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
We are a start-up company, engaged in the exploration, mining, extraction and
recycling of battery metals. We were 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.
We are actively exploring and drilling for lithium-rich brines and deposits from
the Company's claims covering 30,000 acres in Railroad Valley, Nevada.
In our laboratories located in Boston, Massachusetts, and Virginia City, Nevada,
we have been developing and optimizing our proprietary extraction technologies
to harvest nickel, cobalt, manganese, and lithium from recycled batteries for
refinement into battery-grade metal feedstocks.
In an incubator space provided by BASF Corporation and located in Greentown,
Massachusetts, we began, in the first quarter of the 2020 fiscal year, to
develop a closed-loop battery recycling process that separates and recovers each
individual elemental metal from end-of-life batteries, as well as from defects
and waste from battery manufacturing facilities. These recovered metals will be
refined up to battery-grade specifications and then sold.
Currently, the Board of Directors (consisting of Mr. Douglas Cole, Mr. Douglas
MacLellan and Mr. William Hunter) are involved in guiding the Company's goals
and objectives to solely focus on the exploration, extraction and recycling of
Lithium (Li) and other battery metal deposits in the State of Nevada, primarily
through new capital commitments which Mr. Cole is actively seeking.
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 ("ABMC") and reorganized into three divisions; Battery Metals
Mining, Battery Metals Extraction and Battery Metals Recycling. ABMC currently
has 1,300 mining claims on 30,000 acres in the area known as the Western Nevada
Basin, situated in Railroad Valley in Nye County, Nevada (the "WNB Claim"). In
the second half of 2017, we engaged experts to evaluate the region and the WNB
Claim to target onsite exploration efforts and determined that the claims of the
WNB Claim were appropriate for the Company's planned exploration, which we began
in the first half of 2019. With many features similar to Clayton Valley and with
no exploration work targeting lithium to date, Railroad Valley represents a new
and untested target for lithium brine. The Railroad Valley brine exploration can
build on both the dense existing oil field data and the experiences at Clayton
Valley and other Lithium brine basins to target potential brine aquifers. Please
see the Company's website for more information: www.batterymetals.com.
The growth in demand for lithium batteries is predicted by industry researchers
to outpace lithium production in the coming decade. Lithium-ion batteries for
the automotive industry are expected to advance demand beyond current supply.
These industry trends support and validate the Company's new business model.
The Company is currently a pre-revenue organization and we do not anticipate
earning revenues until such time as we have completed construction of our first
lithium-ion battery recycling facility. We do not anticipate earning revenues
from our exploration and extraction businesses until we have undertaken
sufficient exploration work to identify lithium and or other battery metals
reserves. Exploration work will take several years and there is no certainty we
will ever reach a production stage. Our Company is considered to be in the
exploration stage due to not having done exploration work which would result in
a development decision.
--------------------------------------------------------------------------------
25
--------------------------------------------------------------------------------
Employees
The company has ten employees: (a) two officers, Mr. Cole, and our Chief
Technical Officer and (b) eight other employees: Chief of Mining Operations,
Principal Chemical Engineer, Lead Onsite Project Manager, Lead Chemist, Head of
Business Development, Finance Operations head, Corporate Communications head,
and Office Assistant.
RESULTS OF OPERATIONS
American Battery Metals Corp. ("ABMC") has not realized any revenue from its
exploration activities on the Mogollon concession or the Nye County properties
and it is extremely doubtful that the mineral property will be able to produce
any revenue for many years. Without an ore reserve ABMC cannot seek substantial
investors to further fund the Company so that production can be achieved. Not
until commercial production is realized will ABMC have any chance of recognizing
any form of revenue.
Results of Operations
Revenues
During the three and six months ended March 31, 2020 and 2019, the Company did
not realize any revenues.
Expenses
Three Months Ended March 31, 2020
During the three months ended March 31, 2020, the Company incurred $2,015,935 of
operating expenses compared to $6,456,096 of operating expenses during the three
months ended March 31, 2019. Overall, the decrease in operating expense was due
to the fact that the Company issued 19,550,000 common shares for service with a
fair value of $5,839,360 in fiscal 2019 compared to 17,236,200 common shares for
fair value of $689,448 during fiscal 2020. The decrease in share-based
compensation was offset by an increase of $223,875 for exploration costs due to
additional costs incurred on the Company's mineral rights and an increase of
$238,000 in management fees to officers and directors of the Company.
In addition to operating expenses, the Company incurred interest and accretion
expense of $2,503,804 during the three months ended March 31, 2020 compared to
$439,474 during the three months ended March 31, 2019. The increase in interest
and accretion expense was due to the fact that the Company had more conversions
of outstanding convertible notes in the current year compared to prior year
which resulted in the acceleration of accretion on the debt discount that was
originally derived due to the fair value of the convertibility features on the
convertible notes. The Company also had an increase in the loss due to the
change in the fair value of the derivative liability from $235,853 for the three
months ended March 31, 2019 to $3,558,652 for the three months ended March 31,
2020 due to the fact that the Company had a more volatile share price during the
current year which resulted in a wider spread between the fair value of the
common stock and the discounted conversion rates for the convertible debentures.
Finally, the Company recorded a gain on the settlement of debt of $565,405
compared a gain of $568,218 during the three months ended March 31, 2019 due to
the fact that the overall derivative liability amounts were higher which
resulted in more derivative liability being eliminated upon conversion of the
debt with the issuance of common shares.
Net Loss
During the three months ended March 31, 2020, the Company incurred a net loss of
$7,512,986 or $0.03 loss per share compared to a net loss of $6,563,205 or $0.06
loss per share during the three months ended March 31, 2019. The increase in the
net loss is due to the fact that the Company had a larger loss due to the change
in fair value of derivative liabilities due to the increased use of convertible
notes payable as a source of financing for the Company's operations and the
decrease in the loss per share is due to the fact that the Company has more
common shares outstanding in the current year compared to the prior year.
Six Months Ended March 31, 2020
During the six months ended March 31, 2020, the Company incurred $3,099,066 of
operating expenses compared to $7,618,312 of operating expenses during the six
months ended March 31, 2019. Overall, the decrease in operating expense was due
to the fact that the Company issued 22,750,000 common shares for service with a
fair value of $6,328,360 in fiscal 2019 compared to 22,796,200 common shares for
fair value of $922,968 during fiscal 2020. The decrease in share-based
compensation was offset by an increase of $215,566 for exploration costs due to
additional costs incurred on the Company's mineral rights and an increase of
$238,000 in management fees to officers and directors of the Company.
--------------------------------------------------------------------------------
26
--------------------------------------------------------------------------------
In addition to operating expenses, the Company incurred interest and accretion
expense of $4,435,612 during the six months ended March 31, 2020 compared to
$717,164 during the six months ended March 31, 2019. The increase in interest
and accretion expense was due to the fact that the Company had more conversions
of outstanding convertible notes in the current year compared to prior year
which resulted in the acceleration of accretion on the debt discount that was
originally derived due to the fair value of the convertibility features on the
convertible notes. The Company also had an increase in the loss due to the
change in the fair value of the derivative liability from $944,008 for the six
months ended March 31, 2019 to $3,623,387 for the six months ended March 31,
2020 due to the fact that the Company had a more volatile share price during the
current year which resulted in a wider spread between the fair value of the
common stock and the discounted conversion rates for the convertible debentures.
Finally, the Company recorded a gain on the settlement of debt of $693,268
compared a gain of $146,473 during the six months ended March 31, 2019 due to
the fact that the overall derivative liability amounts were higher which
resulted in more derivative liability being eliminated upon conversion of the
debt with the issuance of common shares.
Net Loss
During the six months ended March 31, 2020, the Company incurred a net loss of
$10,461,051 or $0.05 loss per share compared to a net loss of $9,133,011 or
$0.09 loss per share during the six months ended March 31, 2019. The decrease in
the loss per share is due to the fact that the Company has more common shares
outstanding in the current year compared to the prior year.
Liquidity and Capital Resources
At March 31, 2020, the Company had cash of $282,374 and total assets of $443,677
compared to cash of $7,371 and total assets of $92,694 as at September 30, 2019.
The increase in cash is due to the fact that the Company received $2,243,491 of
financing during the current period which was not completely used, including
$1,125,000 of private placement subscriptions for shares to be issued and net
financing of $1,118,491 from convertible notes. The increase in total assets is
due to the increase in cash as there were no material changes in prepaid
expenses or the carrying value of the Company's investment in the CINC joint
venture.
The Company had total current liabilities of $5,176,411 at March 31, 2020
compared to $4,879,614 at September 30, 2019. The increase is due to an increase
in derivative liabilities of $339,094 due to an increased spread between the
conversion rate of the convertible notes and the fair value of the Company's
common shares at March 31, 2020, and an increase in accounts payable and accrued
liabilities of $27,632, and $104,180 increase in amounts due to related parties
due to timing differences between the expenditures incurred and the payment of
the outstanding balances. The increase was offset by a decrease in the carrying
value of notes payable from $398,348 at September 30, 2019 compared to $224,239
at March 31, 2020. The decrease in the carrying value of notes payable was due
to the repayment of convertible notes payable of $855,259 during fiscal 2020 and
the conversion of outstanding convertible notes payable during the year. As at
March 31, 2020, the Company had total face value of convertible debt outstanding
of $2,367,500 compared to total face value of convertible debt of $3,493,259 as
at September 30, 2019.
As at March 31, 2020, the Company had a working capital deficit of $4,767,984
compared to a working capital deficit of $4,822,170 at September 30, 2019.
Overall, the working capital deficit was consistent to September 30, 2019 as the
Company converted or repaid outstanding notes payable and replaced them with new
convertible debentures as well as $1,125,000 of cash was received for share
subscriptions which was used for operating expenses and for repayment of
outstanding convertible notes payable.
During the six months ended March 31, 2020, the Company issued 22,796,200 common
shares for services with a fair value of $922,968, issued 168,633,740 common
shares to convert outstanding notes payable and accrued interest of $8,314,497,
and issued 4,310,807 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.
As at March 31, 2020 and 2019, the Company does not have any issued or
outstanding stock options.
Cash Flows
Cash from Operating Activities.
During the six months ended March 31, 2020, the Company used $1,968,488 of cash
for operating activities as compared to $966,484 during the six months ended
March 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 $1,125,000 from share subscriptions, which allowed it to incur more
operating costs to further the Company's development and operations.
Cash from Investing Activities
During the six months ended March 31, 2020 and 2019, the Company did not have
any investing activities.
--------------------------------------------------------------------------------
27
--------------------------------------------------------------------------------
Cash from Financing Activities
During the six months ended March 31, 2020, the Company received $2,243,491 of
financing, which included $1,973,750 of funding from the issuance of convertible
notes payable less repayments of $855,259 on the convertible notes during the
period, and $1,125,000 from share subscriptions received. Comparatively, for the
six months ended March 31, 2019, the Company received $1,191,264 of funding from
financing activities which was primarily from the funding and repayment of
outstanding convertible notes.
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.
© Edgar Online, source Glimpses
AMERICAN BATTERY TECHNOLOGY COMPANY 
