UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
For
the quarterly period ended
Commission
File number:
| (Exact name of registrant as specified in its charter) |
(State or other jurisdiction of incorporation or organization) |
(I.R.S. Employer Identification No.) |
| (Address of principal executive offices, including zip code) |
| (Registrant’s telephone number, including area code) |
Securities registered pursuant to Section 12(b) of the Act:
| Title of Each Class | Trading Symbol(s) | Name of Each Exchange on Which Registered | ||
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 quarter that the registrant was required to file such reports), and (2) has been
subject to such filing requirements for the past 90 days.
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).
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
| Large accelerated filer | ☐ | Accelerated filer | ☐ | |
| ☒ | 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 common stock outstanding as of February 10, 2025 was .
American Battery Technology Company and Subsidiaries
Index to Form 10-Q
| 2 |
PART I – FINANCIAL INFORMATION
Item 1. Financial Statements
AMERICAN BATTERY TECHNOLOGY COMPANY
Unaudited Condensed Consolidated Balance Sheets
| December 31, 2024 | June 30, 2024 | |||||||
| ASSETS | ||||||||
| Cash | $ | $ | ||||||
| Accounts receivable | ||||||||
| Inventory (Note 4) | ||||||||
| Grants receivable (Note 5) | ||||||||
| Prepaid expenses and deposits | ||||||||
| Subscription receivable (Note 13) | ||||||||
| Restricted cash | ||||||||
| Assets held-for-sale (Note 7) | ||||||||
| Total current assets | ||||||||
| Property, plant and equipment, net (Note 7) | ||||||||
| Mining properties (Note 8) | ||||||||
| Intangible assets (Note 9) | ||||||||
| Right-of-use asset (Note 12) | ||||||||
| Total assets | $ | $ | ||||||
| LIABILITIES & STOCKHOLDERS’ EQUITY | ||||||||
| Accounts payable and accrued liabilities (Note 10) | $ | $ | ||||||
| Right-of-use lease liability – operating | ||||||||
| Notes payable, current (Note 11) | ||||||||
| Total current liabilities | ||||||||
Right-of-use lease liability – operating – long-term | ||||||||
| Equity compensation liability (Note 15) | ||||||||
| Total liabilities | ||||||||
| Commitments and contingencies (Note 17) | ||||||||
| Stockholders’ Equity: | ||||||||
| Series A Preferred Stock Authorized: preferred shares, par value of $ per share; Issued and outstanding: preferred shares as of December 31, 2024 and June 30, 2024. | ||||||||
| Series B Preferred Stock Authorized: preferred shares, par value of $ per share; Issued and outstanding: preferred shares as of December 31, 2024 and June 30, 2024. | ||||||||
| Series C Preferred Stock Authorized: preferred shares, par value of $ per share; Issued and outstanding: preferred shares as of December 31, 2024 and June 30, 2024. | ||||||||
| Series D Preferred Stock Authorized: preferred shares, par value of $per share; Issued and outstanding: preferred shares as of December 31, 2024 and June 30, 2024. | ||||||||
| Common Stock Authorized: common shares, par value of $ per share; Issued and outstanding: and common shares as of December 31, 2024, and June 30, 2024, respectively | ||||||||
| Additional paid-in capital | ||||||||
| Common stock issuable | ( | ) | ( | ) | ||||
| Accumulated deficit | ( | ) | ( | ) | ||||
| Total stockholders’ equity | ||||||||
| Total liabilities and stockholders’ equity | $ | $ | ||||||
The accompanying notes are an integral part of these condensed consolidated unaudited financial statements.
| 3 |
AMERICAN BATTERY TECHNOLOGY COMPANY
Unaudited Condensed Consolidated Statements of Operations
| Three months ended December 31, 2024 | Three months ended December 31, 2023 | Six months ended December 31, 2024 | Six months ended December 31, 2023 | |||||||||||||
| Revenue | $ | $ | $ | $ | ||||||||||||
| Cost of goods sold | ||||||||||||||||
| Gross loss | ( | ) | ( | ) | ||||||||||||
| Expenses: | ||||||||||||||||
| General and administrative | $ | $ | $ | $ | ||||||||||||
| Research and development | ||||||||||||||||
| Exploration costs | ||||||||||||||||
| Total operating expenses | ||||||||||||||||
| Net loss before other income (expense) | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Other income (expense) | ||||||||||||||||
| Interest income (expense) | ( | ) | ( | ) | ( | ) | ||||||||||
| Amortization and accretion of financing costs | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Unrealized gain (loss) on investment | ( | ) | ||||||||||||||
| Change in fair value of derivative liability | ( | ) | ( | ) | ||||||||||||
| Loss on debt extinguishment | ( | ) | ||||||||||||||
| Loss on private placement | ( | ) | ||||||||||||||
| Change in fair value of liability-classified financial instruments | ||||||||||||||||
| Other income | ||||||||||||||||
| Total other income (expense) | ( | ) | ( | ) | ( | ) | ||||||||||
| Net loss | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||
| Net loss per share, basic and diluted | $ | ) | $ | ) | $ | ) | $ | ) | ||||||||
| Weighted average shares outstanding | ||||||||||||||||
The accompanying notes are an integral part of these condensed consolidated unaudited financial statements.
| 4 |
AMERICAN BATTERY TECHNOLOGY COMPANY
Unaudited Condensed Consolidated Statements of Stockholders’ Equity
| Preferred Stock | Common Stock | Additional Paid-In | Common Stock | Accumulated | ||||||||||||||||||||||||||||
| Shares | Amount | Shares | Amount | Capital | Issuable | Deficit | Total | |||||||||||||||||||||||||
| Balance, June 30, 2024 | $ | $ | ( | ) | $ | ( | ) | $ | ||||||||||||||||||||||||
| Shares issued upon vesting of share-based awards | - | ( | ) | |||||||||||||||||||||||||||||
| Stock-based compensation expense | - | - | ||||||||||||||||||||||||||||||
| Shares issued pursuant to an At-The-Market offering | - | |||||||||||||||||||||||||||||||
| Settlement of receivable pursuant to share purchase agreement | - | ( | ) | |||||||||||||||||||||||||||||
| Reclassification of equity-linked contracts to liabilities | - | - | ( | ) | ( | ) | ||||||||||||||||||||||||||
| Issuance of Series D Redeemable Preferred shares | - | |||||||||||||||||||||||||||||||
| Issuance of common shares and warrants pursuant to subscription agreements | - | |||||||||||||||||||||||||||||||
Shares issued pursuant to debt extinguishment | - | |||||||||||||||||||||||||||||||
| Settlement of receivable pursuant to share purchase agreement (Tysadco) | - | - | ||||||||||||||||||||||||||||||
| Net loss for the period | - | - | ( | ) | ( | ) | ||||||||||||||||||||||||||
| Balance, September 30, 2024 | $ | $ | $ | $ | ( | ) | $ | ( | ) | $ | ||||||||||||||||||||||
| Repurchase of Series D Redeemable Preferred shares | ( | ) | ( | ) | - | ( | ) | |||||||||||||||||||||||||
| Shares issued upon vesting of share-based awards | - | ( | ) | |||||||||||||||||||||||||||||
| Issuance of common shares under the Employee Stock Purchase Plan | ||||||||||||||||||||||||||||||||
| Reclassification of equity-classified awards from equity compensation liability | - | - | ||||||||||||||||||||||||||||||
| Stock-based compensation expense | - | - | ||||||||||||||||||||||||||||||
| Shares issued pursuant an At-The-Market offering | - | ( | ) | |||||||||||||||||||||||||||||
| Reclassification of derivative equity instruments from long-term liabilities | - | - | ||||||||||||||||||||||||||||||
| Rescission of common shares and warrants pursuant to subscription agreements | - | ( | ) | ( | ) | ( | ) | |||||||||||||||||||||||||
| Shares issued pursuant to troubled debt restructuring | - | |||||||||||||||||||||||||||||||
| Issuance of common shares and warrants pursuant to registered direct offerings | - | |||||||||||||||||||||||||||||||
| Net loss for the period | - | - | ( | ) | ( | ) | ||||||||||||||||||||||||||
| Balance, December 31, 2024 | $ | $ | $ | $ | ( | ) | $ | ( | ) | $ | ||||||||||||||||||||||
AMERICAN BATTERY TECHNOLOGY COMPANY
Unaudited Condensed Consolidated Statements of Stockholders’ Equity
| Preferred Stock | Common Stock | Additional Paid-In | Common Stock | Accumulated | ||||||||||||||||||||||||||||
| Shares | Amount | Shares | Amount | Capital | Issuable | Deficit | Total | |||||||||||||||||||||||||
| Balance, June 30, 2023 | - | $ | $ | ( | ) | $ | ( | ) | $ | |||||||||||||||||||||||
| Shares issued for professional services | - | ( | ) | ( | ) | |||||||||||||||||||||||||||
| Shares issued upon vesting of share-based awards | - | ( | ) | |||||||||||||||||||||||||||||
| Stock-based compensation expense | - | - | ||||||||||||||||||||||||||||||
| Shares issued pursuant to rounding of reverse stock split | - | ( | ) | |||||||||||||||||||||||||||||
| Shares reclaimed pursuant to asset acquisition | - | ( | ) | ( | ) | ( | ) | |||||||||||||||||||||||||
| Shares issued pursuant to share purchase agreement, net of issuance costs | - | |||||||||||||||||||||||||||||||
| Shares issued pursuant to warrant exercises | - | ( | ) | |||||||||||||||||||||||||||||
| Net loss for the period | - | - | ( | ) | ( | ) | ||||||||||||||||||||||||||
| Balance, September 30, 2023 | $ | $ | $ | $ | $ | ( | ) | $ | ||||||||||||||||||||||||
| Shares issued upon vesting of share-based awards | - | ( | ) | |||||||||||||||||||||||||||||
| Stock-based compensation expense | - | - | ||||||||||||||||||||||||||||||
| Shares issued pursuant to share purchase agreement, net of issuance costs | - | |||||||||||||||||||||||||||||||
| Shares issued pursuant to warrant exercises | - | ( | ) | ( | ) | |||||||||||||||||||||||||||
| Net loss for the period | - | - | ( | ) | ( | ) | ||||||||||||||||||||||||||
| Balance, December 31, 2023 | $ | $ | $ | $ | $ | ( | ) | $ | ||||||||||||||||||||||||
The accompanying notes are an integral part of these condensed consolidated unaudited financial statements.
| 5 |
AMERICAN BATTERY TECHNOLOGY COMPANY
Unaudited Condensed Consolidated Statements of Cash Flows
| Six months ended December 31, 2024 | Six months ended December 31, 2023 | |||||||
| Cash Flows From Operating Activities: | ||||||||
| Net loss | $ | ( | ) | $ | ( | ) | ||
| Adjustments to reconcile net loss to net cash used in operating activities: | ||||||||
| Depreciation expense | ||||||||
| Accretion of financing costs | ||||||||
| Amortization of right-of-use asset | ||||||||
| Write-down of inventory to net realizable value | ||||||||
| Unrealized loss on investment | ||||||||
| Stock-based compensation | ||||||||
| Shares issued for professional services | ( | ) | ||||||
| Change in fair value of derivative liability | ( | ) | ||||||
| Change in fair value of conversion option | ( | ) | ||||||
| Change in fair value of liability-classified equity-linked contracts | ( | ) | ||||||
| Loss on extinguishment of debt | ||||||||
| Loss on private placement | ||||||||
| Changes in operating assets and liabilities: | ||||||||
| Accounts receivable | ( | ) | ||||||
| Inventory | ( | ) | ( | ) | ||||
| Grants receivable | ( | ) | ||||||
| Prepaid expenses and deposits | ||||||||
| Other current assets | ( | ) | ||||||
| Accounts payable and accrued liabilities | ( | ) | ||||||
Right-of-use lease liabilities | ( | ) | ( | ) | ||||
| Net Cash Used in Operating Activities | ( | ) | ( | ) | ||||
| Cash Flows From Investing Activities: | ||||||||
| Other acquisition deposits | ( | ) | ||||||
| Acquisition of property, plant and equipment, and water rights | ( | ) | ( | ) | ||||
| Purchase of water rights/intangible assets | ( | ) | ||||||
| Net Cash Used in Investing Activities | ( | ) | ( | ) | ||||
| Cash Flows From Financing Activities: | ||||||||
| Proceeds from exercise of share purchase warrants | ||||||||
| Proceeds from employee stock purchase plan | ||||||||
| Proceeds from issuance of common shares through At-The-Market offering | ||||||||
| Proceeds from subscription agreements (Note 13) | ||||||||
| Proceeds from registered direct offerings | ||||||||
| Payment of issuance costs, registered direct offerings | ( | ) | ||||||
| Proceeds from notes payable, net of issuance costs | ||||||||
| Principal paid on notes payable | ( | ) | ( | ) | ||||
| Proceeds from share purchase agreement, net of issuance costs | ||||||||
| Net Cash Provided by Financing Activities | ||||||||
| Increase in Cash and Restricted Cash | ||||||||
| Cash and Restricted Cash – Beginning of Period | ||||||||
| Cash and Restricted Cash – End of Period | $ | $ | ||||||
| Supplemental disclosures (Note 16) | ||||||||
The accompanying notes are an integral part of these condensed consolidated unaudited financial statements.
| 6 |
AMERICAN BATTERY TECHNOLOGY COMPANY
Notes to the Condensed Consolidated Financial Statements
(unaudited)
1. Organization and Nature of Operations
American Battery Technology Company (“the Company” or “ABTC”) is an integrated critical battery materials company in the lithium-ion battery industry that is working to increase the domestic U.S. production of battery materials, such as lithium, nickel, cobalt, and manganese through its engagement in the exploration of new primary resources of battery metals, in the development and commercialization of new technologies for the extraction of these battery metals from primary resources, and in the commercialization of an internally developed integrated process for the recycling of lithium-ion batteries. Through this three-pronged approach the Company is working to both increase the domestic production of these battery materials, and to ensure that as these materials reach their end of lives that the constituent elemental battery metals are returned to the domestic manufacturing supply chain in a closed-loop fashion.
The Company was incorporated under the laws of the 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 a limited operating history and generated our initial revenue in the fourth quarter of fiscal 2024. Our principal executive offices are located at 100 Washington Ave., Suite 100, Reno, Nevada 89503.
2. Liquidity and Going Concern
During
the six months ended December 31, 2024, the Company incurred a net loss of $
The continuation of the Company as a going concern is dependent upon generating profit from its operations and its ability to obtain debt or equity financing. There is no assurance that the Company will be able to generate sufficient profits, obtain such financings, or obtain them on favorable terms, which could limit its operations. Any such financing activities are subject to market conditions. These uncertainties cause substantial doubt to exist as to the Company’s ability to continue as a going concern for 12 months from issuance of these 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. These adjustments could be material.
Based on its current operating plan, unless the Company generate income from the operations of its facilities or raises additional capital (debt or equity), it is possible that the Company will be unable to maintain its financial covenants under our existing Note agreement (Note 11). If such covenant violations are not waived by the Note holder, it would result in an event of default, causing an acceleration of the outstanding balances. If the Company does raise additional capital through public or private equity offerings, as opposed to debt or additional Note issuances, the ownership interests of its existing stockholders may be diluted.
3. Basis of Presentation, Summary of Significant Accounting Policies and Recent Accounting Pronouncements
The accompanying condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) for interim financial information and pursuant to the instructions to Form 10-Q and Rule 10-01 of Regulation S-X of the U. S. Securities and Exchange Commission (“SEC”) and on the same basis as the Company prepares its annual audited consolidated financial statements.
| 7 |
AMERICAN BATTERY TECHNOLOGY COMPANY
Notes to the Condensed Consolidated Financial Statements
(unaudited)
The condensed consolidated balance sheet at December 31, 2024, and the condensed consolidated statements of operations, comprehensive income (loss), and stockholders’ equity, and cash flows for the three and six months ended December 31, 2024 and 2023 are unaudited, but include all adjustments, consisting of normal recurring adjustments the Company considers necessary for a fair presentation of the financial position, operating results, and cash flows for the periods presented. The results for the six months ended December 31, 2024 are not necessarily indicative of results to be expected for the year ending June 30, 2025 or for any future interim period. The condensed consolidated balance sheet at June 30, 2024 has been derived from audited financial statements; however, it does not include all of the information and notes required by U.S. GAAP for complete financial statements. The accompanying condensed consolidated financial statements should be read in conjunction with the audited financial statements for the year ended June 30, 2024 and notes thereto included in the Company’s Annual Report on Form 10-K for the fiscal year ended June 30, 2024 as filed with the SEC on September 23, 2024 (the “Fiscal 2024 Form 10-K”). The Company’s consolidated subsidiaries consist of its wholly owned subsidiaries, LithiumOre Corporation (formerly Lithortech Resources Inc), and ABTC 2500 Peru LLC (formerly Aqua Metals Transfer LLC).
The accompanying condensed consolidated interim financial statements include the accounts of the Company and its subsidiaries. All material intercompany balances and transactions have been eliminated in consolidation.
The Company has made a presentation change to reclassify short-term right-of-use operating lease liabilities out of accounts payable and accrued liabilities in the balance sheet. The change to reclassify the amount in the prior period has been made to conform to the current period presentation.
As disclosed in the Company’s Fiscal 2024 Form 10-K, subsequent to the issuance of the Company’s Fiscal 2023 consolidated financial statements, the Company identified errors in the application of Accounting Standards Codification (“ASC”) 710, “Compensation-General,” and ASC 718, “Compensation-Stock Compensation,” related to expense recognition for cash and equity awards that are subject to both service and performance conditions. ASC 710 and ASC 718 require recognition of compensation cost once achievement of the performance condition becomes probable as the requisite service is provided. Historically, the Company did not recognize compensation cost for certain cash and equity awards until the performance conditions in the form of milestones were achieved, and for the Company’s common share warrant performance-based awards, no compensation cost had previously been recognized when the performance conditions either became probable of achievement or were achieved. As the common share warrant and restricted stock unit (“RSU”) performance-based awards to executive officers and key employees are granted with a fixed dollar value and settled in a variable number of common share warrants or RSUs, these awards are liability-classified until the number of common share warrants or RSUs are fixed, and the corresponding compensation cost should be recorded to current or long-term liabilities, or additional paid-in capital, depending on expected timing of settlement of the award, once the performance conditions become probable of achievement.
The
correction of this error resulted in an increase in compensation cost of $
The Company also identified an error in application of ASC 815, “Derivatives and Hedging,” related to the initial and subsequent recognition of a freestanding call option in the Company’s convertible notes that does not qualify for equity classification. ASC 815 requires bifurcation of the conversion option with subsequent changes in the fair value of the bifurcated derivative to be recorded in earnings. At issuance of the convertible notes, the Company should have recognized a derivative liability and a corresponding discount on the convertible notes resulting from bifurcation of the derivative, with subsequent changes in the fair value of the derivative liability and accretion of the discount recorded in earnings.
The
correction of this error resulted in an increase in interest and other expense of $
| 8 |
AMERICAN BATTERY TECHNOLOGY COMPANY
Notes to the Condensed Consolidated Financial Statements
(unaudited)
CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
| Three months ended December 31, 2023 | ||||||||||||
| As Reported | Adjustments | As Corrected | ||||||||||
| Operating expenses | ||||||||||||
| General and administrative | $ | $ | $ | |||||||||
| Research and development | ||||||||||||
| Exploration | ||||||||||||
| Total operating expenses | ||||||||||||
| Net loss before other income (expense) | $ | ( | ) | $ | ( | ) | $ | ( | ) | |||
| Other income (expense) | ||||||||||||
| Amortization and accretion of financing costs | $ | ( | ) | $ | ( | ) | $ | ( | ) | |||
| Change in fair value of derivative liability | ( | ) | ( | ) | ||||||||
| Total other income (expense) | ( | ) | ( | ) | ( | ) | ||||||
| Net loss attributable to common stockholders | $ | ( | ) | $ | ( | ) | $ | ( | ) | |||
| Net loss per share, basic and diluted | $ | ) | $ | ) | $ | ) | ||||||
| Six months ended December 31, 2023 | ||||||||||||
| As Reported | Adjustments | As Corrected | ||||||||||
| Operating expenses | ||||||||||||
| General and administrative | $ | $ | $ | |||||||||
| Research and development | ||||||||||||
| Exploration | ||||||||||||
| Total operating expenses | ||||||||||||
| Net loss before other income (expense) | $ | ( | ) | $ | ( | ) | $ | ( | ) | |||
| Other income (expense) | ||||||||||||
| Amortization and accretion of financing costs | $ | ( | ) | $ | ( | ) | $ | ( | ) | |||
| Change in fair value of derivative liability | ( | ) | ( | ) | ||||||||
| Total other income (expense) | ( | ) | ( | ) | ( | ) | ||||||
| Net loss attributable to common stockholders | $ | ( | ) | $ | ( | ) | $ | ( | ) | |||
| Net loss per share, basic and diluted | $ | ) | $ | ) | $ | ) | ||||||
CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY
| Three months ended December 31, 2023 | ||||||||||||
| As Reported | Adjustments | As Corrected | ||||||||||
| Stockholders’ Equity | ||||||||||||
| Additional paid-in capital: | ||||||||||||
| Stock-based compensation expense | ||||||||||||
| Balance, December 31, 2023 | $ | $ | $ | |||||||||
| Accumulated deficit | ||||||||||||
| Net loss for period | ( | ) | ( | ) | ( | ) | ||||||
| Balance, December 31, 2023 | $ | ( | ) | $ | ( | ) | $ | ( | ) | |||
| Total stockholders’ equity | ||||||||||||
| Balance, December 31, 2023 | $ | $ | ( | ) | $ | |||||||
| 9 |
AMERICAN BATTERY TECHNOLOGY COMPANY
Notes to the Condensed Consolidated Financial Statements
(unaudited)
| Six months ended December 31, 2023 | ||||||||||||
| As Reported | Adjustments | As Corrected | ||||||||||
| Stockholders’ Equity | ||||||||||||
| Additional paid-in capital: | ||||||||||||
| Stock-based compensation expense | ||||||||||||
| Balance, December 31, 2023 | $ | $ | $ | |||||||||
| Accumulated deficit | ||||||||||||
| Net loss for period | ( | ) | ( | ) | ( | ) | ||||||
| Balance, December 31, 2023 | $ | ( | ) | $ | ( | ) | $ | ( | ) | |||
| Total stockholders’ equity | ||||||||||||
| Balance, December 31, 2023 | $ | $ | ( | ) | $ | |||||||
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
| Six months ended December 31, 2023 | ||||||||||||
| As Reported | Adjustments | As Corrected | ||||||||||
| Operating Activities | ||||||||||||
| Net loss attributable to stockholders | $ | ( | ) | $ | ( | ) | $ | ( | ) | |||
| Adjustments to reconcile net loss to net cash used in operating activities: | ||||||||||||
| Amortization and accretion expense | $ | $ | $ | |||||||||
| Stock-based compensation | ||||||||||||
| Shares issued for professional services | ( | ) | ( | ) | ( | ) | ||||||
| Change in fair value of derivative liability | ||||||||||||
| Changes in operating assets and liabilities: | ||||||||||||
| Accounts payable and accrued liabilities | $ | $ | $ | |||||||||
| Net cash used in operating activities | $ | ( | ) | $ | $ | ( | ) | |||||
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 periods. The Company regularly evaluates estimates and assumptions related to the fair value of stock-based compensation, valuation and recoverability of long-lived assets and intangible assets subject to impairment testing, and deferred income tax asset valuation allowances.
Cash and Cash Equivalents
The Company considers all short-term investments with an original maturity of three months or less when purchased to be cash equivalents. The Company did not have any cash equivalents as of December 31, 2024 and June 30, 2024.
| 10 |
AMERICAN BATTERY TECHNOLOGY COMPANY
Notes to the Condensed Consolidated Financial Statements
(unaudited)
Fair Value of Financial Instruments
Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. Fair value is an exit price concept that assumes an orderly transaction between willing market participants and is required to be based on assumptions that market participants would use in pricing an asset or a liability. Current accounting guidance establishes a three-tier fair value hierarchy as a basis for considering such assumptions and for classifying the inputs used in the valuation methodologies. This hierarchy requires entities to maximize the use of observable inputs and minimize the use of unobservable inputs. The three levels of inputs used to measure fair values are as follows:
Level 1: Quoted prices (unadjusted) in active markets for identical assets and liabilities that the reporting entity can assess at the measurement date.
Level 2: Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly.
Level 3: Unobservable inputs for the asset or liability which include the Company’s assumptions regarding the data market participants would use in pricing the asset or liability based on the best information available under the circumstances.
The carrying values of the Company’s cash, accounts receivable, prepaid expenses and deposits, notes payable, accounts payable and accrued liabilities approximate fair value due to their short maturities.
The Company’s recurring fair value measurements include the valuation of the derivative liabilities for the bifurcated notes payable freestanding call and conversion options and for the liability-classified equity-linked contracts, both of which are classified as Level 3 of the fair value hierarchy. See Notes 6 and 11 for relevant fair value disclosures. Given use of unobservable inputs, there is inherently uncertainty that the inputs could reasonably have been different as of the reporting date.
The Company’s non-recurring fair value measurements include the valuation of the assets held-for-sale as of December 31, 2024. See Note 7 for relevant fair value disclosures.
Adoption of Recent Accounting Pronouncements
The Company continually assesses new accounting pronouncements to determine their applicability. When it is determined a new accounting pronouncement affects the Company’s financial reporting, the Company undertakes a review to determine the consequences of the change to its consolidated financial statements and assures there are sufficient controls in place to ascertain the Company’s consolidated financial statements properly reflect the change.
In November 2023, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2023-07, “Segment Reporting - Improvements to Reportable Segment Disclosures”, which updates reportable segment disclosure requirements, primarily through enhanced disclosures about significant segment expenses and information used to assess segment performance. The amendments in this ASU are effective for annual periods beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024. Early adoption is permitted. The Company is in the process of determining the effect this ASU will have on the disclosures contained in the notes to the consolidated financial statements.
In December 2023, the FASB issued ASU 2023-09, “Improvements to Income Tax Disclosures”, which updates income tax disclosures primarily related to the rate reconciliation and income taxes paid information. This ASU also includes certain other amendments to improve the effectiveness of income tax disclosures. The amendments in this ASU are effective for annual periods beginning after December 15, 2024. Early adoption is permitted for annual financial statements that have not yet been issued or made available for issuance. The Company is in the process of determining the effect this ASU will have on the disclosures contained in the notes to the consolidated financial statements.
| 11 |
AMERICAN BATTERY TECHNOLOGY COMPANY
Notes to the Condensed Consolidated Financial Statements
(unaudited)
In November 2024, the FASB Issued ASU 2024-03, “Income Statement - Reporting Comprehensive Income - Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses.” The amendments in this update require disclosures, in the notes to financial statements, of specified information about certain costs and expenses. The amendment clarifies which certain costs and expenses that are included in cost of sales and selling, general, and administrative expense categories that should be disclosed with qualitative descriptions of amounts that are not separately disaggregated quantitatively. Additionally, the amendment requires disclosure of total amounts of selling expenses and an entity’s definition of selling expense. The update will be effective for annual periods beginning after December 15, 2026 and interim reporting periods beginning after December 15, 2027, with early adoption permitted. The Company is in the process of determining the effect this ASU will have on the disclosures contained in the notes to the consolidated financial statements.
4. Inventories
The Company’s inventory for its lithium-ion battery recycling operation is comprised of raw materials, in the form of battery feedstock, and finished goods, in the form of black mass and other metals. Inventory is valued at the lower of average cost or net realizable value. The carrying value of inventory includes those costs to acquire battery feedstock and any related carrying and processing costs incurred by the Company.
| December 31, 2024 | June 30, 2024 | |||||||
| Raw materials | $ | $ | ||||||
| Finished goods | ||||||||
| Total | $ | $ | ||||||
5. Government Grants and Tax Credit Awards
Grants
receivable represent qualifying costs incurred where there is reasonable assurance that the conditions of the grant have been met but
the corresponding funds have not been received as of the reporting date. As collections from the federal government have been and are
expected to continue to be timely, no allowance for doubtful accounts has been established. If amounts become uncollectible, they will
be charged to operations. Grants receivable was $
On
January 20, 2021, the U.S. Department of Energy (“DOE”) announced that the Company had been selected for award negotiation
for a three-year project with a total budget of $
On
August 16, 2021, the Company received a contract award for a 30-month project with a total budget of $
| 12 |
AMERICAN BATTERY TECHNOLOGY COMPANY
Notes to the Condensed Consolidated Financial Statements
(unaudited)
On
October 21, 2022, the U.S. DOE announced that the Company had been selected for award negotiation for a five-year project with a total
budget of $
On
November 17, 2022, the U.S. DOE announced that the Company had been selected for award negotiation for a three-year project with a total
budget of $
On
March 28, 2024, ABTC was selected for a tax credit for up to $
Also
on March 28, 2024, ABTC was selected for an additional tax credit of up to $
On
September 23, 2024, the U.S. DOE announced that the Company had been selected for award negotiations for a highly competitive grant
for $
6. Derivative Liabilities
During the quarter ended December 31, 2024, the Company’s embedded conversion feature on its convertible notes and its outstanding warrants had been treated as derivative liabilities for accounting purposes under ASC 815-40, “Derivatives and Hedging – Contracts in Entity’s Own Equity,” due to insufficient authorized shares to settle these outstanding equity-linked contracts, while the terms of these instruments still allowed the holders to exercise which would require the Company to net-cash settle the instrument. In such cases, the Company adopted a sequencing approach under ASC 815-40 to determine the classification of its equity-linked financial instruments at issuance and at each subsequent reporting date. Under this sequencing policy, the Company reclassified to liabilities those equity-linked financial instruments with the most recent issuance or modification date. The derivative liabilities were initially recorded at fair value and subsequently re-valued each reporting date, with changes in fair value reported in the condensed consolidated statements of operations. The Company utilized the Black-Scholes option-pricing model to value the derivative liabilities at initial reclassification and subsequent valuation dates, adjusted for instrument-specific terms as applicable.
| 13 |
AMERICAN BATTERY TECHNOLOGY COMPANY
Notes to the Condensed Consolidated Financial Statements
(unaudited)
In
August 2024, the Company issued common shares and warrants to purchase common shares under private placement subscription agreements.
See further discussion at Note 13. As there were insufficient authorized shares available at the time of issuance, the warrants were
classified as derivative liabilities, measured at fair value as of issuance, and re-measured to fair value as of September 30, 2024.
Of the $
For
the remaining private placement subscription agreements, the Company recognized the fair value of the warrants of $
In
September 2024, the Company’s convertible notes were amended to increase the conversion rate of the conversion option. See further
discussion at Note 11. Upon modification, the Company no longer had sufficient authorized shares to settle all equity-linked contracts
including the convertible notes upon a potential conversion and accordingly, the embedded conversion feature was bifurcated from the
convertible notes to be accounted for as a derivative liability. The Company calculated a fair value of the bifurcated conversion feature
of $
In
November 2024, the Company’s shareholders approved and adopted an amendment to the articles of incorporation to increase the number
of authorized shares of the Company’s common stock from to .
Upon the increase, the Company had sufficient authorized shares available to settle all equity-linked contracts including the convertible
notes and warrants to purchase common shares included in derivative liabilities. As a result, the Company revalued the bifurcated conversion
feature and the warrants to purchase common shares as of the shareholder approval date and reclassified the associated derivative liabilities
from long-term liabilities to additional paid-in capital in the condensed consolidated balance sheets. The Company recognized a $
The table below sets forth the Black-Scholes inputs and assumptions for the Company’s valuation and re-valuation of its derivative liabilities for the three months ending December 31:
| 2024 | ||||
| Weighted average expected term (years) | ||||
| Risk-free interest rate | % | |||
| Dividend yield | % | |||
| Volatility | % | |||
| 14 |
AMERICAN BATTERY TECHNOLOGY COMPANY
Notes to the Condensed Consolidated Financial Statements
(unaudited)
A summary of the activity related to derivative liabilities for the three months ending December 31, 2024, is as follows:
| Warrant Derivative Liabilities | Conversion Option Derivative Liability | Total Derivative Liabilities | ||||||||||
| Balance, September 30, 2024 | $ | $ | $ | |||||||||
| Change in fair value | ( | ) | ( | ) | ( | ) | ||||||
| Fair value of extinguishments during the period | ( | ) | ( | ) | ||||||||
| Fair value of reclassifications to accounts payable during the period | ( | ) | ( | ) | ||||||||
| Fair value of reclassifications to equity during the period | ( | ) | ( | ) | ( | ) | ||||||
| Balance, December 31, 2024 | $ | $ | $ | |||||||||
7. Property, Plant and Equipment
The table below presents the property, plant and equipment as of December 31, 2024 and June 30, 2024:
| December 31, 2024 | June 30, 2024 | |||||||
| Land | $ | $ | ||||||
| Building | ||||||||
| Equipment and vehicles | ||||||||
| Total property, plant and equipment | ||||||||
| Less: accumulated depreciation | ( | ) | ( | ) | ||||
| Property, plant and equipment, net | $ | |||||||
The
Company recognized depreciation expense of $
During
the fourth quarter of fiscal 2024, the Company approved a plan to sell certain assets comprised primarily of land and a building
from its Fernley location. The Company made this decision due to the acquisition of the Peru facility that would accelerate its time
to production and commercialization. The assets located at Fernley had a carrying amount of $
8. Mining Properties
On July 21, 2022, the Company exercised the option to purchase the rights to unpatented lode claims in Tonopah, Nevada. Since that time, the Company has worked with third parties to conduct drill programs and analysis to verify the grade and continuity of the mining claims. Over 50% of the inferred mineral resources have been upgraded to measured and indicated classifications. The Company is still in the exploration stage and expenses all mineral exploration costs. If the Company identifies proven and probable reserves and develops an economic plan for operating a mine, it will enter the development stage and capitalize future costs until production is established.
On
July 22, 2023, the Company began a third exploration program to advance its Tonopah Flats Lithium Project. This drill program includes
core infill and step out drilling to support the evolution of its domestic resource with the goal of upgrading to a ‘measured and
indicated’ resource classification. The Company selected and engaged KB Drilling for the collection of infill and step out samples
for this latest drill program, which consists of sample collections from eight additional drill holes and includes
| 15 |
AMERICAN BATTERY TECHNOLOGY COMPANY
Notes to the Condensed Consolidated Financial Statements
(unaudited)
In
December 2023, the Company entered into a vacant land offer and acceptance agreement for the Company’s acquisition of certain mineral
patents totaling $
On April 24, 2024, the Company announced the completion of the “Amended Resource Estimate and Initial Assessment with Project Economics for the Tonopah Flats Lithium Project, Esmeralda and Nye Counties, Nevada, USA” (“Amended IA”) and the publication of the S-K 1300 Technical Report Summary (“TRS”) disclosing mineral resources, including an initial economic assessment, for the Tonopah Flats Lithium Project. The TRS was completed by RESPEC Company LLC, a qualified person, in compliance with Item 1300 of Regulation S-K and with an effective date of April 5, 2024.
On January 21, 2025, the Company commenced a new drill program which is the next step in accelerating the commercialization of the lithium resource is the completion and publication of a prefeasibility study (PFS). A critical operation of the PFS is performing this drill program to provide the geotechnical data to define the structural mine pit shape, to increase the resolution of the 3D resource model, and to add to the understanding of the high-grade continuity within the proposed pit. This drill program also includes core sample collections which will be assayed and characterized to further define the resource to the previously unexplored southwest section of the claim block and to work to increase the size of the overall lithium resource.
9. Intangible Assets
On
September 12, 2023, the Company acquired approximately
The
Company’s acquisition of the commercial-scale battery recycling facility at the TRIC included water rights valued at $
The table below presents total intangible assets at:
| December 31, 2024 | June 30, 2024 | |||||||
| Water rights | $ | $ | ||||||
10. Accounts Payable and Accrued Liabilities
The table below presents total accounts payable and accrued liabilities at:
| December 31, 2024 | June 30, 2024 | |||||||
| Trade payables | $ | $ | ||||||
| Accrued fixed assets | ||||||||
| Accrued expenses | ||||||||
| Market agreement settlement | ||||||||
| Total accounts payable and accrued liabilities | $ | $ | ||||||
On
July 3, 2024, the Company and Mercuria Energy America, LLC agreed to resolve their respective disputes related to a Marketing Agreement
entered into in May 2023. Under the terms of the Settlement Agreement, the Company agreed to make six monthly payments to Mercuria Energy
America, LLC of $
| 16 |
AMERICAN BATTERY TECHNOLOGY COMPANY
Notes to the Condensed Consolidated Financial Statements
(unaudited)
11. Notes Payable
On
August 29, 2023, the Company and High Trail (the “Buyers”) entered into a Securities Purchase Agreement (the
“Purchase Agreement”), pursuant to which the Company can sell to the Buyers up to $
The carrying value, net of debt discount and issuance costs, was being accreted over the term of the Notes from date of issuance to date of full repayment, expected to be in October 2024 based on partial redemption payments, using the effective interest rate method.
On
September 13, 2024, the Notes were amended to allow payment of principal totaling $
On
November 14, 2024, the Purchase Agreement and Notes were amended to provide for the issuance of a new series of senior secured
convertible notes (the “2024 Notes”) in the aggregate principal amount of $
| 17 |
AMERICAN BATTERY TECHNOLOGY COMPANY
Notes to the Condensed Consolidated Financial Statements
(unaudited)
The
Company evaluated the amendment to the Purchase Agreement and concluded it was required to be accounted for as a troubled debt restructuring
under ASC 470-60, “Troubled Debt Restructurings by Debtors,” as a concession had been granted to the Company. Per ASC 470-60,
the carrying value of the Notes remained the same as before the amendment, reduced only by the fair value of the common shares issued
to partially settle the Notes. No gain was recognized as the future undiscounted cash flows of the restructured Notes did not exceed
the carrying amount of the Notes, with the effect of the restructuring accounted for prospectively through the revised effective interest
rate of
The table below presents the net carrying amounts of the 2024 Notes as of:
| December 31, 2024 | ||||
| Principal outstanding | $ | |||
| Debt discount | ( | ) | ||
| Amortization of debt discount | ||||
| Net carrying value | $ | |||
The table below presents the maturities of notes payable as of December 31, 2024:
| December 31, 2024 | $ | |||
| Less: unamortized debt discount and issuance costs | ( | ) | ||
| Total notes payable | $ | |||
| Notes payable, current | $ | |||
| Notes payable, non-current | $ |
12. Leases
A lease provides the lessee the right to control the use of an identified asset for a period in exchange for consideration. Operating lease right-of-use assets (“RoU assets”) are presented within the asset section of the Company’s consolidated balance sheets, while lease liabilities are included within the liability section of the Company’s consolidated balance sheets at December 31, 2024 and June 30, 2024.
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.
| 18 |
AMERICAN BATTERY TECHNOLOGY COMPANY
Notes to the Condensed Consolidated Financial Statements
(unaudited)
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
The
Company occupies office facilities under lease agreements that expire at various dates, many of which do not exceed a year in length.
Total operating lease costs for the three months ended December 31, 2024 and 2023, were each approximately $
As
of December 31, 2024, current lease liabilities of $
December 31, 2024 | June 30, 2024 | |||||||
| Operating lease right-of-use asset | $ | $ | ||||||
| Operating lease liabilities | $ | $ | ||||||
The table below presents the maturities of operating lease liabilities as of December 31, 2024:
| December 31, 2025 | $ | |||
| December 31, 2026 | ||||
| December 31, 2027 | ||||
| Total lease payments | ||||
| Less: discount | ( | ) | ||
| Total operating lease liabilities | $ | |||
| Operating lease liabilities, current | $ | |||
| Operating lease liabilities, non-current | $ |
The table below presents the weighted average remaining lease term for operating leases and the weighted average discount rate used in calculating operating lease right-of-use asset as of December 31, 2024.
| Weighted average lease term (years) | ||||
| Weighted average discount rate | % |
| 19 |
AMERICAN BATTERY TECHNOLOGY COMPANY
Notes to the Condensed Consolidated Financial Statements
(unaudited)
13. Stockholders’ Equity
Preferred Stock
The Company’s amended and restated articles of incorporation authorize shares of preferred stock and provide that shares of preferred stock may be issued from time to time in one or more series. The Company’s board of directors (the “Board of Directors”) is authorized to fix the voting rights, if any, designations, powers, preferences, the relative, participating, optional or other special rights and any qualifications, limitations and restrictions thereof, applicable to the shares of each series. The Board of Directors is able to, without stockholder approval, issue shares of preferred stock with voting and other rights that could adversely affect the voting power and other rights of the holders of the common stock and could have anti-takeover effects. The ability of the Board of Directors to issue shares of preferred stock without stockholder approval could have the effect of delaying, deferring or preventing a change of control of the Company or the removal of existing management.
To date, the Company has authorized a total of shares of preferred stock. Of this amount the Company has designated a total of shares to four classes of preferred stock, Series A Preferred Stock, Series B Preferred Stock, Series C Preferred Stock and Series D Preferred Stock. As of December 31, 2024 and June 30, 2024, there were and shares of Series D Preferred Stock issued and outstanding. A description of each class of preferred stock is listed below.
On
September 16, 2024, the Company entered into a Subscription and Investment Representation Agreement with Ryan Melsert, its Chief Executive
Officer, who is an accredited investor, pursuant to which the Company agreed to issue and sell five () shares of the Company’s
Series D Preferred Stock, par value $ per share, to Mr. Melsert for an aggregate purchase price of $
The
Series D Preferred Stock shall be redeemed in whole, but not in part, at any time (i) if such redemption is ordered by the Board of Directors
in its sole discretion or (ii) automatically upon the effectiveness of the amendment to the articles of incorporation, as amended, implementing
an increase in the number of authorized shares of common stock of the Company, which occurred on November 14, 2024. Upon such redemption, the holder of the Series D Preferred
Stock received consideration of $
Subsequent
to the Company’s annual meeting on November 13, 2024, the Company redeemed the Series D Preferred Stock for $
Series A Preferred Stock
The Company has shares of Series A Preferred Stock authorized with a par value of $ per share. The Company had shares of Series A Preferred Stock issued and outstanding on December 31, 2024 and June 30, 2024.
Series B Preferred Stock
The Company has shares of Series B Preferred Stock authorized with a par value of $ per share. The Company had shares of Series B Preferred Stock issued and outstanding on December 31, 2024 and June 30, 2024.
Series C Preferred Stock
The Company has shares of Series C Preferred Stock authorized with a par value of $ per share. The Company had shares of Series C Preferred Stock issued and outstanding on December 31, 2024 and June 30, 2024.
Series D Preferred Stock
The Company has shares of Series D Preferred Stock authorized with a par value of $ per share. The Company had shares of Series D Preferred Stock issued and outstanding on December 31, 2024 and June 30, 2024.
Common Stock
In November 2024, the Company’s shareholders approved and adopted an amendment to the articles of incorporation to increase the number of authorized shares of the Company’s common stock from to . As of December 31, 2024, the Company has shares of common stock authorized, with a par value of $ per share.
| 20 |
AMERICAN BATTERY TECHNOLOGY COMPANY
Notes to the Condensed Consolidated Financial Statements
(unaudited)
Six months ended December 31, 2024:
During the period, the Company issued common shares upon vesting of share-based awards.
On July 22, 2024,
the Board of Directors authorized and approved to extend the expiration date to April 30, 2025 for
On
August 1, 2024, the Company agreed to sell in a private placement 53 Group A Units (defined below) to several accredited investors and
23 Group B Units to the Company’s new Chief Operating Officer, to an immediate family member of the Chief Executive Officer, and
to two current employees, a portion of which was rescinded on November 12, 2024 (see Note 6), resulting in the sale of a total of only
18 Group A Units and 23 Group B Units in such private placement. Each “Group A Unit” consists of shares of Common
Stock,
Upon issuance of the common stock and warrants in the private placement, the Company concluded that it had insufficient authorized shares to settle the warrants sold as well as certain previously issued warrants (see Note 6). As the warrants were therefore accounted for as derivative liabilities and remeasured at fair value each reporting period (see Note 6), the Company allocated the proceeds first to the warrants with any residual proceeds allocated to the common shares. A day-one loss is recognized to the extent the recognized fair value of common shares and warrants exceeds the proceeds received.
During
the six months ended December 31, 2024, the Company issued
common shares to the Note holders pursuant to the debt conversion option in lieu of cash payment of $
During
the six months ended December 31, 2024, the Company recognized stock-based compensation expense of $ million, which was an increase to additional paid-in capital
of $
| 21 |
On
November 13, 2024, the Company’s shareholders approved the Company’s 2024 Employee Stock Purchase Plan (the “2024 ESPP”).
The 2024 ESPP provides the Company’s employees with the ability to contribute a portion of their earnings to purchase the Company’s
shares of common stock. Pursuant to the terms of the 2024 ESPP, the Company’s executive officers and all of its other employees
will be allowed to participate in the 2024 ESPP. During the period, employees purchased shares under the 2024 ESPP with an aggregate
purchase price of $
On
December 23, 2024, the Company entered into a securities purchase agreement with two institutional investors including the Buyers (see
Note 11) for the purchase and sale of (i) shares its common stock, and (ii) warrants exercisable for up to an aggregate of
On
December 27, 2024, the Company entered into another securities purchase agreement with two institutional investors including the
Buyers for the purchase and sale of (i)
shares of its common stock, and (ii) warrants exercisable for up to an aggregate of
| 2024 | 2023 | |||||||
| Convertible notes | ||||||||
| Warrants | ||||||||
| Share awards outstanding | ||||||||
| Total potentially dilutive | ||||||||
During
the six months ended December 31, 2024, there were total warrants
issued. The Company issued
| Number of Warrants | Weighted Average Exercise Price | Weighted Average Remaining Contractual Term | Aggregate Intrinsic Value | |||||||||||||
| Balance, June 30, 2024 | $ | |||||||||||||||
| Granted | ||||||||||||||||
| Exercised | ||||||||||||||||
| Expired | (1,082,715 | ) | ||||||||||||||
| Balance, September 30, 2024 | $ | |||||||||||||||
| Granted | ||||||||||||||||
| Exercised | ||||||||||||||||
| Rescinded | ( | ) | ||||||||||||||
| Expired | ( | ) | ||||||||||||||
| Balance, December 31, 2024 | $ | $ | ||||||||||||||
| Exercisable, December 31, 2024 | $ | $ | ||||||||||||||
| 22 |
AMERICAN BATTERY TECHNOLOGY COMPANY
Notes to the Condensed Consolidated Financial Statements
(unaudited)
The Company has established the 2021 Retention Plan (“the Retention Plan”) to issue shares in the effort to retain key executives, directors, and employees. The Retention Plan allows for several different types of awards to be granted, including but not limited to, restricted share units and restricted share awards, collectively referred to as “share awards”. Share awards generally have the same expense characteristics under US GAAP and generally vest over a four-year period at a rate of % per annum.
Under the Retention Plan, the Company is authorized to issue shares of common stock to employees and non-employees up to ten percent (%) of the total number of shares of common stock outstanding as of December 31, 2022, on a fully diluted basis. The Company adjusts the authorized shares under the plan each December 31, while the Retention Plan remains in effect. During the three months ended December 31, 2024, the Company granted million share awards.
| Units | Weighted- Average Grant Date Fair Value per Unit | |||||||
| Unvested share awards at June 30, 2024 | $ | 5.02 | ||||||
| Granted | 1.00 | |||||||
| Vested | ( | ) | 4.10 | |||||
| Forfeitures | ( | ) | $ | 5.22 | ||||
| Unvested share awards at September 30, 2024 | $ | |||||||
| Granted | ||||||||
| Vested | ( | ) | ||||||
| Forfeitures | ( | ) | $ | |||||
| Unvested awards at December 31, 2024 | $ | |||||||
As awards are granted, stock-based compensation equivalent to the fair market value of the underlying common stock on the date of grant is expensed over the requisite service period, generally four years with a maximum contractual term of ten years, using the graded vesting attribution method as acceptable under ASC 718, “Compensation-Stock Compensation.” The Company accounts for forfeitures as they occur. The fair value of share awards that vested during the quarter ended December 31, 2024 totaled $ million.
The Company recognized stock-based compensation expense of $ million and $ million for the six months ended December 2024 and 2023, respectively. As of December 31, 2024 and June 30, 2024, the equity compensation liability totaled and $ million related to warrants and RSUs awarded to officers of the Company, respectively, where the performance target had not yet been achieved by employees and officers and therefore the number of warrants and RSUs underlying the awards was not yet fixed.
As of December 31, 2024, there were approximately $ million of unamortized expenses relating to outstanding equity compensation awards to be recognized over a remaining weighted-average period of years.
| 23 |
AMERICAN BATTERY TECHNOLOGY COMPANY
Notes to the Condensed Consolidated Financial Statements
(unaudited)
| 2024 | 2023 | |||||||
| Cost of goods sold | $ | $ | ||||||
| General and administrative | ||||||||
| Research and development | ||||||||
| Exploration | ||||||||
| Total stock-based compensation | $ | $ | ||||||
Executive officers and selected other key employees are eligible to receive common share performance-based awards, as determined by the Board of Directors and CEO. The payouts, in the form of share awards, vary based on the degree to which corporate operating objectives are met. These performance-based awards typically include a service-based requirement, which is generally four-years.
16. Supplemental Statement of Cash Flow Disclosures
For the six months ended December 31:
| 2024 | 2023 | |||||||
| Supplemental disclosures: | ||||||||
| Interest paid | $ | $ | ||||||
| Non-cash investing and financing activities: | ||||||||
| Purchases of property and equipment accrued in current liabilities | ||||||||
| Deposits capitalized as investing activities | ||||||||
| Right-of-use asset obtained in exchange for lease liability | ||||||||
| Debt payment satisfied with common shares | ||||||||
| Payable recognized upon rescission of subscription agreement | ||||||||
17. Commitments and Contingencies
From time to time, the Company may become involved in various lawsuits and legal proceedings, which arise in the ordinary course of business. Litigation is subject to inherent uncertainties, and an adverse result in these or other matters may arise from time to time that may harm business. Except as otherwise identified herein, management is currently not aware of any such legal proceedings or claims that could have, individually or in aggregate, a material adverse effect on our business, financial condition, or operating results.
Operating Leases
The Company leases its principal office location in Reno, Nevada. It also leases lab space at the University of Nevada, Reno on short term leases. The principal office location lease expires on November 30, 2027 and the Lab leases expire on November 30, 2025. Consistent with the guidance in ASC 842, the Company has recorded the principal office lease in its condensed consolidated balance sheet as an operating lease. For further information on operating lease commitments, see Note 12 – Leases.
Financial Assurance:
Nevada
and other states, as well as federal regulations governing mine operations on federal land, require financial assurance to be provided
for the estimated costs of mine reclamation and closure, including groundwater quality protection programs. The Company has satisfied
financial assurance requirements using a combination of cash bonds and surety bonds. The amount of financial assurance the Company is
required to provide will vary with changes in laws, regulations, reclamation and closure requirements, and cost estimates. At December
31, 2024, the Company’s financial assurance obligations associated with U.S. mine closure and reclamation/restoration cost estimate
totaled $
| 24 |
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
The following discussion and analysis should be read in conjunction with our condensed consolidated financial statements and related notes in “Item 1. Condensed Consolidated Financial Statements.” References in this report to “American Battery,” the “Company,” “we,” “our” and “us” are references to American Battery Technology Company and its subsidiaries.
Forward-Looking Statements
We make forward-looking statements in this report and may make such statements in future filings with the Securities and Exchange Commission, or SEC. We may also make forward-looking statements in our press releases or other public or shareholder communications. Our forward-looking statements are subject to risks and uncertainties and include information about our current expectations and possible or assumed future results of our operations. When we use words such as “may,” “might,” “will,” “should,” “believe,” “expect,” “anticipate,” “estimate,” “continue,” “could,” “plan,” “potential,” “predict,” “forecast,” “project,” “intend,” “is focused on” or similar expressions, or make statements regarding our intent, belief, or current expectations, we are making forward-looking statements. Our forward-looking statements also include, without limitation, statements about our liquidity and capital resources; our ability to continue as a going concern; our ability to successfully execute on our business strategy; our ability to raise additional capital and statements regarding our anticipated future financial condition, operating results, cash flows and business plans.
While we believe our forward-looking statements are reasonable, you should not place undue reliance on any such forward-looking statements, which are based on information available to us on the date of this report or, if made elsewhere, as of the date made. Because these forward-looking statements are based on estimates and assumptions that are subject to significant business, economic and competitive uncertainties, many of which are beyond our control or are subject to change, actual results could be materially different. Factors that might cause such a difference include, without limitation, the risks and uncertainties discussed in this report, “Item 1A — Risk Factors” in our Form 10-K for the year ended June 30, 2024 and from time to time in our other reports filed with the SEC.
Other factors not currently anticipated may also materially and adversely affect our results of operations, cash flows and financial position. There can be no assurance future results will meet expectations. Forward-looking statements speak only as of the date of this report and we expressly disclaim any intent to update or alter any statements whether as a result of new information, future events or otherwise, except as may be required by applicable law.
Overview
American Battery Technology Company (the “Company”) is an integrated critical battery materials company within the lithium–ion battery industry that is working to increase the domestic U.S. production of battery materials, such as lithium, nickel, cobalt, and manganese through its exploration of new domestic-US primary resources of battery metals, development and commercialization of new technologies for the extraction of these battery metals from primary resources, and commercialization of an internally developed integrated process for the recycling of lithium–ion batteries. Through this three–pronged approach the Company is working to both increase the domestic production of these battery materials, and to ensure spent batteries have their elemental battery metals returned to the domestic manufacturing supply chain in an economical, environmentally-conscious, closed–loop fashion.
To implement this business strategy, the Company has constructed its first integrated lithium–ion battery recycling facility, which takes in waste and end–of–life battery materials from the electric vehicle, stationary storage, and consumer electronics industries. The ramp-up 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. The Company has been awarded a competitively bid grant from the U.S. Advanced Battery Consortium to support a $2 million project to accelerate the development and demonstration of the technologies within this integrated lithium–ion battery recycling facility. The Company has also been awarded an additional grant from the DOE to support a $20 million project under the Bipartisan Infrastructure Law to validate, test, and deploy three next-generation disruptive advanced separation and processing recycling technologies.
Additionally, the Company is accelerating the demonstration and commercialization of its internally developed low–cost and low–environmental impact processing train for the manufacturing of battery grade lithium hydroxide from Nevada–based sedimentary claystone resources. The Company has been awarded a competitive grant from the DOE’s Advanced Manufacturing and Materials Technologies Office through the Critical Materials Innovation program to support a $4.5 million project for the construction and operation of a multi–ton per day integrated continuous demonstration system to support the scale–up and commercialization of these technologies. The Company has also been awarded an additional grant award under the Bipartisan Infrastructure Law to support a $115.5 million project to design, construct, and commission a first-of-kind commercial-scale refinery to produce 30,000 MT of battery-grade lithium hydroxide per year from this resource.
| 25 |
ABTC has completed the construction and commissioning of its claystone to lithium hydroxide (LiOH) pilot plant, marking a significant milestone in the commercialization of its internally-developed processes to access an unrealized domestic primary lithium resource. The construction and commissioning of this pilot plant enables ABTC to demonstrate its technologies for accessing the lithium housed in its unconventional resource, Tonopah Flats Lithium Project (TFLP), in an integrated and continuous system, and to generate large amounts of battery grade lithium hydroxide for delivery to customers for qualifications and evaluation. The construction and operation of this pilot demonstration plant are supported by a competitively awarded grant from the DOE for this $4.5 million effort. Product from the pilot plant is being sent for analysis to confirm and validate the resource.
ABTC has filed an amended Initial Assessment for its Tonopah Flats Lithium Project (TFLP). The TFLP is one of the largest identified lithium resources in the U.S., and while initial pit designs and economic analyses in previous assessments evaluated the full resource, this updated Initial Assessment utilizes a commercialization pathway with a more rigorous mine plan that contemplates utilization of only Measured and Indicated Mineral Resources, and excludes Inferred Mineral Resources, to supply the planned commercial-scale lithium hydroxide refinery. This commercialization pathway allows for an engineered phased development, with improved access to the higher quality portions of the resource, and at improved project economics.
On March 28, 2024, ABTC was selected for an approximately $19.5 million tax credit through the Qualifying Advanced Energy Project Credits program (48C). This tax credit was granted by the U.S. Department of Treasury Internal Revenue Service following a highly competitive technical and economic review process performed by the DOE, which evaluated the feasibility of applicant facilities to advance America’s buildout of globally competitive critical material recycling, processing, and refining infrastructure. This $19.5 million tax credit can be utilized both for the reimbursement of capital expenditures spent to date, and also for equipment and infrastructure for additional value-add operations at ABTC’s battery recycling facility in the Tahoe-Reno Industrial Center (TRIC) in Storey County, Nevada. As of December 31, 2024, the Company has incurred qualifying expenditures for this tax credit but will not recognize any amounts until it has reasonable assurance of compliance with the relevant standards. The Company intends to sell the credit in order to monetize it’s value.
Also on March 28, 2024, ABTC was selected for an additional $40.5 million tax credit through the Qualifying Advanced Energy Project Credits program (48C) to support the design and construction of a new, next-generation, commercial battery recycling facility to be located in the United States. As with ABTC’s initial $19.5 million tax credit under the 48C program supporting the construction and buildout of its battery recycling facility in Nevada, this additional award was granted by the U.S. Department of Treasury Internal Revenue Service following a highly competitive technical and economic review process performed by the DOE, which evaluated the feasibility of applicant facilities to advance America’s buildout of globally competitive critical material recycling, processing, and refining infrastructure. As of December 31, 2024, the Company has not incurred any qualifying expenditures towards this tax credit.
On September 23, 2024, the U.S. DOE announced that the Company had been selected for award negotiations for a highly competitive grant for $150 million to be applied towards the construction of a new lithium-ion battery recycling facility. On December 18, 2024, the Company received a contracted grant award for $144 million of federal investment by the DOE, with these funds awarded to the Company and its subcontractor Argonne National Laboratory, to support the construction of a new lithium-ion battery recycling facility.
Financial Highlights:
| ● | Revenues were $332,000 in the three months ended December 31, 2024, following the Company’s initial recognition of revenues in the fourth quarter of fiscal 2024. | |
| ● | Cost of goods sold was $3.3 million in the three months ended December 31, 2024, include in this amount are non-cash items such as depreciation expense of $1.1 million and stock-based compensation of $0.1 million leaving cash cost of goods sold of $2.1 million. | |
| ● | On September 23, 2024, the Company was selected for a new highly competitive grant from the U.S. DOE for $150 million and on December 18, 2024, the Company received a contracted grant award for $144 million of federal investment to construct a second lithium-ion battery recycling facility. | |
| ● | Government grant reimbursement was $2.3 million for the six months ended December 31, 2024 compared to $1.7 million during the same period of the prior year. Out of the $2.3 million in grant funding for the six months ended December 31, 2024, $0.6 million was recorded as an offset to fixed assets, as reimbursements related to equipment purchases, and $1.7 million was recorded as an offset to research and development costs within the condensed consolidated statement of operations. | |
| ● | As of December 31, 2024, the Company had total cash on hand of $20.6 million of which $15.6 million was available and $5.0 is restricted. | |
| ● | Cash used in operations for the six months ended December 31, 2024 was $12.8 million, compared to $7.4 million of cash used in operations for the six months ended December 31, 2023. | |
| ● | On November 14, 2024, the Company issued a new series of senior convertible notes (the “2024 Notes”) in the aggregate principal amount of $12 million. | |
| ● | In December 2024, the Company entered into two registered direct offerings, as described below, for a total amount of $15 million in gross proceeds. |
| 26 |
Results of Operations for the Three Months Ended December 31, 2024 and 2023
Revenue
During the three months ended December 31, 2024, our revenue was $0.3 million. This is related to the sale of our recycled products produced from recycling operations and followed our initial revenue generated by the Company in the fourth quarter of fiscal 2024.
Cost of Goods Sold
Cost of goods sold during the three months ended December 31, 2024 was $3.3 million. After the removal of non-cash items of $1.2 million such as depreciation expense of $1.1 million and stock-based compensation of $0.1 million, cash cost of goods sold was $2.1 million. The high cost of goods sold is related to the depreciation of the recycling facility fixed assets which is time based, and labor and overhead costs. We expect these costs to continue to rise on an absolute basis but will be reduced as a percentage of revenue as we scale our production and sales and gain efficiencies in the production process.
Management uses certain non-GAAP metrics to evaluate our operating and financial results. We believe the presentation of non-GAAP results is useful to investors for analyzing business trends as well as to view the results from management’s perspective. Non-GAAP Cost of Goods sold excludes certain non-cash charges including depreciation expense and stock-based compensation. Non-GAAP results have limitations as an analytical tool, and you should not consider them in isolation or as a substitute for our results reported under GAAP.
Operating Expenses
During the three months ended December 31, 2024, the Company incurred $10.8 million of operating expenses compared to $8.8 million during the three months ended December 31, 2023.
General and administrative expenses consist of personnel, stock-based compensation, office expenses, legal, recruitment, business development, public relations, and general facility expenses. For the three months ended December 31, 2024 and 2023, general and administrative expenses were $7.7 million and $4.4 million, respectively. The increase of $3.3 million in the current period primarily related to increased employee stock-based compensation, personnel costs due to increased headcount, and external, audit and insurance costs.
Research and development expenses consist primarily of laboratory leases, supplies, personnel, stock-based compensation, and employee benefits. Research and development expenses for the three months ended December 31, 2024 and 2023 were $2.9 million and $3.6 million, respectively. The decrease in the current period is primarily due to allocation of a portion of such costs to inventory and cost of goods sold as part of phase 1 recycling operations coming online in the fourth quarter of fiscal 2024. Research and development expenses are partially offset by federal grant funds for awards the Company has contracted with various federal agencies. The Company recognized an offset to its research and development costs of $1.8 million and $0.7 million related to these awards for the three months ended December 31, 2024 and 2023 respectively.
Exploration costs consist primarily of drilling, assay, claim fees, personnel, stock-based compensation, office and warehouse, travel, and other costs related to exploration of claims in central Nevada. Exploration expenses totaled $0.2 million for the three months ended December 31, 2024 compared to $0.8 million during the same period in the prior year. The decrease quarter-over-quarter resulted principally from higher costs in the prior year related to drilling, assaying and engineering to further define and potentially upgrade the geological classification of the mineral rights.
Other Income (Expense)
During the three months ended December 31, 2024, the Company recorded other income of $0.4 million, consisting of income of $1.1 million resulting from a change in the fair value of liability classified financial instruments partially offset by expense of $0.7 million for amortization of debt financing costs.
Results of Operations for the Six Months Ended December 31, 2024 and 2023
Revenue
During the six months ended December 31, 2024, our revenue was $0.5 million. This is related to the sale of our recycled products produced from recycling operations and followed our initial revenue generated by the Company in the fourth quarter of fiscal 2024. The materials were sold to several customers who took delivery at our plant . Approximately $0.2 million of revenue is attributed to materials that will remain at our plant to be further processed when phase two of the plant is complete. The customer for these materials has full ownership, rights and obligations associated with the materials, including cost of storage.
Cost of Goods Sold
Cost of goods sold during the six months ended December 31, 2024 was $5.8 million. After the removal of non-cash items of $2.4 million such as depreciation expense of $2.2 million and stock-based compensation of $0.2 million, cash cost of goods sold was $3.4 million. The high cost of goods sold is related to the depreciation of the recycling facility fixed assets, which is time based, and the finalization of the production process. We expect these costs to continue to rise on an absolute basis but will be reduced as a percentage of revenue as we scale our production and sales and gain efficiencies in the production process.
Management uses certain non-GAAP metrics to evaluate our operating and financial results. We believe the presentation of non-GAAP results is useful to investors for analyzing business trends as well as to view the results from management’s perspective. Non-GAAP Cost of Goods sold excludes certain non-cash charges including depreciation expense and stock-based compensation. Non-GAAP results have limitations as an analytical tool, and you should not consider them in isolation or as a substitute for our results reported under GAAP.
Operating Expenses
During the six months ended December 31, 2024, the Company incurred $18.3 million of operating expenses compared to $16.8 million during the six months ended December 31, 2023.
General and administrative expenses consist of personnel, stock-based compensation, office, legal, recruitment, business development, public relations, and general facility expenses. For the six months ended December 31, 2024, general and administrative expenses were $12.7 million, an increase of $5.2 million over the same period in the prior year primarily related to increased employee stock-based compensation, personnel costs, and audit and insurance costs.
| 27 |
Research and development expenses consist primarily of laboratory leases, supplies, personnel, stock-based compensation, and employee benefits. Research and development expenses for the six months ended December 31, 2024 and 2023 were $5.0 million and $7.2 million, respectively. The decrease in the current period is primarily due to allocation of a portion of such costs to inventory and cost of goods sold as part of phase 1 recycling operations coming online in the fourth quarter of fiscal 2024. These costs are partially offset by federal grant funds for awards that it has contracted with various federal agencies. The Company recognized an offset to its research and development costs of $2.3 million and $1.2 million related to these awards for the six months ended December 31, 2024 and 2023 respectively.
Exploration costs consist primarily of drilling, assay, claim fees, personnel, stock-based compensation, office and warehouse, travel, and other costs related to exploration of claims in central Nevada. Exploration expenses totaled $0.7 million for the six months ended December 31, 2024 compared to $2.2 million during the same period in the prior year. The decrease year-over-year resulted principally from higher costs in the prior year related to drilling, assaying and engineering to further define and potentially upgrade the geological classification of the mineral rights.
Other Income (Expense)
During the six months ended December 31, 2024, the Company recorded other expense of $1.5 million, including $1.9 million for amortization of debt financing costs, a $0.7 million loss on debt extinguishment, and $0.6 million loss on private placement. These expenses were partially offset by other income of $0.9 million for change in fair value of liability classified instruments and $0.7 million for change in fair value of derivative liability.
Liquidity and Capital Resources
At December 31, 2024, the Company had cash of $20.6 million (of which $15.6 million was available and $5.0 million is restricted) and total assets of $88.3 million compared to available cash of $7.0 million and total assets of $77.7 million at June 30, 2024. On December 23, 2024, the Company issued 5,000,000 shares of common stock and warrants exercisable for up to 5,000,000 shares of common stock in exchange for gross proceeds of $5.0 million (the “First Offering”). On December 27, 2024, the Company issued 3,773,586 shares of common stock and warrants exercisable for up to 3,773,586 shares of common stock in exchange for gross proceeds of $10.0 million (the “Second Offering” and, together with the First Offering, the “Offerings”). The increase of cash is due to proceeds of approximately $15 million from the Offerings and approximately $12 million from the issuance of the 2024 Notes, offset by normal transactional activities related to plant production and paydown of debt obligations.
The Company had total current liabilities of $17.7 million at December 31, 2024, compared to $15.8 million at June 30, 2024. The increase is related to the issuance of the 2024 Notes, offset by some paydown of debt, and the timing of payments for accounts payable and accrued expenses.
As of December 31, 2024 the Company had working capital of $12.8 million compared to $2.6 million at June 30, 2024. The positive working capital at the end of both periods results from the classification of $8.4 million of held-for-sale assets as current at December 31, 2024 and June 30, 2024 and the increase in cash due to proceeds from the Offerings and the issuance of the 2024 Notes. Absent the held-for-sale classification of certain assets, the working capital would have been a positive $4.4 million and a deficiency of $5.8 million at December 31, 2024 and June 30, 2024, respectively.
The continuation of the Company as a going concern is dependent upon generating profit from its operations and its ability to obtain debt or equity financing. There is no assurance that the Company will be able to generate sufficient profits, obtain such financings, or obtain them on favorable terms, which could limit its operations. Any such financing activities are subject to market conditions. These uncertainties cause substantial doubt to exist as to the Company’s ability to continue as a going concern for 12 months from issuance of these 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. These adjustments could be material.
Based on our current operating plan, unless we generate income from the operations of our facilities or raise additional capital (debt or equity), it is possible that we will be unable to maintain our financial covenants under our existing debt agreements. If such covenant violations are not waived by the holders of the Notes and the 2024 Notes, it would result in an event of default, causing an acceleration of the outstanding balances. If we do raise additional capital through public or private equity offerings, as opposed to debt issuances, the ownership interest of our existing stockholders may be diluted.
| 28 |
Cash Flows
For the six months ended December 31:
| 2024 | 2023 | |||||||
| Cash used in operating activities | $ | (12,815,978 | ) | $ | (7,418,700 | ) | ||
| Cash used in investing activities | (1,509,581 | ) | (10,868,460 | ) | ||||
| Cash provided by financing activities | 27,947,535 | 23,613,794 | ||||||
| Net increase in cash during the period | 13,621,976 | 5,326,635 | ||||||
Cash from Operating Activities.
During the six months ended December 31, 2024, the Company used $12.8 million of cash for operating activities, compared to $7.4 million used during the six months ended December 31, 2023. In both periods, the cash used has supported an increased scale of operations including increased employee headcount and personnel costs, increased production, and increased administrative costs related to insurance, legal and accounting.
Cash from Investing Activities
During the six months ended December 31, 2024, the Company used cash in investing activities of $1.5 million for acquisition of property and equipment for its recycling facilities. This is in comparison to cash used in investing activities of $10.9 million for the six months ended December 31, 2023. The decrease is due to the Company’s purchasing more equipment in the beginning stages of the recycling plant build-out in the prior year.
Cash from Financing Activities
During the six months ended December 31, 2024, the Company had cash provided by financing activities of $27.9 million, compared to $23.6 million provided during the six months ended December 31, 2023. The Company has relied on equity and debt financings to support its increased operating activities, the ramp up of the recycling plant, development of the lithium ore pilot plant, and upgrades to the geological category of its Tonopah claims through additional studies and assessments.
The Company had proceeds from equity and debt financings of $23.5 million in the six months ended December 31, 2024 compared to $14.7 million in the prior year period. The increase in cash provided by equity financings in the six months ended December 31, 2024 is related to the sale of 5,938,786 shares of common stock pursuant to its at-the-market (“ATM”) sales agreement for total proceeds of $6.3 million and proceeds from the Offerings; partially offset by paydowns of previous secured convertible notes.
Working Capital
| December 31, 2024 | June 30, 2024 | |||||||
| Current assets | $ | 30,484,727 | $ | 18,406,048 | ||||
| Current liabilities | 17,691,807 | 15,798,298 | ||||||
| Working capital | 12,792,920 | 2,607,750 | ||||||
Future Financing
The Company will continue to rely on sales of our common shares, debt, or other financing to fund our business operations as needed beyond any revenue generated from internal operations and the government tax credits and grants we have been awarded. Issuances of additional shares will result in dilution to existing stockholders. There is no assurance that we will achieve any additional sales of the securities or arrange for debt or other financing to fund planned operating activities, acquisitions and exploration activities.
| 29 |
Critical Accounting Estimates
Our condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”). The preparation of the condensed consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities and disclosure of contingent assets and liabilities at the date of the condensed consolidated financial statements and the reported amounts of revenue and expenses during the reporting periods. We evaluate our estimates and assumptions on an ongoing basis using historical experience and other factors and adjust those estimates and assumptions when facts and circumstances dictate. Actual results could differ materially from those estimates and assumptions.
While some of our significant accounting policies are more fully described in Note 2, “Summary of Significant Accounting Policies” in the notes to our condensed consolidated financial statements in this Quarterly Report on Form 10-Q, all our critical accounting policies and significant estimates are detailed in our Annual Report on Form 10-K for the year ended June 30, 2024.
Off-Balance Sheet Arrangements
As of December 31, 2024, we had no off-balance sheet arrangements.
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 of 1934, as amended (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 (15 U.S.C. 78a et seq.) 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.
| 30 |
The Company’s management, with the participation of the Chief Executive Officer and Chief Financial Officer of the Company, carried out an evaluation of the effectiveness of the design and operation of the Company’s disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) of the Exchange Act) as of December 31, 2024, the end of the period covered by this report. Based on such evaluation, the Company’s Chief Executive Officer and Chief Financial Officer have concluded that, as of December 31, 2024, the Company’s disclosure controls and procedures are not effective, based on the material weaknesses described below.
Material Weakness in 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). Management, with the participation of the principal executive officer and principal financial officer, under the oversight of our Board of Directors, assessed the effectiveness of our internal control over financial reporting as of December 31, 2024 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, management concluded that, as of December 31, 2024, our internal control over financial reporting was not effective, due to the material weaknesses in internal control over financial reporting, described below.
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.
The Company did not have a sufficient complement of personnel with appropriate technical expertise to perform an effective risk assessment. In addition, the Company did not maintain proper segregation of duties related to accounting processes. As a consequence, internal control deficiencies related to the design and operation of process-level controls were determined to be pervasive throughout the Company’s financial reporting processes. While these material weaknesses did result in immaterial misstatements of the Company’s consolidated financial statements, these material weaknesses create a reasonable possibility that a material misstatement of account balances or disclosures in the consolidated financial statements may not be prevented or detected in a timely manner. Therefore, we concluded that the deficiencies represent material weaknesses in the Company’s internal control over financial reporting and our internal control over financial reporting was not effective as of December 31, 2024.
Remediation Plan
During the fiscal year ended June 30, 2024, remediation efforts included removing accounting personnel access to both create and post a journal entry, moving the systems administration tasks to personnel outside of the accounting department, and adding review procedures by qualified personnel over complex accounting matters by way of engaging third-party professionals with whom to consult regarding complex accounting applications and valuations. However, there is no guarantee that these measures will remediate the material weaknesses described above.
In addition to the steps taken outlined above, in July 2024, we hired a new corporate controller with extensive experience in technical accounting, SEC reporting and internal control over financial reporting. In October 2024, we hired a senior accountant with public accounting and public company reporting experience, which will help to mitigate the segregation of duties weakness. We plan to continue to utilize an outside CPA firm for technical expertise and we plan to perform a complete risk assessment to update our control procedures. We expect these additional steps will help mitigate the technical expertise weakness, the segregation of duties weakness and identify any other areas of risk to be incorporated in our overall internal control plan. We expect to remediate these material weaknesses by the end of fiscal year 2025. The Company is currently conducting a diligent search for a permanent Chief Financial Officer with relevant and extensive experience in accounting and finance.
We are committed to ensuring that our internal control over financial reporting is designed and operating effectively. While we believe procedures are in place as of December 31, 2024 to address the material weaknesses, remediation steps are required to be in place and effective for an adequate period of time. We cannot provide assurance that such material weaknesses will be remediated, and we may discover additional material weaknesses that may require additional time and resources to remediate.
Changes in Internal Control over Financial Reporting
Except as noted above with respect to the completion of certain steps in the remediation plan, there was no change in our internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) that occurred during the fiscal quarter 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.
| 31 |
PART II – OTHER INFORMATION
Item 1. Legal Proceedings
We may be involved in certain routine legal proceedings from time to time before various courts and governmental agencies. We cannot predict the final disposition of such proceedings. We regularly review legal matters and record provisions for claims considered probable of loss. The resolution of these pending proceedings is not expected to have a material effect on our operations or consolidated financial statements in the period in which they are resolved.
Item 1A. Risk Factors
Our business is subject to various risks, including those described in Part I, Item 1A of our Annual Report on Form 10-K for the year ended June 30, 2024. There have been no changes to the risk factors set forth in our Annual Report on Form 10-K for the year ended June 30, 2024 under “Item 1A - Risk Factors” and in our Quarterly Report on Form 10-Q for the quarter ended September 30, 2024 under “Item 1A – Risk Factors”. Additionally, the Trump Administration has issued numerous Executive Orders (“EOs”), including the Unleashing American Energy Executive Order on January 20, 2025, which requires an immediate pause in the disbursement of funds appropriated through the Inflation Reduction Act of 2022 during a 90-day review period. The Company is currently evaluating these EOs and other related memoranda to determine what, if any, impact they might have on awards selected or received from the DOE. This pause, or a similar pause, particularly if extended, could delay the timing of projects, and could have a material adverse impact on our business, financial condition, and results of operations.
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.
None.
Item 3. Defaults Upon Senior Securities.
None.
Item 4. Mine Safety Disclosures.
Not applicable.
| 32 |
Item 5. Other Information.
Departure of Chief Financial Officer
On February 10, 2025, Paul McGarry notified the Company of his intent to step down as Interim Chief Financial Officer, effective February 21, 2025 (the “Retirement Date”). Mr. McGarry’s departure is not related to any disagreement with the Company on any matter relating to the Company’s operations, policies, or practices.
Appointment of Interim Chief Financial Officer
On
February 13, 2025, the Board of Directors of the Company appointed
Mr. Deutsch, 60, previously served as the Company’s Chief Financial Officer from May 22, 2023 to January 31, 2025. Mr. Deutsch is returning to the Company out of retirement following Mr. McGarry’s departure in order to serve as the Company’s Interim Chief Financial Officer while the Company conducts its search for his permanent replacement. Mr. Deutsch has over 25 years of finance experience in world-class multinational corporations in the U.S. and abroad. He has led several businesses through transformative high-growth phases and has completed more than 75 M&A transactions with strategic partners. He joins the Company with nearly 20 years serving in the role as Chief Financial Officer with global brands such as Kraft Foods and Aramark Inc., and over the course of his tenure has served in executive financial leadership roles at companies such as Visa, and Philip Morris. Mr. Deutsch has in-depth experience in establishing transformative finance processes and has led large systems implementations. He has an MBA from New York University and a Bachelor of Science in economics from The Wharton School of the University of Pennsylvania.
There is no arrangement or understanding between Mr. Deutsch and any other persons, pursuant to which he was selected as Interim Chief Financial Officer. Mr. Deutsch has not engaged in any transaction, or any currently proposed transaction, in which the Company was or is to be a participant and the amount involved exceeds $120,000, and in which any related person had or will have a direct or indirect material interest. There are no family relationships between Mr. Deutsch and any director or executive officer of the Company.
On February 13, 2025, the Company entered into an Offer Letter (the “Offer Letter”) with Mr. Deutsch, pursuant to which Mr. Deutsch will be an at-will employee of the Company. Pursuant to the Offer Letter, Mr. Deutsch will receive an annual base salary of $280,000 and a one-time signing bonus of $25,000. The foregoing descriptions of the Offer Letter are qualified in their entirety by reference to the full text of the Offer Letter, a copy of which is filed as Exhibit 10.12 hereto, and the terms of which are incorporated by reference.
Item 6. Exhibits
The following exhibits are either provided with this Annual Report or are incorporated herein by reference:
*Furnished herewith.
| 33 |
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, 2025 | By: | /s/ Ryan Melsert |
| Ryan Melsert | ||
| Chief Executive Officer (Principal Executive Officer) | ||
| Date: February 14, 2025 | By: | /s/ Paul E. McGarry |
| Paul E. McGarry | ||
| Interim Chief Financial Officer (Principal Accounting Officer) |
| 34 |