Notes
to the Condensed Consolidated Financial Statements
For
the period ended December 31, 2022
(unaudited)
1.
Organization and Nature of Operations
American
Battery Technology Company (“the Company”) is a startup company in the lithium–ion battery industry that is working
to increase the domestic 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 ensure that as battery components reach the end of their useful lives, their metals are returned to the domestic
manufacturing supply chain in a closed–loop fashion.
The
Company was incorporated under the laws of the State of Nevada on October 6, 2011, for the purpose of acquiring rights to mineral properties
with the eventual objective of being a producing mineral company. We have limited operating history and have not yet generated or realized
any revenues from our activities. Our principal executive offices are located at 100 Washington Street, Suite 100, Reno, NV 89503.
Liquidity
and Capital Resources
During
the six months ended December 31, 2022, the Company incurred a net loss of $8.6 million and used cash of $7.4 million for operating activities.
On December 31, 2022, the Company has an accumulated deficit of $147.3 million.
The
Company believes its current cash holdings will be sufficient to meet its future working capital needs. The Company cannot give assurance
that it can increase its cash balances or limit its cash consumption and thus maintain sufficient cash balances for its planned operations.
The Company may need to raise additional capital in the future. However, the Company cannot assure that it will be able to raise additional
capital on acceptable terms, or at all. Management believes that the Company has sufficient capital and liquidity to fund its operations
for at least one year from the date of issuance of the accompanying financial statements.
These
condensed consolidated financial statements do not include any adjustments to the recoverability and classification of recorded asset
amounts and classification of liabilities that might be necessary should the Company be unable to continue as a going concern.
2.
Summary of Significant Accounting Policies
a)
Basis of Presentation and Principles of Consolidation
The
condensed consolidated financial statements of the Company have been prepared in accordance with accounting principles generally accepted
in the United States (“US GAAP”) and are expressed in U.S. dollars. The Company’s fiscal year end is June 30.
These
condensed consolidated financial statements include the accounts of the Company and its wholly owned subsidiaries, Oroplata Exploraciones
E Ingenieria SRL (inactive), LithiumOre Corporation (formerly Lithortech Resources Inc) and ABTC AG, LLC. All inter–company
accounts and transactions have been eliminated upon consolidation.
Certain
prior year amounts disclosed in “General and administrative” expenses on the Statements of Operations have been
reclassified to “Research and development” expense for consistency with the current year presentation. These
reclassifications have no effect on the previously reported results of operations and cash flows for the three and six months ended
December 31, 2021.
AMERICAN
BATTERY TECHNOLOGY COMPANY
Notes
to the Condensed Consolidated Financial Statements
For
the period ended December 31, 2022
(unaudited)
2.
Summary of Significant Accounting Policies (continued)
b)
Interim Financial Statements
These
condensed consolidated financial statements have been prepared on the same basis as the annual consolidated financial statements and
in the opinion of management, reflect all adjustments, which include only normal recurring adjustments, necessary to present fairly the
Company’s financial position, results of operations and cash flows for the periods shown. The interim financial statements and
notes thereto should be read in conjunction with the Company’s latest Annual Report on Form 10–K for the fiscal year ended
June 30, 2022. The results of operations for such periods are not necessarily indicative of the results expected for a full year or for
any future period.
c)
Use of Estimates
The
preparation of these condensed consolidated financial statements in conformity with US GAAP requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date
of the financial statements and the reported amounts of revenues and expenses during the reporting period. The Company regularly evaluates
estimates and assumptions related to the fair value of stock–based compensation, recoverability of long–lived assets and
deferred income tax asset valuation allowances.
The
Company bases its estimates and assumptions on current facts, historical experience, and various other factors that it believes to be
reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and
liabilities and the accrual of costs and expenses that are not readily apparent from other sources. The actual results experienced by
the Company may differ materially and adversely from the Company’s estimates. To the extent there are material differences between
the estimates and the actual results, future results of operations will be affected.
d)
Loss per Share
The
Company computes net income (loss) per share in accordance with ASC 260, Earnings per Share. ASC 260 requires presentation of both basic
and diluted earnings per share (“EPS”) on the face of the income statement. Basic EPS is computed by dividing net income
(loss) available to common shareholders (numerator) by the weighted average number of shares outstanding (denominator) during the period.
Diluted EPS gives effect to all dilutive potential common shares outstanding during the period using the treasury stock method and convertible
preferred stock using the if–converted method. In computing diluted EPS, the average stock price for the period is used in determining
the number of shares assumed to be purchased from the exercise of stock awards and warrants. Diluted EPS excludes all dilutive potential
shares if their effect is anti-dilutive.
On
December 31, 2022, the Company had 65,651,414
potentially dilutive shares consisting of share purchase warrants exercisable into 40,210,611
common shares and restricted share units (RSUs) equivalent to 25,440,803
common shares.
AMERICAN
BATTERY TECHNOLOGY COMPANY
Notes
to the Condensed Consolidated Financial Statements
For
the period ended December 31, 2022
(unaudited)
2.
Summary of Significant Accounting Policies (continued)
e)
Mining Properties
Costs
of lease, exploration, carrying and retaining unproven mineral properties are expensed as incurred. The Company expenses all mineral
exploration costs as incurred as it is still in the exploration stage. If the Company identifies proven and probable reserves in its
investigation of its properties and upon development of a plan for operating a mine, it will enter the development stage and capitalize
future costs until production is established. When a property reaches the production stage, the related capitalized costs are amortized
on a units-of-production basis over the proven and probable reserves following the commencement of production. Interest expense allocable
to the cost of developing mining properties and to construct new facilities is capitalized until assets are ready for their intended
use.
To
date, the Company has not established the commercial feasibility of any exploration prospects; therefore, all exploration costs are being
expensed.
ASC
930-805, “Extractive Activities-Mining: Business Combinations” states that mineral rights consist of the legal right to explore,
extract, and retain at least a portion of the benefits from mineral deposits. Mining assets include mineral rights which are considered
tangible assets under ASC 930-805. ASC 930-805 requires that mineral rights be recognized at fair value as of the acquisition date. As
a result, the direct costs to acquire mineral rights are initially capitalized as tangible assets. Mineral rights include costs associated
with acquiring patented and unpatented mining claims.
f)
Research and development costs
Research
and development (“R&D”) costs are accounted for in accordance with ASC 730, “Research and Development.” ASC 730-10-25
requires that all R&D costs be recognized as an expense as incurred. However, some costs associated with R&D activities that
have an alternative future use (e.g., materials, equipment, facilities) may be capitalizable.
The
Company has been awarded federal grant awards for specific R&D programs. Under ASU No. 2021-10 “Government Assistance,” the
Company recognizes invoiced government funds as an offset to R&D costs in the period the qualifying costs are incurred. The Company
believes this best reflects the expected net expenditures associated with these programs.
g)
Recent Accounting Pronouncements
In
November 2021, FASB issued ASU No. 2021–10 “Government Assistance (Topic 832): Disclosures by Business Entities about Government
Assistance.” This ASU will improve the transparency of government assistance received by most business entities by requiring the
disclosure of: (1) the types of government assistance received; (2) the accounting for such assistance; and (3) the effect of the assistance
on a business entity’s financial statements. ASU No. 2021–10 is effective for financial statements issued for annual periods
beginning after December 15, 2021, with early application permitted. This ASU is applicable to the Company’s fiscal year beginning
July 1, 2022.
AMERICAN
BATTERY TECHNOLOGY COMPANY
Notes
to the Condensed Consolidated Financial Statements
For
the period ended December 31, 2022
(unaudited)
3.
Property and Equipment
Schedule of Property and Equipment
| |
Land | | |
Building | | |
Equipment | | |
Total | |
Cost: | |
| | | |
| | | |
| | | |
| | |
| |
| | | |
| | | |
| | | |
| | |
Balance, June 30, 2022 | |
$ | 6,728,838 | | |
$ | 10,798,780 | | |
$ | 1,388,392 | | |
$ | 18,916,010 | |
Additions | |
| – | | |
| – | | |
| 799,719 | | |
| 799,719 | |
Construction in process | |
| – | | |
| 2,087,599 | | |
| – | | |
| 2,087,599 | |
| |
| | | |
| | | |
| | | |
| | |
Balance, December 31, 2022 | |
$ | 6,728,838 | | |
$ | 12,886,379 | | |
$ | 2,188,111 | | |
$ | 21,803,328 | |
| |
| | | |
| | | |
| | | |
| | |
Accumulated Depreciation: | |
| | | |
| | | |
| | | |
| | |
| |
| | | |
| | | |
| | | |
| | |
Balance, June 30, 2022 | |
$ | – | | |
$ | – | | |
$ | 39,115 | | |
$ | 39,115 | |
Additions | |
| – | | |
| – | | |
| 35,981 | | |
| 35,981 | |
Balance, December 31, 2022 | |
$ | – | | |
$ | – | | |
$ | 75,096 | | |
$ | 75,096 | |
| |
| | | |
| | | |
| | | |
| | |
Carrying Amounts: | |
| | | |
| | | |
| | | |
| | |
Balance, June 30, 2022 | |
$ | 6,728,838 | | |
$ | 10,798,780 | | |
$ | 1,349,277 | | |
$ | 18,876,895 | |
Balance, December 31, 2022 | |
$ | 6,728,838 | | |
$ | 12,886,379 | | |
$ | 2,113,015 | | |
$ | 21,728,232 | |
The
building and equipment expenditures are primarily under construction and are not commissioned for use as of December 31, 2022.
In
February 2021, the Company entered into an agreement to purchase land with a fair value of $85,000 located in Tonopah, NV in exchange
for an agreed-upon number of common shares though the transaction had not cleared escrow. In September
2021, the Company later issued the shares whereby the stock price had increased. To correct the carrying value, the Company recognized
impairment expense of $186,779. The Company has included the impairment costs in general and administrative expenses for the six months
ended December 31, 2021.
4.
Mining Properties
During
the six months ended December 31, 2022, the Company exercised its option to purchase unpatented mining claims in Tonopah, NV for
total costs of $8.2 million,
of which $150,000
was previously recorded in Prepaid expenses and deposits at June 30, 2022.
AMERICAN
BATTERY TECHNOLOGY COMPANY
Notes
to the Condensed Consolidated Financial Statements
For
the period ended December 31, 2022
(unaudited)
5.
Intangible Assets
Schedule of Intangible Assets
| |
Water Rights | |
| |
| |
Balance, June 30, 2022 | |
$ | 3,851,899 | |
Additions | |
| – | |
Disposals | |
| – | |
Balance, December 31, 2022 | |
$ | 3,851,899 | |
To
date, the Company has purchased water rights in the City of Fernley, Nevada for approximately $3.9 million. The water rights will be
used to ensure the Company’s lithium-ion battery recycling plant will have adequate water to operate at full capacity once construction
is complete. The water rights are treated in accordance with ASC 350 “Intangible Assets,” and have an unlimited useful life upon assignment
to a property through use of a will-serve, which has no expiration date.
The
Company evaluates noteworthy events for necessary adjustment to the carrying value of intangible assets, on a quarterly basis. The Company
did not recognize any impairment on its intangible assets for the six months ended December 31, 2022 and 2021.
6.
Related Party Transactions
The
Company recorded no related party transactions during the six months ended December 31, 2022 and 2021.
On
June 30, 2022 and December 31, 2022, the Company did not have any related party assets or liabilities.
7.
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 condensed consolidated balance sheets, while lease liabilities are included within the liability section of the Company’s condensed consolidated balance sheets
as of June 30, 2022, and December 31, 2022.
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.
AMERICAN
BATTERY TECHNOLOGY COMPANY
Notes
to the Condensed Consolidated Financial Statements
For
the period ended December 31, 2022
(unaudited)
7.
Leases (continued)
The
discount rate used to determine the commencement date present value of lease payments is the interest rate implicit in the lease, or
when that is not readily determinable, the Company estimates a rate of 8.00% for the six months ending December 31, 2022, based on historical
lending agreements. RoU assets include any lease payments required to be made prior to commencement and exclude lease incentives. Both
RoU assets and lease liabilities exclude variable payments not based on an index or rate, which are treated as period costs. The Company’s
lease agreements do not contain significant residual value guarantees, restrictions, or covenants.
The
Company occupies office facilities under lease agreements that expire at various dates. The Company does not have any significant
finance leases. Total operating lease costs for the six months ended December 31, 2022, and 2021 were $97,000
and $15,000,
respectively.
As
of December 31, 2022, short term lease liabilities of $114,685
are included in “Accounts payable and accrued liabilities” on the condensed consolidated balance sheets. The table below
presents total operating lease RoU assets, net of amortization, and lease liabilities at:
Schedule of Operating Lease ROU Assets and Lease Liabilities
| |
December 31, 2022 | | |
June 30, 2022 | |
Operating lease right–of–use asset | |
$ | 193,678 | | |
$ | 244,203 | |
Operating lease liabilities | |
$ | 231,816 | | |
$ | 274,794 | |
The
table below presents the maturities of operating lease liabilities as of December 31, 2022:
Schedule of Maturity of Operating Lease Liabilities
| |
| | |
December 31, 2023 | |
$ | 129,098 | |
December 31, 2024 | |
| 121,868 | |
Total lease payments | |
| 250,966 | |
Less: discount | |
| (19,150 | ) |
| |
| | |
Total operating lease liabilities | |
$ | 231,816 | |
The
table below presents the weighted average remaining lease term for operating leases and weighted average discount rate used in calculating
operating lease right–of–use asset as of December 31, 2022.
Schedule of Weighted Average Remaining Lease Term for Operating Leases and Weighted Average Discount Rate
Weighted average lease term (years) | |
| 1.83 | |
Weighted average discount rate | |
| 8.00 | % |
AMERICAN
BATTERY TECHNOLOGY COMPANY
Notes
to the Condensed Consolidated Financial Statements
For
the period ended December 31, 2022
(unaudited)
8.
Stockholders’ Equity
The
Company’s authorized common stock consists of 1,200,000,000 shares of common stock, with par value of $0.001.
Series
A Preferred Stock
The
Company has 500,000 shares of Series A Preferred Stock authorized with a par value of $0.001. The Company had Series A Preferred Stock
issued and outstanding of nil at June 30, 2022 and December 31, 2022.
On
January 27, 2022, the Company redeemed all outstanding shares of Series A Preferred Stock.
Series
B Preferred Stock
The
Company has 2,000,000 shares of Series B Preferred Stock authorized with a par value of $10.00. The Company had Series B Preferred Stock
issued and outstanding of nil at June 30, 2022 and December 31, 2022.
Series
C Preferred Stock
The
Company has 2,000,000 shares of Series C Preferred Stock authorized with a par value of $10.00. The Company had Series C Preferred Stock
issued and outstanding of nil at June 30, 2022 and December 31, 2022.
On
December 18, 2020, the Company issued 48.29
units of Series C Preferred Stock (241,450
shares of Series C preferred stock) at $50,000
per unit for proceeds of $2.4 million.
Each unit is comprised of 5,000
shares of Series C Preferred Stock (each share of Series C Preferred Stock is convertible into 80
shares of common stock) and a warrant to purchase 400,000
common shares of the Company at $0.25
per share until March
31, 2023. Each holder is entitled to receive a non–cumulative dividend at an 8%
rate per share, per annum. The dividend shall be payable at the Company’s option either in cash or in common shares of the
Company. If paid in common shares, the Company shall issue the number of common shares equal to the dividend amount divided by the
stated value and then multiplied by eighty.
In
addition, on December 18, 2020, the Company issued 8 units of Series C Preferred Stock (40,000 shares of Series C preferred stock) with
a fair value of $400,000 for the conversion of $381,622 of note payable and $18,378 of accrued interest.
During
the six months ended December 31, 2021, the Series C Preferred Stockholders converted 180,000 shares of Series C Preferred Stock into
14,400,000 shares of common stock.
On
February 2, 2022, the Company issued a Mandatory Conversion Notice to the remaining Series C Preferred stockholders. The notice converted
all outstanding shares of Series C Preferred Stock to common stock at a conversion ratio of 80 shares of common stock for each share
of Series C Preferred Stock.
AMERICAN
BATTERY TECHNOLOGY COMPANY
Notes
to the Condensed Consolidated Financial Statements
For
the period ended December 31, 2022
(unaudited)
8.
Stockholders’ Equity (continued)
Common
Stock
Six
months ended December 31, 2022
During
the period, the Company issued 1,827,188
common shares, with a par value of $1,827,
pursuant the vesting of restricted share units issued to employees and directors of the Company. Of
the vested shares, 850,000
common shares with a fair value of approximately $490,000
were issued to officers of the Company.
During the period, the Company
issued 4,000,000
common shares with a par value of $4,000
pursuant the Share Purchase Agreement, effective April 2, 2021. The Company is due to receive estimated proceeds of $2.0
million. Of this amount $1.4 million is reflected in current assets and $0.6 million as a component of stockholders’ equity.
During
the period the Company issued 150,129
shares for professional services, to non-employees, with a fair value of approximately $104,000,
of which, $60,000
was due and issuable on June 30, 2022.
During
the period, the Company recognized stock-based compensation of approximately $3.5
million, which is an increase to additional paid-in capital, a component of stockholders’ equity. Of the amount,
approximately $1.6 million was recognized for officers and directors of the Company.
Six
months ended December 31, 2021
During
the period, the Company issued 14,400,000 common shares pursuant to the conversion of 180,000 shares of Series C Preferred Stock at a
conversion ratio of 80 shares of common stock for each share of Series C Preferred Stock.
During
the period, the Company issued 25,389,611
units for net proceeds of $39.1
million pursuant to a private placement issuance at $1.54
per share. Each unit is comprised of one common share of the Company and one share purchase warrant, where each share purchase
warrant is exercisable into one common share of the Company at $1.75
per share for a period of five
years from the issuance date. As part of the financing, the Company paid $2.2
million of share issuance costs and issued 1,955,000
warrants as a commission fee, which are exercisable at $1.54 per
common share for a period of three
years from the date of the issuance. The fair value of the commission warrants was $2.7
million and was determined based on the Black–Scholes option pricing model assuming volatility of 166%,
risk–free rate of 0.56%,
expected life of three
years, and no expected forfeitures or dividends.
During
the period, the Company issued 4,500,000 common shares pursuant the exercise of 5,625,216 share purchase warrants for proceeds of $337,500,
of which 250,000 share purchase warrants, pursuant an aggregate cash exercise price of $18,750, exercised during the quarter ended June
30, 2021.
During
the period, the Company issued 3,000,000 common shares pursuant the Share Purchase Agreement, effective April 2, 2021, for aggregate
proceeds of $4.0 million.
During
the period, the Company issued 10,105,258
common shares for services with a fair value of $15.7
million, including 7,024,040
common shares with a fair value of $11.0
million to officers and directors. As of December 31, 2021, the Company is due to issue 2,066,045
shares of common stock with a fair value of $3.3 million
for professional services, of which 2,035,000
common shares with a fair value of $2.6
million as board compensation to two directors of the Company.
On
April 2, 2021, the Company entered into a purchase agreement with Tysadco Partners LLC, a Delaware limited company
(“Tysadco”). Pursuant to the agreement, Tysadco
committed to purchase up to $75.0
million worth of the Company’s common stock over a period of 24 months. The Company shall have the right, but not the
obligation, to direct Tysadco to buy the lesser of $10.0
million in
common stock or 200% of the average shares traded for the five days prior to the closing request date, at a purchase price of 95% of
the of the median share price during the five 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 period, the Company issued 3,000,000 common
shares for proceeds of $4.0 million.
AMERICAN
BATTERY TECHNOLOGY COMPANY
Notes
to the Condensed Consolidated Financial Statements
For
the period ended December 31, 2022
(unaudited)
9.
Share Purchase Warrants
Schedule of Share Purchase Warrants Activity
| |
Number of
Warrants | | |
Weighted
Average
Exercise
Price | |
| |
| | |
| |
Balance, June 30, 2022 | |
| 40,210,611 | | |
$ | 1.21 | |
Issued | |
| - | | |
$ | - | |
Exercised | |
| - | | |
$ | - | |
Expired | |
| - | | |
$ | - | |
Balance, December 31, 2022 | |
| 40,210,611 | | |
$ | 1.21 | |
Additional
information regarding share purchase warrants as of December 31, 2022, is as follows:
Schedule of Additional Information Regarding Share Purchase Warrants
| |
Outstanding and
Exercisable | |
Range of Exercise Prices | |
Number of
Warrants | | |
Weighted
Average
Remaining
Contractual
Life (years) | |
| |
| | | |
| | |
$0.08 | |
| 11,250,000 | | |
| 1.8 | |
$0.25 | |
| 1,616,000 | | |
| 1.0 | |
$1.54 | |
| 1,955,000 | | |
| 1.7 | |
$1.75 | |
| 25,389,611 | | |
| 3.7 | |
| |
| 40,210,611 | | |
| 3.0 | |
10.
Restricted Shares & Restricted Share Units
Under
the 2021 Equity Incentive Plan (“the Plan”), the Company is authorized to issue up to 60,000,000
shares to employees and non-employees of the
Company.
Several
employees, officers, and directors have been granted service-based Restricted Shares unites (“RSUs”). The service based
RSUs generally vest over a four-year
period and are convertible into one share of common stock upon vesting.
AMERICAN
BATTERY TECHNOLOGY COMPANY
Notes
to the Condensed Consolidated Financial Statements
For
the period ended December 31, 2022
(unaudited)
10.
Restricted Shares & Restricted Share Units (Continued)
During the six months ended, the Company granted 27.2 million restricted share units
(“RSUs”) with a grant date fair value of approximately $13.8 million, of which, 11.1 million RSUs were granted, with a grant date
fair value of $5.7 million, to officers and directors of the Company.
The
table below is inclusive of both restricted share awards (“RSAs”) and RSUs for the period ended December 31, 2022:
Schedule of Restricted Shares and Restricted
Share Units Non-vested
| |
Units | | |
Weighted-
Average
Grant Date
Fair Value
per Unit | |
| |
| | |
| |
Unvested awards at June 30, 2022 | |
| 350,000 | | |
$ | 0.82 | |
Granted | |
| 27,183,616 | | |
| 0.51 | |
Vested | |
| (1,920,938 | ) | |
| 0.54 | |
Forfeitures | |
| - | | |
| - | |
Unvested awards at December 31, 2022 | |
| 25,612,678 | | |
| 0.51 | |
As
units are granted, stock-based compensation equivalent to the fair market value on the date of grant is expensed over the requisite service
period, as acceptable under ASC 718, “Stock-Based Compensation.” During the six-months ended December 31, 2022, the Company recognized
stock-based compensation of approximately $3.5
million, including $1.6
million to officers and directors of the company.
The
Company recognized stock-based compensation expense in the respective line items of the condensed consolidated statements of operations for the
six months ended:
Schedule
of Stock-Based Compensation Expense
| |
December 31, 2022 | | |
December 31, 2021 | |
General and administrative | |
$ | 2,460,584 | | |
| - | |
Research and development | |
| 759,681 | | |
| - | |
Exploration | |
| 303,040 | | |
| - | |
Stock-based compensation expense | |
$ | 3,523,305 | | |
| - | |
As
of December 31, 2022, there was approximately $10.4 million of remaining expense related to outstanding awards, which are expected to be recognized over a remaining weighted-average period of 3.3 years.
Executive officers and selected other key
employees are eligible to receive common share performance-based awards, as determined by the board of directors. The payouts, in the
form of unrestricted common shares, 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. No granting of these awards occur until performance
thresholds are achieved. For the three and six months ended December 31, 2022 and 2021, there have been no performance-based awards granted
to officers or employees of the Company.
AMERICAN
BATTERY TECHNOLOGY COMPANY
Notes
to the Condensed Consolidated Financial Statements
For
the period ended December 31, 2022
(unaudited)
11.
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. Management is currently not aware of any such legal proceedings or claims that could have, individually or in the aggregate,
a material adverse effect on our business, financial condition, or operating results.
Operating
Leases
We
lease our principal office location in Reno, Nevada. We also lease two adjacent lab spaces in the University of Nevada, Reno on
short term leases. The principal office location lease expires on November 30, 2024 and the lab leases expire on March 15, 2023.
Consistent with the guidance in ASC 842 “Leases,” we have recorded the principal office lease in our consolidated
balance sheet as an operating lease. For further information on operating lease commitments, refer to Note 6 –
Leases.
Financial
Assurance
Nevada
and other states, as well as federal regulations governing mining operations on federal land, require financial assurance to be provided
for the estimated costs of mine reclamation and closure, including groundwater quality protection programs. ABTC has satisfied financial
assurance requirements using a combination of cash bonds and surety bonds. The amount of financial assurance ABTC is required to provide
will vary with changes in laws, regulations, reclamation and closure requirements, and cost estimates. At December 31, 2022, ABTC’s
financial assurance obligations associated with U.S. mine closure and reclamation/restoration cost estimates totaled approximately $20,000,
for which the Company is legally required to satisfy its financial assurance obligations for its mining properties in Tonopah, Nevada.
The Company was previously released of most of its liability in the Railroad Valley region of Nevada.
12.
Subsequent Events
On
January 6, 2023, the Company executed new Employment Agreement with Scott Jolcover, Chief Resource Officer. The Agreement is a two-year
term, effective January 3, 2023 and provides for an annual base salary of $240,000. The Agreement provides for a cash bonus of up
to 75% of the annual base salary based on the achievement of certain milestones. The Agreement also provides for a grant of Restricted
Stock Units equal to $300,000 divided by the 20-day trailing volume-weighted average price prior to the effective date of the Agreement
and $500,000 worth of warrants with a three-year expiration at a quantity and exercise price as calculated by Black-Scholes at the effective
date of the Agreement, both conditioned on achieving certain milestones and subject to a vesting schedule outlined in the Agreement.
On
January 10, 2023, the Company executed new Employment Agreement with Andres Meza, Chief Operating Officer, The Agreement is a two-year
term, effective January 3, 2023 and provides for an annual base salary of $275,000. The Agreement also provides for a cash bonus of up
to 75% of the annual base salary based on the achievement of certain milestones. The Agreement also provides for a grant of Restricted
Stock Units equal to $500,000 divided by the 20-day trailing volume-weighted average price prior to the effective date of the Agreement
and $1.0 million worth of warrants with a four-year expiration of a quantity and exercise price as calculated by Black-Scholes at the effective
date of the Agreement, both conditioned on achieving certain milestones and subject to a vesting schedule outlined in the Agreement.
During
January 2023, the Company issued 1,477,187 common shares pursuant the vesting of service-based RSUs. Of this amount 685,000 shares were
issued to officers of the Company.
The
Company has evaluated subsequent events through the date the financial statements were available to be issued and has not identified
any additional subsequent events requiring adjustments to, or disclosures in the accompanying condensed financial statements.