturing of lithium-ion battery cells and of electric vehicles and other end-use products have grown substantially within the US in recent years, there has been little domestic growth in the battery feedstock and material refining portions of the manufacturing supply chain. This has led to an imbalance within the domestic US supply chain and has caused the majority of cell manufacturing and end-use product manufacturers to rely on foreign supplies of their raw and refined feedstock materials. The situation is so dire that in its “Mineral Commodity Summaries 2020” report, the US Geological Survey estimated that less than 1% of each of the critical and strategic battery metals (lithium, nickel, cobalt, and manganese) produced globally in 2020 were produced within the US.

 

American Battery Metals Corporation (“ABMC”) is a startup company in the lithium-ion battery industry that is working to increase the domestic US production of these four battery metals through its engagement in the exploration of new primary resources of battery metals, in the development and commercialization of new technologies for the extraction of these battery metals from primary resources, and in the commercialization of an internally developed integrated process for the recycling of lithium-ion batteries for the recovery of battery metals. Through this three-pronged approach ABMC is working to both increase the domestic production of these battery metals, and also to ensure that as these materials reach their end of lives that the constituent elemental battery metals are returned to the manufacturing supply chain in a closed-loop fashion.

 

Battery Metals Exploration

 

The Company’s exploration efforts are currently focused on the sampling and characterization of lithium-bearing of brine and claystone sedimentary resources in the Western Nevada Basin (WNB) located in Nye County, Nevada. Through sampling and evaluation of its previous brine stone holdings over the past year, the Company currently holds 644 BLM unpatented placer mining claims on approximately 12,880 acres of land. The Company is performing bench scale characterization and extraction trials to evaluate the technical and economic feasibility of extracting elemental lithium from these, and newly acquired, resources in order to produce battery grade lithium hydroxide, and other high value lithium products, for sale to the battery metals market. In September 2021, the Company entered into an exploration license agreement on 305 unpatented lode claims for prospective lithium claystone exploration in the city of Tonopah’s mining district area.

 

ABMC has been evaluating the expansion and collection of samples of exploration efforts to nickel, cobalt, and manganese rich resources throughout the US and Canada, however, has not yet entered into any formal agreements or contracts.

 

Battery Metals Extractions

 

In addition, ABMC has been working in collaboration with several lithium-rich resource owners within the Clayton Valley area of Central Nevada. These resources largely consist of lithium-rich claystone sedimentary deposits, and ABMC has been working with these resource owners in order to receive sample quantities of materials from various drilling locations. Through characterizations and experimentation, ABMC has found that the mechanisms by which lithium is held within these deposits is quite unique, and ABMC has been performing bench scale trials on an internally developed first-of-kind selective leaching process for the low-cost extraction of lithium from these claystone resources. This novel method of enabling a selective leaching of lithium from these claystone sedimentary resources has allowed for significantly lower consumption of acid, lower levels of contaminants in the generated leach liquor, and lower overall costs of production. After reviewing the performance of this novel process and confirming its uniqueness through discussions with third party industry analysts, ABMC is considering preparing and submitting an initial provisional patent application for this technology.

 

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With the material generated during these selective extraction trials, ABMC has performed bench scale separations, purification, and concentration processes to produce a high purity aqueous lithium hydroxide solution followed by crystallization and filtration processes to produce a battery cathode grade lithium hydroxide powder product. ABMC is currently evaluating the composition and morphology of these product materials relative to the required material specifications from high energy density cathode manufacturers in order to determine the technical and economic feasibility of manufacturing lithium hydroxide monohydrate products through this set of technologies with Clayton Valley claystone sedimentary resources as the feedstock.

 

The remainder of the Company’s extraction efforts have been through using recycled materials as feedstock.

 

Lithium-Ion Battery Recycling

 

ABMC has developed a universal lithium-ion battery recycling system that is able to recycle batteries of a wide range of form factors (packs, modules, cylindrical cells, prismatic cells, pouch cells, defect and intermediate waste cells, metal scraps, slurries, and powders) and of a wide range of cathode chemistries (lithiated cobalt oxide, lithiated nickel-cobalt-aluminum oxide, lithiated nickel-cobalt-manganese oxide, lithiated nickel-cobalt-manganese-aluminum oxide, lithiated nickel-oxide, and lithiated manganese-oxide) of various relative weighting of transition metals. While there currently has not been a large proliferation of lithium-ion battery recycling facilities in operation globally, the few that are operating generally implement “brute force” methods of processing batteries, by performing bulk high temperature calcinations or bulk acid dissolutions. These upfront processes can be simpler to implement; however, they also make it very difficult to enable high material recovery efficiencies of high value metal products downstream.

 

ABMC has developed a highly strategic recycling processing train that does not employ any high temperature operations or any bulk chemical treatments of the full battery. Several of the leaders of the ABMC team have previously worked in the design, construction, commissioning, and optimization of one of the largest lithium-ion battery manufacturing factories in the world. Through these experiences they gained a first principles physics-based understanding of every stage of lithium-ion battery cell manufacturing, and more importantly a fundamental understanding of the failure mechanisms that can cause battery components, cells, and modules to fail. Through these fundamental understandings the ABMC team has developed an automated high-speed mechanical separation process, which works to exploit the weaknesses in battery design to essentially “de-manufacture” the modules and cells in a rapid and automated fashion in order to dissect and separate the constituent components. This system is able to feed battery materials, without bulk discharging operations, and separate module materials, cell casings, electrode foils, low density materials, material powders, and wastewater in a matter of minutes without any direct hands-on operator interactions.

 

After the battery feedstock material is separated and sorted, what remains is a stream that contains rinse water, organic carbonates, dissolved fluorine and phosphorous species, dissolved metals, and is of very high pH due to the leaching of loosely held lithium from the electrodes. While many current facilities lightly treat this water stream in order to meet discharge requirements, the ABMC team has instead developed a 6-part system that is able to treat this water in a targeted fashion, extract contaminants in non-hazardous forms, and purify the water to a higher quality than even the onsite well water. This treated water is then re-used back in the separations process in a closed loop fashion. The avoidance of the discharge of this water, and of the purchasing of makeup water, results in significant levelized cost savings and a dramatically lowered environmental footprint.

 

While the scrap metal products are sold directly after being separated from the automated disassembly system, the cathode and anode powders are sent for further processing in an internally developed chemical extraction system. This consists of a series of dilute acid dissolution, impurity removal, selective extraction, and purification systems that are able to individually extract lithium, nickel, cobalt, and manganese elemental metals and upgrade them to the battery cathode grade specifications demanded by high energy density cathode manufacturers.

 

Through the high speed and automated de-manufacturing of a wide variety of battery feedstock materials, and the low cost and high material recovery efficiency chemical extraction train, ABMC is able to successfully extract battery metals from end-of-life products and manufacturing waste and return them to the lithium-ion battery manufacturing supply chain in an economically sustainable fashion. As a result of their lower environmental footprint, lower total cost of production, and high stability of supply these recycled battery cathode metal feedstocks are highly valuable and sought after by domestic US high energy density cathode manufacturers.

 

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The largest high energy density cathode manufacturing within the US is BASF, and in order to accelerate the commercialization of closed loop lithium-ion battery recycling, they initiated the Circularity Challenge in early 2019. This was a global competition where they challenged companies throughout the world to develop new innovative technologies for the recycling of large format lithium-ion batteries to establish a circular economy in the battery supply chain industries. To winners of the Circularity Challenge, BASF offered seed funding, access to development laboratories, and the exploration of partnership agreements. Over 100 companies throughout the world applied to this challenge throughout 2019, and after several down select and review presentations, in September 2019 BASF selected ABMC as the sole winner of the battery recycling portion of this Circularity Challenge. BASF is one of the largest purchasers of lithium-ion battery metal feedstocks in the US, and through the relationship established through this Circularity Challenge ABMC and BASF have been exploring several avenues of working together to accelerate the commercialization of this lithium-ion battery recycling technology.

 

The Company is working with its design-build general contractor and architectural firm on the design and construction of an initial plant and storage facilities for its battery recycling business (the “Pilot Plant”) (See further discussion in Properties below). When completed, the Pilot Plant is expected to consist of approximately 100,000 square feet of building space, including a 60,000 square foot production space, space for a development center with laboratories and offices, and a warehouse. The Pilot Plant production space will be built in two phases, 30,000 square feet at first, then another 30,000 square feet in the second phase.

 

Recent Financing Transaction

 

On September 27, 2021, the Company entered into a definitive securities purchase agreement with a U.S.-based institutional asset manager for the sale of ABMC common shares yielding approximately $36,925,000 of net proceeds, after deducting placement agent fees and estimated offering expenses payable by us. The net proceeds from the transaction are expected to fully fund the Company through the construction and commissioning of its Nevada-based 20,000 metric tonne per year battery recycling pilot plant as well as provide working capital to the Company over the next twelve months. For details of this financing transaction, please refer to the current report on form 8-K filed with the Securities and Exchange Commission on September 28, 2021.

 

Company History

 

The Company was incorporated under the laws of the State of Nevada on October 6, 2011 for the purpose of acquiring rights to mineral properties with the eventual objective of being a producing mineral company. We have limited operating history and have not yet generated or realized any revenues from our activities. Our principal executive offices are located at 401 S Ryland Street, Suite 138, Reno, NV 89502.

 

On August 8, 2016, the Company formed Lithortech Resources Inc. as a wholly owned subsidiary of the Company to serve as its operating subsidiary for lithium resource exploration and development. On June 29, 2018, the Company changed the name of Lithortech Resources to LithiumOre Corp. (“LithiumOre”). On May 3, 2019, the Company changed its name to American Battery Metals Corporation. On August 12, 2021, the Company filed a Certificate of Amendment with the State of Nevada to change its name to American Battery Technology Company which name better aligns with the Company’s current business activities.

 

The growth in demand for lithium-ion batteries is predicted by industry researchers to grow by over ten-fold over the next ten years, while over the same period there are limited announcements for new production sources of domestic US based lithium, nickel, cobalt, or manganese. As a result, there will be increased pressure on the prices of domestically sourced battery metals, and increased reliance on foreign sourced battery metals. These industry trends support and validate the Company’s multifaceted three-pronged business model to increase the production of domestic US sourced battery metals. The Company is currently a pre-revenue organization and we do not anticipate earning revenues until such time as we have initial operations of our lithium-ion battery recycling facility underway, or until we have undertaken sufficient exploration work to identify lithium and or other battery metals reserves and have validated and commercialized a cost-effective extraction system.

 

Market and Industry

 

Lithium is extracted from primarily two sources: hard rock spodumene and pegmatite crystals, and dissolved lithium salts from brine pools. Currently, the world’s top producers of Lithium are located in Australia, Chile, Argentina, and China.

 

Excluding the US, 2020, worldwide Lithium production totaled approximately 82,000 tons, with the top 4 countries (Australia, Chile, China, Argentina) contributing roughly 95% of the global production. Most of the world’s lithium supply is produced by five companies: Albemarle Corporation, FMC Corporation/Livent, Chile’s Sociedad Quimica Y Minera de Chile (SQM), Ganfeng Lithium, and Tianqi Lithium. Albemarle, FMC, and SQM have traditionally been considered the “Big 3” of global lithium producers. FMC Corporation spun off its lithium production to Livent in 2018.

 

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In 2020, the market share of the “Big 3” companies decreased from 85% to 53%, with the Chinese companies attaining 40% market share.

 

Much of the current production of Lithium in Australia is derived from conventional mining techniques of ancient Precambrian rocks containing Lithium ore which is crushed and fed into capital intensive processing plants which upgrade the lithium mineral using gravity, flotation, magnetic and roasting purification processes.

 

Alternatively, Lithium production from Chile and Argentina uses a much less capital intense extraction method. Lithium is located beneath various salt flats. The Lithium is leached from nearby source rocks and becomes concentrated in salty brines just under the surface. The Lithium enriched brines are then pumped up to settle in multiple shallow surface evaporation pools which produces a thicker Lithium rich liquid. That liquid is treated with sodium carbonate, which creates lithium carbonate.

 

The Lithium market has typically been dominated by the ceramic and medical sectors, however recently the demand for Lithium for the battery markets- to fuel electric vehicles and energy storage applications- outstripped any other sector.

 

The primary lithium-ion battery manufacturers by capacity are: CATL, BYD, Tesla, Panasonic of Japan, and LG Chem of South Korea.

 

Lithium is not currently traded on any commodity exchanges, but rather is usually distributed in a chemical form such as lithium carbonate (Li2CO3) and sold directly to end users for a negotiated price per ton of lithium carbonate.

 

General Market Analysis

 

Lithium-ion batteries have become the rechargeable battery of choice in cell phones, computers, electric cars and now larger scale electric storage. The growth in demand for lithium batteries is predicted to far outpace lithium production in the coming decade; in particular, Lithium-ion batteries for the automotive industry is expected to continue to drive demand beyond supply.

 

Recently, Japan and South Korea have both recorded high levels of Lithium-ion battery exports as auto companies’ ramp up battery consumption to power all-electric vehicle sales. China has the most electric vehicles on the road, but both European and North American auto manufacturers are committed to significantly increasing EV sales by 2025. According to Goldman Sachs, 25% of cars sold will have electric engines by 2025, up from 5% today. Just a 1% increase of Electric Vehicles hitting the market could increase lithium demand by roughly half of the current production of lithium today.

 

Tesla’s mile long Gigafactory started producing powerful Lithium-ion batteries in January 2017 with its partner Panasonic. The Gigafactory will supply batteries for the 500,000 cars Tesla hopes to produce by the end of the decade, as well as to power homes. Also, Chrysler, Dodge, Ford, GM, BMW, Volkswagen, Mercedes-Benz, Mitsubishi, Nissan, Saturn, Tesla and Toyota have all announced plans to build lithium-ion battery powered cars. After Tesla released the Model 3 in July 2017, there have been over 500,000 reservations for the vehicle and production is starting 2 years ahead of schedule. Elon Musk has stated that Tesla will have to acquire the entire lithium market to meet the current demands. Thus, the global lithium market is approaching shortages, which has made it a useful commodity and mineral explorers have launched efforts to locate and bring new suppliers to the marketplace.

 

Lithium brine exploration and development has proven to be much more cost effective and faster to be put into production than the hard rock mine counterparts. Lithium brine deposits are considered placer deposits and are easier to gain mining permits for. Brine is also a liquid which means that drilling to find it is more akin to drilling for water or oil. It’s also typically located relatively close to surface, which limits the depth of required drilling. Once lithium brine is found, the reserve data is more straightforward to understand and quantify.

 

As the brines are found in large flat areas, the construction of numerous flat evaporation pools or direct solvent extraction can be achieved at relatively low cost. Environmental impact is minimized as the excess residual brines can be pumped back into the salt flats. In addition, the Company is now exploring prospective near-surface claystone deposits.

 

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In Summary:

 

Historically, lithium demand came from industrial sectors manufacturing greases, glass, and ceramics. The processing of lithium for industrial applications requires lower specification products.

 

The introduction of the lithium-ion battery for consumer electronics, EV, and energy storage applications changed the demand dynamic; the batteries for e-mobility and energy storage now dominate current and future demand for lithium. Electric vehicles will continue to require vast amounts of lithium with higher grade and purities.

 

Electric Vehicle OEM are increasingly quality-conscious and develop close relationships to the modern “megafactories” that supply them with battery cells. In order to consistently supply the desired high nickel cathodes, megafactories need high purity raw materials - particularly lithium - to create low impurity lithium hydroxide.

 

In the United States, there are not currently enough chemical producers in operation to meet existing or future standards; battery grade hydroxide production is quite small as compared to the whole lithium supply chain. To meet market demand, this segment must quickly grow in the short term, at an estimated rate of 35-40% between now and 2025.

 

In 2019, explanations for the drop in the price of lithium were erroneously attributed to the “oversupply myth.” The reality is that there is not “too much lithium” in production but rather that there is not enough battery grade lithium hydroxide to meet market demand to fuel the explosive projections for Electric Vehicles.

 

Existing producers know that aside from handling and limited shelf life, consistently producing battery grade hydroxide within “spec,” while meeting the qualification challenges going forward will require significantly more high-grade lithium products. This will require new resources of raw materials, which demands investment in new exploration and mining projects.

 

Competition

 

We compete with other mining/exploration and battery recycling companies, many of which possess greater financial resources and technical facilities than we do, in connection with the acquisition of suitable exploration properties, building and operating process plants and in connection with the engagement of qualified personnel. The lithium exploration/mining and battery recycling industries are fragmented, and we are a very small participant in these sectors. Many of our competitors have been in business longer than we have and have established more strategic partnerships and relationships and have greater financial accessibility than we have.

 

While we compete with other exploration companies in acquiring suitable properties, we believe that there would be readily available purchasers of lithium and other precious metals if they were to be produced from any of our leased properties. The price of precious metals can be affected by a number of factors beyond our control, including:

 

fluctuations in the market prices for lithium;

 

fluctuating supplies of lithium;

 

fluctuating demand for lithium; and

 

mining activities of others.

 

If lithium mineralization that is determined to be of economic grade and in sufficient quantity to justify production were located, additional capital would be required to develop, mine and sell our production.

 

Covid-19 Impact

 

In March 2020, the World Health Organization declared COVID-19 a pandemic. As COVID-19 continues to spread throughout the world, the ongoing global pandemic continues to prompt governments and businesses to maintain and, in some cases, extend unprecedented measures in response. Such measures have included federal, state, county and local governments, and public health organizations and authorities around the world implementing a variety of measures intended to control the spread of the virus, including quarantines, “stay-at-home” orders, travel restrictions, school closures, business limitations and closures, social distancing and hygiene requirements. The COVID-19 pandemic has also disrupted global supply chains and workforce participation and created significant volatility and disruption of financial markets. A prolonged economic downturn and adverse impact to global economies or a sustained slowdown in growth or demand could have an adverse effect on commodity prices and/or our ability to raise financing to meet our ongoing obligations. The full extent to which COVID-19 impacts the Company will depend on future developments, which are highly uncertain and cannot be predicted, including new information which may emerge concerning COVID-19 and the actions required to contain or treat its impact, among others.

 

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Item 1A. Risk Factors

 

Not required.

 

Item 1B. Unresolved Staff Comments

 

Not applicable.

 

Item 2. Properties

 

We operate within the U.S.A, with our principal executive offices located in Reno, Nevada. As our Pilot Plant is being constructed we are currently operating out of temporary executive suites under an initial one year lease that has a minimum base rent of $659 per month. Our extraction office is located in Tonopah, Nevada, our battery metal extraction and lithium-ion battery recycling technologies laboratories located in Reno, Nevada and Greentown, Massachusetts, our mining claims located in the Western Nevada Basin and Inyo County, CA, our farm and water rights located in Currant, Nevada, and our water rights and undeveloped industrial land in Fernley, Nevada and McCarran, Nevada.

 

We believe that all our property and facilities are generally well maintained, effectively used and are adequate to operate our business.

 

Set forth below is information regarding significant properties operated by us:

 

Proposed Pilot Plant – Fernley, NV

 

On July 29, 2020, the Company entered into escrow to purchase approximately 12½ acres of undeveloped industrial land in Fernley, Nevada in a Qualified Opportunity Zone (QOZ). The Company intends to construct a commercial pilot plant to be a first-of-its-kind lithium-ion battery recycling facility on this land (the “Pilot Plant”). The Company intends to invest approximately $30 million between September 2021 and September 2022 in order to construct and commission the first portion of this facility. This first phase will consist of approximately 30,000 sq. ft. of industrial processing space, as well as laboratory and office space. Once this first phase is operational, the Company estimates that this battery recycling facility will be operating in a financially self-sufficient manner as it sells scrap metal and high value metal filter cake products.

 

Beginning in the 4th calendar quarter of 2022 the Company intends to invest an additional approximately $10 million to install value-add operations to this recycling facility to further increase operating margins. These value-add operations will allow for the manufacturing of battery cathode grade metal products (lithium hydroxide, nickel sulfate, cobalt sulfate, manganese sulfate) in addition to the sale of scrap metals.

 

Undeveloped Industrial Land – McCarran, NV

 

On June 28, 2021, the Company purchased approximately 13.87 acres of industrial-zoned land in McCarran, Nevada. The Company intends to construct a supplemental storage facility for pilot plant feedstock on this site.

 

Additional Undeveloped Industrial Land – Fernley, NV

 

On July 23, 2021, the Company purchased an additional 12.44 acres of industrial-zoned land in Fernley, Nevada. The Company intends to construct a supplemental storage facility for feedstock on this site to be used in the Pilot Plant.

 

Water Rights

 

Between March 3, 2021 and July 8, 2021, the Company purchased approximately 290 AF of water rights in Basin 76, Fernley, Nevada, to be used at the Company’s discretion.

 

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Laboratory Facilities

 

The Company operates out of two laboratory facilities for the research and development of its battery metal extraction and lithium-ion battery recycling technologies.

 

Greentown Labs, Somerville, MA

 

The Company occupies wet chemistry laboratory space, free of charge, from Greentown Labs, which is the largest clean technology incubator in North America. Besides desk and lab space, the Company also has access to more than $1 million worth of resources, equipment, programming, and staff support. The Company was afforded this opportunity by winning the Greentown Labs Circularity Challenge, an accelerator program for start-ups developed in partnership with BASF, one of the world’s leading chemical companies. The program intends to advance innovative ideas to disrupt the plastics, energy storage and recycling value chains to enable a circular economy. The Company is utilizing Greentown Labs to advance their metal extraction techniques and lithium-ion battery recycling technologies.

 

Center for Applied Research, Reno, NV

 

The Company leases a laboratory and office space from the University of Nevada, Reno. The laboratory is utilized for metal extraction research and for the testing of soil samples. The cost of the month-to-month lease is $2,949 a month.

 

Mining Claims

 

The Company currently has 644 placer mining claims that cover approximately 12,880 acres in the area known as the Western Nevada Basin, situated in Railroad Valley in Nye County, Nevada. On April 1, 2021, the Company staked 16 Placer mining claims PAN 1-16, in the Panamint mining district in California. We do not currently have any partnership agreements or royalty agreements in connection with such claims.

 

We also own a 120-acre parcel of private property with water rights, in the town of Currant, NV near Railroad Valley. This property will function as the base of operations for field exploration activities and logistics.

 

We lease from the Bureau of Land Management our Western Nevada Basin Claims where we are exploring and drilling for possible lithium-rich brine.

 

The Western Nevada Basin (WNB) Claims are located in east central Nye County, Nevada (Figure 1) approximately 93 miles northeast of the county seat of Tonopah, NV, the major commercial center for the region; 56 miles southwest of the town of Ely, NV and 120 miles northeast of Silver Peak NV, the only currently operating lithium producer in the State.

 

 

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Figure 1. Location Map. The Western Nevada Basin Claim is located within the central portion of the Railroad Valley, approximately 169 miles north-northwest of Las Vegas, NV and 234 miles east-southeast of Reno, NV.

 

 

Figure 2. The Western Nevada Basin Mining Property covers approximately 12,880 acres. It consists of a total six hundred and forty-seven (644) placer claims. Each claim covers approximately 20 acres and was laid out by aliquot parts as required by the Bureau of Land Management.

 

Lithium is a locatable mineral according to the Code of Federal Regulations. Mining rights to lithium are held by lode claims where it occurs in bedrock and by placer claims where it occurs in sediments and brines. A body of legal precedents set during the original development of lithium brines in the area provides that lithium in valley sediments by nature of the unconsolidated host rock are staked by and produced from placer claims.

 

In Nevada the claim staking procedure requires recording documents with both the county Recorder’s Office and the state BLM office. Claims must be staked by posts at the claims four corners and a Notice of Location which describe the claims legal description of location and owner. The claims are required to be recorded at the county courthouse within the proper jurisdiction within 90 days from the staking date.

 

Placer claims on Federal lands are held to a September 1 to August 31 assessment year when Intent to Hold or Proof of labor documents need to be filed with the county for the annual assessment work. The pertinent documents are filed with the Nye County Recorder’s Office.

 

The current Federal BLM annual maintenance fee is $165 per 20-acre (or a portion thereof) placer claim (http://www.blm.gov/ca/st/en/info/iac/miningfacts.html). Payment of those fees allows the claim to stay on the BLM active database. Non-payment results in the claims moving to ‘closed’ status.

 

Before August 31st of each year, a payment of $165 per claim is made to the BLM to hold the claims in good standing for the following assessment year. The total BLM cost for the 2021 assessment year for the 644WNB Claims was $106,260. Fees were also paid in 2018, 2019, and 2020 in order to maintain the current mining claims.

 

In 2020 the total number of placer mining claims were reduced from 1,300 to 644. The decision to reduce the current mining claim holdings was based on detailed geologic and geophysical interpretations of field studies conducted on the WNB Claims over several months in 2019 and 2020. In order to increase shareholder value “on a claim-by-claim basis”; only the most prospective claims were maintained while interpreted potential unproductive claims were effectively dropped in order to save exploration funds.

 

11

 

 

When fees are paid a claim is deemed ‘active’. Active and approved claim fees are also due to the County before November 1st of each year. A payment to Nye County, NV, of $12 per claim to file an affidavit of assessment fees paid and notice of intent to hold the claims into the next assessment year. The total Nye County holding cost for the current 644 WNB claims is $7,728 and will be paid before November 1, 2021. Payments to the County are current as of October 31, 2020.

 

As public lands, there is right of free access and both surface and mineral rights are held by the Federal government. Public records (Bureau of Land Management) show no military withdrawals or Areas of Critical Environmental Concern. The Railroad Valley Wildlife Management Area is located to the west of the WNB claim boundary and has no effect on any planned work on the WNB claim area.

 

To the Company’s knowledge, there are no known environmental liabilities to which the property is subject or other significant factors and risks that may access, title, or the right or ability to perform work on the property. The NOI permit for the drilling site was approved on July 13, 2018.

 

Accessibility

 

The main route of access to the WNB project is Nevada State U.S. Route 6 which provides all year access to Railroad Valley and the project area. U.S. Route 6 provides direct access to the two nearby commercial centers; Tonopah, located southwest of the project at the junction of Routes 6 and 95, approximately 90 minutes away, and Ely, a slightly larger commercial center with a population of over 4,200 approximately, located northeast of the project approximately 60 minutes away. US Highway 95 is the main highway linking Las Vegas and Reno, the two largest metropolitan areas in Nevada.

 

Climate

 

Railroad Valley is in the rain shadow of the Sierra Nevada Mountains. The region is arid to almost semiarid. Winters are cold while summers are hot. Average annual precipitation is approximately 5 inches; however, variations occur at differing altitudes. Exploration can be conducted in the spring, summer, and fall seasons.

 

Local Resources

 

Railroad Valley contains several small communities which include Currant, Crow’s Nest, Green Springs, Locke’s, and Nyala. Electrical power is available within the valley area.

 

The larger population centers of Ely and Tonopah are connected via U.S. Route 6 to the project area. Tonopah has a population of approximately 2,500 and is the governmental center for the region. Ely has a population of approximately 4,200 and is the closest commercial center. Groceries, hardware, a bank and a choice of motels and restaurants are available in both Ely and Tonopah.

 

The area has a long history of mining. Mining personnel can be sourced mostly from the larger towns of Tonopah or Ely.

 

Infrastructure

 

A reasonable network of 4x4, graded and paved roads connect the claim area to the rest of Nevada. Electrical power is available at several sites throughout the valley and could easily provide power to any operation at the project area. The nearest rail and large commercial airline service are in Las Vegas, NV approximately 169 miles to the south.

 

Physiography

 

Railroad Valley is one of the longest topographically closed drainage basins in Nevada, extending more than 110 miles in a north-south direction and up to 20 miles wide. This valley is one of the Central Nevada Desert Basins in the Tonopah Basin. The southern end of the valley begins near Gray Top Mountain (7,036 feet) and stretches north all the way to Mount Hamilton (10,745 feet). The mountain masses are dominated by the White Pine, Grant and Quinn Canyon ranges east of the valley.

 

12

 

 

Railroad Valley comprises an area of approximately 2,750 square miles. Two large flat areas occur within the valley. The claims are located on the large Northern flat area of the valley floor at elevations generally of 4400 – 4700 feet. The valley floor is characterized by subdued topography with washes eroding into slightly older valley-fill sediments.

 

The claims are located on flat areas where vegetation is scarce. There is sufficient surface area for recovery and processing facilities within the Claims.

 

Geologic Setting

 

The claims are located in the Basin and Range physiographic province which stretches from southern Oregon and Idaho to Mexico. It is characterized by extreme elevation changes between mountains and flat intermountain valleys or basins.

 

Plate tectonics powered by crustal spreading broadly generates two types of forces: compression as plates are moved together and extension as those forces relax. Compression was the dominant geologic force affecting the western United States beginning about 200 million years ago as the Pacific Ocean plate moved eastward under the North American continental plate. Those forces compressed the overlying pile of sedimentary rocks accumulated over hundreds of millions of years into a thick stack reaching up to elevations of 14,000 feet, similar to the altiplano of Mexico and South America which formed at the same time from similar forces. That highland plateau stretched west – east from the Sierra Nevada Mountains in California to the Wasatch Range in Utah.

 

Extension became the dominant force beginning in the Eocene - Oligocene epochs approximately 55 to 25 million years ago. Also, the relative movement of the tectonic plates changed about 30 million years ago with the movement becoming more oblique to the continent. This relaxed the compressional forces and also tended to ‘tear’ the crust apart, creating diagonal extensions.

 

The resulting compressional and extensional tectonics have created throughout Nevada a classical Basin and Range province consisting of narrow, N- to NE-trending, fault block mountain chains separated by flat linear valleys. This geological pattern is repeated across the State and has created a number of currently arid, ‘trapped’ or closed basins with respect to drainage that have the potential of containing lithium brine deposits.

 

Geology of Lithium Brines

 

Lithium brine deposits are accumulations of saline groundwater that are enriched in dissolved lithium. All producing lithium brine deposits share a number of first-order characteristics:

 

  (1) arid climate;
  (2) closed basin containing a salt flat (also known as a Playa or Salar);
  (3) tectonically driven subsidence;
  (4) associated igneous or geothermal activity;
  (5) suitable lithium source-rocks;
  (6) one or more adequate aquifers; and
  (7) sufficient time to concentrate a brine.

 

The single most important factor determining if a nonmarine basin can accumulate lithium brine is whether or not the basin is closed.

 

Lithium enriched brines are formed by complex processes that include evaporation, re-mobilization, salt and lithium clay dissolution and precipitation. In essence, lithium is liberated through weathering or derived from hydrothermal fluids from a variety of rock sources within a closed basin where lithium, a lightweight element, cannot escape.

 

Lithium is highly soluble and, unlike sodium (Na), potassium (K), or calcium (Ca), does not readily produce evaporite minerals when concentrated by evaporation. Instead, it ends up in residual brines in the shallow subsurface. Economic brines have Li concentrations in the range of 200 to 4,000 milligrams per liter (mg/l). 1 mg/l = 1 ppm.

 

Clayton Valley contains the only currently producing lithium brine project in Nevada. Production has been on-going since 1967. The production at Clayton Valley is located approximately 120 miles west of Railroad Valley. Evidence from Clayton Valley suggests that felsic vitric tuffs are a particularly favorable primary source of lithium as well, uplifted Neogene Lake beds from earlier in the basin’s history, which have been altered to hectorite, may provide a source of lithium.

 

13

 

 

Geology of Railroad Valley

 

Railroad Valley has produced about 44 million barrels of oil (MMBO) from nine petroleum fields and has been extensively studied to determine relations between structure and oil production. Several interpretations of basin configuration have evolved, based on improved seismic acquisition and processing and better understanding of deformation styles and kinetics.

 

Oil was first discovered at Railroad Valley by Shell Oil in 1954. Their first discovery well reached a depth of 10,360 feet and it was determined that there were commercial oil reserves at intervals between 6,450 and 6,730 feet. The valley area is essentially wedge shaped with the wedge increasing in thickness from west to east. A low-angle attenuation fault has been reported to underlie Railroad Valley which has been interpreted to be a result of asymmetric arching rather than a series of down-to-the-west high-angle normal faults.

 

The stratigraphy of the valley is known to contain Paleozoic platform carbonate rocks, Tertiary volcanic rocks, and Tertiary lacustrine sediments. In comparison to Clayton Valley, Railroad Valley has a large endowment of Neogene volcanic flows and tophaceous rocks.

 

Oil exploration has reported several laterally continuous thick lithium brine horizons throughout Railroad Valley. Testing for lithium from the brines was not conducted by the oil industry. Good reservoir rocks for oil may not represent good reservoir hosts for lithium. The underlying brine-waters of the Railroad Valley were at one time examined as a potential reservoir for Las Vegas.

 

Volcanic rocks form a large part of the Neogene rock sequence: ash-flow tuffs and basalt flows from major calderas in eastern and central Nevada. Thickness of the volcanic section can vary greatly because of Neogene erosion and faulting. The thickness of ash flow tuffs in Railroad Valley can range from less than 1,000 ft to more than 3,000 ft. These rocks have shown good porosity and may represent an enormous source for lithium.

 

Tertiary lacustrine formations consist of varying proportions of fresh-water carbonate, shale, sandstone, and volcanic debris. To date, oil production from Tertiary lacustrine reservoirs is limited, but there is production from the Sheep Pass Formation in the Eagle Springs field, and formerly there was production from Currant field; both in Railroad Valley.

 

The northern Playa area of Railroad Valley contained a large lake during the Pleistocene Epoch, more than 7,000 years ago. The lake has subsequently evaporated within the valley; however, at one point it reportedly covered an area of over 525 square miles and attained a maximum depth of 315 feet. The large Railroad Valley north playa today is partly covered by young erosional alluvium.

 

Mineral Resources and Mineral Reserves

 

The Railroad Valley has demonstrated enrichment in lithium in the nearby dry sediments as evidenced from the NURE sample database from the U.S. Geological Survey. However, the project is at an exploration stage. There are no current lithium brine mineral resources or reserves on the property.

 

Exploration and Development

 

Exploration and Development would consist of direct sampling and analysis of lithium both laterally and vertically across the project area from both volcanic horizons and underground brines contained within the Playa. Drilling and mobilization represent the largest costs of the program. Every effort would be made to minimize costs and maximize the sampling of brine from either re-entry and perforation of ‘shut-in’ oil wells or testing of current water wells in the project area.

 

Future Exploration and Development

 

The Company believes there is value in their WNB claims and will continue to evaluate those claims. However, resources are limited, and the Company’s primary focus is on the development of its battery recycling facility in Fernley, NV.

 

14

 

 

Item 3. Legal Proceedings

 

In January 2018, the Company filed a complaint in Nevada seeking the return or cancellation of 16 million common shares which the Company believes were fraudulently issued as well as claims against the former CEO of the Company, Craig Alford. As a result, the Company entered into agreements to cancel eleven million shares (of which ten million shares have already been cancelled). The remaining five million shares were cancelled and reissued after the Company determined that the recipients provided proper consideration for such shares. Alford has filed a counterclaim against the Company for amounts allegedly owed to him that the Company believes is entirely without merit. The litigation continues against Alford and certain other relief defendants but has been delayed due to Covid -19 restrictions.

 

On April 6, 2021, Alford served a complaint against the Company and its transfer agent, Action Stock Transfer, for failure to remove a restricted legend from 4,000,000 common shares held in Alford’s name and alleged damages to Alford for such failure. The complaint was filed in Utah state court. The Company responded with a motion to stay the proceedings until after the Nevada proceedings are completed. The motion was granted by the court to stay the proceedings until October 1, 2021. On September 15, 2021, the Company filed a motion to extend the stay in light of the continuance of the trial date of the November proceeding. The parties are in the process of negotiating a stipulation to extend the stay.

 

Other than the preceding, to the best of our knowledge, we are not currently a party to any legal proceedings that, individually or in the aggregate, are deemed to be material to our financial condition or results of operations.

 

We are required by Section 78.090 of the Nevada Revised Statutes (the “NRS”) to maintain a registered agent in the State of Nevada. Our registered agent for this purpose is United Corporate Services, Inc., 2520 St Rose Pkwy Suite 319, Henderson, NV 89074. All legal process and any demand or notice authorized by law to be served upon us may be served upon our registered agent in the State of Nevada in the manner provided in NRS 14.020(2).

 

Item 4. Mine Safety Disclosures

 

Not applicable.

 

15

 

 

PART II

 

Item 5. Market for Common Equity and Related Stockholder Matters

 

Market Information

 

Our shares of common stock are eligible for quotation on “OTCQB” operated by the OTC Markets Group under the symbol “ABML.”

 

On October 7, 2021, the closing price of our Common Stock as reported by the OTC Markets Group was $1.49 per share.

 

Holders

 

As of October 7, 2021, we have approximately 131 shareholders of record, including our directors and officers. One such holder is Cede & Co., a nominee for Depository Trust Company, or DTC. Shares of common stock that are held by financial institutions as nominees for beneficial owners are deposited into participant accounts at DTC and are considered to be held of record by Cede & Co. as one stockholder.

 

Dividends

 

We have never declared or paid any cash dividends on our common stock. We currently intend to retain all available funds and any future earnings to support our operations and finance the growth and development of our business. We do not intend to pay cash dividends on our common stock for the foreseeable future. Any future determination related to dividend policy will be made at the discretion of our Board of Directors. The Nevada Revised Statutes, however, prohibits us from declaring dividends where, after giving effect to the distribution of the dividend:

 

we would not be able to pay our debts as they become due in the usual course of business; or
     
  our total assets would be less than the sum of our total liabilities plus the amount that would be needed to satisfy the rights of stockholders who have preferential rights superior to those receiving the distribution, unless otherwise permitted under our Articles of Incorporation.

 

Stock Options, Warrants and Rights

 

As of June 30, 2021, ABMC has 44,482,000 potentially issuable shares of common stock from share purchase warrants and convertible preferred stock, including:

 

● 16,616,000 shares of common stock issuable upon conversion of 207,700 shares of Series C Preferred Stock issued and outstanding; 

 

● 1,616,000 shares of common stock issuable upon exercise of warrants with an exercise price of $0.25 per share; 

 

● 25,500,000 shares of common stock issuable upon exercise of warrants with an exercise price of $0.075 per share; and 

 

● 500,000 shares of common stock issuable upon exercise of warrants with an exercise price of $0.15 per share. 

 

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Penny Stock

 

Our common stock is subject to the provisions of Section 15(g) of the Exchange Act and Rule 15g-9 thereunder, commonly referred to as the “penny stock rule”. Section 15(g) sets forth certain requirements for transactions in penny stock, and Rule 15g-9(d) incorporates the definition of “penny stock” that is found in Rule 3a51-1 of the Exchange Act. The SEC generally defines a penny stock to be any equity security that has a market price less than US$5.00 per share, subject to certain exceptions. We are subject to the SEC’s penny stock rules. Since our common stock is deemed to be penny stock, trading in the shares of our common stock is subject to additional sales practice requirements on broker dealers who sell penny stock to persons other than established customers and accredited investors. “Accredited investors” are generally persons with assets in excess of US$1,000,000 or annual income exceeding US$200,000 or US$300,000 together with their spouse. For transactions covered by these rules, broker dealers must make a special suitability determination for the purchase of securities and must have the purchaser’s written consent to the transaction prior to the purchase. Additionally, for any transaction involving penny stock, unless exempt, the rules require the delivery, prior to the first transaction, of a risk disclosure document prepared by the SEC relating to the penny stock market. A broker-dealer also must disclose the commissions payable to both the broker-dealer and the registered representative and current quotations for the securities. Finally, monthly statements must be sent disclosing recent price information for penny stocks held in an account and information to the limited market in penny stocks. Consequently, these rules may restrict the ability of broker-dealer to trade and/or maintain a market in our common stock and may affect the ability of our stockholders to sell their shares.

 

Securities Authorized for Issuance under Equity Compensation Plans

 

As of June 30, 2021, the Company had 60,000,000 shares of common stock authorized to issue under its Employee Retention Plan and none issued.

 

Recent Sales of Unregistered Securities

 

On May 18, 2021, the Company issued 349,999 common shares with a fair value of $528,298 for consulting services.

 

On June 9, 2021, the Company issued 16,590 common shares with a fair value of $36,000 for consulting services.

 

On June 30, 2021, the Company issued 518,205 common shares with a fair value of $1,046,500 for consulting services, which included 18,205 common shares with a fair value of $37,502 to directors of the Company for directors’ fees.

 

From April 1, 2021 to June 30, 2021, the Company issued 10,622,997 common shares pursuant to the cashless exercise of share purchase warrants and 3,950,000 common shares pursuant to the exercise of share purchase warrants for total proceeds of $331,250. From April 1, 2021 to June 30, 2021, the Company issued 2,600,000 common shares pursuant to the conversion of 32,500 shares of Series C Preferred Stock.

 

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

 

Purchases of Equity Securities by the Issuer and “Affiliated Purchasers”

 

We did not purchase any shares of our common stock or other securities during the period ended June 30, 2021.

 

ITEM 6. Selected Financial Data

 

Not required.

 

ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITIONS AND RESULTS OF OPERATIONS.

 

You should read the following discussion of our financial condition and results of operations in conjunction with the consolidated financial statements and the notes thereto included elsewhere in the Form 10-K. The following discussion contains forward-looking statements that reflect our plans, estimates and beliefs. Our actual results could differ materially from those discussed in the forward-looking statements. Factors that could cause or contribute to these differences include those discussed below and elsewhere in this Form 10-K.

 

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RESULTS OF OPERATIONS

 

Working Capital

 

   

June 30, 2021

   

June 30, 2020

 
    $     $  
Current Assets     14,135,718       1,067,258  
Current Liabilities     1,822,498       5,795,170  
Working Capital (Deficit)     12,313,220       (4,727,912 )

 

Cash Flows

 

   

Twelve months ended
June 30,

2021

   

Nine months

ended
June 30,

2020

 
  $     $  
Cash Flows used in Operating Activities     (7,756,438 )     (3,018,519 )
Cash Flows used in Investing Activities     (7,083,247 )     (3,896 )
Cash Flows provided by Financing Activities     26,853,263       3,844,968  
Net Increase in Cash During the Period     12,013,578       822,553  

 

Operating Revenues

 

During the twelve months ended June 30, 2021 and nine months ended June 30, 2020, the Company did not earn any revenues. The Company is currently still in its development stage.

 

Operating Expenses and Net Loss

 

During the twelve months ended June 30, 2021, the Company incurred operating expenses of $37,724,330 compared to operating expenses of $4,387,169 during the nine months ended June 30, 2020. The increase in operating expenses was due to an increase in our overall operations during the fiscal year of 2021, highlighted by purchases of various properties and water rights in preparation for the commencement of construction of our lithium-ion battery recycling pilot plant. Our biggest expenditures for the twelve months ended June 30, 2021 were related to labor costs, including consulting fees of $24,133,707 and management fees of $5,017,231 of which the majority of those costs related to share-based compensation. We also saw an increase in payroll expense from $1,346,994 in fiscal year of 2020 to that of $3,409,866 in fiscal year of 2021 due to an increase in the number of staff in our office relating to the growth of our operations. We currently are expecting that we will require more staffing as we continue to grow our business. We also saw an increase in professional fees from $372,186 during the nine months ended June 30, 2020 to $1,239,351 during the twelve months ended June 30, 2021 due to additional legal fees for due diligence and general legal services related to our acquisitions of various land properties and water rights throughout the fiscal year of 2021 as well as an increase in accounting and audit fees related to the increased time and costs incurred in connection therewith.

 

We incurred a net loss attributable to stockholders of $41,864,705 during the twelve months ended June 30, 2021 or a loss of $0.08 per share compared to a net loss attributable to stockholders of $13,318,408 or a loss of $0.05 per share during the nine months ended June 30, 2020. In addition to operating expenses, we incurred finance costs of $422,768, a loss of $19,655,296 relating to the change in the fair value of derivative liabilities during the twelve-month period ended June 30, 2021 as well as $2,915,025 of accretion and interest costs which was offset by a gain on settlement of convertible debt of $18,683,279 from the activity relating to the servicing and settlement of our convertible debentures during that year. During the nine months ended June 30, 2020, we incurred a loss on the change in fair value of derivative liability of $5,863,127 and accretion and interest expense of $4,391,184, which was offset by a gain on settlement of debt of $1,319,326. The increase in other expense during the current year was due to an increase in the number and dollar value of convertible debentures in the fiscal year ended June 30, 2021 compared to that of the prior year and also due to an increase in the activity of convertible debentures as we focused more of our financing activities to raising equity from the issuance of common shares that were buoyed by an appreciation in the market price of our common stock. As we were able to raise funds from the issuance of equity instruments, we used part of the proceeds from the offerings of our common stock to pay down and settle our outstanding convertible debentures that carried discounts to the market price of the Company’s common shares upon conversion as well as high interest rates indicative of the borrowing costs of a development stage company. Moving forward, we believe that the Company is in a much stronger financial position than the fiscal year of 2020 due to a higher cash base and working capital, which will be a key factor as the Company continues its strategic objectives of graduation from the development stage to construction of our battery recycling pilot plant and eventually of production and revenue-earning activities.

 

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Liquidity and Capital Resources

 

Cash and Assets

 

As of June 30, 2021, the Company had cash of $12,843,502 and total assets of $21,263,103 compared to cash of $829,924 and total assets of $1,161,314 at June 30, 2020. The increase in cash was due to proceeds received from the sales of our shares of common stock and exercise of share purchase warrants which was offset by an increase in the amount of cash used for our day-to-day operating expenditures as we continue to grow our business. We also continued to build out our core asset base through the strategic acquisitions of various land properties in Nevada and various water rights which will be used in our future production process and will be more cost effective and efficient than sourcing our expected water use through third parties.

 

Liabilities

 

Our liabilities decreased from $6,101,818 at June 30, 2020 to $1,822,498 at June 30, 2021 primarily due to paying down and settling our outstanding convertible debentures during the year of 2021, which carried high interest rates and a significant discount to the market price of our common shares which could cause dilution for our existing shareholders. As of June 30, 2021, we no longer have any outstanding convertible debentures issued and outstanding or derivative liability with respect to conversion features that are held by note holders. This was in comparison to outstanding face value of convertible debentures of $2,211,200, of which $2,084,051 was unamortized discount, and the fair value of derivative liability of $4,519,654 (the fair value of the conversion features within the convertible debentures) held by our convertible note holders at June 30, 2020. As of June 30, 2021, the majority of our liabilities was comprised of accounts payable and accrued liabilities in the aggregate amount of $1,616,852 compared to that of $514,838 at June 30, 2020 and the increase in the amount of $1,102,014 reflected an increase in the Company’s day-to-day operating costs. Most of our trade accounts payable and accrued liabilities are expected to be settled over the next 12 months.

 

Working Capital and Capital Transactions

 

As at June 30, 2021, we have a working capital of $12,313,220 compared to a working capital deficit of $4,727,912 as at June 30, 2020. The strengthening of our working capital was due to our ability to raise significant funding through the issuance of equity instruments which were used to repay our debt financing and continue to fund our growth and strategic objectives as we move closer to construction of our battery recycling pilot plant and, eventually, to production activity.

 

We have 573,267,632 common shares issued and outstanding at June 30, 2021 compared to 365,191,213 common shares issued and outstanding at June 30, 2020. During the twelve months ended June 30, 2021, we issued 69,715,910 common shares from registered and unregistered sales of our common shares, 57,670,677 common shares from the exercise of outstanding share purchase warrants, 34,534,830 common shares as payments for services, including share-based compensation to certain officers and directors of the Company, 22,685,750 common shares for the settlement of convertible debentures, 16,750,000 common shares for share purchase agreements, 5,900,000 common shares for the conversion from certain issued Series C preferred shares, and 69,252 common shares for deposit on real property.

 

Cash flows from Operating Activities

 

During the twelve months ended June 30, 2021, we used $7,756,438 for operating activities compared to use of $3,018,519 for operating activities during the nine months ended June 30, 2020. The increase in cash used for our operating activities is due to an overall increase in our day-to-day operations.

 

Cash flows from Investing Activities

 

During the twelve months ended June 30, 2021, we used $7,083,247 of cash for investing activities including $5,440,087 for the acquisition of land and building properties, and $1,643,160 for acquisition of water rights. During the nine months ended June 30, 2020, we used $3,896 of cash for acquisition of properties and equipment.

 

19

 

 

Cash flows from Financing Activities

 

During the year ended June 30, 2021, we received $26,853,263 of cash from financing activities, which included $25,931,451 from the issuance of common shares from private placements, net of issuance costs of $1,300,000, $1,395,000 from the issuance of convertible debentures, $862,500 from the exercise of share purchase warrants, and was offset by the repayment of convertible debentures in the aggregate amount of $1,295,202. During the nine months ended June 30, 2020, we received $2,600,000 from the issuance of common shares, $2,522,250 of proceeds from issuance of convertible debentures less repayments of $1,533,274, and proceeds of $255,992 from government loans.

 

Liquidity and Capital Resources

 

During the year ended June 30, 2021, the Company has incurred a net loss of $41,760,064 and used cash of $7,756,438 for operating activities. As of June 30, 2021, the Company has an accumulated deficit of $105,073,651.

 

On September 27, 2021, the Company secured approximately $36,925,000 net proceeds to construct and commission the pilot plant, fund operations, and increase research and development activities. The Company believes its recent capital raise, and its current cash holdings will be sufficient to meet its future working capital needs. The Company cannot give assurance that it can increase its cash balances or limit its cash consumption and thus maintain sufficient cash balances for its planned operations. The Company may need to raise additional capital in the future. However, the Company cannot assure that it will be able to raise additional capital on acceptable terms, or at all. Subject to the foregoing, management believes that the Company has sufficient capital and liquidity to fund its operations for at least one year from the date of issuance of the accompanying financial statements.

 

These audited consolidated financial statements do not include any adjustments to the recoverability and classification of recorded asset amounts and classification of liabilities that might be necessary should the Company be unable to continue as a going concern.

 

Off-Balance Sheet Arrangements

 

As of June 30, 2021, we had no significant off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that are material to stockholders.

 

Future Financings

 

We will continue to rely on equity sales of our common shares to continue to fund our business operations. Issuances of additional shares will result in dilution to existing stockholders. There is no assurance that we will achieve any additional sales of the equity securities or arrange for debt or other financing to fund planned acquisitions and exploration activities.

 

Critical Accounting Policies

 

Our consolidated financial statements and accompanying notes have been prepared in accordance with United States generally accepted accounting principles applied on a consistent basis. The preparation of financial statements in conformity with U.S. generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting periods.

 

We regularly evaluate the accounting policies and estimates that we use to prepare our consolidated financial statements. A complete summary of these policies is included in the notes to our financial statements. In general, management’s estimates are based on historical experience, on information from third party professionals, and on various other assumptions that are believed to be reasonable under the facts and circumstances. Actual results could differ from those estimates made by management.

 

20

 

 

Recently Issued Accounting Pronouncements

 

In August 2020, the FASB issued ASU No. 2020-06, Debt—Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging - Contracts in Entity’s Own Equity (Subtopic 815-40), which simplifies the accounting for convertible instruments. The guidance removes certain accounting models that separate the embedded conversion features from the host contract for convertible instruments, requiring bifurcation only if the convertible debt feature qualifies as a derivative under ASC 815 or for convertible debt issued at a substantial premium. The ASU removes certain settlement conditions required for equity contracts to qualify for the derivative scope exception, permitting more contracts to qualify for it. The ASU is effective for annual reporting periods beginning after December 15, 2021, including interim reporting periods within those annual periods, with early adoption permitted no earlier than the fiscal year beginning after December 15, 2020.

 

The Company has not yet adopted the new pronouncement as of June 30, 2021.

 

Item 7a. Quantitative and Qualitative Disclosures About Market Risk

 

Not Applicable.

 

Item 8. Financial Statements and Supplementary Data.

 

21

 

 

AMERICAN BATTERY METALS CORPORATION

 

Consolidated Financial Statements

 

For the twelve months ended June 30, 2021 and the nine months ended June 30, 2020

 

Report of Independent Registered Public Accounting Firm – Marcum LLP F-1
Report of Independent Registered Public Accounting Firm – Pinnacle Accountancy Group of Utah F-2
Consolidated Balance Sheets F-3
Consolidated Statements of Operations F-4
Consolidated Statements of Stockholders’ Equity (Deficit) F-5
Consolidated Statements of Cash Flows F-7
Notes to the Consolidated Financial Statements F-8

 

22

 

 

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

 

To the Stockholders and Board of Directors of

 

American Battery Metals Corporation

 

Opinion on the Financial Statements

 

We have audited the accompanying consolidated balance sheet of American Battery Metals Corporation (the “Company”) as of June 30, 2021, the related consolidated statements of operations, stockholders’ equity (deficit) and cash flows for the year ended June 30, 2021 and the related notes (collectively referred to as the “financial statements”). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of June 30, 2021, and the results of its operations and its cash flows for the year ended June 30, 2021, in conformity with accounting principles generally accepted in the United States of America.

 

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 audit. 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 audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audit 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 audit 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 audit 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 audit provides a reasonable basis for our opinion.

 

Marcum LLP

 

We have served as the Company’s auditor since 2021.

 

Costa Mesa, CA

October 13, 2021

 

F- 1

 

 

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

 

To The Board of Directors and Stockholders of

American Battery Metals Corporation

 

Opinion on the Financial Statements

 

We have audited the accompanying consolidated balance sheets of American Battery Metals Corporation (the “Company”) as of June 30, 2020 and September 30, 2019, and the related consolidated statements of operations, stockholders’ deficit, and cash flows for the nine months ended June 30, 2020 and the twelve months ended September 30, 2019 (collectively referred to as the consolidated financial statements). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company as of June 30, 2020 and September 30, 2019, and the results of its operations and its cash flows for the periods then ended, in conformity with accounting principles generally accepted in the United States of America.

 

Consideration of the Company’s Ability to Continue as a Going Concern

 

The accompanying consolidated financial statements have been prepared assuming the Company will continue as a going concern. As discussed in Note 1 to the consolidated financial statements, the Company has not generated sufficient cash flows from operations to fund its business operations. This factor, among others, raises substantial doubt about the Company’s ability to continue as a going concern. Management’s plans in regard to this matter are also described in Note 1. The consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty.

 

Basis for Opinion

 

These consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s consolidated 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 consolidated 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 consolidated 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 consolidated 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 consolidated financial statements. We believe that our audits provide a reasonable basis for our opinion.

 

/s/Pinnacle Accountancy Group of Utah

 

We have served as the Company’s auditor since 2016.

 

Farmington, Utah

September 28, 2020

 

F- 2

 

 

AMERICAN BATTERY METALS CORPORATION

Consolidated Balance Sheets

 

    June 30,
2021
$
    June 30,
2020
$
 
ASSETS            
             
Current assets                
                 
Cash     12,843,502       829,924  
Prepaid expenses     1,292,216       237,334  
                 
Total current assets     14,135,718       1,067,258  
                 
Investment in joint venture           35,250  
Property and equipment (Note 3)     5,484,225       58,806  
Intangible assets (Note 4)     1,643,160        
                 
Total assets     21,263,103       1,161,314  
                 
LIABILITIES                
                 
Current liabilities                
                 
Accounts payable and accrued liabilities     1,616,852       514,838  
Due to related parties (Note 5)     205,646       624,949  
Derivative liability (Note 7)           4,519,654  
Notes payable, net of unamortized discount of $nil and $2,084,051, respectively (Note 8)           127,149  
Current portion of loans payable (Note 8)           8,580  
                 
Total current liabilities     1,822,498       5,795,170  
                 
Loans payable (Note 8)           306,648  
Total liabilities     1,822,498       6,101,818  
                 
Contingencies (Note 13)            
                 
STOCKHOLDERS’ EQUITY (DEFICIT)                
                 
Series A Preferred Stock
Authorized: 500,000 preferred shares, par value of $0.001 per share
Issued and outstanding: 500,000 and 300,000 preferred shares, at June 30, 2021 and 2020, respectively
    500       300  
                 
Series B Preferred Stock
Authorized: 2,000,000 preferred shares, par value of $10.00 per share
Issued and outstanding: nil shares.
           
                 
Series C Preferred Stock
Authorized: 1,000,000 preferred shares, par value of $10.00 per share
Issued and outstanding: 207,700 and nil preferred shares, at June 30, 2021 and 2020, respectively
    2,077,000        
                 
Common Stock
Authorized: 1,200,000,000 common shares, par value of $0.001 per share
               
Issued and outstanding: 573,267,632 and 365,191,213 common shares at June 30, 2021 and 2020, respectively     573,268       365,191  
                 
Additional paid-in capital     121,615,738       55,452,951  
Common stock issuable     247,750       2,450,000  
Deficit     (105,073,651 )     (63,208,946 )
                 
Total stockholders’ equity (deficit)     19,440,605       (4,940,504 )
                 
Total liabilities and stockholders’ equity (deficit)     21,263,103       1,161,314  

 

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

 

F- 3

 

 

AMERICAN BATTERY METALS CORPORATION

Consolidated Statements of Operations

 

    Twelve months ended
June 30,
2021
$
    Nine months ended
June 30,
2020
$
 
             
Operating expenses                
                 
Exploration costs     117,058       292,656  
General and administrative     37,572,022       4,094,513  
Impairment of joint venture (Note 6)     35,250        
                 
Total operating expenses     37,724,330       4,387,169  
                 
Net loss before other income (expense)     (37,724,330 )     (4,387,169 )
                 
Other income (expense)                
                 
Accretion and interest expense     (2,915,025 )     (4,391,184 )
Finance costs     (422,768 )      
Change in fair value of derivative liability (Note 7)     (19,655,296 )     (5,863,127 )
Gain on forgiveness of debt     255,992        
Gain on settlement of debt (Note 9)     18,683,279       1,319,326  
Other income     18,084       3,746  
                 
Total other income (expense)     (4,035,734 )     (8,931,239 )
Net loss     (41,760,064 )     (13,318,408 )
Accrued dividends     (104,641 )      
Net Loss Attributable to Common Stockholders     (41,864,705 )     (13,318,408 )
Net loss per share, basic and diluted     (0.08 )     (0.05 )
Weighted average shares outstanding     498,296,667       254,938,086  

 

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

 

F- 4

 

 

AMERICAN BATTERY METALS CORPORATION

Consolidated Statements of Stockholders’ Equity (Deficit)

 

    Series A Preferred Shares     Series C
Preferred Shares
    Common Shares     Additional     Common
         
    Number     Amount
$
    Number     Amount
$
    Number     Amount
$
    Paid-In
Capital
$
   

stock

issuable
$

    Deficit
$
    Total
$
 
                                                             
Balance, June 30, 2020     300,000       300                   365,191,213       365,191       55,452,951       2,450,000       (63,208,946 )     (4,940,504 )
                                                                                 
Shares issued for services     200,000       200                   34,534,830       34,535       29,090,231       229,000             29,353,966  
                                                                                 
Shares issued for exercise of warrants                             57,670,677       57,671       804,829                   862,500  
                                                                                 
Shares issued from private placement, net of issuance costs                 241,450       2,414,500       69,715,910       69,716       14,873,784       (2,450,000 )           14,908,000  
                                                                                 
Shares issued pursuant to note conversion                 40,000       400,000       22,685,750       22,686       7,890,707                   8,313,393  
                                                                                 
Shares issued pursuant to Series C preferred shares conversion                 (73,750 )     (737,500 )     5,900,000       5,900       731,600                    
                                                                                 
Shares issued pursuant to share purchase agreement                             16,750,000       16,750       11,006,701                   11,023,451  
                                                                                 
Shares issued as a commitment fee                             750,000       750       1,138,500                   1,139,250  
                                                                                 
Shares issued pursuant to property purchase agreement                             69,252       69       271,711                   271,780  
                                                                                 
Share subscriptions received                                               18,750             18,750  
                                                                                 
Beneficial conversion feature on convertible debts                                         271,000                   271,000  
                                                                                 
Share purchase warrants issued                                         83,724                   83,724  
                                                                                 
Net loss for the period                                                     (41,760,064 )     (41,760,064 )
                                                                                 
Accrued dividends                                                     (104,641 )     (104,641 )
                                                                                 
Balance, June 30, 2021     500,000       500       207,700       2,077,000       573,267,632       573,268       121,615,738       247,750       (105,073,651 )     19,440,605  

 

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

 

F- 5

 

 

AMERICAN BATTERY METALS CORPORATION

Consolidated Statements of Stockholders’ Equity (Deficit)

 

    Series A Preferred Shares     Common Shares     Additional
    Share          
    Number     Amount
$
    Number     Amount
$
    Paid-In
Capital
$
    Subscriptions
Received
$
    Deficit
$
    Total
$
 
                                                 
Balance, September 30, 2019                 132,678,133       132,678       44,970,398             (49,890,538 )     (4,787,462 )
                                                                 
Shares issued for services                 24,111,031       24,111       1,048,267                   1,072,378  
                                                                 
Shares issued for exercise of warrants                 9,924,304       9,924       (9,924 )                  
                                                                 
Shares issued from private placement                 3,750,000       3,750       146,250                   150,000  
                                                                 
Shares issued pursuant to note conversion                 193,014,921       193,015       9,120,896                   9,313,911  
                                                                 
Share subscriptions received                                   2,450,000             2,450,000  
                                                                 
Warrant cancellations                 1,712,824       1,713       (1,713 )                  
                                                                 
Fair value of share purchase warrants                             179,077                   179,077  
                                                                 
Issuance of preferred shares     300,000       300                   (300 )                  
                                                                 
Net loss for the period                                         (13,318,408 )     (13,318,408 )
                                                                 
Balance, June 30, 2020     300,000       300       365,191,213       365,191       55,452,951       2,450,000       (63,208,946 )     (4,940,504 )

 

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

 

F- 6

 

 

AMERICAN BATTERY METALS CORPORATION

Consolidated Statements of Cash Flows

 

    Twelve months ended
June 30,
2021
$
    Nine months ended
June 30,
2020
$
 
             
Operating Activities                
                 
Net loss attributable to common stockholders     (41,864,705 )     (13,318,408 )
                 
Adjustments to reconcile net loss to net cash used in operating activities:                
                 
Accretion expense     2,814,775       3,971,342  
Change in fair value of derivative liability     19,655,296       5,863,127  
Depreciation expense     14,668        
Discount on convertible notes payable     51,000       396,893  
Fair value of share purchase warrants issued     83,724       179,077  
Gain on settlement of debt     (18,683,279 )     (1,319,326 )
Gain on forgiveness of debt     (255,992 )        
Impairment of joint venture     35,250        
Shares issued for commitment fee     1,139,250        
Shares issued for services     29,353,966       1,072,378  
                 
Changes in operating assets and liabilities:                
                 
Prepaid expenses     (783,102 )     (182,935 )
Accounts payable and accrued liabilities     1,102,014       152,653  
Due to related parties     (419,303 )     166,680  
                 
Net Cash Used In Operating Activities     (7,756,438 )     (3,018,519 )
                 
Investing Activities                
                 
Acquisition of property and equipment     (5,440,087 )     (3,896 )
Purchase of water rights/intangible assets     (1,643,160 )      
                 
Net Cash Used In Investing Activities     (7,083,247 )     (3,896 )
                 
Financing Activities                
                 
Proceeds from issuance of convertible notes payable     1,395,000       2,522,250  
Proceeds from bank loan           255,992  
Proceeds from exercise of share purchase warrants     862,500        
Proceeds from issuance of common shares, net of issuance costs     25,931,451       2,600,000  
Repayment of convertible note payable     (1,295,202 )     (1,533,274 )
Repayment of loans payable     (59,236 )      
Share subscriptions received     18,750        
                 
Net Cash Provided By Financing Activities     26,853,263       3,844,968  
                 
Change in Cash     12,013,578       822,553  
                 
Cash – Beginning of Period     829,924       7,371  
                 
Cash – End of Period     12,843,502       829,924  
                 
Supplemental disclosures (Note 11)                

 

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

 

F- 7

 

 

AMERICAN BATTERY METALS CORPORATION

Notes to the Consolidated Financial Statements

For the year ended June 30, 2021 and the nine month period from October 1, 2019 to June 30, 2020

 

1. Organization and Nature of Operations
   
  American Battery Metals Corporation (formerly Oroplata Resources Inc.) (“the Company”) was incorporated under the laws of the state of Nevada on October 6, 2011 for the purpose of acquiring and developing mineral properties. The Company has a wholly-owned subsidiary called Oroplata Exploraciones E Ingenieria SRL, which was incorporated in the Dominican Republic on January 10, 2012. On July 26, 2016, the Company incorporated LithiumOre Corporation (formerly Lithortech Resources Inc.), a Nevada company, as a wholly-owned subsidiary. On July 5, 2019, the Company incorporated ABMC AG, LLC, a Nevada company as a wholly-owned subsidiary. The Company currently holds mineral rights in the Western Nevada Basin of Nye County in the state of Nevada. In July 2020, management changed its year end date from September 30th to June 30th, and these consolidated financial statements reflect the twelve-month period ended June 30, 2021 and the nine -month period ended June 30, 2020.
   
  On March 11, 2020, the World Health Organization declared COVID-19 a global pandemic. This contagious disease outbreak and any related adverse public health developments, has adversely affected workforces, economies, and financial markets globally, leading to an economic downturn. The impact on the Company is not currently determinable, but management continues to monitor the situation.
   
 

Liquidity and Capital Resources

   
  During the year ended June 30, 2021, the Company has incurred a net loss of $41,760,064 and used cash of $7,756,438 for operating activities. As of June 30, 2021, the Company has an accumulated deficit of $105,073,651.
   
 

On September 27, 2021, the Company secured approximately $36,925,000 net proceeds to construct and commission the pilot plant, fund operations, and increase research and development activities. The Company believes its recent capital raise, and its current cash holdings will be sufficient to meet its future working capital needs. The Company cannot give assurance that it can increase its cash balances or limit its cash consumption and thus maintain sufficient cash balances for its planned operations. The Company may need to raise additional capital in the future. However, the Company cannot assure that it will be able to raise additional capital on acceptable terms, or at all. Subject to the foregoing, management believes that the Company has sufficient capital and liquidity to fund its operations for at least one year from the date of issuance of the accompanying financial statements.

   
  These audited consolidated financial statements do not include any adjustments to the recoverability and classification of recorded asset amounts and classification of liabilities that might be necessary should the Company be unable to continue as a going concern.

 

2. Summary of Significant Accounting Policies
     
  (a) Basis of Presentation
     
    The consolidated financial statements of the Company have been prepared in accordance with accounting principles generally accepted in the United States (“US GAAP”) and are expressed in U.S. dollars. The Company’s fiscal year end is June 30.
     
    These consolidated financial statements include the accounts of the Company and its wholly-owned inactive subsidiaries, Oroplata Exploraciones E Ingenieria SRL and LithiumOre Corporation (formerly Lithortech Resources Inc) and ABMC AG, LLC. All inter-company accounts and transactions have been eliminated on consolidation.
     
  (b) Use of Estimates
     
    The preparation of financial statements in conformity with US GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. The Company regularly evaluates estimates and assumptions related to the fair value of stock-based compensation, recoverability of long-lived assets, valuation of derivative liability, and deferred income tax asset valuation allowances.

 

F- 8

 

 

AMERICAN BATTERY METALS CORPORATION

Notes to the Consolidated Financial Statements

For the year ended June 30, 2021 and the nine month period from October 1, 2019 to June 30, 2020

 

2.       Summary of Significant Accounting Policies (continued)

 

(b) Use of Estimates (continued)

 

The Company bases its estimates and assumptions on current facts, historical experience and various other factors that it believes to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities and the accrual of costs and expenses that are not readily apparent from other sources. The actual results experienced by the Company may differ materially and adversely from the Company’s estimates. To the extent there are material differences between the estimates and the actual results, future results of operations will be affected.

 

(c) Long-Lived Assets

 

Long-lived assets, such as property and equipment, mineral properties, and purchased intangibles, are evaluated for impairment whenever events or changes in circumstances indicate that the carrying amount of the asset may not be recoverable in accordance with Accounting Standards Codification topic 360 “Property, Plant, and Equipment”. Circumstances which could trigger a review include, but are not limited to: significant decreases in the market price of the asset; significant adverse changes in the business climate or legal factors; accumulation of costs significantly in excess of the amount originally expected for the acquisition or construction of the asset; current period cash flow or operating losses combined with a history of losses or a forecast of continuing losses associated with the use of the asset; and current expectation that the asset will more likely than not be sold or disposed significantly before the end of its estimated useful life. The Company’s long-lived assets consist of vehicles, equipment, and land. Vehicles and equipment are depreciated on a straight-line basis over their estimated value lives ranging between 3 and 7 years.

 

Recoverability of assets is measured by a comparison of the carrying amount of an asset to estimated undiscounted future cash flows expected to be generated by an asset. If the carrying amount of an asset exceeds its estimated future cash flows, an impairment charge is recognized as the amount by which the carrying amount exceeds the estimated fair value of the asset. The estimated fair value is determined using a discounted cash flow analysis. Any impairment in value is recognized as an expense in the period when the impairment occurs.

 

Expenditures for major repairs and maintenance which extend the useful lives of property and equipment are capitalized. All other maintenance expenditures, including planned major maintenance activities, are expensed as incurred. Gains or losses from property disposals are included in income or loss from operations.

 

(d) Intangible Assets

 

Intangible assets that have indefinite useful lives are tested annually for impairment, or more frequently if events and circumstances indicate that the asset might be impaired. An impairment loss is recognized to the extent that the carrying amount of the asset group exceeds its fair value.

 

(e) Loss per Share

 

The Company computes net income (loss) per share in accordance with ASC 260, Earnings per Share. ASC 260 requires presentation of both basic and diluted earnings per share (“EPS”) on the face of the income statement. Basic EPS is computed by dividing net income (loss) available to common shareholders (numerator) by the weighted average number of shares outstanding (denominator) during the period. Diluted EPS gives effect to all dilutive potential common shares outstanding during the period using the treasury stock method and convertible preferred stock using the if-converted method. In computing diluted EPS, the average stock price for the period is used in determining the number of shares assumed to be purchased from the exercise of stock options or warrants. Diluted EPS excludes all dilutive potential shares if their effect is anti-dilutive. At June 30, 2021, the Company has 44,482,000 (2020 – 8,603,112) potentially dilutive shares.

 

F- 9

 

 

AMERICAN BATTERY METALS CORPORATION

Notes to the Consolidated Financial Statements

For the year ended June 30, 2021 and the nine month period from October 1, 2019 to June 30, 2020

 

2. Summary of Significant Accounting Policies (continued)

 

(f) Financial Instruments

 

Pursuant to ASC 820, Fair Value Measurements and Disclosures, an entity is required to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. ASC 820 establishes a fair value hierarchy based on the level of independent, objective evidence surrounding the inputs used to measure fair value. A financial instrument’s categorization within the fair value hierarchy is based upon the lowest level of input that is significant to the fair value measurement. ASC 820 prioritizes the inputs into three levels that may be used to measure fair value:

 

Level 1

 

Level 1 applies to assets or liabilities for which there are quoted prices in active markets for identical assets or liabilities.

 

Level 2

 

Level 2 applies to assets or liabilities for which there are inputs other than quoted prices that are observable for the asset or liability such as quoted prices for similar assets or liabilities in active markets; quoted prices for identical assets or liabilities in markets with insufficient volume or infrequent transactions (less active markets); or model-derived valuations in which significant inputs are observable or can be derived principally from, or corroborated by, observable market data.

 

Level 3

 

Level 3 applies to assets or liabilities for which there are unobservable inputs to the valuation methodology that are significant to the measurement of the fair value of the assets or liabilities.

 

The Company’s financial instruments consist principally of cash, accounts payable and accrued liabilities, amounts due to related parties, derivative liabilities, loans payable and notes payable. Pursuant to ASC 820, the fair value of cash is determined based on “Level 1” inputs, which consist of quoted prices in active markets for identical assets. The recorded values of all other financial instruments approximate their current fair values because of their nature and respective maturity dates or durations.

 

Fair value measurements on a recurring basis

 

    Level 1     Level 2     Level 3  
As of June 30, 2021:                  
Liabilities                  
Derivative liabilities   $    -     $     -     $ -  
                         
As of June 30, 2020:                        
Liabilities                        
Derivative liabilities   $ -     $ -     $ 4,519,654  

 

F- 10

 

 

AMERICAN BATTERY METALS CORPORATION

Notes to the Consolidated Financial Statements

For the year ended June 30, 2021 and the nine month period from October 1, 2019 to June 30, 2020

 

2.       Summary of Significant Accounting Policies (continued)

 

(g) Income Taxes

 

The Company accounts for income taxes using the asset and liability method in accordance with ASC 740, Income Taxes. The asset and liability method provides that deferred tax assets and liabilities are recognized for the expected future tax consequences of temporary differences between the financial reporting and tax bases of assets and liabilities, and for operating loss and tax credit carry-forward.

 

Deferred tax assets and liabilities are measured using the currently enacted tax rates and laws that will be in effect when the differences are expected to reverse. The Company records a valuation allowance to reduce deferred tax assets to the amount that is believed more likely than not to be realized.

 

Any uncertain tax position liabilities have been applied against the deferred tax balance given that there is a sufficient net operating loss to cover any penalties and fees associated with the uncertain tax position. We are confident that all uncertain tax positions will be reversed as the correct information returns are filed with the United States Internal Revenue Service. 

 

We recognize accrued interest and penalties related to unrecognized tax benefits in the provision for income taxes in the consolidated statement of operations.

 

Due to the Company’s net loss position from inception on October 6, 2011 to June 30, 2021, there was no provision for income taxes recorded. As a result of the Company’s losses to date, there exists doubt as to the ultimate realization of the deferred tax assets. Accordingly, a valuation allowance equal to the total deferred tax assets has been recorded at June 30, 2021 and 2020.

 

(h) Stock-based Compensation

 

The Company records stock-based compensation in accordance with ASC 718, Compensation – Stock Compensation using the fair value method. All transactions in which goods or services are the consideration received for the issuance of equity instruments are accounted for based on the fair value of the consideration received or the fair value of the equity instrument issued, whichever is more reliably measurable. Equity instruments issued to employees and the cost of the services received as consideration are measured and recognized based on the fair value of the equity instruments issued. At June 30, 2021 and 2020, the Company did not grant any stock options. The Company will utilize the Black Scholes method when calculating stock-based compensation expense relating to stock option awards and warrants.

 

(i) Mineral Property Costs

 

Mineral property acquisition costs are capitalized as incurred. Exploration and evaluation costs are expensed as incurred until proven and probable reserves are established. The Company assesses the carrying costs for impairment under ASC 360, “Property, Plant, and Equipment” at each fiscal quarter end. When it has been determined that a mineral property can be economically developed as a result of establishing proven and probable reserves, the costs then incurred to develop such property, are capitalized. Such costs will be amortized using the units-of-production method over the estimated life of the probable reserve. If mineral properties are subsequently abandoned or impaired, any capitalized costs will be charged to operations.

 

(j) Advertising and Marketing Costs

 

The Company expenses advertising and marketing development costs as incurred. No advertising costs were incurred for the twelve months ended June 30, 2021 and nine months ended June 30, 2020.

 

(k) Debt and Embedded Derivatives

 

The Company applies the accounting standards for derivatives and hedging and for distinguishing liabilities from equity when accounting for hybrid contracts. The Company accounts for convertible debt instruments when the Company has determined that the embedded conversion options should not be bifurcated from their host instruments in accordance with ASC 470-20 Debt with Conversion and Other Options. The Company uses option pricing valuation models to determine the fair value of embedded derivatives and records any change in fair value as a component of other income or expense in the consolidated statement of operations (see Note 7).

 

F- 11

 

 

AMERICAN BATTERY METALS CORPORATION

Notes to the Consolidated Financial Statements

For the year ended June 30, 2021 and the nine month period from October 1, 2019 to June 30, 2020

 

2.       Summary of Significant Accounting Policies (continued)

 

(k) Debt and Embedded Derivatives (continued)

 

ASC 815 provides three criteria that, if met, require companies to bifurcate conversion options from their host instruments and account for them as free-standing derivative financial instruments. These three criteria include circumstances in which (a) the economic characteristics and risks of the embedded derivative instrument are not clearly and closely related to the economic characteristics and risks of the host contract, (b) the hybrid instrument that embodies both the embedded derivative instrument and the host contract is not re-measured at fair value under otherwise applicable generally accepted accounting principles with changes in fair value reported in earnings as they occur and (c) a separate instrument with the same terms as the embedded derivative instrument would be considered a derivative instrument. Professional standards also provide an exception to this rule when the host instrument is deemed to be conventional.

 

The Company records, when necessary, discounts to convertible notes for the intrinsic value of conversion options embedded in debt instruments based upon the differences between the fair value of the underlying common stock at the commitment date of the note transaction and the effective conversion price embedded in the note. Debt discounts under these arrangements are amortized over the term of the related debt to their earliest date of redemption. The Company also records when necessary deemed dividends for the intrinsic value of conversion options embedded in preferred shares based upon the differences between the fair value of the underlying common stock at the commitment date of the note transaction and the effective conversion price embedded in the note.

 

ASC 815-40 provides that, among other things, generally, if an event is not within the entity’s control or could require net cash settlement, then the contract shall be classified as an asset or a liability. The Company uses the option pricing model to determine the fair market value of the derivative liabilities for the twelve months ended June 30. 2021 and nine months ended June 30. 2020.

 

(l) Debt Modifications and Extinguishments

 

When the Company modifies or extinguishes debt, it does so in accordance with ASC Topic 470-50-40, which requires modification to debt instruments to be evaluated to assess whether the modifications are considered “substantial modifications”. A substantial modification of terms shall be accounted for like an extinguishment. Based on the guidance relied upon and the analysis performed, if the Company believes the embedded conversion feature has no fair value on the date of issuance (measurement date) and the embedded conversion feature has no beneficial conversion feature, the embedded conversion feature does not meet the criteria in ASC 470-50-40-10 or 470-20-25 and the issuance of the convertible note payable is considered a modification, and not an extinguishment that would require the recognition of a gain or loss. If the Company determines the change in terms meet the criteria for substantial modification under ASC 470 it will treat the modification as extinguishment and recognize a loss from debt extinguishment.

 

(m) Leases

 

The Company follows the guidance of ASC 842, Leases, which requires an entity to recognize a right-of-use asset (“ROU”) and a lease liability for virtually all leases. Operating lease ROU assets and liabilities are recognized at commencement date based on the present value of lease payments over the lease term. ROU assets represent the Company’s right to use an underlying asset for the lease term and lease liabilities represent the Company’s obligation to make lease payments arising from the lease. The Company uses an implicit rate of interest to determine the present value of lease payments utilizing its incremental borrowing rate, as the implicit rate of interest in the respective leases is not readily determinable. The Company’s incremental borrowing rate is a hypothetical rate based on its understanding of what its credit rating would be. As of June 30, 2021 and 2020, operating lease ROU assets and liabilities were immaterial.

 

F- 12

 

 

AMERICAN BATTERY METALS CORPORATION

Notes to the Consolidated Financial Statements

For the year ended June 30, 2021 and the nine month period from October 1, 2019 to June 30, 2020

 

2.       Summary of Significant Accounting Policies (continued)

 

(n) Recent Accounting Guidance

 

New Significant Accounting Pronouncements

 

In August 2020, the FASB issued ASU No. 2020-06, Debt—Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging - Contracts in Entity’s Own Equity (Subtopic 815-40), which simplifies the accounting for convertible instruments. The guidance removes certain accounting models that separate the embedded conversion features from the host contract for convertible instruments, requiring bifurcation only if the convertible debt feature qualifies as a derivative under ASC 815 or for convertible debt issued at a substantial premium. The ASU is effective for annual reporting periods beginning after December 15, 2021, including interim reporting periods within those annual periods, with early adoption permitted no earlier than the fiscal year beginning after December 15, 2020. The Company is currently evaluating the timing and method of adoption and the related impact of the new guidance on the earnings per share and on its financial statements.

 

3. Property and Equipment

 

During the twelve months ended June 30, 2021, the Company purchased land for $907,381 comprised of 12.44 acres and located in Fernley, Nevada. The Company will be constructing five separate building areas on this property to create a Pilot Plant campus that includes: Production Process Areas, Feedstock Sorting Area, Analytical Laboratory Spaces & Process Development Bays, a Storage Warehouse, and general Office Space.

 

On February 3, 2021, the Company made the final payment on vacant land located in Ely, NV, purchased for $204,000.

 

On June 28, 2021, the Company closed the acquisition of property comprised of 13.8 acres located in McCarran, Nevada for $4,229,240.

 

    Equipment
$
    Vehicle
$
    Land
$
    Total
$
 
                         
Cost:                                
                                 
Balance, September 30, 2019                        
Additions           61,916              
                                 
Balance, June 30, 2020           61,916             61,916  
Additions     99,466             5,340,621       5,440,087  
                                 
 Balance, June 30, 2021     99,466       61,916       5,340,621       5,502,003  
                                 
Accumulated Depreciation                                
                                 
Balance, September 30, 2019                        
Additions           3,110              
                                 
Balance, June 30, 2020           3,110             3,110  
Additions     4,356       10,312             14,668  
                                 
Balance, June 30, 2021     4,356       13,422             17,778  
Carrying Amounts:                                
                                 
Balance, June 30, 2020           58,806             58,806  
Balance, June 30, 2021     95,110       48,494       5,340,621       5,484,225  

 

F- 13

 

 

AMERICAN BATTERY METALS CORPORATION

Notes to the Consolidated Financial Statements

For the year ended June 30, 2021 and the nine month period from October 1, 2019 to June 30, 2020

 

4. Intangible Assets

 

During the year ended June 30, 2021, the Company purchased 127 acres of water rights in the City of Fernley, Nevada for $1,643,160. The water rights will be used to ensure the Company’s lithium-ion battery recycling plant will have adequate water to operate at full capacity once construction is complete. The water rights are treated in accordance with ASC 350, Intangible Assets, and have an unlimited useful life given that there are no expiration dates on the water rights acquired by the Company.

 

     

Water Rights

$

 
         
Cost:        
         
Balance, June 30, 2020      
Additions     1,643,160  
         
Balance, June 30, 2021     1,643,160  

 

5. Related Party Transactions

 

(a) As of June 30, 2021, the Company owes $120,146 (2020 - $120,146) to the former Chief Executive Officer and Director of the Company for advances to the Company to fund day-to-day operations. The amounts owing are unsecured, non-interest bearing, and due on demand.

 

(b) As of June 30, 2021, the Company owes $85,500 (2020 - $85,500) to the former Chief Executive Officer and Director of the Company for advances to the Company to fund day-to-day operations and accrued management fees. The amounts owing are unsecured, non-interest bearing, and due on demand.

 

(c) As of June 30, 2021, the Company owed $nil (2020 - $388,577) to the Chief Executive Officer of the Company for accrued management fees. The amounts owing are unsecured, non-interest bearing, and due on demand. The amounts owed were paid in November 2020.

 

(d) As of June 30, 2021, the Company owed $nil (2020– $30,726) to directors of the Company for accrued management fees. The amounts owing are unsecured, non-interest bearing, and due on demand. The amounts owed were paid in December 2020.

 

(e) During the year ended June 30, 2021, the Company issued 16,590 shares to Just Business Management for consulting services, of which Director David Batstone was a 50% owner as of June 30, 2021. Additionally, JB People & Planet, of which Director David Batstone is a 5.161% owner, purchased 8,538,012 shares through a warrant exercise and purchased 125,000 Preferred C shares.

 

6.       Investment in Joint Venture

 

On October 8, 2018, the Company entered into a joint venture agreement with CINC Industries Inc. (“CINC”), a Nevada company, for a period of five years whereby the joint venture will propagate the sale of a new process for extraction of lithium salt from salt brine solutions using CINC’s existing and future processing equipment. As part of the joint venture, each of CINC and the Company holds a 50% interest in the joint venture. CINC is responsible for completing testing on the pilot project, providing training to the Company for use of its processing equipment, manufacturing up to 20 test units, and support and product development, as well as shared costs on other personnel utilized in the joint venture company. The Company is responsible for the initial funding for all equipment and associated expenses, the cost of the lease space, and marketing and sales of the joint venture agreement. The joint venture is committed to acquiring a minimum amount of processing equipment, goods, accessories, and/or materials totaling: (i) $1,000,000 by October 8, 2020; (ii) $3,000,000 by October 8, 2021; (iii) $6,000,000 by October 8, 2022; and (v) $10,000,000 by October 8, 2023. If the joint venture fails to meet the minimum amounts above, the Company will lose the exclusive right to market, promote and sell the processing equipment provided by CINC. As part of the joint venture agreement, the Company issued 250,000 common shares to CINC. On June 4, 2021, the Company informed CINC that it was exercising its right to terminate the joint venture agreement and recorded a loss on extinguishment of the agreement of $35,250.

 

F- 14

 

 

AMERICAN BATTERY METALS CORPORATION

Notes to the Consolidated Financial Statements

For the year ended June 30, 2021 and the nine month period from October 1, 2019 to June 30, 2020

 

7. Derivative Liabilities

 

The Company records the fair value of the conversion price of the convertible debentures as disclosed in Note 2 in accordance with ASC 815, Derivatives and Hedging. The fair value of the derivatives was calculated using a multi-nominal lattice model. The fair value of the derivative liabilities is revalued on each balance sheet date with corresponding gains and losses recorded in the consolidated statement of operations. For the twelve months ended June 30, 2021, the Company recorded a loss on the change in the fair value of derivative liability of $19,655,296 (nine months ended June 30, 2020 - $5,863,127).

 

As at June 30, 2021, the Company recorded a derivative liability of $nil (2020 - $4,519,654). The following inputs and assumptions were used to value the derivative liabilities outstanding during the periods ended June 30, 2021 and 2020:

 

    June 30, 2021     June 30, 2020  
Expected volatility     136-286 %     158-240 %
Risk free rate     0.04-0.16 %     0.16 %
Expected life (in years)     0.2-1.0       0.5-1.0  

 

A summary of the activity of the derivative liability is shown below:

 

Balance, September 30, 2019   $ 3,437,200  
Derivative additions associated with convertible notes     2,591,119  
Adjustment for conversion/prepayment     (7,371,792 )
Mark to market adjustment     5,863,127  
         
Balance, June 30, 2020     4,519,654  
         
Derivative additions associated with convertible notes     403,378  
Adjustment for conversion/prepayment     (24,578,328 )
Mark to market adjustment     19,655,296  
         
Balance, June 30, 2021      

 

8.       Loans Payable

 

On January 27, 2020, the Company entered into a finance loan agreement relating to the acquisition of a company vehicle. Under the terms of the finance loan, the Company will make monthly installment payments of $1,089 at a finance loan interest rate of 7.99% per annum, which is due in February 2026. The loan was paid off prior to maturity in January 2020. As of June 30, 2021, the Company carried a balance of $nil (2020 - $59,236) on the loan.

 

On May 7, 2020, the Company received $255,992 from the U.S. Small Business Administration as part of the Paycheck Protection Program. The amounts are unsecured, bears interest at 1% per annum commencing on November 7, 2020, and is due on May 7, 2022. In June 2021, the U.S. Small Business Administration forgave the balance owing of $255,992.

 

F- 15

 

 

AMERICAN BATTERY METALS CORPORATION

Notes to the Consolidated Financial Statements

For the year ended June 30, 2021 and the nine month period from October 1, 2019 to June 30, 2020

 

    June 30,
2021
$
    June 30,
2020
$
 
             
Eagle Equities, LLC, $147,250 on January 31, 2020, unsecured, bears interest at 10% per annum, due on January 31, 2021, convertible into common stock at 60% of the lowest trading price in the ten trading days prior to conversion, unamortized discount of $137,038 (2020)           10,212