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EX-32.1 - AMERICAN BATTERY METALS CORPex32-1.htm
EX-31.2 - AMERICAN BATTERY METALS CORPex31-2.htm
EX-31.1 - AMERICAN BATTERY METALS CORPex31-1.htm

 

 

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

FORM 10-Q

Amendment No. 1

 

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

 

For the quarter period ended December 31, 2020

 

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

 

Commission File number: 000-55088

 

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

 

Nevada   33-1227980

(State or other jurisdiction

of incorporation or organization)

 

(I.R.S. Employer

Identification No.)

 

930 Tahoe Blvd. Suite 802-16, Incline Village, NV 89451
(Address of principal executive offices)

 

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

 

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

 

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

 

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

 

Yes [X] No [  ]

 

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).

 

Yes [X] No [  ]

 

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

 

[  ] Large accelerated filer   [  ] Accelerated filer
[X] Non-accelerated filer   [X] 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 [X]

 

The number of shares of the Registrant’s common stock, par value $0.001 per share, outstanding as of April 26, 2021 were 556,376,046.

 

 

 

 

 

 

EXPLANATORY NOTE

 

We are filing this Amendment No. 1 on Form 10-Q/A to amend and restate in their entirety the following items of our Quarterly Report on Form 10-Q for the quarter ended December 31, 2020, as originally filed with the Securities and Exchange Commission on February 16, 2021 (the “Original Form 10-Q”): (i) Item 1 of Part I “Financial Information,” (ii) Item 2 of Part I, “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” and we have also updated the signature page, the certifications of our Chief Executive Officer and Chief Financial Officer in Exhibits 31.1, and 32.1 and our financial statements formatted in Extensible Business Reporting Language (XBRL) in Exhibits 101. No other sections were affected, but for the convenience of the reader, this report on Form 10-Q/A restates in its entirety, as amended, our Original Form 10-Q. This report on Form 10-Q/A is presented as of the filing date of the Original Form 10-Q and does not reflect events occurring after that date, or modify or update disclosures in any way other than as required to reflect the restatement described below.

 

We have determined that our previously reported results for the quarter ended December 31, 2020 erroneously reflected a stock issuance that was characterized as a consulting payment which was in fact a common stock share purchase in the amount of $1,200,000. There were no changes to the assets and liabilities on our balance sheet or the number of common shares outstanding as of December 31, 2020. We have made necessary conforming changes in “Management’s Discussion and Analysis of Financial Condition and Results of Operations” resulting from the correction of this error.

 

 2 

 

 

AMERICAN BATTERY METALS CORPORATION

Table of Contents

 

   

Page

Number

  PART I. FINANCIAL INFORMATION  
     
ITEM I. Financial Statements 4
     
  Condensed Consolidated Balance Sheets (unaudited) as at December 31, 2020 and June 30, 2020 5
     
  Condensed Consolidated Statements of Operations (unaudited) for the three and six months ended December 31, 2020 and 2019 6
     
  Condensed Consolidated Statements of Stockholders’ Deficit (unaudited) for the three and six months ended December 31, 2020 and 2019 7
     
  Condensed Consolidated Statements of Cash Flows (unaudited) for the six months ended December 31, 2020 and 2019 9
     
  Notes to the Condensed Consolidated Financial Statements (unaudited) 10
     
ITEM 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations 21
ITEM 3. Quantitative and Qualitative Disclosures about Market Risk 24
ITEM 4. Controls and Procedures 25
     
  PART II. OTHER INFORMATION  
     
ITEM 1. Legal Proceedings 25
ITEM 1A. Risk Factors 25
ITEM 2. Unregistered Sales of Equity Securities and Use of Proceeds 25
ITEM 3. Defaults Upon Senior Securities 26
ITEM 4. Mine Safety Disclosure 26
ITEM 5. Other Information 26
ITEM 6. Exhibits 27
  SIGNATURES 28

 

 3 

 

 

PART I – FINANCIAL STATEMENTS

 

ITEM 1. FINANCIAL STATEMENTS

 

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

 

Operating results for the six months ended December 31, 2020 are not necessarily indicative of the results that can be expected for the year ending June 30, 2021.

 

 4 

 

 

AMERICAN BATTERY METALS CORPORATION

Condensed Consolidated Balance Sheets

(unaudited)

 

  

December 31,

2020

$

  

June 30,

2020

$

 
   (Restated – Note 11)     
ASSETS          
Current assets          
Cash   403,654    829,924 
Prepaid expenses   207,454    237,334 
Total current assets   611,108    1,067,258 
           
Investment in joint venture   35,250    35,250 
Property and equipment   960,984    58,806 
Total assets   1,607,342    1,161,314 
           
LIABILITIES          
Current liabilities          
Accounts payable and accrued liabilities   447,421    514,838 
Due to related parties   200,646    624,949 
Derivative liability   6,669,330    4,519,654 
Notes payable, net of unamortized discount of $569,705 and $2,084,051, respectively   523,173    127,149 
Current portion of loans payable   8,934    8,580 
Total current liabilities   7,849,504    5,795,170 
           
Loans payable   301,509    306,648 
Total liabilities   8,151,013    6,101,818 
           
STOCKHOLDERS’ DEFICIT          
Series A Preferred Stock Authorized: 1,000,000 preferred shares, par value of $0.001 per share Issued and outstanding: 500,000 and 300,000 preferred shares, respectively   500    300 
           
Series C Preferred Stock Authorized: 1,000,000 preferred shares, par value of $10 per share Issued and outstanding: 281,450 and 0 preferred shares, respectively   2,814,500     
           
Common Stock Authorized: 1,200,000,000 common shares, par value of $0.001 per share Issued and outstanding: 502,622,746 and 365,191,213 common shares, respectively   502,622    365,191 
           
Additional paid-in capital   84,517,981    55,452,951 
           
Share subscriptions received   35,000    2,450,000 
           
Share subscriptions receivable   (6,250)    
           
Accumulated deficit   (94,408,024)   (63,208,946)
           
Total stockholders’ deficit   (6,543,671)   (4,940,504)
           
Total liabilities and stockholders’ deficit   1,607,342    1,161,314 

 

 5 

 

 

AMERICAN BATTERY METALS CORPORATION

Condensed Consolidated Statements of Operations

(unaudited)

 

  

For the three months

ended

December 31,

2020

$

  

For the three months

ended

December 31,

2019

$

  

For the six months

ended

December 31,

2020

$

  

For the six months

ended

December 31,

2019

$

 
                 
   (Restated –
Note 11)
       (Restated –
Note 11)
     
Operating expenses                    
                     
Exploration costs   2,902    11,311    109,699    334,679 
General and administrative   22,614,058    1,071,820    24,920,354    2,143,089 
                     
Net loss from operations   (22,616,960)   (1,083,131)   (25,030,053)   (2,477,768)
                     
Other income (expense)                    
                     
Accretion and interest expense   (837,953)   (1,119,583)   (2,200,500)   (2,220,077)
Change in fair value of derivative liability   (6,244,285)   (876,960)   (7,018,171)   (939,514)
Gain on settlement of debt   1,850,178    127,863    3,462,611    214,050 
Financing cost   (190,980)       (405,096)    
Other income       3,746        3,746 
Other expense   (7,869)       (7,869)    
                     
Total other income (expense)   (5,430,909)   (1,864,934)   (6,169,025)   (2,941,795)
                     
Net loss   (28,047,869)   (2,948,065)   (31,199,078)   (5,419,563)
Net loss per share, basic and diluted   (0.06)   (0.02)   (0.07)   (0.04)
Weighted average shares outstanding, basic and diluted   462,276,476    150,474,502    453,644,098    137,016,722 

 

 6 

 

 

AMERICAN BATTERY METALS CORPORATION

Condensed Consolidated Statement of Stockholders’ Deficit

(unaudited)

 

   Series A Preferred Shares   Series C Preferred Shares   Common Shares   Additional

Paid-In

  

Share

subscriptions

   Accumulated   Total Stockholders’ 
   Number  

Amount

$

   Number  

Amount

$

   Number  

Amount

$

  

Capital

$

  

Received

$

  

Receivable

$

  

Deficit

$

  

Deficit

$

 
                                             
Balance, June 30, 2020   300,000    300            365,191,213    365,191    55,452,951    2,450,000        (63,208,946)   (4,940,504)
                                                        
Shares issued for services   200,000    200            31,140,000    31,140    22,581,130    35,000            22,647,470 
                                                        
Shares issued for exercise of warrants                   12,381,562    12,381    (12,381)                
                                                        
Shares issued from private placement           241,450    2,414,500    60,625,000    60,625    2,389,375    (2,450,000)   (6,250)       2,408,250 
                                                        
Shares issued pursuant to note conversion           40,000    400,000    21,284,971    21,285    2,564,182                2,985,467 
                                                        
Shares issued pursuant to share purchase agreement                   12,000,000    12,000    1,188,000                1,200,000 
                                                        
Share purchase warrants issued                           83,724                83,724 
                                                        
Beneficial conversion feature on convertible debts                           271,000                271,000 
                                                        
Net loss for the period                                       (31,191,209)   (31,191,209)
                                                        
Dividends declared                                       (7,869)   (7,869)
                                                        
Balance, December 31, 2020
(Restated – Note 11)
   500,000    500    281,450    2,814,500    502,622,746    502,622    84,517,981    35,000    (6,250)   (94,408,024)   (6,543,671)

 

 7 

 

 

AMERICAN BATTERY METALS CORPORATION

Condensed Consolidated Statement of Stockholders’ Deficit

(unaudited)

 

   Series A Preferred Shares   Common Shares  

Additional

Paid-In

   Share   Accumulated   Total Stockholders’ 
   Number  

Amount

$

   Number  

Amount

$

  

Capital

$

  

Subscriptions

$

  

Deficit

$

  

Deficit

$

 
Balance, June 30, 2019           116,234,968    116,235    42,849,297        (47,419,040)   (4,453,508)
                                         
Issuance of preferred shares   300,000    300            (300)            
                                         
Shares issued for services           9,210,000    9,210    914,810            924,020 
                                         
Shares issued pursuant to note conversion           42,347,922    42,347    2,578,142            2,620,489 
                                         
Shares issued for warrant exercise           2,996,985    2,997    (2,997)            
                                         
Share subscriptions received                       275,000        275,000 
                                         
Share purchase warrants issued                   94,786            94,786 
                                         
Net loss for the period                           (5,419,563)   (5,419,563)
                                         
Balance, December 31, 2019   300,000    300    170,789,875    170,789    46,433,738    275,000    (52,838,603)   (5,958,776)

 

 8 

 

 

AMERICAN BATTERY METALS CORPORATION

Condensed Consolidated Statements of Cash Flows

(unaudited)

 

  

For the

six months

ended

December 31,

2020

$

  

For the

six months

ended

December 31,

2019

$

 
   (Restated – Note 11)     
Operating Activities          
Net loss   (31,199,078)   (5,419,563)
Adjustments to reconcile net loss to net cash used in operating activities:          
Accretion expense   2,111,346    1,911,522 
Change in fair value of derivative liability   7,018,171    939,514 
Depreciation   5,202     
Dividends declared   7,869      
Discount on convertible notes payable   73,499    297,318 
Gain on settlement of debt   (3,462,611)   (214,050)
Shares issued for services   22,647,470    924,020 
Warrants issued   83,724    94,786 
Changes in operating assets and liabilities:          
Prepaid expenses   29,880    (8,788)
Accounts payable and accrued liabilities   397,873    233,294 
Due to related parties   (424,303)   (199,983)
           
Net Cash Used In Operating Activities   (2,710,958)   (1,441,930)
           
Investing Activities          
Acquisition of equipment   (4,785)    
Acquisition of land   (907,380)    
           
Net Cash Used In Investing Activities   (912,165)    
           
Financing Activities          
Proceeds from issuance of convertible notes payable   1,350,000    1,382,500 
Repayment of convertible note payable   (1,761,397)   (212,697)
Proceeds from private placement and share purchase agreement   3,608,250    275,000 
           
Net Cash Provided By Financing Activities   3,196,853    1,444,803 
           
Change in Cash   (426,270)   2,873 
Cash – Beginning   829,924    16,690 
           
Cash – End   403,654    19,563 
           
Supplemental disclosures:          
Interest paid   63,216    8,966 
Income taxes paid        
           
Non-cash investing and financing activities:          
Discount on convertible debenture   275,000    1,654,836 
Original issuance discount on convertible debentures   51,000    44,700 
Beneficial conversion feature on convertible debentures   271,000     
Common shares issued for conversion of debt   2,585,467    2,620,489 
Preferred shares issued for conversion of debt   400,000     

 

 9 

 

 

AMERICAN BATTERY METALS CORPORATION

Notes to the Condensed Consolidated Financial Statements

For the period ended December 31, 2020

(unaudited)

 

1. Organization and Nature of Operations

 

The accompanying unaudited condensed consolidated financial statements of American Battery Metals Corporation have been prepared in accordance with the rules and regulations of the Securities and Exchange Commission (the “SEC”), including the instructions to Form 10-Q and Regulation S-X. Certain information and note disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles in the United States of America have been condensed or omitted from these statements pursuant to such rules and regulations and, accordingly, they do not include all the information and notes necessary for comprehensive consolidated financial statements and should be read in conjunction with our audited consolidated financial statements for the period ended June 30, 2020, included in our Annual Report on Form 10-KT for the period ended June 30, 2020.

 

The Company was incorporated under the laws of the state of Nevada on October 6, 2011 for the purpose of acquiring and developing mineral properties. The Company has a wholly-owned subsidiary called Oroplata Exploraciones E Ingenieria SRL, which was incorporated in the Dominican Republic on January 10, 2012. On July 26, 2016, the Company incorporated Lithortech Resources Inc., a Nevada company, as a wholly-owned subsidiary. The Company currently holds mineral rights in the Western Nevada Basin of Nye County in the state of Nevada.

 

On March 11, 2020, the World Health Organization declared COVID-19 a global pandemic. This contagious disease outbreak and any related adverse public health developments, has adversely affected workforces, economies, and financial markets globally, leading to an economic downturn. The impact on the Company has not been significant, but management continues to monitor the situation.

 

Going Concern

 

These unaudited condensed consolidated financial statements have been prepared on a going concern basis, which implies that the Company will continue to realize its assets and discharge its liabilities in the normal course of business. As at December 31, 2020, the Company has not earned any revenue, has a working capital deficit of $7,238,396, and an accumulated deficit of $94,408,024. The continuation of the Company as a going concern is dependent upon the continued financial support from its management, and its ability to identify future investment opportunities and obtain the necessary debt or equity financing, and generating profitable operations from the Company’s future operations. If the Company is able to obtain financing, there is no certainty that terms will be favorable to the Company. These factors raise substantial doubt regarding the Company’s ability to continue as a going concern. These unaudited condensed consolidated financial statements do not include any adjustments to the recoverability and classification of recorded asset amounts and classification of liabilities that might be necessary should the Company be unable to continue as a going concern.

 

2. Summary of Significant Accounting Policies

 

(a) Basis of Presentation

 

The financial statements of the Company have been prepared in accordance with accounting principles generally accepted in the United States (“US GAAP”) and are expressed in U.S. dollars. The Company’s fiscal year end is June 30.

 

(b) Principles of Consolidation

 

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

 

 10 

 

 

AMERICAN BATTERY METALS CORPORATION

Notes to the Condensed Consolidated Financial Statements

For the period ended December 31, 2020

(unaudited)

 

3. Convertible Notes Payable

 

  

December 31,

2020

$

  

June 30,

2020

$

 
Eagle Equities, LLC, $147,250 on January 31, 2020, unsecured, bears interest at 10% per annum, due on January 31, 2021, convertible into common stock at 60% of the lowest trading price in the ten trading days prior to conversion, unamortized discount of $nil (June 30, 2020 - $137,038)       10,212 
           
GS Capital Partners, LLC, $147,250 on January 31, 2020, unsecured, bears interest at 10% per annum, due on January 31, 2021, convertible into common stock at 40% of the lowest trading price in the twenty trading days prior to conversion, unamortized discount of $nil (June 30, 2020 - $134,584)       12,666 
           
GS Capital Partners, LLC, $177,200 on February 7, 2020, unsecured, bears interest at 10% per annum which increases to 22% per annum on default, due on February 7, 2021, convertible into common stock at 60% of the lowest trading price in the twenty trading days prior to conversion, unamortized discount of $nil (June 30, 2020 - $165,770)       11,430 
           
Power Up Lending Group Ltd., $83,000 on February 14, 2020, unsecured, bears interest at 10% per annum, due on December 1, 2021, convertible into common stock at 61% of the lowest trading price in the ten trading days prior to conversion, unamortized discount of $nil (June 30, 2020 - $76,662)       6,338 
           
Crown Bridge Partners, LLC, $75,000 on February 14, 2020, unsecured, bears interest at 10% per annum, due on February 14, 2021, convertible into common stock at 65% of the lower of the lowest closing bid or the lowest trading price in the twenty trading days prior to conversion, unamortized discount of $nil (June 30, 2020 - $70,577)       4,423 
           
BHP Capital NY Inc., $110,000 on February 18, 2020, unsecured, bears interest at 10% per annum, due on February 18, 2021, convertible into common stock at 61% of the lesser of: (i) lowest trading price during the previous twenty trading days before the issue date; or (ii) the lowest trading price during the twenty trading days prior to conversion, unamortized discount of $nil (June 30, 2020 - $103,282)       6,718 
           
Jefferson Street Capital, LLC, $110,000 on February 18, 2020, unsecured, bears interest at 10% per annum, due on February 18, 2021, convertible into common stock at 61% of the lesser of: (i) the lowest trading price during the previous twenty trading days before the issue date; or (ii) the lowest trading price during the twenty trading days prior to conversion, unamortized discount of $nil (June 30, 2020 - $103,818)    –    6,182 

 

 11 

 

 

AMERICAN BATTERY METALS CORPORATION

Notes to the Condensed Consolidated Financial Statements

For the period ended December 31, 2020

(unaudited)

 

3. Convertible Notes Payable (continued)

 

  

December 31,

2020

$

  

June 30,

2020

$

 
Odyssey Capital, LLC, $220,000 on February 19, 2020, unsecured, bears interest at 10% per annum, due on February 19, 2021 convertible into common stock at 60% of the lowest closing bid price for the fifteen trading days prior to conversion, unamortized discount of $nil (June 30, 2020 - $205,226)     –    14,774 
           
GS Capital Partners, LLC, $520,000 on March 17, 2020, unsecured, bears interest at 10% per annum, due on March 17, 2021, convertible into common stock at 63% of the lowest trading price in the twenty trading days prior to conversion, unamortized discount of $nil (June 30, 2020 - $478,979)       41,021 
           
Power Up Lending Group Ltd., $78,000 on April 6, 2020, unsecured, bears interest at 12% per annum which increases to 22% per annum on default, due on April 6, 2021, convertible into common stock at 61% of the lowest trading price in the ten trading days prior to conversion, unamortized discount of $nil (June 30, 2020 - $75,816)       2,184 
           
Adar Alef, LLC, $110,000 on April 7, 2020, unsecured, bears interest at 10% per annum, due April 7, 2021, convertible into common stock at 60% of the lowest closing bid price for the fifteen trading days prior to conversion, unamortized discount of $nil (June 30, 2020 - $107,464)       2,536 
           
Auctus Fund, LLC, $150,000 on April 10, 2020, unsecured, bears interest at 10% per annum which increases to 24% per annum on default, due on April 10, 2021, convertible into common stock at 68% of the lowest trading in the twenty trading days prior to conversion, unamortized discount of $nil (June 30, 2020 - $146,667)       3,333 
           
Power Up Lending Group Ltd., $43,000 on April 21, 2020, unsecured, bears interest at 10% per annum which increases to 22% per annum on default, due on April 21, 2021, convertible into common stock at 61% of the lowest trading price during the ten trading days prior to conversion, unamortized discount of $nil (June 30, 2020 - $42,176)       824 
           
Black Ice Advisors, LLC, $115,500 on April 22, 2020, unsecured, bears interest at 10% per annum, due on April 22, 2021, convertible into common stock at 60% of the lowest closing bid price for the fifteen trading days prior to conversion, unamortized discount of $nil (June 30, 2020 - $113,318)       2,182 
           
Efrat Investments, LLC, $125,000 on April 23, 2020, unsecured, bears interest at 10% per annum, due on April 23, 2021, convertible into common stock at 60% of the lowest closing bid price for the fifteen trading days prior to conversion, unamortized discount of $nil (June 30, 2020 - $122,674)       2,326 

 

 12 

 

 

AMERICAN BATTERY METALS CORPORATION

Notes to the Condensed Consolidated Financial Statements

For the period ended December 31, 2020

(unaudited)

 

3. Convertible Notes Payable (continued)

 

  

December 31,

2020

$

  

June 30,

2020

$

 
GS Capital Partners, LLC, $520,000 on July 27, 2020, unsecured, bears interest at 10% per annum, due on October 27, 2021 convertible into common stock at 1) fixed price of $0.25 per share during the first 6 months this note is in effect; and 2) 64% of the lowest trading price for the twenty trading days prior to conversion after the 6th monthly anniversary of the note, unamortized discount of $10,000 (June 30, 2020 - $nil)   128,378     
           
GS Capital Partners, LLC, $312,000 on August 14, 2020, unsecured, bears interest at 10% per annum, due on August 14, 2021, convertible into common stock at 1) fixed price of $0.25 per share during the first 6 months this note is in effect; and 2) 64% of the lowest trading price for the twenty trading days prior to conversion after the 6th monthly anniversary of the note, unamortized discount of $6,000 (June 30, 2020 - $nil)   306,000     
           
Jefferson Street Capital, LLC, $302,500 on September 29, 2020, unsecured, bears interest at 1% per annum which increases to 22% per annum on default, due on March 29, 2021, convertible into common stock at the lesser of 1) 70% of the lowest trading price for the ten trading days prior to the issue date of this note or; 2) 70% of the lowest trading price for the ten trading days prior to conversion, unamortized discount of $300,525 (June 30, 2020 - $nil)   1,975     
           
GS Capital Partners, LLC, $340,000 on October 20, 2020, unsecured, bears interest at 10% per annum, due on October 20, 2021, convertible into common stock at a fixed price of $0.10 per share, unamortized discount of $253,180 (June 30, 2020 - $nil)   86,820      
           
    523,173    127,149 

 

During the six months ended December 31, 2020, the Company paid $1,824,613 (2019 - $221,663) for the settlement of $1,295,202 (2019 - $163,766) of outstanding principal balance of convertible notes, $63,216 (2019 - $8,966) of accrued interest, $403,938 (2019 - $nil) of financing costs, and $3,148,613 (2019 - $128,013) of derivative liabilities resulting in a gain on settlement of debt of $3,086,356 (2019 - $79,082).

 

4. Property and Equipment

 

During the six months ended December 31, 2020, the Company purchased land at a cost of $907,380. The land is comprised of 12.44 acres and is located at 345 Winston Lane in Fernley, Nevada. The Company will be constructing five separate building areas on this property to create a Pilot Plant campus that includes: Production Process Areas, Feedstock Sorting Area, Analytical Laboratory Spaces & Process Development Bays, a Storage Warehouse, and general Office Space.

 

 13 

 

 

AMERICAN BATTERY METALS CORPORATION

Notes to the Condensed Consolidated Financial Statements

For the period ended December 31, 2020

(unaudited)

 

4. Property and Equipment (continued)

 

   Vehicle
$
   Land
$
   Total
$
 
Cost:               
                
Balance, June 30, 2020   61,916        61,916 
Additions       907,380    907,380 
                
Balance, December 31, 2020   61,916    907,380    969,296 
                
Accumulated Depreciation:               
                
Balance, June 30, 2020   3,110        3,110 
Additions   5,202        5,202 
                
Balance, December 31, 2020   8,312        8,312 
                
Carrying Amounts:               
                
Balance, June 30, 2020   58,806        58,806 
Balance, December 31, 2020   53,604    907,380    960,984 

 

5. Related Party Transactions

 

  (a) As of December 31, 2020, the Company owes $120,146 (June 30, 2020 - $120,146) to the former Chief Executive Officer and Director of the Company for advances to the Company to fund day-to-day operations. The amounts owing are unsecured, non-interest bearing, and due on demand.
     
  (b) As of December 31, 2020, the Company owes $85,500 (June 30, 2020 - $85,500) to the former Chief Executive Officer and Director of the Company for advances to the Company to fund day-to-day operations and accrued management fees. The amounts owing are unsecured, non-interest bearing, and due on demand.
     
  (c) As of December 31, 2020, there is $5,000 (June 30, 2020 - $388,577 owed to) owing from the Chief Executive Officer. The amounts owing are unsecured, non-interest bearing, and due on demand.
     
  (d) As of December 31, 2020, the Company owes $nil (June 30, 2020– $30,726) to directors of the Company for accrued management fees. The amounts owing are unsecured, non-interest bearing, and due on demand.

 

6. Investment in Joint Venture

 

On October 8, 2018, the Company entered into a joint venture agreement with CINC Industries Inc. (“CINC”), a non-related Nevada company, for a period of five years whereby the joint venture will propagate the sale of a new process for extraction of lithium salt from salt brine solutions using CINC’s existing and future processing equipment. As part of the joint venture, each of CINC and the Company holds a 50% interest in the joint venture.

 

CINC is responsible for completing testing on the pilot project, providing training to the Company for use of its processing equipment, manufacturing up to 20 test units, and support and product development, as well as shared costs on other personnel utilized in the joint venture company. The Company is responsible for the initial funding for all equipment and associated expenses, the cost of the lease space, and marketing and sales of the joint venture agreement.

 

 14 

 

 

AMERICAN BATTERY METALS CORPORATION

Notes to the Condensed Consolidated Financial Statements

For the period ended December 31, 2020

(unaudited)

 

6. Investment in Joint Venture (continued)

 

As part of the joint venture agreement, the Company issued 250,000 common shares to CINC. The joint venture is committed to acquiring a minimum amount of processing equipment, goods, accessories, and/or materials totaling: (i) $1,000,000 by October 8, 2020; (ii) $3,000,000 by October 8, 2021; (iii) $6,000,000 by October 8, 2022; and (v) $10,000,000 by October 8, 2023. In the event that the joint venture fails to meet the minimum amounts above, the Company will lose the exclusive right to market, promote and sell the processing equipment provided by CINC. To date, the joint venture has not purchased any amounts and the Company believes that it is unlikely that any amounts shall be purchased in the future. Furthermore, neither party is making any efforts towards the joint venture at this time.

 

7. Derivative Liabilities

 

The Company records the fair value of the conversion price of the convertible debentures in accordance with ASC 815, Derivatives and Hedging. The fair value of the derivatives was calculated using a multi-nominal lattice model. The fair value of the derivative liabilities is revalued on each balance sheet date with corresponding gains and losses recorded in the consolidated statement of operations. For the six months ended December 31, 2020, the Company recorded a loss on the change in the fair value of derivative liability of $7,018,171 (2019 - $939,514). As at December 31, 2020, the Company recorded a derivative liability of $6,669,330 (June 30, 2020 - $4,519,654).

 

The following inputs and assumptions were used to value the derivative liabilities outstanding at December 31, 2020 and June 30, 2020:

 

   December 31, 2020   June 30, 2020 
Expected volatility   158-208%   158-240%
Risk free rate   0.12-0.14%   0.16%
Expected life (in years)   0.25-1.0    0.5-1.0 

 

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

 

   $ 
Balance, June 30, 2020   4,519,654 
Derivative additions associated with convertible notes   275,000 
Adjustment for conversion/prepayment   (5,143,495)
Mark-to-market adjustment   7,018,171 
      
Balance, December 31, 2020   6,669,330 

 

8. Loans Payable

 

(a)On January 27, 2020, the Company entered into a finance loan agreement relating to the acquisition of a company vehicle. Under the terms of the finance loan, the Company will make monthly installment payments of $1,089 at a finance loan interest rate of 7.99% per annum, which is due in February 2026. As of December 31, 2020, the Company owed $54,451 (June 30, 2020 - $59,236) on the finance loan, including $8,934 (June 30, 2020 - $8,580) which is due in the next twelve months. The remaining balance has been fully paid off subsequent to the period ended December 31, 2020. Refer to Note 12.
   
(b)On May 7, 2020, the Company received $255,992 from the U.S. Small Business Administration as part of the Coronavirus Aid Relief and Economic Security (“CARES”) Act Paycheck Protection Program. The amounts are unsecured, bears interest at 1% per annum commencing on November 7, 2020, and is due on May 7, 2022. Funds from these loans may be used for payroll, rent, utilities and other qualifying expenses. The terms of the loans provide that certain amounts may be forgiven if the funds are used for qualifying expenses as described in the CARES Act.

 

9. Share Capital

 

The Company’s authorized common stock consists of 1,200,000,000 shares of common stock, with par value of $0.001 per share, 1,000,000 shares of Series A preferred stock, with par value of $0.001 per share, and 1,000,000 shares of Series C preferred stock, with par value of $10 per share.

 

 15 

 

 

AMERICAN BATTERY METALS CORPORATION

Notes to the Condensed Consolidated Financial Statements

For the period ended December 31, 2020

(unaudited)

 

9. Share Capital (continued)

 

Series A Preferred Stock

 

On December 17, 2020, the Company issued 200,000 Series A Preferred Stock with a fair value of $200 to officers and directors of the Company as management fee. The Series A Preferred Stock has no conversion rights, not entitled to receive dividends, carries voting rights of 1,000 votes per share of preferred stock, and is redeemable at the option of the Company at par value of $0.001 per share.

 

Series C Preferred Stock

 

On December 18, 2020, the Company issued 48.29 units of Series C Preferred Stock at $50,000 per unit for proceeds of $2,414,500. Each unit is comprised of 5,000 shares of Series C Preferred Stock (each share of Series C Preferred Stock is convertible into eighty shares of common stock) and a warrant to purchase 400,000 common shares of the Company at $0.25 per share until December 31, 2023. Each holder is entitled to receive a non-cumulative dividend at 8% per annum at the rate per share. The dividend shall be payable at the Company’s option either in cash or in common shares of the Company. If paid in Common Shares, the Company shall pay to the holders the number of Common Shares equal to the dividend amount divided by the Stated Value and then multiplied by eighty. The investors in the Series C Preferred Stock are all independent investors except for 2,500 shares of Series C Preferred Stock purchased by our chief resource officer.

 

In addition, the Company issued 8 units with a fair value of $400,000 for the conversion of $381,622 of note payable and $18,378 of accrued interest. During the six months ended December 31, 2020, the Company has received additional $1,200,000 for future issuance.

 

Common Stock

 

On July 9, 2020, the Company issued 7,950,000 common shares with a fair value of $941,280 for consulting services.

 

On July 9, 2020, the Company issued 6,081,150 common shares with a fair value of $720,008 for the conversion of $147,250 of note payable, $6,503 of accrued interest, $105 of fees and $614,477 of derivative liability resulting in a gain on settlement of $48,327.

 

On August 18, 2020, the Company issued 2,890,000 common shares with a fair value of $262,990 for consulting services.

 

On August 26, 2020, the Company issued 2,196,822 common shares with a fair value of $193,320 for the conversion of $100,000 of note payable, $5,342 of accrued interest, $105 of fees and $110,007 of derivative liability resulting in a gain on settlement of $22,134.

 

On September 16, 2020, the Company issued 1,696,856 common shares with a fair value of $157,808 for the conversion of $77,200 of note payable, $4,931 of accrued interest, $105 of fees and $87,842 of derivative liability resulting in a gain on settlement of $12,270.

 

On September 29, 2020, the Company issued 2,400,000 common shares with a fair value of $378,000 for consulting services, including 2,000,000 common shares with a fair value of $315,000 issued to a director of the Company as management fee.

 

On September 30, 2020, the Company issued 5,178,487 common shares with a fair value of $699,096 for the conversion of $270,000 of note payable, $13,833 of accrued interest, $105 of fees and $560,268 of derivative liability resulting in a gain on settlement of $145,110.

 

On October 6, 2020, the Company issued 4,805,558 common shares with a fair value of $617,514 for the conversion of $250,000 of note payable, $12,311 of accrued interest, $105 of fees and $491,605 of derivative liability resulting in a gain on settlement of $136,507.

 

 16 

 

 

AMERICAN BATTERY METALS CORPORATION

Notes to the Condensed Consolidated Financial Statements

For the period ended December 31, 2020

(unaudited)

 

9. Share Capital (continued)

 

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

 

On October 20, 2020, the Company issued 1,326,098 common shares with a fair value of $197,721 for the conversion of $71,548 of note payable, $7,396 of accrued interest and $130,683 of derivative liability resulting in a gain on settlement of $11,906.

 

On November 30, 2020, the Company issued 3,000,000 common shares with a fair value of $765,000 to directors of the Company for consulting services.

 

On December 29, 2020, the Company issued 14,400,000 common shares with a fair value of $20,160,000 for consulting services.

 

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

 

During the six months ended December 31, 2020, the Company issued 12,381,562 common shares for the exercise of cashless warrants. The fair value of $12,381 for the warrants exercised was transferred to common shares from additional paid-in capital.

 

10. Share Purchase Warrants

 

  

Number of

warrants

  

Weighted average exercise price

$

 
Balance, June 30, 2020   8,603,112    0.14 
Issued   71,516,000    0.13 
Exercised   (4,361,112)   0.13 
           
Balance, December 31, 2020   75,758,000    0.13 

 

Additional information regarding share purchase warrants as of December 31, 2020, is as follows:

 

   Outstanding and exercisable 

Range of

Exercise Prices

$

  Number of Warrants   Weighted Average Remaining Contractual Life (years) 
         
0.075   51,500,000    2.61 
0.10   1,000,000    0.03 
0.15   500,000    0.03 
0.25   22,516,000    0.89 
0.50   242,000    0.00 
           
    75,758,000    3.56 

 

 17 

 

 

AMERICAN BATTERY METALS CORPORATION

Notes to the Condensed Consolidated Financial Statements

For the period ended December 31, 2020

(unaudited)

 

11. Restatement

 

The Company has restated its consolidated financial statements as at December 31, 2020 and for the three and six months then ended to reflect adjustments related to 500,000 share purchase warrants issued in connection with the $340,000 convertible debt issued on October 20, 2020 and 12,000,000 common shares issued for $1.2 million cash subscription but were incorrectly recorded as consulting fees. This restatement resulted in a decrease in net loss of $7,656,276 for the three and six months ended December 31, 2020, and a decrease in loss per share by $0.02 per share for each of the three and six months ended December 31, 2020.

 

The impact of the restatement as at December 31, 2020 and for the three and six months ended December 31, 2020 is summarized below:

 

Consolidated Balance Sheet

 

   As at December 31, 2020 
  

As reported

$

  

Adjustment

$

  

As restated

$

 
Stockholders’ Deficit               
                
Additional paid-in capital   90,974,257    (6,456,276)   84,517,981 
                
Share subscription received   1,235,000    (1,200,000)   35,000 
                
Deficit   (102,064,300)   7,656,276    (94,408,024)
                
Total Stockholders’ Deficit   (6,543,671)       (6,543,671)

 

Consolidated Statement of Operations

 

   Three Months Ended December 31, 2020 
  

As reported

$

  

Adjustment

$

  

As restated

$

 
Expenses               
                
General and administrative   30,270,334    (7,656,276)   22,614,058 
                
Net loss from operations   (30,273,236)   7,656,276    (22,616,960)
                
Net loss   (35,704,145)   7,656,276    (28,047,869)
                
Net loss per share, basic and diluted   (0.08)   0.02    (0.06)

 

   Six Months Ended December 31, 2020 
  

As reported

$

  

Adjustment

$

  

As restated

$

 
Expenses               
                
General and administrative   32,576,630    (7,656,276)   24,920,354 
                
Net loss from operations   (32,686,329)   7,656,276    (25,030,053)
                
Net loss   (38,855,354)   7,656,276    (31,199,078)
                
Net loss per share, basic and diluted   (0.09)   0.02    (0.07)

 

 18 

 

 

AMERICAN BATTERY METALS CORPORATION

Notes to the Condensed Consolidated Financial Statements

For the period ended December 31, 2020

(unaudited)

 

11. Restatement (continued)

 

Consolidated Statement of Stockholders’ Deficit

 

   Six Months Ended December 31, 2020 
  

As reported

$

  

Adjustment

$

  

As restated

$

 
             
Shares issued for services   30,387,470    (7,740,000)   22,647,470 
                
Shares issued pursuant to share purchase agreement       1,200,000    1,200,000 
                
Share purchase warrants issued       83,724    83,724 
                
Net loss for the period   (38,847,485)   7,656,276    (31,191,209)

 

Consolidated Statement of Cash Flows

 

   Six Months Ended December 31, 2020 
  

As reported

$

  

Adjustment

$

  

As restated

$

 
Operating Activities               
                
Net loss   (38,855,354)   7,656,276    (31,199,078)
                
Adjustments to reconcile net loss to net cash used in operating activities:               
                
Shares issued for services   30,387,470    (7,740,000)   22,647,470 
                
Warrants issued       83,724    83,724 

 

 19 

 

 

AMERICAN BATTERY METALS CORPORATION

Notes to the Condensed Consolidated Financial Statements

For the period ended December 31, 2020

(unaudited)

 

12. Subsequent Events

 

The Company has evaluated events occurring subsequent to December 31, 2020 through the date these financial statements were issued and noted the following:

 

  (a) On January 19, 2021, the Company issued 486,451 common shares for past legal fees. The fair value of $35,000 has been included in share subscriptions received as of December 31, 2020.
     
  (b) On February 3, 2021, the Company issued 3,200,000 common shares pursuant to conversion of 40,000 Series C preferred shares.
     
  (c) On February 5, 2021, the Company issued 69,252 common shares pursuant to a rental agreement with purchase option dated February 24, 2019 for the sale of real property situate at 601 S Main Street, City of Tonopah, County of Nye, State of Nevada. These common shares have been held in escrow until title is transferred to the Company.
     
  (d) On February 10, 2021, the Company issued 175,958 common shares pursuant to the conversion of $138,378 of convertible notes payable and $2,388 of accrued interest dated July 27, 2020.
     
  (e) On February 10, 2021, the Company issued 408,271 common shares pursuant to the conversion of $312,000 of convertible notes payable and $14,617 of accrued interest dated August 14, 2020.
     
  (f) On February 10, 2021, the Company issued 379,441 common shares pursuant to the conversion of $302,500 of convertible notes payable and $1,053 of accrued interest dated September 29, 2020.
     
  (g) On February 10, 2021, the Company issued 437,109 common shares pursuant to the conversion of $340,000 of convertible notes payable and $9,688 of accrued interest dated October 20, 2020.
     
  (h) Subsequent to the period ended December 31, 2020, the Company issued 15,426,974 common shares for the exercise of warrants.
     
  (i) Subsequent to the period ended December 31, 2020, the Company issued 4,250,000 common shares to a third party pursuant to a share purchase agreement dated October 20, 2020. Proceeds of $3,045,869 have been received as of February 10, 2021.
     
  (j) Subsequent to the period ended December 31, 2020, the Company has fully paid off the remaining balance of the finance loan agreement relating to the acquisition of a company vehicle. Refer to Note 8(a).

 

 20 

 

 

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

 

Forward-Looking Statements

 

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

 

Background

 

The lithium-ion battery manufacturing supply chain is organized into four industries that operate in series: battery feedstock providers, material refiners, cell manufacturers, and end-use product (electric vehicle, stationary storage, consumer electronics, etc.) manufacturers. While the scale of manufacturing of lithium-ion battery cells and of electric vehicles and other end-use products have grown substantially within the US in recent years, there has been little domestic growth in the battery feedstock and material refining portions of the manufacturing supply chain. This has led to an imbalance within the domestic US supply chain and has caused the majority of cell manufacturing and end-use product manufacturers to rely on foreign supplies of their raw and refined feedstock materials. The situation is so dire that in its “Mineral Commodity Summaries 2020” report, the US Geological Survey calculated that less than 1% of each of the critical and strategic battery metals (lithium, nickel, cobalt, and manganese) produced globally in 2019 were produced within the US.

 

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

 

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, if and when it ever occurs. We have limited operating history and have not yet generated or realized any revenues from our activities. Our principal executive offices are located at 930 Tahoe Blvd., Suite 802-16, Incline Village, NV 89451.

 

On August 8, 2016, the Company formed Lithortech Resources Inc. as a wholly owned subsidiary of the Company to serve as its operating subsidiary for lithium resource exploration and development. On June 29, 2018, the Company changed the name of Lithortech Resources to LithiumOre Corp. (“LithiumOre”). On May 3, 2019, the Company changed its name to American Battery Metals Corporation.

 

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

 

RESULTS OF OPERATIONS

 

American Battery Metals Corp. (“ABMC”) has not realized any revenue from battery recycling or from its prior exploration activities on the Nye County property and is unsure when it shall be able to produce any revenue from such activities. ABMC’s ability to generate revenue is dependent on its ability to secure sufficient capital to fund its business operations.

 

Results of Operations

 

Revenues

 

During the three and six months ended December 31, 2020 and 2019, the Company has not realized any revenues.

 

 21 

 

 

Expenses

 

Three Months Ended December 31, 2020 and 2019

 

During the three months ended December 31, 2020, the Company incurred $22,616,960 of operating expenses compared to $1,083,131 of operating expenses during the three months ended December 31, 2019. Overall, the increase in operating expense was due to the fact that the Company issued 27,490,000 common shares for consulting services with a fair value of $21,065,200 in fiscal 2020 compared with the issuance of 5,560,000 common shares with a fair value of $233,520 for consulting services during the three months ended December 31, 2019. Of the remaining operating expenses not related to share-based compensation of $1,503,536 the expenditures were higher than the prior period amount of $849,611 due to an increase in general and administrative expense as the overall level of day-to-day operating costs increased including increases in payroll and benefits expense as the Company required more staffing compared to prior year.

 

In addition to operating expenses, the Company incurred other income and expense of $5,430,909 during the three months ended December 31, 2020 compared to $1,864,934 during the three months ended December 31, 2019. The increase was due to a higher loss relating to the change in fair value of the derivative liability of $6,244,285 compared to $876,960 during the three months ended December 31, 2019 due to the fact that the Company experienced a larger volatility or spread in its share price at December 31, 2020 which resulted in a larger value attributed to the conversion feature of the Company’s outstanding convertible debentures for the period. In addition, the Company recorded a gain on the settlement of debt of $1,850,178 for the three months ended December 31, 2020 compared to $127,863 during the three months ended December 31, 2019 due in large part to the fact that the Company was successful in raising financing proceeds from the issuance of common shares which resulted in the Company repaying some outstanding convertible debentures resulting in the reversal of the fair value of the derivative liability. Overall, the Company recorded accretion and interest expense of $837,953 during the three months ended December 31, 2020 compared to $1,119,583 during the three months ended December 31, 2019 and the decrease was due to the repayment of various convertible debentures resulting in lower accretion and interest costs incurred during the current period. As part of the repayment of convertible debentures during the period, the Company incurred financing and early payment penalty costs of $190,980.

 

Net Loss

 

During the three months ended December 31, 2020, the Company incurred a net loss of $28,047,869 or $0.06 loss per share compared to a net loss of $2,948,065 or $0.02 loss per share during the three months ended December 31, 2019. The increase in the net loss is due to the fact that the Company had more general and administrative costs due to increases in share-based compensation, but was offset by the fact that the Company recorded a larger gain on settlement of debt in the current year due to an increase in the number of debt settlements which included the elimination of the derivative liability.

 

Six Months Ended December 31, 2020 and 2019

 

During the six months ended December 31, 2020, the Company incurred $25,030,053 of operating expenses compared to $2,477,768 of operating expenses during the six months ended December 31, 2019. Overall, the increase in operating expense was due to the fact that the Company issued 31,140,000 common shares for consulting services with a fair value of $22,647,470 in fiscal 2020 compared to the issuance of 5,560,000 common shares with a fair value of $233,520 for consulting services during the six months ended December 31, 2019. Of the remaining operating expenses not related to share-based compensation of $2,334,359, the expenditures were higher than the prior period amount of $2,244,248 due to an increase in general and administrative expense as the overall level of day-to-day operating costs increased including increases in payroll and benefits expense as the Company required more staffing compared to prior year.

 

In addition to operating expenses, the Company incurred other income and expense of $6,169,025 during the six months ended December 31, 2020 compared to $2,941,795 during the six months ended December 31, 2019. The increase was due to a higher loss relating to the change in fair value of the derivative liability of $7,018,171 compared to $939,514 during the six months ended December 31, 2019 due to the fact that the Company experienced a larger volatility or spread in its share price at December 31, 2020 which resulted in a larger value attributed to the conversion feature of the Company’s outstanding convertible debentures for the period. In addition, the Company recorded a gain on the settlement of debt of $3,462,611 for the six months ended December 31, 2020 compared to $214,050 during the six months ended December 31, 2019 due in large part to the fact that the Company was successful in raising financing proceeds from the issuance of common shares which resulted in the Company repaying some outstanding convertible debentures resulting in the reversal of the fair value of the derivative liability. Overall, the Company recorded accretion and interest expense of $2,200,500 during the six months ended December 31, 2020 which was consistent to the six months ended December 31, 2019 amount of $2,220,077. As part of the repayment of convertible debentures during the period, the Company incurred financing and early payment penalty costs of $405,096.

 

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Net Loss

 

During the six months ended December 31, 2020, the Company incurred a net loss of $31,199,078 or $0.07 loss per share compared to a net loss of $5,419,563 or $0.04 loss per share during the six months ended December 31, 2019. The increase in the net loss is due to the fact that the Company had more general and administrative costs due to increases in share-based compensation, but was offset by the fact that the Company recorded a larger gain on settlement of debt in the current year due to an increase in the number of debt settlements which included the elimination of the derivative liability.

 

Liquidity and Capital Resources

 

At December 31, 2020, the Company had cash of $403,654 and total assets of $1,607,342 compared to cash of $829,924 and total assets of $1,161,314 as at June 30, 2020. The decrease in cash is due to the fact that the Company incurred more operating costs as it had more general and administrative expense and payroll expense due to the increase in staffing during the current year compared to the prior year. The Company’s cash flow is supported by its financing activities, as it received $3,608,250 of financing from private placements and $1,350,000 of proceeds from convertible debentures during the period ended December 31, 2020 less repayments of convertible debentures of $1,761,397. The increase in total assets is due to the purchase of land in Nevada for $907,380 during the period ended December 31, 2020 offset by the use of cash for operating activities during the period.

 

The Company had total current liabilities of $7,849,504 at December 31, 2020 compared to $5,795,170 at June 30, 2020. The increase in liabilities is due to an increase in the derivative liability from $4,519,654 at June 30, 2020 to $6,669,330 at December 31, 2020 as the Company’s share price during the current period was more volatile than the prior year which resulted in a larger spread between the fair value of the Company’s common share and the discounted variable conversion rate of the convertible debenture and hence, a larger fair value in the carrying amount of the conversion feature embedded into the convertible debentures. As at December 31, 2020, the Company had total face value of convertible debt outstanding of $1,092,878 compared to total face value of convertible debt of $2,211,200 as at June 30, 2020. The decrease in the face value of outstanding convertible debentures was due to the repayment of numerous convertible notes during the period by management as they used the proceeds from the issuance of common shares and Series C preferred shares to repay outstanding debt obligations.

 

As at December 31, 2020, the Company had a working capital deficit of $7,238,396 compared to a working capital deficit of $4,727,912 at June 30, 2020. The increase in the working capital deficit was due to the overall increase in the fair value of the derivative liability relating to the conversion feature on the convertible note payable offset by decreases in the settlement of outstanding convertible notes payable. Trade accounts payable and accrued liabilities were lower by $67,417 and due to timing differences between recognition of costs and the repayment of obligations on a period-by-period basis.

 

During the period ended December 31, 2020, the Company issued 31,140,000 common shares for services with a fair value of $22,647,470, issued 21,284,971 common shares with a fair value of $2,985,467 to convert outstanding notes payable and accrued interest, issued 60,625,000 common shares in a private placement for $2,408,250 (which was received during the year ended June 30, 2020), issued 12,000,000 common shares in a share purchase agreement for proceeds of $1,200,000, and issued 12,381,562 common shares for the exercise of cashless share purchase warrants that were previously issued to note holders as an inducement for the convertible note proceeds. In addition, the Company issued 200,000 Series A preferred shares with a par value of $200 to officers and directors during the period for compensation and 241,450 Series C preferred shares at $10.00 per share for proceeds of $2,414,500 and 40,000 Series C preferred shares to settle outstanding convertible debt and accrued interest of $400,000.

 

As at December 31, 2020 and June 30, 2020, the Company does not have any issued or outstanding stock options.

 

Cash Flows

 

Cash from Operating Activities.

 

During the six months ended December 31, 2020, the Company used $2,710,958 of cash for operating activities as compared to $1,441,930 during the six months ended December 31, 2019. The increase in the use of cash for operating activities was due to the fact that the Company raised more funding from financing activities, including $3,608,250 from share subscriptions, which allowed them to incur more operating costs to further the Company’s development and operations.

 

Cash from Investing Activities

 

During the six months ended December 31, 2020, the Company incurred $907,380 for the purchase of land in Nevada and $4,785 for the purchase of equipment. The Company did not have any investing activities during the six months ended December 31, 2019.

 

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Cash from Financing Activities

 

During the six months ended December 31, 2020, the Company received $3,196,853 of financing, which included $3,608,250 from subscription proceeds related to a private placement of units, $1,350,000 of funding from the issuance of convertible notes payable less repayments of $1,761,397 on the convertible notes during the period. Comparatively, for the six months ended December 31, 2019, the Company received $1,444,803 of funding from financing activities which included $1,382,500 from the issuance of convertible notes payable less repayments of $212,697, and proceeds from private placement of $275,000.

 

Off-Balance Sheet Arrangements

 

None.

 

Critical Accounting Policies and Estimates

 

In presenting the Company’s financial statements in conformity with U.S. generally accepting accounting principles, or GAAP, the Company is required to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenue, costs and expenses and related disclosures.

 

Some of the estimates and assumptions the Company is required to make relate to matters that are inherently uncertain as they pertain to future events. The Company bases these estimates and assumptions on historical experience or on various other factors that it believes to be reasonable and appropriate under the circumstances. On an ongoing basis, the Company reconsiders and evaluates its estimates and assumptions. Actual results may differ significantly from these estimates.

 

The Company believes that the critical accounting policies listed below involve its more significant judgments, assumptions and estimates and, therefore, could have the greatest potential impact on its financial statements. In addition, the Company believes that a discussion of these policies is necessary to understand and evaluate the financial statements contained in this filing.

 

Estimates and Assumptions

 

Management uses estimates and assumptions in preparing financial statements in accordance with generally accepted accounting principles. Those estimates and assumptions affect the reported amounts of the assets and liabilities, the disclosure of contingent assets and liabilities, and the reported revenues and expenses. Actual results could vary from the estimates that were assumed in preparing these financial statements.

 

Mineral claim acquisition and exploration costs

 

The cost of acquiring mineral properties or claims is initially capitalized and then tested for recoverability whenever events or changes in circumstances indicate that its carrying amount may not be recoverable. Mineral exploration costs are expensed as incurred.

 

Income Taxes

 

The Company utilizes the liability method of accounting for income taxes. Under the liability method deferred tax assets and liabilities are determined based on differences between financial reporting and the tax bases of the assets and liabilities and are measured using the enacted tax rates and laws that will be in effect, when the differences are expected to be reversed. An allowance against deferred tax assets is recorded, when it is more likely than not, that such tax benefits will not be realized.

 

Recent Accounting Pronouncements

 

The Company does not expect the adoption of any recent accounting pronouncements to have a material impact on its financial statements.

 

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.

 

Not Applicable.

 

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ITEM 4. CONTROLS AND PROCEDURES.

 

Evaluation of Disclosure Controls and Procedures

 

The Company maintains disclosure controls and procedures designed to provide reasonable assurance that information required to be disclosed in reports filed pursuant to the Securities Exchange Act of 1934 is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms, and that such information is accumulated and communicated to management, including the Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure. In addition, The Company contracts with an independent firm to review and test its internal controls. A control system, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met.

As of December 31, 2020, the Company’s management carried out an evaluation of the effectiveness of our disclosure controls and procedures as such term is defined in Rule 13a-15(e) under the Securities and Exchange Act of 1934. Based on that evaluation, it was concluded the disclosure controls and procedures were not effective as of December 31, 2020.

 

Changes in Internal Controls Over Financial Reporting

 

There were no changes in our internal control over financial reporting during the quarter ended December 31, 2020 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

 

PART II – OTHER INFORMATION

 

ITEM 1. LEGAL PROCEEDINGS

 

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

 

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

 

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

 

ITEM 1A. RISK FACTORS.

 

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

 

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

 

On October 20, 2020, the Company issued a 10% Convertible Promissory Note in the principal amount of $340,000 with a purchase price of $332,500 to GS Capital Partners, LLC. The note is due October 20, 2021. The holder shall have the right from time to time, and at any time to convert all or any amount of the outstanding and unpaid principal amount of the note into fully paid and non-assessable shares of common stock. The conversion price shall be a fixed price of $0.10 per share. The note may be prepaid until 180 days from the issuance date at a price of 108% - 128% of the face amount plus any accrued interest as of the date of prepayment. The default rate on the note is 24% per annum.

 

On November 30, 2020, the Company issued 3,000,000 common shares with a fair value of $765,000 to directors of the Company for consulting services.

 

In December 2020, the Company issued 500,000 common shares with a fair value of $105,000 as a commitment fee.

 

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In December 2020, the Company issued 12,000,000 common shares for proceeds of $1,200,000 as part of a private placement.

 

On December 29, 2020, the Company issued 14,400,000 common shares with a fair value of $20,160,000 for consulting services

 

On December 18, 2020, the Company issued 48.29 units of Series C Preferred Stock at $50,000 per unit for proceeds of $2,414,500. Each unit is comprised of 5,000 shares of Series C Preferred Stock (each share of Series C Preferred Stock is convertible into eighty shares of common stock) and a warrant to purchase 400,000 common shares of the Company at $0.25 per share until December 31, 2023.

 

In addition, the Company issued 8 units of Series C Preferred Stock with a fair value of $400,000 for the conversion of $381,622 of note payable and $18,378 of accrued interest.

 

From October 1, 2020 through December 31, 2020, the Company issued 7,326,430 common shares for the exercise of cashless warrants.

 

From October 1, 2020 through December 31, 2020, the Company issued 6,131,656 common shares for the conversions of $321,548 in principal of convertible notes and $19,707 of accrued interest.

 

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

 

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

 

None

 

ITEM 4. MINE SAFETY DISCLOSURE

 

Not Applicable

 

ITEM 5. OTHER INFORMATION

 

As of February 8, 2021, the Company no longer had any variable convertible notes outstanding. The Company believes that going forward it shall be able to finance its business operations from more traditional sources.

 

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ITEM 6. EXHIBITS

 

(a) (3) Exhibits

 

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

 

Exhibit   Description   Filed Herein  

Incorporated

Date

 

By

Form

 

Reference

Exhibit

10.1   Securities Purchase Agreement by and between American Battery Metals Corporation and GS Capital Partners, LLC dated October 20, 2020       February 16, 2021   10-Q   10.1
10.2   Convertible Promissory Note of American Battery Metals Corporation in favor of GS Capital Partners, LLC dated October 20, 2020       February 16, 2021   10-Q   10.2
31.1   Certification of Chief Executive Officer as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.   x            
31.2   Certification of Chief Financial Officer as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.                
32.1   Certification of Chief Executive Officer and Chief Financial Officer as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.   x            
101   INS XBRL Instant Document.   x            
101   SCH XBRL Taxonomy Extension Schema Document   x            
101   CAL XBRL Taxonomy Extension Calculation Linkbase Document   x            
101   LAB XRBL Taxonomy Label Linkbase Document   x            
101   PRE XBRL Taxonomy Extension Presentation Linkbase Document   x            
101   DEF XBRL Taxonomy Extension Definition Linkbase Document   x            

 

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SIGNATURES

 

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

 

 

AMERICAN BATTERY METALS CORPORATION

(Registrant)

     
Date: April 28, 2021 By: /s/ Douglas D. Cole
    Douglas D. Cole
    Chief Executive Officer
    Chairman

 

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