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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

FORM 10-Q

 

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

 

For the quarter period ended December 31, 2021

 

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

 

Commission File number: 000-55088

 

AMERICAN BATTERY TECHNOLOGY COMPANY
(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.)

 

100 Washington Ave. Suite 100, Reno, NV 89503

(Address of principal executive offices)

 

(775) 473-4744

(Registrant’s telephone number)

 

 

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

 

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

 

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

 

Yes ☒ 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” 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 ☒

 

The number of shares of the Registrant’s common stock, par value $0.001 per share, outstanding as of February 14, 2022 were 634,671,867.

 

 

 

 
 

 

AMERICAN BATTERY TECHNOLOGY COMPANY

Table of Contents

 

   

Page

Number

PART I. FINANCIAL INFORMATION  
     
ITEM 1. Financial Statements 3
     
  Condensed Consolidated Balance Sheets (unaudited) at December 31, 2021 and June 30, 2021 4
     
  Condensed Consolidated Statements of Operations (unaudited) for the three and six months ended December 31, 2021 and 2020 5
     
  Condensed Consolidated Statements of Stockholders’ Equity (Deficit) (unaudited) for the three and six months ended December 31, 2021 and 2020 6
     
  Condensed Consolidated Statements of Cash Flows (unaudited) for the six months ended December 31, 2021 and 2020 7
     
  Notes to the Condensed Consolidated Financial Statements (unaudited) 8
     
ITEM 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations 13
     
ITEM 3. Quantitative and Qualitative Disclosures about Market Risk 14
     
ITEM 4. Controls and Procedures 14
     
PART II. OTHER INFORMATION  
     
ITEM 1. Legal Proceedings 15
     
ITEM 1A. Risk Factors 15
     
ITEM 2. Unregistered Sales of Equity Securities and Use of Proceeds 15
     
ITEM 3. Defaults Upon Senior Securities 15
     
ITEM 4. Mine Safety Disclosure 15
     
ITEM 5. Other Information 15
     
ITEM 6. Exhibits 16
     
SIGNATURES   17

 

2
 

 

PART I – FINANCIAL STATEMENTS

 

ITEM 1. FINANCIAL STATEMENTS

 

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

 

Operating results for the three months ended December 31, 2021 are not necessarily indicative of the results that can be expected for the year ending June 30, 2022.

 

3
 

 

AMERICAN BATTERY TECHNOLOGY COMPANY

Condensed Consolidated Balance Sheets

(unaudited)

 

                 
   

December 31, 2021

$

   

June 30, 2021

$

 
ASSETS                
Current assets                
                 
Cash   $ 42,540,643     $ 12,843,502  
Prepaid expenses and deposits   1,832,672     1,292,216  
                 
Total current assets     44,373,315       14,135,718  
                 
Property and equipment (Note 3)     11,747,322       5,484,225  
Intangible assets (Note 4)     3,815,910       1,643,160  
Right-of-use asset     296,407       -  
Total assets   $ 60,232,954     $ 21,263,103  
                 
LIABILITIES                
                 
Current liabilities                
                 
Accounts payable and accrued liabilities   $ 4,456,401     $ 1,616,852  
Due to related parties (Note 5)     205,646       205,646  
                 
Total current liabilities     4,662,047       1,822,498  
                 
Long-term liabilities     231,816       -  
                 
Total liabilities     4,893,863       1,822,498  
                 
Contingencies (Note 10)     -       -  
                 
                 
STOCKHOLDERS’ EQUITY                
                 
Series A Preferred Stock
Authorized: 500,000 preferred shares, par value of $0.001 per share
Issued and outstanding: 500,000 preferred shares, as of December 31, 2021 and June 30, 2021 		    500       500  
                 
Series B Preferred Stock
Authorized: 2,000,000 preferred shares, par value of $10.00 per share Issued and outstanding: nil preferred shares as of December 31 and June 30, 2021 		    –       –  
                 
Series C Preferred Stock
Authorized: 2,000,000 preferred shares, par value of $10.00 per share Issued and outstanding: 27,700 and 207,700 preferred shares as of December 31, and June 30, 2021, respectively 		    277,000       2,077,000  
                 
Common Stock
Authorized: 1,200,000,000 common shares, par value of $0.001 per share Issued and outstanding: 631,787,717 and 573,267,632 common shares as of December 31 and June 30, 2021, respectively 		    631,788       573,268  
                 
Additional paid-in capital     180,279,474       121,615,738  
Common stock issuable     3,304,500       247,750  
Accumulated deficit     (129,154,171 )     (105,073,651 )
                 
Total stockholders’ equity     55,339,091       19,440,605  
                 
Total liabilities and stockholders’ equity   $ 60,232,954     $ 21,263,103  

 

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

 

4
 

 

AMERICAN BATTERY TECHNOLOGY COMPANY

Condensed Consolidated Statements of Operations

(unaudited)

 

                                 
   

Three-months ended
December 31,
2021

$

   

Three-months ended
December 31,
2020

$

   

Six months ended
December 31,
2021

$

   

Six months ended
December 31,
2020

$

 
Operating expenses                                
                                 
Exploration costs   $ 190,289     $ 2,902     $ 270,984     $ 109,699  
General and administrative   3,916,825     22,614,058     23,823,416     24,920,354  
                                 
Total operating expenses     4,107,114       22,616,960       24,094,400       25,030,053  
                                 
Net loss before other income (expense)     (4,107,114 )     (22,616,960 )     (24,094,400 )     (25,030,053 )
                                 
Other income (expense)                                
                                 
Accretion and interest expense     (4,140 )     (837,953 )     (4,140 )     (2,200,500 )
Financing costs     -       (190,980 )     -       (405,096 )
Change in fair value of derivative liability (Note 7)     -       (6,244,285 )     -       (7,018,171 )
Gain on settlement of debt     -       1,850,178       -       3,462,611  
Other income (expense)     25,775       -       39,775       -  
                                 
Total other income (expense)     21,635       (5,423,040 )     35,635       (6,161,156 )
                                 
Net loss attributable to stockholders   $ (4,085,479 )   $ (28,040,000 )   $ (24,058,765 )   $ (31,191,209 )
                                 
Net loss per share, basic and diluted   $ (0.01 )   $ (0.06 )   $ (0.04 )   $ (0.07 )
                                 
Weighted average shares outstanding     631,458,183       462,276,476       652,587,349       453,644,098  

 

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

 

5
 

 

AMERICAN BATTERY TECHNOLOGY COMPANY

Condensed Consolidated Statement of Stockholders’ Equity (Deficit)

(unaudited)

 

                                                                                 
    Series A           Series C                        Additional                    
  P. Shares
Number 		    Par Amount     P. Shares
Number 		    Par Amount     C. Shares
Number 		    Par Amount     Paid-In
Capital 		    C. Stock
Issuable 		    Accumulated
Deficit 		    Total  
Balance September 30, 2021     500,000       500       40,200       402,000       629,768,190       629,768       178,716,600       3,080,000       (125,062,684 )     57,766,184  
Shares issued for services     -       -       -       -       1,019,527       1,020       1,438,874       224,500       -       1,664,394  
Shares issued pursuant to Series C preferred shares conversion     -       -       (12,500 )     (125,000 )     1,000,000       1,000       124,000       -       -       -  
Dividends declared     -       -       -       -       -       -       -       -       (6,008 )     (6,008 )
Net loss for the period     -       -       -       -       -       -       -       -       (4,085,479 )     (4,085,479 )
Balance, December 31, 2021     500,000       500       27,700       277,000       631,787,717       631,788       180,279,474       3,304,500       (129,154,171 )     55,339,091  

 

    Series A           Series C                       Additional                    
  P. Shares
Number 		    Par Amount     P. Shares
Number 		    Par Amount     C. Shares
Number 		    Par Amount     Paid-In
Capital 		    C. Stock
Issuable 		    Accumulated
Deficit 		    Total  
Balance, September 30, 2020     300,000       300       -       -       459,264,660       459,265       61,161,379       1,343,750       (66,360,155 )     (3,395,461 )
Shares issued for services     200,000       200       -       -       17,900,000       17,900       21,012,100       35,000       -       21,065,200  
Shares issued for exercise of warrants     -       -       -       -       7,326,430       7,326       (7,326 )     -       -       -  
Shares issued from private placement, net of issuance costs     -       -       241,450       2,414,500       -       -       -       (6,250 )     -       2,408,250  
Shares issued pursuant to note conversion     -       -       40,000       400,000       6,131,656       6,131       809,104       -       -       1,215,235  
Share subscriptions received     -       -       -       -       12,000,000       12,000       1,542,724       (1,343,750 )     -       210,974  
Dividends declared     -       -       -       -       -       -       -       -       (7,869 )     (7,869 )
Net loss for the period,     -       -       -       -       -       -       -       -       (28,040,000 )     (28,040,000 )
Balance, December 31, 2020     500,000       500       281,450       2,814,500       502,622,746       502,622       84,517,981       28,750       (94,408,024 )     (6,543,671 )

 

    Series A           Series C                       Additional                    
  P. Shares
Number 		    Par Amount     P. Shares
Number 		    Par Amount     C. Shares
Number 		    Par Amount     Paid-In
Capital 		    C. Stock
Issuable 		    Accumulated
Deficit 		    Total  
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  
Shares issued for services     -       -       -       -       10,105,258       10,105       15,647,995       3,075,500       -       18,733,600  
Shares issued for exercise of warrants     -       -       -       -       5,625,216       5,625       331,875       (18,750 )     -       318,750  
Shares issued from private placement, net of issuance costs     -       -       -       -       25,389,611       25,390       36,913,261       -       -       36,938,651  
Shares issued pursuant to Series C preferred shares conversion     -       -       (180,000 )     (1,800,000 )     14,400,000       14,400       1,785,600       -       -       -  
Shares issued pursuant to share purchase agreement     -       -       -       -       3,000,000       3,000       3,985,005       -       -       3,988,005  
Dividends declared     -       -       -       -       -       -       -       -       (21,755 )     (21,755 )
Net loss for the period     -       -       -       -       -       -       -       -       (24,058,765 )     (24,058,765 )
Balance, December 31, 2021     500,000       500       27,700       277,000       631,787,717       631,788       180,279,474       3,304,500       (129,154,171 )     55,339,091  

 

    Series A           Series C                       Additional                    
  P. Shares
Number 		    Par Amount     P. Shares
Number 		    Par Amount     C. Shares
Number 		    Par Amount     Paid-In
Capital 		    C. Stock
Issuable 		    Accumulated
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                       31,140,000       31,140       22,581,130       35,000       -       22,647,470  
Shares issued for exercise of warrants     -                               12,381,562       12,381       (12,381 )     -       -       -  
Shares issued from private placement, net of issuance costs     -               241,450       2,414,500       60,625,000       60,625       2,389,375       (2,456,250 )             2,408,250  
Shares issued pursuant to note conversion     -               40,000       400,000       21,284,971       21,285       2,564,182                       2,985,467  
Share subscriptions received     -                               12,000,000       12,000       1,542,724                       1,554,724  
Dividends declared     -                                                               (7,869 )     (7,869 )
Net loss for the period,   -     -     -     -     -     -     -     -       (31,191,209 )   (31,191,209 )
Balance, December 31, 2020     500,000       500       281,450       2,814,500       502,622,746       502,622       84,517,981       28,750       (94,408,024 )     (6,543,671 )

 

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

 

6
 

 

AMERICAN BATTERY TECHNOLOGY COMPANY

Condensed Consolidated Statements of Cash Flows

(unaudited)

 

                 
   

Six-months ended
December 31, 2021
$

   

Six-months ended
December 31, 2020
$

 
             
Operating Activities                
                 
Net loss, attributable to common stockholders   $ (24,058,765 )   $ (31,191,209 )
                 
Adjustments to reconcile net loss to net cash used in operating activities:                
                 
Accretion expense     -       2,111,346  
Change in fair value of derivative liability     -       7,018,171  
Depreciation expense     24,412       5,202  
Right-of-use asset amortization     15,163       -  
Net change in operating lease liability     (8,468 )      -
Discount on convertible notes payable     -       73,499  
Gain on settlement of debt     -       (3,462,611 )
Shares issued for services     18,733,600       22,647,470  
Warrants issued     -        83,724   
Loss on impairment     186,779       -  
                 
Changes in operating assets and liabilities:                
                 
Prepaid expenses and deposits     (540,456 )     29,880
Accounts payable and accrued liabilities     1,326,659       397,873  
Due to related parties     -       (424,303 )
                 
Net Cash Used In Operating Activities     (4,321,076 )     (2,710,958 )
                 
Investing Activities                
                 
Acquisition of property and equipment     (5,054,439 )     (4,785 )
Purchase of water rights     (2,172,750 )     (907,380 )
                 
Net Cash Used In Investing Activities     (7,227,189 )     (912,165 )
                 
Financing Activities                
                 
Proceeds from issuance of convertible notes payable     -       1,350,000  
Repayment of convertible note payable     -       (1,761,397 )
Proceeds from exercise of share purchase warrants     318,750       -  
Proceeds from issuance of common shares     43,088,006       3,608,250  
Share issuance costs     (2,161,350 )     -  
                 
Net Cash Provided By Financing Activities     41,245,406       3,196,853  
                 
Change in Cash     29,697,141       (426,270 )
                 
Cash – Beginning     12,843,502       829,924  
                 
Cash – End   $ 42,540,643     $ 403,654  
                 
Supplemental disclosures                
Interest paid           63,216  
                 
Non-cash investing and financing activities                
                 
Building construction costs     1,419,849       -  
Discount on convertible debt     -       275,000  
Original issuance discount on convertible debt     -       51,000  
Beneficial conversion feature on convertible debt           271,000  
Common shares issued for conversion of debt     -       2,585,467  
Preferred shares issued for conversion of debt     -       400,000  
Common shares issued for conversion of preferred shares     1,800,000       -  
Fair value of commission warrants issued     2,699,039       -  
Dividends payable     21,755       7,869  

 

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

 

7
 

 

AMERICAN BATTERY TECHNOLOGY COMPANY

Notes to the Condensed Consolidated Financial Statements

For the period ended December 31, 2021

(unaudited)

 

1. Organization and Nature of Operations

 

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

 

The Company was incorporated under the laws of the 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 100 Washington Ave., Suite 100, Reno, NV 89503.

 

Liquidity and Capital Resources

 

During the six months ended December 31, 2021, the Company incurred a net loss of $24,058,765 and used cash of $4,321,076 for operating activities. At December 31, 2021, the Company has an accumulated deficit of $129,154,171.

 

On September 27, 2021, the Company secured net proceeds of $36,938,651 to construct and commission its lithium-ion battery recycling 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 condensed consolidated financial statements do not include any adjustments to the recoverability and classification of recorded asset amounts and classification of liabilities that might be necessary should the Company be unable to continue as a going concern.

 

2. Summary of Significant Accounting Policies

 

(a) Basis of Presentation and Principles of Consolidation

 

The condensed 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 condensed consolidated financial statements and related notes are presented in accordance with accounting principles generally accepted in the United States and are expressed in U.S. dollars. These condensed consolidated financial statements include the accounts of the Company and its wholly owned subsidiaries, Oroplata Exploraciones E Ingenieria SRL (inactive) and LithiumOre Corporation (formerly Lithortech Resources Inc) and ABTC AG, LLC. All inter-company accounts and transactions have been eliminated upon consolidation.

 

(b) Interim Financial Statements

 

These condensed consolidated financial statements have been prepared on the same basis as the annual consolidated financial statements and in the opinion of management, reflect all adjustments, which include only normal recurring adjustments, necessary to present fairly the Company’s financial position, results of operations and cash flows for the periods shown. The results of operations for such periods are not necessarily indicative of the results expected for a full year or for any future period.

 

(c) Use of Estimates

 

The preparation of these condensed consolidated financial statements in conformity with US GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. The Company regularly evaluates estimates and assumptions related to the fair value of stock-based compensation, recoverability of long-lived assets and deferred income tax asset valuation allowances.

 

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

 

(d) 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, warrants and convertible shares. Diluted EPS excludes all dilutive potential shares if their effect is anti-dilutive. At December 31, 2021, the Company had 49,960,611 share purchase warrants outstanding and Series C Preferred Stock convertible to 2,216,000 common shares that are both potentially dilutive in nature.

 

(e) Recent 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

 Schedule of Property and Equipment

    Building     Equipment     Vehicles     Land     Total  
Cost:                              
                               
Balance, June 30, 2021     -       99,466       61,916       5,340,621       5,502,003  
Additions   4,874,640     28,327     -     1,571,321     6,474,288  
Impairment loss     -       -       -       (186,779 )     (186,779 )
                                         
Balance, December 31, 2021     4,874,640       127,793       61,916       6,725,163       11,789,512  
                                         
Accumulated Depreciation                                        
                                         
Balance, June 30, 2021     -       4,356       13,422       -       17,778  
Additions     -       17,944       6,468       -       24,412  
Balance, December 31, 2021     -       22,300       19,890       -       42,190  
                                         
Carrying Amounts:                                        
Balance, June 30, 2021     -       95,110       48,494       5,340,621       5,484,225  
Balance, December 31, 2021     4,874,640       105,493       42,026       6,725,163       11,747,322  

 

8
 

 

AMERICAN BATTERY TECHNOLOGY COMPANY

Notes to the Condensed Consolidated Financial Statements

For the period ended December 31, 2021

(unaudited)

 

The building is currently in construction and is not available for use. As of December 30, 2021, equipment deposits related to operations of the Company whereby the equipment is not yet complete nor placed in service in the amount of $1,134,377 (June 30, 2021 - $nil) is presented in “Prepaid expenses and deposits” on the consolidated balance sheets.

 

The Company has impaired the carrying value of land purchased February 2021 in Tonopah, NV. The Company adjusted the carrying value of the land to that of the closing price stated in the agreement ($85,000). The impairment is due to the change in value of the stock from the time the agreement was originally executed to the time the stock was transferred into the mutual escrow account. The execution of the contract in full, including title transfer, did not occur until September 2021. The Company has adjusted the carrying value of the land using the agreed-upon contract price of the parcel at inception of the contract. Loss on impairment of $186,779 is recognized in general and administrative expenses for the six months ended December 31, 2021.

 

4. Intangible Assets

 Schedule of Intangible assets

   

Water Rights

 
Cost:      
       
Balance, June 30, 2021     1,643,160  
Additions   2,172,750  
Impairment loss     -  
Balance, December 31, 2021     3,815,910  

 

During the six months ended December 31, 2021, the Company purchased 173.8 acres of water rights in the City of Fernley, Nevada for $2,172,750. 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.

 

5. Related Party Transactions

 

As of December 31, 2021, the Company owes $205,646 (June 30, 2021 - $205,646) to two former executives of the Company for advances made to the Company to fund day-to-day operations. The amounts owing are unsecured, non-interest bearing, and due on demand.

 

During the six months ended December 31, 2021, the Company issued 10,000,000 common shares pursuant to the conversion of 125,000 Series C Preferred Shares to a company in which a director of the Company has a minority equity interest of 5.161%.

 

6. Leases

 

A lease provides the lessee the right to control the use of an identified asset for a period in exchange for consideration. Operating lease right-of-use assets (“ROU assets”) are presented within the asset section of the Company’s Consolidated Balance Sheets, while lease liabilities are included within the liability section of the Company’s Consolidated Balance Sheets as of December 31, 2021.

 

ROU assets represent the Company’s right to use an underlying asset for the lease term and operating lease liabilities represent the Company’s obligation to make lease payments arising from the lease. The Company determines if an arrangement is a lease at inception. ROU assets and liabilities are recognized at the lease commencement date based on the present value of lease payments over the lease term. Most operating leases contain renewal options that provide for rent increases based on prevailing market conditions. The terms used to calculate the ROU assets for certain properties include the renewal options that the Company is reasonably certain to exercise.

 

The discount rate used to determine the commencement date present value of lease payments is the interest rate implicit in the lease, or when that is not readily determinable, the Company estimates a rate of 8.0% for the period ending December 31, 2021 based on historical lending agreements. ROU assets include any lease payments required to be made prior to commencement and exclude lease incentives. Both ROU assets and lease liabilities exclude variable payments not based on an index or rate, which are treated as period costs. The Company’s lease agreements do not contain significant residual value guarantees, restrictions, or covenants.

 

The Company occupies office facilities under lease agreements that expire at various dates. The Company does not have any significant finance leases. Total operating lease costs for the six months ended December 31, 2021 were $15,163.

 

As of December 31, 2021, short term lease liabilities of $71,286 are included in “Accounts payable and accrued expenses” on the consolidated balance sheets. The table below presents total operating lease ROU assets and lease liabilities at:

 Schedule of Total Operating Lease ROU Assets and Lease Liabilities

   

December 31,
2021

$

   

June 30,

2021

$

 
Operating lease right-of-use asset     296,407       –  
Operating lease liabilities     303,102           –  

 

The table below presents the maturities of operating lease liabilities as of December 31, 2021:

 Schedule of Maturity of Operating Lease Liabilities

   

December 31,
2021

$

 
2022     93,296  
2023     129,098  
2024   121,868  
Total lease payments     344,262  
Less: discount     (41,160 )
         
Total operating lease liabilities     303,102  

 

The table below presents the weighted average remaining lease term for operating leases and weighted average discount rate used in calculating operating lease right-of-use assets:

 Schedule of Weighted Average Remaining Lease Term For Operating Leases and Weighted Average Discount Rate

   

Six Months Ended
December 31,
2021

$

 
Weighted average lease term (years)     2.8  
Weighted average discount rate     8.0 %

 

7. Derivative Liabilities

 

The Company records the fair value of the conversion option of convertible debentures in accordance with ASC 815, Derivatives and Hedging. The fair value of the derivatives was calculated using a multi-nominal lattice model. The fair value of the derivative liabilities is revalued on each balance sheet date with corresponding gains and losses recorded in the condensed consolidated statements of operations.

 

For the six months ended December 31, 2021, the Company did not record an expense associated with the change in fair market value of derivatives because the Company had no derivative liability at December 31, 2021 and June 30, 2021. For the six months ended December 31, 2020, the Company recognized an expense related to the change in fair value of derivative liabilities of $7,018,171.

 

9
 

 

AMERICAN BATTERY TECHNOLOGY COMPANY

Notes to the Condensed Consolidated Financial Statements

For the period ended December 31, 2021

(unaudited)

 

8. Stockholders’ Equity

 

The Company’s authorized common stock consists of 1,200,000,000 shares of common stock, with par value of $0.001.

 

Series A Preferred Stock

 

The Company has 500,000 shares of Series A Preferred Stock authorized and outstanding with a par value of $0.001 as of December 31 and June 30, 2021. The shares allow the holder to vote 1,000 shares for each share of Series A stock in any vote of the shareholders of the Company and the Board is authorized to issue such preferred stock as is necessary. On August 25, 2021, the Board approved a resolution to retire all the outstanding Series A shares of Preferred Stock. On January 27, 2022, the Company redeemed all outstanding shares of Series A Preferred Stock.

 

Series B Preferred Stock

 

As of December 31 and June 30, 2021, 2,000,000 shares authorized with a par value of $10.00, no shares issued.

 

Series C Preferred Stock

 

On December 18, 2020, the Company issued 48.29 units of Series C Preferred Stock (241,450 shares of Series C preferred stock) at $50,000 per unit for proceeds of $2,414,500. Each unit is comprised of 5,000 shares of Series C Preferred Stock (each share of Series C Preferred Stock is convertible into eighty shares of common stock) and a warrant to purchase 400,000 common shares of the Company at $0.25 per share until December 31, 2023. Each holder is entitled to receive a non-cumulative dividend at 8% per annum at the rate per share. The dividend shall be payable at the Company’s option either in cash or in common shares of the Company. If paid in common shares, the Company shall issue the number of common shares equal to the dividend amount divided by the stated value and then multiplied by eighty.

 

In addition, on December 18, 2020, the Company issued 8 units of Series C Preferred Stock (40,000 shares of Series C preferred stock) with a fair value of $400,000 for the conversion of $381,622 of note payable and $18,378 of accrued interest.

 

During the six months ended December 31, 2021, the Series C Preferred Stockholders converted 180,000 shares of Series C Preferred Stock (par value of $1,800,000) to 14,400,000 shares of common stock.

 

Common Stock

 

Six Months Ended December 31, 2021

 

During the period, the Company issued 14,400,000 common shares pursuant to the conversion of 180,000 shares of Series C Preferred Stock at a conversion ratio of 80 shares of common stock for each share of Series C Preferred Stock.

 

During the period, the Company issued 25,389,611 units for proceeds of $39,100,001 pursuant to a private placement issuance at $1.54 per share. Each unit is comprised of one common share of the Company and one share purchase warrant, where each share purchase warrant is exercisable into one common share of the Company at $1.75 per share for a period of five years from the issuance date. As part of the financing, the Company paid $2,161,350 of share issuance costs and issued 1,955,000 warrants as a commission fee, which are exercisable at $1.54 per common share for a period of three years from the date of the issuance. The fair value of the commission warrants was $2,699,039 and was determined based on the Black-Scholes option pricing model assuming volatility of 166%, risk-free rate of 0.56%, expected life of three years, and no expected forfeitures or dividends.

 

During the period, the Company issued 4,500,000 common shares pursuant the exercise of 5,625,216 share purchase warrants for proceeds of $337,500, of which 250,000 share purchase warrants, pursuant an aggregate cash exercise price of $18,750, exercised during the quarter ended June 30, 2021.

 

During the period, the Company issued 3,000,000 common shares pursuant the Share Purchase Agreement, effective April 2, 2021, for aggregate proceeds of $3,988,005.

 

During the six months ended December 31, 2021, the Company issued 10,105,258 common shares for services with a fair value of $15,658,100, including 7,024,040 common shares with a fair value of $11,001,541 to officers and directors of the Company. As of December 31, 2021, the Company has 2,660,045 shares of common stock issuable for professional services with a fair value of $3,304,500 for professional services, of which 2,035,000 common shares with a fair value of $2,632,000 as compensation to board members of the Company.

 

10
 

 

AMERICAN BATTERY TECHNOLOGY COMPANY

Notes to the Condensed Consolidated Financial Statements

For the period ended December 31, 2021

(unaudited)

 

Common Stock (Continued)

 

Six Months ended December 31, 2020

 

During the period, the Company issued 31,140,000 common shares for services with a fair value of $22,612,270 for professional services, including 5,000,000 shares issued to directors of the Company with a fair value of $1,080,000.

 

During the period, the Company issued 21,284,971 common shares with a fair value of $2,585,467 for the conversion of $915,998 of note payable, $94,697 of accrued interest, $525 of fees and $1,994,882 of derivative liability resulting in a gain on settlement of $376,254.

 

On October 6, 2020, the Company entered into a Purchase Agreement (the “Agreement”) with Tysadco Partners LLC, a Delaware limited company (“Tysadco”). Pursuant to the Agreement, Tysadco committed to purchase, subject to certain restrictions and conditions, up to $10,000,000 worth of the Company’s common stock over a period of 24 months from the effectiveness of the registration statement registering the resale of shares purchased by Tysadco. The Company shall have the right, but not the obligation, to direct Tysadco to buy the lesser of $250,000 in common stock per sale or 200% of the average shares traded for the 10 days prior to the closing request date, at a purchase price of 85% of the of the two lowest individual daily VWAPs during the five (5) trading days commencing on the first trading day following delivery and clearing of the delivered shares, with a minimum request of $25,000. During the six months ended December 31, 2020, the Company issued 12,000,000 common shares for proceeds of $1,200,000 and another 500,000 common shares with a fair value of $105,000 as a commitment fee.

 

During the period, the Company issued 60,625,000 units for proceeds of $2,450,000 received during the year ended June 30, 2020. Each unit is comprised of one common share of the Company and 0.8 share purchase warrant where each whole share purchase warrant can be exercised into one common share of the Company at $0.075 per share until October 31, 2024.

 

During the period, the Company issued 12,381,562 common shares for the exercise of cashless warrants.

 

9. Share Purchase Warrants

Schedule of Share Purchase Warrants Activity

    2021  
    Number of warrants    

Weighted average exercise price

 
             
Balance, June 30     27,866,000       0.09  
Issued     27,344,611       1.73  
Exercised     (6,000,000 )     0.08  
Expired     -       -  
Balance, December 31     49,210,611       0.99  

 

11
 

 

AMERICAN BATTERY TECHNOLOGY COMPANY

Notes to the Condensed Consolidated Financial Statements

For the period ended December 31, 2021

(unaudited)

 

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

Schedule of Additional Information Regarding Share Purchase Warrants

    2021
    Outstanding and exercisable
Range of Exercise Prices   Number of Warrants    

Weighted Average Remaining Contractual Life (years)

             
0.075     20,250,000     2.8
0.25     1,616,000     2.0
1.54     1,955,000     2.7
1.75     25,389,611     4.7
      49,210,611     3.8

 

10. Restricted Share Units

 

The Company has established a restricted share unit (RSU) incentive plan for executives, directors, and certain employees. Awards generally vest over a four-year period at a rate of 25% per annum commencing on the first anniversary of the grant date.

 

During the three months ended September 30, 2021, the Company contracted 775,000 restricted share units to two employees of the Company, including an officer of the Company. During the three months ended December 31, 2021, the identical employees amended their employee contracts to have these share unit agreements reverted back to the Company. Share-based compensation expense was originally recorded during the three months ended September 30, 2021, however, the expense has been reversed during the three months ended December 31, 2021. No share-based compensation during the six months ended December 31, 2020.

 

11. Contingencies

 

From time to time, the Company may become involved in various lawsuits and legal proceedings, which arise in the ordinary course of business. Litigation is subject to inherent uncertainties, and an adverse result in these or other matters may arise from time to time that may harm business. Management is currently not aware of any such legal proceedings or claims that could have, individually or in the aggregate, a material adverse effect on our business, financial condition, or operating results.

 

12. Subsequent Events

 

On January 27, 2022, the Company redeemed all outstanding shares of Series A Preferred Stock.

 

On January 27, 2022, the Company issued 668,150 shares from the cashless exercise of 750,000 share purchase warrants.

 

On February 2, 2022 the Company issued a Mandatory Conversion Notice to the remaining Series C Preferred stockholders. The notice converts all outstanding shares of Series C Preferred Stock to common stock at an 80:1 conversion ratio. 3,216,000 Common shares have been issued since October 1, 2021, with 2,216,000 common shares being issued after December 31, 2021.

 

On February 8, 2022 the Company issued $125,700 in dividend payments to Series C stockholders that held shares from date of issuance. No remaining dividends are expected to be paid in relation to Series C Preferred Stock as there are no remaining Series C Preferred Stock outstanding as of the issuance date of this report.

 

The Company has evaluated subsequent events through the date the financial statements were available to be issued and has not identified any additional subsequent events requiring adjustments to, or disclosures in the accompanying condensed financial statements.

 

12
 

 

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

 

Forward-Looking Statements

 

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

 

Background

 

The lithium-ion battery manufacturing supply chain is organized into four industries that operate in series: battery material manufacturers, 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 material manufacturing and material refining portions of the supply chain. This has led to an imbalance within the domestic US supply chain and has caused most of the 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 2021” report, the US Geological Survey estimated that less than 1% of each of these critical and strategic battery metals (lithium, nickel, cobalt, and manganese) produced globally in 2021 were produced within the US.

 

American Battery Technology Company (“ABTC”) is a technology development and commercialization company in the lithium-ion battery industry that is working to increase the domestic US production of these battery materials 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 ABTC is working to both increase the domestic production of these battery metals, and to ensure that as these materials reach their end of lives that the constituent elemental metals are returned to the domestic manufacturing supply chain in a closed-loop fashion.

 

In order to implement this business strategy, the company is currently constructing its first integrated lithium-ion battery recycling facility, which will take in waste and end-of-life battery materials from the electric vehicle, stationary storage, and consumer electronics industries. The construction, commissioning, and operations of this facility are of the highest priority to the company, and as such it has significantly increased the resources devoted to its execution including the further internal hiring of technical staff, expansion of laboratory facilities, and purchasing of equipment. Correspondingly, while the company has traditionally enlisted the services of many external advisors and consultants, the company has conducted a thorough review and has ended service agreements that are not critical to the execution of this mission. The net impact of this increase in internal technical resources, and decrease in external consulting services, has resulted in an 80% decrease in total operating costs and a 90% reduction in the value of shares issued for services from the three months ended September 30, 2021 to the three months ended December 31, 2021.

 

Financial highlights:

 

  ● Cash was $42.5 million as of December 31, 2021
  ● Cash provided by private placement for the six months ended December 31, 2021 was $36.9 million
  ● Cash used for the acquisition of property, equipment and water rights for the six months ended December 31, 2021 were $7.2 million
  ● Cash used in operations for the six months ended December 31, 2021 was $4.3 million, up 59% year-over-year
  ● Total operating costs for the six months ended December 31, 2021 were $24.1 million, down 4% year-over-year
  ● Total operating costs for the three months ended December 31, 2021 were $4.1 million, down 79% from the three months ended September 30, 2021
  ● Total value of shares issued for services for the three months ended December 31, 2021 were $1.7 million, down 90% from the three months ended September 30, 2021

 

Components of Statements of Operations

 

Expenses

 

Exploration costs consist of expenditures in the exploration of new primary resources of battery metals including drilling, travel and soil sampling costs.

 

General and administrative expenses consist of office expense, legal, salaries and benefits and laboratory costs. The Company has recognized non-cash expenses related to shares issued for professional services of $16.9 million during the three months ended September 30, 2021, and $1.8 million during the three months ended December 31, 2021. The Company has recognized non-cash expenses related to shares issued for professional services of $18.7 million during the six months ended December 31, 2021 compared to $22.6 million during the six months ended December 31, 2020.

 

During the six months ended December 31, 2021, the Company incurred $24.1 million of operating expenses compared to $25.0 million of operating expenses during the six months ended December 31, 2020.

 

The Company incurred other income of $35,635 during the six months ended December 31, 2021 compared to other expenses of $6.2 million during the six months ended December 31, 2020.

 

Net Loss

 

During the six months ended December 31, 2021, the Company incurred a net loss of $24.1 million or $0.04 loss per share compared to a net loss of $31.2 million or $0.07 loss per share during the six months ended December 31, 2020.

 

Liquidity and Capital Resources

 

At December 31, 2021, the Company had cash of $42.5 million and total assets of $60.2 million compared to cash of $12.8 million and total assets of $21.3 million at June 30, 2021. The increase in cash was due to the fact that the Company received net proceeds of $43.1 million from private placements and $0.3 million of proceeds from exercises of share purchase warrants. The increase in total assets was due to the increase in cash of $29.7 million and increase in property and equipment and intangible assets of $7.2 million relating to additional acquisitions of land and water rights which will be used for the Company’s future pilot plant operations.

 

The Company had total current liabilities of $4.7 million at December 31, 2021, compared to $1.8 million at June 30, 2021. The increase in current liabilities is due to an increase in accounts payable and accrued liabilities based on larger day-to-day operating expenditures and unbilled construction costs.

 

As of December 31, 2021, the Company had a working capital of $39.7 million compared to a working capital of $12.3 million at June 30, 2021. The increase in working capital was due to the settlement of outstanding convertible notes payable, and the extinguishment of the corresponding derivative liabilities associated with said convertible notes, with the issuance of common shares and payment of cash during the period. The increase in working capital was also attributed to the inflow of financing activity during the six months ended December 31, 2021.

 

Cash Flows

 

Cash from Operating Activities.

 

During the six months ended December 31, 2021, the Company used $4.3 million of cash for operating activities as compared to $2.7 million during the six months ended December 31, 2020. The increase in the use of cash for operating activities was due to an increase in operating activity in the current period including additional staff, legal costs, accounting costs and increased office expenses.

 

Cash from Investing Activities

 

During the six months ended December 31, 2021, the Company paid $7.2 million on expenditures related to the construction, procurement of equipment and water rights necessary to construct and commission the Pilot Plant. This is in comparison to the to acquisition costs of $0.9 million for the six months ended December 31, 2020. The increase in the investing activities is due to the fact that the Company continues to invest in the construction of its Pilot Plant where the necessary demonstrations will occur, as well as the continued acquisition of water rights and land in the Norther Nevada region to support further operations of the Company. The Company expects to see additional increases in investing activities as these projects progress to meet management expectations.

 

Cash from Financing Activities

 

During the six months ended December 31, 2021, the Company had net cash provided by financing activities of $41.2 million compared to $3.2 million for the six months ended December 31, 2020.

 

On September 27, 2021, the Company entered into a securities purchase agreement for the purchase and sale of an aggregate of 25,389,611 shares of the Company’s common stock and warrants to purchase an aggregate of up to 25,389,611 shares of common stock in a registered direct offering at a combined purchase price of $1.54 per share and warrant, for net proceeds to the Company of $36.9 million. The Warrants are immediately exercisable and may be exercised at any time until September 29, 2026, at an exercise price of $1.75 per share.

 

The Company engaged a placement agent to act as the Company’s placement agent in connection with the offering and agreed to pay the placement agent a cash fee of 5% of the gross proceeds the Company receives in the offering. In addition, the Company agreed to issue to the placement agent warrants to purchase shares equal to 5% of the gross proceeds sold under the securities purchase agreement or warrants to purchase up to an aggregate of 1,955,000 shares. The placement agent warrants generally will have the same terms as the investor warrants, except they will expire September 29, 2024, at an exercise price of $1.54.

 

On August 5, 2021, the Company elected to exercise its rights pursuant to the Purchase Agreement dated April 2, 2021, to issue 3,000,000 shares for net proceeds to the Company of $4.0 million.

 

In addition, the Company also received $0.3 million of proceeds from the exercise of share purchase warrants.

 

Off-Balance Sheet Arrangements

 

As of December 31, 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.

 

13
 

 

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.

 

Not Applicable.

 

ITEM 4. CONTROLS AND PROCEDURES.

 

Controls and Procedures

 

Evaluation of Disclosure Controls and Procedures.

 

We maintain disclosure controls and procedures, as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act. Disclosure controls and procedures are controls and other procedures designed to ensure that the information required to be disclosed by us in the reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by us in the reports that we file or submit under the Exchange Act is accumulated and communicated to our management, including our principal executive officer and our principal financial officer, as appropriate, to allow timely decisions regarding required disclosure. In designing and evaluating the disclosure controls and procedures, management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable and not absolute assurance of achieving the desired control objectives, and management necessarily applies its judgment in evaluating the cost-benefit relationship of possible controls and procedures.

 

Based on our management’s evaluation (with the participation of the individuals serving as our principal executive officer and principal financial officer) of our disclosure controls and procedures as required by Rules 13a-15 and 15d-15 under the Exchange Act, each of the individuals serving as our principal executive officer and principal financial officer has concluded that our disclosure controls and procedures were not effective at the reasonable assurance level as of December 31, 2021, the end of the period covered by this report. . As set forth below, the Company is addressing the issues underlying this conclusion.

 

Management’s Report on Internal Control over Financial Reporting.

 

Our management is responsible for establishing and maintaining adequate internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) of the Exchange Act). Internal control over financial reporting is a process designed under the supervision and with the participation of our management, including the individuals serving as our principal executive officer and principal financial officer, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with accounting principles generally accepted in the United States of America.

 

A material weakness is a deficiency, or combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of annual or interim financial statements will not be prevented or detected on a timely basis.

 

Management assessed the effectiveness of our internal control over financial reporting based on the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission in Internal Control-Integrated Framework (2013 Framework). Based on this assessment, our management concluded that, as of December 31, 2021, our internal control over financial reporting was not effective based on those criteria due to material weaknesses in our internal control over financial reporting described below.

 

Material Weakness in Internal Control over Financial Reporting

 

We did not maintain adequate documentation evidencing the operating effectiveness of certain control activities and did not maintain proper levels of supervision and review of complex accounting matters. We did not maintain appropriate segregation of duties related to accounting processes.

 

The control deficiencies create a reasonable possibility that a material misstatement to the financial statements will not be prevented or detected on a timely basis, and there we concluded that the deficiencies represent material weaknesses in our internal control over financial reporting and our internal control over financial reporting was not effective as of December 31, 2021.

 

Remediation Plan

 

We continue to enhance our internal control over financial reporting to remediate the material weaknesses described above. We are committed to ensuring that our internal control over financial reporting is designed and operating effectively.

 

Our remediation process includes, but not limited to:

 

  ● Successful hiring of additional personnel with the expertise necessary to improve the financial reporting function
     
  ● Successful implementation of a more comprehensive ERP solution that include accounting modules that integrate internal controls into the accounting process
     
  ● Providing guidance, education and training to employees relating to our accounting policies and procedures
     
  ● Further developing and documenting detailed policies and procedures regarding business processes for significant accounts, critical accounting policies and critical accounting estimates
     
  ● Establishing effective general controls over IT systems to ensure that information produced can be relied upon by process level controls

 

We have engaged a firm that specializes in Cyber and IT protection to further enhance the protection of our financial information, employee information, proprietary methods and strategic partnerships.

 

We expect to remediate these material weaknesses during fiscal 2022. However, we may discover additional material weaknesses that may require additional time and resources to remediate.

 

Attestation Report on Internal Control over Financial Reporting.

 

This Interim Report on Form 10-Q does not include an attestation report of our independent registered public accounting firm due to the deferral allowed for smaller reporting companies.

 

Changes in Internal Control over Financial Reporting

 

There was no change in our internal control over financial reporting that occurred during the period covered by this Interim Report on Form 10-Q that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting. Although we have altered some work routines due to the COVID-19 pandemic, the changes in our work environment, including remote work arrangements, have not materially impacted our internal controls over financial reporting and have not adversely affected the Company’s ability to maintain operations.

 

14
 

 

PART II – OTHER INFORMATION

 

ITEM 1. LEGAL PROCEEDINGS

 

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

 

On April 6, 2021, Alford 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 1A. RISK FACTORS.

 

We are a smaller reporting company as defined by Rule 12b-2 of the Exchange Act and are not required to provide the information required under this item.

 

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.

 

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

 

During the six months ended December 31, 2021, the Company issued 4,500,000 common shares pursuant the cash exercise of 4,750,000 share purchase warrants for proceeds of $337,500, of which 250,000 share purchase warrants, pursuant an aggregate cash exercise price of $18,750, exercised during the prior year ended June 30, 2021.

 

During the six months ended December 31, 2021, the Company issued 1,125,216 common shares for the cashless exercise of 1,250,000 share purchase warrants, of which 677,300 common shares pursuant to the cashless exercise of 800,000 share purchase warrants, exercised during the prior year ended June 30, 2021.

 

During the six months ended December 31, 2021, the Company issued 10,105,258 common shares for services with a fair value of $15,658,100, including 7,024,040 common shares with a fair value of $11,001,541 to officers and directors of the Company. As of December 31, 2021, the Company has 2,660,045 shares of common stock issuable for professional services with a fair value of $3,304,500 for professional services, of which 2,035,000 common shares with a fair value of $2,632,000 as compensation to board members of the Company.

 

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

 

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

 

None

 

ITEM 4. MINE SAFETY DISCLOSURE

 

Not Applicable

 

ITEM 5. OTHER INFORMATION

 

None

 

15
 

 

ITEM 6. EXHIBITS

 

(a) (3) Exhibits

 

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

 

Exhibit   Description   Filed Herein   Incorporated Date  

By

Form

  Reference Exhibit
31.1   Certification of Chief Executive Officer as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.   x            
31.2   Certification of Chief Financial Officer as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002   x            
32.1   Certification of Chief Executive Officer as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002   x            
32.2   Certification of Chief Financial Officer as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002   x            
101   INS Inline XBRL Instant Document.   x            
101   SCH Inline XBRL Taxonomy Extension Schema Document   x            
101   CAL Inline XBRL Taxonomy Extension Calculation Linkbase Document   x            
101   LAB Inline XRBL Taxonomy Label Linkbase Document   x            
101   PRE Inline XBRL Taxonomy Extension Presentation Linkbase Document   x            
101   DEF Inline XBRL Taxonomy Extension Definition Linkbase Document   x            
104   Cover Page Interactive Data File (embedded within the Inline XBRL document)   x            

 

16
 

 

SIGNATURES

 

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

 

 

AMERICAN BATTERY TECHNOLOGY COMPANY

(Registrant)

     
Date: February 14, 2022 By:  /s/ Ryan Melsert
    Ryan Melsert
    Chief Executive Officer
    Director

 

17

 

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